CONTENTS

CORPORATE INFORMATION 02

ABOUT PEL 03

NOTICE OF ANNUAL GENERAL MEETING 04

VISION / MISSION 08

GOVERNANCE 09

RISKS AND OPPORTUNITIES 21

DIRECTOR’S REPORT 27

SHAREHOLDERS INFORMATION 49

CONSOLIDATED FINANCIAL STATEMENTS 52

SEPARATE FINANCIAL STATEMENTS 120 02 CORPORATE INFORMATION

BOARD OF DIRECTORS Mr. M. Naseem Saigol Chairman - Non Executive Mr. Muhammad Murad Saigol Chief Executive Officer - Executive/Certified (DTP) Mr. Muhammad Zeid Yousuf Saigol Director - Executive/Certified (DTP) Syed Manzar Hassan Director - Executive/Certified (DTP) Syed Haroon Rashid Director - Non Executive/Independent/Certified (DTP) Mr. Muhammad Kamran Saleem Director - Non Executive/Independent/Certified (DTP) Mr. Asad Ullah Khawaja Director - NIT Nominee/Independent Mr. Usman Shahid Director - NBP Nominee U/S 164 of the Act / Non Executive Ms. Azra Shoaib Director - NBP Nominee U/S 164 of the Act / Non Executive

AUDIT COMMITTEE BANKERS Mr. Asad Ullah Khawaja Chairman/Member Albaraka Bank (Pakistan) Limited Syed Haroon Rashid Member Askari Bank Limited Mr. Usman Shahid Member Bank Alfalah Limited Syed Manzar Hassan Member The Bank of Khyber The Bank of Punjab HR & REMUNERATION COMMITTEE Sindh Bank Limited Mr. Asad Ullah Khawaja Chairman/Member Faysal Bank Limited Syed Haroon Rashid Member Bank Islami (Pakistan) Limited Mr. Usman Shahid Member MCB Bank Limited Syed Manzar Hassan Member National Bank of Pakistan Pak Brunei Investment Company Limited Pak Libya Holding Company (Private) Limited COMPANY SECRETARY Pak Oman Investment Company Limited Muhammad Omer Farooq Silk Bank Limited Soneri Bank Limited CHIEF FINANCIAL OFFICER Standard Chartered Bank (Pakistan) Limited Summit Bank Limited Syed Manzar Hassan, FCA Saudi Pak Industrial and Agriculture Investment Company Limited AUDITORS United Bank Limited Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants A member of Russell Bedford International REGISTERED OFFICE KARACHI 17- Aziz Avenue, Canal Bank, Kohinoor Building LEGAL ADVISOR Gulberg-V, Lahore 25-West Wharf Road, M/s Hassan & Hassan Advocates Tel: 042-35718274-6, Karachi Fax: 042-35762707 Tel: 021-32200951-4 COMPANY REG. NO. E-Mail: [email protected] Fax: 021-32310303 0000802 ISLAMABAD CHINA NATIONAL TAX NO. (NTN) Room # 301, 3rd Floor, 206, No. 1007, Zhong 2011386-2 Green Trust Tower, Shan Naun Er Road, Blue Area, Islamabad Shanghai, China STATUS OF COMPANY Tel: 051-2824543, 2828941 Tel: 86-21-64567713 Fax: 051-2273858 Fax: 86-21-54109971 Public Interest Company (PIC) TRANSFORMER WORKS SHARIAH ADVISOR FACILITY 14-K.M. Ferozepur Mufti Usama Ehsan 34-K.M. Road, Lahore Safwa Shariah Advisory (Private) Limited Ferozepur Road, Tel: 042-35920151-9 Keath Village, Lahore SHARE REGISTRAR Tel: 042-35935151-2 Corplink (Pvt.) Limited Wings Arcade, 1-K Commercial Model Town, Lahore. Tel: 042-35916714, 35839182, Fax: 042-35869037 E-Mail: [email protected] 03 ABOUT PEL

PEL is the pioneer manufacturer of electrical goods in Pakistan. In 1956, the Company was set up by Malik Brothers in technical collaboration with M/s AEG of Germany (“AEG”) to manufacture transformers, switchgear and electric motors. AEG exited from the venture and sold their share of PEL to the Malik Brothers in the late 1960s, which was subsequently acquired by the Saigol Group of Companies in 1978. Since its inception, the Company has always been contributing towards the advancement and development of the engineering sector in Pakistan by introducing a range of quality electrical equipment, home appliances and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship schemes and training programmes. Until the acquisition by the Saigol Group, PEL was solely catering the power equipment market. The Company ventured into home appliances market in 1981 after acquisition as a part of the Group’s long term strategy of diversification. The Company comprises of two divisions; each offering a wide range of products as follows: Power Division • Distribution Transformers • Power Transformers • Energy Meters • Switchgears • Grid Stations • EPC Appliances Division • Refrigerators • Air Conditioners • Deep Freezers • Microwave Ovens • Water Dispensers • LED Tvs • Washing Machines • Small Domestic Appliances (Electric Kettle, Toaster, Sandwich Maker, Steam Iron) 04 NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 64th Annual General Meeting of Shareholders of Pak Elektron Limited will be held on Friday, May 29, 2020 at 11:00 A.M. at 06-Egerton Road, Opposite LDA Plaza, Lahore to transact the following business:

1. To confirm the minutes of Extra Ordinary General Meeting held on October 21, 2019.

2. To receive and adopt the Annual Audited Accounts of the Company for the year ended December 31, 2019 together with Directors' and Auditors' Reports thereon.

3. To appoint Auditors to hold office till the conclusion of the next Annual General Meeting and to fix their remuneration.

4. Any other business with the permission of the Chair.

By Order of the Board

Lahore: M. Omer Farooq May 02, 2020 Company Secretary

Notes:

1. Share Transfer Books of the Company will remain closed from May 23, 2020 to May 29, 2020 (both days inclusive). Physical transfers/CDS Transactions IDs received in order at Company registrar office M/s Corplink (Pvt.) Limited Wings Arcade, 1-K, Commercial Model Town, Lahore on or before May 22, 2020 will be treated in time.

2. A member entitled to attend and vote at this Meeting may appoint another Member as proxy. Proxies in order to be effective, must be received at17-Aziz Avenue, Canal Bank, Gulberg-V, Lahore the Registered Office of the Company not later than forty-eight hours before the time of the meeting and must be duly stamped, signed and witnessed.

3. Members whose shares are deposited with Central Depository System are requested to bring their original National Identity Cards or original Passports along with their Account Numbers in Central Depository System for attending the meeting.

4. Members are requested to notify the Company change in their addresses, if any.

5. Annual Audited Financial Statements of the Company for the Financial Year ended December 31, 2019 have been placed on the Company's website i.e. www.pel.com.pk.

6. SUBMISSION OF COPY OF CNIC/NTN DETAILS (MANDATORY)

Pursuant to the directives of the Securities and Exchange Commission of Pakistan CNIC number of individuals is mandatorily required to be mentioned on dividend warrants and pursuant to the provisions of Finance Act 2017, the rate of deduction of income tax under section 150 of the Income Tax Ordinance 2001 from dividend payment have been revised as: for filers of Income Tax return 15% and Non filers of Income Tax return 20%. In case of Joint account, each holder is to be treated individually as either a filer or non-filer and tax will be deducted on the basis of shareholding of each joint holder as may be notified by the shareholder, in writing as follows, to our Share Registrars, or if no notification, each joint holder shall be assumed to have an equal number of shares.

Company Folio/CDS Total Shares Principal Shareholder Joint Shareholder Name Account No.

Name & Shareholding Name & Shareholding CNIC No. Proportion CNIC No. proportion No. of Shares No. of Shares 05

The CNIC number/NTN details is now mandatory and is required for checking the tax status as per the Active Taxpayers List (ATL) issued by Federal Board of Revenue (FBR) from time to time.

Individuals including all joint holders holding physical share certificates are therefore requested to submit a copy of their valid CNIC to the company or its Registrar if not already provided, For shareholders other than individuals, the checking will be done by matching the NTN number, therefore the Corporate shareholders having CDC accounts are requested in their own interest to provide a copy of NTN certificate to check their names in the ATL before the book closure date to their respective participants/CDC, whereas corporate shareholders holding physical share certificates should send a copy of their NTN certificate to the Company or its Share Registrar. The Shareholders while sending CNIC or NTN certificates, as the case may be must quote their respective folio numbers.

In case of non-receipt of the copy of a valid CNIC or NTN, the Company would be unable to comply with SRO 831(1)/2012 dated July 05, 2012 of SECP and therefore will be constrained under Section 243(3) of the Companies Act, 2017 to withhold dispatch of dividend warrants of such shareholder. Further, all shareholders are advised to immediately check their status on ATL and may, if required take necessary action for inclusion of their name in the ATL. The company as per the new law, shall apply 20% rate of withholding tax if the shareholders name, with relevant details, does not appear on the ATL, available on the FBR website on the first day of book closure and deposit the same in the Government Treasury as this has to be done within the prescribed time.

7. Payment of Cash Dividend Electronically

As per provision of Section 242 of Companies Act, 2017 any dividend payable in cash shall only be paid through electronic mode directly in to the bank account designated by the entitled shareholders. The shareholders are requested to provide their folio number, name and details of bank account consisting of bank name, branch name, branch code, Account number, Title of Account and IBAN in which they desire their dividend to be credited, failing which the Company will be unable to pay the dividend through any other mode. Standard request form has also been placed on website of the Company. The members are requested to send the information on the same to our shares registrar (M/s Corplink Private Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore.) at the earliest possible.

In case shares are held in CDC then the form must be submitted directly to shareholder's broker/participant/CDC Investor account services.

8. Transmission of Annual Financial Statements through E-mail

The Securities and Exchange Commission of Pakistan vide SRO 787(I)/2014 dated September 08, 2014 has allowed companies to circulate annual balance sheet, profit & loss account, auditors' and directors' reports along with notice of annual general meeting to its members through e-mail. Members who wish to avail this facility can give their written consent. Standard request form has also been placed on website of the Company. The members are requested to send the information on the same to our shares registrar (M/s Corplink Private Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore.)

9. Transmission of Annual Financial Statements through CD/DVD/USB

SECP through its SRO 470(I)/2016 dated May 31, 2016 have allowed companies to circulate the annual balance sheet, profit and loss account, auditors' report and directors' report etc to its members through CD/DVD/USB at their registered addresses. However a shareholder may request to the Company Secretary at Pak Elektron Limited, Factory Premises, 14-K.M. Ferozepur Road, Lahore to provide printed copy of Annual Financial Statements and the same will be provided at his/her registered address, free of cost, within one week of the demand. 06

1.0 ZAKAT DECLARATIONS (CZ-50)

The Zakat will be deducted from the dividends at source at the rate of 2.5% of the paid-up value of the shares (Rs. 10/- each) under Zakat and Ushr Laws and will be deposited within the prescribed period with the relevant authority, Please submit your Zakat Declarations under Zakat and Ushr Ordinance, 1980 & Rule 4 of Zakat (Deduction & Refund) Rules, 1981 CZ-50 Form, in case you want to claim exemption, with your brokers or the Central Depository Company Ltd. (in case the shares are held in Investor Account Services on the CDC) or to our Registrars, M/s Corplink Private Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore (in case the shares are held in paper certificate form). The shareholders while sending the Zakat Declarations, as the case may be must quote company name and respective folio numbers. 07 08

Vision

To excel in providing engineering goods and services through continuous improvement.

Mission

To provide quality products and services to the complete satisfaction of our customers and maximize returns for all stakeholders through optimal use of resources.

To focus on personal development of our human resource to meet future challenges.

To promote good governance, corporate values and a safe working environment with a strong sense of social responsibility. GOVERNANCE 10 BOARD OF DIRECTORS

M NASEEM SAIGOL Chairman/Non-Executive

Mr. M. Naseem Saigol is the Chairman of the Saigol Group of Companies including PEL. He holds a degree in chemical engineering from USA. Mr. M. Naseem Saigol came up with the vision to serve the nation through power industry in 1994 when Pakistan was facing a severe shortage of power supply. He joined hands with Tomen Corporation Japan (later on acquired by Toyota Tsusho Corporation, Japan) and formed Kohinoor Energy Limited (KEL) as an Independent Power Producer. KEL is proudly contributing to the dire power needs of the country. Mr. M. Naseem Saigol has been the Chairman of All Pakistan Textile Mills Association (APTMA), Vice President of Lahore Chamber of Commerce and Industry, President of Faisalabad Chamber of Commerce and Industry, and is member of Industrial Employers' Association. He holds the office of Honorary Consulate of Belgium. Mr. M. Naseem Saigol through his business group in terms of services, manufacturing home appliances and electrical equipment, textile products and exports thereof, and power generation, is not only contributing to exchequer and the GDP of the country but also bestows businesses to local vendor industry and provides job opportunities to thousands of Pakistanis. He, being an eminent textile entrepreneur, has also the honor to provide technical and management expertise to the governments of Libya, Somalia and Tanzania for establishing textile industry in their countries. Mr. M. Naseem Saigol is also on the Boards of Kohinoor Energy Limited, Saritow Spinning Mills Limited, Kohinoor Industries Limited and Kohinoor Power Company Limited.

M. MURAD SAIGOL Chief Executive Officer

Mr. M. Murad Saigol is the Chief Executive and Managing Director of the Company. He did his graduation from School of Oriental and African Studies, London UK. He looks after all of the Strategic and Operational affairs of the Company. He joined PEL in 2005 and achieved certain land marks in Company Business. In his current role he is responsible to drive the Company affairs in accordance with Board of Directors Vision and Mission. He is a Corporate Governance Certified Director under Directors Training Program. Mr. M.Murad Saigol is also on the Boards of Saritow Spinning Mills Limited, Kohinoor Industries Limited and Kohinoor Power Company Limited.

M. ZEID YOUSAF SAIGOL Executive Director

Mr. M. Zeid Yousaf Saigol is an Executive Director on the Board of PEL. He holds Bachelors in Science (BS) in Chemical Engineering from Carnegie Mellon University USA. He is associated with Company since 2011 and is leading the Company's Power Division Operations. He is a Corporate Governance Certified Director under Directors Training Program. Mr. M. Zeid Yousaf Saigol is also on the Boards of Saritow Spinning Mills Limited, Kohinoor Industries Limited and Kohinoor Power Company Limited.

SYED MANZAR HASSAN Executive Director & CFO

Syed Manzar Hassan is an Executive Director on the Board of PEL and is also the Chief Financial Officer of the Company. He is a Fellow Member of Institute of Chartered Accountants of Pakistan. He has over 20 years' experience in Financial Management, Financial & Management Reporting and handling Corporate Matters with a Specialization in Corporate Finance. He joined PEL in 1998 and is responsible for financial matters including budgeting and financial planning. In his current role, he is responsible for all necessary financing arrangements for smooth cash flow, budgeting and business planning, management and corporate accounting, company taxation and regulatory issues and company IT resource management. He is a member of the Company's Human Resource & Remuneration Committee. He is a Corporate Governance Certified Director under Directors Training Program. 11

MUHAMMAD KAMRAN SALEEM Independent Non-Executive Director

Mr. Muhammad Kamran Saleem holds L.L.M., ACA (Eng. & Wales), FCA (Pak.), FCMA, FCIS. He is also the chairman of standing committee on Takaful and Window Takaful at Federation of Pakistan Chamber of Commerce and Industry. He is a founding management employee at Pak Qatar Group. Mr. Muhammad Kamran Saleem is Chief Executive Officer at Pak Qatar Investments (Private) Limited and currently holds title of 'Director-Finance and Company Secretary' at Pak-Qatar Family Takaful Limited. He has been member of team achieving key milestones i.e. implementation of SAP (FICO), Shariah and Statutory Reporting, Taxation and Compliance for Insurance and Takaful Industry In Pakistan. He also supervises Treasury through Fund Managers and is member of Investment Committee at Pak-Qatar Family Takaful Limited with oversight of PKR 20 Billion in various assess classes. Being a qualified lawyer, he also supervises legal team and has exposure in handling legal queries and cases at Pak- Qatar Group including supervision of Risk Management Committee. He has also served in Automobile, Sugar and Textile Conglomerate apart from his audit and consultancy assignments as external auditor during professional practice. He is a Corporate Governance Certified Director under Directors Training Program.

SYED HAROON RASHID Independent Non-Executive Director

Syed Haroon Rashid has over twenty years of experience in corporate Finance and strategic management having worked in various Financial as well as non-Financial institutions. He started his career with the Experts Advisory Cell, a successor to the Board of Industrial Management, established to assist the Ministry of Production in the management & control, corporate planning and performance evaluation of public sector industrial enterprises in sectors ranging from fertilizer, automobiles, heavy engineering, chemicals, petroleum, cement to steel. Subsequently, he served as Advisor with the Investment Corporation of Pakistan which was the first closed-end mutual fund established in Pakistan in the early 1960's. Later, he joined the Zarai Taraqiati Bank Ltd. as part of a senior management team formed for the restructuring of the Bank where he served as Head, Restructuring (Project Loans) as well as Head, Project Implementation Unit of the Asian Development Bank. He played a major role in restructuring of corporate loan departments of the organization and worked to successfully revitalize them. He is also a training consultant with the National Institute of Banking and Finance, Islamabad (State Bank of Pakistan). Syed Haroon Rashid has also served as NIT's (National Investment Trust) Director on Boards of various public listed companies. He is also a Certified Director of the IFC (World Bank Group) sponsored by Pakistan Institute of Corporate Governance. Syed Harron Rashid is also on the Boards of Saritow Spinning Mills Limited, Baluchistan Wheels Limited and Ghandara Nissan Limited.

OTHER DIRECTORS

In addition to the above directors the following are Nominee Independent Non-Executive Directors on the Board of PEL. 1.) Asad Ullah Khawaja | Nominated by National Investment Trust 2.) Usman Shahid | Nominated by National Bank of Pakistan 3.) Azra Shoaib | Nominated by National Bank of Pakistan 12 BOARD OF DIRECTORS

COMPOSITION OF THE BOARD OF

DIRECTORS 17% 33% 33% In order to ensure transparency, good governance and smooth functioning of the 67% Company's operations, the Company has 50% implemented the regulatory framework in Independent Directors terms of qualification, experience and Executive Directors Nominee Directors Non-Executive Directors composition of the Board of Directors as Other Non-Executive Directors well as awareness of the Board Composition of Composition of the Board Non-Executive Directors responsibilities. The Board comprises 9 directors effectively representing All directors are highly qualified and shareholders' interests. There are 6 non- experienced and come from varied executive directors including 2 independent discipline, which enables the Board to carry directors and 3 directors nominated by out effective and efficient decision making. holders of special interest under now Detailed profile of each member of the Section 164 of the Companies Act, 2017. Board is presentedpage 10 .

INDEPENDENT DIRECTORS The Company has 2 Independent Directors on its Board; Mr. Muhammad Kamran Saleem and Syed Haroon Rashid who meet the definition of independence provided by Companies Act 2017 andt he y ha ve submitted to the Company their declaration s to this effect.

FEMALE DIRECTOR Ms. Azra Shoaib is the only female director on the Board of Directors of the Company.

MEETINGS OF THE BOARD The Board of Directors meets atleast four times every year as required by the regulatory framework. Special meetings are also called to discuss and decide on important matters as and when required. The Board met 4 times during the year. The notices, along with agenda, were circulated in a timely manner. The decisions taken by the Board were clearly documented in the minutes of meetings maintained by the Company Secretary and were circulated to all directors for endorsement within the stipulated time and were approved by the Board in subsequent meetings. All Board Meetings were held in Pakistan during the year, had the requisite quorum as prescribed by Code of Corporate Governance and were also attended by the Chief Financial Officer and Company Secretary.

Name of Directors Attendance ATTENDANCE OF BOD MEETINGS

M. Naseem Saigol 4 10 M. Murad Saigol 3 esent 08 M. Zeid Yousuf Saigol 3 Syed Manzar Hassan 4 06 4 Syed Haroon Rashid 04

Sheikh Muhammad Shakeel 2 No. of pr Directors 02 Asad Ullah Khawaja 4

Usman Shahid 3 - 1st 2nd 3rd 4th Jamal Baquar 1 Meetings of the Board Azra Shoaib 2 Attendance Quorum required Muhammad Kamran Saleem - 13

BOARD OPERATIONS the Board of Directors while Mr. Sheikh Muhammad Shakeel, an existing director Each member of the Board is fully aware of did not contest elections. Further, the his responsibilities as an individual member Nominee Director Mr. Jamal Baquar was as well as the responsibilities of all members withdrawn by National Bank of Pakistan. together as a board. The Board actively participates in all major ANNUAL EVALUATION OF BOARD’S decisions of the Company including PERFORMANCE appointment approval of capital expenditure budgets, investments, issuance PEL has put in place a comprehensive of equity and debt capital, related party mechanism for undertaking annual transactions and appointment of key evaluation of the performance of the Board personnel. of Directors in accordance with the The Board also monitors the Company's requirement of the Code of Corporate operations by approval of financial Governance. statements, review of internal and external The mechanism evaluates the performance audit observations, if any and of the Board on the following parameters: recommendation of dividend. • Board composition, organization and The Board has devised formal policies for scope conducting business and ensures their • Board functions and responsibilities monitoring through an independent Internal • Monitoring of Company's performance Audit Department which continuously monitors adherence to Company Policies. Evaluation forms and checklists are circulated to all members of the Board and The responsibility of implementing the each member is required to submit the strategies as approved by the Board of same duly filled to the Company Secretary. Directors is that of the management. The The results are consolidated and discussed management conducts the routine business in the nest meeting to formulate a strategy operations of the Company in an effective for improvement in Board's performance. and ethical manner in accordance with the strategies and goals approved by the Board OFFICE OF THE CHAIRMAN AND and identifies and administers the key risks and opportunities which could impact the CHIEF EXECUTIVE OFFICER Company in the ordinary course of The office of Chairman and that of the Chief execution of its business. Management is Executive Officer of the Company are held also concerned in keeping the Board separately, as part of the Company's members updated regarding any changes governance structure, with clear division of in the operating environment or risk profile. roles and responsibilities. It is also the responsibility of management, with the oversight of the Board and its Audit ROLES AND RESPONSIBILITIES OF Committee, to prepare financial statements THE CHAIRMAN AND CHIEF that fairly present the financial position of EXECUTIVE OFFICER the Company in accordance with applicable accounting standards and legal The Chairman acts as the head of the Board requirements. and is responsible for assessing and making recommendations regarding effectiveness CHANGES TO THE BOARD of the Board and ensuring effective role of the Board in fulfilling all its responsibilities Election of directors was held on October and has the power to set agendas, give 19, 2019, wherein a new member Mr. directions and sign the minutes of Board Muhammad Kamran Saleem was elected on meetings. 14 BOARD OF DIRECTORS

The Chief Executive Officer is an executive DIRECTORS' TRAINING PROGRAM director who also acts as the head of the The following directors have obtained Company's management in the capacity of certification under the Directors' Training managing director and implements the Program from SECP approved institutes in policies delegated by the Board within the accordance with requirements of the Code limits prescribed. of Corporate Governance: The main responsibilities of the Chief 1. M. Murad Sagol Executive Officer include: 2. M. Zeid Yousuf Saigol • Safeguarding the Company's assets 3. Muhammad Kamran Saleem • Creation of shareholder value 4. Syed Haroon Rashid • Identification of potential 5. Syed Manzar Hassan • diversification/investment projects Certifications of the remaining members of the Board are expected to be completed as • Implementation of projects approved by per schedule prescribed by Listed the Board Companies (Code of Corporate • Ensuring effective functioning of the Governance) Regulations, 2019 . internal control system DIRECTORS' REMUNERATION • Identifying risks and designing mitigation strategies There are formal and transparent procedures for fixing the remuneration of • Development of human capital and good directors and no director is involved in investors' relations deciding his own remuneration. • Compliance with regulations and best Remuneration levels are kept at a practices. reasonable level in order to attract and retain directors, without compromising FORMAL ORIENTATION AT INDUCTION independence. New members of the Board are taken through a detailed orientation process at FOREIGN DIRECTORS the time of induction. The orientation The Company does not have any foreign process involves a familiarization program directors on its Board. which mainly features the following: • Vision, mission, core values and strategies IMPLEMENTED GOVERNANCE and stakeholders. PRACTICES VS LEGAL REQUIREMENTS • Significant policies PEL as an organization encourages • Summary of financial position proactive and accountable management • Risks exposure and management system to ensure transparency and compliance with laws. To further strengthen • Critical performance indicators implementation of the same, PEL has well • Roles and responsibilities of director composed and structured policies and under the statute procedures based on international standards that are ahead of our laws and • Expectations from the Board regulations. For this we have instituted a • Facets of business including strategic comprehensive legal and compliance plans, forecasts, minutes of past meetings function in the company that goes beyond legal requirements. and litigations. 15 RELATED PARTIES

Related parties from the Company's perspective comprise subsidiary, associated companies and undertakings, key management personnel and post employment benefit plan. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, and includes the Chief Executive and Directors of the Company. The details of Company's related parties, with whom the Company had transactions during the year or has balances outstanding as at the reporting date are as follows:

Aggregate %age of shareholding Name of related party Nature of relationship Basis of relationship Nature of transaction in the Company

Pak Elektron Limited Provident Fund Trust Contribution to N/A Employees Provident Fund Trust provident fund PEL Marketing (Private) Limited Subsidiary Investment Sale of goods N/A Expense allocation Kohinoor Power Company Limited Associated company Investment Purchase of services N/A Red Communication Arts(Private) Limited Associated undertakingCommon Directors Purchase of services N/A Mr. M. Murad Saigol Key management personnel Chief executive Remuneration 0.0025% Mr. M. Zeid Yousuf Saigol Key management personnel Director Remuneration 2.9637% Mr. Syed Manzar Hassan Key management personnel Director Remuneration 0.0004%

The Board of Directors has approved a policy for Related Party Transactions, which require that the company shall carry out transactions with its related parties on an arm's length basis in the normal course of business. The term 'arm's length' requires conducting business on the same terms and conditions as the business between two unrelated / unconcerned persons. The policy specifies that all transactions entered into with related parties shall require Board's approval. There were no transactions with related parties on non-arm’s length basis. PREPARATION AND FAIR PRESENTATION OF THE FINANCIAL STATEMENTS

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017(XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations,or has no realistic alternative but to do so. The Board of directors is responsible for overseeing the Company's financial reporting process. 16 AUDIT COMMITTEE

Composition Designation sales, receipts and payments, assets and Mr. Asad Ullah Khawaja Chairman liabilities and the reporting Mr. Usman Shahid Member structure are adequate and Sheikh Muhammad Shakeel Member effective. Syed Haroon Rashid Member j) Review of Company's statement on internal control system prior to Directors th th rd th Total 16 26 23 30 endorsement by the Board April April August October Attended of Directors and internal Mr. Asad Ullah Khawaja 4 audit reports. Mr. Usman Shahid 3 k) Instituting special projects, Sheikh Muhammad Shakeel 2 value for money studies or Syed Haroon Rashid 4 other investigations on any matter specified by the Board of Directors, in Salient Features & Terms d) Facilitating the external consultation with the CEO of References audit and discussion with external auditors of major and to consider remittance The Board of Directors of the observations arising from of any matter to the Company have determined the interim and final audits and external auditors or to any following term of reference of any matter that the auditors other external body. the Audit Committee: may wish to highlight (in l) Determination of a) Determination of the absence of compliance with relevant appropriate measures to management, where statuary requirements. necessary). safeguard the Company's m) Monitoring compliance assets. e) Review of Management with the best practices of b) Review of preliminary Letter issued by external corporate governance and announcements of results auditors and identification of significant prior to publication. management's responsible violations thereof. thereto. c) Review of quarterly, half n) Review of arrangement for yearly and annual financial f) Ensuring coordination staff and management to statements of the between the internal and report to audit committee Company, prior to their external auditors of financial and other matters approval by the Board of Company. and recommend instituting Directors, focusing on: g) Review of the scope and remedial and mitigating measures; • Major judgmental areas, extent of internal audit and ensuring that the internal o) Recommend to the Board • Significant adjustments audit function has of Directors the resulting from the audit, adequate resources and is appointment of external • appropriately placed within auditors, their removal, The going concern the Company. assumption, audit fees, the provision of any service permissible to • h) consideration of major Any change in findings of internal be rendered to the accounting policies and investigations of activities Company by external practices, characterized by fraud, auditors in addition to audit of its financial • corruption and abuse of Significant related party statements, measures for transactions power and management's response thereto. redressal and rectification • Compliance with of non-complinaces with applicable accounting i) ascertaining that the the Code of Corporate standards, and internal control systems Governance Regulations. including financial and • Compliance with Code operational controls, p) Consideration of any other of Corporate accounting systems for issue or matter as maybe Governance Regulations timely and appropriate assigned by the Board of and other statutory and recording of purchases and Directors. regulatory requirements. 17 HUMAN RESOURCEAND REMUNERATION COMMITTEE

Composition Designation Financial Officer, the Mr. Asad Ullah Khawaja Chairman Company Secretary and the Head of Internal Mr. Usman Shahid Member Audit, including their Syed Manzar Hassan Member terms of appointment Syed Haroon Rashid Member and remuneration package.

th Directors 4 Total The Committee meets on as Attended April required basis or when Mr. Asad Ullah Khawaja 1 directed by the Board sets Mr. Usman Shahid 1 the agenda, time, date and Sheikh Muhammad Shakeel 1 venue of the meeting in Syed Haroon Rashid 1 consultation with the Chairman of the Committee. Salient Features & Terms c) Recommending human SeniorMan a ger Human of Reference resource management Resources acts as Secretary policies to the board; The Board of Directors of the of the Committee and submits the minutes of the Company have determined the d) Recommending to the meeting duly signed by following term of reference of board the selection, Chairman to the Company the Human Resource and evaluation, Secretary. These minutes are Remuneration Committee: development, then circulated to the Board compensation (including a) Recommend to the of Directors. board forc onsideration retirement benefits) of and approval a policy chief financial officer, framework for company secretary and determining head of internal audit; remuneration of e) Consideration and directors (both executive approval on and non-executive recommendations of directors and members chief executive office on of senior management). such matters for key The definition of senior management positions management will be who report directly to determined by the chief executive officer; board which shall and normally include the first layer of management f) Ensure, in consultation below the chief with the Chief Executive executive officer level; that succession plans are in place and review such b) Undertaking annually a plans at regular intervals formal process of for those executives, evaluation of whose appointment performance of the requires Board approval board as a whole and its (under Code of committees either Corporate Governance), directly or by engaging namely, the Chief external independent consultant; 18 CORPORATE GOVERNANCE

STATEMENT OF COMPLIANCE WITH LISTED COMPANIES (CODE OF CORPORATE GOVERNANCE) REGULATIONS, 2019

The company has complied with the 7. The meetings of the Board were requirements of the Regulations in the presided over by the Chairman and, in following manner: his absence, by a director elected by the Board for this purpose. The Board has 1. The total number of directors are Nine complied with the requirements of Act as per the following, and the Regulations with respect to a) Male: Eight frequency, recording and circulating minutes of meeting of the Board; b) Female: One 8. The Board have a formal policy and 2. The composition of the Board is as transparent procedures for follows: remuneration of directors in accordance Category Names with the Act and these Regulations; Independent Director Mr. Asad Ullah Khawaja 9. The Board has arranged Directors Mr. M. Kamran Saleem Training Orientation Program for Non-Executive Directors Mr. M. Naseem Saigol following Directors; Syed Haroon Rashid Mr. Usman Shahid a) Mr. Muhammad Murad Saigol b) Mr. Muhammad Zeid Yousuf Saigol Executive Directors Mr. M. Murad Saigol Mr. M. Zeid Yousuf Saigol c) Syed Manzar Hassan Syed Manzar Hassan d) Syed Haroon Rashid Female Director Ms. Azra Shoaib 10. The Board has approved appointment of chief financial officer, company 3. The directors have confirmed that none secretary and head of internal audit, of them is serving as a director on more including their remuneration and terms than seven listed companies, including and conditions of employment and this company; complied with relevant requirements of 4. The company has prepared a code of the Regulations; conduct and has ensured that 11. Chief financial officer and chief appropriate steps have been taken to executive officer duly endorsed the disseminate it throughout the company financial statements before approval of along with its supporting policies and the Board; procedures; 12. The Board has formed committees 5. The Board has developed a comprising of members given below. vision/mission statement, overall corporate strategy and significant a) Audit Committee: policies of the company. The Board has 1. Mr. Asad Ullah Khawaja ensured that complete record of 2. Mr. Usman Shahid particulars of the significant policies along with their date of approval or 3. Syed Haroon Rashid updating is maintained by the company; b) HR and Remuneration Committee: 6. All the powers of the Board have been 1. Mr. Asad Ullah Khawaja duly exercised and decisions on 2. Mr. Usman Shahid relevant matters have been taken by the Board/ shareholders as empowered by 3. Syed Manzar Hassan the relevant provisions of the Act and 4. Syed Haroon Rashid these Regulations; 19

13. The terms of reference of the aforesaid 17. The statutory auditors or the persons committees have been formed, associated with them have not been documented and advised to the appointed to provide other services committee for compliance; except in accordance with the Act, these Regulations or any other regulatory 14. The frequency of meetings requirement and the auditors have (quarterly/half yearly/ yearly) of the confirmed that they have observed IFAC committee were as per following, guidelines in this regard; a) Audit Committee: 18. We confirm that all requirements of 1. April 04, 2019 regulations 3, 6, 7, 8, 27,32, 33 and 36 of 2. April 26, 2019 the Regulations have been complied with; and 3. August 23, 2019 4. October 30, 2019 19. We confirm that there is no non- compliance with requirements of CCGR. b) HR and Remuneration Committee: 1. April 04, 2019 M. Naseem Saigol 15. The Board has set up an effective Chairman internal audit function/ or has outsourced the internal audit function to Lahore: who are considered suitably qualified May 02, 2020 and experienced for the purpose and are conversant with the policies and procedures of the company; 16. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the Quality Control Review program of the Institute of Chartered Accountants of Pakistan and registered with Audit Oversight Board of Pakistan, that they and all their partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan and that they and the partners of the firm involved in the audit are not a close relative (spouse, parent, dependent and non-dependent children) of the chief executive officer, chief financial officer, head of internal audit, company secretary or director of the company; 20 CORPORATE GOVERNANCE

Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants

72-A, Faisal Town, Lahore - 54770, Pakistan.

T: +92 42 35160430 - 32 F: +92 42 35160433 E: [email protected] W: www.rsrir.com Independent Auditor’s Review Report To the members of PAK ELEKTRON LIMITED Review Report on the Statement of Compliance contained in Listed Companies (Code of Corporate Governance) Regulations, 2019

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019 ['the Regulations'] prepared by the Board of Directors of PAK ELEKTRON LIMITEDfor the year ended December 31, 2019 in accordance with the requirements of regulation 36 of the Regulations. The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our responsibility is to review whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Regulations and report if it does not and to highlight any non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries of the Company's personnel and review of various documents prepared by the Company to comply with the Regulations. As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks. The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval, its related party transactions. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the requirements contained in the Regulations as applicable to the Company for the year ended December 31, 2019. The director's report on the financial statements for the year ended December 31, 2019 was amended to disclose a non-adjusting event occurring after the reporting period. We have, earlier, issued our review report on the statement of compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019, dated March 27, 2020, wherein we have expressed an unmodified conclusion on that statement. This is an amended review report on the statement of compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019. Our review procedures subsequent to that date were restricted to the subsequent amendment of the director's report. The engagement partner on the review resulting in this independent auditor's review report is ZUBAIR IRFAN MALIK.

RAHMAN SARFARAZ RAHIM IQBAL RAFIQ Chartered Accountants Lahore: May 02, 2020

Member of Russell Bedford International - a global network of independent professional services firms RISKS AND OPPORTUNITIES 22 RISKS AND OPPORTUNITIES

PEL's activities expose it to a variety of risks developing and monitoring PEL's risk which are subject to difference levels of management policies. uncertainty against which PEL has implemented effective mitigating strategies. The Audit Committee oversees how These risks can emanate from a number of management monitors compliance with factors including but not limited to PEL's risk management policies and uncertainties in financial markets, project procedures and reviews the adequacy of the failures, legal liabilities, credit risk, accidents risk management framework in relation to and disasters as well as deliberate the risks faced by PEL. The Audit Committee aggressive actions from an adversary, or is assisted in its oversight role by Internal uncertain or unpredictable events. Audit department. Internal Audit department undertakes both regular and ad Risk Governance Structure hoc reviews of risk management controls and procedures, the results of which are PEL's risk management policies are reported to the Audit Committee. established to identify and analyze the risks faced by PEL, to set appropriate risk limits The Human Resource & Remuneration and controls, and to monitor risks and Committee focuses on risks in its area of adherence to limits. Risk management oversight. This includes succession planning policies and systems are reviewed regularly with a view to ensure availability of talented to reflect changes in market conditions and functionaries in each area of critical PEL's activities. PEL, through its training and company operations as well as assessment management standards and procedures, of compensation programs to ensure that aims to develop a disciplined and they do not escalate corporate risk. constructive control environment in which all employees understand their roles and Risk Assessment obligations. The Board of Directors have carried out a The Board of Directors has overall robust assessment of the principal riks responsibility for the establishment and facing the Company, including those that oversight of PEL's risk management wood threaten the business model, future framework. The Board is responsible for performance, solvency or liquidity.

RISKS AND MITIGATION STRATEGIES Likelihood / Risk Source Capital affected Mitigation strategy Magnitude Technological shift Moderate / External Manufactured / Regular balancing, may render PEL's High Intellectual Capital modernization and production process replacement carried obsolete. out at all production facilities in order to ensure state of the art production plants utilizing latest technology resulting in cost efficiencies and improved products. Strong market Low / External Manufactured / PEL holds a competition Moderate Intellectual Capital considerable market lowering demand share and has for PEL's products continued focus on sustaining and 23

Likelihood / Risk Source Capital affected Mitigation strategy Magnitude maintaining its market share through offering new and improved products and effective marketing strategies

Turnover of Low / Internal Human Capital PEL has formulated personnel at critical Moderate a comprehensive positions may affect succession plan smooth running of which includes operations performance evaluation and appropriate training requirements for development of potential and prospective future leaders Breach of IT Security Low / High Internal Financial / Adequate IT controls may affect Intellectual Capital are in place to operations and prevent cause financial and unauthorized data data loss access to confidential information. Regular IT audits and trainings are conducted to monitor IT controls

Accidents and Low / High Internal / Manufactured / PEL has put in place disasters, natural or External Financial / a comprehensive by deliberate Intellectual Capital Disaster Recovery actions, may disrupt and Business operations Continuity Plan which has been implemented at all locations and PEL's staff is fully trained and equipped to recover from any disruption Further strict and standard operating procedures are in place and implemented together with 24 RISKS AND OPPORTUNITIES

Likelihood / Risk Source Capital affected Mitigation strategy Magnitude employee trainings, operational discipline and regular safety audits

Loss of customer Low / High External Manufactured Continued focus on confidence in PEL Capital new and improved brand adversely products and state affecting sales of the art after sales services to customers

Breach of law Low / High Internal Manufactured / Monitoring of latest resulting in fines, Financial Capital updates in penal action or regulatory suspension of framework is carried business operations out to prevent in breach of law. Expert legal advice is obtained before taking any critical decision

Default by Low / Internal Financial / PEL maintains customers causing Moderate Relationship Capital procedures covering financial loss the application for credit approvals, granting and renewal of counterparty limits and monitoring of exposures against these limits. As part of these processes the financial viability of all counterparties is regularly monitored and assessed. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other form of credit insurance. 25

Likelihood / Risk Source Capital affected Mitigation strategy Magnitude Liquidity shortfall Low / Internal Financial Capital The responsibility resulting in inability Moderate for liquidity risk to make payments management rests as the fall due with the Board of Directors, who has built an appropriate liquidity risk management framework for the management of the PEL's short, medium and long-term funding and liquidity management requirements. Liquidity risk is managed by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities

Increase in interest Moderate / External Financial Capital PEL manages rates resulting high Moderate interest rate risk by interest costs analyzing its interest rate exposure on a dynamic basis. Cash flow interest rate risk is managed by simulating various scenarios taking into consideration refinancing, renewal of existing positions and alternative financing. Based on these scenarios, the management calculates impact on profit after taxation and equity of defined interest rate shift, mostly 100 basis points 26 RISKS AND OPPORTUNITIES

Likelihood / Risk Source Capital affected Mitigation strategy Magnitude Rupee depreciation High / High External Manufactured / The Company does causing increase in Financial Capital continuous costs monitoring of expected/forecast committed and non- committed foreign currency payments and receipts. Reports on forecast foreign currency transactions, receipts and payments are prepared on monthly basis, exposure to currency risk is measured and appropriate steps are taken to ensure that such exposure is minimized

OPPORTUNITIES AND MATERIALIZATION STRATEGIES

Opportunity Source Capital affected Materialization strategy

There are still numerous Internal Manufactured Continuously seek unexplored product lines Capital avenues to diversify that are offered by current within and outside the competitors of PEL. Appliance and Power Industry

Demand for grid station External Manufactured The company is aiming installations and Capital to capitalize on its brand underground and on equity and commercial ground electrifications due relations with WAPDA to increase in housing Distribution Companies sector schemes, in the emerging CPEC upgrading of grid stations, Scenario along with government's focus investment in initiatives towards augmentation of to enhance relationships transmission and dispatch with customers in the Infrastructure and CPEC private/corporate sector DIRECTOR’S REPORT 28 CHAIRMAN’S REVIEW

The cornerstone of our business philosophy revolves around customer satisfaction, capacity building and human resource. Our organization has passed through a dynamic phase where skills, technologies and scales are developed. With the increased capacity and improved competitiveness our PEL brand is well positioned as standout market leader.

I am pleased to inform that in mile stone electricity generation revolves around customer this challenging economic era capacity, augmentation of satisfaction, capacity building your company maintained its electricity T&D infrastructure is and human resource. Our share holders trust and market at of the priority list. After organization has passed through share due to its quality products expected stability as a result of a dynamic phase where skills, and business practices. measures by taken by technologies and scales are incumbent Government, the developed. With the increased At the close of 2019, Company Company foresees a promising capacity and improved achieved a revenue level of way forward for this segment. competitiveness our PEL brand Rs.37.621 Billion against Rs. Seeing future potential in Power is well positioned as standout 38.990 Billion of previous year. Division , company is setting up market leader. Despite of overall economic a Power Transformer stress, Appliances Division manufacturing facility at 34 KM business maintained its revenue Ferozepur Road Lahore, which M. Naseem Saigol level at Rs. 27.787 Billion against will be completed in next year. Chairman Rs. 27.275 Billion of preceding Our focus will remain on year. In such a challenging continuous research and Lahore environment, this all is due to development which will enable May 02, 2020 our team resilience, strong us to not only cater for the local customer focus and reception of demands but also explore new PEL's brand image in the markets outside Pakistan. industry. Under the prevailing Power Division business competitive circumstances we remained slower, with a revenue remained committed to our of Rs. 9.834 Billion against strategy of steady growth in 11.715 Billion of previous year. quality avenues with significant Slow ordering from WAPDA and emphasis on product Discos is the underlying reason development. The cornerstone of this decline. After attaining of our business philosophy 29 CEO’S REMARKS

The year under review remained “High End Series” Super Silver & requirements during peak highly challenging to meet Super, New energy efficient seasons and in timely deliveries influences of prevailing tough Deep Freezer “Arctic Crystal against future high order economic macros. Company Glass Door Series” with intakes. business fundamentals are intact improved aesthetics launched Aggressive marketing campaign and it will again attain its growth during the year well received in both by global & local brands, momentum as country economy the market. The Company kept persistent pricing pressure and revives. The company is on way on improving product features, strong market competition to launch latest market introduce aesthetics and continue to pose challenges for competitive product models increase product range that led Company profitability and both in home appliances and to strengthening the customer's performance. However, we power division through ongoing confidence. remain committed to drive the R&D. The company aims to The sales in Power Division business forward and explore achieve sustainable growth by remained lower by 16% due to the new avenues despite these undertaking strategic and low ordering from Government numerous challenges. Resilient forward looking investments that sector. However, seeing future Company performance during build on our robust earnings potential, company is setting up 2019, besides our planned based and meet the rising a Power Transformer diversification & productivity demand of company products. manufacturing facility at 34 KM initiatives, improved brand Despite of challenging Ferozepur Road Lahore, which equity and dedication provide environment, In current year will be completed in next year. confidence of sustained company achieved a revenue of We foresee a potential recovery profitability for the shareholders Rs. 37,621 million which is lower and further growth momentum of the Company. by 3.51% as compared to the in power division due to corresponding period (2018 : electricity T&D infrastructure Rs. 38,990 million). Decline in augmentation needs after M. Murad Saigol sales is due to prevailing country managing electricity generation Chief Executive Officer economic outlook and will shortfall. reverse with the improvement in Gross profit achieved in 2019 Lahore key economic indicators. amounts to Rs. 6,573 million as May 02, 2020 Appliance Division showed a compared to Rs. 6,997 million in mild a business volume increase 2017, resulting a decline of @ 6 of Rs. 511 million despite overall % as compared to previous year decline in per capita disposable mainly due to increase in input income. Revenues of this cost due to Pak Rupee division increased to depreciation and increase in Rs. 27,787 million against Rs. energy tariff. Profit after tax was 27,275 million of year 2018. recorded at Rs. 879 million as Company continued to launch compared to Rs. 1,372 for the “New Series” with improved previous year. esthetics and energy saving Earning per share is Rs. 1.68 as feature, in all of the products to compared to that of Rs. 2.67 of strengthen its market presence. previous year. Washing Machine production line, after successful Company is continuously commissioning started its investing in manufacturing and commercial production during operational capabilities, to the year. PEL washing machine support the expected future by quality product received a growth in revenue, production warm market response. and profits, Company Refrigerator energy efficient Investment in building, plant “Life Series”, with extended and machinery, will increase the space and improved esthetics production capacities and also launched during the year is well improve operational efficiencies. received in the market. Air This will enable us to meet the conditioners energy efficient production and warehousing 30 DIRECTORS’ REPORT

The Board of Directors’ is pleased to present to you the annual report of the Company along with the audited financial statements for the year ended December 31, 2019.

MACRO - ECONOMIC development budget, utilities improved from 138 to 108. tariff adjustments, and the OVERVIEW Industry Overview policy rate increase (by 750 Global Economic Over View bps since Jan '18). So far, Large Scale Manufacturing The rising trade barriers and these measures appear to Industries –LSMI sector associated uncertainty (US- address the macroeconomic remained in pressure with China trade war & Brexit) imbalances and push the negative 3.35% growth on weighed on the global economy towards stability. YOY basis reported as on Dec business sentiment and The passage from these 31, 2019 due to overall activity. Global growth this stabilization measures has sluggish economy. Business year was 2.5% and recorded a significantly improved the of Home Appliances with weakest pace since the twin deficits, but on the other Imported inputs remained financial crisis a decade ago. hand, it has also triggered the challenging due to massive This weakness was headline inflation to reach as Pak Rupee depreciation, widespread reflecting high as 14.5% in Jan '20. besides the margin cuts, country market contraction common influences across Market confidence seems to observed as a result of drastic both developed and be gradually returning, the decline in disposable income. developing economies. Also central bank has paused its However, local value addition refer to Post Balance sheet interest rate hike cycle by protected industry against a Events i.e. COVID 19 as keeping the policy rate at margin cut in proportion to summarized later which will 13.25% since July 2019. exchange rate fluctuation. On have a tremendous effects on Pakistan's FX reserves have YOY basis (Jan ~ Dec), Global and Local Economy. been on the rise as they hit an Refrigerators Production units almost two-year high at Domestic Economic declined by 30.89%, Air $12.27 billion in Jan '20. Overview Conditioners 7% while Deep Current Account Deficit (CAD) Freezers and TV Sets Pakistan was no exception to also declined and narrowed increased by 41.34 % and the above. Having posted an to US$13.5 billion (4.8% of 0.86% respectively -Source: average growth at 4.7% GDP) in FY19 compared to LSMI Quantum Index during FY14-18, our GDP US$19.9 billion (6.3% of GDP) (Pakistan Bureaus of growth decelerated to 3.3% in FY18. The narrowing of the Statistics). in FY19 - a 2.2% decline CAD has continued in FY20, compared to FY18. Growth as the CAD narrowed 75% to Power Division Business also forecast during the year $2.153 billion in the first six remained subdued due to ahead is revised downwards months of the fiscal year of overall economic slowdown. at 2.4%; which, however, is 2020 driven by lower import As a result of slashed expected to recover gradually for transport and machineries, development budget and an to 3.0% in FY21. The followed by food items and overall sluggishness in Private economic activity decelerated metals. The stock market has Industries, consumption of in response to contractionary also recovered considerably Power Division Products also monetary policy and other during Q4 of 2019. Sovereign went on slow down. Increased structural adjustments e.g. rating and outlook of Pakistan input costs due to massive transition to a market- and the Pakistani Banking Pak Rupee depreciation and determined exchange rate System has been upgraded to rise in energy costs could not allowing the rupee to find its “Stable”. be fully translated as margins new equilibrium that resulted decline due to local value Also, Pakistan's rank for “Ease a 35.5% downward revision addition. during the year, cut in the of Doing Business” stands 31

FINANCIAL PERFORMANCE Summary of financial results for the current year in comparison budgeted results for the current and with the reported results of the previous year is as follows:

Rupees in million

2019 2019 2018 (Actual) (Budget) (Actual)

Gross revenue 37,621 40,500 38,990 Gross profit 6,573 7,000 6,997 Operating profit 3,364 3,700 3,663 Finance cost 2,480 2,500 2,103 Profit before tax 881 1,200 1,557 Profit after tax 879 1,200 1,371 Earnings per share - Rupees 1.68 2.33 2.67

During the year, Company revenues registered at Rs. 37, 621 million with a decline @ 3.51% as compared with Rs. 38,990 million of year 2018. Gross profit margin of the Company stands at Rs. 6,573 million against Rs. 6,997 million for the year 2018. Profitability also reduced to Rs. 878 million against Rs. 1,372 million of previous year. Earnings per share reduced to Rs. 1.68 against Rs. 2.67 of year 2018. Profitability contraction is resulted by challenging economic environment. Prevailing tough macro- economic conditions have led to increase in input costs. The abrupt Pak Rupee depreciation, rise in petroleum products prices and energy costs, mounting inflation and sharp rise in policy rate were the economic challenges faced during the year. Home Appliances Division maintained its revenue despite of challenging economic conditions and competitive environment; however, Power Division registered a decline in revenues due to timing of orders in take and performance from WAPDA Distribution Companies. 32 DIRECTORS’ REPORT

PRODUCT WISE Further a wide product Freezers, Visi Coolers and OPERATING penetration gap especially in Chest Coolers in different parts rural areas is yet to be bridged of Pakistan. PERFORMANCE and your company is well Company business positioned to take the Refrigerator fundamentals are intact and is opportunity. A number of well equipped to grasp an Refrigerator, being a prime initiatives have been opportunity as result of product of the Company, premeditated with respect to expected near future economic contributed 59% of the product innovation which will stabilization. A continuous R&D appliance division's revenues be complemented with process is on way to make the and 43% towards overall appropriate marketing product energy efficient, revenues during the year 2019. campaigns. There was a considerable durable and with improved decline in disposable incomes Deep Freezer esthetics. during the year; so, Deep Freezer revenue Air conditioner (AC) Refrigerator revenue are down registered a decline of 14.55% by 6.25%. Product cost increase Split ACs Business witnessed a due to prevailing economic due to massive local currency revenue growth of 30.88% on slowdown. The shrinkage is depreciation and energy price YoY basis. Air conditioners observed in general consumer hike could not be passed on to energy efficient “High End base due to drastic decline in customers in full due to their Series” Super Silver & Super disposable income and certain economic Matte with SEER (Seasonal institutional sales. Company vulnerabilities. Energy Efficiency Ratio) and customized products are highly improved esthetics launched During the period under competitive due to “O Zone during the year remained review, Company launched Friendly Refrigerants" as per market preferred choice. energy efficient Refrigerator UN Montreal Protocol and are Revenue growth is a wide body “Life Series”, with reliable choice for MNCs in the continuation of consumer extended space, improved corporate sector. Company confidence backed by esthetics and cost effective customized product satisfies performance of “AERO”, product design. Company's the demand of Ice cream and “ALLURE”, “ACE”, “APEX” and refrigerators being energy beverage companies; and has “FIT” models earlier launched. efficient with improved earned strong brand equity. Product development is fueled aesthetics, lowest start-up, New energy efficient “Arctic by the concept of energy turbo cooling and freshness Crystal Glass Door Series” with efficient and 4 star rating LEDs are preferred consumer improved aesthetics received a inverter technologies to meet choice. Further R&D is on way warm market response. PEL the customer satisfaction and to develop energy efficient and Deep Freezers has become the market competition. quality products. The multi preferred choice of corporate door and side-by-side Institutions like Unilever, Such a remarkable growth, in a refrigerators are also Friesland Campina Engro drastically declining disposable introduced in the market which Pakistan Limited (Engro Foods), income regime is backed by fetched a very promising Lotte Akhtar Beverages (Pepsi), launch of energy efficient, response from the customers. Sukkur beverages (Pepsi) meeting high quality standards Parallel to product Pakistan Fruit Juice company with improved aesthetics. ACs development initiatives, and Pakistan Dairies (Igloo) lower penetration level continuous marketing who are the major customers of indicates its future growth campaigns and tireless sales PEL's deep freezers. potential. Post economic activities lead to maintain the stabilization a robust product Your company is capitalizing on market share. demand is expected and your stronger relations and technical company is well equipped to With the continued stabilization expertise and our After-Sale grasp the opportunity. due to post IMF program Department has signed service Emerging Middle-Class and measures, again improvement agreements Lotte Akhtar growing urbanization are in disposable income of Beverages (PEPSI) and potential market growth middle class is expected and Friesland Campnia Pakistan drivers. Uninterrupted and demand of refrigerators will be Limited (Engro Foods) for lower cost electricity supply will again on its growth trajectory. repair services of Deep further increase the market 33

demand. Company's country market with a brand “COLOR market attention and sizeable wide highly responsive after ON”. A massive launch with growth is expected in the years sales services network is also advertisement campaigns all to come. playing a vital role to win across the country to stamp the Distribution Transformer "Consumer Confidence”. product awareness was then (DTR) made. Microwave Oven PEL, is amongst the Pioneers in PEL LED Televisions with latest During the period under review Distribution Transformer features on competitive price is Company registered decline of Manufacturing in Pakistan, has well received in market. During 25.48% in revenue from last set up a state-of-the-art the year 2019 a revenue year. PEL microwave ovens have Distribution Transformer increase @ 145.37 % over the improved product features and manufacturing and testing corresponding year is offer a unique cooking facility in year 2009 to attain registered. experience and also include Global Quality Standards. solo as well as grill models Introducing state of the art Distribution Transformer is inspired by users' need for both technology regarding Video among company's premier the options. PEL microwave Processing and Latest Sound products. During year 2019 ovens are equipped with Standards were adopted to product revenues remained manual as well as digital meet with the customer lower by 25.91% due to slow interface depending on requirements. Further now a ordering from WAPDA customers' needs. These days due to versatility of distribution companies and products are well-designed and ANDROID OS in mobiles, lower demand from Industrial recommended for space-saving, television manufacturers also sector as a result of overall they also offer customized focused to embed this feature in economic slowdown. cooking experience. the LED TVs. We have Power generation capacity is up incorporated the ANDROID OS Water Dispenser to mark right now in the country in LED TVs to convert the and augmentation of T&D On consistent Market Demand television from NORMAL to infrastructure is required to to widen the Product Range SMART and offer the user to make the generated electricity Company entered into Water enjoy the SMART television available to end consumers. As Dispenser trading and after experience. the current slowdown ends, a seeing business potential Washing Machines robust demand of Distribution decided to set up a Production Transformers is expected and Facility and started Commercial The persistent urge of Your Company is well equipped Production in year 2017. enhancing our product portfolio to take this opportunity. Also, Company enlarging its brand and diversification has led us to the revival of local Industrial equity maintained a revenue set up a Washing Machine sector will create an incremental increase @ 14.16% during the manufacturing facility. There is demand from private sector. year 2019 Sales, despite of sizeable market of Washing Further, we are confident that prevailing economic adversities Machine which exists in the we will gain our due share of and drastic decline in country and it is also an distribution transformer in disposable income. The essential home appliances present government's initiative continuous research and product in domestic of Five Million houses of “Naya development activities are on consumption. There is a Pakistan Housing Authority the way to improve product growing niche of automatic and Project”. quality & esthetics. semi-automatic washing machines observed in the Your Company also gaining LED Television country during recent years. ground in the export market in Growing local LED Television Company foresees a reasonable Middle East, Africa, and Central market induced Company to market share in near future. The Asia, Swaziland with special enter into this segment of home state-of-the-art manufacturing focus on Afghanistan. appliance products. As a key facility has been installed and PEL transformer manufacturing unit of home appliances commercial production is facility continues to be the product portfolio, PEL decided started in July 2019. flagship of the Company by to enter into the manufacturing PEL automatic & semi automatic maintaining its image of being of LED televisions. The washing machines with latest the best state-of the-art Company has set up its product features and manufacturing set up in the production line in year 2018 competitive sales price gaining region. With the highest quality and made a colorful entry in the 34 DIRECTORS’ REPORT human resource, manufacturing urbanization and Population Development & approval of and design infrastructure your pressure will increase demand Three Phase GSM / GPRS based Company is committed to not of Power Transformers. We are on MPECO Specification only maintain, but enhance its confident that we will gain our Customized Meter and brand image in local as well as due share of distribution development of Firmware, global markets. transformer supply share in Programming and Calibration present government Five Million Power Transformer (PTR) Software has already been houses of “Naya Pakistan obtained. And your Company is Company started Power Housing Authority Project”. well positioned to grasp any Transformer Business in year Our focus will remain on arising opportunity 2004, in technical Collaboration continuous research and with GANZ Hungry. Power Construction of Five Million development which will enable Transformer is a high value asset Houses by “Naya Pakistan us to not only cater for the local in any electrical network. There Housing Authority” is another demands but also explore new are limited Power Transformer opportunity window for Energy markets outside Pakistan. suppliers in Pakistan. The Meter Business and Your Company as part of its plan is Switch Gears (SG) Company is well positioned to on its way to achieve another take its due market share. Company is among the milestone by setting up a Pioneers of Switch Gear Industry EPC Contracting complete Power Transformer in Pakistan and is engaged in manufacturing facility under PEL- EPC Department takes up Switch Gear business since its company's flagship at 34 KM turnkey contracts involving inception in 1958. PEL is one of Ferozepur Road Lahore which Engineering, Procurement and the leading manufacturers of will be completed in next year. Construction (EPC) for building Pakistan. Switch Gear Business power infrastructure projects During the year, sales revenue reflected declining trend @ comprising electrical of Power Transformer increased 6.63% during the year under networks/electrification and by 265.89% as compared to last review due to timing of ordering grid stations up to 220 KV level. year, as company effectively by WAPDA distribution managed the execution of companies and in private EPC Business reflected a orders obtained. Company business as a result of overall declining trend @ 53.70 % and obtained “STL Short Circuit economic slowdown. registered revenue of Rupees Certification from VEIKI-VNL 1,452 million against 3,135 We are confident that as current Lab, Hungary” last year after million previous year. The slowdown ends robust demand successful testing of Power decline in EPC business is of switch gear items will arise as Transformer and also managed based on the envisaged result smooth ordering from successful short circuit from reduced business plan of WAPDA Discos and industrial local WAPDA Laboratories. We Company during the year. sector as well and your expect an order book Company redefined its business company is well positioned to breakthrough in near future. plan due to certain shifts in obtain its due market share. The business dimensions requiring As earlier explained that after overall private business of long working capital days and attaining required power housing schemes and low margins in recent economic generation capacity, the next upcoming projects of industrial scenario. Company made a priority to make the same estates seem very promising in deliberate effort to reduce its available to end consumers for next following years. business size to control working which augmentation of T&D Energy Meters capital deployment. infrastructure is required. And demand of Power Transformers, Energy Meter Business during EPC Business still holds a great being high value item in grid the review registered 34.40% potential due to development stations, will increase. We are YOY growth due to timely of proposed SEZs under CPEC confident that PEL being key execution of ordering from arrangements and your player will gain its due business WAPDA Distribution companies. company is well prepared to share from WAPDA Distribution Your company has already grasp arising future Companies. With the revival of developed Single Phase, Three opportunities in this sector. local industry an additional Phase GSM Energy Meters and demand of Power Transformer is DLMS Compliant Single-Phase expected. Housing Sector Energy Meter and got it Growth backed by rapid approved from NTDC. 35

FINANCIAL RATIOS

Unit 2019 2018 2017 2016 2015 2014

Profitability Ratios Gross Profit ratio % 23.56 24.60 29.41 30.87 29.59 30.75 Net Profit to Sales % 3.15 4.82 10.67 13.68 11.46 10.92 EBIT margin Rupees in millions 3,383 3,765 5,173 5,691 5,295 4,438 EBITDA margin Rupees in millions 4,368 4,616 6,055 6,541 6,041 5,195 % change in sales % (3.51) (7.93) 24.10 16.37 21.54 27.94 % change EBIT margin % (10.14) (27.23) (9.10) 7.47 19.32 71.07 EBITDA Margin to Sales % 15.66 16.23 19.53 24.38 24.05 25.32 Operating Leverage Times 2.89 3.44 (0.38) 0.46 0.90 2.54 Return on Equity - without revaluation resevres % 3.56 5.79 14.56 17.61 18.96 20.33 - with revaluation resevres % 2.86 4.53 12.25 14.39 14.40 14.37 Return on Capital Employed % 1.87 3.12 7.68 9.28 8.13 7.45

Liquidity Ratios Current ratio Times 1.76 1.77 2.40 2.84 2.52 2.44 Quick / Acid Test ratio Times 1.19 1.04 1.55 1.73 1.61 1.49 Cash to Current Liabilities Times 0.03 0.03 0.05 0.07 0.07 0.05 Cash Flow from Operations to Sales Times 0.13 (0.04) 0.06 0.08 0.08 (0.17)

Activity/Turnover Ratios Inventory turnover ratio Times 2.30 2.27 2.74 2.64 2.83 2.79 No. of Days in Inventory Days 159 161 133 138 129 131 Debtor turnover ratio Times 3.86 3.73 4.42 4.23 3.96 3.83 No. of Days in Receivables Days 95 98 83 86 92 95 Creditor turnover ratio Times 23.11 26.07 27.39 24.72 23.59 17.63 No. of Days in Payables Days 16 14 13 15 15 21 Total Assets turnover ratio Times 0.54 0.55 0.71 0.67 0.69 0.63 Fixed Assets turnover ratio Times 1.62 1.75 2.39 2.04 1.85 1.63 Operating Cycle Days 238 245 203 210 206 206

Investment/Market Ratios Earning per Share - Basic Rupees 1.68 2.67 6.56 7.51 6.61 6.13 Earning per Share - Diluted Rupees 1.68 2.67 6.56 7.51 6.61 6.13 Price Earnings ratio Times 16.12 9.33 7.24 9.49 9.46 6.68 Dividend Yield ratio % - - 5.16 2.46 2.00 - Dividend Payout ratio % - - 37.34 23.31 18.91 - Dividend Cover ratio Times - - 2.68 4.29 5.29 - Cash Dividend per Share Rupees - - 2.45 1.75 1.25 - Stock Dividend per Share % ------Market Value per Share - year end Rupees 27.07 24.90 47.49 71.28 62.54 40.93 - high during the year Rupees 28.74 61.85 123.73 74.64 94.97 40.93 - low during the year Rupees 14.32 21.96 43.10 53.57 42.33 18.87 Break-up Value per Share - without revaluation resevres Rupees 48.66 46.72 44.76 40.97 33.07 26.57 - with revaluation resevres Rupees 60.76 59.94 53.35 50.36 45.14 38.04 Market capitalization Rupees in millions 13,472 12,392 23,635 35,475 24,900 16,296

Capital Structure Ratios Financial Leverage ratio Times 0.51 0.57 0.49 0.45 0.69 0.84 Weighted Average Cost of Debt % 13.50 10.69 9.31 9.13 11.15 14.81 Debt to Equity ratio % 13:87 13:87 18:82 20:80 29:71 36:64 Interest Cover ratio Times 1.52 2.30 4.50 5.16 3.67 2.47 36 DIRECTORS’ REPORT

PATTERN OF SHAREHOLDING

FORM 34

THE COMPANIES ACT 2017 [Section 227(2)(f)] PATTERN OF SHAREHOLDING

1. Name of the Company PAK ELEKTRON LIMITED

2. Pattern of holding of the shares held by the shareholders as at 31-12-2019

2.2 Number of Shareholding Total shareholders From To shares held

1,004 1 100 35,982 2,034 101 500 846,913 1,962 501 1,000 1,847,477 3,552 1,001 5,000 9,909,959 1,027 5,001 10,000 8,148,537 389 10,001 15,000 5,023,137 243 15,001 20,000 4,467,541 179 20,001 25,000 4,210,650 108 25,001 30,000 3,074,986 57 30,001 35,000 1,891,079 55 35,001 40,000 2,121,046 40 40,001 45,000 1,743,968 92 45,001 50,000 4,517,543 22 50,001 55,000 1,177,025 26 55,001 60,000 1,536,645 18 60,001 65,000 1,144,975 17 65,001 70,000 1,159,918 19 70,001 75,000 1,398,405 10 75,001 80,000 784,422 13 80,001 85,000 1,078,305 17 85,001 90,000 1,504,168 12 90,001 95,000 1,122,227 40 95,001 100,000 3,992,465 6 100,001 105,000 621,083 9 105,001 110,000 973,707 4 110,001 115,000 448,375 6 115,001 120,000 717,700 5 120,001 125,000 619,000 5 125,001 130,000 641,400 6 130,001 135,000 803,625 3 135,001 140,000 416,000 5 140,001 145,000 714,770 11 145,001 150,000 1,650,000 4 150,001 155,000 609,500 3 155,001 160,000 472,599 4 160,001 165,000 654,000 1 165,001 170,000 169,000 3 170,001 175,000 522,000 2 175,001 180,000 359,500 4 185,001 190,000 757,000 3 190,001 195,000 575,000 16 195,001 200,000 3,196,400 1 200,001 205,000 203,000 2 205,001 210,000 415,800 2 210,001 215,000 426,500 2 215,001 220,000 433,990 4 220,001 225,000 898,500 1 225,001 230,000 230,000 2 230,001 235,000 465,076 1 240,001 245,000 245,000 3 245,001 250,000 748,500 1 255,001 260,000 257,500 1 265,001 270,000 268,000 3 270,001 275,000 823,000 37

PATTERN OF SHAREHOLDING

4. Number of Shareholding Total shareholders From To shares held

1 275,001 280,000 277,000 1 280,001 285,000 281,250 4 285,001 290,000 1,156,000 8 295,001 300,000 2,400,000 1 300,001 305,000 300,500 1 305,001 310,000 305,300 1 310,001 315,000 315,000 4 325,001 330,000 1,314,500 1 335,001 340,000 337,120 2 345,001 350,000 700,000 1 355,001 360,000 357,000 1 360,001 365,000 361,500 1 370,001 375,000 375,000 1 385,001 390,000 389,000 2 395,001 400,000 800,000 1 425,001 430,000 427,500 1 435,001 440,000 440,000 2 485,001 490,000 972,770 7 495,001 500,000 3,498,000 1 500,001 505,000 502,500 2 505,001 510,000 1,016,500 1 510,001 515,000 511,000 1 515,001 520,000 515,803 1 525,001 530,000 529,500 2 545,001 550,000 1,100,000 3 555,001 560,000 1,677,000 1 570,001 575,000 575,000 1 580,001 585,000 581,000 1 595,001 600,000 600,000 1 605,001 610,000 608,000 1 615,001 620,000 617,645 2 645,001 650,000 1,296,500 1 695,001 700,000 700,000 1 710,001 715,000 711,500 2 740,001 745,000 1,482,447 1 745,001 750,000 750,000 1 760,001 765,000 765,000 1 795,001 800,000 800,000 1 805,001 810,000 810,000 1 810,001 815,000 811,250 2 870,001 875,000 1,748,523 1 970,001 975,000 975,000 3 995,001 1,000,000 3,000,000 1 1,095,001 1,100,000 1,100,000 1 1,315,001 1,320,000 1,317,000 1 1,335,001 1,340,000 1,336,500 1 1,415,001 1,420,000 1,415,500 1 1,425,001 1,430,000 1,426,500 1 1,440,001 1,445,000 1,445,000 1 1,445,001 1,450,000 1,450,000 1 1,450,001 1,455,000 1,450,650 2 1,495,001 1,500,000 3,000,000 2 1,595,001 1,600,000 3,200,000 1 1,790,001 1,795,000 1,792,000 1 1,995,001 2,000,000 2,000,000 1 2,160,001 2,165,000 2,162,000 1 2,495,001 2,500,000 2,500,000 1 2,925,001 2,930,000 2,929,552 1 2,995,001 3,000,000 3,000,000 1 3,000,001 3,005,000 3,000,500 1 3,155,001 3,160,000 3,158,000 1 3,215,001 3,220,000 3,217,945 1 3,265,001 3,270,000 3,266,300 1 3,370,001 3,375,000 3,372,500 1 3,400,001 3,405,000 3,400,195 1 3,520,001 3,525,000 3,525,000 1 4,035,001 4,040,000 4,039,500 38 DIRECTORS’ REPORT

2.2 Number of Shareholding Total shareholders From To shares held

1 4,710,001 4,715,000 4,710,893 1 4,925,001 4,930,000 4,926,500 1 4,995,001 5,000,000 5,000,000 1 5,305,001 5,310,000 5,306,000 2 6,695,001 6,700,000 13,400,000 1 7,375,001 7,380,000 7,378,000 1 7,495,001 7,500,000 7,500,000 1 8,465,001 8,470,000 8,468,625 1 13,495,001 13,500,000 13,500,000 1 14,735,001 14,740,000 14,737,537 1 106,845,001 106,850,000 106,849,067 1 126,635,001 126,640,000 126,635,715

11,172 497,681,485

CLASSIFICATION OF ORDINARY SHARES BY CATEGORIES AS AT DECEMBER 31, 2019

Categories of Shareholders Share held Percentage

Directors, Chief Executive Officer, and their spouse and minor children 146,112,028 29.3585% Associated Companies, undertakings and related party 1,450,650 0.2915% NIT and ICP 5,232,738 1.0514% Banks Development Financial Institutions Non Banking Financial Institution 23,266,279 4.6749% Insurance Companies 32,919,713 6.6146% Modarabas and Mutual Funds 5,916,593 1.1888% Share holders holding 10% or more 233,484,782 46.9145% General Public a) Local 233,867,060 46.9913% b) Foreign 7,710 0.0015% Others (to be specified) 1- Investment Companies 3,284,000 0.6599% 2- Joint Stock Companies 11,344,560 2.2795% 3- Foreign Companies 29,376,058 5.9026% 4- Pension Funds 3,455,947 0.6944% 5- Other Companies 1,448,149 0.2910% 39

PATTERN OF SHAREHOLDING CATEGORIES OF SHAREHOLDING AS ON DECEMBER 31, 2019

Sr. Name No. of Shares Percentage No. Held

Associated Companies, Undertakings and Related Parties (Name Wise):

1 SARITOW (PAKISTAN) LIMITED 1,450,650 0.2915

Mutual Funds (Name Wise Detail) 1 CDC - TRUSTEE AKD INDEX TRACKER FUND (CDC) 58,275 0.0117 2 CDC - TRUSTEE AL AMEEN ISLAMIC DEDICATED EQUITY FUND (CDC) 900 0.0002 3 CDC - TRUSTEE AL-AMEEN ISLAMIC ASSET ALLOCATION FUND (CDC) 700 0.0001 4 CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND (CDC) 357,000 0.0717 5 CDC - TRUSTEE ALFALAH GHP ISLAMIC DEDICATED EQUITY FUND (CDC) 10,315 0.0021 6 CDC - TRUSTEE ALFALAH GHP ISLAMIC STOCK FUND (CDC) 163,000 0.0328 7 CDC - TRUSTEE ALHAMRA ISLAMIC STOCK FUND (CDC) 529,500 0.1064 8 CDC - TRUSTEE FAYSAL MTS FUND - MT (CDC) 94,500 0.0190 9 CDC - TRUSTEE KSE MEEZAN INDEX FUND (CDC) 515,803 0.1036 10 CDC - TRUSTEE NBP ISLAMIC ACTIVE ALLOCATION EQUITY FUND (CDC) 67,500 0.0136 11 CDC - TRUSTEE NBP ISLAMIC STOCK FUND (CDC) 557,000 0.1119 12 CDC - TRUSTEE NBP MAHANA AMDANI FUND - MT (CDC) 107,000 0.0215 13 CDC - TRUSTEE NBP SAVINGS FUND - MT (CDC) 70,000 0.0141 14 CDC - TRUSTEE NBP STOCK FUND (CDC) 2,162,000 0.4344 15 CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND (CDC) 200,000 0.0402 16 CDC - TRUSTEE UBL STOCK ADVANTAGE FUND (CDC) 289,500 0.0582 17 CDC-TRUSTEE ALHAMRA ISLAMIC ASSET ALLOCATION FUND (CDC) 500,000 0.1005 18 MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND (CDC) 5,000 0.0010 19 MCBFSL TRUSTEE ABL ISLAMIC DEDICATED STOCK FUND (CDC) 100,000 0.0201

Directors, CEO and their Spouse and Minor Children (Name Wise):

1 MR. M. NASEEM SAIGOL (CDC) 126,635,715 25.4451 2 MR. MUHAMMAD MURAD SAIGOL 12,421 0.0025 3 MR. MUHAMMAD ZEID YOUSAF SAIGOL 14,749,958 2.9637 4 MUHAMMAD KAMRAN SALEEM 500 0.0001 5 SYED MANZAR HASSAN 2,041 0.0004 6 SYED HAROON RASHID 500 0.0001 7 MRS. SEHYR SAIGOL W/O MR. M. NASEEM SAIGOL (CDC) 4,710,893 0.9466

Executives: --

Public Sector Companies & Corporations: --

Banks, Development Finance Institutions, Non Banking Finance Companies, Insurance Companies, Takaful, Modarabas and Pension Funds: 59,770,539 12.0098

Shareholders holding five percent or more voting intrest in the listed company (Name Wise)

1 MR. M. NASEEM SAIGOL (CDC) 126,635,715 25.4451 2 MRS. AMBER HAROON SAIGOL (CDC) 106,849,067 21.4694

All trades in the shares of the listed company, carried out by its Directors, CEO, CFO, Company Secretary, Their spouses and minor children:

S. No. NAME SALE PURCHASE

1 MR. M. NASEEM SAIGOL (CDC) - 1,730,000 2 MRS. AMBER HAROON SAIGOL W/O MR. M. AZAM SAIGOL (CDC) - 1,030,000 3 MRS. AMBER HAROON SAIGOL W/O MR. M. AZAM SAIGOL (CDC) (Inheritance Transmission) - 3,589,534 40 DIRECTORS’ REPORT

2019

29.3585 146,112,028 0.2915 1,450,650 1.0514 5,232,738 4.6749 23,266,279 6.6146 32,919,713 1.1888 5,916,593 46.9145 233,484,782

46.9913 233,867,060 0.0015 7,710

0.6599 3,284,000

2.2795 11,344,560

5.9026 29,376,058 0.6944 3,455,947

0.2910 1,448,149 41

CAPITAL EXPENDITURE ¥ Installation of AC's at Qutub Foundation Customer satisfaction is a primary ¥ Membership with World Wide Fund For organizational objective and company is Nature 2019-20 always determined for its energy efficient ¥ NUST Endowment Fund-Need Based and esthetically improved products for Scholarship Program market competitiveness. Company is ¥ Donation for Earth Victims – Mirpur Khas consistently spending on development of ¥ Donation to Jugnu Mohsin Hospital different models in its existing products to cater market demand. On consistent market ¥ Mayo Hospital AC Installation demand, the Company during the year ¥ Education Fee Support added Washing Machine production line ¥ Donation to Children's Hospital which started commercial production from July 2019. TRADING IN SHARES BY DIRECTORS Demand of energy efficient products with AND EXECUTIVES improved esthetics is latest market trend. Details of trading conducted by directors, Company for market competitiveness executives, their spouses and minor children spends a lot on required modifications in in the shares of PEL during the year is given manufacturing line. Further, Company is on page 39. widening its product range on continues market demand. Both of the steps relate to CORPORATE AND FINANCIAL improved profitability and long term business sustainability. In this way company REPORTING FRAMEWORK safeguards the stake holders interest i.e. The Directors are pleased to state that: security of Investment and Payout. • The financial statements, prepared by the DIVIDEND AND APPROPRIATIONS management of the company, present its state of affairs fairly, the result of its In view of the financial results for 2019, the operations, cash flows and changes in Board of Directors did not proposed any equity. dividend for the year 2019. • Proper books of accounts of the company have been maintained. CORPORATE SOCIAL RESPONSIBILITY • Appropriate accounting policies have At PEL we pride ourselves in aligning our been consistently applied in the business strategy to meet societal needs. preparation of financial statements and We believe in giving something back to the accounting estimates are based on society because we care. For us it’s about reasonable and prudent judgment. more than just aligning our activities with • International accounting standards, as our stakeholder’s expectations whether it’s applicable in Pakistan, have been our clients, suppliers, the community, our followed in preparation of financial employees and society as a whole. Through statements and any departure there from a broad range of community initiatives, has been adequately disclosed. charitable giving, foundation grants and volunteerism, we seek to create more value • The system of internal control is sound in for our society to continue to bring joy in design and has been effectively people’s lives. implemented and monitored. Some of the significant activities carried out • There are no significant doubts upon the are as given below: Company's ability to continue as a going concern. ¥ Charity Donation to SOS Children Village, Muzaffarabad • There has been no material departure from the best practices of corporate ¥ Charity Donation to General Hospital, Lahore governance, as detailed in the listing regulations. ¥ Charity to Shahdara Hospital,Lahore 42 DIRECTORS’ REPORT

• Key operating and financial data for last six 2. HR & Remuneration Committee (6) years in summarized form is given on Mr. Asad Ullah Khawaja Chairman page 35. Syed Haroon Rashid Member • The Company has been declaring regular Mr. Usman Shahid Member dividends to its shareholders for the past three years, however, in view of the financial Syed Manzar Hassan Member results for 2018, the Board of Directors do not propose any dividend for the year REVIEW OF RELATED PARTY 2018. TRANSACTIONS • There is nothing outstanding against the Details of all related party transactions are Company on account of taxes, duties, levies placed before the Audit Committee and upon and charges except for those which are recommendations of the Audit Committee, the being made in normal course of business. same are placed before the Board for review • The Company maintains Provident Fund and approval in accordance with requirements accounts for its employees. The values of of the Code of Corporate Governance. the investments of the fund as on December 31, 2018 is Rs. 430 million. INTERNAL FINANCIAL CONTROLS A system of sound internal control established BOARD OF DIRECTORS and implemented at all levels of the Company Total number of Directors: of the Board of Directors. The system of internal control is sound in design for ensuring a) Male achievement of Company’s objectives and b) Female operational effectiveness and efficiency, reliable financial reporting and compliance Composition: with laws, regulations and policies. (i) Independent Directors (ii) Other Non-executive Directors SUBSEQUENT EVENTS (iii) Executive Directors ¥ COVID-19 started at the end of December Name of Directors 19 and broke out in China in January 2020. The material imports from China remain Mr. M. Naseem Saigol, Chairman suspended due to lock down, Financial Mr. Muhammad Murad Saigol impact and materiality of which is not Mr. Muhammad Zeid Yousuf Saigol quantified at present, although we have sufficient production capacity. The Syed Manzar Hassan economic impact of local slow down started Syed Haroon Rashid from February 2020 and a lock down in Mr. Muhammad Kamran Saleem March is in progress. Mr. Asad Ullah Khawaja ¥ Prime Minister announced a package of Rs. 1,250 billion for general public and Mr. Usman Shahid industries to mitigate the COVID-19 Ms. Azra Shoaib miseries and announced reduction of Policy Rate to 11% along with the deferral of due Committees of the Board principal and mark up payments for period The Board has made following committees: from 3 to 6 months as State Bank of 1. Audit Committee Pakistan decides in consultation with commercial banks. Mr. Asad Ullah Khawaja Chairman ¥ The Board of Directors of Pak Elektron Syed Haroon Rashid Member Limited ['PEL'] and PEL Marketing (Private) Mr. Usman ShahidMember Limited ['PMPL'] in their respective Syed Manzar Hassan Member meetings held on March 27, 2020 have approved the scheme of arrangement for amalgamation of PMPL, a wholly owned subsidiary of PEL, with and into PEL with effect from April 30, 2020. The 43

amalgamation is pending apporval by the ending June 2020. Securities and Exchange Commission of Pakistan. The exchange rate stability seen so far is mainly the result of a massive reduction in the APPOINTMENT OF AUDITORS import bill. However, squeezed imports have Rahman Sarfaraz Rahim Iqbal Rafiq, Chartered downside effects on both government Accountants, have completed the annual audit revenues and industrial growth. Government of PEL for the year ended December 31, 2019 needs to take measures to provide impetus to and have issued an unmodified report. They economic activity in order to increase the will retire at the conclusion of the forthcoming aggregate demand. AGM, and being eligible, have offered While the macroeconomic scenario paints a themselves for reappointment for the year picture of cautious optimism, the Company is ending December 31, 2020. The Board of confident and aspires to continue its journey Directors on the suggestion of the Audit with its sights set on sustained & qualitative Committee has recommended their re- long term growth leading to significant appointment as auditors of the PEL for the creation of value for all its stakeholders. In this year ending December 31, 2020 at a fee to be regard, the Company believes that principles mutually agreed. of global best practices will continue to provide a firm premise for its future FUTURE OUTLOOK endeavors. With the advent of COVID 19 initially in China Viable energy solutions, Improvement in and later to Globe including Pakistan , the Human Index Level, Channelizing youth economic stability across the world and in potential and Improvement in governance Pakistan is looking vulnerable and is level are the measures to meet the challenges dependent on huge stimulus. The of growing population which is expected to Government capability is limited to cope up double by 2050. Cost competitiveness is right with this humungous challenge. Moving now major challenge to local Industry, can be ahead, it is vital that the Government met through joint ventures & technical continues to address underlying structural collaborations. vulnerabilities and put the economy on a balanced and sustainable path. The global China Pak Economic Corridor (CPEC) has support from the donor agencies and might emerged with tangible existence on the help mitigating the challenges that will surface canvas. Most of the Energy Projects are as a result of uncertainity that exist in the times functional, and there is no electricity load to come. The year 2020 will be a very shedding. Most of the developments of road challenging year or years. This suggests that infrastructure are completed are near to current agenda needs to be reinforced with competition, while modalities of railway line deep rooted structural reforms. Recent project ML-I are under discussion. These all stagnancy in agricultural sector and decline in developments will promote local industry and industrial output makes it pertinent to Foreign Direct Investment (FDI). Six Special highlight the urgent need for supportive Economic Zones -SEZ have been notified out policies. Expansion of projects under CPEC of 46 SEZs proposed under CPEC and cooperation in the agriculture, industrial arrangements and infrastructure development and socio-economic sectors will be is almost complete. instrumental. ACKNOWLEDGMENT The current account balance recorded a surplus in October 2019 after a gap of four We take this opportunity to thank all our years, a clear indication of receding pressures stakeholders for their patronage and look on the country's external accounts. The rupee forward to their continued support. has strengthened its position against US$ in the last seven months, from trading at PKR 164 in June 2019 to the current rate of PKR 155. M. Murad Saigol Foreign remittances have shown a healthy trend and the government is confident that Chief Executive Officer measures taken are likely to achieve the target Lahore of US$ 24 billion, set for the current fiscal year May 02, 2020 44 45 46 47 48

2018 2019 žÜ»ò}

38,990 37,621 ãæW¦ù 6,997 6,573 3,663 3,364 «o 2,103 2,480 1,557 881 «oLiZI 1,371 879 «oLiZˆ 9zgXãæW¥° 2.67 1.68 SHAREHOLDERS INFORMATION

2018 2019 žÜ»ò} 50 SHAREHOLDERS INFORMATION

REGISTERED OFFICE DIVIDEND REMITTANCE All ordinary shares issued by the Company carry equal voting rights, Ordinary dividend declared and 17-Aziz Avenue, Canal Bank, Generally, matters at the general approved at the Annual General Gulberg-V, Lahore. meetings are decided by a show of Meeting will be paid within the Tel: 042-35718274-6 hands in the first instance. Voting statutory time limit of 30 days. Fax: 042-35762707 by show of hands operates on the (i) For shares held in physical principle of “One Member-One SHARE REGISTRAR form: to shareholders whose Vote”. If majority of shareholders names appear in the Register raise their hands in favor of a Corplink (Pvt) Limited of Members of the Company particular resolution, it is taken as Wings Arcade, 1-K Commercial after entertaining all requests passed, unless a poll is demanded. Model Town, Lahore. for transfer of shares lodged Tel: 042-35839182, 35887262 Since the fundamental voting with the Company on or Fax: 042-35869037 principle in the Company is “One before the book closure date. Share-One Vote”, voting takes LISTING ON STOCK (ii) For shares held in electronic place by a poll, if demanded. On a EXCHANGES from: to shareholders whose poll being taken, the decision names appear in the arrived by poll is final, overruling Ordinary shares of Pak Elektron statement of beneficial any decision taken on a show of Limited are listed on Pakistan Stock ownership furnished by CDC hands. Exchange Limited. as at end of business on book closure date. STOCK CODE / SYMBOL INVESTOR’S GRIEVANCES WITHHOLDING OF TAX & The stock code / symbol for ZAKAT ON ORDINARY To date none of the investors or trading in ordinary shares of Pak DIVIDEND shareholders has filed any Elektron Limited at Pakistan Stock significant complaint against any Exchange Limited is PAEL. As per the provisions of the service provided by the Company Income Tax Ordinance, 2001, to its shareholders. STATUTORY COMPLIANCE income tax is deductible at source by the Company at the applicable PROXIES During the year, the Company has rates. complied with all applicable Pursuant to section 137 of the provisions, filed all returns/forms Zakat is also deductible at source Companies Act, 2017) and and furnished all the relevant form the ordinary dividend at the according to the Memorandum particulars as required under the rate of 2.5% of the face value of and Articles of Association of the Companies Act, 2017 and allied the share, other than corporate Company, every shareholder of rules, the Securities and Exchange holders or individuals who have the Company who is entitled to Commission of Pakistan provided an undertaking for non- attend and vote at a general Regulations and the listing deduction. meeting of the Company can requirements. appoint another member as GENERAL MEETINGS & his/her proxy to attend and vote DIVIDEND VOTING RIGHTS instead of him/her. Every notice calling a general meeting of the in view of the financial results for Pursuant to section 132 of the Company contains a statement 2019, the Board of Directors did Companies Act, 2017) PEL holds a that a shareholder entitled to not proposed any dividend for the General Meeting of shareholders appoint a proxy. The instrument year 2019. at least once a year. Every appointing a proxy (duly signed by shareholder has a right to attend the shareholder appointing that BOOK CLOSURE DATES the General Meeting. The notice of proxy) should be deposited at the such meeting is sent to all the office of the Company not less Share Transfer Books of the shareholders at least 21 days than forty-eight hours before the Company will remain closed from before the meeting and also meeting. May 23, 2020 to May 29, 2020 advertised in at least one English (both days inclusive). and one Urdu newspaper having circulation in Karachi, Lahore and WEB PRESENCE Islamabad. DIVIDEND WARRANTS Updated information regarding Shareholders having holding of at Cash dividends are paid through the Company can be accessed at least 10% of voting rights may also dividend warrants addressed to its website, www.pel.com.pk The apply to the Board of Directors to the ordinary shareholders whose website contains the latest call for meeting of shareholders, names appear in the Register of financial results of the Company and if the Board does not take Shareholders at the date of book together with the Company’s action on such application within closure. profile. 21 days, the shareholders may themselves call the meeting. 51

SERVICE STANDARDS Listed below are various investor services and the maximum time limits set for their execution:

For requests received For requests received through post over the counter

Transfer and transmission of shares 30 days after receipt 30 days after receipt Issue of duplicate share certificates 30 days after receipt 30 days after receipt Issue of duplicate dividend warrants 5 days after receipt 5 days after receipt Issue of revalidated dividend warrants 5 days after receipt 5 days after receipt Change of address 2 days after receipt 1 day after receipt

Well qualified personnel of the Shares Registrar have been entrusted with the responsibility of ensuring that services are rendered within the set time limits.

Fundamental knowledge and understanding of financial market is crucial for the general public and lack of financial literacy or capability makes them vulnerable to frauds. SECP recognizes the importance of investor education and therefore initiated this investor education program, called 'JamaPunji', an investor training program, to promote financial literacy in Pakistan. www.jamapunji.pk 53

Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants

72-A, Faisal Town, Lahore - 54770, Pakistan.

T: +92 42 35160430 - 32 F: +92 42 35160433 E: [email protected] W: www.rsrir.com INDEPENDENT AUDITOR’S REPORT To the members of PAK ELEKTRON LIMITED Report on the Audit of the Consolidated Financial Statements Opinion We have audited the annexed consolidated financial statements of PAK ELEKTRON LIMITED and its subsidiary ['the Group'], which comprise the consolidated statement of financial position as at December 31, 2019, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information. In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at December 31, 2019, and of its consolidated financial performance and its consolidated cash flows for the year then ended in with the accounting and reporting standards as applicable in Pakistan. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing ['ISAs'] as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities CONSOLIDATED FINANCIAL STATEMENTS for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan ['the Code'] and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How our audit addressed the matter

1. First time adoption of IFRS 9 – Financial Instruments As referred to in note 3.1 to the consolidated Our key procedures to review the application of financial statements, the Group has adopted IFRS 9 included, amongst others, review of the IFRS 9 - 'Financial Instruments'. The new methodology developed and applied by the standard requires the Group to make Group to estimate the ECL in relation to financial allowance for impairment of financial assets assets. We also considered and evaluated the using Expected Credit Loss ['ECL'] approach assumptions used in applying the ECL as against the Incurred Loss Model methodology based on historical information and previously applied by the Group. qualitative factors as relevant for such estimates. Determination of ECL for financial assets Further, we assessed the integrity and quality of requires significant judgment and the data used for ECL computation based on the assumptions including consideration of accounting records and information system of the

Member of Russell Bedford International - a global network of independent professional services firms Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants

72-A, Faisal Town, Lahore - 54770, Pakistan.

T: +92 42 35160430 - 32 Key audit matter How our audit addressed the matter F: +92 42 35160433 E: [email protected] factors such as historical credit loss Group as well as the related external sources as W: www.rsrir.com experience and forward-looking macro- used for this purpose. economic information. We checked the mathematical accuracy of the We have considered the first time ECL model by performing recalculation on test INDEPENDENT AUDITOR’S REPORT application of IFRS 9 requirements as a key basis. To the members of PAK ELEKTRON LIMITED audit matter due to significance of the In addition to above, we assessed the adequacy Report on the Audit of the Consolidated Financial Statements change in accounting methodology and of disclosures in the consolidated financial involvement of estimates and judgments in Opinion statements of the Group regarding application of this regard. IFRS 9 as per the requirements of the above We have audited the annexed consolidated financial statements of PAK ELEKTRON LIMITED and its standard. subsidiary ['the Group'], which comprise the consolidated statement of financial position as at December 31, 2019, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant 2. First time adoption of IFRS 15 – Revenue accounting policies and other explanatory information. from Contracts with Customers In our opinion, consolidated financial statements give a true and fair view of the consolidated financial As referred to in note 3.2 to the consolidated Our key procedures to review the application of position of the Group as at December 31, 2019, and of its consolidated financial performance and its financial statements, the Group has adopted IFRS 15 included, amongst others, review of consolidated cash flows for the year then ended in with the accounting and reporting standards as IFRS 15 – 'Revenue from Contracts with managements' impact assessment of all contracts applicable in Pakistan. Customers'. IFRS 15 introduces a new five with customers in light of application of the new step model for recognition of revenue which standard, review of contracts to determine Basis for Opinion is primarily based on the transfer of control whether performance obligations have been We conducted our audit in accordance with International Standards on Auditing ['ISAs'] as applicable in to the customers along with detailed identified, classified and accounted for Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities presentation and disclosure about contracts separately, whether allocation of transaction price for the Audit of the Consolidated Financial Statements section of our report. We are independent of the with customers, information about between each performance obligation is Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for disaggregation of revenue, performance appropriate and whether the revenue has been Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan ['the Code'] obligations, contract assets and contract recognized at a point in time or over a period of and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the liabilities. time appropriately. audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We have considered the first time Key Audit Matters application of IFRS 15 as a key audit matter due to significance of the change in Key audit matters are those matters that, in our professional judgment, were of most significance in our accounting methodology, involvement of audit of the consolidated financial statements of the current period. These matters were addressed in the significant estimates and judgments context of our audit of the consolidated financial statements as a whole, and in forming our opinion resulting in adjustments, presentation and thereon, and we do not provide a separate opinion on these matters. incremental quantitative and qualitative disclosures. Key audit matter How our audit addressed the matter 3. First time adoption of IFRS 16 – Leases 1. First time adoption of IFRS 9 – Financial Instruments As referred to in note 3.3 to the consolidated Our key procedures to review the application of financial statements, the Group has adopted IFRS 16 included, amongst others, review of

As referred to in note 3.1 to the consolidated Our key procedures to review the application of IFRS 16 – 'Leases'. IFRS 16 sets out the managements' impact assessment of all lease financial statements, the Group has adopted IFRS 9 included, amongst others, review of the principles for the recognition, measurement, arrangements in light of application of the new IFRS 9 - 'Financial Instruments'. The new methodology developed and applied by the presentation and disclosure of leases and standard, review of lease contracts to determine standard requires the Group to make Group to estimate the ECL in relation to financial requires lessees to account for all leases whether the same are in scope of IFRS 16 and are allowance for impairment of financial assets assets. We also considered and evaluated the under a single on-balance sheet model with also subject to recognition exemption under IFRS using Expected Credit Loss ['ECL'] approach assumptions used in applying the ECL corresponding recognition of right-of-use 16 for short-term and low value leases. We also as against the Incurred Loss Model methodology based on historical information and asset. Lessor accounting under IFRS 16 is reviewed contracts to determine whether it is a previously applied by the Group. qualitative factors as relevant for such estimates. substantially unchanged from accounting lease contract, and if so its various components, Determination of ECL for financial assets Further, we assessed the integrity and quality of under IAS 17 'Leases' i.e. operating and lease term, rental amount, payment terms, etc., requires significant judgment and the data used for ECL computation based on the finance leases. For lessees all leases will be reviewed the appropriateness of discount rate assumptions including consideration of accounting records and information system of the classified as finance leases only with the used by the Company to determine the present exception of certain short-term leases. value of lease liability and calculation of related depreciation and finance charge. Member of Russell Bedford International - a global network of independent professional services firms Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants

72-A, Faisal Town, Lahore - 54770, Pakistan.

T: +92 42 35160430 - 32 Key audit matter How our audit addressed the matter F: +92 42 35160433 E: [email protected] factors such as historical credit loss Group as well as the related external sources as W: www.rsrir.com experience and forward-looking macro- used for this purpose. economic information. We checked the mathematical accuracy of the We have considered the first time ECL model by performing recalculation on test INDEPENDENT AUDITOR’S REPORT application of IFRS 9 requirements as a key basis. To the members of PAK ELEKTRON LIMITED audit matter due to significance of the In addition to above, we assessed the adequacy Report on the Audit of the Consolidated Financial Statements change in accounting methodology and of disclosures in the consolidated financial involvement of estimates and judgments in Opinion statements of the Group regarding application of this regard. IFRS 9 as per the requirements of the above We have audited the annexed consolidated financial statements of PAK ELEKTRON LIMITED and its standard. subsidiary ['the Group'], which comprise the consolidated statement of financial position as at December 31, 2019, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant 2. First time adoption of IFRS 15 – Revenue accounting policies and other explanatory information. from Contracts with Customers In our opinion, consolidated financial statements give a true and fair view of the consolidated financial As referred to in note 3.2 to the consolidated Our key procedures to review the application of position of the Group as at December 31, 2019, and of its consolidated financial performance and its financial statements, the Group has adopted IFRS 15 included, amongst others, review of consolidated cash flows for the year then ended in with the accounting and reporting standards as IFRS 15 – 'Revenue from Contracts with managements' impact assessment of all contracts applicable in Pakistan. Customers'. IFRS 15 introduces a new five with customers in light of application of the new step model for recognition of revenue which standard, review of contracts to determine Basis for Opinion is primarily based on the transfer of control whether performance obligations have been We conducted our audit in accordance with International Standards on Auditing ['ISAs'] as applicable in to the customers along with detailed identified, classified and accounted for Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities presentation and disclosure about contracts separately, whether allocation of transaction price for the Audit of the Consolidated Financial Statements section of our report. We are independent of the with customers, information about between each performance obligation is Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for disaggregation of revenue, performance appropriate and whether the revenue has been Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan ['the Code'] obligations, contract assets and contract recognized at a point in time or over a period of and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the liabilities. time appropriately. audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We have considered the first time Key Audit Matters application of IFRS 15 as a key audit matter due to significance of the change in Key audit matters are those matters that, in our professional judgment, were of most significance in our accounting methodology, involvement of audit of the consolidated financial statements of the current period. These matters were addressed in the significant estimates and judgments context of our audit of the consolidated financial statements as a whole, and in forming our opinion resulting in adjustments, presentation and thereon, and we do not provide a separate opinion on these matters. incremental quantitative and qualitative disclosures. Key audit matter How our audit addressed the matter 3. First time adoption of IFRS 16 – Leases 1. First time adoption of IFRS 9 – Financial Instruments As referred to in note 3.3 to the consolidated Our key procedures to review the application of financial statements, the Group has adopted IFRS 16 included, amongst others, review of

As referred to in note 3.1 to the consolidated Our key procedures to review the application of IFRS 16 – 'Leases'. IFRS 16 sets out the managements' impact assessment of all lease financial statements, the Group has adopted IFRS 9 included, amongst others, review of the principles for the recognition, measurement, arrangements in light of application of the new IFRS 9 - 'Financial Instruments'. The new methodology developed and applied by the presentation and disclosure of leases and standard, review of lease contracts to determine standard requires the Group to make Group to estimate the ECL in relation to financial requires lessees to account for all leases whether the same are in scope of IFRS 16 and are allowance for impairment of financial assets assets. We also considered and evaluated the under a single on-balance sheet model with also subject to recognition exemption under IFRS using Expected Credit Loss ['ECL'] approach assumptions used in applying the ECL corresponding recognition of right-of-use 16 for short-term and low value leases. We also as against the Incurred Loss Model methodology based on historical information and asset. Lessor accounting under IFRS 16 is reviewed contracts to determine whether it is a previously applied by the Group. qualitative factors as relevant for such estimates. substantially unchanged from accounting lease contract, and if so its various components, Determination of ECL for financial assets Further, we assessed the integrity and quality of under IAS 17 'Leases' i.e. operating and lease term, rental amount, payment terms, etc., requires significant judgment and the data used for ECL computation based on the finance leases. For lessees all leases will be reviewed the appropriateness of discount rate assumptions including consideration of accounting records and information system of the classified as finance leases only with the used by the Company to determine the present exception of certain short-term leases. value of lease liability and calculation of related depreciation and finance charge. Member of Russell Bedford International - a global network of independent professional services firms Key audit matter How our audit addressed the matter Key audit matter How our audit addressed the matter

We have considered the first time consolidated financial statements. For such application of IFRS 15 as a key audit matter reasons we have considered tax due to significance of the change in contingencies as a key audit matter. accounting methodology, involvement of significant estimates and judgments resulting in adjustments, presentation and Information other than the Consolidated Financial Statements and Auditor's Report Thereon incremental quantitative and qualitative Management is responsible for the other information. The other information comprises the information disclosures. included in the annual report, but does not include the consolidated financial statements and our auditor's report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not 3. Inventory valuation express any form of assurance conclusion thereon. Stock in trade amounts to Rs 7,793 million as To address the valuation of stock in trade, we In connection with our audit of the consolidated financial statements, our responsibility is to read the other at the reporting date. The valuation of stock assessed historical costs recorded in the information and, in doing so, consider whether the other information is materially inconsistent with the in trade at cost has different components, inventory valuation; testing on a sample basis consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be which includes judgment in relation to the with purchase invoices. We tested the materially misstated. allocation of labour and overheads which reasonability of assumptions applied by the are incurred in bringing the stock to its management in allocating direct labour and If, based on the work we have performed, we conclude that there is a material misstatement of this other present location and condition. Judgment direct overhead costs to inventories. information, we are required to report that fact. We have nothing to report in this regard. has also been applied by management in We also assessed management's determination Responsibilities of Management and Board of Directors for the Consolidated Financial Statements determining the Net Realizable Value ['NRV'] of the net realizable value of inventories by of stock in trade. Management is responsible for the preparation and fair presentation of the consolidated financial performing tests on the sales prices secured by statements in accordance with the accounting and reporting standards as applicable in Pakistan and the The estimates and judgments applied by the Group for similar or comparable items of requirements of Companies Act, 2017(XIX of 2017) and for such internal control as management management are influenced by the amount inventories. determines is necessary to enable the preparation of consolidated financial statements that are free from of direct costs incurred historically, material misstatement, whether due to fraud or error. expectations of repeat orders to utilize the stock in trade, sales contract in hand and In preparing the consolidated financial statements, management is responsible for assessing the Group's historically realized sales prices. ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or The significance of the balance coupled with to cease operations, or has no realistic alternative but to do so. the judgment involved has resulted in the valuation of inventories being identified as a The Board of directors is responsible for overseeing the Group's financial reporting process. key audit matter Auditor's Responsibilities for the Audit of the Consolidated Financial Statements The disclosures in relation to inventories are Our objectives are to obtain reasonable assurance about whether the consolidated financial statements included in note 27. as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee 4. Tax contingencies that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material As disclosed in note 20 to the annexed Our key audit procedures in this area included, misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, consolidated financial statements, various amongst others, a review of the correspondence individually or in the aggregate, they could reasonably be expected to influence the economic decisions tax matters are pending adjudication at of the Group with the relevant tax authorities and of user taken on the basis of these consolidated financial statements. various levels with the taxation authorities tax advisors including judgments or orders As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and other legal forums. Such contingencies passed by the competent authorities. and maintain professional skepticism throughout the audit. We also: require the management to make judgments We also obtained and reviewed confirmations and estimates in relation to the • Identify and assess the risks of material misstatement of the consolidated financial statements, whether from the Group's external tax advisor for their interpretation of tax laws and regulations due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit views on the status of each case and an overall and the recognition and measurement of evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a opinion on the open tax position of the Group. any provisions that may be required against material misstatement resulting from fraud is higher than for one resulting from error, as fraud may such contingencies. Due to inherent We involved internal tax experts to assess and involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. uncertainties and the time period such review the management's conclusions on • Obtain an understanding of internal control relevant to the audit in order to design audit procedures matters may take to resolve, the contingent tax matters and evaluated whether that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the management's judgments and estimates in adequate disclosures have been made in note 19 effectiveness of the Group's internal control. relation to such contingencies may be to the annexed consolidated financial statements. complex and can significantly impact the • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Key audit matter How our audit addressed the matter Key audit matter How our audit addressed the matter

We have considered the first time consolidated financial statements. For such application of IFRS 15 as a key audit matter reasons we have considered tax due to significance of the change in contingencies as a key audit matter. accounting methodology, involvement of significant estimates and judgments resulting in adjustments, presentation and Information other than the Consolidated Financial Statements and Auditor's Report Thereon incremental quantitative and qualitative Management is responsible for the other information. The other information comprises the information disclosures. included in the annual report, but does not include the consolidated financial statements and our auditor's report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not 3. Inventory valuation express any form of assurance conclusion thereon. Stock in trade amounts to Rs 7,793 million as To address the valuation of stock in trade, we In connection with our audit of the consolidated financial statements, our responsibility is to read the other at the reporting date. The valuation of stock assessed historical costs recorded in the information and, in doing so, consider whether the other information is materially inconsistent with the in trade at cost has different components, inventory valuation; testing on a sample basis consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be which includes judgment in relation to the with purchase invoices. We tested the materially misstated. allocation of labour and overheads which reasonability of assumptions applied by the are incurred in bringing the stock to its management in allocating direct labour and If, based on the work we have performed, we conclude that there is a material misstatement of this other present location and condition. Judgment direct overhead costs to inventories. information, we are required to report that fact. We have nothing to report in this regard. has also been applied by management in We also assessed management's determination Responsibilities of Management and Board of Directors for the Consolidated Financial Statements determining the Net Realizable Value ['NRV'] of the net realizable value of inventories by of stock in trade. Management is responsible for the preparation and fair presentation of the consolidated financial performing tests on the sales prices secured by statements in accordance with the accounting and reporting standards as applicable in Pakistan and the The estimates and judgments applied by the Group for similar or comparable items of requirements of Companies Act, 2017(XIX of 2017) and for such internal control as management management are influenced by the amount inventories. determines is necessary to enable the preparation of consolidated financial statements that are free from of direct costs incurred historically, material misstatement, whether due to fraud or error. expectations of repeat orders to utilize the stock in trade, sales contract in hand and In preparing the consolidated financial statements, management is responsible for assessing the Group's historically realized sales prices. ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or The significance of the balance coupled with to cease operations, or has no realistic alternative but to do so. the judgment involved has resulted in the valuation of inventories being identified as a The Board of directors is responsible for overseeing the Group's financial reporting process. key audit matter Auditor's Responsibilities for the Audit of the Consolidated Financial Statements The disclosures in relation to inventories are Our objectives are to obtain reasonable assurance about whether the consolidated financial statements included in note 27. as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee 4. Tax contingencies that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material As disclosed in note 20 to the annexed Our key audit procedures in this area included, misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, consolidated financial statements, various amongst others, a review of the correspondence individually or in the aggregate, they could reasonably be expected to influence the economic decisions tax matters are pending adjudication at of the Group with the relevant tax authorities and of user taken on the basis of these consolidated financial statements. various levels with the taxation authorities tax advisors including judgments or orders As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and other legal forums. Such contingencies passed by the competent authorities. and maintain professional skepticism throughout the audit. We also: require the management to make judgments We also obtained and reviewed confirmations and estimates in relation to the • Identify and assess the risks of material misstatement of the consolidated financial statements, whether from the Group's external tax advisor for their interpretation of tax laws and regulations due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit views on the status of each case and an overall and the recognition and measurement of evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a opinion on the open tax position of the Group. any provisions that may be required against material misstatement resulting from fraud is higher than for one resulting from error, as fraud may such contingencies. Due to inherent We involved internal tax experts to assess and involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. uncertainties and the time period such review the management's conclusions on • Obtain an understanding of internal control relevant to the audit in order to design audit procedures matters may take to resolve, the contingent tax matters and evaluated whether that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the management's judgments and estimates in adequate disclosures have been made in note 19 effectiveness of the Group's internal control. relation to such contingencies may be to the annexed consolidated financial statements. complex and can significantly impact the • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the board of directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other Matters As referred to in note 2.6, the annexed consolidated financial statements were amended by the management to disclose a non-adjusting event occurring after the reporting period. We have, earlier, issued an auditor's report, dated March 27, 2020, on the audit of consolidated financial statements before the said amendment, wherein we have expressed an unmodified opinion on those consolidated financial statements. This is an amended auditor's report on the audit of annexed amended consolidated financial statements. Our audit procedures subsequent to that date were restricted to the subsequent amendment of the financial statements as described in note 2.6. The engagement partner on the audit resulting in this independent auditor's report is ZUBAIR IRFAN MALIK.

RAHMAN SARFARAZ RAHIM IQBAL RAFIQ Chartered Accountants

Lahore: May 07, 2020 Consolidated Statement of Financial Position as at December 31, 2019

Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000

EQUITY AND LIABILITIES ASSETS

SHARE CAPITAL AND RESERVES NON-CURRENT ASSETS

Property, plant and equipment 21 22,939,060 21,957,015 Authorized capital 7 6,000,000 6,000,000 Intangible assets 22 306,332 313,352

Long term investments 23 5,763 6,985 Issued, subscribed and paid-up capital 8 5,426,392 5,426,392 Long term deposits 24 360,180 365,957 Capital reserve 9 4,279,947 4,279,947 Long term advances 25 1,230,805 1,109,094 Surplus on revaluation of property, plant and equipment 10 6,023,632 6,579,049

Accumulated profit 14,958,172 13,994,307 24,842,140 23,752,403

TOTAL EQUITY 30,688,143 30,279,695 CURRENT ASSETS

LIABILITIES Stores, spares and loose tools 26 848,347 859,145 Stock in trade 27 7,793,568 10,786,157 NON-CURRENT LIABILITIES Trade debts 28 9,317,613 9,558,024 Construction work in progress 29 1,697,509 1,535,735 Redeemable capital 11 - - Short term advances 30 1,683,654 1,663,220 Long term finances 12 2,162,154 2,646,032 Short term deposits and prepayments 31 1,891,598 1,105,179 Lease liabilities 13 137,386 59,778 Other receivables 401,854 360,962 Warranty obligations 14 159,536 - Short term investments 32 21,596 22,071 Deferred taxation 15 3,116,986 3,087,822 Advance income tax/Income tax refundable 33 2,299,396 1,985,785

Deferred income 16 34,942 36,781 Cash and bank balances 34 513,907 471,258

5,611,004 5,830,413 26,469,042 28,347,536

CURRENT LIABILITIES

Trade and other payables 17 1,203,624 922,850 Unclaimed dividend 15,052 18,650

Accrued interest/markup/profit 488,912 390,172

Short term borrowings 18 10,955,490 12,843,848

Current portion of non-current liabilities 19 2,348,957 1,814,311

15,012,035 15,989,831

TOTAL LIABILITIES 20,623,039 21,820,244

CONTINGENCIES AND COMMITMENTS 20

TOTAL EQUITY AND LIABILITIES 51,311,182 52,099,939 TOTAL ASSETS 51,311,182 52,099,939

The annexed notes from 1 to 60 form an integral part of these financial statements. The annexed notes from 1 to 60 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Consolidated Statement of Financial Position as at December 31, 2019

Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000

EQUITY AND LIABILITIES ASSETS

SHARE CAPITAL AND RESERVES NON-CURRENT ASSETS

Property, plant and equipment 21 22,939,060 21,957,015 Authorized capital 7 6,000,000 6,000,000 Intangible assets 22 306,332 313,352

Long term investments 23 5,763 6,985 Issued, subscribed and paid-up capital 8 5,426,392 5,426,392 Long term deposits 24 360,180 365,957 Capital reserve 9 4,279,947 4,279,947 Long term advances 25 1,230,805 1,109,094 Surplus on revaluation of property, plant and equipment 10 6,023,632 6,579,049

Accumulated profit 14,958,172 13,994,307 24,842,140 23,752,403

TOTAL EQUITY 30,688,143 30,279,695 CURRENT ASSETS

LIABILITIES Stores, spares and loose tools 26 848,347 859,145 Stock in trade 27 7,793,568 10,786,157 NON-CURRENT LIABILITIES Trade debts 28 9,317,613 9,558,024 Construction work in progress 29 1,697,509 1,535,735 Redeemable capital 11 - - Short term advances 30 1,683,654 1,663,220 Long term finances 12 2,162,154 2,646,032 Short term deposits and prepayments 31 1,891,598 1,105,179 Lease liabilities 13 137,386 59,778 Other receivables 401,854 360,962 Warranty obligations 14 159,536 - Short term investments 32 21,596 22,071 Deferred taxation 15 3,116,986 3,087,822 Advance income tax/Income tax refundable 33 2,299,396 1,985,785

Deferred income 16 34,942 36,781 Cash and bank balances 34 513,907 471,258

5,611,004 5,830,413 26,469,042 28,347,536

CURRENT LIABILITIES

Trade and other payables 17 1,203,624 922,850 Unclaimed dividend 15,052 18,650

Accrued interest/markup/profit 488,912 390,172

Short term borrowings 18 10,955,490 12,843,848

Current portion of non-current liabilities 19 2,348,957 1,814,311

15,012,035 15,989,831

TOTAL LIABILITIES 20,623,039 21,820,244

CONTINGENCIES AND COMMITMENTS 20

TOTAL EQUITY AND LIABILITIES 51,311,182 52,099,939 TOTAL ASSETS 51,311,182 52,099,939

The annexed notes from 1 to 60 form an integral part of these financial statements. The annexed notes from 1 to 60 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Consolidated Statement of Profit or Loss Consolidated Statement of Comprehensive Income For the year ended December 31, 2019 For the year ended December 31, 2019

Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees Rupees

Revenue 35 37,621,269 38,990,247 Items that may be reclassified subsequently to profit or loss - -

Sales tax, excise duity and discounts 35 (9,721,351) (10,544,936) Items that will not be reclassified to profit or loss Net revenue 27,899,918 28,445,311 Surplus on revaluation of property, plant and equipment recognised during the year 10 - 3,045,215 Cost of sales 36 (21,326,893) (21,448,040) Deferred tax adjustment on surplus on revaluation of property, plant and equipment Gross profit 6,573,025 6,997,271 - recognised during the year 10 - (672,091) - attributable to changes in tax rates 10 - 52,268 Other income 37 33,887 17,977 - attributable to change in proportion of income taxable under final tax regime 10 (26,753) 79,462 Distribution cost 38 (1,956,380) (2,207,445) (26,753) 2,504,854 Administrative and general expenses 39 (1,229,762) (1,073,652) Other comprehensive (loss)/income (26,753) 2,504,854 Other expenses 40 (56,872) (71,050) Profit for the year 878,593 1,371,469 (3,243,014) (3,352,147) Total comprehensive income 851,840 3,876,323 Operating profit 3,363,898 3,663,101 The annexed notes from 1 to 60 form an integral part of these financial statements. Finance cost 41 (2,480,088) (2,103,343) 883,810 1,559,758

Share of loss of associate 23.1 (2,806) (2,456) Profit before taxation 881,004 1,557,302

Taxation 42 (2,411) (185,833) Profit after taxation 878,593 1,371,469

Earnings per share - basic and diluted 43 1.68 2.67

The annexed notes from 1 to 60 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Chief Executive Officer Director Chief Financial Officer Consolidated Statement of Profit or Loss Consolidated Statement of Comprehensive Income For the year ended December 31, 2019 For the year ended December 31, 2019

Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees Rupees

Revenue 35 37,621,269 38,990,247 Items that may be reclassified subsequently to profit or loss - -

Sales tax, excise duity and discounts 35 (9,721,351) (10,544,936) Items that will not be reclassified to profit or loss Net revenue 27,899,918 28,445,311 Surplus on revaluation of property, plant and equipment recognised during the year 10 - 3,045,215 Cost of sales 36 (21,326,893) (21,448,040) Deferred tax adjustment on surplus on revaluation of property, plant and equipment Gross profit 6,573,025 6,997,271 - recognised during the year 10 - (672,091) - attributable to changes in tax rates 10 - 52,268 Other income 37 33,887 17,977 - attributable to change in proportion of income taxable under final tax regime 10 (26,753) 79,462 Distribution cost 38 (1,956,380) (2,207,445) (26,753) 2,504,854 Administrative and general expenses 39 (1,229,762) (1,073,652) Other comprehensive (loss)/income (26,753) 2,504,854 Other expenses 40 (56,872) (71,050) Profit for the year 878,593 1,371,469 (3,243,014) (3,352,147) Total comprehensive income 851,840 3,876,323 Operating profit 3,363,898 3,663,101 The annexed notes from 1 to 60 form an integral part of these financial statements. Finance cost 41 (2,480,088) (2,103,343) 883,810 1,559,758

Share of loss of associate 23.1 (2,806) (2,456) Profit before taxation 881,004 1,557,302

Taxation 42 (2,411) (185,833) Profit after taxation 878,593 1,371,469

Earnings per share - basic and diluted 43 1.68 2.67

The annexed notes from 1 to 60 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Chief Executive Officer Director Chief Financial Officer Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity For the year ended December 31, 2019 For the year ended December 31, 2019

Note 2019 2018 Revenue Share capital Capital reserves Rupees '000 Rupees '000 reserves Surplus on CASH FLOW FROM OPERATING ACTIVITIES Issued revaluation of subscribed and Capital property, plant Accumulated Total Cash generated from operations 44 6,204,103 1,100,498 Note paid-up capital reserve and equipment profit equity Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Payments for:

Interest/markup on borrowings - Interest based arrangements (1,851,801) (1,217,343) Balance as at January 01, 2018 5,426,392 4,279,947 4,274,019 13,020,232 27,000,590 Interest/markup/profit on borrowings - Shariah compliant (279,033) (196,675) Comprehensive income Income tax (313,611) (809,596) Profit after taxation - - - 1,371,469 1,371,469 Net cash generated from/(used in) operating activities 3,759,658 (1,123,116) Other comprehensive income - - 2,504,854 - 2,504,854

CASH FLOW FROM INVESTING ACTIVITIES Total comprehensive income - - 2,504,854 1,371,469 3,876,323 Incremental depreciation 10 - - (199,824) 199,824 - Purchase of property, plant and equipment (2,069,197) (2,369,292) Transaction with owners Purchase of intangible assets (3,802) (8,030) Proceeds from disposal of property, plant and equipment 168,001 36,288 Final dividend on ordinary shares @ Rs. 1.20 per share - - - (597,218) (597,218) Net cash used in investing activities (1,904,998) (2,341,034) - - - (597,218) (597,218) CASH FLOW FROM FINANCING ACTIVITIES Balance as at December 31, 2018 5,426,392 4,279,947 6,579,049 13,994,307 30,279,695

Redemption of redeemable capital (101,875) (275,000) Balance as at January 01, 2019 5,426,392 4,279,947 6,579,049 13,994,307 30,279,695

Long term finances obtained 1,780,122 226,013 Impact of application of IFRS 15 - - - (443,392) (443,392) Repayment of long term finances (1,688,597) (1,542,813) Balance as at January 01, 2019 - Proceeds from sale and lease back activities 187,180 109,944 as adjusted 5,426,392 4,279,947 6,579,049 13,550,915 29,836,303 Repayment of leased liabilities (96,885) (92,076) Net decrease in short term borrowings (1,888,358) 5,616,480 Comprehensive income Dividend paid (3,598) (591,334) Profit after taxation - - - 878,593 878,593 Net cash (used in)/generated from financing activities (1,812,011) 3,451,214 Other comprehensive loss - - (26,753) - (26,753) Total comprehensive income - - (26,753) 878,593 851,840 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 42,649 (12,936) Incremental depreciation 10 - - (528,664) 528,664 - CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 471,258 484,194 Transaction with owners - - - - - CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 45 513,907 471,258 Balance as at December 31, 2019 5,426,392 4,279,947 6,023,632 14,958,172 30,688,143

The annexed notes from 1 to 60 form an integral part of these financial statements.

The annexed notes from 1 to 60 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Chief Executive Officer Director Chief Financial Officer Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity For the year ended December 31, 2019 For the year ended December 31, 2019

Note 2019 2018 Revenue Share capital Capital reserves Rupees '000 Rupees '000 reserves Surplus on CASH FLOW FROM OPERATING ACTIVITIES Issued revaluation of subscribed and Capital property, plant Accumulated Total Cash generated from operations 44 6,204,103 1,100,498 Note paid-up capital reserve and equipment profit equity Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Payments for:

Interest/markup on borrowings - Interest based arrangements (1,851,801) (1,217,343) Balance as at January 01, 2018 5,426,392 4,279,947 4,274,019 13,020,232 27,000,590 Interest/markup/profit on borrowings - Shariah compliant (279,033) (196,675) Comprehensive income Income tax (313,611) (809,596) Profit after taxation - - - 1,371,469 1,371,469 Net cash generated from/(used in) operating activities 3,759,658 (1,123,116) Other comprehensive income - - 2,504,854 - 2,504,854

CASH FLOW FROM INVESTING ACTIVITIES Total comprehensive income - - 2,504,854 1,371,469 3,876,323 Incremental depreciation 10 - - (199,824) 199,824 - Purchase of property, plant and equipment (2,069,197) (2,369,292) Transaction with owners Purchase of intangible assets (3,802) (8,030) Proceeds from disposal of property, plant and equipment 168,001 36,288 Final dividend on ordinary shares @ Rs. 1.20 per share - - - (597,218) (597,218) Net cash used in investing activities (1,904,998) (2,341,034) - - - (597,218) (597,218) CASH FLOW FROM FINANCING ACTIVITIES Balance as at December 31, 2018 5,426,392 4,279,947 6,579,049 13,994,307 30,279,695

Redemption of redeemable capital (101,875) (275,000) Balance as at January 01, 2019 5,426,392 4,279,947 6,579,049 13,994,307 30,279,695

Long term finances obtained 1,780,122 226,013 Impact of application of IFRS 15 - - - (443,392) (443,392) Repayment of long term finances (1,688,597) (1,542,813) Balance as at January 01, 2019 - Proceeds from sale and lease back activities 187,180 109,944 as adjusted 5,426,392 4,279,947 6,579,049 13,550,915 29,836,303 Repayment of leased liabilities (96,885) (92,076) Net decrease in short term borrowings (1,888,358) 5,616,480 Comprehensive income Dividend paid (3,598) (591,334) Profit after taxation - - - 878,593 878,593 Net cash (used in)/generated from financing activities (1,812,011) 3,451,214 Other comprehensive loss - - (26,753) - (26,753) Total comprehensive income - - (26,753) 878,593 851,840 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 42,649 (12,936) Incremental depreciation 10 - - (528,664) 528,664 - CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 471,258 484,194 Transaction with owners - - - - - CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 45 513,907 471,258 Balance as at December 31, 2019 5,426,392 4,279,947 6,023,632 14,958,172 30,688,143

The annexed notes from 1 to 60 form an integral part of these financial statements.

The annexed notes from 1 to 60 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Chief Executive Officer Director Chief Financial Officer Notes to the Consolidated Financial Statements For the year ended December 31, 2019

1 LEGAL STATUS AND OPERATIONS 2.3 Basis of measurement

The Group comprises of the following; These consolidated financial statements have been prepared under the historical cost convention except for certain items of property, plant and equipment at revalued amounts, certain assets at recoverable amounts, monetary assets and liabilities Parent Group denominated in foreign currency measured at spot exchange rates and certain financial instruments measured at fair value/amortized cost. In these financial statements, except for the amounts reflected in the statement of cash flows, all Pak Elektron Limited transactions have been accounted for on accrual basis.

Subsidiary Group 2.4 Critical accounting judgements and key sources of estimation uncertainty

PEL Marketing (Private) Limited The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and 1.1 Pak Elektron Limited - Parent Group associated assumptions and judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which forms the basis of making judgments about carrying values of assets Pak Elektron Limited ['the Parent Group' or 'PEL'] was incorporated in Pakistan on March 03, 1956 as a Public Limited Group and liabilities that are not readily apparent from other sources. Subsequently, actual results may differ from these estimates. under the Companies Act, 1913 (now Companies Act, 2017). Registered office of PEL is situated at 17 - Aziz Avenue, Canal Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized Bank, Gulberg - V, Lahore. The manufacturing facilities of PEL are located at 34 - K.M. Ferozepur road, Keath village, Lahore in the period in which the estimate is revised and in any future periods affected. and 14 - K.M. Ferozepur Road, Lahore. PEL is currently listed on Pakistan Stock Exchange Limited. The principal activity of PEL is manufacturing and sale of electrical capital goods and domestic appliances. 2.4.1 Critical accounting judgements

PEL is currently organized into two main operating divisions - Power Division and Appliances Division. PEL's activities are as Judgments made by management in the application of accounting and reporting standards that have significant effect on follows: the financial statements and estimates with a risk of material adjustment in subsequent years are as follows:

Power Division: Manufacturing of transformers, switchgears, energy meters, engineering, procurement and construction (a) Business model assessment (see note 6.26.1) contracting. The Group classifies its financial assets on the basis of the Group's business model for managing the financial assets and Appliances Division: Manufacturing, assembling and distribution of refrigerators, deep freezers, air conditioners, microwave the contractual cash flow characteristics of the financial asset. The Group determines the business model at a level that ovens, washing machines, water dispensers and other home appliances. reflects how financial assets are managed to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their 1.2 PEL Marketing (Private) Limited - Subsidiary Group performance measured, the risks that affect the performance of the assets and how these are managed.

PEL Marketing (Private) Limited ['the Subsidiary Group' or 'PMPL'] was incorporated in Pakistan on August 11, 2011 as a (b) Satisfaction of performance obligations in construction contracts (see note ) Private Limited Group under the repealed Companies Ordinance, 1984. Registered office of PMPL is situated at 17 - Aziz Avenue, Canal Bank, Gulberg - V, Lahore. The principal activity of PMPL is sale of electrical capital goods and domestic The Group has determined that for construction contracts the customer controls all of the work in progress. This is appliances. because these contracts are customer specific and the Group is entitled to reimbursment of costs incurred to date, including a reasonable margin, if applicable, in case the contract is terminanted by the customer. 2 BASIS OF PREPARATION 2.4.2 Key sources of estimation uncertainty 2.1 Consolidated financial statements The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date that may These financial statements are the consolidated financial statements of the Group comprising Pak Elektron Limited, the have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next Parent Group and PEL Marketing (Private) Limited, the Subsidiary Group. financial year, are as follows:

A parent is an entity that has one or more subsidiaries. (a) Calculation of impairment allowance for expected credit losses on financial assets (see note 6.26.1)

A subsidiary is an entity in which the Parent Group directly or indirectly controls, beneficially owns or holds more that fifty The Group recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date of percent of the voting securities or otherwise has the power to elect and/or appoint more than fifty percent of its directors. The initial recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing credit risk since initial recognition of the respective financial asset. Estimating expected credit losses and changes there whether the Group controls another entity. in requires taking into account qualitative and quantitative forward looking information. When measuring expectied credit losses on financial assets the Group uses reasonable and supportable forward looking information as well as The assets and liabilities of the Subsidiary Group have been consolidated on a line by line basis and the carrying value of historical data to calculate the difference between the contractual cash flows due and those that the Group would investment is eliminated against the Parent Group's share in the net assets of the Subsidiary Group. expect to receive, taking into account cash flows from collateral and integral credit enhancements, if any. Probability of default constitutes a key input in measuring expected credit losses. Probability of default is an estimate of the likelihood Inter-Group transactions, balances and unrealized gains/losses on transactions between the Parent and Subsidiary have of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of been eliminated. Accounting policies of the Subsidiary Group are same as those of the Parent Group to ensure consistency in future conditions. If the expected credit loss rates on financial assets past due had been 10% higher/lower as at the accounting treatments of like transactions. reporting date, the loss allowance on financial assets would have been higher/lower by Rs. 61.254 million. 2.2 Statement of compliance (b) Depreciation method, rates and useful lives of property, plant and equipment (see note 6.1.1)

These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in The Group reassesses useful lives, depreciation method and rates for each item of property, plant and equipment Pakistan. The accounting and reporting standards applicable in Pakistan comprise of: annually by considering expected pattern of economic benefits that the Group expects to derive from that item.

- International Financial Reporting Standards ['IFRS'] issued by the International Accounting Standards Board ['IASB'] as (c) Amortization method, rates and useful lives of intangible assets (see note 6.2) notified under the Companies Act, 2017; The Group reassesses useful lives, amortization method and rates for each intangible asset annually by considering - Islamic Financial Accounting Standards ['IFAS'] issued by Institute of Chartered Accountants of Pakistan as notified expected pattern of economic benefits that the Group expects to derive from that asset. under the Companies Act, 2017; and (d) Revaluation of property, plant and equipment (see note 6.1.1) - Provisions of and directives issued under the Companies Act, 2017. Revaluation of property, plant and equipment is carried out by independent professional valuers. Revalued amounts of Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS and IFAS, the provisions of and non-depreciable items are determined by reference to local market values and that of depreciable items are directives issued under the Companies Act, 2017 have been followed. determined by reference to present depreciated replacement values. Notes to the Consolidated Financial Statements For the year ended December 31, 2019

1 LEGAL STATUS AND OPERATIONS 2.3 Basis of measurement

The Group comprises of the following; These consolidated financial statements have been prepared under the historical cost convention except for certain items of property, plant and equipment at revalued amounts, certain assets at recoverable amounts, monetary assets and liabilities Parent Group denominated in foreign currency measured at spot exchange rates and certain financial instruments measured at fair value/amortized cost. In these financial statements, except for the amounts reflected in the statement of cash flows, all Pak Elektron Limited transactions have been accounted for on accrual basis.

Subsidiary Group 2.4 Critical accounting judgements and key sources of estimation uncertainty

PEL Marketing (Private) Limited The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and 1.1 Pak Elektron Limited - Parent Group associated assumptions and judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which forms the basis of making judgments about carrying values of assets Pak Elektron Limited ['the Parent Group' or 'PEL'] was incorporated in Pakistan on March 03, 1956 as a Public Limited Group and liabilities that are not readily apparent from other sources. Subsequently, actual results may differ from these estimates. under the Companies Act, 1913 (now Companies Act, 2017). Registered office of PEL is situated at 17 - Aziz Avenue, Canal Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized Bank, Gulberg - V, Lahore. The manufacturing facilities of PEL are located at 34 - K.M. Ferozepur road, Keath village, Lahore in the period in which the estimate is revised and in any future periods affected. and 14 - K.M. Ferozepur Road, Lahore. PEL is currently listed on Pakistan Stock Exchange Limited. The principal activity of PEL is manufacturing and sale of electrical capital goods and domestic appliances. 2.4.1 Critical accounting judgements

PEL is currently organized into two main operating divisions - Power Division and Appliances Division. PEL's activities are as Judgments made by management in the application of accounting and reporting standards that have significant effect on follows: the financial statements and estimates with a risk of material adjustment in subsequent years are as follows:

Power Division: Manufacturing of transformers, switchgears, energy meters, engineering, procurement and construction (a) Business model assessment (see note 6.26.1) contracting. The Group classifies its financial assets on the basis of the Group's business model for managing the financial assets and Appliances Division: Manufacturing, assembling and distribution of refrigerators, deep freezers, air conditioners, microwave the contractual cash flow characteristics of the financial asset. The Group determines the business model at a level that ovens, washing machines, water dispensers and other home appliances. reflects how financial assets are managed to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their 1.2 PEL Marketing (Private) Limited - Subsidiary Group performance measured, the risks that affect the performance of the assets and how these are managed.

PEL Marketing (Private) Limited ['the Subsidiary Group' or 'PMPL'] was incorporated in Pakistan on August 11, 2011 as a (b) Satisfaction of performance obligations in construction contracts (see note ) Private Limited Group under the repealed Companies Ordinance, 1984. Registered office of PMPL is situated at 17 - Aziz Avenue, Canal Bank, Gulberg - V, Lahore. The principal activity of PMPL is sale of electrical capital goods and domestic The Group has determined that for construction contracts the customer controls all of the work in progress. This is appliances. because these contracts are customer specific and the Group is entitled to reimbursment of costs incurred to date, including a reasonable margin, if applicable, in case the contract is terminanted by the customer. 2 BASIS OF PREPARATION 2.4.2 Key sources of estimation uncertainty 2.1 Consolidated financial statements The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date that may These financial statements are the consolidated financial statements of the Group comprising Pak Elektron Limited, the have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next Parent Group and PEL Marketing (Private) Limited, the Subsidiary Group. financial year, are as follows:

A parent is an entity that has one or more subsidiaries. (a) Calculation of impairment allowance for expected credit losses on financial assets (see note 6.26.1)

A subsidiary is an entity in which the Parent Group directly or indirectly controls, beneficially owns or holds more that fifty The Group recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date of percent of the voting securities or otherwise has the power to elect and/or appoint more than fifty percent of its directors. The initial recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing credit risk since initial recognition of the respective financial asset. Estimating expected credit losses and changes there whether the Group controls another entity. in requires taking into account qualitative and quantitative forward looking information. When measuring expectied credit losses on financial assets the Group uses reasonable and supportable forward looking information as well as The assets and liabilities of the Subsidiary Group have been consolidated on a line by line basis and the carrying value of historical data to calculate the difference between the contractual cash flows due and those that the Group would investment is eliminated against the Parent Group's share in the net assets of the Subsidiary Group. expect to receive, taking into account cash flows from collateral and integral credit enhancements, if any. Probability of default constitutes a key input in measuring expected credit losses. Probability of default is an estimate of the likelihood Inter-Group transactions, balances and unrealized gains/losses on transactions between the Parent and Subsidiary have of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of been eliminated. Accounting policies of the Subsidiary Group are same as those of the Parent Group to ensure consistency in future conditions. If the expected credit loss rates on financial assets past due had been 10% higher/lower as at the accounting treatments of like transactions. reporting date, the loss allowance on financial assets would have been higher/lower by Rs. 61.254 million. 2.2 Statement of compliance (b) Depreciation method, rates and useful lives of property, plant and equipment (see note 6.1.1)

These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in The Group reassesses useful lives, depreciation method and rates for each item of property, plant and equipment Pakistan. The accounting and reporting standards applicable in Pakistan comprise of: annually by considering expected pattern of economic benefits that the Group expects to derive from that item.

- International Financial Reporting Standards ['IFRS'] issued by the International Accounting Standards Board ['IASB'] as (c) Amortization method, rates and useful lives of intangible assets (see note 6.2) notified under the Companies Act, 2017; The Group reassesses useful lives, amortization method and rates for each intangible asset annually by considering - Islamic Financial Accounting Standards ['IFAS'] issued by Institute of Chartered Accountants of Pakistan as notified expected pattern of economic benefits that the Group expects to derive from that asset. under the Companies Act, 2017; and (d) Revaluation of property, plant and equipment (see note 6.1.1) - Provisions of and directives issued under the Companies Act, 2017. Revaluation of property, plant and equipment is carried out by independent professional valuers. Revalued amounts of Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS and IFAS, the provisions of and non-depreciable items are determined by reference to local market values and that of depreciable items are directives issued under the Companies Act, 2017 have been followed. determined by reference to present depreciated replacement values. (e) Recoverable amount and impairment of non-financial assets (see note 6.26.2) Despite the foregoing, the Group may make an irrevocable election/designation at initial recognition of financial asset: The management of the Group reviews carrying amounts of its non-financial assets for possible impairment and makes - To present subsequent changes in fair value of an equity instrument that is not held for trading nor contingent formal estimates of recoverable amount if there is any such indication. consideration recognized by an acquirer in a business combination in other comprehensive income and classify it as (f) Taxation (see note 6.21) FVTOCI The Group takes into account the current income tax law and decisions taken by appellate and other relevant legal - To designate a debt instrument that meets the amortized cost or FVTOCI criteria as measured art FVTPL if doing so forums while estimating its provision for current tax. Provision for deferred tax is estimated after taking into account eliminates or significantly reduces a measurement or recognition inconsistency. historical and expected future turnover and profit trends and their taxability under the current tax law. (g) Provisions (see note 6.16) When a financial asset measured at FVTOCI is derecognized, the cumulative gain or loss recognized in other comprehensive income is reclassified to profit or loss as a reclassification adjustment except for equity instruments measured at FVTOCI, Provisions are based on best estimate of the expenditure required to settle the present obligation at the reporting date, where the cumulative gain or loss previously recognized in other comprehensive income is subsequently transferred to that is, the amount that the Group would rationally pay to settle the obligation at the reporting date or to transfer it to a accumulated profits. third party. This involves estimation of most likely amounts for one-off events such as litigations and estimation of probability-weighted expected values for large papulations of events, such as warrenties. The Group has reviewed and assessed the existing financial assets as at December 31, 2019 based on facts and (h) Net realizable values of stock in trade (see note 6.5) circumstances that existed at that date and concluded that initial application of IFRS 9 has had the following impact on the Group's financial assets as regards their classification and measurement. The Group estimates net realizable values of its stock in trade as the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. IAS 39 Classification IFRS 9 Classification 2.5 Functional currency Long term advances Loans and receivables Financial assets at amortized cost These financial statements have been prepared in Pak Rupees which is the Group's functional currency. Long term deposits Loans and receivables Financial assets at amortized cost Trade debts Loans and receivables Financial assets at amortized cost 2.6 Issue of consolidated financial statements Short term deposits Loans and receivables Financial assets at amortized cost Bank balances Loans and receivables Financial assets at amortized cost These consolidated financial statements were intially authorized for issue on March 27, 2020 by the Board of Directors of the Short term investments Financial assets at fair value through Financial assets at fair value through Parent Company. Subsequently, these consolidated financial statements were amended to disclose non-adusting event occuring after the reporting period (see note 59.2). The amendment is restricted to note 59.2 only and there were no profit or loss profit or loss amendments to the amounts reported in the previously issued consolidated financial statements.. The amended Redeemable capital Financial liabilities at amortized cost Financial liabilities at amortized cost consolidated financial statements were authorized for issue on May 02, 2020 by the Board of Directors of the Parent Long term finances Financial liabilities at amortized cost Financial liabilities at amortized cost Company. Lease liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost Trade creditors Financial liabilities at amortized cost Financial liabilities at amortized cost 3 NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS EFFECTIVE DURING THE YEAR. Foreign bills payable Financial liabilities at amortized cost Financial liabilities at amortized cost Accrued liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost The following new and revised standards, interpretations and amendments are effective in the current period but are either not relevant to the Group or their application does not have any material impact on the interim financial statements of the Employees' provident fund Financial liabilities at amortized cost Financial liabilities at amortized cost Group other than presentation and disclosures. Compensated absences Financial liabilities at amortized cost Financial liabilities at amortized cost Unclaimed dividend Financial liabilities at amortized cost Financial liabilities at amortized cost 3.1 IFRS 9 - Financial Instruments Other payables Financial liabilities at amortized cost Financial liabilities at amortized cost Accrued interest/markup/profit Financial liabilities at amortized cost Financial liabilities at amortized cost IFRS 9 introduces new requirements for the classification and measurement of financial assets and financial liabilities, Short term borrowings Financial liabilities at amortized cost Financial liabilities at amortized cost impairment of financial assets and general hedge accounting. The Group has applied IFRS 9 in accordance transitions provision set out in the standard. Impairment of financial assets

The date of initial application of IFRS 9 (the date on which the Group has assessed its existing financial assets and financial In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred liabilities in terms of the requirements of IFRS 9) is December 31, 2019. Accordingly, the Group has applied the requirements credit loss model under IAS 39. The expected credit loss model requires the Group to account for expected credit losses and IFRS 9 to instruments that continue to be recognized as at December 31, 2019. Comparative amounts in relation to changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the instruments that continue to be recognized as at December 31, 2019 have not been restated as allowed by IFRS 9. financial assets. Therefore, it is no longer necessary for a credit loss to have occurred before the same is recognized.

Classification and measurement IFRS 9 requires the Group to measure the loss allowance for financial instrument at an amount equal to lifetime expected credit losses if the credit risk has increased significantly since initial recognition, or if the financial instrument is a purchased or The classification and measurement requirements for financial liabilities have been substantially carried forward from IAS 39. originated credit impaired financial asset. However, if the credit risk on a financial instrument has not increased significantly All recognized financial assets that are within the scope of IFRS 9 are required to be measured subsequently at amortized cost since initial recognition, except for a purchased or originated credit-impaired financial asset, the Group is required to or fair value on the basis of the Group's business model for managing the financial assets and the contractual cash flow measure the loss allowance for that financial asset at an amount equal to 12-months expected credit loss. IFRS also requires a characteristics of the financial assets. Specifically: simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit losses for trade receivables, contract assets and lease receivables in certain circumstances. - Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cashflows and the contractual terms of the financial asset give rise on specified dates to cash flows that are 3.2 IFRS 15 - Revenue from Contracts with Customers solely payments of principal and interest on the principal amount outstanding are subsequently measured at amortized cost and accordingly classified as 'financial assets at amortized cost’ IFRS 15 - Revenue from Contracts with Customers provides a single, principles based five-step model to be applied to all contracts with customer. - Financial assets that are held within a business model whose objective is achieved by both collecting contractual cashflows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash - Identify the contract with customer. flows that are solely payments of principal and interest on the principal amount outstanding subsequently measured at fair value through other comprehensive income and accordingly classified as 'financial assets at fair value through other - Identify the performance obligations in the contract. comprehensive income [FVTOCI]’ - Determine the transaction price. - All other financial instruments are subsequently measured at fair value through profit or loss and accordingly classified as 'financial assets at fair value through profit or loss [FVTPL]' - Allocate the transaction price to the performance obligations in the contracts.

- Recognized revenue when (or as) the entity satisfies a performance obligation. (e) Recoverable amount and impairment of non-financial assets (see note 6.26.2) Despite the foregoing, the Group may make an irrevocable election/designation at initial recognition of financial asset: The management of the Group reviews carrying amounts of its non-financial assets for possible impairment and makes - To present subsequent changes in fair value of an equity instrument that is not held for trading nor contingent formal estimates of recoverable amount if there is any such indication. consideration recognized by an acquirer in a business combination in other comprehensive income and classify it as (f) Taxation (see note 6.21) FVTOCI The Group takes into account the current income tax law and decisions taken by appellate and other relevant legal - To designate a debt instrument that meets the amortized cost or FVTOCI criteria as measured art FVTPL if doing so forums while estimating its provision for current tax. Provision for deferred tax is estimated after taking into account eliminates or significantly reduces a measurement or recognition inconsistency. historical and expected future turnover and profit trends and their taxability under the current tax law. (g) Provisions (see note 6.16) When a financial asset measured at FVTOCI is derecognized, the cumulative gain or loss recognized in other comprehensive income is reclassified to profit or loss as a reclassification adjustment except for equity instruments measured at FVTOCI, Provisions are based on best estimate of the expenditure required to settle the present obligation at the reporting date, where the cumulative gain or loss previously recognized in other comprehensive income is subsequently transferred to that is, the amount that the Group would rationally pay to settle the obligation at the reporting date or to transfer it to a accumulated profits. third party. This involves estimation of most likely amounts for one-off events such as litigations and estimation of probability-weighted expected values for large papulations of events, such as warrenties. The Group has reviewed and assessed the existing financial assets as at December 31, 2019 based on facts and (h) Net realizable values of stock in trade (see note 6.5) circumstances that existed at that date and concluded that initial application of IFRS 9 has had the following impact on the Group's financial assets as regards their classification and measurement. The Group estimates net realizable values of its stock in trade as the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. IAS 39 Classification IFRS 9 Classification 2.5 Functional currency Long term advances Loans and receivables Financial assets at amortized cost These financial statements have been prepared in Pak Rupees which is the Group's functional currency. Long term deposits Loans and receivables Financial assets at amortized cost Trade debts Loans and receivables Financial assets at amortized cost 2.6 Issue of consolidated financial statements Short term deposits Loans and receivables Financial assets at amortized cost Bank balances Loans and receivables Financial assets at amortized cost These consolidated financial statements were intially authorized for issue on March 27, 2020 by the Board of Directors of the Short term investments Financial assets at fair value through Financial assets at fair value through Parent Company. Subsequently, these consolidated financial statements were amended to disclose non-adusting event occuring after the reporting period (see note 59.2). The amendment is restricted to note 59.2 only and there were no profit or loss profit or loss amendments to the amounts reported in the previously issued consolidated financial statements.. The amended Redeemable capital Financial liabilities at amortized cost Financial liabilities at amortized cost consolidated financial statements were authorized for issue on May 02, 2020 by the Board of Directors of the Parent Long term finances Financial liabilities at amortized cost Financial liabilities at amortized cost Company. Lease liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost Trade creditors Financial liabilities at amortized cost Financial liabilities at amortized cost 3 NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS EFFECTIVE DURING THE YEAR. Foreign bills payable Financial liabilities at amortized cost Financial liabilities at amortized cost Accrued liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost The following new and revised standards, interpretations and amendments are effective in the current period but are either not relevant to the Group or their application does not have any material impact on the interim financial statements of the Employees' provident fund Financial liabilities at amortized cost Financial liabilities at amortized cost Group other than presentation and disclosures. Compensated absences Financial liabilities at amortized cost Financial liabilities at amortized cost Unclaimed dividend Financial liabilities at amortized cost Financial liabilities at amortized cost 3.1 IFRS 9 - Financial Instruments Other payables Financial liabilities at amortized cost Financial liabilities at amortized cost Accrued interest/markup/profit Financial liabilities at amortized cost Financial liabilities at amortized cost IFRS 9 introduces new requirements for the classification and measurement of financial assets and financial liabilities, Short term borrowings Financial liabilities at amortized cost Financial liabilities at amortized cost impairment of financial assets and general hedge accounting. The Group has applied IFRS 9 in accordance transitions provision set out in the standard. Impairment of financial assets

The date of initial application of IFRS 9 (the date on which the Group has assessed its existing financial assets and financial In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred liabilities in terms of the requirements of IFRS 9) is December 31, 2019. Accordingly, the Group has applied the requirements credit loss model under IAS 39. The expected credit loss model requires the Group to account for expected credit losses and IFRS 9 to instruments that continue to be recognized as at December 31, 2019. Comparative amounts in relation to changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the instruments that continue to be recognized as at December 31, 2019 have not been restated as allowed by IFRS 9. financial assets. Therefore, it is no longer necessary for a credit loss to have occurred before the same is recognized.

Classification and measurement IFRS 9 requires the Group to measure the loss allowance for financial instrument at an amount equal to lifetime expected credit losses if the credit risk has increased significantly since initial recognition, or if the financial instrument is a purchased or The classification and measurement requirements for financial liabilities have been substantially carried forward from IAS 39. originated credit impaired financial asset. However, if the credit risk on a financial instrument has not increased significantly All recognized financial assets that are within the scope of IFRS 9 are required to be measured subsequently at amortized cost since initial recognition, except for a purchased or originated credit-impaired financial asset, the Group is required to or fair value on the basis of the Group's business model for managing the financial assets and the contractual cash flow measure the loss allowance for that financial asset at an amount equal to 12-months expected credit loss. IFRS also requires a characteristics of the financial assets. Specifically: simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit losses for trade receivables, contract assets and lease receivables in certain circumstances. - Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cashflows and the contractual terms of the financial asset give rise on specified dates to cash flows that are 3.2 IFRS 15 - Revenue from Contracts with Customers solely payments of principal and interest on the principal amount outstanding are subsequently measured at amortized cost and accordingly classified as 'financial assets at amortized cost’ IFRS 15 - Revenue from Contracts with Customers provides a single, principles based five-step model to be applied to all contracts with customer. - Financial assets that are held within a business model whose objective is achieved by both collecting contractual cashflows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash - Identify the contract with customer. flows that are solely payments of principal and interest on the principal amount outstanding subsequently measured at fair value through other comprehensive income and accordingly classified as 'financial assets at fair value through other - Identify the performance obligations in the contract. comprehensive income [FVTOCI]’ - Determine the transaction price. - All other financial instruments are subsequently measured at fair value through profit or loss and accordingly classified as 'financial assets at fair value through profit or loss [FVTPL]' - Allocate the transaction price to the performance obligations in the contracts.

- Recognized revenue when (or as) the entity satisfies a performance obligation. IFRS 15 - Revenue from Contracts with Customers' supersedes IAS 11 - Construction Contracts, IAS 18 - Revenue and related - IAS 12 - Income Taxes - The amendments clarify that the requirements in the former paragraph 52B (to recognise the interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of income tax consequences of dividends where the transactions or events that generated distributable profits are other standards. The new standard establishes a five-step model to account for revenue arising from contracts with recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be that only deals with situations where there are different tax rates for distributed and undistributed profits. entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgment, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with - IAS 23 - Borrowing Costs - The amendments clarify that if any specific borrowing remains outstanding after the related their customers. asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. The group has applied IFRS 15 using the acculative effect method and therefore comparatives information has not been restated and continues to be reported under IAS 8 and IAS 11. The accumulative effect of appling IFRS 15 has been 3.8 Plan Amendment, Curtailment or Settlement (Amendments to IAS 19 - Employee Benefits) recognised as on January 01, 2019 with the corresponding adjustment to accumulated profit as on that date. IAS 19 - Employees Benefits has been amended to provide that: 3.3 IFRS 16 - Leases (2016) - If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net IFRS 16 supersedes IAS 17 - Leases, IFRIC 4 - Determining whether an Arrangement contains a Lease, SIC-15 - Operating interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. In Leases- Incentives and SIC-27 - Evaluating the Substance of Transactions Involving the Legal Form of a Lease'. The standard addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to requirements regarding the asset ceiling. account for most leases under a single on-balance sheet model. Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in IAS 17. 4 NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS NOT YET EFFECTIVE. Whereas, for lessees all leases will be classified as finance leases only. However, as per relevant guidelines issued by Institute of Chartered Accountants of Pakistan, contracts under Ijarah will continue to be treated as operating leases under IFAS 2. Effective date (annual periods beginning The Group adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of on or after) January 01, 2019. Under this method, the standard is applied retrospectively with cumulative effect of initially applying standard recognised at the date of initial application and accordingly the Group is not required to restate prior year results. IFRS 17 - Insurance contracts (2017) January 01, 2021 The Group assessed its existing contracts and concluded that right-of-use assets as disclosed these financial statements shall Sale or contribution of assets between an Investor and its Associate or Joint Deferred Indefinitely be recognised along with their corresponding lease liabilities. For other existing contracts, the Group elected to use the Venture (Amendments to IFRS 10 - Consolidated Financial Statementsand IAS 28 - recognition exemptions for lease contracts that, at the commencement date, have a lease term of twelve months or less and do not contain a purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of low value Investments in Associates and Joint Ventures). (‘lowvalue assets’). Amendments to References to the Conceptual Framework in IFRS Standards January 01, 2020

The right-of-use assets were recognised based on the amount equal to their corresponding lease liabilities, adjusted for Definition of a Business (Amendments to IFRS 3 - Business Combinations) January 01, 2020 related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present Definition of Material (Amendments to IAS 1 - First-time Adoption of International January 01, 2020 value of the remaining lease payments. The Group did not have any sub-lease as on January 01, 2019. Accordingly, initial application of IFRS 16 did not have any impact on the opening retained earnings as of January 01, 2019 and on these financial Financial Reporting Standards and IAS 8 - Accounting Policies, Changes in statements, except for the recognition of right-of-use assets and corresponding lease liabilities as disclosed in these financial Accounting Estimates and Errors) statements. Interest Rate Benchmark Reform (Amendments to IFRS 9 - Financial Instruments, January 01, 2020 3.4 IFRIC 23 - Uncertainty over Income Tax Treatments IAS 39 - Financial Instruments: Recognition and Measurements, and IFRS 7 - Financial Instruments: Disclosures) The interpretation addresses the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. It specifically considers: Other than afore-mentioned standards, interpretations and amendments, IASB has also issued the following standards which have not been notified by the Securities and Exchange Commission of Pakistan ['SECP']: - Whether tax treatments should be considered collectively IFRS 1 - First Time Adoption of International Financial Reporting Standards - Assumptions for taxation authorities' examinations IFRS 14 - Regulatory Deferral Accounts IFRS 17 – Insurance contracts (2017) - The determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates The Group intends to adopt these new and revised standards, interpretations and amendments on their effective dates, - The effect of changes in facts and circumstances subject to, where required, notification by Securities and Exchange Commission of Pakistan under section 225 of the Companies Act, 2017 regarding their adoption. The management anticipates that the adoption of the above standards, 3.5 Prepayment Features with Negative Compensation (Amendments to IFRS 9 - Financial Instruments) amendments and interpretations in future periods, will have no material impact on the Group's financial statements other than in presentation/disclosures. IFRS 9 - Financial Instruments have been amended regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative 5 CHANGES IN ACCOUNTING POLICIES compensation payments. The adoption of new and revised standards, interpretations and amendments effective during the year has resulted in 3.6 Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28 - Investments in Associates and Joint Ventures) changes to accounting policies as follows:

IAS 28 - Investments in Associates and Joint Ventures have been amended to clarify that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.

3.7 Annual Improvements to IFRS Standards 2015 – 2017 Cycle

The annual improvements have made amendments to the following standards:

- IFRS 3 - Business Combinations and IFRS 11 - Joint Arrangements - The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. IFRS 15 - Revenue from Contracts with Customers' supersedes IAS 11 - Construction Contracts, IAS 18 - Revenue and related - IAS 12 - Income Taxes - The amendments clarify that the requirements in the former paragraph 52B (to recognise the interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of income tax consequences of dividends where the transactions or events that generated distributable profits are other standards. The new standard establishes a five-step model to account for revenue arising from contracts with recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be that only deals with situations where there are different tax rates for distributed and undistributed profits. entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgment, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with - IAS 23 - Borrowing Costs - The amendments clarify that if any specific borrowing remains outstanding after the related their customers. asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. The group has applied IFRS 15 using the acculative effect method and therefore comparatives information has not been restated and continues to be reported under IAS 8 and IAS 11. The accumulative effect of appling IFRS 15 has been 3.8 Plan Amendment, Curtailment or Settlement (Amendments to IAS 19 - Employee Benefits) recognised as on January 01, 2019 with the corresponding adjustment to accumulated profit as on that date. IAS 19 - Employees Benefits has been amended to provide that: 3.3 IFRS 16 - Leases (2016) - If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net IFRS 16 supersedes IAS 17 - Leases, IFRIC 4 - Determining whether an Arrangement contains a Lease, SIC-15 - Operating interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. In Leases- Incentives and SIC-27 - Evaluating the Substance of Transactions Involving the Legal Form of a Lease'. The standard addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to requirements regarding the asset ceiling. account for most leases under a single on-balance sheet model. Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in IAS 17. 4 NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS NOT YET EFFECTIVE. Whereas, for lessees all leases will be classified as finance leases only. However, as per relevant guidelines issued by Institute of Chartered Accountants of Pakistan, contracts under Ijarah will continue to be treated as operating leases under IFAS 2. Effective date (annual periods beginning The Group adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of on or after) January 01, 2019. Under this method, the standard is applied retrospectively with cumulative effect of initially applying standard recognised at the date of initial application and accordingly the Group is not required to restate prior year results. IFRS 17 - Insurance contracts (2017) January 01, 2021 The Group assessed its existing contracts and concluded that right-of-use assets as disclosed these financial statements shall Sale or contribution of assets between an Investor and its Associate or Joint Deferred Indefinitely be recognised along with their corresponding lease liabilities. For other existing contracts, the Group elected to use the Venture (Amendments to IFRS 10 - Consolidated Financial Statementsand IAS 28 - recognition exemptions for lease contracts that, at the commencement date, have a lease term of twelve months or less and do not contain a purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of low value Investments in Associates and Joint Ventures). (‘lowvalue assets’). Amendments to References to the Conceptual Framework in IFRS Standards January 01, 2020

The right-of-use assets were recognised based on the amount equal to their corresponding lease liabilities, adjusted for Definition of a Business (Amendments to IFRS 3 - Business Combinations) January 01, 2020 related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present Definition of Material (Amendments to IAS 1 - First-time Adoption of International January 01, 2020 value of the remaining lease payments. The Group did not have any sub-lease as on January 01, 2019. Accordingly, initial application of IFRS 16 did not have any impact on the opening retained earnings as of January 01, 2019 and on these financial Financial Reporting Standards and IAS 8 - Accounting Policies, Changes in statements, except for the recognition of right-of-use assets and corresponding lease liabilities as disclosed in these financial Accounting Estimates and Errors) statements. Interest Rate Benchmark Reform (Amendments to IFRS 9 - Financial Instruments, January 01, 2020 3.4 IFRIC 23 - Uncertainty over Income Tax Treatments IAS 39 - Financial Instruments: Recognition and Measurements, and IFRS 7 - Financial Instruments: Disclosures) The interpretation addresses the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. It specifically considers: Other than afore-mentioned standards, interpretations and amendments, IASB has also issued the following standards which have not been notified by the Securities and Exchange Commission of Pakistan ['SECP']: - Whether tax treatments should be considered collectively IFRS 1 - First Time Adoption of International Financial Reporting Standards - Assumptions for taxation authorities' examinations IFRS 14 - Regulatory Deferral Accounts IFRS 17 – Insurance contracts (2017) - The determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates The Group intends to adopt these new and revised standards, interpretations and amendments on their effective dates, - The effect of changes in facts and circumstances subject to, where required, notification by Securities and Exchange Commission of Pakistan under section 225 of the Companies Act, 2017 regarding their adoption. The management anticipates that the adoption of the above standards, 3.5 Prepayment Features with Negative Compensation (Amendments to IFRS 9 - Financial Instruments) amendments and interpretations in future periods, will have no material impact on the Group's financial statements other than in presentation/disclosures. IFRS 9 - Financial Instruments have been amended regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative 5 CHANGES IN ACCOUNTING POLICIES compensation payments. The adoption of new and revised standards, interpretations and amendments effective during the year has resulted in 3.6 Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28 - Investments in Associates and Joint Ventures) changes to accounting policies as follows:

IAS 28 - Investments in Associates and Joint Ventures have been amended to clarify that an entity applies IFRS 9 Financial Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.

3.7 Annual Improvements to IFRS Standards 2015 – 2017 Cycle

The annual improvements have made amendments to the following standards:

- IFRS 3 - Business Combinations and IFRS 11 - Joint Arrangements - The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. Previous accounting policy New accounting policy Without As adoption Adjustment reported Impairment of financial assets Rupees '000 Rupees '000 Rupees '000

A financial asset is assessed at each reporting date to The Group recognizes a loss allowance for expected credit Impact on equity determine whether there is any objective evidence that it is losses on financial assets carried at amortized cost on date impaired. Individually significant financial assets are tested for of initial recognition. The amount of expected credit losses Accumulated profits 15,434,016 (475,844) 14,958,172 impairment on an individual basis. The remaining financial is updated on each reporting date to reflect the changes in assets are assessed collectively in groups that share similar credit risk since initial recognition of the respective Impact on liabilities credit risk characteristics. A financial asset is considered to be financial asset. impaired if objective evidence indicates that one or more Impairment is recognized at an amount equal to lifetime Warranty obligations - 475,844 475,844 events have had a negative effect on the estimated future cash expected credit losses for financial assets for which credit flows of the asset. risk has increased significantly since initial recognition. For Impact on profit or loss An impairment loss in respect of a financial asset measured at financial assets for which credit risk is low, impairment is amortized cost is calculated as the difference between its recognized at an amount equal to twelve months' Warranty period services 270,809 32,452 303,261 carrying amount, and the present value of the estimated future expected credit losses, with the exception of trade debts, cash flows discounted at the original effective interest rate. for which the Group recognises lifetime expected credit Impact on earnings per share Impairment loss in respect of a financial asset measured at fair losses estimated using internal credit risk grading based value is determined by reference to that fair value. All on the Group's historical credit loss experience, adjusted Decrease in earnings per share 1.75 (0.07) 1.68 impairment losses are recognized in profit or loss. An for factors that are specific to debtors, general economic impairment loss is reversed if the reversal can be related conditions, and an assessment for both the current as well 6 SIGNIFICANT ACCOUNTING POLICIES objectively to an event occurring after the impairment loss was as the forecast direction of conditions at the reporting recognized. An impairment loss is reversed only to the extent date, including time value of money where appropriate. The accounting policies set out below have been applied consistently to all periods presented in these financial statements that the financial asset’s carrying amount after the reversal All impairment losses are recognized in profit or loss. An except of the change referred to in note 5. does not exceed the carrying amount that would have been impairment loss is reversed if the reversal can be related determined, net of amortization, if no impairment loss had objectively to an event occurring after the impairment loss 6.1 Property, plant and equipment been recognized. was recognized. An impairment loss is reversed only to the extent that the financial asset’s carrying amount after the 6.1.1 Operating fixed assets reversal does not exceed the carrying amount that would have been determined, net of amortization, if no Operating fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses with the impairment loss had been recognized. exception of land, building and plant and machinery. Land, building and plant and machinery are measured at revalued The Group writes off a financial asset when there is amounts less accumulated depreciation and accumulated impairment losses, if any. Cost comprises purchase price, information indicating that the counter-party is in severe including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, and includes other financial condition and there is no realistic prospect of costs directly attributable to the acquisition or construction, erection and installation. recovery. Any recoveries made post write-off are recognized in profit or loss. Assets' residual values, if significant and their useful lives are reviewed and adjusted, if appropriate, at each reporting date.

Liabilties against assets subject to finance lease / Lease liabilities When significant parts of an item of operating fixed assets have different useful lives, they are recognized as separate items.

Leases in terms of which the Group assumes substantially all At the commencement date of the lease, the Group Major renewals and improvements to operating fixed assets are recognized in the carrying amount if it is probable that the risks and rewards of ownership are classified as finance leases. recognises lease liabilities measured at the present value embodied future economic benefits will flow to the Group and the cost of renewal or improvement can be measured reliably. Assets subject to finance lease are classified as 'operating of lease payments to be made over the lease term. The The cost of the day-to-day servicing of operating fixed assets are recognized in profit or loss as incurred. fixed assets'. On initial recognition, these are measured at lease payments include fixed payments (including in- cost, being an amount equal to the lower of its fair value and substance fixed payments) less any lease incentives The Group recognizes depreciation in profit or loss by applying reducing balance method, with the exception of computer the present value of minimum lease payments. Subsequent to receivable, variable lease payments that depend on an hardware and allied items, which are depreciated using straight line method, over the useful life of each operating fixed asset initial recognition, these are measured at cost less index or a rate, and amounts expected to be paid under using rates specified in note to the financial statements. Depreciation on additions to operating fixed assets is charged from accumulated depreciation and accumulated impairment residual value guarantees. The lease payments also the month in which the item becomes available for use. Depreciation is discontinued from the month in which it is disposed or losses. Depreciation, subsequent expenditure, de- include the exercise price of a purchase option reasonably classified as held for disposal. recognition, and gains and losses on de-recognition are certain to be exercised by the Group and payments of accounted for in accordance with the respective policies for penalties for terminating a lease, if the lease term reflects An operating fixed asset is de-recognized when permanently retired from use. Any gain or loss on disposal of operating fixed operating fixed assets. Liabilities against assets subject to the Group exercising the option to terminate. The variable assets is recognized in profit or loss. finance lease are classified as 'financial liabilities at amortized lease payments that do not depend on an index or a rate cost' ' respectively, however, since they fall outside the scope are recognised as expense in the period on which the Increases in the carrying amounts arising on revaluation of property, plant and equipment are recognised, net of tax, in other of measurement requirements of IFRS 9, these are measured event or condition that triggers the payment occurs. comprehensive income and accumulated in surplus on revaluation of property, plant and equipment in share capital and in accordance with the requirements of IAS 17. On initial In calculating the present value of lease payments, the reserves. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognition, these are measured at cost, being their fair value Group uses if the interest rate implicit in the lease. After the recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other at the date of commencement of lease, less attributable commencement date, the amount of lease liabilities is comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to transaction costs. Subsequent to initial recognition, minimum increased to reflect the accretion of interest and reduced profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to lease payments made under finance leases are apportioned for the lease payments made. In addition, the carrying profit or loss and depreciation based on the asset’s original cost, net of tax, is reclassified from the surplus on revaluation of between the finance charge and the reduction of outstanding amount of lease liabilities is remeasured if there is a property, plant and equipment to accumulated profit. liability. The finance charge is allocated to each period during modification, a change in the lease term, a change in the in- the lease term so as to produce a constant periodic rate of substance fixed lease payments or a change in the 6.1.2 Capital work in progress interest on the remaining balance of the liability. Deposits assessment to purchase the underlying asset. against finance leases, subsequent to initial recognition are Capital work in progress is stated at cost less identified impairment loss, if any, and includes the cost of material, labour and carried at cost. appropriate overheads directly relating to the construction, erection or installation of an item of operating fixed assets. These costs are transferred to operating fixed assets as and when related items become available for intended use. The follwing table summerises the impact of application of new and revised standards, interpretations and amendments effective during the year, on the Group's consolidated financial statements, for the year ended December 31, 2019. Previous accounting policy New accounting policy Without As adoption Adjustment reported Impairment of financial assets Rupees '000 Rupees '000 Rupees '000

A financial asset is assessed at each reporting date to The Group recognizes a loss allowance for expected credit Impact on equity determine whether there is any objective evidence that it is losses on financial assets carried at amortized cost on date impaired. Individually significant financial assets are tested for of initial recognition. The amount of expected credit losses Accumulated profits 15,434,016 (475,844) 14,958,172 impairment on an individual basis. The remaining financial is updated on each reporting date to reflect the changes in assets are assessed collectively in groups that share similar credit risk since initial recognition of the respective Impact on liabilities credit risk characteristics. A financial asset is considered to be financial asset. impaired if objective evidence indicates that one or more Impairment is recognized at an amount equal to lifetime Warranty obligations - 475,844 475,844 events have had a negative effect on the estimated future cash expected credit losses for financial assets for which credit flows of the asset. risk has increased significantly since initial recognition. For Impact on profit or loss An impairment loss in respect of a financial asset measured at financial assets for which credit risk is low, impairment is amortized cost is calculated as the difference between its recognized at an amount equal to twelve months' Warranty period services 270,809 32,452 303,261 carrying amount, and the present value of the estimated future expected credit losses, with the exception of trade debts, cash flows discounted at the original effective interest rate. for which the Group recognises lifetime expected credit Impact on earnings per share Impairment loss in respect of a financial asset measured at fair losses estimated using internal credit risk grading based value is determined by reference to that fair value. All on the Group's historical credit loss experience, adjusted Decrease in earnings per share 1.75 (0.07) 1.68 impairment losses are recognized in profit or loss. An for factors that are specific to debtors, general economic impairment loss is reversed if the reversal can be related conditions, and an assessment for both the current as well 6 SIGNIFICANT ACCOUNTING POLICIES objectively to an event occurring after the impairment loss was as the forecast direction of conditions at the reporting recognized. An impairment loss is reversed only to the extent date, including time value of money where appropriate. The accounting policies set out below have been applied consistently to all periods presented in these financial statements that the financial asset’s carrying amount after the reversal All impairment losses are recognized in profit or loss. An except of the change referred to in note 5. does not exceed the carrying amount that would have been impairment loss is reversed if the reversal can be related determined, net of amortization, if no impairment loss had objectively to an event occurring after the impairment loss 6.1 Property, plant and equipment been recognized. was recognized. An impairment loss is reversed only to the extent that the financial asset’s carrying amount after the 6.1.1 Operating fixed assets reversal does not exceed the carrying amount that would have been determined, net of amortization, if no Operating fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses with the impairment loss had been recognized. exception of land, building and plant and machinery. Land, building and plant and machinery are measured at revalued The Group writes off a financial asset when there is amounts less accumulated depreciation and accumulated impairment losses, if any. Cost comprises purchase price, information indicating that the counter-party is in severe including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, and includes other financial condition and there is no realistic prospect of costs directly attributable to the acquisition or construction, erection and installation. recovery. Any recoveries made post write-off are recognized in profit or loss. Assets' residual values, if significant and their useful lives are reviewed and adjusted, if appropriate, at each reporting date.

Liabilties against assets subject to finance lease / Lease liabilities When significant parts of an item of operating fixed assets have different useful lives, they are recognized as separate items.

Leases in terms of which the Group assumes substantially all At the commencement date of the lease, the Group Major renewals and improvements to operating fixed assets are recognized in the carrying amount if it is probable that the risks and rewards of ownership are classified as finance leases. recognises lease liabilities measured at the present value embodied future economic benefits will flow to the Group and the cost of renewal or improvement can be measured reliably. Assets subject to finance lease are classified as 'operating of lease payments to be made over the lease term. The The cost of the day-to-day servicing of operating fixed assets are recognized in profit or loss as incurred. fixed assets'. On initial recognition, these are measured at lease payments include fixed payments (including in- cost, being an amount equal to the lower of its fair value and substance fixed payments) less any lease incentives The Group recognizes depreciation in profit or loss by applying reducing balance method, with the exception of computer the present value of minimum lease payments. Subsequent to receivable, variable lease payments that depend on an hardware and allied items, which are depreciated using straight line method, over the useful life of each operating fixed asset initial recognition, these are measured at cost less index or a rate, and amounts expected to be paid under using rates specified in note to the financial statements. Depreciation on additions to operating fixed assets is charged from accumulated depreciation and accumulated impairment residual value guarantees. The lease payments also the month in which the item becomes available for use. Depreciation is discontinued from the month in which it is disposed or losses. Depreciation, subsequent expenditure, de- include the exercise price of a purchase option reasonably classified as held for disposal. recognition, and gains and losses on de-recognition are certain to be exercised by the Group and payments of accounted for in accordance with the respective policies for penalties for terminating a lease, if the lease term reflects An operating fixed asset is de-recognized when permanently retired from use. Any gain or loss on disposal of operating fixed operating fixed assets. Liabilities against assets subject to the Group exercising the option to terminate. The variable assets is recognized in profit or loss. finance lease are classified as 'financial liabilities at amortized lease payments that do not depend on an index or a rate cost' ' respectively, however, since they fall outside the scope are recognised as expense in the period on which the Increases in the carrying amounts arising on revaluation of property, plant and equipment are recognised, net of tax, in other of measurement requirements of IFRS 9, these are measured event or condition that triggers the payment occurs. comprehensive income and accumulated in surplus on revaluation of property, plant and equipment in share capital and in accordance with the requirements of IAS 17. On initial In calculating the present value of lease payments, the reserves. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognition, these are measured at cost, being their fair value Group uses if the interest rate implicit in the lease. After the recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other at the date of commencement of lease, less attributable commencement date, the amount of lease liabilities is comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to transaction costs. Subsequent to initial recognition, minimum increased to reflect the accretion of interest and reduced profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to lease payments made under finance leases are apportioned for the lease payments made. In addition, the carrying profit or loss and depreciation based on the asset’s original cost, net of tax, is reclassified from the surplus on revaluation of between the finance charge and the reduction of outstanding amount of lease liabilities is remeasured if there is a property, plant and equipment to accumulated profit. liability. The finance charge is allocated to each period during modification, a change in the lease term, a change in the in- the lease term so as to produce a constant periodic rate of substance fixed lease payments or a change in the 6.1.2 Capital work in progress interest on the remaining balance of the liability. Deposits assessment to purchase the underlying asset. against finance leases, subsequent to initial recognition are Capital work in progress is stated at cost less identified impairment loss, if any, and includes the cost of material, labour and carried at cost. appropriate overheads directly relating to the construction, erection or installation of an item of operating fixed assets. These costs are transferred to operating fixed assets as and when related items become available for intended use. The follwing table summerises the impact of application of new and revised standards, interpretations and amendments effective during the year, on the Group's consolidated financial statements, for the year ended December 31, 2019. 6.2 Intangible assets 6.6.2 Post-employment benefits

6.2.1 Goodwill The Group operates an approved funded contributory provident fund for all its permanent employees who have completed the minimum qualifying period of service as defined under the respective scheme. Equal monthly contributions are made Goodwill represents the excess of the cost of business combination over the acquirer's interest in the net fair value of the both by the Group and the employees at the rate of ten percent of basic salary and cost of living allowance, where applicable, identifiable assets, liabilities and contingent liabilities of the acquiree. This is stated at cost less any accumulated impairment to cover the obligation. Contributions are charged to profit or loss. losses, if any. 6.7 Financial instruments 6.2.2 Technology transfer 6.7.1 Recognition The intangible assets in respect of technology transfer are amortized over the useful life of plant and machinery involved in use of such technology. Amortization of intangible commences when it becomes available for use. A financial instrument is recognized when the Group becomes a party to the contractual provisions of the instrument.

6.2.3 Computer software and ERP 6.7.2 Classification

Computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific The Group classifies its financial assets on the basis of the Group's business model for managing the financial assets and the software. Costs that are directly associated with the production of identifiable and unique software products controlled by contractual cash flow characteristics of the financial asset. Financial liabilities are classified in accordance with the substance the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as of contractual provisions. The Group determines the classification of its financial instruments at initial recognition as follows: intangible assets. These costs are amortized over their estimated useful lives. Amortization of intangible commences when it becomes available for use. (a) Financial assets at amortized cost

6.3 Right-of-use assets These are financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cashflows and the contractual terms of the financial asset give rise on specified dates to cash flows that are The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is solely payments of principal and interest on the principal amount outstanding. available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities (b) Financial assets at fair value through profit or loss recognised, initial direct costs incurred (if any), and lease payments made at or before the commencement date less lease incentives received (if any). Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the These are financial assets which have not been classified as 'financial assets at amortized cost' or as 'financial assets at lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful fair value through other comprehensive income', are mandatorily measured at fair value through profit or loss or for life and the lease term. Right-of-use assets are subject to impairment. which the Group makes an irrevocable election at initial recognition to designate as 'financial asset at fair value through profit or loss' if doing so eliminates or significantly reduces a measurement or recognition inconsistency. 6.4 Stores, spares and loose tools (c) Financial liabilities at amortized cost These are generally held for internal use and are valued at cost. Cost is determined on the basis of moving average except for items in transit, which are valued at invoice price plus related cost incurred up to the reporting date. For items which are These are financial liabilities which are not derivates, financial guarantee contracts, commitments to provide loans at considered obsolete, the carrying amount is written down to nil. Spare parts held for capitalization are classified as property, below-market interest rate, contingent consideration payable to an acquirer in a business combination or financial plant and equipment through capital work in progress. liabilities that arise when transfer of a financial asset does not qualify for derecognition.

6.5 Stock in trade 6.7.3 Measurement

These are valued at lower of cost and net realizable value, with the exception of stock of waste which is valued at net realizable The particular measurement methods adopted are disclosed in individual policy statements associated with each financial value. Cost is determined using the following basis: instrument.

Raw materials Moving average cost 6.7.4 Derecognition Work in process Average manufacturing cost Finished goods Average manufacturing cost A financial asset is derecognized when the Group's contractual rights to the cash flows from the financial assets expire or Stock in transit Invoice price plus related cost incurred up to the reporting date when the Group transfers the financial asset to another party without retaining control of substantially all risks and rewards of the financial asset. A financial liability is derecognized when the Group's obligations specified in the contract expire or a Average manufacturing cost in relation to work in process and finished goods consists of direct material, labour and an discharged or cancelled. appropriate proportion of manufacturing overheads. 6.7.5 Off-setting Net realizable value signifies the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. A financial asset and financial liability is offset and the net amount reported in the statement of financial position if the Group has legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the 6.6 Employee benefits asset and settle the liability simultaneously.

6.6.1 Short-term employee benefits 6.7.6 Regular way purchases or sales of financial assets

The Group recognizes the undiscounted amount of short term employee benefits to be paid in exchange for services Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame rendered by employees as a liability after deducting amount already paid and as an expense in profit or loss unless it is established by regulation or convention in the market place. Regular way purchases or sales of financial assets are included in the cost of inventories or property, plant and equipment as permitted or required by the approved accounting recognized and derecognized on a trade date basis. and reporting standards as applicable in Pakistan. If the amount paid exceeds the undiscounted amount of benefits, the excess is recognized as an asset to the extent that the prepayment would lead to a reduction in future payments or cash 6.8 Ordinary share capital refund. Ordinary share capital is recognized as equity. Transaction costs directly attributable to the issue of ordinary shares are The Group provides for compensated absences of its employees on un-availed balance of leaves in the period in which the recognized as deduction from equity. leaves are earned. 6.9 Preference share capital

Preference share capital is recognized as equity in accordance with the interpretation of the provision of the repealed Companies Ordinance, 1984, including those pertaining to implied classifications of preference shares. 6.2 Intangible assets 6.6.2 Post-employment benefits

6.2.1 Goodwill The Group operates an approved funded contributory provident fund for all its permanent employees who have completed the minimum qualifying period of service as defined under the respective scheme. Equal monthly contributions are made Goodwill represents the excess of the cost of business combination over the acquirer's interest in the net fair value of the both by the Group and the employees at the rate of ten percent of basic salary and cost of living allowance, where applicable, identifiable assets, liabilities and contingent liabilities of the acquiree. This is stated at cost less any accumulated impairment to cover the obligation. Contributions are charged to profit or loss. losses, if any. 6.7 Financial instruments 6.2.2 Technology transfer 6.7.1 Recognition The intangible assets in respect of technology transfer are amortized over the useful life of plant and machinery involved in use of such technology. Amortization of intangible commences when it becomes available for use. A financial instrument is recognized when the Group becomes a party to the contractual provisions of the instrument.

6.2.3 Computer software and ERP 6.7.2 Classification

Computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific The Group classifies its financial assets on the basis of the Group's business model for managing the financial assets and the software. Costs that are directly associated with the production of identifiable and unique software products controlled by contractual cash flow characteristics of the financial asset. Financial liabilities are classified in accordance with the substance the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as of contractual provisions. The Group determines the classification of its financial instruments at initial recognition as follows: intangible assets. These costs are amortized over their estimated useful lives. Amortization of intangible commences when it becomes available for use. (a) Financial assets at amortized cost

6.3 Right-of-use assets These are financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cashflows and the contractual terms of the financial asset give rise on specified dates to cash flows that are The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is solely payments of principal and interest on the principal amount outstanding. available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities (b) Financial assets at fair value through profit or loss recognised, initial direct costs incurred (if any), and lease payments made at or before the commencement date less lease incentives received (if any). Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the These are financial assets which have not been classified as 'financial assets at amortized cost' or as 'financial assets at lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful fair value through other comprehensive income', are mandatorily measured at fair value through profit or loss or for life and the lease term. Right-of-use assets are subject to impairment. which the Group makes an irrevocable election at initial recognition to designate as 'financial asset at fair value through profit or loss' if doing so eliminates or significantly reduces a measurement or recognition inconsistency. 6.4 Stores, spares and loose tools (c) Financial liabilities at amortized cost These are generally held for internal use and are valued at cost. Cost is determined on the basis of moving average except for items in transit, which are valued at invoice price plus related cost incurred up to the reporting date. For items which are These are financial liabilities which are not derivates, financial guarantee contracts, commitments to provide loans at considered obsolete, the carrying amount is written down to nil. Spare parts held for capitalization are classified as property, below-market interest rate, contingent consideration payable to an acquirer in a business combination or financial plant and equipment through capital work in progress. liabilities that arise when transfer of a financial asset does not qualify for derecognition.

6.5 Stock in trade 6.7.3 Measurement

These are valued at lower of cost and net realizable value, with the exception of stock of waste which is valued at net realizable The particular measurement methods adopted are disclosed in individual policy statements associated with each financial value. Cost is determined using the following basis: instrument.

Raw materials Moving average cost 6.7.4 Derecognition Work in process Average manufacturing cost Finished goods Average manufacturing cost A financial asset is derecognized when the Group's contractual rights to the cash flows from the financial assets expire or Stock in transit Invoice price plus related cost incurred up to the reporting date when the Group transfers the financial asset to another party without retaining control of substantially all risks and rewards of the financial asset. A financial liability is derecognized when the Group's obligations specified in the contract expire or a Average manufacturing cost in relation to work in process and finished goods consists of direct material, labour and an discharged or cancelled. appropriate proportion of manufacturing overheads. 6.7.5 Off-setting Net realizable value signifies the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. A financial asset and financial liability is offset and the net amount reported in the statement of financial position if the Group has legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the 6.6 Employee benefits asset and settle the liability simultaneously.

6.6.1 Short-term employee benefits 6.7.6 Regular way purchases or sales of financial assets

The Group recognizes the undiscounted amount of short term employee benefits to be paid in exchange for services Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame rendered by employees as a liability after deducting amount already paid and as an expense in profit or loss unless it is established by regulation or convention in the market place. Regular way purchases or sales of financial assets are included in the cost of inventories or property, plant and equipment as permitted or required by the approved accounting recognized and derecognized on a trade date basis. and reporting standards as applicable in Pakistan. If the amount paid exceeds the undiscounted amount of benefits, the excess is recognized as an asset to the extent that the prepayment would lead to a reduction in future payments or cash 6.8 Ordinary share capital refund. Ordinary share capital is recognized as equity. Transaction costs directly attributable to the issue of ordinary shares are The Group provides for compensated absences of its employees on un-availed balance of leaves in the period in which the recognized as deduction from equity. leaves are earned. 6.9 Preference share capital

Preference share capital is recognized as equity in accordance with the interpretation of the provision of the repealed Companies Ordinance, 1984, including those pertaining to implied classifications of preference shares. 6.10 Loans and borrowings 6.17 Trade and other receivables

Loans and borrowings are classified as 'financial liabilities at amortized cost'. On initial recognition, these are measured at 6.17.1 Financial assets cost, being fair value at the date the liability is incurred, less attributable transaction costs. Subsequent to initial recognition, these are measured at amortized cost with any difference between cost and value at maturity recognized in the profit or loss These are classified as 'financial assets at amortized cost'. On initial recognition, these are measured at fair value at the date of over the period of the borrowings on an effective interest basis. transaction, plus attributable transaction costs, except for trade debts that do not have a significant financing component, which are measured at undiscounted invoice price. Subsequent to initial recognition, these are measured at amortized cost 6.11 Investments in equity securities using the effective interest method, with interest recognized in profit or loss. 6.11.1 Investments in associates 6.17.2 Non-financial assets Investments in associates are accounted for using the equity method of accounting. Under the equity method, investments in These, both on initial recognition and subsequently, are measured at cost. associates are carried in the consolidated statement of financial position at cost as adjusted for post acquisition changes in the Group's share of net assets of the associate, less any impairment in the value of investment. Losses of an associate in 6.18 Contracts with customers excess of the Group's interest in that associate (which includes any long term interest that, in substance, form part of the Group's net investment in the associate) are recognized only to the extent that the Group has incurred legal or constructive 6.18.1 Revenue obligation or made payment on behalf of the associate. Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue 6.11.2 Investments in other quoted equity securities from a contract with customer when the Group satisfies a specified in that contract. The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant Investments in quoted equity securities are classified as 'financial assets at fair value through profit or loss'. On initial payment terms, and the related revenue recognition policies. recognition, these are measured at fair value on the date of acquisition. Subsequent to initial recognition, these are measured at fair value. Changes in fair value are recognized in profit or loss. Gains and losses on de-recognition are recognized in profit Nature and timing of satisfaction of performance or loss. Dividend income is recognized in profit or loss when right to receive payment is established. Product/service obligations, including significant payment terms Revenue recognition policies 6.12 Lease liabilities Home appliances Performance obligation are satisfied when customers obtain Revenue is recognised when the At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease control of home appliances when the these are delivered to goods are delivered and have payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed Refrigerators, deep and have been accepted at their premises. Invoices are been accepted by customers at payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts freezers, air generated at that point in time. Invoices are usually payable their premises. expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase conditioners, within a period ranging from 30 days to 90 days, except for option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term microwave ovens, retail sales which are payable at the time of purchase. reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate washing machines, Discounts are allowed based on the payment terms and are recognised as expense in the period on which the event or condition that triggers the payment occurs. water dispensers and volume of sales. There are no customer loyalty programs. other home These contracts do not permit the customer to return any item. In calculating the present value of lease payments, the Group uses if the interest rate implicit in the lease. After the appliances. However, there are warranty provisions in place which provide commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease for the Group's obligations for service/replacement of payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the products where these do not meet the agreed specifications or lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying otherwise do not perform as guaranteed by the Group. asset. Electrical capital Performance obligation are satisfied when customers obtain Revenue is recognised when the 6.13 Short-term leases goods control of electrical capital goods when the these are goods are delivered and have delivered to and have been accepted at their premises. been accepted by customers at The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease Transformers, Invoices are generated at that point in time. Invoices, where their premises. term of twelve months or less from the commencement date and do not contain a purchase option). Lease payments on switchgears, energy customer is the Federal/Provincial Government, are payable in short-term leases are recognised as expense on a straight-line basis over the lease term. meters accordance with the tender documents, usually upto 90 days. For private customers, invoices are paid for in advance. These 6.14 Ijarah transactions products do not carry any discounts. There are no customer loyalty programs. These contracts do not permit the customer Ujrah payments under an Ijarah are recognized as an expense in the profit or loss on a straight-line basis over the Ijarah terms to return any item. However, there are warranty provisions in unless another systematic basis are representative of the time pattern of the user's benefit, even if the payments are not on place which provide for the Group's obligations for that basis. service/replacement of products where these do not meet the agreed specifications or otherwise do not perform as 6.15 Trade and other payables guaranteed by the Group.

6.15.1 Financial liabilities Construction contracts The Group contructs power grid stations for Government as Revenue is recognised over time well as private customers. Pe rformance obligations are using the output method based on These are classified as 'financial liabilities at amortized cost'. On initial recognition, these are measured at cost, being their fair Engineering, satisfied over time by reference to stage of completion of measurements of the value of value at the date the liability is incurred, less attributable transaction costs. Subsequent to initial recognition, these are procurement and contract activity at the balance sheet date. Invoices are issued services transferred to date, measured at amortized cost using the effective interest method, with interest recognized in profit or loss. construction services according to contractual terms and are usually payable within a relative to the remaining services period ranging from 30 days to 90 days, except for those promised under the contract. 6.15.2 Non-financial liabilities contracts for which transaction price has been received in advance. A percentage of transaction price is retained by These, both on initial recognition and subsequently, are measured at cost. Government customers as 'retention money' from payments to the Group, which is released on expiry of an agreed period 6.16 Provisions and contingencies after completion of contract activity.] Uninvoiced amounts are presented as contract assets. Provisions are recognized when the Group has a legal and constructive obligation as a result of past events and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provision is recognized at an amount that is the best estimate of the expenditure required to settle the present obligation at the reporting date. Where outflow of resources embodying economic benefits is not probable, or where a reliable estimate of the amount of obligation cannot be made, a contingent liability is disclosed, unless the possibility of outflow is remote. 6.10 Loans and borrowings 6.17 Trade and other receivables

Loans and borrowings are classified as 'financial liabilities at amortized cost'. On initial recognition, these are measured at 6.17.1 Financial assets cost, being fair value at the date the liability is incurred, less attributable transaction costs. Subsequent to initial recognition, these are measured at amortized cost with any difference between cost and value at maturity recognized in the profit or loss These are classified as 'financial assets at amortized cost'. On initial recognition, these are measured at fair value at the date of over the period of the borrowings on an effective interest basis. transaction, plus attributable transaction costs, except for trade debts that do not have a significant financing component, which are measured at undiscounted invoice price. Subsequent to initial recognition, these are measured at amortized cost 6.11 Investments in equity securities using the effective interest method, with interest recognized in profit or loss. 6.11.1 Investments in associates 6.17.2 Non-financial assets Investments in associates are accounted for using the equity method of accounting. Under the equity method, investments in These, both on initial recognition and subsequently, are measured at cost. associates are carried in the consolidated statement of financial position at cost as adjusted for post acquisition changes in the Group's share of net assets of the associate, less any impairment in the value of investment. Losses of an associate in 6.18 Contracts with customers excess of the Group's interest in that associate (which includes any long term interest that, in substance, form part of the Group's net investment in the associate) are recognized only to the extent that the Group has incurred legal or constructive 6.18.1 Revenue obligation or made payment on behalf of the associate. Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue 6.11.2 Investments in other quoted equity securities from a contract with customer when the Group satisfies a specified in that contract. The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant Investments in quoted equity securities are classified as 'financial assets at fair value through profit or loss'. On initial payment terms, and the related revenue recognition policies. recognition, these are measured at fair value on the date of acquisition. Subsequent to initial recognition, these are measured at fair value. Changes in fair value are recognized in profit or loss. Gains and losses on de-recognition are recognized in profit Nature and timing of satisfaction of performance or loss. Dividend income is recognized in profit or loss when right to receive payment is established. Product/service obligations, including significant payment terms Revenue recognition policies 6.12 Lease liabilities Home appliances Performance obligation are satisfied when customers obtain Revenue is recognised when the At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease control of home appliances when the these are delivered to goods are delivered and have payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed Refrigerators, deep and have been accepted at their premises. Invoices are been accepted by customers at payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts freezers, air generated at that point in time. Invoices are usually payable their premises. expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase conditioners, within a period ranging from 30 days to 90 days, except for option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term microwave ovens, retail sales which are payable at the time of purchase. reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate washing machines, Discounts are allowed based on the payment terms and are recognised as expense in the period on which the event or condition that triggers the payment occurs. water dispensers and volume of sales. There are no customer loyalty programs. other home These contracts do not permit the customer to return any item. In calculating the present value of lease payments, the Group uses if the interest rate implicit in the lease. After the appliances. However, there are warranty provisions in place which provide commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease for the Group's obligations for service/replacement of payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the products where these do not meet the agreed specifications or lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying otherwise do not perform as guaranteed by the Group. asset. Electrical capital Performance obligation are satisfied when customers obtain Revenue is recognised when the 6.13 Short-term leases goods control of electrical capital goods when the these are goods are delivered and have delivered to and have been accepted at their premises. been accepted by customers at The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease Transformers, Invoices are generated at that point in time. Invoices, where their premises. term of twelve months or less from the commencement date and do not contain a purchase option). Lease payments on switchgears, energy customer is the Federal/Provincial Government, are payable in short-term leases are recognised as expense on a straight-line basis over the lease term. meters accordance with the tender documents, usually upto 90 days. For private customers, invoices are paid for in advance. These 6.14 Ijarah transactions products do not carry any discounts. There are no customer loyalty programs. These contracts do not permit the customer Ujrah payments under an Ijarah are recognized as an expense in the profit or loss on a straight-line basis over the Ijarah terms to return any item. However, there are warranty provisions in unless another systematic basis are representative of the time pattern of the user's benefit, even if the payments are not on place which provide for the Group's obligations for that basis. service/replacement of products where these do not meet the agreed specifications or otherwise do not perform as 6.15 Trade and other payables guaranteed by the Group.

6.15.1 Financial liabilities Construction contracts The Group contructs power grid stations for Government as Revenue is recognised over time well as private customers. Pe rformance obligations are using the output method based on These are classified as 'financial liabilities at amortized cost'. On initial recognition, these are measured at cost, being their fair Engineering, satisfied over time by reference to stage of completion of measurements of the value of value at the date the liability is incurred, less attributable transaction costs. Subsequent to initial recognition, these are procurement and contract activity at the balance sheet date. Invoices are issued services transferred to date, measured at amortized cost using the effective interest method, with interest recognized in profit or loss. construction services according to contractual terms and are usually payable within a relative to the remaining services period ranging from 30 days to 90 days, except for those promised under the contract. 6.15.2 Non-financial liabilities contracts for which transaction price has been received in advance. A percentage of transaction price is retained by These, both on initial recognition and subsequently, are measured at cost. Government customers as 'retention money' from payments to the Group, which is released on expiry of an agreed period 6.16 Provisions and contingencies after completion of contract activity.] Uninvoiced amounts are presented as contract assets. Provisions are recognized when the Group has a legal and constructive obligation as a result of past events and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provision is recognized at an amount that is the best estimate of the expenditure required to settle the present obligation at the reporting date. Where outflow of resources embodying economic benefits is not probable, or where a reliable estimate of the amount of obligation cannot be made, a contingent liability is disclosed, unless the possibility of outflow is remote. 6.18.2 Contract assets Diluted EPS is calculated by adjusting basic EPS by the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares and post-tax effect of changes in profit or loss A contract asset is the right to consideration in exchange for goods or services transferred to the customer. The Group attributable to ordinary shareholders of the Group that would result from conversion of all dilutive potential ordinary shares recognizes a contract asset for the earned consideration that is conditional if the Group performs by transferring goods or into ordinary shares. services to a customer before the customer pays consideration or before payment is due. 6.24 Cash and cash equivalents 6.18.3 Contract liabilities Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand and cash at banks. Interest income A contract liability is the obligation to transfer goods or services to a customer for which the Group has received on cash and cash equivalents is recognized using effective interest method. consideration from the customer. A contract liability is recognized at earlier of when the payment is made or the payment is due if a customer pays consideration before the Group transfers goods or services to the customer. 6.25 Foreign currency transactions and balances

6.18.4 Warranty obligations Transactions in foreign currency are translated to the functional currency of the Group using exchange rate prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency The Group accounts for its warranty obligations when the underlying product or service is sold or rendered. The provision is at exchange rate prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign currency that based on historical warranty data and weighing-in various possible outcomes against their associated probabilities. are measured at fair value are translated to the functional currency at exchange rate prevailing at the date the fair value is determined. Non-monetary assets and liabilities denominated in foreign currency that are measured at historical cost are 6.19 Comprehensive income translated to functional currency at exchange rate prevailing at the date of initial recognition. Any gain or loss arising on translation of foreign currency transactions and balances is recognized in profit or loss. Comprehensive income is the change in equity resulting from transactions and other events, other than changes resulting from transactions with shareholders in their capacity as shareholders. Total comprehensive income comprises all 6.26 Impairment components of profit or loss and other comprehensive income ['OCI']. OCI comprises items of income and expense, including reclassification adjustments, that are not recognized in profit or loss as required or permitted by approved 6.26.1 Financial assets accounting and reporting standards as applicable in Pakistan, and is presented in 'statement of other comprehensive income'. The Group recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date of initial recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in credit 6.20 Borrowing costs risk since initial recognition of the respective financial asset.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that Impairment is recognized at an amount equal to lifetime expected credit losses for financial assets for which credit risk has necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, increased significantly since initial recognition. For financial assets for which credit risk is low, impairment is recognized at an until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the amount equal to twelve months' expected credit losses, with the exception of trade debts, for which the Group recognises temporary investment of specific borrowings pending their expenditure on qualifying asset is deducted from the borrowing lifetime expected credit losses estimated using internal credit risk grading based on the Group's historical credit loss costs eligible for capitalization. All other borrowing costs are recognized in profit or loss as incurred. experience, adjusted for factors that are specific to debtors, general economic conditions, and an assessment for both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate. 6.21 Income tax All impairment losses are recognized in profit or loss. An impairment loss is reversed if the reversal can be related objectively Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in profit or loss except to the to an event occurring after the impairment loss was recognized. An impairment loss is reversed only to the extent that the extent that it relates to items recognized directly in other comprehensive income, in which case it is recognized in other financial asset’s carrying amount after the reversal does not exceed the carrying amount that would have been determined, comprehensive income. net of amortization, if no impairment loss had been recognized.

6.21.1 Current taxation The Group writes off a financial asset when there is information indicating that the counter-party is in severe financial condition and there is no realistic prospect of recovery. Any recoveries made post write-off are recognized in profit or loss. Current tax is the amount of tax payable on taxable income for the year and any adjustment to the tax payable in respect of previous years. Provision for current tax is based on current rates of taxation in Pakistan after taking into account tax credits, 6.26.2 Non-financial assets rebates and exemptions available, if any. The amount of unpaid income tax in respect of the current or prior periods is recognized as a liability. Any excess paid over what is due in respect of the current or prior periods is recognized as an asset. The carrying amount of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s 6.21.2 Deferred taxation recoverable amount is estimated. The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present Deferred tax is accounted for using the' balance sheet approach' providing for temporary differences between the carrying values using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. In this regard, the to the asset or cash generating unit. effects on deferred taxation of the portion of income that is subject to final tax regime is also considered in accordance with the treatment prescribed by The Institute of Chartered Accountants of Pakistan. Deferred tax is measured at rates that are An impairment loss is recognized if the carrying amount of the asset or its cash generating unit exceeds its estimated expected to be applied to the temporary differences when they reverse, based on laws that have been enacted or recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash substantively enacted by the reporting date. A deferred tax liability is recognized for all taxable temporary differences. A generating units are allocated to reduce the carrying amounts of the assets in a unit on a pro rata basis. Impairment losses deferred tax asset is recognized for deductible temporary differences to the extent that future taxable profits will be available recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer against which temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced exists. An impairment loss is reversed if there has been a change in the estimates used in determining the recoverable to the extent that it is no longer probable that the related tax benefit will be realized. amount. An impairment loss is reversed only to that extent that the asset’s carrying amount after the reversal does not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment loss had been 6.22 Government grants recognized.

Government grants that compensate the Group for expenses or losses already incurred are recognized in profit or loss in the 6.27 Dividend distribution to ordinary shareholders period in which these are received and are deducted in reporting the relevant expenses or losses. Grants relating to property, plant and equipment are recognized as deferred income and an amount equivalent to depreciation charged on such assets Dividend to ordinary shareholders is recognized as a deduction from accumulated profit in statement of changes in equity is transferred to profit or loss. and as a liability, to the extent it is unclaimed/unpaid, in the Group’s financial statements in the year in which the dividends are approved by the Group’s shareholders. 6.23 Earnings per share ['EPS'] 6.28 Basis of allocation of common expenses Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year. Distribution, administrative and finance cost are allocated to PEL Marketing (Private) Limited ['PMPL'] on the basis of percentage of resources used by PMPL, under the interservices agreement between the PEL and PMPL. 6.18.2 Contract assets Diluted EPS is calculated by adjusting basic EPS by the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares and post-tax effect of changes in profit or loss A contract asset is the right to consideration in exchange for goods or services transferred to the customer. The Group attributable to ordinary shareholders of the Group that would result from conversion of all dilutive potential ordinary shares recognizes a contract asset for the earned consideration that is conditional if the Group performs by transferring goods or into ordinary shares. services to a customer before the customer pays consideration or before payment is due. 6.24 Cash and cash equivalents 6.18.3 Contract liabilities Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand and cash at banks. Interest income A contract liability is the obligation to transfer goods or services to a customer for which the Group has received on cash and cash equivalents is recognized using effective interest method. consideration from the customer. A contract liability is recognized at earlier of when the payment is made or the payment is due if a customer pays consideration before the Group transfers goods or services to the customer. 6.25 Foreign currency transactions and balances

6.18.4 Warranty obligations Transactions in foreign currency are translated to the functional currency of the Group using exchange rate prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency The Group accounts for its warranty obligations when the underlying product or service is sold or rendered. The provision is at exchange rate prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign currency that based on historical warranty data and weighing-in various possible outcomes against their associated probabilities. are measured at fair value are translated to the functional currency at exchange rate prevailing at the date the fair value is determined. Non-monetary assets and liabilities denominated in foreign currency that are measured at historical cost are 6.19 Comprehensive income translated to functional currency at exchange rate prevailing at the date of initial recognition. Any gain or loss arising on translation of foreign currency transactions and balances is recognized in profit or loss. Comprehensive income is the change in equity resulting from transactions and other events, other than changes resulting from transactions with shareholders in their capacity as shareholders. Total comprehensive income comprises all 6.26 Impairment components of profit or loss and other comprehensive income ['OCI']. OCI comprises items of income and expense, including reclassification adjustments, that are not recognized in profit or loss as required or permitted by approved 6.26.1 Financial assets accounting and reporting standards as applicable in Pakistan, and is presented in 'statement of other comprehensive income'. The Group recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date of initial recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in credit 6.20 Borrowing costs risk since initial recognition of the respective financial asset.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that Impairment is recognized at an amount equal to lifetime expected credit losses for financial assets for which credit risk has necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, increased significantly since initial recognition. For financial assets for which credit risk is low, impairment is recognized at an until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the amount equal to twelve months' expected credit losses, with the exception of trade debts, for which the Group recognises temporary investment of specific borrowings pending their expenditure on qualifying asset is deducted from the borrowing lifetime expected credit losses estimated using internal credit risk grading based on the Group's historical credit loss costs eligible for capitalization. All other borrowing costs are recognized in profit or loss as incurred. experience, adjusted for factors that are specific to debtors, general economic conditions, and an assessment for both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate. 6.21 Income tax All impairment losses are recognized in profit or loss. An impairment loss is reversed if the reversal can be related objectively Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in profit or loss except to the to an event occurring after the impairment loss was recognized. An impairment loss is reversed only to the extent that the extent that it relates to items recognized directly in other comprehensive income, in which case it is recognized in other financial asset’s carrying amount after the reversal does not exceed the carrying amount that would have been determined, comprehensive income. net of amortization, if no impairment loss had been recognized.

6.21.1 Current taxation The Group writes off a financial asset when there is information indicating that the counter-party is in severe financial condition and there is no realistic prospect of recovery. Any recoveries made post write-off are recognized in profit or loss. Current tax is the amount of tax payable on taxable income for the year and any adjustment to the tax payable in respect of previous years. Provision for current tax is based on current rates of taxation in Pakistan after taking into account tax credits, 6.26.2 Non-financial assets rebates and exemptions available, if any. The amount of unpaid income tax in respect of the current or prior periods is recognized as a liability. Any excess paid over what is due in respect of the current or prior periods is recognized as an asset. The carrying amount of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s 6.21.2 Deferred taxation recoverable amount is estimated. The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present Deferred tax is accounted for using the' balance sheet approach' providing for temporary differences between the carrying values using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. In this regard, the to the asset or cash generating unit. effects on deferred taxation of the portion of income that is subject to final tax regime is also considered in accordance with the treatment prescribed by The Institute of Chartered Accountants of Pakistan. Deferred tax is measured at rates that are An impairment loss is recognized if the carrying amount of the asset or its cash generating unit exceeds its estimated expected to be applied to the temporary differences when they reverse, based on laws that have been enacted or recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash substantively enacted by the reporting date. A deferred tax liability is recognized for all taxable temporary differences. A generating units are allocated to reduce the carrying amounts of the assets in a unit on a pro rata basis. Impairment losses deferred tax asset is recognized for deductible temporary differences to the extent that future taxable profits will be available recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer against which temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced exists. An impairment loss is reversed if there has been a change in the estimates used in determining the recoverable to the extent that it is no longer probable that the related tax benefit will be realized. amount. An impairment loss is reversed only to that extent that the asset’s carrying amount after the reversal does not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment loss had been 6.22 Government grants recognized.

Government grants that compensate the Group for expenses or losses already incurred are recognized in profit or loss in the 6.27 Dividend distribution to ordinary shareholders period in which these are received and are deducted in reporting the relevant expenses or losses. Grants relating to property, plant and equipment are recognized as deferred income and an amount equivalent to depreciation charged on such assets Dividend to ordinary shareholders is recognized as a deduction from accumulated profit in statement of changes in equity is transferred to profit or loss. and as a liability, to the extent it is unclaimed/unpaid, in the Group’s financial statements in the year in which the dividends are approved by the Group’s shareholders. 6.23 Earnings per share ['EPS'] 6.28 Basis of allocation of common expenses Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year. Distribution, administrative and finance cost are allocated to PEL Marketing (Private) Limited ['PMPL'] on the basis of percentage of resources used by PMPL, under the interservices agreement between the PEL and PMPL. 6.29 Segment reporting 8.1.2 Re-profiling of preference shares

Segment reporting is based on the operating segments that are reported in the manner consistent with internal reporting of PEL offered re-profiling of preference shares to investors, who did not convert their preference shares into ordinary shares in the Group. An operating segment is a component of the Group that engages in business activities from which it may earn response to the conversion notices issued by PEL.The investors to the instrument had, in principle, agreed to the re-profiling revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other term sheet and commercial terms and conditions therein. Further, SECP had allowed PEL to proceed with the re-profiling components. An operating segment’s operating results are reviewed regularly by the Chief Executive Officer to make subject to fulfillment of legal requirements. The legal documentation was prepared and circulated amongst the concerned decisions about resources to be allocated to the segment and assess its performance and for which discrete financial investors which was endorsed by the said investors except for National Bank of Pakistan, as a result of which the original time information is available. frame for reprofiling has lapsed. PEL is in the process of finalising another reprofiling exercise based on mutual agreement to be made amongst the existing investors. Segment results that are reported to the Chief Executive Officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly other operating income and expenses, 8.1.3 Accumulated preference dividend share of profit/(loss) of associates, finance costs, and provision for taxes. As at reporting date an amount of approximately Rs. 427.098 million (2018: Rs. 384.388 million) has been accumulated on Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment. The account of preference dividend which is payable if and when declared by the Board, to be appropriated out of the business segments are engaged in providing products or services which are subject to risks and rewards which differ from distributable profits for that year. In case the preference dividend continues to be accumulated it would be settled at the time the risk and rewards of other segments. of exercising the redemption or conversion option in accordance with the under process reprofiling exercise.

As per the opinion of the Group's legal counsel, the provision of cumulative dividend at 9.5% p.a. will prevail on account of 7 AUTHORIZED CAPITAL preference dividend, as the approval process of the revised terms of reprofiling from different quarters is not yet complete.

2019 2018 2019 2018 9 CAPITAL RESERVE No. of shares No. of shares Rupees '000 Rupees '000 This represents premium on issue of right ordinary shares recognized under Section 83(1) of the repealed Companies Ordinance, 1984. 500,000,000 500,000,000 Ordinary shares of Rs. 10 each 5,000,000 5,000,000 2019 2018 62,500,000 62,500,000 'A' class preference shares of Rs. 10 each 625,000 625,000 Rupees '000 Rupees '000 37,500,000 37,500,000 'B' class preference shares of Rs. 10 each 375,000 375,000

100,000,000 100,000,000 1,000,000 1,000,000 10 SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT 600,000,000 600,000,000 6,000,000 6,000,000 As at beginning of the year 6,579,049 4,274,019 8 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL Surplus recognized during the year Surplus for the year - 3,045,215 2019 2018 2019 2018 Deferred taxation - (672,091) No. of shares No. of shares Rupees '000 Rupees '000 - 2,373,124 Ordinary shares of Rs. 10 each Incremental depreciation transferred to accumulated profits Incremental depreciation for the year (716,624) (280,450) 372,751,051 372,751,051 Issued for cash 3,727,511 3,727,511 Deferred taxation 187,960 80,626 Issued for other than cash: (528,664) (199,824) 137,500 137,500 - against machinery 1,375 1,375 Other adjustments 408,273 408,273 - against acquisition of PEL Appliances Limited 4,083 4,083 Deferred tax adjustment attributable to changes in proportion 6,040,820 6,040,820 - against conversion of preference shares 60,408 60,408 of income taxable under final tax regime (26,753) 79,462 118,343,841 118,343,841 - as fully paid bonus shares 1,183,439 1,183,439 Deferred tax adjustment attributable to changes in tax rates - 52,268 497,681,485 497,681,485 4,976,816 4,976,816 (26,753) 131,730 'A' class preference shares of Rs. 10 each As at end of the year 6,023,632 6,579,049 44,957,592 44,957,592 Issued for cash 449,576 449,576 542,639,077 542,639,077 5,426,392 5,426,392

8.1 'A' class preference shares

8.1.1 Current status of original issue

PEL, in the December 2004, issued 'A' class preference shares to various institutional investors amounting to Rs. 605 million against authorized share capital of this class amounting to Rs. 625 million. In Januray 2010, PEL sent out notices to all preference shareholders seeking conversion of outstanding preference shares into ordinary shares of PEL in accordance with the option available to the investors under the original terms of the issue. As at the reporting date outstanding balance of preference shares amounts to Rs. 449.58 million representing investors who did not opt to convert their holdings into the ordinary shares of PEL. Subsequently, PEL offered re-profiling of preference shares to these remaining investors. See note 8.1.2.

The Securities and Exchange Commission of Pakistan ['SECP'] issued order to Pakistan Stock Exchange Limited ['the Exchange'] dated February 6, 2009 for delisting of these preference shares. However, the Company took up the matter with the honorable Lahore High Court which, through order dated October 10, 2017, accepted the appeal of PEL and set aside the SECP order and the appellate order. 6.29 Segment reporting 8.1.2 Re-profiling of preference shares

Segment reporting is based on the operating segments that are reported in the manner consistent with internal reporting of PEL offered re-profiling of preference shares to investors, who did not convert their preference shares into ordinary shares in the Group. An operating segment is a component of the Group that engages in business activities from which it may earn response to the conversion notices issued by PEL.The investors to the instrument had, in principle, agreed to the re-profiling revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other term sheet and commercial terms and conditions therein. Further, SECP had allowed PEL to proceed with the re-profiling components. An operating segment’s operating results are reviewed regularly by the Chief Executive Officer to make subject to fulfillment of legal requirements. The legal documentation was prepared and circulated amongst the concerned decisions about resources to be allocated to the segment and assess its performance and for which discrete financial investors which was endorsed by the said investors except for National Bank of Pakistan, as a result of which the original time information is available. frame for reprofiling has lapsed. PEL is in the process of finalising another reprofiling exercise based on mutual agreement to be made amongst the existing investors. Segment results that are reported to the Chief Executive Officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly other operating income and expenses, 8.1.3 Accumulated preference dividend share of profit/(loss) of associates, finance costs, and provision for taxes. As at reporting date an amount of approximately Rs. 427.098 million (2018: Rs. 384.388 million) has been accumulated on Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment. The account of preference dividend which is payable if and when declared by the Board, to be appropriated out of the business segments are engaged in providing products or services which are subject to risks and rewards which differ from distributable profits for that year. In case the preference dividend continues to be accumulated it would be settled at the time the risk and rewards of other segments. of exercising the redemption or conversion option in accordance with the under process reprofiling exercise.

As per the opinion of the Group's legal counsel, the provision of cumulative dividend at 9.5% p.a. will prevail on account of 7 AUTHORIZED CAPITAL preference dividend, as the approval process of the revised terms of reprofiling from different quarters is not yet complete.

2019 2018 2019 2018 9 CAPITAL RESERVE No. of shares No. of shares Rupees '000 Rupees '000 This represents premium on issue of right ordinary shares recognized under Section 83(1) of the repealed Companies Ordinance, 1984. 500,000,000 500,000,000 Ordinary shares of Rs. 10 each 5,000,000 5,000,000 2019 2018 62,500,000 62,500,000 'A' class preference shares of Rs. 10 each 625,000 625,000 Rupees '000 Rupees '000 37,500,000 37,500,000 'B' class preference shares of Rs. 10 each 375,000 375,000

100,000,000 100,000,000 1,000,000 1,000,000 10 SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT 600,000,000 600,000,000 6,000,000 6,000,000 As at beginning of the year 6,579,049 4,274,019 8 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL Surplus recognized during the year Surplus for the year - 3,045,215 2019 2018 2019 2018 Deferred taxation - (672,091) No. of shares No. of shares Rupees '000 Rupees '000 - 2,373,124 Ordinary shares of Rs. 10 each Incremental depreciation transferred to accumulated profits Incremental depreciation for the year (716,624) (280,450) 372,751,051 372,751,051 Issued for cash 3,727,511 3,727,511 Deferred taxation 187,960 80,626 Issued for other than cash: (528,664) (199,824) 137,500 137,500 - against machinery 1,375 1,375 Other adjustments 408,273 408,273 - against acquisition of PEL Appliances Limited 4,083 4,083 Deferred tax adjustment attributable to changes in proportion 6,040,820 6,040,820 - against conversion of preference shares 60,408 60,408 of income taxable under final tax regime (26,753) 79,462 118,343,841 118,343,841 - as fully paid bonus shares 1,183,439 1,183,439 Deferred tax adjustment attributable to changes in tax rates - 52,268 497,681,485 497,681,485 4,976,816 4,976,816 (26,753) 131,730 'A' class preference shares of Rs. 10 each As at end of the year 6,023,632 6,579,049 44,957,592 44,957,592 Issued for cash 449,576 449,576 542,639,077 542,639,077 5,426,392 5,426,392

8.1 'A' class preference shares

8.1.1 Current status of original issue

PEL, in the December 2004, issued 'A' class preference shares to various institutional investors amounting to Rs. 605 million against authorized share capital of this class amounting to Rs. 625 million. In Januray 2010, PEL sent out notices to all preference shareholders seeking conversion of outstanding preference shares into ordinary shares of PEL in accordance with the option available to the investors under the original terms of the issue. As at the reporting date outstanding balance of preference shares amounts to Rs. 449.58 million representing investors who did not opt to convert their holdings into the ordinary shares of PEL. Subsequently, PEL offered re-profiling of preference shares to these remaining investors. See note 8.1.2.

The Securities and Exchange Commission of Pakistan ['SECP'] issued order to Pakistan Stock Exchange Limited ['the Exchange'] dated February 6, 2009 for delisting of these preference shares. However, the Company took up the matter with the honorable Lahore High Court which, through order dated October 10, 2017, accepted the appeal of PEL and set aside the SECP order and the appellate order. 11 REDEEMABLE CAPITAL Note 2019 2018 Rupees '000 Rupees '000 These represent interest/markup/profit based debt securities issued to institutional and other investors. The details are as follows: 13 LEASE LIABILITIES

Description 2019 2018 Pricing Security Arrangements and repayment Rupees '000 Rupees '000 Present value of minimum lease payments 13.1 & 13.2 241,094 102,368

Shariah compliant Current portion presented under current liabilities 13.1 & 13.2 (103,708) (42,590) Sukuk Funds - 101,875 Three months KIBOR plus 1% Charge on present and These were issued for the purpose of refinance of existing machinery with per annum (2018: Three future operating fixed diminishing musharaka facility. 137,386 59,778 months KIBOR plus 1% per assets of PEL. Later, PEL entered into restructuring arrangement, whereby, the outstanding annum) subject to floor and principal was deferred till June 2015 with the outstanding liability payable in cap of 8% and 16% sixteen equal quarterly installments commencing from June 2015. The Group respectively. has fully redeemed these Sukuk Funds during the year. 13.1 These represent vehicles and machinery acquired under finance lease arrangements. The leases are priced at rates ranging Total - 101,875 from three months KIBOR to six months KIBOR plus 1.5% to 3% per annum (2018: six months to one year KIBOR plus 1.5% to Current portion presented 4.5% per annum). Lease rentals are payable monthly over a tenor ranging from 3 to 4 years. Under the terms of agreement, under current liabilities - (101,875) taxes, repairs, replacements and insurance costs in respect of assets subject to finance lease are borne by the Group. The Group also has the option to acquire these assets at the end of their respective lease terms by adjusting the deposit amount - - against the residual value of the asset and intends to exercise the option. 12 LONG TERM FINANCES 13.2The amount of future payments under the finance lease arrangements and the period in which these payments will become due are as follows: These represent long term finances utilized under interest/markup/profit arrangements from banking companies and financial institutions. The details are as follows:

Description 2019 2018 Pricing Security Arrangements and repayment Note 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Shariah compliant Diminishing Musharakah 642,857 750,000 Three months KIBOR plus 1% Charge over operating The finance has been obtained from Faysal Bank Limited for the purpose of per annum (2018: Three fixed assets of the PEL balancing modernization and replacement requirements. The finance is Not later than one year 133,420 50,351 months KIBOR plus 1% per and personal repayable in fourteen equal quarterly installments commencing from August annum). guarantees of 2019. Later than one year but not later than five years 152,359 64,573 sponsoring directors of the PEL. Total future minimum lease payments 285,779 114,924 Finance charge allocated to future periods (44,685) (12,556) Diminishing Musharakah 1,000,000 - Three months KIBOR plus Charge over present The finance has been obtained from Faysal Bank Limited for the purpose of 1.5% per annum. and futur e fixed assets working capital rquirement and for construction of washing machine unit and of PEL and personal warehouse/godown. The finance is repayable in fifteen equal quaterly Present value of future minimum lease payments 241,094 102,368 guarantees of installments commencing from February 2020. sponsoring directors of Not later than one year 19 (103,708) (42,590) Interest based arrangement PEL. Later than one year but not later than five years 137,386 59,778 Term Finance 208,333 375,000 Three months KIBOR plus Charge over present The finance has been obtained from Pak Oman InvestmentCompany Limited for 3.8% per annum (2018:Three and future current assets the purpose of financing capital expenditure. The finance is repayable in twelve months KIBOR plus 3.8% per of PEL, mortgage of the equal quarterly installments commencing from March 2018. annum). PEL's land and building. 14 WARRANTY OBLIGATIONS

Term Finance 1,071,429 1,928,571 Three months KIBOR plus Charge over operating The finance has been obtained from Bank Alfalah Limited for the purpose of 1.25% per annum (2018: fixed assets of the PEL financing the repayment of existing long term loans of the PEL. The finance is This represents provision for warranties related to goods sold during the current and previous years. The Group expects to Three months KIBOR plus and personal repayable in fourteen equal quarterly installments commencing from December 1.25% per annum). guarantees of 2017. settle majority of the liability over the next three years. sponsoring directors of the PEL.

Term Finance - 14,517 Three months KIBOR plus Charge over operating The finance was obtained from The Bank of Punjab for the purpose of financing Note 2019 2018 2.10% per annum. (2018: fixed assets of the PEL capital expenditure. The finance has been fully repaid during the year. Rupees '000 Rupees '000 Three months KIBOR plus and personal 2.10% per annum). guarantees of sponsoring directors of the PEL. Present value of warranty obligations 14.1 475,844 -

Term Finance 130,122 - Three months KIBOR plus Charge over operating The finance has been obtained from The Bank of Punjab for the purpose of Current portion presented under current liabilities 17 (316,308) - 1.5% per annum. fixed assets of the PEL erection of new power transformer manufacturing facility. The finance is and personal repayable in sixteen equal quarterly installments commencing from September 159,536 - guarantees of 2020. sponsoring directors of the PEL. 14.1 Movement in warranty obligations Term Finance 131,250 - Three months KIBOR plus 2% Char ge over operating The finance has been obtained from Pak Oman InvestmentCompany Limited for per annum. fixed assets of PEL and the purpose of financing capital expenditure. The finance is repayable in sixteen As at beginning of the year - - personal guarantees of equal quarterly installments commencing from August 2019. sponsoring directors of Impact of application of IFRS 15 14.1.1 443,392 - PEL.

Term Finance 500,000 - Three months KIBOR plus Charge over operating The finance has been obtained from Saudi Pak Industrial and Agricultural As at beginning of the year - as adjusted 443,392 -

2.25% per annum. fixed assets of PEL and Investment Company Limited for the purpose of refinancing capital expenditure. Amounts charged against the provision (270,809) - personal guarantees of The finance is repayable in sixteen equal quarterly installments commencing sponsoring directors of from October 2020. Unwinding of the discount/changes in discount rate 13,427 - PEL. Addition during the year 304,664 - Demand Finance 315,769 568,384 Three months KIBOR plus 2% Charge over operating This represents demand finance facility sanctioned by National Bank of Pakistan per annum (2018: Three fixed assets of the PEL against an upfront payment of 1,650 million against Private Placed Term Finance Excess provision reversed (14,830) - months KIBOR plus 2% per and personal Certificates. The finance is repayable in sixteen equal quarterly installments annum). guarantees of commencing from April 2017. sponsoring directors of As at end of the year 475,844 - the PEL.

Demand Finance 407,643 679,406 Three months KIBOR plus Charge over present The finance has been obtained from National Bank of Pakistan for settlement of 2.25% per annum (2018: and future current assets long term finances obtained from NIB Bank Limited. The finance is repayable in 14.1.1 The group has recognized the cummulative effect of initially applying IFRS 15 as adjustment to opening balance as at January Three months KIBOR plus of the PEL and personal twenty three equal quarterly installments commencing from September 2015. 01, 2019. Accordingly, the comparative information has not been restated. 2.25% per annum). guarantees of sponsoring directors of PEL. 2,764,546 3,565,878 Total 4,407,403 4,315,878 Current portion presented under current liabilities (2,245,249) (1,669,846) 2,162,154 2,646,032

11 REDEEMABLE CAPITAL Note 2019 2018 Rupees '000 Rupees '000 These represent interest/markup/profit based debt securities issued to institutional and other investors. The details are as follows: 13 LEASE LIABILITIES

Description 2019 2018 Pricing Security Arrangements and repayment Rupees '000 Rupees '000 Present value of minimum lease payments 13.1 & 13.2 241,094 102,368

Shariah compliant Current portion presented under current liabilities 13.1 & 13.2 (103,708) (42,590) Sukuk Funds - 101,875 Three months KIBOR plus 1% Charge on present and These were issued for the purpose of refinance of existing machinery with per annum (2018: Three future operating fixed diminishing musharaka facility. 137,386 59,778 months KIBOR plus 1% per assets of PEL. Later, PEL entered into restructuring arrangement, whereby, the outstanding annum) subject to floor and principal was deferred till June 2015 with the outstanding liability payable in cap of 8% and 16% sixteen equal quarterly installments commencing from June 2015. The Group respectively. has fully redeemed these Sukuk Funds during the year. 13.1 These represent vehicles and machinery acquired under finance lease arrangements. The leases are priced at rates ranging Total - 101,875 from three months KIBOR to six months KIBOR plus 1.5% to 3% per annum (2018: six months to one year KIBOR plus 1.5% to Current portion presented 4.5% per annum). Lease rentals are payable monthly over a tenor ranging from 3 to 4 years. Under the terms of agreement, under current liabilities - (101,875) taxes, repairs, replacements and insurance costs in respect of assets subject to finance lease are borne by the Group. The Group also has the option to acquire these assets at the end of their respective lease terms by adjusting the deposit amount - - against the residual value of the asset and intends to exercise the option. 12 LONG TERM FINANCES 13.2The amount of future payments under the finance lease arrangements and the period in which these payments will become due are as follows: These represent long term finances utilized under interest/markup/profit arrangements from banking companies and financial institutions. The details are as follows:

Description 2019 2018 Pricing Security Arrangements and repayment Note 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Shariah compliant Diminishing Musharakah 642,857 750,000 Three months KIBOR plus 1% Charge over operating The finance has been obtained from Faysal Bank Limited for the purpose of per annum (2018: Three fixed assets of the PEL balancing modernization and replacement requirements. The finance is Not later than one year 133,420 50,351 months KIBOR plus 1% per and personal repayable in fourteen equal quarterly installments commencing from August annum). guarantees of 2019. Later than one year but not later than five years 152,359 64,573 sponsoring directors of the PEL. Total future minimum lease payments 285,779 114,924 Finance charge allocated to future periods (44,685) (12,556) Diminishing Musharakah 1,000,000 - Three months KIBOR plus Charge over present The finance has been obtained from Faysal Bank Limited for the purpose of 1.5% per annum. and futur e fixed assets working capital rquirement and for construction of washing machine unit and of PEL and personal warehouse/godown. The finance is repayable in fifteen equal quaterly Present value of future minimum lease payments 241,094 102,368 guarantees of installments commencing from February 2020. sponsoring directors of Not later than one year 19 (103,708) (42,590) Interest based arrangement PEL. Later than one year but not later than five years 137,386 59,778 Term Finance 208,333 375,000 Three months KIBOR plus Charge over present The finance has been obtained from Pak Oman InvestmentCompany Limited for 3.8% per annum (2018:Three and future current assets the purpose of financing capital expenditure. The finance is repayable in twelve months KIBOR plus 3.8% per of PEL, mortgage of the equal quarterly installments commencing from March 2018. annum). PEL's land and building. 14 WARRANTY OBLIGATIONS

Term Finance 1,071,429 1,928,571 Three months KIBOR plus Charge over operating The finance has been obtained from Bank Alfalah Limited for the purpose of 1.25% per annum (2018: fixed assets of the PEL financing the repayment of existing long term loans of the PEL. The finance is This represents provision for warranties related to goods sold during the current and previous years. The Group expects to Three months KIBOR plus and personal repayable in fourteen equal quarterly installments commencing from December 1.25% per annum). guarantees of 2017. settle majority of the liability over the next three years. sponsoring directors of the PEL.

Term Finance - 14,517 Three months KIBOR plus Charge over operating The finance was obtained from The Bank of Punjab for the purpose of financing Note 2019 2018 2.10% per annum. (2018: fixed assets of the PEL capital expenditure. The finance has been fully repaid during the year. Rupees '000 Rupees '000 Three months KIBOR plus and personal 2.10% per annum). guarantees of sponsoring directors of the PEL. Present value of warranty obligations 14.1 475,844 -

Term Finance 130,122 - Three months KIBOR plus Charge over operating The finance has been obtained from The Bank of Punjab for the purpose of Current portion presented under current liabilities 17 (316,308) - 1.5% per annum. fixed assets of the PEL erection of new power transformer manufacturing facility. The finance is and personal repayable in sixteen equal quarterly installments commencing from September 159,536 - guarantees of 2020. sponsoring directors of the PEL. 14.1 Movement in warranty obligations Term Finance 131,250 - Three months KIBOR plus 2% Char ge over operating The finance has been obtained from Pak Oman InvestmentCompany Limited for per annum. fixed assets of PEL and the purpose of financing capital expenditure. The finance is repayable in sixteen As at beginning of the year - - personal guarantees of equal quarterly installments commencing from August 2019. sponsoring directors of Impact of application of IFRS 15 14.1.1 443,392 - PEL.

Term Finance 500,000 - Three months KIBOR plus Charge over operating The finance has been obtained from Saudi Pak Industrial and Agricultural As at beginning of the year - as adjusted 443,392 -

2.25% per annum. fixed assets of PEL and Investment Company Limited for the purpose of refinancing capital expenditure. Amounts charged against the provision (270,809) - personal guarantees of The finance is repayable in sixteen equal quarterly installments commencing sponsoring directors of from October 2020. Unwinding of the discount/changes in discount rate 13,427 - PEL. Addition during the year 304,664 - Demand Finance 315,769 568,384 Three months KIBOR plus 2% Charge over operating This represents demand finance facility sanctioned by National Bank of Pakistan per annum (2018: Three fixed assets of the PEL against an upfront payment of 1,650 million against Private Placed Term Finance Excess provision reversed (14,830) - months KIBOR plus 2% per and personal Certificates. The finance is repayable in sixteen equal quarterly installments annum). guarantees of commencing from April 2017. sponsoring directors of As at end of the year 475,844 - the PEL.

Demand Finance 407,643 679,406 Three months KIBOR plus Charge over present The finance has been obtained from National Bank of Pakistan for settlement of 2.25% per annum (2018: and future current assets long term finances obtained from NIB Bank Limited. The finance is repayable in 14.1.1 The group has recognized the cummulative effect of initially applying IFRS 15 as adjustment to opening balance as at January Three months KIBOR plus of the PEL and personal twenty three equal quarterly installments commencing from September 2015. 01, 2019. Accordingly, the comparative information has not been restated. 2.25% per annum). guarantees of sponsoring directors of PEL. 2,764,546 3,565,878 Total 4,407,403 4,315,878 Current portion presented under current liabilities (2,245,249) (1,669,846) 2,162,154 2,646,032

Note 2019 2018 16.1 The UNIDO vide its contract number 2000/257 dated December 15, 2000, out of the multilateral fund for the implementation Rupees '000 Rupees '000 of the Montreal Protocol, has given grant-in-aid to PEL for the purpose of phasing out ODS at the Refrigerator and Chest Freezer Plant of PEL. The total grant-in-aid of USD 1,367,633 (Rs. 91,073,838) comprises the capital cost of the project included in fixed assets amounting to USD 1,185,929 (Rs. 79,338,650) and grant recoverable in cash of USD 181,704 (Rs. 15 DEFERRED TAXATION 11,735,188) being the incremental operating cost for six months.

Deferred tax liability on taxable temporary differences 15.1 3,982,402 3,708,750 The grant received in cash amounting to Rs.11,735,188 was recognized as income in the year of receipt i.e. year ended June

Deferred tax asset on deductible temporary differences 15.1 (865,416) (620,928) 30, 2001. The value of machinery received in grant was capitalized in year 2001 which started its operation in January 2003.

The grant amounting to Rs. 1.839 million (2018: Rs. 1.936 million) has been included in other income in proportion to 3,116,986 3,087,822 depreciation charged on related plant and machinery keeping in view the matching principle.

15.1 Recognized deferred tax assets and liabilities Note 2019 2018 Rupees '000 Rupees '000 Deferred tax assets and liabilities are attributable to the following: 17 TRADE AND OTHER PAYABLES 2019 As at Recognized in Recognized on As at Trade creditors 468,541 414,995 January 01 profit or loss balance sheet December 31 Foreign bills payable 17.1 101,960 108,823 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Accrued liabilities 145,488 182,301 Deferred tax liabilities Advances from customers 82,678 93,969 Operating fixed assets - owned 3,678,339 241,572 26,753 3,946,664 Employees' provident fund 6,774 11,247 Right-of-use assets 30,411 5,327 - 35,738 Compensated absences 33,902 34,162 Warranty obligations 14 316,308 - 3,708,750 246,899 26,753 3,982,402 Workers' Profit Participation Fund 17.2 11,431 26,765 Deferred tax assets Workers' Welfare Fund 17.3 18,011 31,883 Provisions (189,804) (119,450) - (309,254) Other payables 18,531 18,705 Unused tax losses and credits (423,967) (132,195) - (556,162) 1,203,624 922,850 Long term investments (7,157) 7,157 - - (620,928) (244,488) - (865,416) 17.1 Foreign bills payable are secured against bills of exchange accepted by the Group in favour of suppliers. 3,087,822 2,411 26,753 3,116,986 Note 2019 2018 Rupees '000 Rupees '000 2018 As at Recognized in Recognized on As at 17.2 Workers' Profit Participation Fund January 01 profit or loss balance sheet December 31 Rupees '000 Rupees '000 Rupees '000 Rupees '000 As at beginning of the year 26,765 82,450 Deferred tax liabilities Interest on fund utilized by the Group 41 1,516 4,940 Charged to profit or loss for the year 40 11,431 26,772 Operating fixed assets - owned 3,351,793 (213,815) 540,361 3,678,339 Paid during the year (28,281) (87,397) Operating fixed assets - leased 27,223 3,188 - 30,411 As at end of the year 11,431 26,765 3,379,016 (210,627) 540,361 3,708,750 Deferred tax assets 17.2.1 Interest on funds utilized by the Group has been recognized at 13.59 % (2018: 9%) per annum. Provisions (215,828) 26,024 - (189,804) Unused tax losses and credits (742,959) 318,992 - (423,967) Note 2019 2018 Long term investments (6,878) (279) - (7,157) Rupees '000 Rupees '000 (965,665) 344,737 - (620,928) 17.3 Workers' Welfare Fund 2,413,351 134,110 540,361 3,087,822 As at beginning of the year 31,883 73,897

15.2 Deferred tax arising from the timing differences pertaining to income taxable under normal provisions and as a separate Charged to profit or loss for the year 40 18,011 31,883

block of the Income Tax Ordinance, 2001 ['the Ordinance'] has been calculated at 29% and 15 % (2018: 29% and 15%) Paid/adjusted during the year (31,883) (73,897) respectively of the timing differences based on tax rates notified by the Government of Pakistan for future tax years for such As at end of the year 18,011 31,883 income.

18 SHORT TERM BORROWINGS 2019 2018 Rupees '000 Rupees '000 Secured

16 DEFERRED INCOME Short term finances utilized under interest/markup/profit arrangements from

- Banking companies - Interest based arrangement 18.1 9,149,436 10,788,911

As at beginning of the year 36,781 38,717 - Banking companies - Shariah compliant 18.1 1,756,054 1,854,937

Recognized in profit or loss (1,839) (1,936) - Non Banking Finance Companies ('NBFCs') 18.2 50,000 200,000

As at end of the year 34,942 36,781 10,955,490 12,843,848 Note 2019 2018 16.1 The UNIDO vide its contract number 2000/257 dated December 15, 2000, out of the multilateral fund for the implementation Rupees '000 Rupees '000 of the Montreal Protocol, has given grant-in-aid to PEL for the purpose of phasing out ODS at the Refrigerator and Chest Freezer Plant of PEL. The total grant-in-aid of USD 1,367,633 (Rs. 91,073,838) comprises the capital cost of the project included in fixed assets amounting to USD 1,185,929 (Rs. 79,338,650) and grant recoverable in cash of USD 181,704 (Rs. 15 DEFERRED TAXATION 11,735,188) being the incremental operating cost for six months.

Deferred tax liability on taxable temporary differences 15.1 3,982,402 3,708,750 The grant received in cash amounting to Rs.11,735,188 was recognized as income in the year of receipt i.e. year ended June

Deferred tax asset on deductible temporary differences 15.1 (865,416) (620,928) 30, 2001. The value of machinery received in grant was capitalized in year 2001 which started its operation in January 2003.

The grant amounting to Rs. 1.839 million (2018: Rs. 1.936 million) has been included in other income in proportion to 3,116,986 3,087,822 depreciation charged on related plant and machinery keeping in view the matching principle.

15.1 Recognized deferred tax assets and liabilities Note 2019 2018 Rupees '000 Rupees '000 Deferred tax assets and liabilities are attributable to the following: 17 TRADE AND OTHER PAYABLES 2019 As at Recognized in Recognized on As at Trade creditors 468,541 414,995 January 01 profit or loss balance sheet December 31 Foreign bills payable 17.1 101,960 108,823 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Accrued liabilities 145,488 182,301 Deferred tax liabilities Advances from customers 82,678 93,969 Operating fixed assets - owned 3,678,339 241,572 26,753 3,946,664 Employees' provident fund 6,774 11,247 Right-of-use assets 30,411 5,327 - 35,738 Compensated absences 33,902 34,162 Warranty obligations 14 316,308 - 3,708,750 246,899 26,753 3,982,402 Workers' Profit Participation Fund 17.2 11,431 26,765 Deferred tax assets Workers' Welfare Fund 17.3 18,011 31,883 Provisions (189,804) (119,450) - (309,254) Other payables 18,531 18,705 Unused tax losses and credits (423,967) (132,195) - (556,162) 1,203,624 922,850 Long term investments (7,157) 7,157 - - (620,928) (244,488) - (865,416) 17.1 Foreign bills payable are secured against bills of exchange accepted by the Group in favour of suppliers. 3,087,822 2,411 26,753 3,116,986 Note 2019 2018 Rupees '000 Rupees '000 2018 As at Recognized in Recognized on As at 17.2 Workers' Profit Participation Fund January 01 profit or loss balance sheet December 31 Rupees '000 Rupees '000 Rupees '000 Rupees '000 As at beginning of the year 26,765 82,450 Deferred tax liabilities Interest on fund utilized by the Group 41 1,516 4,940 Charged to profit or loss for the year 40 11,431 26,772 Operating fixed assets - owned 3,351,793 (213,815) 540,361 3,678,339 Paid during the year (28,281) (87,397) Operating fixed assets - leased 27,223 3,188 - 30,411 As at end of the year 11,431 26,765 3,379,016 (210,627) 540,361 3,708,750 Deferred tax assets 17.2.1 Interest on funds utilized by the Group has been recognized at 13.59 % (2018: 9%) per annum. Provisions (215,828) 26,024 - (189,804) Unused tax losses and credits (742,959) 318,992 - (423,967) Note 2019 2018 Long term investments (6,878) (279) - (7,157) Rupees '000 Rupees '000 (965,665) 344,737 - (620,928) 17.3 Workers' Welfare Fund 2,413,351 134,110 540,361 3,087,822 As at beginning of the year 31,883 73,897

15.2 Deferred tax arising from the timing differences pertaining to income taxable under normal provisions and as a separate Charged to profit or loss for the year 40 18,011 31,883 block of the Income Tax Ordinance, 2001 ['the Ordinance'] has been calculated at 29% and 15 % (2018: 29% and 15%) Paid/adjusted during the year (31,883) (73,897) respectively of the timing differences based on tax rates notified by the Government of Pakistan for future tax years for such As at end of the year 18,011 31,883 income.

18 SHORT TERM BORROWINGS 2019 2018 Rupees '000 Rupees '000 Secured

16 DEFERRED INCOME Short term finances utilized under interest/markup/profit arrangements from

- Banking companies - Interest based arrangement 18.1 9,149,436 10,788,911

As at beginning of the year 36,781 38,717 - Banking companies - Shariah compliant 18.1 1,756,054 1,854,937

Recognized in profit or loss (1,839) (1,936) - Non Banking Finance Companies ('NBFCs') 18.2 50,000 200,000

As at end of the year 34,942 36,781 10,955,490 12,843,848 18.1 These facilities have been obtained from various banking companies for working capital requirements and carry 2019 2018 interest/markup/profit at rates ranging from 8.03% to 16.86% (2018: 7.11% to 12.3%) per annum. These facilities are secured Rupees '000 Rupees '000 by pledge / hypothecation of raw material and components, work-in-process, finished goods, imported goods, machinery, spare parts, charge over book debts and personal guarantees of the sponsoring directors of PEL. These facilities are 20.2 Commitments generally for a period of one year and renewed at the end of the period. 20.2.1 Commitments under irrevocable letters of credit for import of 18.2 These facilities have been obtained from NBFCs for working capital requirements and carry interest/markup at rates ranging stores, spare parts and raw material 682,628 2,012,639 from 11.60% to 12.05% (2018: 7.12% to 11.55%) per annum. These facilities are secured by charge over operating fixed assets of the Company and personal guarantees of the directors of PEL. 20.2.2 Commitments under ijarah contracts 18.3 The aggregate un-availed short term borrowing facilities as at the reporting date amounts to Rs. 9,566 million (2018: Rs. 10,464 million). The aggregate amount of ujrah payments for ijarah financing and the period in which these payments will become due are as follows:

Note 2019 2018 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000

19 CURRENT PORTION OF NON-CURRENT LIABILITIES - payments not later than one year 79,822 13,295 - payments later than one year 169,728 16,139 Redeemable capital 11 - 101,875 249,550 29,434 Long term finances 12 2,245,249 1,669,846 Liabilities against assets subject to finance lease 13 103,708 42,590 2,348,957 1,814,311

20 CONTINGENCIES AND COMMITMENTS

20.1 Contingencies

20.1.1 Various banking and insurance companies have issued guarantees on behalf of the Group as detailed below:

2019 2018 Rupees '000 Rupees '000

Tender bonds 416,312 488,314 Performance bonds 2,638,598 2,863,884 Advance guarantees 390,174 647,033 Custom guarantees 87,670 72,064 Foreign guarantees 91,598 80,682

20.1.2 The Group may have to indemnify its Directors for any losses that may arise due to personal guarantees given by them for securing the debts of the Group, in case the Group defaults.

20.1.3 Section 5A imposes tax rate at 5% of the accounting profit before tax of a public company that does not distribute atlest 20% of its after tax profits as cash dividend with in six months of the end of the tax year.

No provision for income tax on undistributed profits, has been made as the matter is subjudice before Lahore High Court and the management of the Group expects a favourable outcome.

20.1.4 The Finance Act 2015 introduced Super Tax for rehabilitation of temporarily displaced persons vide newly inserted section 4B to the Ordinance whereby, at rates ranging from 2% to 3% of the income equal to or excedding Rs. 500 million. No provision for Super Tax has been made for tax years 2015 to 2019 as the matter is subjudice before Honourable Supreme Court. The Group is not in a position to state about the outcome of the matter, which is entirely dependent on the judgement of aforesaid Apex Superior Court.

20.1.5 Appeal of the Group for the tax years 2009, 2016 and 2017 were decided by the Commissioner Inland Revenue (Appeals) [‘CIR(A)’]. The issues involve in these appeals were mostly those concerning allowance/disallowance of various expences. Appeals have been filed by Group as well as the Department before the Appellate Tribunal which are pending. The management expects to get adequate relief from the Appellate Authority and no additional tax liability is expected to arise.

20.1.6 The Group claimed adjustment for the minimum tax paid amounting to Rs. 150.925 million in tax year 2017 and Rs. 350.821 million in tax year 2015 aggregating to Rs. 550.751 million. Minimum tax of Rs. 725.575 million was paid despite losses sustained in the Tax Years 2010 to 2015. The CIR(A) placing reliance on the decisions of the Appellate Tribunal and judgement of the Lahore High Court has conclude that in view if the loses sustained the Appellant is entitled to tax credit in terms of Section 113(2)(c). The Department and Group has filed appeals before the honorable tribunal which are pending. 18.1 These facilities have been obtained from various banking companies for working capital requirements and carry 2019 2018 interest/markup/profit at rates ranging from 8.03% to 16.86% (2018: 7.11% to 12.3%) per annum. These facilities are secured Rupees '000 Rupees '000 by pledge / hypothecation of raw material and components, work-in-process, finished goods, imported goods, machinery, spare parts, charge over book debts and personal guarantees of the sponsoring directors of PEL. These facilities are 20.2 Commitments generally for a period of one year and renewed at the end of the period. 20.2.1 Commitments under irrevocable letters of credit for import of 18.2 These facilities have been obtained from NBFCs for working capital requirements and carry interest/markup at rates ranging stores, spare parts and raw material 682,628 2,012,639 from 11.60% to 12.05% (2018: 7.12% to 11.55%) per annum. These facilities are secured by charge over operating fixed assets of the Company and personal guarantees of the directors of PEL. 20.2.2 Commitments under ijarah contracts 18.3 The aggregate un-availed short term borrowing facilities as at the reporting date amounts to Rs. 9,566 million (2018: Rs. 10,464 million). The aggregate amount of ujrah payments for ijarah financing and the period in which these payments will become due are as follows:

Note 2019 2018 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000

19 CURRENT PORTION OF NON-CURRENT LIABILITIES - payments not later than one year 79,822 13,295 - payments later than one year 169,728 16,139 Redeemable capital 11 - 101,875 249,550 29,434 Long term finances 12 2,245,249 1,669,846 Liabilities against assets subject to finance lease 13 103,708 42,590 2,348,957 1,814,311

20 CONTINGENCIES AND COMMITMENTS

20.1 Contingencies

20.1.1 Various banking and insurance companies have issued guarantees on behalf of the Group as detailed below:

2019 2018 Rupees '000 Rupees '000

Tender bonds 416,312 488,314 Performance bonds 2,638,598 2,863,884 Advance guarantees 390,174 647,033 Custom guarantees 87,670 72,064 Foreign guarantees 91,598 80,682

20.1.2 The Group may have to indemnify its Directors for any losses that may arise due to personal guarantees given by them for securing the debts of the Group, in case the Group defaults.

20.1.3 Section 5A imposes tax rate at 5% of the accounting profit before tax of a public company that does not distribute atlest 20% of its after tax profits as cash dividend with in six months of the end of the tax year.

No provision for income tax on undistributed profits, has been made as the matter is subjudice before Lahore High Court and the management of the Group expects a favourable outcome.

20.1.4 The Finance Act 2015 introduced Super Tax for rehabilitation of temporarily displaced persons vide newly inserted section 4B to the Ordinance whereby, at rates ranging from 2% to 3% of the income equal to or excedding Rs. 500 million. No provision for Super Tax has been made for tax years 2015 to 2019 as the matter is subjudice before Honourable Supreme Court. The Group is not in a position to state about the outcome of the matter, which is entirely dependent on the judgement of aforesaid Apex Superior Court.

20.1.5 Appeal of the Group for the tax years 2009, 2016 and 2017 were decided by the Commissioner Inland Revenue (Appeals) [‘CIR(A)’]. The issues involve in these appeals were mostly those concerning allowance/disallowance of various expences. Appeals have been filed by Group as well as the Department before the Appellate Tribunal which are pending. The management expects to get adequate relief from the Appellate Authority and no additional tax liability is expected to arise.

20.1.6 The Group claimed adjustment for the minimum tax paid amounting to Rs. 150.925 million in tax year 2017 and Rs. 350.821 million in tax year 2015 aggregating to Rs. 550.751 million. Minimum tax of Rs. 725.575 million was paid despite losses sustained in the Tax Years 2010 to 2015. The CIR(A) placing reliance on the decisions of the Appellate Tribunal and judgement of the Lahore High Court has conclude that in view if the loses sustained the Appellant is entitled to tax credit in terms of Section 113(2)(c). The Department and Group has filed appeals before the honorable tribunal which are pending.

t t

96,527 32,259 85,001 23,664 63,385

125,618 290,413 375,414 621,281 558,163 111,776 147,490 154,930 218,315 744,250 Net book 1,035,256 5,771,302 1,179,444 Net book 1,035,256 3,444,504 2,433,970 3,178,220 value as a

302-303, value as a upees '000

14,323,240 21,384,202 22,939,060 13,797,790 18,560,480 18,778,795 21,957,015 upees '000 R R # December 31 December 31 t t Plot

------

As a As a 6,711 6,434

61,690 28,655 35,366 85,180 36,754 43,188

116,537 177,483 102,750 153,633 and

2,425,643 8,722,207 2,238,728 8,010,621 e upees '000 11,503,560 11,538,926 10,590,912 10,634,100 10,634,100 upees '000 R R December 31 December 31

Lahor

------5,431 8,836 (5,959) (6,869) (6,734) (8,956) (35,371) (42,768) (20,326) (27,060) (69,828) (44,530) (25,019) (11,387) (72,100) (10,191) (19,147) (91,247) (91,247) oad,

R

upees '000 upees '000 Adjustment

Adjustment

R R

------ozepur

tion tion er F TION TION 458,091

1,078,489 1,536,580 1,536,580 1,536,580 evalua evalua upees '000 upees '000 R R . R

R

K.M, - oup DEPRECIA DEPRECIA 14 ------Gr t 7,011 4,637 a 11,881 19,746 30,719 12,227 19,238 10,767 17,797 34,622 14,130 18,767 186,915 706,155 955,416 974,654 144,194 614,754 822,134 840,901 840,901 the

or the year upees '000 or the year

upees '000

F of and R F R

t use t

------in anals) As a As a 6,434 K 85,180 36,754 43,188 10,753 32,815 43,568 102,750 153,633 118,943 109,972 130,398 still 2,238,728 8,010,621 1,636,443 6,308,542 8,304,298 8,347,866 8,347,866 January 01 e

upees '000 10,590,912 10,634,100 January 01

upees '000 511 R R ar

te te

5 5 5 5 5 % % a a

10 30 20 10 30 20 20 - - R R 2019 2018 (2018: which

t t Marla). As a anals As a K million) 158,217 148,796 303,101 297,124 113,656 410,780 621,281 558,163 196,956 126,414 301,123 161,364 100,139 261,503 744,250

15

1,035,256 8,196,945 1,179,444 1,035,256 5,683,232 2,433,970 3,178,220 upees '000 23,045,447 32,887,762 34,477,986 21,808,411 29,151,392 29,412,895 32,591,115

upees '000 R 511

R

December 31

December 31

anals of 64.54

K ea ------

Rs.

ar 322 34,914 52,068 19,133 71,201 ansfers (51,420) (34,914) (86,334) (52,068) (19,133) (71,201) ansfers r r T T 2,513,713 1,134,546 3,683,173 (2,513,713) (1,083,126) (3,596,839) upees '000 upees '000 R total (2018: R

a (2018:

------with

million (6,015) e Marla (52,723) (49,775) (52,506) (26,736) (45,906)

(313,602) (422,115) (422,115)

Disposals (114,785) (239,933) (239,933) (239,933) AMOUNT upees '000 AMOUNT Disposals 15 R upees '000 70.2

R Lahor

UED UED Rs.

AL anals AL

of K ------tion tion oad,

R

/ REV / REV 482,768 T T 322

1,162,909 2,936,118 4,581,795 4,581,795 4,581,795 evalua evalua assets upees '000 upees '000 OS OS of R R R R

C C

ea ted ozepur ar er ------F

ecia 13,984 28,397 16,839 48,431 35,208 11,918 18,583 16,438 416,092 475,312 187,180 235,611 701,024 897,039 391,790 457,499 109,944 126,382 583,881 488,706 total Additions 1,598,063 2,308,986 1,423,087 1,911,793 2,495,674 a K.M, Additions upees '000 depr

upees '000

- R R

34 with

t fully t

a, As a

As a 196,956 126,414 301,123 161,364 100,139 261,503 744,250 552,488 214,254 141,232 309,313 103,488 102,834 206,322 255,544 Amazai 1,035,256 5,683,232 2,433,970 3,178,220 4,520,323 1,010,883 1,266,427 January 01 upees '000 21,808,411 29,151,392 32,591,115 January 01 18,543,220 24,280,830 24,487,152 25,753,579 upees '000 R includes R Islampur ot K Gadoon

es es ea, AND EQUIPMENT oup equipment oup

Ar Mouza ess ess t a ail e and allied items e and allied items and ogr ogr ted dwar dwar PLANT , Y plant

Industr , T loca ty is fice equipment and fixtur fice equipment and fixtur omputer har apital work in pr omputer har apital work in pr oper ehicles ehicles ehicles ehicles r Assets owned by the Gr Land Building Plant and machinery Of C V Right-of-use assets Plant and machinery V C Building Plant and machinery Assets owned by the Gr Land Building Plant and machinery Of C V Right-of-use assets Plant and machinery V C Building Plant and machinery PROPER P Land Gadoon 21.1 21.2 21

t t

96,527 32,259 85,001 23,664 63,385

125,618 290,413 375,414 621,281 558,163 111,776 147,490 154,930 218,315 744,250 Net book 1,035,256 5,771,302 1,179,444 Net book 1,035,256 3,444,504 2,433,970 3,178,220 value as a

302-303, value as a upees '000

14,323,240 21,384,202 22,939,060 13,797,790 18,560,480 18,778,795 21,957,015 upees '000 R R # December 31 December 31 t t Plot

------

As a As a 6,711 6,434

61,690 28,655 35,366 85,180 36,754 43,188

116,537 177,483 102,750 153,633 and

2,425,643 8,722,207 2,238,728 8,010,621 e upees '000 11,503,560 11,538,926 10,590,912 10,634,100 10,634,100 upees '000 R R December 31 December 31

Lahor

------5,431 8,836 (5,959) (6,869) (6,734) (8,956) (35,371) (42,768) (20,326) (27,060) (69,828) (44,530) (25,019) (11,387) (72,100) (10,191) (19,147) (91,247) (91,247) oad,

R upees '000 upees '000 Adjustment

Adjustment

R R

------ozepur

tion tion er F TION TION 458,091

1,078,489 1,536,580 1,536,580 1,536,580 evalua evalua upees '000 upees '000 R R . R

R

K.M, - oup DEPRECIA DEPRECIA 14 ------Gr t 7,011 4,637 a 11,881 19,746 30,719 12,227 19,238 10,767 17,797 34,622 14,130 18,767 186,915 706,155 955,416 974,654 144,194 614,754 822,134 840,901 840,901 the or the year upees '000 or the year

upees '000

F of and R F R

t use t

------in anals) As a As a 6,434 K 85,180 36,754 43,188 10,753 32,815 43,568 102,750 153,633 118,943 109,972 130,398 still 2,238,728 8,010,621 1,636,443 6,308,542 8,304,298 8,347,866 8,347,866 January 01 e upees '000 10,590,912 10,634,100 January 01

upees '000 511 R R ar

te te

5 5 5 5 5 % % a a

10 30 20 10 30 20 20 - - R R 2019 2018 (2018: which

t t Marla). As a anals As a K million) 158,217 148,796 303,101 297,124 113,656 410,780 621,281 558,163 196,956 126,414 301,123 161,364 100,139 261,503 744,250

15

1,035,256 8,196,945 1,179,444 1,035,256 5,683,232 2,433,970 3,178,220 upees '000 23,045,447 32,887,762 34,477,986 21,808,411 29,151,392 29,412,895 32,591,115

upees '000 R 511

R

December 31

December 31

anals of 64.54

K ea ------

Rs.

ar 322 34,914 52,068 19,133 71,201 ansfers (51,420) (34,914) (86,334) (52,068) (19,133) (71,201) ansfers r r T T 2,513,713 1,134,546 3,683,173 (2,513,713) (1,083,126) (3,596,839) upees '000 upees '000 R total (2018: R

a (2018:

------with

million (6,015) e Marla (52,723) (49,775) (52,506) (26,736) (45,906)

(313,602) (422,115) (422,115)

Disposals (114,785) (239,933) (239,933) (239,933) AMOUNT upees '000 AMOUNT Disposals 15 R upees '000 70.2

R Lahor

UED UED Rs.

AL anals AL

of K ------tion tion oad,

R

/ REV / REV 482,768 T T 322

1,162,909 2,936,118 4,581,795 4,581,795 4,581,795 evalua evalua assets upees '000 upees '000 OS OS of R R R R

C C

ea ted ozepur ar er ------F

ecia 13,984 28,397 16,839 48,431 35,208 11,918 18,583 16,438 416,092 475,312 187,180 235,611 701,024 897,039 391,790 457,499 109,944 126,382 583,881 488,706 total Additions 1,598,063 2,308,986 1,423,087 1,911,793 2,495,674 a K.M, Additions upees '000 depr

upees '000

- R R

34 with t fully t

a, As a

As a 196,956 126,414 301,123 161,364 100,139 261,503 744,250 552,488 214,254 141,232 309,313 103,488 102,834 206,322 255,544 Amazai 1,035,256 5,683,232 2,433,970 3,178,220 4,520,323 1,010,883 1,266,427 January 01 upees '000 21,808,411 29,151,392 32,591,115 January 01 18,543,220 24,280,830 24,487,152 25,753,579 upees '000 R includes R Islampur ot K Gadoon es es ea, AND EQUIPMENT oup equipment oup

Ar Mouza ess ess t a ail e and allied items e and allied items and ogr ogr ted dwar dwar PLANT , Y plant

Industr , T loca ty is fice equipment and fixtur fice equipment and fixtur omputer har apital work in pr omputer har apital work in pr oper ehicles ehicles ehicles ehicles r Assets owned by the Gr Land Building Plant and machinery Of C V Right-of-use assets Plant and machinery V C Building Plant and machinery Assets owned by the Gr Land Building Plant and machinery Of C V Right-of-use assets Plant and machinery V C Building Plant and machinery PROPER P Land Gadoon 21.1 21.2 21 21.3 Disposal of operating fixed assets Note 2019 2018

2019 Rupees '000 Rupees '000 Accumulated Net Disposal Gain/(loss) Mode of Particulars Cost depreciation book value proceeds on disposal disposal Particulars of buyer 21.4 The depreciation charge for the year has been allocated as follows: Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Plant and machinery Cost of sales 36 910,818 772,241 Lamination Cutting Line TBA300 131,237 - 131,237 131,237 - Negotiation Orix modaraba, Lahore Step Lap Lamination DTR 7,246 - 7,246 - (7,246) Negotiation Orix modaraba, Lahore Administrative and general expenses 39 63,836 68,660 138,483 - 138,483 131,237 (7,246) 974,654 840,901 Office equipment and fixtures Table and chairs 31,975 21,914 10,061 199 (9,862) Negotiation Scrap sale Mobile sets 1,018 280 738 - (738) Negotiation Scrap sale 21.5 Revaluation of property, plant and equipment Miscellaneous office items 18,561 12,349 6,212 2,875 (3,337) Negotiation Scrap sale Assets having net book value less than Rs. 500,000 each 1,169 828 341 156 (185) Negotiation Scrap sale Most recent valuation of land, building and plant and machinery was carried out by an independent valuer, Asif Associates 52,723 35,371 17,352 3,230 (14,122) (Private) Limited, on December 31, 2018 and was incorporated in the financial statements for the year ended December 31, Computer hardware and allied items 2018. For basis of valuation and other fair value measurement disclosures refer to note 50. Assets having net book value less than Rs. 500,000 each 6,015 5,959 56 62 6 Negotia tion Scrap sale Had there been no revaluation, the cost, accumulated depreciation and net book value of revalued items would have been as follows: Vehicles Audi A6 11,910 7,082 4,828 10,500 5,672 As Per Company Policy Synergy Technology, Lahore. 2019 Toyota Fortuner 6,229 2,126 4,103 3,229 (874) As Per Company Policy Amer Hamza (employee), Lahor e. Suzuki Jimny 2,293 1,579 714 1,409 695 Insurance claim Adamjee Insurance Company Limited, Lahore. Accumulated Net Honda Civic 2,254 929 1,325 1,674 349 As Per Company Policy Muhammad Raza (employee), Lahore. Honda Civic 2,113 986 1,127 1,319 192 As Per Company Policy Qazi Nisar (employee), Lahore. Cost depreciation book value Toyota Corolla 1,992 232 1,760 2,356 596 Negotiation First Habib Modaraba, Lahore. Toyota Corolla 1,735 1,232 503 465 (38) As Per Company Policy Liaqat Ali (employee), Lahore. Rupees '000 Rupees '000 Rupees '000 Toyota Corolla 1,731 1,177 554 477 (77) As Per Company Policy Rehmat ali (employee), Lahore. Toyota Corolla 1,543 636 907 1,198 291 As Per Company Policy Rafique Ahmed (employee), Lahore. Suzuki Cultus 1,085 302 783 1,300 517 As Per C ompany Policy Gulzaib (employee), Lahore. Land 189,184 - 189,184 Suzuki Cultus 981 434 547 587 40 As Per Company Policy Asif Ilyas (employee), Lahore. Building 5,816,039 1,434,921 4,381,118 Assets having net book value Plant and machinery 12,135,143 3,494,328 8,640,815 less than Rs. 500,000 each 15,909 10,480 5,429 8,958 3,529 As Per Company Policy Various emploees 49,775 27,195 22,580 33,472 10,892 246,996 68,525 178,471 168,001 (10,470) 2018 2018 Accumulated Net Accumulated Net Disposal Gain/(loss) Mode of Cost depreciation book value Particulars Cost depreciation book value proceeds on disposal disposal Par ticulars of buyer Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Office equipment and fixtures

Table and chairs 5,246 3,995 1,251 256 (995) Negotiation Various individuals Land 189,184 - 189,184 Air conditioners 6,719 5,268 1,451 328 (1,123) Negotiation Various individuals Building 3,302,326 1,321,029 1,981,297 Mobile sets 566 299 267 - (267) As Per Company Policy Various individuals Miscellaneous office items 39,975 34,968 5,007 1,949 (3,058) Negotiation Various individuals Plant and machinery 10,898,107 3,426,343 7,471,764

52,506 44,530 7,976 2,533 (5,443)

Computer hardware and allied items Computer and printers 10,961 10,961 - 512 512 Negotiation Various individuals 21.5.1 As per most recent valuation, forced sale values of land, building and plant and machinery are as follows: Laptops 4,441 2,792 1,649 2,901 1,252 Negotiation Various individuals Mobile sets 427 359 68 39 (29) As Per Company Policy Various individuals Allied items 10,907 10,907 - 382 382 Negotiation V arious individuals Rupees 26,736 25,019 1,717 3,834 2,117 Rupees '000

Land 919,800 Building 2,927,828 Vehicles Plant and machinery 11,998,078 Audi A3 4,060 460 3,600 4,750 1,150 As Per Company Policy Mehdi Hassan (employee), Lahore. BMW X1 5,217 591 4,626 5,737 1,111 As Per Company Policy Mehdi Hassan (employee), Lahore. 15,845,706 Honda City 1,494 971 523 747 224 As Per Company Policy Atif Imtiaz (employee), Lahore. Honda Civic 2,439 1,505 934 642 (292) As Per Company Policy Waseem Ishaq (employee), Lahore. Honda Civic 2,489 1,460 1,029 539 (490) As Per Company Policy Iftikhar Ahmed (employee), Lahore. Honda Civic 2,469 1,448 1,021 560 (461) As Per Company Policy Tariq Irani (employee), Lahore. 22 INTANGIBLE ASSETS Honda Civic 2,448 1,277 1,171 470 (701) As Per Company P olicy Javed A Khan (employee), Rawalpindi. Honda Civic 2,164 793 1,371 1,456 85 As Per Company Policy Atif Ali (employee), Lahore. Honda Civic 2,521 892 1,629 328 (1,301) As Per Company Policy Sadiq Munir (employee), Lahore. Note 2019 Porsche 1,202 439 763 3,000 2,237 Negotia tion Performance Automotive, Lahor e. Cost Accumulated Amortization Net book Suzuki Mehran 578 10 568 222 (346) As Per Company Policy Shees Butt (employee), Faisalabad. As at As at As at For the As at value as at Toyota Corolla 1,731 1,015 716 600 (116) As Per Company Policy Javed Iqbal (employee), Lahore. January 01 Additions December 31 January 01 period December 31 December 31 Toyota Corolla 1,771 924 847 831 (16) As Per Company Policy Rizwan Cheema (employee), Lahore. Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Assets having net book value less than Rs. 500,000 each 15,323 9,793 5,530 10,039 4,509 As Per Company Policy Various employees Technology transfer agreement 22.1 117,054 - 117,054 42,888 3,708 46,596 70,458 45,906 21,578 24,328 29,921 5,593 Goodwill 22.2 312,341 - 312,341 91,859 - 91,859 220,482 125,148 91,127 34,021 36,288 2,267 Software 22.3 17,006 3,802 20,808 6,911 4,273 11,184 9,624 Enterprise Resour ce Planning system 22.4 31,675 - 31,675 23,066 2,841 25,907 5,768 478,076 3,802 481,878 164,724 10,822 175,546 306,332

21.3 Disposal of operating fixed assets Note 2019 2018

2019 Rupees '000 Rupees '000 Accumulated Net Disposal Gain/(loss) Mode of Particulars Cost depreciation book value proceeds on disposal disposal Particulars of buyer 21.4 The depreciation charge for the year has been allocated as follows: Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Plant and machinery Cost of sales 36 910,818 772,241 Lamination Cutting Line TBA300 131,237 - 131,237 131,237 - Negotiation Orix modaraba, Lahore Step Lap Lamination DTR 7,246 - 7,246 - (7,246) Negotiation Orix modaraba, Lahore Administrative and general expenses 39 63,836 68,660 138,483 - 138,483 131,237 (7,246) 974,654 840,901 Office equipment and fixtures Table and chairs 31,975 21,914 10,061 199 (9,862) Negotiation Scrap sale Mobile sets 1,018 280 738 - (738) Negotiation Scrap sale 21.5 Revaluation of property, plant and equipment Miscellaneous office items 18,561 12,349 6,212 2,875 (3,337) Negotiation Scrap sale Assets having net book value less than Rs. 500,000 each 1,169 828 341 156 (185) Negotiation Scrap sale Most recent valuation of land, building and plant and machinery was carried out by an independent valuer, Asif Associates 52,723 35,371 17,352 3,230 (14,122) (Private) Limited, on December 31, 2018 and was incorporated in the financial statements for the year ended December 31, Computer hardware and allied items 2018. For basis of valuation and other fair value measurement disclosures refer to note 50. Assets having net book value less than Rs. 500,000 each 6,015 5,959 56 62 6 Negotia tion Scrap sale Had there been no revaluation, the cost, accumulated depreciation and net book value of revalued items would have been as follows: Vehicles Audi A6 11,910 7,082 4,828 10,500 5,672 As Per Company Policy Synergy Technology, Lahore. 2019 Toyota Fortuner 6,229 2,126 4,103 3,229 (874) As Per Company Policy Amer Hamza (employee), Lahor e. Suzuki Jimny 2,293 1,579 714 1,409 695 Insurance claim Adamjee Insurance Company Limited, Lahore. Accumulated Net Honda Civic 2,254 929 1,325 1,674 349 As Per Company Policy Muhammad Raza (employee), Lahore. Honda Civic 2,113 986 1,127 1,319 192 As Per Company Policy Qazi Nisar (employee), Lahore. Cost depreciation book value Toyota Corolla 1,992 232 1,760 2,356 596 Negotiation First Habib Modaraba, Lahore. Toyota Corolla 1,735 1,232 503 465 (38) As Per Company Policy Liaqat Ali (employee), Lahore. Rupees '000 Rupees '000 Rupees '000 Toyota Corolla 1,731 1,177 554 477 (77) As Per Company Policy Rehmat ali (employee), Lahore. Toyota Corolla 1,543 636 907 1,198 291 As Per Company Policy Rafique Ahmed (employee), Lahore. Suzuki Cultus 1,085 302 783 1,300 517 As Per C ompany Policy Gulzaib (employee), Lahore. Land 189,184 - 189,184 Suzuki Cultus 981 434 547 587 40 As Per Company Policy Asif Ilyas (employee), Lahore. Building 5,816,039 1,434,921 4,381,118 Assets having net book value Plant and machinery 12,135,143 3,494,328 8,640,815 less than Rs. 500,000 each 15,909 10,480 5,429 8,958 3,529 As Per Company Policy Various emploees 49,775 27,195 22,580 33,472 10,892 246,996 68,525 178,471 168,001 (10,470) 2018 2018 Accumulated Net Accumulated Net Disposal Gain/(loss) Mode of Cost depreciation book value Particulars Cost depreciation book value proceeds on disposal disposal Par ticulars of buyer Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Office equipment and fixtures

Table and chairs 5,246 3,995 1,251 256 (995) Negotiation Various individuals Land 189,184 - 189,184 Air conditioners 6,719 5,268 1,451 328 (1,123) Negotiation Various individuals Building 3,302,326 1,321,029 1,981,297 Mobile sets 566 299 267 - (267) As Per Company Policy Various individuals Miscellaneous office items 39,975 34,968 5,007 1,949 (3,058) Negotiation Various individuals Plant and machinery 10,898,107 3,426,343 7,471,764

52,506 44,530 7,976 2,533 (5,443)

Computer hardware and allied items Computer and printers 10,961 10,961 - 512 512 Negotiation Various individuals 21.5.1 As per most recent valuation, forced sale values of land, building and plant and machinery are as follows: Laptops 4,441 2,792 1,649 2,901 1,252 Negotiation Various individuals Mobile sets 427 359 68 39 (29) As Per Company Policy Various individuals Allied items 10,907 10,907 - 382 382 Negotiation V arious individuals Rupees 26,736 25,019 1,717 3,834 2,117 Rupees '000

Land 919,800 Building 2,927,828 Vehicles Plant and machinery 11,998,078 Audi A3 4,060 460 3,600 4,750 1,150 As Per Company Policy Mehdi Hassan (employee), Lahore. BMW X1 5,217 591 4,626 5,737 1,111 As Per Company Policy Mehdi Hassan (employee), Lahore. 15,845,706 Honda City 1,494 971 523 747 224 As Per Company Policy Atif Imtiaz (employee), Lahore. Honda Civic 2,439 1,505 934 642 (292) As Per Company Policy Waseem Ishaq (employee), Lahore. Honda Civic 2,489 1,460 1,029 539 (490) As Per Company Policy Iftikhar Ahmed (employee), Lahore. Honda Civic 2,469 1,448 1,021 560 (461) As Per Company Policy Tariq Irani (employee), Lahore. 22 INTANGIBLE ASSETS Honda Civic 2,448 1,277 1,171 470 (701) As Per Company P olicy Javed A Khan (employee), Rawalpindi. Honda Civic 2,164 793 1,371 1,456 85 As Per Company Policy Atif Ali (employee), Lahore. Honda Civic 2,521 892 1,629 328 (1,301) As Per Company Policy Sadiq Munir (employee), Lahore. Note 2019 Porsche 1,202 439 763 3,000 2,237 Negotia tion Performance Automotive, Lahor e. Cost Accumulated Amortization Net book Suzuki Mehran 578 10 568 222 (346) As Per Company Policy Shees Butt (employee), Faisalabad. As at As at As at For the As at value as at Toyota Corolla 1,731 1,015 716 600 (116) As Per Company Policy Javed Iqbal (employee), Lahore. January 01 Additions December 31 January 01 period December 31 December 31 Toyota Corolla 1,771 924 847 831 (16) As Per Company Policy Rizwan Cheema (employee), Lahore. Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Assets having net book value less than Rs. 500,000 each 15,323 9,793 5,530 10,039 4,509 As Per Company Policy Various employees Technology transfer agreement 22.1 117,054 - 117,054 42,888 3,708 46,596 70,458 45,906 21,578 24,328 29,921 5,593 Goodwill 22.2 312,341 - 312,341 91,859 - 91,859 220,482 125,148 91,127 34,021 36,288 2,267 Software 22.3 17,006 3,802 20,808 6,911 4,273 11,184 9,624 Enterprise Resour ce Planning system 22.4 31,675 - 31,675 23,066 2,841 25,907 5,768 478,076 3,802 481,878 164,724 10,822 175,546 306,332

2018 24.1 These represent security deposits against Ijarah financing. Cost Accumulated Amortization Net book As at As at As at For the As at value as at 24.2 These have been deposited with various utility companies and regulatory authorities. These are classified as 'financial assets January 01 Additions December 31 January 01 period December 31 December 31 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' at amortized cost' under IFRS 9 which are required to be carried at amortized cost. However, these, being held for an indefinite period with no fixed maturity date, are carried at cost. Technology transfer agreement 22.1 117,054 - 117,054 38,984 3,904 42,888 74,166 Goodwill 22.2 312,341 - 312,341 91,859 - 91,859 220,482 24.3 These have been deposited with various customers against EPC and other contracts and are refundable on completion of Software 22.3 8,976 8,030 17,006 4,853 2,058 6,911 10,095 projects in accordance with term of contracts. These are classified as 'financial assets at amortized cost' under IFRS 9 which Enterprise Resour ce Planning system 22.4 31,675 - 31,675 18,825 4,241 23,066 8,609 are required to be carried at amortized cost. However, due to uncertainties regarding dates of refund of these deposits, these 470,046 8,030 478,076 154,521 10,203 164,724 313,352 have been carried at cost.

22.1 The Group has obtained technology of single phase meters, three phase digital meters and also of power transformers from 25 LONG TERM ADVANCES different foreign companies. These are amortized on the same rate as of the depreciation of the relevant plant. Note 2019 2018 22.2 Goodwill represents the difference between the cost of the acquisition (fair value of consideration paid) and the fair value of Rupees '000 Rupees '000 the net identifiable assets acquired at the time of acquisition of PEL Appliances Limited and PEL Daewoo Electronics Limited by the Group. In view of cancelation of LG license, goodwill related to PEL Daewoo Electronics Limited was fully impaired by Face value of advances 2,114,913 1,963,211 providing impairment loss of Rs. 140.569 million in December 31, 2011. The carrying value represents goodwill related to PEL Appliances Limited for which there is no indication of impairment. Less: unamortized notional interest 25.2 (294,611) (230,402) 1,820,302 1,732,809 22.3 The Group has acquired different software for its business purpose. These are being amortized at 33% per annum on reducing balance method. Current portion presented under current assets 30 (589,497) (623,715) 1,230,805 1,109,094 22.4 These are being amortized at 33% per annum on reducing balance method.

23 LONG TERM INVESTMENTS 25.1 These advances have been made to various customers for renovation of show rooms. These are classified as 'fianancial assets at amortized cost' under IFRS 9 which are measured at amortized cost determined using a discount rate of 13.56% (2018: This represent investments in ordinary shares of Kohinoor Power Company Limited, an associate. The investment has been 10.72%). accounted for using equity method. The particulars of investment are as follows: Note 2019 2018 Rupees '000 Rupees '000 2019 2018

2,910,600 (2018: 2,910,600) ordinary shares of Rs. 10 each 25.2 Unamortized notional interest Percentage of ownership interest 23.10% 23.10% As at beginning of the year 230,402 126,368 2019 2018 Recognized during the year 38.2 189,123 184,408 Rupees '000 Rupees '000 Amortization for the year (124,914) (80,374) As at end of the year 294,611 230,402 Cost of investment 54,701 54,701 Share of post acquisition loss - net of dividend received (11,663) (8,857) 26 STORES, SPARES AND LOOSE TOOLS 43,038 45,844 Accumulated impairment (37,275) (38,859) Stores 279,668 290,865 Spares 455,386 452,987 5,763 6,985 Loose tools 132,117 134,117 23.1 Extracts of financial statements of associated company 867,171 877,969 Impairment for slow moving and obsolete items (18,824) (18,824) The assets and liabilities of Kohinoor Power Company Limited as at the reporting date and related revenue and profit for the year then ended based on the un-audited financial statements for the year ended December 31, 2018 are as follows: 848,347 859,145

26.1 There are no spare parts held exclusively for capitalization as at the reporting date. Note 2019 2018 Rupees '000 Rupees '000 27 STOCK IN TRADE

Assets 147,479 159,384 Raw material Liabilities 3,654 3,411 - in stores 3,992,761 5,130,566 Revenue 7,831 4,473 - in transit 1,315,147 2,110,833 Loss for the year 12,147 10,630 Write-down to net realisable value (39,060) (37,037) Share of loss 2,806 2,456 5,268,848 7,204,362 Market value per share (Rupees) 1.98 2.40 Work in process 656,835 758,928 24 LONG TERM DEPOSITS Finished goods 1,875,761 2,829,889 Write-down to net realisable value (7,876) (7,022) Financial institutions 24.1 27,601 7,858 1,867,885 2,822,867 Utility companies and regulatory authorities 24.2 167,734 42,351

Customers 24.3 164,845 315,748 7,793,568 10,786,157

360,180 365,957 27.1 Stock in trade valued at Rs. 1,849 million (2018: Rs. 1,754 million) is pledged as security with providers of debt finances. 2018 24.1 These represent security deposits against Ijarah financing. Cost Accumulated Amortization Net book As at As at As at For the As at value as at 24.2 These have been deposited with various utility companies and regulatory authorities. These are classified as 'financial assets January 01 Additions December 31 January 01 period December 31 December 31 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' at amortized cost' under IFRS 9 which are required to be carried at amortized cost. However, these, being held for an indefinite period with no fixed maturity date, are carried at cost. Technology transfer agreement 22.1 117,054 - 117,054 38,984 3,904 42,888 74,166 Goodwill 22.2 312,341 - 312,341 91,859 - 91,859 220,482 24.3 These have been deposited with various customers against EPC and other contracts and are refundable on completion of Software 22.3 8,976 8,030 17,006 4,853 2,058 6,911 10,095 projects in accordance with term of contracts. These are classified as 'financial assets at amortized cost' under IFRS 9 which Enterprise Resour ce Planning system 22.4 31,675 - 31,675 18,825 4,241 23,066 8,609 are required to be carried at amortized cost. However, due to uncertainties regarding dates of refund of these deposits, these 470,046 8,030 478,076 154,521 10,203 164,724 313,352 have been carried at cost.

22.1 The Group has obtained technology of single phase meters, three phase digital meters and also of power transformers from 25 LONG TERM ADVANCES different foreign companies. These are amortized on the same rate as of the depreciation of the relevant plant. Note 2019 2018 22.2 Goodwill represents the difference between the cost of the acquisition (fair value of consideration paid) and the fair value of Rupees '000 Rupees '000 the net identifiable assets acquired at the time of acquisition of PEL Appliances Limited and PEL Daewoo Electronics Limited by the Group. In view of cancelation of LG license, goodwill related to PEL Daewoo Electronics Limited was fully impaired by Face value of advances 2,114,913 1,963,211 providing impairment loss of Rs. 140.569 million in December 31, 2011. The carrying value represents goodwill related to PEL Appliances Limited for which there is no indication of impairment. Less: unamortized notional interest 25.2 (294,611) (230,402) 1,820,302 1,732,809 22.3 The Group has acquired different software for its business purpose. These are being amortized at 33% per annum on reducing balance method. Current portion presented under current assets 30 (589,497) (623,715) 1,230,805 1,109,094 22.4 These are being amortized at 33% per annum on reducing balance method.

23 LONG TERM INVESTMENTS 25.1 These advances have been made to various customers for renovation of show rooms. These are classified as 'fianancial assets at amortized cost' under IFRS 9 which are measured at amortized cost determined using a discount rate of 13.56% (2018: This represent investments in ordinary shares of Kohinoor Power Company Limited, an associate. The investment has been 10.72%). accounted for using equity method. The particulars of investment are as follows: Note 2019 2018 Rupees '000 Rupees '000 2019 2018

2,910,600 (2018: 2,910,600) ordinary shares of Rs. 10 each 25.2 Unamortized notional interest Percentage of ownership interest 23.10% 23.10% As at beginning of the year 230,402 126,368 2019 2018 Recognized during the year 38.2 189,123 184,408 Rupees '000 Rupees '000 Amortization for the year (124,914) (80,374) As at end of the year 294,611 230,402 Cost of investment 54,701 54,701 Share of post acquisition loss - net of dividend received (11,663) (8,857) 26 STORES, SPARES AND LOOSE TOOLS 43,038 45,844 Accumulated impairment (37,275) (38,859) Stores 279,668 290,865 Spares 455,386 452,987 5,763 6,985 Loose tools 132,117 134,117 23.1 Extracts of financial statements of associated company 867,171 877,969 Impairment for slow moving and obsolete items (18,824) (18,824) The assets and liabilities of Kohinoor Power Company Limited as at the reporting date and related revenue and profit for the year then ended based on the un-audited financial statements for the year ended December 31, 2018 are as follows: 848,347 859,145

26.1 There are no spare parts held exclusively for capitalization as at the reporting date. Note 2019 2018 Rupees '000 Rupees '000 27 STOCK IN TRADE

Assets 147,479 159,384 Raw material Liabilities 3,654 3,411 - in stores 3,992,761 5,130,566 Revenue 7,831 4,473 - in transit 1,315,147 2,110,833 Loss for the year 12,147 10,630 Write-down to net realisable value (39,060) (37,037) Share of loss 2,806 2,456 5,268,848 7,204,362 Market value per share (Rupees) 1.98 2.40 Work in process 656,835 758,928 24 LONG TERM DEPOSITS Finished goods 1,875,761 2,829,889 Write-down to net realisable value (7,876) (7,022) Financial institutions 24.1 27,601 7,858 1,867,885 2,822,867 Utility companies and regulatory authorities 24.2 167,734 42,351

Customers 24.3 164,845 315,748 7,793,568 10,786,157

360,180 365,957 27.1 Stock in trade valued at Rs. 1,849 million (2018: Rs. 1,754 million) is pledged as security with providers of debt finances. Note 2019 2018 32 SHORT TERM INVESTMENTS Rupees '000 Rupees '000 These represent investments in listed equity securities classified as 'financial assets at fair value through profit or loss'. The 28 TRADE DEBTS details are as follows: Gross amount due - against sale of goods 8,723,451 7,090,620 Note 2019 2018

- against execution of construction contracts 28.1 1,206,697 3,054,705 Rupees '000 Rupees '000

9,930,148 10,145,325 Standard Chartered Bank (Pakistan) Limited Impairment allowance for expected credit losses 28.2 (612,535) (587,301) 915,070 (2018: 915,070) ordinary shares of Rs. 10 each 9,317,613 9,558,024 Market value: Rs. 23.60 (2018: Rs. 24.12) per share

28.1 These include retention money for construction contracts in progress amounting to Rs. 551.251 million (2018: Rs. 617.648 As at beginning of the year 22,071 21,824 million) held by the customers in accordance with contract terms. Changes in fair value 37 & 40 (475) 247 As at end of the year 21,596 22,071 Note 2019 2018 Rupees '000 Rupees '000 33 ADVANCE INCOME TAX/INCOME TAX REFUNDABLE

28.2 Movement in impairment allowance for expected credit losses Advance income tax/income tax refundable 2,299,396 2,129,147 Provision for taxation 42 - (143,362) As at beginning of the year 587,301 576,971 Recognized during the year 39 25,234 10,330 2,299,396 1,985,785 As at end of the year 612,535 587,301 34 CASH AND BANK BALANCES 29 CONSTRUCTION WORK IN PROGRESS Cash in hand 11,891 16,818 This represents unbilled construction work in progress. Cash at banks 502,016 454,440 513,907 471,258 Note 2019 2018 Rupees '000 Rupees '000 35 NET REVENUE 30 SHORT TERM ADVANCES This represents revenue recognized from contracts with customers Advances to suppliers and contractors Sale of goods Gross amount due 620,050 622,554 - local 35,649,614 35,201,408 Impairment allowance for doubtful advances (32,730) (32,730) - exports 606,054 888,957 587,320 589,824 36,255,668 36,090,365 Advances to employees Construction contracts 1,365,601 2,899,882 Gross amount due 30.1 508,286 451,130 Impairment allowance for doubtful advances (1,449) (1,449) 37,621,269 38,990,247 506,837 449,681 Sales tax and excise duty (5,346,720) (3,710,466) Advances to customers 589,497 623,715 Trade discounts (4,374,631) (6,834,470) 1,683,654 1,663,220 (9,721,351) (10,544,936) 27,899,918 28,445,311 30.1 These include advances for

- purchases 225,807 230,008 36 COST OF SALES - expenses 125,672 105,524

- traveling 155,358 114,149 Finished goods at the beginning of the year 2,829,889 2,121,128 Cost of goods manufactured 36.1 19,328,681 19,723,220 506,837 449,681 Finished goods at the end of the year (1,875,761) (2,829,889)

31 SHORT TERM DEPOSITS AND PREPAYMENTS Cost of goods sold 20,180,881 19,014,459 Cost of construction contracts 1,146,012 2,433,581

Security deposits 21,326,893 21,448,040 Gross amount due 336,231 313,512 Impairment allowance for expected credit losses (5,379) (5,379)

330,852 308,133

Margin deposits 207,323 421,671

Prepayments 46,211 52,865

Sales tax refundable 979,702 -

Letters of credit 327,510 322,510

1,891,598 1,105,179 Note 2019 2018 32 SHORT TERM INVESTMENTS Rupees '000 Rupees '000 These represent investments in listed equity securities classified as 'financial assets at fair value through profit or loss'. The 28 TRADE DEBTS details are as follows: Gross amount due - against sale of goods 8,723,451 7,090,620 Note 2019 2018

- against execution of construction contracts 28.1 1,206,697 3,054,705 Rupees '000 Rupees '000

9,930,148 10,145,325 Standard Chartered Bank (Pakistan) Limited Impairment allowance for expected credit losses 28.2 (612,535) (587,301) 915,070 (2018: 915,070) ordinary shares of Rs. 10 each 9,317,613 9,558,024 Market value: Rs. 23.60 (2018: Rs. 24.12) per share

28.1 These include retention money for construction contracts in progress amounting to Rs. 551.251 million (2018: Rs. 617.648 As at beginning of the year 22,071 21,824 million) held by the customers in accordance with contract terms. Changes in fair value 37 & 40 (475) 247 As at end of the year 21,596 22,071 Note 2019 2018 Rupees '000 Rupees '000 33 ADVANCE INCOME TAX/INCOME TAX REFUNDABLE

28.2 Movement in impairment allowance for expected credit losses Advance income tax/income tax refundable 2,299,396 2,129,147 Provision for taxation 42 - (143,362) As at beginning of the year 587,301 576,971 Recognized during the year 39 25,234 10,330 2,299,396 1,985,785 As at end of the year 612,535 587,301 34 CASH AND BANK BALANCES 29 CONSTRUCTION WORK IN PROGRESS Cash in hand 11,891 16,818 This represents unbilled construction work in progress. Cash at banks 502,016 454,440 513,907 471,258 Note 2019 2018 Rupees '000 Rupees '000 35 NET REVENUE 30 SHORT TERM ADVANCES This represents revenue recognized from contracts with customers Advances to suppliers and contractors Sale of goods Gross amount due 620,050 622,554 - local 35,649,614 35,201,408 Impairment allowance for doubtful advances (32,730) (32,730) - exports 606,054 888,957 587,320 589,824 36,255,668 36,090,365 Advances to employees Construction contracts 1,365,601 2,899,882 Gross amount due 30.1 508,286 451,130 Impairment allowance for doubtful advances (1,449) (1,449) 37,621,269 38,990,247 506,837 449,681 Sales tax and excise duty (5,346,720) (3,710,466) Advances to customers 589,497 623,715 Trade discounts (4,374,631) (6,834,470) 1,683,654 1,663,220 (9,721,351) (10,544,936) 27,899,918 28,445,311 30.1 These include advances for

- purchases 225,807 230,008 36 COST OF SALES - expenses 125,672 105,524

- traveling 155,358 114,149 Finished goods at the beginning of the year 2,829,889 2,121,128 Cost of goods manufactured 36.1 19,328,681 19,723,220 506,837 449,681 Finished goods at the end of the year (1,875,761) (2,829,889)

31 SHORT TERM DEPOSITS AND PREPAYMENTS Cost of goods sold 20,180,881 19,014,459 Cost of construction contracts 1,146,012 2,433,581

Security deposits 21,326,893 21,448,040 Gross amount due 336,231 313,512 Impairment allowance for expected credit losses (5,379) (5,379)

330,852 308,133

Margin deposits 207,323 421,671

Prepayments 46,211 52,865

Sales tax refundable 979,702 -

Letters of credit 327,510 322,510

1,891,598 1,105,179 Note 2019 2018 38.1 These include charge in respect of employees retirement benefits amounting to Rs. 17.446 million (2018: Rs. 17.108 million). Rupees '000 Rupees '000 38.2 These include notional interest expense amounting to Rs. 21,745 million (2018: Rs. 104.034 million) on long term advances. 36.1 Cost of goods manufactured (See note 25.2). Work-in-process at beginning of the year 758,928 848,453

Raw material and components consumed 16,289,944 16,936,321 Note 2019 2018

Direct wages 859,985 799,473 Rupees '000 Rupees '000

Factory overheads: - salaries, wages and benefits 460,306 422,952 39 ADMINISTRATIVE AND GENERAL EXPENSES

- traveling and conveyance 29,023 27,930 Salaries and benefits 39.1 643,820 557,738

- electricity, gas and water 355,619 339,186 Traveling and conveyance 60,028 52,271

- repairs and maintenance 72,215 68,323 Rent, rates and taxes 110,598 101,253

- vehicles running and maintenance 31,406 30,060 Ujrah payments 40,229 46,788

- insurance 36,990 35,855 Legal and professional 80,241 67,721 - depreciation 21.4 910,818 772,241 Electricity, gas and water 40,962 36,223 - amortization of intangible assets 22 10,822 10,203 Auditor's remuneration 39.2 5,900 5,877 - provision for obsolete and slow moving stock 26 & 27 2,877 2,522 Repairs and maintenance 24,059 20,907 - carriage and freight 26,022 23,742 Vehicles running and maintenance 23,558 20,305 - erection and testing 125,106 151,605 Printing, stationery and periodicals 5,334 5,016 - other factory overheads 15,455 13,282 Postage, telegrams and telephones 10,605 9,791 Entertainment and staff welfare 20,234 17,447 2,076,659 1,897,901 Advertisement 7,168 12,693 19,985,516 20,482,148 Insurance 15,987 15,105 Work-in-process at end of the year (656,835) (758,928) Provision for expected credit losses 25,234 10,330 19,328,681 19,723,220 Depreciation 21.4 63,836 68,660 Others 51,969 25,527 36.2 These include charge in respect of employees retirement benefits amounting to Rs. 37.005 million (2018: Rs. 39.401 million). 1,229,762 1,073,652 Note 2019 2018 Rupees '000 Rupees '000 39.1 These include charge in respect of employees retirement benefits amounting to Rs. 25.292 million (2018: Rs. 21.544 million). 37 OTHER INCOME Note 2019 2018 Gain on financial instruments Rupees '000 Rupees '000 Reversal of impairment loss on long term investments 23 1,584 593 Changes in fair value of short term investments at fair value through profit and loss 32 - 247 39.2 Auditor's remuneration Gain on sale and lease back activities 13,364 - Annual statutory audit 4,300 4,300 Gain on disposal of property, plant and equipment - 2,267 Limited scope review 800 800 14,948 3,107 Review report under corporate governance 500 500 Other income Out of pocket expenses 300 277 Amortization of grant-in-aid 16 1,839 1,936 5,900 5,877 Others 17,100 12,934 18,939 14,870 40 OTHER EXPENSES 33,887 17,977 Loss on financial instruments 38 DISTRIBUTION COST Changes in fair value of short term investments at fair value through profit and loss 32 475 - Loss on disposal of property, plant and equipment 10,470 - Salaries and benefits 38.1 494,326 468,433 Loss on sale and lease back activities - 4,721 Traveling and conveyance 86,346 89,541 Rent, rates and taxes 101,432 111,552 10,945 4,721 Electricity, gas, fuel and water 23,977 23,116 Others Repairs and maintenance 8,277 8,555 Workers' Profit Participation Fund 17.2 11,431 26,772 Vehicles running and maintenance 56,821 59,421 Workers' Welfare Fund 17.3 18,011 31,883 Printing and stationery 11,030 11,680 Donations 4,655 7,674 Postage, telegrams and telephones 24,183 25,815 Others 11,830 - Entertainment and staff welfare 37,278 38,007

Advertisement and sales promotion 295,472 462,122 45,927 66,329

Insurance 17,214 17,940 56,872 71,050 Freight and forwarding 381,941 451,391 Contract and tendering 1,663 1,981 Warranty period services 303,261 317,342

Others 38.2 113,159 120,549

1,956,380 2,207,445 Note 2019 2018 38.1 These include charge in respect of employees retirement benefits amounting to Rs. 17.446 million (2018: Rs. 17.108 million). Rupees '000 Rupees '000 38.2 These include notional interest expense amounting to Rs. 21,745 million (2018: Rs. 104.034 million) on long term advances. 36.1 Cost of goods manufactured (See note 25.2). Work-in-process at beginning of the year 758,928 848,453

Raw material and components consumed 16,289,944 16,936,321 Note 2019 2018

Direct wages 859,985 799,473 Rupees '000 Rupees '000

Factory overheads: - salaries, wages and benefits 460,306 422,952 39 ADMINISTRATIVE AND GENERAL EXPENSES

- traveling and conveyance 29,023 27,930 Salaries and benefits 39.1 643,820 557,738

- electricity, gas and water 355,619 339,186 Traveling and conveyance 60,028 52,271

- repairs and maintenance 72,215 68,323 Rent, rates and taxes 110,598 101,253

- vehicles running and maintenance 31,406 30,060 Ujrah payments 40,229 46,788

- insurance 36,990 35,855 Legal and professional 80,241 67,721 - depreciation 21.4 910,818 772,241 Electricity, gas and water 40,962 36,223 - amortization of intangible assets 22 10,822 10,203 Auditor's remuneration 39.2 5,900 5,877 - provision for obsolete and slow moving stock 26 & 27 2,877 2,522 Repairs and maintenance 24,059 20,907 - carriage and freight 26,022 23,742 Vehicles running and maintenance 23,558 20,305 - erection and testing 125,106 151,605 Printing, stationery and periodicals 5,334 5,016 - other factory overheads 15,455 13,282 Postage, telegrams and telephones 10,605 9,791 Entertainment and staff welfare 20,234 17,447 2,076,659 1,897,901 Advertisement 7,168 12,693 19,985,516 20,482,148 Insurance 15,987 15,105 Work-in-process at end of the year (656,835) (758,928) Provision for expected credit losses 25,234 10,330 19,328,681 19,723,220 Depreciation 21.4 63,836 68,660 Others 51,969 25,527 36.2 These include charge in respect of employees retirement benefits amounting to Rs. 37.005 million (2018: Rs. 39.401 million). 1,229,762 1,073,652 Note 2019 2018 Rupees '000 Rupees '000 39.1 These include charge in respect of employees retirement benefits amounting to Rs. 25.292 million (2018: Rs. 21.544 million). 37 OTHER INCOME Note 2019 2018 Gain on financial instruments Rupees '000 Rupees '000 Reversal of impairment loss on long term investments 23 1,584 593 Changes in fair value of short term investments at fair value through profit and loss 32 - 247 39.2 Auditor's remuneration Gain on sale and lease back activities 13,364 - Annual statutory audit 4,300 4,300 Gain on disposal of property, plant and equipment - 2,267 Limited scope review 800 800 14,948 3,107 Review report under corporate governance 500 500 Other income Out of pocket expenses 300 277 Amortization of grant-in-aid 16 1,839 1,936 5,900 5,877 Others 17,100 12,934 18,939 14,870 40 OTHER EXPENSES 33,887 17,977 Loss on financial instruments 38 DISTRIBUTION COST Changes in fair value of short term investments at fair value through profit and loss 32 475 - Loss on disposal of property, plant and equipment 10,470 - Salaries and benefits 38.1 494,326 468,433 Loss on sale and lease back activities - 4,721 Traveling and conveyance 86,346 89,541 Rent, rates and taxes 101,432 111,552 10,945 4,721 Electricity, gas, fuel and water 23,977 23,116 Others Repairs and maintenance 8,277 8,555 Workers' Profit Participation Fund 17.2 11,431 26,772 Vehicles running and maintenance 56,821 59,421 Workers' Welfare Fund 17.3 18,011 31,883 Printing and stationery 11,030 11,680 Donations 4,655 7,674 Postage, telegrams and telephones 24,183 25,815 Others 11,830 - Entertainment and staff welfare 37,278 38,007

Advertisement and sales promotion 295,472 462,122 45,927 66,329

Insurance 17,214 17,940 56,872 71,050 Freight and forwarding 381,941 451,391 Contract and tendering 1,663 1,981 Warranty period services 303,261 317,342

Others 38.2 113,159 120,549

1,956,380 2,207,445 Note 2019 2018 Unit 2019 2018 Rupees '000 Rupees '000 43 EARNINGS PER SHARE - BASIC AND DILUTED 41 FINANCE COST Earnings Interest/markup/profit on borrowings:

redeemable capital 1,958 19,655 Profit after taxation Rupees '000' 878,593 1,371,469

long term finances 650,503 443,864 Preference dividend for the year Rupees '000' (42,710) (42,710)

lease liabilities 25,223 6,362 Profit attributable to ordinary shareholders Rupees '000' 835,883 1,328,759 short term borrowings 1,547,712 1,168,730

Shares 2,225,396 1,638,611

Interest on Workers' Profit Participation Fund 17.2 1,516 4,940 Weighted average number of ordinary shares outstanding during the year No. of shares 497,681,485 497,681,485 Bank charges and commission 253,176 459,792 2,480,088 2,103,343 Earnings per share

Basic and diluted Rupees 1.68 2.67 42 TAXATION 43.1 As per the opinion of the Group's legal counsel, the provision for dividend at 9.5% per annum, under the original terms of Provision for taxation 33 & 42.1 issue of preference shares, will prevail on account of preference dividend. for current year - 143,362 43.2 There is no diluting effect on the basic earnings per share of the Group as the conversion rights pertaining to outstanding for prior year - (91,639) preference shares, under the original terms of issue, are no longer exercisable. - 51,723 Deferred taxation 2019 2018 adjustment attributable to origination and reversal of temporary differences 2,411 162,516 Rupees '000 Rupees '000 adjustment attributable to changes in tax rates 15.1 - (28,406) 44 CASH GENERATED FROM OPERATIONS 2,411 134,110 Profit before taxation 881,004 1,557,302 2,411 185,833 Adjustments for non-cash and other items 42.1 Provision for current tax has been made in accordance with section 113 and 154 (2018: section 18 and 154) of the Income Tax Interest/markup/profit on borrowings 2,225,396 1,638,611 Ordinance, 2001 ['the Ordinance']. Provision for the current year is nil due to utilization of available tax credits. No Notional interest 64,209 104,034 reconciliation between applicable tax rate and the average effective tax rate has been presented accordingly. Loss/(gain) on disposal of property, plant and equipment 10,470 (2,267) Amortization of grant-in-aid (1,839) (1,936) 42.2 Reconciliation between average effective tax rate and applicable tax rate for the year ended December 31, 2018. Amortization of intangible assets 10,822 10,203 Share of loss of associate 2,806 2,456 Unit 2018 Reversal of impairment loss on long term investments (1,584) (593) Changes in fair value of financial assets at fair value through profit or loss 475 (247) Profit before taxation Rupees 1,557,302 Impairment allowance for expected credit losses 25,234 10,330 Impairmrnt allowance for obsolete and slow moving stock 2,877 2,522 Provision for taxation Rupees 185,833 (Gain)/loss on sale and lease back activities (13,364) 4,721 Average effective tax rate % 11.93 Depreciation 974,654 840,901 3,300,156 2,608,735 Tax effects of: 4,181,160 4,166,037 Income taxable under final tax regime % (3.74) Changes in working capital Admissible deductions, losses and tax credits % 25.39 Stores, spares and loose tools 10,798 (112,737) Deferred taxation % (8.61) Stock in trade 2,989,712 (2,638,831) Others % 4.03 Trade debts 215,177 535,563 Applicable tax rate % 29.00 Contract assets (161,774) (142,550) Short term advances (54,652) (193,679) 42.3 Assessments upto Tax Year 2019 have been finalized under the relevant provisions of the Ordinance execpt for Tax Year 2009, Short term deposits and prepayments (786,419) 4,053 2016 and 2017. See note 20.1.5. Other receivables (40,892) (49,872) Long term advances (151,702) (416,285) Long term deposits 5,777 5,979 Warranty obligation 32,452 - Trade and other payables (35,534) (57,180) 2,022,943 (3,065,539) Cash generated from operations 6,204,103 1,100,498 Note 2019 2018 Unit 2019 2018 Rupees '000 Rupees '000 43 EARNINGS PER SHARE - BASIC AND DILUTED 41 FINANCE COST Earnings Interest/markup/profit on borrowings: redeemable capital 1,958 19,655 Profit after taxation Rupees '000' 878,593 1,371,469 long term finances 650,503 443,864 Preference dividend for the year Rupees '000' (42,710) (42,710) lease liabilities 25,223 6,362 Profit attributable to ordinary shareholders Rupees '000' 835,883 1,328,759 short term borrowings 1,547,712 1,168,730

Shares 2,225,396 1,638,611

Interest on Workers' Profit Participation Fund 17.2 1,516 4,940 Weighted average number of ordinary shares outstanding during the year No. of shares 497,681,485 497,681,485 Bank charges and commission 253,176 459,792 2,480,088 2,103,343 Earnings per share

Basic and diluted Rupees 1.68 2.67 42 TAXATION 43.1 As per the opinion of the Group's legal counsel, the provision for dividend at 9.5% per annum, under the original terms of Provision for taxation 33 & 42.1 issue of preference shares, will prevail on account of preference dividend. for current year - 143,362 43.2 There is no diluting effect on the basic earnings per share of the Group as the conversion rights pertaining to outstanding for prior year - (91,639) preference shares, under the original terms of issue, are no longer exercisable. - 51,723 Deferred taxation 2019 2018 adjustment attributable to origination and reversal of temporary differences 2,411 162,516 Rupees '000 Rupees '000 adjustment attributable to changes in tax rates 15.1 - (28,406) 44 CASH GENERATED FROM OPERATIONS 2,411 134,110 Profit before taxation 881,004 1,557,302 2,411 185,833 Adjustments for non-cash and other items 42.1 Provision for current tax has been made in accordance with section 113 and 154 (2018: section 18 and 154) of the Income Tax Interest/markup/profit on borrowings 2,225,396 1,638,611 Ordinance, 2001 ['the Ordinance']. Provision for the current year is nil due to utilization of available tax credits. No Notional interest 64,209 104,034 reconciliation between applicable tax rate and the average effective tax rate has been presented accordingly. Loss/(gain) on disposal of property, plant and equipment 10,470 (2,267) Amortization of grant-in-aid (1,839) (1,936) 42.2 Reconciliation between average effective tax rate and applicable tax rate for the year ended December 31, 2018. Amortization of intangible assets 10,822 10,203 Share of loss of associate 2,806 2,456 Unit 2018 Reversal of impairment loss on long term investments (1,584) (593) Changes in fair value of financial assets at fair value through profit or loss 475 (247) Profit before taxation Rupees 1,557,302 Impairment allowance for expected credit losses 25,234 10,330 Impairmrnt allowance for obsolete and slow moving stock 2,877 2,522 Provision for taxation Rupees 185,833 (Gain)/loss on sale and lease back activities (13,364) 4,721 Average effective tax rate % 11.93 Depreciation 974,654 840,901 3,300,156 2,608,735 Tax effects of: 4,181,160 4,166,037 Income taxable under final tax regime % (3.74) Changes in working capital Admissible deductions, losses and tax credits % 25.39 Stores, spares and loose tools 10,798 (112,737) Deferred taxation % (8.61) Stock in trade 2,989,712 (2,638,831) Others % 4.03 Trade debts 215,177 535,563 Applicable tax rate % 29.00 Contract assets (161,774) (142,550) Short term advances (54,652) (193,679) 42.3 Assessments upto Tax Year 2019 have been finalized under the relevant provisions of the Ordinance execpt for Tax Year 2009, Short term deposits and prepayments (786,419) 4,053 2016 and 2017. See note 20.1.5. Other receivables (40,892) (49,872) Long term advances (151,702) (416,285) Long term deposits 5,777 5,979 Warranty obligation 32,452 - Trade and other payables (35,534) (57,180) 2,022,943 (3,065,539) Cash generated from operations 6,204,103 1,100,498 Note 2019 2018 47 CONTRACTS WITH CUSTOMERS Rupees '000 Rupees '000 47.1 Disaggregation of revenue 45 CASH AND CASH EQUIVALENTS The table below provides disaggregation of revenue and its relationship with revenue information disclosued for the Cash and bank balances 34 513,907 471,258 Group's Operating Segments presented in note 53. 513,907 471,258 Power Division Appliances Division Total 46 TRANSACTIONS AND BALANCES WITH RELATED PARTIES 2019 2018 2019 2018 2019 2018 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Related parties from the Group's perspective comprise associated companies and undertakings, key management personnel and post employment benefit plan. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, and includes the Chief Product/service lines Executive and Directors of the Parent Company. The details of Group's related parties, with whom the Group had transactions Home appliances - - 27,787,338 27,275,501 27,787,338 27,275,501 during the year or has balances outstanding as at the reporting date are as follows: Electrical capital goods 8,468,330 8,814,864 - - 8,468,330 8,814,864 Name of related party Nature of relationship Basis of relationship Aggregate Construction contracts 1,365,601 2,899,882 - - 1,365,601 2,899,882 %age of shareholding 9,833,931 11,714,746 27,787,338 27,275,501 37,621,269 38,990,247 in the Company Timing of revenue recognition Pak Elektron Limited Employees Provident Fund Trust Provident Fund Trust Contribution to providend fund 0.00% Products transferred at a PEL Marketing (Private) Limited Subsidiary Investment 0.00% point in time 8,468,330 8,814,864 27,787,338 27,275,501 36,255,668 36,090,365 Kohinoor Power Company Limited Associated company Investment 0.00% Products/services Red Comminication Arts transferred over time 1,365,601 2,899,882 - - 1,365,601 2,899,882 (Private) Limited Associated company Common directorship 0.00% 9,833,931 11,714,746 27,787,338 27,275,501 37,621,269 38,990,247 Mr. M. Murad Saigol Key management personnel Chief executive 0.0025% Mr. M. Zeid Yousuf Saigol Key management personnel Director 2.9637% 47.2 Contract balances Mr. Syed Manzar Hassan Key management personnel Director 0.0004%

Transactions with key management personnel are limited to payment of short term and post employment benefits, advances The information about receivables, contract assets and contract liabilties from contracts with customers is as follows: against issue of ordinary shares and dividend payments. Transactions with post employment benefit plan are limited to Nature of balance Presented in financial statements as Note 2019 2018 employer's contribution made. The Group in the normal course of business carries out various transactions with its associated companies and continues to have a policy whereby all such transactions are carried out on commercial terms and Rupees '000' Rupees '000' conditions which are equivalent to those prevailing in an arm's length transaction. Receivables Trade debts 28 9,317,613 9,558,024 Details of transactions and balances with related parties are as follows: Contract assets Construction work in progress 29 1,697,509 1,535,735 Contract liabilties Advances from customers 17 82,678 93,969 Note 2019 2018 11,097,800 11,187,728 Rupees '000 Rupees '000 46.1 Transactions with related parties 47.3 Changes in contract assets and liabilities Nature of relationship Nature of transactions Significant changes in contract assets and contract liabilities during the year Provident Fund Trust Contribution for the year 79,743 71,646 are as follows: Contract Contract Associated companies and undertakings Purchase of services 76,743 50,304 assets liabilities Rupees '000' Rupees '000' Key management personnel Short term employee benefits 52 47,974 50,125 Post employment benefits 52 1,760 1,600 As at beginning of the year 1,535,735 93,969 Revenue recognized against contract liabilty as at beginning of the year - (93,969) Directors and sponsors Dividend paid 3,598 295,933 Net increase due to cash received in excess of revenue recognized - 82,678 Transfers from contracts assets recognized at the beginning of the year to receivables (1,535,735) - 46.2 Balances with related parties Net increases as a result of contract activity 1,697,509 - As at end of the year 1,697,509 82,678 Nature of relationship Nature of balances Provident Fund Trust Contribution payable 6,774 11,247

Key management personnel Short term employee benefits payable 1,356 2,805

Associated companies and undertakings Purchase of services 11,921 - Note 2019 2018 47 CONTRACTS WITH CUSTOMERS Rupees '000 Rupees '000 47.1 Disaggregation of revenue 45 CASH AND CASH EQUIVALENTS The table below provides disaggregation of revenue and its relationship with revenue information disclosued for the Cash and bank balances 34 513,907 471,258 Group's Operating Segments presented in note 53. 513,907 471,258 Power Division Appliances Division Total 46 TRANSACTIONS AND BALANCES WITH RELATED PARTIES 2019 2018 2019 2018 2019 2018 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Related parties from the Group's perspective comprise associated companies and undertakings, key management personnel and post employment benefit plan. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, and includes the Chief Product/service lines Executive and Directors of the Parent Company. The details of Group's related parties, with whom the Group had transactions Home appliances - - 27,787,338 27,275,501 27,787,338 27,275,501 during the year or has balances outstanding as at the reporting date are as follows: Electrical capital goods 8,468,330 8,814,864 - - 8,468,330 8,814,864 Name of related party Nature of relationship Basis of relationship Aggregate Construction contracts 1,365,601 2,899,882 - - 1,365,601 2,899,882 %age of shareholding 9,833,931 11,714,746 27,787,338 27,275,501 37,621,269 38,990,247 in the Company Timing of revenue recognition Pak Elektron Limited Employees Provident Fund Trust Provident Fund Trust Contribution to providend fund 0.00% Products transferred at a PEL Marketing (Private) Limited Subsidiary Investment 0.00% point in time 8,468,330 8,814,864 27,787,338 27,275,501 36,255,668 36,090,365 Kohinoor Power Company Limited Associated company Investment 0.00% Products/services Red Comminication Arts transferred over time 1,365,601 2,899,882 - - 1,365,601 2,899,882 (Private) Limited Associated company Common directorship 0.00% 9,833,931 11,714,746 27,787,338 27,275,501 37,621,269 38,990,247 Mr. M. Murad Saigol Key management personnel Chief executive 0.0025% Mr. M. Zeid Yousuf Saigol Key management personnel Director 2.9637% 47.2 Contract balances Mr. Syed Manzar Hassan Key management personnel Director 0.0004%

Transactions with key management personnel are limited to payment of short term and post employment benefits, advances The information about receivables, contract assets and contract liabilties from contracts with customers is as follows: against issue of ordinary shares and dividend payments. Transactions with post employment benefit plan are limited to Nature of balance Presented in financial statements as Note 2019 2018 employer's contribution made. The Group in the normal course of business carries out various transactions with its associated companies and continues to have a policy whereby all such transactions are carried out on commercial terms and Rupees '000' Rupees '000' conditions which are equivalent to those prevailing in an arm's length transaction. Receivables Trade debts 28 9,317,613 9,558,024 Details of transactions and balances with related parties are as follows: Contract assets Construction work in progress 29 1,697,509 1,535,735 Contract liabilties Advances from customers 17 82,678 93,969 Note 2019 2018 11,097,800 11,187,728 Rupees '000 Rupees '000 46.1 Transactions with related parties 47.3 Changes in contract assets and liabilities Nature of relationship Nature of transactions Significant changes in contract assets and contract liabilities during the year Provident Fund Trust Contribution for the year 79,743 71,646 are as follows: Contract Contract Associated companies and undertakings Purchase of services 76,743 50,304 assets liabilities Rupees '000' Rupees '000' Key management personnel Short term employee benefits 52 47,974 50,125 Post employment benefits 52 1,760 1,600 As at beginning of the year 1,535,735 93,969 Revenue recognized against contract liabilty as at beginning of the year - (93,969) Directors and sponsors Dividend paid 3,598 295,933 Net increase due to cash received in excess of revenue recognized - 82,678 Transfers from contracts assets recognized at the beginning of the year to receivables (1,535,735) - 46.2 Balances with related parties Net increases as a result of contract activity 1,697,509 - As at end of the year 1,697,509 82,678 Nature of relationship Nature of balances Provident Fund Trust Contribution payable 6,774 11,247

Key management personnel Short term employee benefits payable 1,356 2,805

Associated companies and undertakings Purchase of services 11,921 - 48 FINANCIAL INSTRUMENTS 49.1.1 Credit risk management practices

The carrying amounts of the Company's financial instruments by class and category are as follows: In order to minimise credit risk, the Group has adopted a policy of only dealing with creditworthty counterparties and limiting significant exposure to any single counterparty. The Group only transacts with counterparties that have reasonably high external credit ratings. Where an external rating is not available, the Group uses an internal credit risk grading mechanism. 2019 2018 Particularly for customers, a dedicated team responsible for the determination of credit limits uses a credit scoring system to Rupees '000 Rupees '000 assess the potential as well as existing customers' credit quality and assigns or updates credit limits accordingly. The ageing profile of trade debts and individually significant balances, along with collection activities are reviewed on a regular basis. 48.1 Financial assets High risk customers are identified and restrictions are placed on future trading, including suspending future shipments and administering dispatches on a prepayment basis or confirmed letters of credit. Cash in hand 11,891 16,818 The Group reviews the recoverable amount of each financial asset on an individual basis at each reporting date to ensure that adequate loss allowance is made in accordnace with the assessment of credit risk for each financial asset. Financial assets at amortized cost

Long term deposits 332,579 358,099 The Group considers a financial asset to have low credit risk when the asset has reasonably high external credit rating or if an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has no Long term advances 1,820,302 1,732,809 past due amounts or otherwise there is no significant increase in credit risk if the amounts are past due in the normal course of Trade debts 9,317,613 9,558,024 business based on history with the counterparty. Short term deposits 207,323 421,671 Cash at banks 502,016 454,440 In assessing whether the credit risk on a financial asset has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial asset at the reporting date with the risk of a default occurring on the 12,179,833 12,525,043 financial asset at the date of initial recognition. In making this assessment, the Group considers both quantitative and Financial assets mandatorily measured at fair value qualitative information that is reasonable and supportable, including historical experience and forward-looking information through profit or loss that is available without undue cost or effort. Irrespective of the outcome of the above assessment, the Group presumes that Short term investments 21,596 22,071 the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise. This is 12,213,320 12,563,932 usually the case with various customers of the Group where the Group has long standing business relationship with these customers and any amounts that are past due by more than 30 days in the normal course of business are considered 48.2 Financial liabilities 'performing' based on history with the customers. Therefore despite the foregoing, the Group considers some past due trade debts to have low credit risk where the customer has a good history of meeting its contractual cash flow obligations and is expected to maintain the same in future. Financial liabilities at amortized cost Redeemable capital - 101,875 The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in Long term finances 4,407,403 4,315,878 credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk. Leased liabilities 241,094 102,368

Trade creditors 468,541 414,995 The Group considers 'default' to have occurred when the financial asset is credit-impaired. A financial asset is ocnsidered to Foreign bills payable 101,960 108,823 be credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that Accrued liabilities 145,488 182,301 financial asset have occurred. Employees' provident fund 6,774 11,247 Compensated absences 33,902 34,162 The Group writes off a financial asset when there is information indicating that the counter-party is in severe financial Unclaimed dividend 15,052 18,650 condition and there is no realistic prospect of recovery. Other payables 18,531 19,659 The Group's credit risk grading framework comprises the following categories: Accrued interest/markup/profit 488,912 390,172 Short term borrowings 10,955,490 12,843,848 Category Description Basis for recognizing ECL 16,883,147 18,543,978 Performing The counterparty has low credit risk Trade debts: Lifetime ECL 49 FINANCIAL RISK EXPOSURE AND MANAGEMENT Other assets: Twelve month ECL Doubtful Credit risk has increased significantly since initial recognition Lifetime ECL The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk, interest rate risk and price risk). These risks affect revenues, expenses and assets and liabilities of the Group. In default There is evidence indicating the assets is credit-impaired Lifetime ECL Write-off There is no realistic prospect of recovery Amount is written-off The Board of Directors has the overall responsibility for establishment and oversight of risk management framework. The Board of Directors has developed a risk policy that sets out fundamentals of risk management framework. The risk policy 49.1.2 Exposure to credit risk focuses on unpredictability of financial markets, the Group's exposure to risk of adverse effects thereof and objectives, policies and processes for measuring and managing such risks. The management team of the Group is responsible for Credit risk principally arises from debt instruments held by the Group as at the reporting date. The maximum exposure to administering and monitoring the financial and operational financial risk management throughout the Group in accordance credit risk as at the reporting date is as follows: with the risk management framework. Note 2019 2018 The Group’s exposure to financial risks, the way these risks affect the financial position and performance, and forecast Rupees Rupees transactions of the Group and the manner in which such risks are managed is as follows: Financial assets at amortized cost 49.1 Credit risk Long term deposits 24 332,579 358,099 Credit risk is the risk of financial loss to the Group, if the counterparty to a financial instrument fails to meet its obligations. Long term advances 25 1,230,805 1,109,094 Trade debts 28 9,930,148 10,145,325 Short term deposits 31 207,323 421,671 Bank balances 34 502,016 454,440 12,202,871 12,488,629 48 FINANCIAL INSTRUMENTS 49.1.1 Credit risk management practices

The carrying amounts of the Company's financial instruments by class and category are as follows: In order to minimise credit risk, the Group has adopted a policy of only dealing with creditworthty counterparties and limiting significant exposure to any single counterparty. The Group only transacts with counterparties that have reasonably high external credit ratings. Where an external rating is not available, the Group uses an internal credit risk grading mechanism. 2019 2018 Particularly for customers, a dedicated team responsible for the determination of credit limits uses a credit scoring system to Rupees '000 Rupees '000 assess the potential as well as existing customers' credit quality and assigns or updates credit limits accordingly. The ageing profile of trade debts and individually significant balances, along with collection activities are reviewed on a regular basis. 48.1 Financial assets High risk customers are identified and restrictions are placed on future trading, including suspending future shipments and administering dispatches on a prepayment basis or confirmed letters of credit. Cash in hand 11,891 16,818 The Group reviews the recoverable amount of each financial asset on an individual basis at each reporting date to ensure that adequate loss allowance is made in accordnace with the assessment of credit risk for each financial asset. Financial assets at amortized cost

Long term deposits 332,579 358,099 The Group considers a financial asset to have low credit risk when the asset has reasonably high external credit rating or if an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has no Long term advances 1,820,302 1,732,809 past due amounts or otherwise there is no significant increase in credit risk if the amounts are past due in the normal course of Trade debts 9,317,613 9,558,024 business based on history with the counterparty. Short term deposits 207,323 421,671 Cash at banks 502,016 454,440 In assessing whether the credit risk on a financial asset has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial asset at the reporting date with the risk of a default occurring on the 12,179,833 12,525,043 financial asset at the date of initial recognition. In making this assessment, the Group considers both quantitative and Financial assets mandatorily measured at fair value qualitative information that is reasonable and supportable, including historical experience and forward-looking information through profit or loss that is available without undue cost or effort. Irrespective of the outcome of the above assessment, the Group presumes that Short term investments 21,596 22,071 the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise. This is 12,213,320 12,563,932 usually the case with various customers of the Group where the Group has long standing business relationship with these customers and any amounts that are past due by more than 30 days in the normal course of business are considered 48.2 Financial liabilities 'performing' based on history with the customers. Therefore despite the foregoing, the Group considers some past due trade debts to have low credit risk where the customer has a good history of meeting its contractual cash flow obligations and is expected to maintain the same in future. Financial liabilities at amortized cost Redeemable capital - 101,875 The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in Long term finances 4,407,403 4,315,878 credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk. Leased liabilities 241,094 102,368

Trade creditors 468,541 414,995 The Group considers 'default' to have occurred when the financial asset is credit-impaired. A financial asset is ocnsidered to Foreign bills payable 101,960 108,823 be credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that Accrued liabilities 145,488 182,301 financial asset have occurred. Employees' provident fund 6,774 11,247 Compensated absences 33,902 34,162 The Group writes off a financial asset when there is information indicating that the counter-party is in severe financial Unclaimed dividend 15,052 18,650 condition and there is no realistic prospect of recovery. Other payables 18,531 19,659 The Group's credit risk grading framework comprises the following categories: Accrued interest/markup/profit 488,912 390,172 Short term borrowings 10,955,490 12,843,848 Category Description Basis for recognizing ECL 16,883,147 18,543,978 Performing The counterparty has low credit risk Trade debts: Lifetime ECL 49 FINANCIAL RISK EXPOSURE AND MANAGEMENT Other assets: Twelve month ECL Doubtful Credit risk has increased significantly since initial recognition Lifetime ECL The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk, interest rate risk and price risk). These risks affect revenues, expenses and assets and liabilities of the Group. In default There is evidence indicating the assets is credit-impaired Lifetime ECL Write-off There is no realistic prospect of recovery Amount is written-off The Board of Directors has the overall responsibility for establishment and oversight of risk management framework. The Board of Directors has developed a risk policy that sets out fundamentals of risk management framework. The risk policy 49.1.2 Exposure to credit risk focuses on unpredictability of financial markets, the Group's exposure to risk of adverse effects thereof and objectives, policies and processes for measuring and managing such risks. The management team of the Group is responsible for Credit risk principally arises from debt instruments held by the Group as at the reporting date. The maximum exposure to administering and monitoring the financial and operational financial risk management throughout the Group in accordance credit risk as at the reporting date is as follows: with the risk management framework. Note 2019 2018 The Group’s exposure to financial risks, the way these risks affect the financial position and performance, and forecast Rupees Rupees transactions of the Group and the manner in which such risks are managed is as follows: Financial assets at amortized cost 49.1 Credit risk Long term deposits 24 332,579 358,099 Credit risk is the risk of financial loss to the Group, if the counterparty to a financial instrument fails to meet its obligations. Long term advances 25 1,230,805 1,109,094 Trade debts 28 9,930,148 10,145,325 Short term deposits 31 207,323 421,671 Bank balances 34 502,016 454,440 12,202,871 12,488,629 49.1.3 Credit quality and impairment 49.1.4 Concentrations of credit risk

Credit quality of financial assets is assessed by reference to external credit ratings, where available, or to internal credit risk There are no significant concentrations of credit risk, except for trade debts. The Group's one (2018: two) significant grading. The credit quality of the Group’s financial assets exposed to credit risk is as follows: customer account for Rs. 325.405 million (2018: Rs. 930.603 million) of trade debts as at the reporting date, apart from which, exposure to any single customer does not exceed 10% (2018: 10%) of trade debts as at the reporting date. These significant External Internal credit 12-month or Gross carrying Loss customers have long standing business relationships with the Group and have a good payment record and accordingly non- Note rating risk grading life-time ECL amount allowance performance by these customers is not expected.

49.1.5 Collateral held Long term deposits 24 N/A Performing 12-month 332,579 - ECL The Group does not hold any collateral to secure its financial assets. Long term advances 25 N/A Performing 12-month 1,230,805 - 49.1.6 Changes in impairment allowance for expected credit losses ECL Trade debts 28 N/A Performing Lifetime ECL 8,730,312 - The changes in impairment allowance for expected credit losses have been presented in note 28. N/A Doubtfull Lifetime ECL 612,535 N/A In-default Lifetime ECL 587,301 612,535 49.2 Liquidity risk 9,930,148 612,535 Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

Short term deposits 31 N/A Performing 12-month 207,323 - 49.2.1 Liquidity risk management ECL Bank balances 34 A3 - A1+, P 2 N/A 12-month 502,016 - The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking ECL damage to the Group's reputation. The Group monitors cash flow requirements and produces cash flow projections for the 12,202,871 612,535 short and long term. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational cash flows, including servicing of financial obligations. This includes maintenance of balance sheet liquidity ratios, debtors and (a) Long term deposits creditors concentration both in terms of overall funding mix and avoidance of undue reliance on large individual customer. The Group also maintains various lines of credit with banking companies. These include deposits placed with various utility companies and regulatory authorities and those place with customers of construction contracts. Deposits with utlity companies and regulatory authorities are substiantially perpatual in 49.2.2 Exposure to liquidity risk nature and therefore no credit risk is associated there with. Deposits with customers are against construction contracts with government departments placed in accoradance with the terms of tender documents and do not carry any The following presents the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed significant credit risk. Accordingly no loss allownace has been made. repayment periods. The analysis have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay and includes both interest/markup/profit and principal cash (b) Long term advances flows. To the extent that interest/markup/profit flows are floating rate, the undiscounted amount is derived from interest/markup/profit rate curves at the reporting date. These advances have been extended to the customers who have long standing bussiness relationship and excellent credit history with Group. No credit risk is associated with these advances and accordingly no loss allowance has been made. 2019 Carrying Contractual One year One to More than (c) Trade debts amount cash flows or less three years three years Rupees Rupees Rupees Rupees Rupees For trade debts, the Group has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The Group determines the expected credit losses on trade debts by using internal credit risk gradings. As at the Redeemable capital - - - - - reporting date, trade debts amounting to Rs 587.301 million and Rs. 612.535 million are concidered 'doubtfull' and 'in- defult' repectively. Othre trade debts are considered 'performing' including those past due as there is no significant Long term finances 4,407,403 5,320,079 2,753,784 2,448,023 118,272 increase in credit risk in respect of these receivables since initial recognition. The ageing analysis of trade receivables as Lease liabilities 241,094 285,779 133,420 152,359 - at the reporting date is as follows: Trade creditors 468,541 468,541 468,541 - - Foreign bills payable 101,960 101,960 101,960 - - 2019 2018 Accrued liabilities 145,488 145,488 145,488 - - Rupees Rupees Employees' provident fund 6,774 6,774 6,774 - - Compensated absences 33,902 33,902 33,902 - - Neither past due nor impaired 7,576,534 7,165,613 Unclaimed dividend 15,052 15,052 15,052 - - Past due by upto 30 days 1,095,453 1,172,774 Other payables 18,531 18,531 18,531 - - Past due by 31 days to 180 days 665,626 1,219,637 Accrued interest/markup/profit 488,912 488,912 488,912 - - Past due by 180 days or more 592,535 587,301 Short term borrowings 10,955,490 10,955,490 10,955,490 - - 9,930,148 10,145,325 16,883,147 17,840,508 15,121,854 2,600,382 118,272 (d) Short term deposits

These are placed with financial institutions with reasonably high credit ratings and therefore no credit loss is expected. Accordingly no loss allowance has been made.

(e) Bank balances

The bankers of the Group have reasonably high credit ratings as determined by various indpendent credit rating agencies. Due to long standing business relationships with these counterparties and considering their strong financial standing, management does not expect any credit loss. 49.1.3 Credit quality and impairment 49.1.4 Concentrations of credit risk

Credit quality of financial assets is assessed by reference to external credit ratings, where available, or to internal credit risk There are no significant concentrations of credit risk, except for trade debts. The Group's one (2018: two) significant grading. The credit quality of the Group’s financial assets exposed to credit risk is as follows: customer account for Rs. 325.405 million (2018: Rs. 930.603 million) of trade debts as at the reporting date, apart from which, exposure to any single customer does not exceed 10% (2018: 10%) of trade debts as at the reporting date. These significant External Internal credit 12-month or Gross carrying Loss customers have long standing business relationships with the Group and have a good payment record and accordingly non- Note rating risk grading life-time ECL amount allowance performance by these customers is not expected.

49.1.5 Collateral held Long term deposits 24 N/A Performing 12-month 332,579 - ECL The Group does not hold any collateral to secure its financial assets. Long term advances 25 N/A Performing 12-month 1,230,805 - 49.1.6 Changes in impairment allowance for expected credit losses ECL Trade debts 28 N/A Performing Lifetime ECL 8,730,312 - The changes in impairment allowance for expected credit losses have been presented in note 28. N/A Doubtfull Lifetime ECL 612,535 N/A In-default Lifetime ECL 587,301 612,535 49.2 Liquidity risk 9,930,148 612,535 Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

Short term deposits 31 N/A Performing 12-month 207,323 - 49.2.1 Liquidity risk management ECL Bank balances 34 A3 - A1+, P 2 N/A 12-month 502,016 - The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking ECL damage to the Group's reputation. The Group monitors cash flow requirements and produces cash flow projections for the 12,202,871 612,535 short and long term. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational cash flows, including servicing of financial obligations. This includes maintenance of balance sheet liquidity ratios, debtors and (a) Long term deposits creditors concentration both in terms of overall funding mix and avoidance of undue reliance on large individual customer. The Group also maintains various lines of credit with banking companies. These include deposits placed with various utility companies and regulatory authorities and those place with customers of construction contracts. Deposits with utlity companies and regulatory authorities are substiantially perpatual in 49.2.2 Exposure to liquidity risk nature and therefore no credit risk is associated there with. Deposits with customers are against construction contracts with government departments placed in accoradance with the terms of tender documents and do not carry any The following presents the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed significant credit risk. Accordingly no loss allownace has been made. repayment periods. The analysis have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay and includes both interest/markup/profit and principal cash (b) Long term advances flows. To the extent that interest/markup/profit flows are floating rate, the undiscounted amount is derived from interest/markup/profit rate curves at the reporting date. These advances have been extended to the customers who have long standing bussiness relationship and excellent credit history with Group. No credit risk is associated with these advances and accordingly no loss allowance has been made. 2019 Carrying Contractual One year One to More than (c) Trade debts amount cash flows or less three years three years Rupees Rupees Rupees Rupees Rupees For trade debts, the Group has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The Group determines the expected credit losses on trade debts by using internal credit risk gradings. As at the Redeemable capital - - - - - reporting date, trade debts amounting to Rs 587.301 million and Rs. 612.535 million are concidered 'doubtfull' and 'in- defult' repectively. Othre trade debts are considered 'performing' including those past due as there is no significant Long term finances 4,407,403 5,320,079 2,753,784 2,448,023 118,272 increase in credit risk in respect of these receivables since initial recognition. The ageing analysis of trade receivables as Lease liabilities 241,094 285,779 133,420 152,359 - at the reporting date is as follows: Trade creditors 468,541 468,541 468,541 - - Foreign bills payable 101,960 101,960 101,960 - - 2019 2018 Accrued liabilities 145,488 145,488 145,488 - - Rupees Rupees Employees' provident fund 6,774 6,774 6,774 - - Compensated absences 33,902 33,902 33,902 - - Neither past due nor impaired 7,576,534 7,165,613 Unclaimed dividend 15,052 15,052 15,052 - - Past due by upto 30 days 1,095,453 1,172,774 Other payables 18,531 18,531 18,531 - - Past due by 31 days to 180 days 665,626 1,219,637 Accrued interest/markup/profit 488,912 488,912 488,912 - - Past due by 180 days or more 592,535 587,301 Short term borrowings 10,955,490 10,955,490 10,955,490 - - 9,930,148 10,145,325 16,883,147 17,840,508 15,121,854 2,600,382 118,272 (d) Short term deposits

These are placed with financial institutions with reasonably high credit ratings and therefore no credit loss is expected. Accordingly no loss allowance has been made.

(e) Bank balances

The bankers of the Group have reasonably high credit ratings as determined by various indpendent credit rating agencies. Due to long standing business relationships with these counterparties and considering their strong financial standing, management does not expect any credit loss. 2018 (c) Exchange rates applied as at the reporting date

Carrying Contractual One year One to More than The following spot exchange rates were applied as at the reporting date. amount cash flows or less three years three years Rupees Rupees Rupees Rupees Rupees 2019 2018 Redeemable capital 101,875 103,885 103,885 - - Rupees Rupees Long term finances 4,315,878 4,962,564 2,059,357 2,903,207 - Lease liabilities 102,368 114,924 50,351 64,573 - GBP - 176.5100 Trade creditors 414,995 414,995 414,995 - - EUR 173.5841 159.1000 Foreign bills payable 108,823 108,823 108,823 - - USD 154.8476 139.1000 Accrued liabilities 182,301 182,301 182,301 - - CHF 159.8674 141.2700 Employees' provident fund 11,247 11,247 11,247 - - CNY 22.2409 20.2100 Compensated absences 34,162 34,162 34,162 - - AED 42.1566 - Unclaimed dividend 18,650 18,650 18,650 - - AUD 108.4785 - Other payables 19,659 19,659 19,659 - - (d) Sensitivity analysis Accrued interest/markup/profit 390,172 390,172 390,172 - -

Short term borrowings 12,843,848 12,843,848 12,843,848 - - A five percent appreciation in Pak Rupee against foreign currencies would have incresed profit for the year and equity as 18,543,978 19,205,230 16,237,450 2,967,780 - at the reporting date by Rs. 5.1 million (2018: Rs. 5.441 million). A five percent depreciation in Pak Rupee would have had an equal but opposite effect on profit for the year and equity. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores the impact, if any, on provision for taxation for the year. 49.3 Market risk 49.3.2 Interest rate risk 49.3.1 Currency risk Interest rate risk is the risk that fair values or future cash flows of a financial instrument will fluctuate because of changes in Currency risk is the risk that fair values or future cash flows of a financial instrument will fluctuate because of changes in interest rates. foreign exchange rates. Currency risk arises from transactions and resulting balances that are denominated in a currency other than functional currency. (a) Interest rate risk management (a) Currency risk management The Group manages interest rate risk by analysing its interest rate exposure on a dynamic basis. Cash flow interest rate risk is managed by simulating various scenarios taking into consideration refinancing, renewal of existing positions and The Group manages its exposure to currency risk through continuous monitoring of expected/forecast committed and alternative financing. Based on these scenarios, the Group calculates impact on profit after taxation and equity of non-committed foreign currency payments and receipts. Reports on forecast foreign currency transactions, receipts defined interest rate shift, mostly 100 basis points. and payments are prepared on monthly basis, exposure to currency risk is measured and appropriate steps are taken to ensure that such exposure is minimized while optimizing return. This includes matching of foreign currency (b) Interest/markup/profit bearing financial instruments liabilities/payments to assets/receipts and using source inputs in foreign currency. The effective interest/markup/profit rates for interest/markup/profit bearing financial instruments are mentioned in (b) Exposure to currency risk relevant notes to the financial statements. The Group's interest/markup/profit bearing financial instruments as at the reporting date are as follows: The Group's exposure to currency risk as at the reporting date is as follows:

2019 2018 2019 2018 Rupees Rupees Rupees Rupees Fixed rate instruments - - Financial assets - -

Financial liabilities Variable rate instruments Foreign bills payable Financial liabilities 15,603,987 17,363,969 - USD (86,161) (92,204) CN (2,617) (16,619) (c) Fair value sensitivity analysis for fixed rate instruments EUR (11,391) - The Group does not have any fixed rate instruments. EUR (1,791) - (101,960) (108,823) (d) Cash flow sensitivity analysis for variable rate instruments

Net balance sheet exposure (101,960) (108,823) An increase of 100 basis points in interest rates as at the reporting date would have decreased profit for the year and Foreign currency commitments equity as at the reporting date by Rs. 156.04 million (2018: Rs. 173.64 million). A decrease of 100 basis points would have had an equal but opposite effect on profit and equity. The analysis assumes that all other variables, in particular CHF (19,546) (17,235) foreign exchange rates, remain constant and ignores the impact, if any, on provision for taxation for the year. CNY (85,928) (28,496) EUR (114,229) (156,714) 49.3.3 Other price risk GBP - (1,059) Other price risk represents the risk that the fair value or future cash flows of financial instrument will fluctuate because of USD (460,502) (1,809,135) changes in market prices, other than those arising from interest rate risk or currency risk, whether those changes are caused

AUD (2,423) - by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments. The (682,628) (2,012,639) Group is exposed to price risk in respect of its investments in equity securities. However, the risk is minimal as these investments are held for strategic purposes rather than trading purposes. The Group does not actively trade in these Net exposure (784,588) (2,121,462) investments. 2018 (c) Exchange rates applied as at the reporting date

Carrying Contractual One year One to More than The following spot exchange rates were applied as at the reporting date. amount cash flows or less three years three years Rupees Rupees Rupees Rupees Rupees 2019 2018 Redeemable capital 101,875 103,885 103,885 - - Rupees Rupees Long term finances 4,315,878 4,962,564 2,059,357 2,903,207 - Lease liabilities 102,368 114,924 50,351 64,573 - GBP - 176.5100 Trade creditors 414,995 414,995 414,995 - - EUR 173.5841 159.1000 Foreign bills payable 108,823 108,823 108,823 - - USD 154.8476 139.1000 Accrued liabilities 182,301 182,301 182,301 - - CHF 159.8674 141.2700 Employees' provident fund 11,247 11,247 11,247 - - CNY 22.2409 20.2100 Compensated absences 34,162 34,162 34,162 - - AED 42.1566 - Unclaimed dividend 18,650 18,650 18,650 - - AUD 108.4785 - Other payables 19,659 19,659 19,659 - - (d) Sensitivity analysis Accrued interest/markup/profit 390,172 390,172 390,172 - -

Short term borrowings 12,843,848 12,843,848 12,843,848 - - A five percent appreciation in Pak Rupee against foreign currencies would have incresed profit for the year and equity as 18,543,978 19,205,230 16,237,450 2,967,780 - at the reporting date by Rs. 5.1 million (2018: Rs. 5.441 million). A five percent depreciation in Pak Rupee would have had an equal but opposite effect on profit for the year and equity. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores the impact, if any, on provision for taxation for the year. 49.3 Market risk 49.3.2 Interest rate risk 49.3.1 Currency risk Interest rate risk is the risk that fair values or future cash flows of a financial instrument will fluctuate because of changes in Currency risk is the risk that fair values or future cash flows of a financial instrument will fluctuate because of changes in interest rates. foreign exchange rates. Currency risk arises from transactions and resulting balances that are denominated in a currency other than functional currency. (a) Interest rate risk management (a) Currency risk management The Group manages interest rate risk by analysing its interest rate exposure on a dynamic basis. Cash flow interest rate risk is managed by simulating various scenarios taking into consideration refinancing, renewal of existing positions and The Group manages its exposure to currency risk through continuous monitoring of expected/forecast committed and alternative financing. Based on these scenarios, the Group calculates impact on profit after taxation and equity of non-committed foreign currency payments and receipts. Reports on forecast foreign currency transactions, receipts defined interest rate shift, mostly 100 basis points. and payments are prepared on monthly basis, exposure to currency risk is measured and appropriate steps are taken to ensure that such exposure is minimized while optimizing return. This includes matching of foreign currency (b) Interest/markup/profit bearing financial instruments liabilities/payments to assets/receipts and using source inputs in foreign currency. The effective interest/markup/profit rates for interest/markup/profit bearing financial instruments are mentioned in (b) Exposure to currency risk relevant notes to the financial statements. The Group's interest/markup/profit bearing financial instruments as at the reporting date are as follows: The Group's exposure to currency risk as at the reporting date is as follows:

2019 2018 2019 2018 Rupees Rupees Rupees Rupees Fixed rate instruments - - Financial assets - -

Financial liabilities Variable rate instruments Foreign bills payable Financial liabilities 15,603,987 17,363,969 - USD (86,161) (92,204) CN (2,617) (16,619) (c) Fair value sensitivity analysis for fixed rate instruments EUR (11,391) - The Group does not have any fixed rate instruments. EUR (1,791) - (101,960) (108,823) (d) Cash flow sensitivity analysis for variable rate instruments

Net balance sheet exposure (101,960) (108,823) An increase of 100 basis points in interest rates as at the reporting date would have decreased profit for the year and Foreign currency commitments equity as at the reporting date by Rs. 156.04 million (2018: Rs. 173.64 million). A decrease of 100 basis points would have had an equal but opposite effect on profit and equity. The analysis assumes that all other variables, in particular CHF (19,546) (17,235) foreign exchange rates, remain constant and ignores the impact, if any, on provision for taxation for the year. CNY (85,928) (28,496) EUR (114,229) (156,714) 49.3.3 Other price risk GBP - (1,059) Other price risk represents the risk that the fair value or future cash flows of financial instrument will fluctuate because of USD (460,502) (1,809,135) changes in market prices, other than those arising from interest rate risk or currency risk, whether those changes are caused

AUD (2,423) - by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments. The (682,628) (2,012,639) Group is exposed to price risk in respect of its investments in equity securities. However, the risk is minimal as these investments are held for strategic purposes rather than trading purposes. The Group does not actively trade in these Net exposure (784,588) (2,121,462) investments. 50 FAIR VALUE MEASUREMENTS Valuation technique Significant inputs Sensitivity

The Group measures some of its assets at fair value at the end of each reporting period. Fair value measurements are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements and has the following levels. Building Cost approach that reflects Estimated construction costs A 5% increase in estimated the cost to the market and other ancillary construction and other Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. participants to construct expenditure. ancillary expenditure would assets of comparable utility result in a significant Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either and age, adjusted for increase in fair value of directly (that is, as prices) or indirectly (that is, derived from prices). obsolescence and buildings by Rs. 288.565 depreciation. There was no million (2018: Rs.172.225 Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). change in valuation million). The fair value hierarchy of financial instruments measured at fair value and the information about how the fair values of these technique during the year. financial instruments are determined are as follows: Plant and machinery Cost approach that reflects Estimated purchase price, A 5% increase in estimated 50.1 Financial instruments measured at fair value the cost to the market including import duties and purchase price, including participants to acquire non-refundable purchase import duties and non- 50.1.1 Recurring fair value measurements assets of comparable utility taxes and other costs directly refundable purchase taxes and age, adjusted for attributable to the acquisition and other directly Financial instruments Hierarchy Valuation techniques and key inputs 2019 2018 obsolescence and or construction, erection and attributable costs would depreciation. There was no installation. result in a significant Rupees '000 Rupees '000 change in valuation increase in fair value of plant technique during the year. and machinery by Rs. Financial assets at fair value 716.162 million (2018: Rs. through profit or loss 689.89 million).

Investments in quoted Reconciliation of fair value measurements categorized in Level 2 is presented in note 21.5. equity securities Level 1 Quoted bid prices in an active market 21,596 22,071 There were no transfers between fair value hierarchies during the year. 50.1.2 Non-recurring fair value measurements 50.3.2 Non-recurring fair value measurements There are no non-recurring fair value measurements as at the reporting date. There are no non-recurring fair value measurements as at the reporting date. 50.2 Financial instruments not measured at fair value 51 CAPITAL MANAGEMENT The management considers the carrying amount of all financial instruments not measured at fair value at the end of each The Group's objective when measuring capital is to safeguard the Group's ability to continue as going concern while reporting period to approximate their fair values as at the reporting date. providing returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure through debt and equity balance. The Group manages its capital structure and makes adjustments to it in light of changes in 50.3 Assets and liabilities other than financial instruments. economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders or issue of new shares. Consistent with others in industry, the Group monitors capital on the basis of gearing 50.3.1 Recurring fair value measurements ratio which is debt divided by total capital employed. Debt comprises long term finances, redeemable capital and lease liabilities, including current maturity. Total capital employed includes total equity plus debt. The gearing ratios as at the For recurring fair value measurements, the fair value hierarchy and information about how the fair values are determined is as reporting date are as follows: follows:

Level 1 Level 2 Level 3 2019 2018 Unit 2019 2018 Rupees '000 Rupees '000 Total debt Rupees '000' 4,648,497 4,520,121 Land - 1,035,256 - 1,035,256 1,035,256 Total equity Rupees '000' 30,688,143 30,279,695 Building - 5,771,302 - 5,771,302 3,444,504 Total capital employed Rupees '000' 35,336,640 34,799,816 Plant and machinery - 14,323,240 - 14,323,240 13,797,790 Gearing ratio % age 13.15 12.99

For fair value measurements categorised into Level 2 the following information is relevant: The Group is not subject to externally imposed capital requirements, except those related to maintenance of debt covenants, commonly imposed by the providers of debt finance. Valuation technique Significant inputs Sensitivity 52 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES Land Market comparable Estimated purchase price, A 5% increase in estimated approach that reflects recent including non-refundable purchase price, including The aggregate amount charged to profit or loss in respect of chief executive, directors and executives on account of managerial remuneration, allowances and perquisites, post employment benefits and the number of such directors and transaction prices for similar purchase taxes and other non-refundable purchase executives is as follows: properties costs directly attributable to taxes and other costs directly the acquisition. attributable to the acquisition would result in a significant increase in fair value of buildings by Rs. 51.763 million (2018: Rs. 51.763 million). 50 FAIR VALUE MEASUREMENTS Valuation technique Significant inputs Sensitivity

The Group measures some of its assets at fair value at the end of each reporting period. Fair value measurements are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements and has the following levels. Building Cost approach that reflects Estimated construction costs A 5% increase in estimated the cost to the market and other ancillary construction and other Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. participants to construct expenditure. ancillary expenditure would assets of comparable utility result in a significant Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either and age, adjusted for increase in fair value of directly (that is, as prices) or indirectly (that is, derived from prices). obsolescence and buildings by Rs. 288.565 depreciation. There was no million (2018: Rs.172.225 Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). change in valuation million). The fair value hierarchy of financial instruments measured at fair value and the information about how the fair values of these technique during the year. financial instruments are determined are as follows: Plant and machinery Cost approach that reflects Estimated purchase price, A 5% increase in estimated 50.1 Financial instruments measured at fair value the cost to the market including import duties and purchase price, including participants to acquire non-refundable purchase import duties and non- 50.1.1 Recurring fair value measurements assets of comparable utility taxes and other costs directly refundable purchase taxes and age, adjusted for attributable to the acquisition and other directly Financial instruments Hierarchy Valuation techniques and key inputs 2019 2018 obsolescence and or construction, erection and attributable costs would depreciation. There was no installation. result in a significant Rupees '000 Rupees '000 change in valuation increase in fair value of plant technique during the year. and machinery by Rs. Financial assets at fair value 716.162 million (2018: Rs. through profit or loss 689.89 million).

Investments in quoted Reconciliation of fair value measurements categorized in Level 2 is presented in note 21.5. equity securities Level 1 Quoted bid prices in an active market 21,596 22,071 There were no transfers between fair value hierarchies during the year. 50.1.2 Non-recurring fair value measurements 50.3.2 Non-recurring fair value measurements There are no non-recurring fair value measurements as at the reporting date. There are no non-recurring fair value measurements as at the reporting date. 50.2 Financial instruments not measured at fair value 51 CAPITAL MANAGEMENT The management considers the carrying amount of all financial instruments not measured at fair value at the end of each The Group's objective when measuring capital is to safeguard the Group's ability to continue as going concern while reporting period to approximate their fair values as at the reporting date. providing returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure through debt and equity balance. The Group manages its capital structure and makes adjustments to it in light of changes in 50.3 Assets and liabilities other than financial instruments. economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders or issue of new shares. Consistent with others in industry, the Group monitors capital on the basis of gearing 50.3.1 Recurring fair value measurements ratio which is debt divided by total capital employed. Debt comprises long term finances, redeemable capital and lease liabilities, including current maturity. Total capital employed includes total equity plus debt. The gearing ratios as at the For recurring fair value measurements, the fair value hierarchy and information about how the fair values are determined is as reporting date are as follows: follows:

Level 1 Level 2 Level 3 2019 2018 Unit 2019 2018 Rupees '000 Rupees '000 Total debt Rupees '000' 4,648,497 4,520,121 Land - 1,035,256 - 1,035,256 1,035,256 Total equity Rupees '000' 30,688,143 30,279,695 Building - 5,771,302 - 5,771,302 3,444,504 Total capital employed Rupees '000' 35,336,640 34,799,816 Plant and machinery - 14,323,240 - 14,323,240 13,797,790 Gearing ratio % age 13.15 12.99

For fair value measurements categorised into Level 2 the following information is relevant: The Group is not subject to externally imposed capital requirements, except those related to maintenance of debt covenants, commonly imposed by the providers of debt finance. Valuation technique Significant inputs Sensitivity 52 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES Land Market comparable Estimated purchase price, A 5% increase in estimated approach that reflects recent including non-refundable purchase price, including The aggregate amount charged to profit or loss in respect of chief executive, directors and executives on account of managerial remuneration, allowances and perquisites, post employment benefits and the number of such directors and transaction prices for similar purchase taxes and other non-refundable purchase executives is as follows: properties costs directly attributable to taxes and other costs directly the acquisition. attributable to the acquisition would result in a significant increase in fair value of buildings by Rs. 51.763 million (2018: Rs. 51.763 million). Chief Executive Directors Executives 2018 2019 2018 2019 2018 2019 2018 Power Appliances Total Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Division Division Rupees '000' Rupees '000' Rupees '000' Remuneration 12,046 12,046 29,641 28,042 195,917 156,009 Revenue 11,714,746 27,275,501 38,990,247 House rent 1,205 1,205 1,908 1,844 43,196 33,930 Utilities 1,205 1,205 1,205 1,205 19,592 15,601 Finance cost 688,585 1,414,758 2,103,343 Bonus - - - - 11,159 7,481 Depreciation and amortization 393,077 458,027 851,104 Post employment benefits - - 1,760 1,600 19,178 14,889 Meeting fee - - 435 345 - - Segment profit 279,840 1,325,317 1,605,157

Segment assets 19,668,173 30,416,925 50,085,098 Reimbursable expenses

Motor vehicles expenses - - - - 18,045 15,501 2019 2018 Medical expenses - - 329 224 8,608 6,008 Rupees '000' Rupees '000' 14,456 14,456 35,278 33,260 315,695 249,419 53.1 Reconciliation of segment profit Number of persons 1 1 2 2 87 73 Total profit for reportable segments 902,140 1,605,157 52.1 Chief executive, directors and executives have been provided with free use of the Group's vehicles. Un-allocated other expenses (21,136) (47,855) Profit before taxation 881,004 1,557,302 52.2 No remuneration has been paid to non-executive directors

53 SEGMENT INFORMATION 53.2 Reconciliation of segment assets Total assets for reportable segments 48,984,427 50,085,098 An operating segment is a component of an entity: Other corporate assets 2,326,755 2,014,841 (a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and Total assets 51,311,182 52,099,939 expenses relating to transactions with other components of the same entity),

(b) whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about 53.3 Information about major customers resources to be allocated to the segment and assess its performance, and Revenue derived from Multan Electric Power Company - 2,650,670

(c) for which discrete financial information is available. 54 EMPLOYEES PROVIDENT FUND TRUST Information about the Group's reportable segments as at the reporting date is as follows: The following information is based on the un-audited financial statements of the Pak Elektron Limited Employees Provident Segments Nature of business Fund Trust for the year ended December 31, 2019.

Power Division Manufacturing of transformers, switchgears, energy meters, engineering, procurement and construction contracting. 2019 2018

Appliances Division Manufacturing, assembling and distribution of refrigerators, deep freezers, air Size of the fund - total assets Rupees '000' 471,337 389,017 conditioners, microwave ovens, washing machines, water dispensers and other home Fair value of investments Rupees '000' 429,787 351,027 appliances. Percentage of investments made % age 91.18 90.23

2019 The break-up of investments is as follows:

Power Appliances 2019 2018 Division Division Total Rupees '000' Rupees '000' Rupees '000' Rupees '000' % age Rupees '000' % age

Revenue 9,833,931 27,787,338 37,621,269 Government securities 134,496 31.29 118,131 33.65 Deposit accounts with commercial banks 295,291 68.71 232,896 66.35 Finance cost 791,153 1,688,935 2,480,088 429,787 100.00 351,027 100.00 Depreciation and amortization 453,387 532,089 985,476

Segment profit 141,135 761,005 902,140

Segment assets 18,809,516 30,174,911 48,984,427 Chief Executive Directors Executives 2018 2019 2018 2019 2018 2019 2018 Power Appliances Total Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Division Division Rupees '000' Rupees '000' Rupees '000' Remuneration 12,046 12,046 29,641 28,042 195,917 156,009 Revenue 11,714,746 27,275,501 38,990,247 House rent 1,205 1,205 1,908 1,844 43,196 33,930 Utilities 1,205 1,205 1,205 1,205 19,592 15,601 Finance cost 688,585 1,414,758 2,103,343 Bonus - - - - 11,159 7,481 Depreciation and amortization 393,077 458,027 851,104 Post employment benefits - - 1,760 1,600 19,178 14,889 Meeting fee - - 435 345 - - Segment profit 279,840 1,325,317 1,605,157

Segment assets 19,668,173 30,416,925 50,085,098 Reimbursable expenses

Motor vehicles expenses - - - - 18,045 15,501 2019 2018 Medical expenses - - 329 224 8,608 6,008 Rupees '000' Rupees '000' 14,456 14,456 35,278 33,260 315,695 249,419 53.1 Reconciliation of segment profit Number of persons 1 1 2 2 87 73 Total profit for reportable segments 902,140 1,605,157 52.1 Chief executive, directors and executives have been provided with free use of the Group's vehicles. Un-allocated other expenses (21,136) (47,855) Profit before taxation 881,004 1,557,302 52.2 No remuneration has been paid to non-executive directors

53 SEGMENT INFORMATION 53.2 Reconciliation of segment assets Total assets for reportable segments 48,984,427 50,085,098 An operating segment is a component of an entity: Other corporate assets 2,326,755 2,014,841 (a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and Total assets 51,311,182 52,099,939 expenses relating to transactions with other components of the same entity),

(b) whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about 53.3 Information about major customers resources to be allocated to the segment and assess its performance, and Revenue derived from Multan Electric Power Company - 2,650,670

(c) for which discrete financial information is available. 54 EMPLOYEES PROVIDENT FUND TRUST Information about the Group's reportable segments as at the reporting date is as follows: The following information is based on the un-audited financial statements of the Pak Elektron Limited Employees Provident Segments Nature of business Fund Trust for the year ended December 31, 2019.

Power Division Manufacturing of transformers, switchgears, energy meters, engineering, procurement and construction contracting. 2019 2018

Appliances Division Manufacturing, assembling and distribution of refrigerators, deep freezers, air Size of the fund - total assets Rupees '000' 471,337 389,017 conditioners, microwave ovens, washing machines, water dispensers and other home Fair value of investments Rupees '000' 429,787 351,027 appliances. Percentage of investments made % age 91.18 90.23

2019 The break-up of investments is as follows:

Power Appliances 2019 2018 Division Division Total Rupees '000' Rupees '000' Rupees '000' Rupees '000' % age Rupees '000' % age

Revenue 9,833,931 27,787,338 37,621,269 Government securities 134,496 31.29 118,131 33.65 Deposit accounts with commercial banks 295,291 68.71 232,896 66.35 Finance cost 791,153 1,688,935 2,480,088 429,787 100.00 351,027 100.00 Depreciation and amortization 453,387 532,089 985,476

Segment profit 141,135 761,005 902,140

Segment assets 18,809,516 30,174,911 48,984,427 55 PLANT CAPACITY AND ACTUAL PRODUCTION

2019 2018

Actual Actual Annual production Annual production production during the production during the Unit capacity year capacity year

Transformers/Power Transformers MVA 7,000 2,229 7,000 2,397 Switch gears Nos. 12,000 4,126 12,000 4,805 Energy meters Nos. 1,700,000 662,833 1,700,000 826,007 Air conditioners Tonnes 200,000 94,808 200,000 103,220 Refrigerators/deep freezers Cfts. 6,950,000 4,072,399 6,950,000 5,075,992 Microwave ovens Litres 2,500,000 707,249 2,500,000 1,945,097 LED TVs Sets 200,000 41,710 200,000 24,190 Washing machines Kgs 150,000 104,754 50,000 7,005

55.1 Under utilization of capacity is mainly attributable to consumer demand.

56 NUMBER OF EMPLOYEES

2019 2018

Total number of employees 5,185 5,817

Average number of employees 5,448 6,165

57 RECLASSIFICATIONS

The following have been reclassified for better presentation.

Particulars From To 2019 2018

Advances to customers Trade debts Short term advances 589,497 623,715

58 RECOVERABLE AMOUNTS AND IMPAIRMENT

As at the reporting date, recoverable amounts of all assets/cash generating units are equal to or exceed their carrying amounts, unless stated otherwise in these financial statements.

59 EVENTS AFTER THE REPORTING PERIOD

59.1 The Board of Directors of Pak Elektron Limited ['PEL'] and PEL Marketing (Private) Limited ['PMPL'] in their respective meetings held on March 27, 2020 have approved the scheme of arrangement for amalgamation of PMPL, a wholly owned subsidiary of PEL, with and into PEL with effect from April 30, 2020. The amalgamation is pending approval by the Securities and Exchange Commission of Pakistan. Once the amalgamation is approved, the entire issued, subscribed and paid-up capital of PMPL, comprising of Rs. 10,000 ordinary shares of Rs. 10 each shall stand cancelled without any payment or other consideration, from effective date.

59.2 COVID-19 pandemic started at the end of December 19 and broke out in China in January 2020. The material imports from China remain suspended due to lock down, Financial impact and materiality of which is not quantified at present, although the management believes to have sufficient production capacity. The economic impact of local slow down started from February 2020 and a lock down commenced in March 2020 is in progress. The Prime Minister of Pakistan announced a package of Rs. 1,250 billion for general public and industries to mitigate the COVID-19 miseries and announced reduction of Policy Rate to 9% along with the deferral of due principal and mark up payments for period from upto one year as State Bank of Pakistan decided in consultation with commercial banks. The impact on financial statements of the foregoing is not quantified at this stage.

60 GENERAL

60.1 Figures have been rounded off to the nearest thousands.

60.2 Comparative figures have been rearranged and reclassified, where necessary, for the purpose of comparison. However, there were no significant reclassifications during the year other than those referred to in note 57.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer SEPARATE FINANCIAL STATEMENTS Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants

72-A, Faisal Town, Lahore - 54770, Pakistan.

T: +92 42 35160430 - 32 Key audit matter How our audit addressed the matter F: +92 42 35160433 E: [email protected] requires significant judgment and Further, we assessed the integrity and quality of W: www.rsrir.com assumptions including consideration of the data used for ECL computation based on the factors such as historical credit loss accounting records and information system of the experience and forward-looking macro- Company as well as the related external sources INDEPENDENT AUDITOR’S REPORT economic information. as used for this purpose. To the members of PAK ELEKTRON LIMITED We have considered the first time We checked the mathematical accuracy of the Report on the Audit of the Financial Statements application of IFRS 9 requirements as a key ECL model by performing recalculation on test audit matter due to significance of the basis. Opinion change in accounting methodology and In addition to above, we assessed the adequacy We have audited the annexed financial statements of PAK ELEKTRON LIMITED ['the Company'], which involvement of estimates and judgments in of disclosures in the financial statements of the comprise the statement of financial position as at December 31, 2019, the statement of profit or loss, the this regard. Company regarding application of IFRS 9 as per statement of comprehensive income, the statement of changes in equity, the statement of cash flows for the requirements of the above standard. the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of the audit. 2. First time adoption of IFRS 15 – Revenue In our opinion and to the best of our information and according to the explanations given to us, the from Contracts with Customers statement of financial position, the statement of profit or loss, the statement of comprehensive income, As referred to in note 3.2 to the financial the statement of changes in equity and the statement of cash flows together with the notes forming part statements, the Company has adopted IFRS Our key procedures to review the application of thereof conform with the accounting and reporting standards as applicable in Pakistan and give the 15 – 'Revenue from Contracts with IFRS 15 included, amongst others, review of information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and Customers'. IFRS 15 introduces a new five managements' impact assessment of all contracts respectively give a true and fair view of the state of the Company's affairs as at December 31, 2018 and of step model for recognition of revenue which with customers in light of application of the new the profit, other comprehensive income, the changes in equity and its cash flows for the year then ended. is primarily based on the transfer of control standard, review of contracts to determine Basis for Opinion to the customers along with detailed whether performance obligations have been presentation and disclosure about contracts identified, classified and accounted for We conducted our audit in accordance with International Standards on Auditing ['ISAs'] as applicable in with customers, information about separately, whether allocation of transaction price Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities disaggregation of revenue, performance between each performance obligation is for the Audit of the Financial Statements section of our report. We are independent of the Company in obligations, contract assets and contract appropriate and whether the revenue has been accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional liabilities. recognized at a point in time or over a period of Accountants as adopted by the Institute of Chartered Accountants of Pakistan ['the Code'] and we have time appropriately. fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence We have considered the first time we have obtained is sufficient and appropriate to provide a basis for our opinion. application of IFRS 15 as a key audit matter due to significance of the change in Key Audit Matters accounting methodology, involvement of Key audit matters are those matters that, in our professional judgment, were of most significance in our significant estimates and judgments audit of the financial statements of the current period. These matters were addressed in the context of our resulting in adjustments, presentation and audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a incremental quantitative and qualitative separate opinion on these matters. disclosures.

Key audit matter How our audit addressed the matter 3. First time adoption of IFRS 16 – Leases As referred to in note 3.3 to the financial 1. First time adoption of IFRS 9 – Financial statements, the Company has adopted IFRS Our key procedures to review the application of Instruments 16 – 'Leases'. IFRS 16 sets out the principles IFRS 16 included, amongst others, review of As referred to in note 3.1 to the financial Our key procedures to review the application of for the recognition, measurement, managements' impact assessment of all lease statements, the Company has adopted IFRS IFRS 9 included, amongst others, review of the presentation and disclosure of leases and arrangements in light of application of the new 9 - 'Financial Instruments'. The new standard methodology developed and applied by the requires lessees to account for all leases standard, review of lease contracts to determine requires the Company to make allowance for Company to estimate the ECL in relation to under a single on-balance sheet model with whether the same are in scope of IFRS 16 and are impairment of financial assets using financial assets. We also considered and corresponding recognition of right-of-use also subject to recognition exemption under IFRS Expected Credit Loss ['ECL'] approach as evaluated the assumptions used in applying the asset. Lessor accounting under IFRS 16 is 16 for short-term and low value leases. We also against the Incurred Loss Model previously ECL methodology based on historical information substantially unchanged from accounting reviewed contracts to determine whether it is a applied by the Company. and qualitative factors as relevant for such under IAS 17 'Leases' i.e. operating and lease contract, and if so its various components, estimates. finance leases. For lessees all leases will be lease term, rental amount, payment terms, etc., Determination of ECL for financial assets classified as finance leases only with the reviewed the appropriateness of discount rate Member of Russell Bedford International - a global network of independent professional services firms exception of certain short-term leases. used by the Company to determine the present Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants

72-A, Faisal Town, Lahore - 54770, Pakistan.

T: +92 42 35160430 - 32 Key audit matter How our audit addressed the matter F: +92 42 35160433 E: [email protected] requires significant judgment and Further, we assessed the integrity and quality of W: www.rsrir.com assumptions including consideration of the data used for ECL computation based on the factors such as historical credit loss accounting records and information system of the experience and forward-looking macro- Company as well as the related external sources INDEPENDENT AUDITOR’S REPORT economic information. as used for this purpose. To the members of PAK ELEKTRON LIMITED We have considered the first time We checked the mathematical accuracy of the Report on the Audit of the Financial Statements application of IFRS 9 requirements as a key ECL model by performing recalculation on test audit matter due to significance of the basis. Opinion change in accounting methodology and In addition to above, we assessed the adequacy We have audited the annexed financial statements of PAK ELEKTRON LIMITED ['the Company'], which involvement of estimates and judgments in of disclosures in the financial statements of the comprise the statement of financial position as at December 31, 2019, the statement of profit or loss, the this regard. Company regarding application of IFRS 9 as per statement of comprehensive income, the statement of changes in equity, the statement of cash flows for the requirements of the above standard. the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of the audit. 2. First time adoption of IFRS 15 – Revenue In our opinion and to the best of our information and according to the explanations given to us, the from Contracts with Customers statement of financial position, the statement of profit or loss, the statement of comprehensive income, As referred to in note 3.2 to the financial the statement of changes in equity and the statement of cash flows together with the notes forming part statements, the Company has adopted IFRS Our key procedures to review the application of thereof conform with the accounting and reporting standards as applicable in Pakistan and give the 15 – 'Revenue from Contracts with IFRS 15 included, amongst others, review of information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and Customers'. IFRS 15 introduces a new five managements' impact assessment of all contracts respectively give a true and fair view of the state of the Company's affairs as at December 31, 2018 and of step model for recognition of revenue which with customers in light of application of the new the profit, other comprehensive income, the changes in equity and its cash flows for the year then ended. is primarily based on the transfer of control standard, review of contracts to determine Basis for Opinion to the customers along with detailed whether performance obligations have been presentation and disclosure about contracts identified, classified and accounted for We conducted our audit in accordance with International Standards on Auditing ['ISAs'] as applicable in with customers, information about separately, whether allocation of transaction price Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities disaggregation of revenue, performance between each performance obligation is for the Audit of the Financial Statements section of our report. We are independent of the Company in obligations, contract assets and contract appropriate and whether the revenue has been accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional liabilities. recognized at a point in time or over a period of Accountants as adopted by the Institute of Chartered Accountants of Pakistan ['the Code'] and we have time appropriately. fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence We have considered the first time we have obtained is sufficient and appropriate to provide a basis for our opinion. application of IFRS 15 as a key audit matter due to significance of the change in Key Audit Matters accounting methodology, involvement of Key audit matters are those matters that, in our professional judgment, were of most significance in our significant estimates and judgments audit of the financial statements of the current period. These matters were addressed in the context of our resulting in adjustments, presentation and audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a incremental quantitative and qualitative separate opinion on these matters. disclosures.

Key audit matter How our audit addressed the matter 3. First time adoption of IFRS 16 – Leases As referred to in note 3.3 to the financial 1. First time adoption of IFRS 9 – Financial statements, the Company has adopted IFRS Our key procedures to review the application of Instruments 16 – 'Leases'. IFRS 16 sets out the principles IFRS 16 included, amongst others, review of As referred to in note 3.1 to the financial Our key procedures to review the application of for the recognition, measurement, managements' impact assessment of all lease statements, the Company has adopted IFRS IFRS 9 included, amongst others, review of the presentation and disclosure of leases and arrangements in light of application of the new 9 - 'Financial Instruments'. The new standard methodology developed and applied by the requires lessees to account for all leases standard, review of lease contracts to determine requires the Company to make allowance for Company to estimate the ECL in relation to under a single on-balance sheet model with whether the same are in scope of IFRS 16 and are impairment of financial assets using financial assets. We also considered and corresponding recognition of right-of-use also subject to recognition exemption under IFRS Expected Credit Loss ['ECL'] approach as evaluated the assumptions used in applying the asset. Lessor accounting under IFRS 16 is 16 for short-term and low value leases. We also against the Incurred Loss Model previously ECL methodology based on historical information substantially unchanged from accounting reviewed contracts to determine whether it is a applied by the Company. and qualitative factors as relevant for such under IAS 17 'Leases' i.e. operating and lease contract, and if so its various components, estimates. finance leases. For lessees all leases will be lease term, rental amount, payment terms, etc., Determination of ECL for financial assets classified as finance leases only with the reviewed the appropriateness of discount rate Member of Russell Bedford International - a global network of independent professional services firms exception of certain short-term leases. used by the Company to determine the present Key audit matter How our audit addressed the matter Information other than the Financial Statements and Auditor's Report Thereon Management is responsible for the other information. The other information comprises the information We have considered the first time value of lease liability and calculation of related included in the annual report, but does not include the financial statements and our auditor's report application of IFRS 15 as a key audit matter depreciation and finance charge. thereon. due to significance of the change in accounting methodology, involvement of Our opinion on the financial statements does not cover the other information and we do not express any significant estimates and judgments form of assurance conclusion thereon. resulting in adjustments, presentation and In connection with our audit of the financial statements, our responsibility is to read the other information incremental quantitative and qualitative and, in doing so, consider whether the other information is materially inconsistent with the financial disclosures. statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 4. Inventory valuation Responsibilities of Management and Board of Directors for the Financial Statements Stock in trade amounts to Rs 7,793 million as To address the valuation of stock in trade, we at the reporting date. The valuation of stock assessed historical costs recorded in the Management is responsible for the preparation and fair presentation of the financial statements in in trade at cost has different components, inventory valuation; testing on a sample basis accordance with the accounting and reporting standards as applicable in Pakistan and the requirements which includes judgment in relation to the with purchase invoices. We tested the of Companies Act, 2017(XIX of 2017) and for such internal control as management determines is allocation of labour and overheads which reasonability of assumptions applied by the necessary to enable the preparation of financial statements that are free from material misstatement, are incurred in bringing the stock to its management in allocating direct labour and whether due to fraud or error. present location and condition. Judgment direct overhead costs to inventories. In preparing the financial statements, management is responsible for assessing the Company's ability to has also been applied by management in We also assessed management's determination continue as a going concern, disclosing, as applicable, matters related to going concern and using the determining the Net Realizable Value ['NRV'] of the net realizable value of inventories by going concern basis of accounting unless management either intends to liquidate the Company or to of stock in trade. performing tests on the sales prices secured by cease operations, or has no realistic alternative but to do so. The estimates and judgments applied by the Company for similar or comparable items of The Board of directors is responsible for overseeing the Company's financial reporting process. management are influenced by the amount inventories. of direct costs incurred historically, Auditor's Responsibilities for the Audit of the Financial Statements expectations of repeat orders to utilize the Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are stock in trade, sales contract in hand and free from material misstatement, whether due to fraud or error, and to issue an auditor's report that historically realized sales prices. includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an The significance of the balance coupled with audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material the judgment involved has resulted in the misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, valuation of inventories being identified as a individually or in the aggregate, they could reasonably be expected to influence the economic decisions key audit matter of user taken on the basis of these financial statements. The disclosures in relation to inventories are As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment included in note 27. and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud 5. Tax contingencies or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that As disclosed in note 20 to the annexed Our key audit procedures in this area included, is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material financial statements, various tax matters are amongst others, a review of the correspondence misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve pending adjudication at various levels with of the Company with the relevant tax authorities collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. the taxation authorities and other legal and tax advisors including judgments or orders • Obtain an understanding of internal control relevant to the audit in order to design audit procedures forums. Such contingencies require the passed by the competent authorities. that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the management to make judgments and We also obtained and reviewed confirmations effectiveness of the Company's internal control. estimates in relation to the interpretation of from the Company's external tax advisor for their • tax laws and regulations and the recognition Evaluate the appropriateness of accounting policies used and the reasonableness of accounting views on the status of each case and an overall and measurement of any provisions that may estimates and related disclosures made by management. opinion on the open tax position of the be required against such contingencies. Due • Company. Conclude on the appropriateness of management's use of the going concern basis of accounting and, to inherent uncertainties and the time period based on the audit evidence obtained, whether a material uncertainty exists related to events or such matters may take to resolve, the We involved internal tax experts to assess and conditions that may cast significant doubt on the Company's ability to continue as a going concern. If management's judgments and estimates in review the management's conclusions on we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report relation to such contingencies may be contingent tax matters and evaluated whether to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify complex and can significantly impact the adequate disclosures have been made in note 19 our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's financial statements. For such reasons we to the annexed financial statements. report. However, future events or conditions may cause the Company to cease to continue as a going have considered tax contingencies as a key concern. audit matter. Key audit matter How our audit addressed the matter Information other than the Financial Statements and Auditor's Report Thereon Management is responsible for the other information. The other information comprises the information We have considered the first time value of lease liability and calculation of related included in the annual report, but does not include the financial statements and our auditor's report application of IFRS 15 as a key audit matter depreciation and finance charge. thereon. due to significance of the change in accounting methodology, involvement of Our opinion on the financial statements does not cover the other information and we do not express any significant estimates and judgments form of assurance conclusion thereon. resulting in adjustments, presentation and In connection with our audit of the financial statements, our responsibility is to read the other information incremental quantitative and qualitative and, in doing so, consider whether the other information is materially inconsistent with the financial disclosures. statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 4. Inventory valuation Responsibilities of Management and Board of Directors for the Financial Statements Stock in trade amounts to Rs 7,793 million as To address the valuation of stock in trade, we at the reporting date. The valuation of stock assessed historical costs recorded in the Management is responsible for the preparation and fair presentation of the financial statements in in trade at cost has different components, inventory valuation; testing on a sample basis accordance with the accounting and reporting standards as applicable in Pakistan and the requirements which includes judgment in relation to the with purchase invoices. We tested the of Companies Act, 2017(XIX of 2017) and for such internal control as management determines is allocation of labour and overheads which reasonability of assumptions applied by the necessary to enable the preparation of financial statements that are free from material misstatement, are incurred in bringing the stock to its management in allocating direct labour and whether due to fraud or error. present location and condition. Judgment direct overhead costs to inventories. In preparing the financial statements, management is responsible for assessing the Company's ability to has also been applied by management in We also assessed management's determination continue as a going concern, disclosing, as applicable, matters related to going concern and using the determining the Net Realizable Value ['NRV'] of the net realizable value of inventories by going concern basis of accounting unless management either intends to liquidate the Company or to of stock in trade. performing tests on the sales prices secured by cease operations, or has no realistic alternative but to do so. The estimates and judgments applied by the Company for similar or comparable items of The Board of directors is responsible for overseeing the Company's financial reporting process. management are influenced by the amount inventories. of direct costs incurred historically, Auditor's Responsibilities for the Audit of the Financial Statements expectations of repeat orders to utilize the Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are stock in trade, sales contract in hand and free from material misstatement, whether due to fraud or error, and to issue an auditor's report that historically realized sales prices. includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an The significance of the balance coupled with audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material the judgment involved has resulted in the misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, valuation of inventories being identified as a individually or in the aggregate, they could reasonably be expected to influence the economic decisions key audit matter of user taken on the basis of these financial statements. The disclosures in relation to inventories are As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment included in note 27. and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud 5. Tax contingencies or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that As disclosed in note 20 to the annexed Our key audit procedures in this area included, is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material financial statements, various tax matters are amongst others, a review of the correspondence misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve pending adjudication at various levels with of the Company with the relevant tax authorities collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. the taxation authorities and other legal and tax advisors including judgments or orders • Obtain an understanding of internal control relevant to the audit in order to design audit procedures forums. Such contingencies require the passed by the competent authorities. that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the management to make judgments and We also obtained and reviewed confirmations effectiveness of the Company's internal control. estimates in relation to the interpretation of from the Company's external tax advisor for their • tax laws and regulations and the recognition Evaluate the appropriateness of accounting policies used and the reasonableness of accounting views on the status of each case and an overall and measurement of any provisions that may estimates and related disclosures made by management. opinion on the open tax position of the be required against such contingencies. Due • Company. Conclude on the appropriateness of management's use of the going concern basis of accounting and, to inherent uncertainties and the time period based on the audit evidence obtained, whether a material uncertainty exists related to events or such matters may take to resolve, the We involved internal tax experts to assess and conditions that may cast significant doubt on the Company's ability to continue as a going concern. If management's judgments and estimates in review the management's conclusions on we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report relation to such contingencies may be contingent tax matters and evaluated whether to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify complex and can significantly impact the adequate disclosures have been made in note 19 our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's financial statements. For such reasons we to the annexed financial statements. report. However, future events or conditions may cause the Company to cease to continue as a going have considered tax contingencies as a key concern. audit matter. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the board of directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements Based on our audit, we further report that in our opinion: a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017); b) the statement of financial position, the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns; c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company's business; and d) no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980). Other Matters As referred to in note 2.6, the annexed financial statements were amended by the management to disclose a non-adjusting event occurring after the reporting period. We have, earlier, issued an auditor's report, dated March 27, 2020, on the audit of financial statements before the said amendment, wherein we have expressed an unmodified opinion on those financial statements. This is an amended auditor's report on the audit of annexed amended financial statements. Our audit procedures subsequent to that date were restricted to the subsequent amendment of the financial statements as described in note 2.6. The engagement partner on the audit resulting in this independent auditor's report is ZUBAIR IRFAN MALIK.

RAHMAN SARFARAZ RAHIM IQBAL RAFIQ Chartered Accountants

Lahore: May 07, 2020 Statement of Financial Position as at December 31, 2019

Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000

EQUITY AND LIABILITIES ASSETS

SHARE CAPITAL AND RESERVES NON-CURRENT ASSETS

Authorized capital 7 6,000,000 6,000,000 Property, plant and equipment 21 22,939,060 21,957,015 Intangible assets 22 306,332 313,352 Issued, subscribed and paid-up capital 8 5,426,392 5,426,392 Long term investments 23 5,863 7,085 Capital reserve 9 4,279,947 4,279,947 Long term deposits 24 360,180 365,957

Surplus on revaluation of property, plant and equipment 10 6,023,632 6,579,049 23,611,435 22,643,409 Accumulated profit 7,277,582 6,884,031 TOTAL EQUITY 23,007,553 23,169,419 CURRENT ASSETS

LIABILITIES Stores, spares and loose tools 25 848,347 859,145 Stock in trade 26 7,789,297 8,374,111 NON-CURRENT LIABILITIES Trade debts 27 2,490,298 4,870,122 Construction work in progress 28 1,697,509 1,535,735

Redeemable capital 11 - - Short term advances 29 1,094,157 965,614

Long term finances 12 2,162,154 2,646,032 Short term deposits and prepayments 30 1,891,598 1,105,179

Lease liabilities 13 137,386 59,778 Other receivables 401,854 360,962

Warranty obligations 14 120,010 - Short term investments 31 21,596 22,071

Deferred taxation 15 2,484,471 2,423,945 Advance income tax/Income tax refundable 32 2,603,652 3,132,528

Deferred income 16 34,942 36,781 Cash and bank balances 33 379,733 357,910

4,938,963 5,166,536 19,218,041 21,583,377

CURRENT LIABILTIES

Trade and other payables 17 1,074,549 823,850 Unclaimed dividend 15,052 18,650 Accrued interest/markup/profit 488,912 390,172 Short term borrowings 18 10,955,490 12,843,848 Current portion of non-current liabilities 19 2,348,957 1,814,311

14,882,960 15,890,831

TOTAL LIABILITIES 19,821,923 21,057,367

CONTINGENCIES AND COMMITMENTS 20

TOTAL EQUITY AND LIABILITIES 42,829,476 44,226,786 TOTAL ASSETS 42,829,476 44,226,786

The annexed notes from 1 to 58 form an integral part of these financial statements. The annexed notes from 1 to 58 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Statement of Financial Position as at December 31, 2019

Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000

EQUITY AND LIABILITIES ASSETS

SHARE CAPITAL AND RESERVES NON-CURRENT ASSETS

Authorized capital 7 6,000,000 6,000,000 Property, plant and equipment 21 22,939,060 21,957,015 Intangible assets 22 306,332 313,352 Issued, subscribed and paid-up capital 8 5,426,392 5,426,392 Long term investments 23 5,863 7,085 Capital reserve 9 4,279,947 4,279,947 Long term deposits 24 360,180 365,957

Surplus on revaluation of property, plant and equipment 10 6,023,632 6,579,049 23,611,435 22,643,409 Accumulated profit 7,277,582 6,884,031 TOTAL EQUITY 23,007,553 23,169,419 CURRENT ASSETS

LIABILITIES Stores, spares and loose tools 25 848,347 859,145 Stock in trade 26 7,789,297 8,374,111 NON-CURRENT LIABILITIES Trade debts 27 2,490,298 4,870,122 Construction work in progress 28 1,697,509 1,535,735

Redeemable capital 11 - - Short term advances 29 1,094,157 965,614

Long term finances 12 2,162,154 2,646,032 Short term deposits and prepayments 30 1,891,598 1,105,179

Lease liabilities 13 137,386 59,778 Other receivables 401,854 360,962

Warranty obligations 14 120,010 - Short term investments 31 21,596 22,071

Deferred taxation 15 2,484,471 2,423,945 Advance income tax/Income tax refundable 32 2,603,652 3,132,528

Deferred income 16 34,942 36,781 Cash and bank balances 33 379,733 357,910

4,938,963 5,166,536 19,218,041 21,583,377

CURRENT LIABILTIES

Trade and other payables 17 1,074,549 823,850 Unclaimed dividend 15,052 18,650 Accrued interest/markup/profit 488,912 390,172 Short term borrowings 18 10,955,490 12,843,848 Current portion of non-current liabilities 19 2,348,957 1,814,311

14,882,960 15,890,831

TOTAL LIABILITIES 19,821,923 21,057,367

CONTINGENCIES AND COMMITMENTS 20

TOTAL EQUITY AND LIABILITIES 42,829,476 44,226,786 TOTAL ASSETS 42,829,476 44,226,786

The annexed notes from 1 to 58 form an integral part of these financial statements. The annexed notes from 1 to 58 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Statement of Profit or Loss Statement of Comprehensive Income For the year Ended December 31, 2019 For the year Ended December 31, 2019

Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees Rupees

Revenue 34 27,696,469 27,182,898 Items that may be reclassified subsequently to profit or loss - -

Sales tax, excise duty and discounts 34 (5,346,720) (3,710,466) Items that will not be reclassified to profit or loss Net revenue 22,349,749 23,472,432 Surplus on revaluation of property, plant and equipment recognised during the year 10 - 3,045,215 Cost of sales 35 (19,021,046) (20,719,396) Deferred tax adjustment on surplus on revaluation of property, plant and equipment Gross profit 3,328,703 2,753,036 - recognised during the year 10 - (672,091) Other income 36 32,303 17,384 - attributable to changes in tax rates 10 - 52,268 - attributable to change in proportion of income taxable under Final tax regime 10 (26,753) 79,462 Distribution cost 37 (953,701) (732,340) (26,753) 2,504,854 Administrative and general expenses 38 (611,644) (516,884) Other expenses 39 (44,427) (51,203) Other comprehensive (loss)/income (26,753) 2,504,854 (1,609,772) (1,300,427) Profit for the year 177,842 528,345

Operating profit 1,751,234 1,469,993 Total comprehensive income 151,089 3,033,199

The annexed notes from 1 to 58 form an integral part of these financial statements. Finance cost 40 (1,539,898) (976,447) Profit before taxation 211,336 493,546

Taxation 41 (33,494) 34,799 Profit after taxation 177,842 528,345

Earnings per share - basic and diluted 42 0.27 0.98

The annexed notes from 1 to 58 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Chief Executive Officer Director Chief Financial Officer Statement of Profit or Loss Statement of Comprehensive Income For the year Ended December 31, 2019 For the year Ended December 31, 2019

Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees Rupees

Revenue 34 27,696,469 27,182,898 Items that may be reclassified subsequently to profit or loss - -

Sales tax, excise duty and discounts 34 (5,346,720) (3,710,466) Items that will not be reclassified to profit or loss Net revenue 22,349,749 23,472,432 Surplus on revaluation of property, plant and equipment recognised during the year 10 - 3,045,215 Cost of sales 35 (19,021,046) (20,719,396) Deferred tax adjustment on surplus on revaluation of property, plant and equipment Gross profit 3,328,703 2,753,036 - recognised during the year 10 - (672,091) Other income 36 32,303 17,384 - attributable to changes in tax rates 10 - 52,268 - attributable to change in proportion of income taxable under Final tax regime 10 (26,753) 79,462 Distribution cost 37 (953,701) (732,340) (26,753) 2,504,854 Administrative and general expenses 38 (611,644) (516,884) Other expenses 39 (44,427) (51,203) Other comprehensive (loss)/income (26,753) 2,504,854 (1,609,772) (1,300,427) Profit for the year 177,842 528,345

Operating profit 1,751,234 1,469,993 Total comprehensive income 151,089 3,033,199

The annexed notes from 1 to 58 form an integral part of these financial statements. Finance cost 40 (1,539,898) (976,447) Profit before taxation 211,336 493,546

Taxation 41 (33,494) 34,799 Profit after taxation 177,842 528,345

Earnings per share - basic and diluted 42 0.27 0.98

The annexed notes from 1 to 58 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Chief Executive Officer Director Chief Financial Officer Statement of Cash Flows Statement of Changes in Equity For the year Ended December 31, 2019 For the year Ended December 31, 2019

Note 2019 2018 Revenue Share capital Capital reserves Rupees '000 Rupees '000 reserves

Surplus on CASH FLOW FROM OPERATING ACTIVITIES Issued revaluation of subscribed property, Cash generated from operations 43 5,251,428 169,110 and paid-up Capital plant and Accumulated Total Note capital reserve equipment profit equity Payments for: Interest/markup on borrowings - Interest based arrangements (1,004,269) (257,670) Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Interest/markup/profit on borrowings - Shariah compliant (279,033) (196,675) Income tax (229,294) (868,859) Balance as at January 01, 2018 5,426,392 4,279,947 4,274,019 6,753,080 20,733,438 Net cash generated from/(used in) operating activities 3,738,832 (1,154,094) Comprehensive income Profit after taxation - - - 528,345 528,345 CASH FLOW FROM INVESTING ACTIVITIES Other comprehensive income - - 2,504,854 - 2,504,854 Total comprehensive income - - 2,504,854 528,345 3,033,199 Purchase of property, plant and equipment (2,069,197) (2,369,292) Purchase of intangible assets (3,802) (8,030) Incremental depreciation 10 - - (199,824) 199,824 - Proceeds from disposal of property, plant and equipment 168,001 36,288 Transaction with owners Net cash used in investing activities (1,904,998) (2,341,034) Final dividend on ordinary shares @ Rs. 1.20 per share - - - (597,218) (597,218) CASH FLOW FROM FINANCING ACTIVITIES - - - (597,218) (597,218)

Redemption of redeemable capital (101,875) (275,000) Balance as at December 31, 2018 5,426,392 4,279,947 6,579,049 6,884,031 23,169,419 Long term finances obtained 1,780,122 226,013

Repayment of long term finances (1,688,597) (1,542,813) Balance as at January 01, 2019 5,426,392 4,279,947 6,579,049 6,884,031 23,169,419 Proceeds from sale and lease back activities 187,180 109,944

Repayment of lease liabilities (96,885) (92,076) Impact of application of IFRS 15 - - - (312,955) (312,955) Net (decrease)/increase in short term borrowings (1,888,358) 5,616,480 Balance as at January 01, 2019 -

Dividend paid (3,598) (591,334) as adjusted 5,426,392 4,279,947 6,579,049 6,571,076 22,856,464

Net cash (used in)/generated from financing activities (1,812,011) 3,451,214 Comprehensive income

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 21,823 (43,914) Profit after taxation - - - 177,842 177,842

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 357,910 401,824 Other comprehensive loss - - (26,753) - (26,753)

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 44 379,733 357,910 Total comprehensive income - - (26,753) 177,842 151,089

The annexed notes from 1 to 58 form an integral part of these financial statements. Incremental depreciation 10 - - (528,664) 528,664 - Transaction with owners - - - - -

Balance as at December 31, 2019 5,426,392 4,279,947 6,023,632 7,277,582 23,007,553

The annexed notes from 1 to 58 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Chief Executive Officer Director Chief Financial Officer Statement of Cash Flows Statement of Changes in Equity For the year Ended December 31, 2019 For the year Ended December 31, 2019

Note 2019 2018 Revenue Share capital Capital reserves Rupees '000 Rupees '000 reserves

Surplus on CASH FLOW FROM OPERATING ACTIVITIES Issued revaluation of subscribed property, Cash generated from operations 43 5,251,428 169,110 and paid-up Capital plant and Accumulated Total Note capital reserve equipment profit equity Payments for: Interest/markup on borrowings - Interest based arrangements (1,004,269) (257,670) Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Interest/markup/profit on borrowings - Shariah compliant (279,033) (196,675) Income tax (229,294) (868,859) Balance as at January 01, 2018 5,426,392 4,279,947 4,274,019 6,753,080 20,733,438 Net cash generated from/(used in) operating activities 3,738,832 (1,154,094) Comprehensive income Profit after taxation - - - 528,345 528,345 CASH FLOW FROM INVESTING ACTIVITIES Other comprehensive income - - 2,504,854 - 2,504,854 Total comprehensive income - - 2,504,854 528,345 3,033,199 Purchase of property, plant and equipment (2,069,197) (2,369,292) Purchase of intangible assets (3,802) (8,030) Incremental depreciation 10 - - (199,824) 199,824 - Proceeds from disposal of property, plant and equipment 168,001 36,288 Transaction with owners Net cash used in investing activities (1,904,998) (2,341,034) Final dividend on ordinary shares @ Rs. 1.20 per share - - - (597,218) (597,218) CASH FLOW FROM FINANCING ACTIVITIES - - - (597,218) (597,218)

Redemption of redeemable capital (101,875) (275,000) Balance as at December 31, 2018 5,426,392 4,279,947 6,579,049 6,884,031 23,169,419 Long term finances obtained 1,780,122 226,013

Repayment of long term finances (1,688,597) (1,542,813) Balance as at January 01, 2019 5,426,392 4,279,947 6,579,049 6,884,031 23,169,419 Proceeds from sale and lease back activities 187,180 109,944

Repayment of lease liabilities (96,885) (92,076) Impact of application of IFRS 15 - - - (312,955) (312,955) Net (decrease)/increase in short term borrowings (1,888,358) 5,616,480 Balance as at January 01, 2019 -

Dividend paid (3,598) (591,334) as adjusted 5,426,392 4,279,947 6,579,049 6,571,076 22,856,464

Net cash (used in)/generated from financing activities (1,812,011) 3,451,214 Comprehensive income

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 21,823 (43,914) Profit after taxation - - - 177,842 177,842

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 357,910 401,824 Other comprehensive loss - - (26,753) - (26,753)

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 44 379,733 357,910 Total comprehensive income - - (26,753) 177,842 151,089

The annexed notes from 1 to 58 form an integral part of these financial statements. Incremental depreciation 10 - - (528,664) 528,664 - Transaction with owners - - - - -

Balance as at December 31, 2019 5,426,392 4,279,947 6,023,632 7,277,582 23,007,553

The annexed notes from 1 to 58 form an integral part of these financial statements.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer Chief Executive Officer Director Chief Financial Officer Notes to the Financial Statements For the year Ended December 31, 2019

1 LEGAL STATUS AND OPERATIONS (b) Satisfaction of performance obligations in construction contracts (see note 6.18.4)

Pak Elektron Limited ['the Company'] was incorporated in Pakistan on March 03, 1956 as a Public Limited Company under the The Company has determined that for construction contracts the customer controls all of the work in progress. This is Companies Act, 1913 (now Companies Act, 2017). Registered office of the Company is situated at 17 - Aziz Avenue, Canal because these contracts are customer specific and the Company is entitled to reimbursment of costs incurred to date, Bank, Gulberg - V, Lahore. The manufacturing facilities of the Company are located at 34 - K.M. Ferozepur Road, Keath Village, including a reasonable margin, if applicable, in case the contract is terminanted by the customer. Lahore and 14 - K.M, Ferozepur Road, Lahore. The Company is currently listed on Pakistan Stock Exchange Limited. The principal activity of the Company is manufacturing and sale of electrical capital goods and domestic appliances. 2.4.2 Key sources of estimation uncertainty

The Company is currently organized into two main operating divisions - Power Division and Appliances Division. The The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date that may Company's activities are as follows: have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are as follows: Power Division: Manufacturing of transformers, switchgears, energy meters, engineering, procurement and construction contracting. (a) Calculation of impairment allowance for expected credit losses on financial assets (see note 6.26.1)

Appliances Division: Manufacturing, assembling and distribution of refrigerators, deep freezers, air conditioners, microwave The Company recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date ovens, washing machines, water dispensers and other home appliances. of inital recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in credit risk since initial recognition of the respective financial asset. Estimating expected credit losses and changes there 2 BASIS OF PREPARATION in requires taking into account qualitative and quantitative forward looking information. When measuring expectied credit losses on financial assets the Company uses reasonable and supportable forward looking information as well as 2.1 Separate financial statements historical data to calculate the difference between the contractual cash flows due and those that the Company would expect to receive, taking into account cash flows from collateral and integral credit enhancements, if any. Probability of These financial statements are the separate financial statements of the Company in which investments in subsidiary and default constitutes a key input in measuring expected credit losses. Probability of default is an estimate of the likelihood associated entities are accounted for on the basis of cost rather than on the basis of reported results. Consolidated financial of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of statements are prepared and presented separately. future conditions. If the expected credit loss rates on financial assets past due had been 10% higher/lower as at the reporting date, the loss allowance on financial assets would have been higher/lower by Rs. 61.254 million. 2.2 Statement of compliance (b) Depreciation method, rates and useful lives of property, plant and equipment (see note 6.1.1) These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in The Company reassesses useful lives, depreciation method and rates for each item of property, plant and equipment Pakistan. The accounting and reporting standards applicable in Pakistan comprise of: annually by considering expected pattern of economic benefits that the Company expects to derive from that item. - International Financial Reporting Standards ['IFRS'] issued by the International Accounting Standards Board ['IASB'] as (c) Amortization method, rates and useful lives of intangible assets (see note 6.2) notified under the Companies Act, 2017; The Company reassesses useful lives, amortization method and rates for each intangible asset annually by considering expected pattern of economic benefits that the Company expects to derive from that asset. - Islamic Financial Accounting Standards ['IFAS'] issued by Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; and (d) Revaluation of property, plant and equipment (see note 6.1.1) Revaluation of property, plant and equipment is carried out by independent professional valuers. Revalued amounts of - Provisions of and directives issued under the Companies Act, 2017. non-depreciable items are determined by reference to local market values and that of depreciable items are determined by reference to present depreciated replacement values. Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS and IFAS, the provisions of and directives issued under the Companies Act, 2017 have been followed. (e) Recoverable amount and impairment of non-financial assets (see note 6.26.2) The management of the Company reviews carrying amounts of its non-financial assets for possible impairment and 2.3 Basis of measurement makes formal estimates of recoverable amount if there is any such indication. These financial statements have been prepared under the historical cost convention except for certain items of property, (f) Taxation (see note 6.21) plant and equipment at revalued amounts, certain assets at recoverable amounts, monetary assets and liabilities The Company takes into account the current income tax law and decisions taken by appellate and other relevant legal denominated in foreign currency measured at spot exchange rates and certain financial instruments measured at fair forums while estimating its provision for current tax. Provision for deferred tax is estimated after taking into account value/amortized cost. In these financial statements, except for the amounts reflected in the statement of cash flows, all historical and expected future turnover and profit trends and their taxability under the current tax law. transactions have been accounted for on accrual basis. (g) Provisions (see note 6.16) 2.4 Critical accounting judgements and key sources of estimation uncertainty Provisions are based on best estimate of the expenditure required to settle the present obligation at the reporting date, that is, the amount that the Company would rationally pay to settle the obligation at the reporting date or to transfer it to a The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the third party. This involves estimation of most likely amounts for one-off events such as litigations and estimation of application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and probability-weighted expected values for large papulations of events, such as warrenties. associated assumptions and judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which forms the basis of making judgments about carrying values of assets (h) Net realizable values of stock in trade (see note 6.5) and liabilities that are not readily apparent from other sources. Subsequently, actual results may differ from these estimates. The Company estimates net realizable values of its stock in trade as the estimated selling price in the ordinary course of Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized business less estimated costs of completion and estimated costs necessary to make the sale. in the period in which the estimate is revised and in any future periods affected. 2.5 Functional currency 2.4.1 Critical accounting judgements These financial statements have been prepared in Pak Rupees which is the Company's functional currency. Judgments made by management in the application of accounting and reporting standards that have significant effect on the financial statements and estimates with a risk of material adjustment in subsequent years are as follows: 2.6 Issue of financial statements (a) Business model assessment (see note 6.26.1) These financial statements were intially authorized for issue on March 27, 2020 by the Board of Directors of the Company. Subsequently, these financial statements were amended to disclose non-adusting event occuring after the reporting period The Company classifies its financial assets on the basis of the Company's business model for managing the financial assets (see note 57.2). The amendment is restricted to note 57.2 only and there were no amendments to the amounts reported in and the contractual cash flow characteristics of the financial asset. The Company determines the business model at a level the previously issued financial statements.. The amended financial statements were authorized for issue on May 02, 2020 by that reflects how financial assets are managed to achieve a particular business objective. This assessment includes the Board of Directors of the Company. judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed. Notes to the Financial Statements For the year Ended December 31, 2019

1 LEGAL STATUS AND OPERATIONS (b) Satisfaction of performance obligations in construction contracts (see note 6.18.4)

Pak Elektron Limited ['the Company'] was incorporated in Pakistan on March 03, 1956 as a Public Limited Company under the The Company has determined that for construction contracts the customer controls all of the work in progress. This is Companies Act, 1913 (now Companies Act, 2017). Registered office of the Company is situated at 17 - Aziz Avenue, Canal because these contracts are customer specific and the Company is entitled to reimbursment of costs incurred to date, Bank, Gulberg - V, Lahore. The manufacturing facilities of the Company are located at 34 - K.M. Ferozepur Road, Keath Village, including a reasonable margin, if applicable, in case the contract is terminanted by the customer. Lahore and 14 - K.M, Ferozepur Road, Lahore. The Company is currently listed on Pakistan Stock Exchange Limited. The principal activity of the Company is manufacturing and sale of electrical capital goods and domestic appliances. 2.4.2 Key sources of estimation uncertainty

The Company is currently organized into two main operating divisions - Power Division and Appliances Division. The The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date that may Company's activities are as follows: have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are as follows: Power Division: Manufacturing of transformers, switchgears, energy meters, engineering, procurement and construction contracting. (a) Calculation of impairment allowance for expected credit losses on financial assets (see note 6.26.1)

Appliances Division: Manufacturing, assembling and distribution of refrigerators, deep freezers, air conditioners, microwave The Company recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date ovens, washing machines, water dispensers and other home appliances. of inital recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in credit risk since initial recognition of the respective financial asset. Estimating expected credit losses and changes there 2 BASIS OF PREPARATION in requires taking into account qualitative and quantitative forward looking information. When measuring expectied credit losses on financial assets the Company uses reasonable and supportable forward looking information as well as 2.1 Separate financial statements historical data to calculate the difference between the contractual cash flows due and those that the Company would expect to receive, taking into account cash flows from collateral and integral credit enhancements, if any. Probability of These financial statements are the separate financial statements of the Company in which investments in subsidiary and default constitutes a key input in measuring expected credit losses. Probability of default is an estimate of the likelihood associated entities are accounted for on the basis of cost rather than on the basis of reported results. Consolidated financial of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of statements are prepared and presented separately. future conditions. If the expected credit loss rates on financial assets past due had been 10% higher/lower as at the reporting date, the loss allowance on financial assets would have been higher/lower by Rs. 61.254 million. 2.2 Statement of compliance (b) Depreciation method, rates and useful lives of property, plant and equipment (see note 6.1.1) These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in The Company reassesses useful lives, depreciation method and rates for each item of property, plant and equipment Pakistan. The accounting and reporting standards applicable in Pakistan comprise of: annually by considering expected pattern of economic benefits that the Company expects to derive from that item. - International Financial Reporting Standards ['IFRS'] issued by the International Accounting Standards Board ['IASB'] as (c) Amortization method, rates and useful lives of intangible assets (see note 6.2) notified under the Companies Act, 2017; The Company reassesses useful lives, amortization method and rates for each intangible asset annually by considering expected pattern of economic benefits that the Company expects to derive from that asset. - Islamic Financial Accounting Standards ['IFAS'] issued by Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; and (d) Revaluation of property, plant and equipment (see note 6.1.1) Revaluation of property, plant and equipment is carried out by independent professional valuers. Revalued amounts of - Provisions of and directives issued under the Companies Act, 2017. non-depreciable items are determined by reference to local market values and that of depreciable items are determined by reference to present depreciated replacement values. Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS and IFAS, the provisions of and directives issued under the Companies Act, 2017 have been followed. (e) Recoverable amount and impairment of non-financial assets (see note 6.26.2) The management of the Company reviews carrying amounts of its non-financial assets for possible impairment and 2.3 Basis of measurement makes formal estimates of recoverable amount if there is any such indication. These financial statements have been prepared under the historical cost convention except for certain items of property, (f) Taxation (see note 6.21) plant and equipment at revalued amounts, certain assets at recoverable amounts, monetary assets and liabilities The Company takes into account the current income tax law and decisions taken by appellate and other relevant legal denominated in foreign currency measured at spot exchange rates and certain financial instruments measured at fair forums while estimating its provision for current tax. Provision for deferred tax is estimated after taking into account value/amortized cost. In these financial statements, except for the amounts reflected in the statement of cash flows, all historical and expected future turnover and profit trends and their taxability under the current tax law. transactions have been accounted for on accrual basis. (g) Provisions (see note 6.16) 2.4 Critical accounting judgements and key sources of estimation uncertainty Provisions are based on best estimate of the expenditure required to settle the present obligation at the reporting date, that is, the amount that the Company would rationally pay to settle the obligation at the reporting date or to transfer it to a The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the third party. This involves estimation of most likely amounts for one-off events such as litigations and estimation of application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and probability-weighted expected values for large papulations of events, such as warrenties. associated assumptions and judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which forms the basis of making judgments about carrying values of assets (h) Net realizable values of stock in trade (see note 6.5) and liabilities that are not readily apparent from other sources. Subsequently, actual results may differ from these estimates. The Company estimates net realizable values of its stock in trade as the estimated selling price in the ordinary course of Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized business less estimated costs of completion and estimated costs necessary to make the sale. in the period in which the estimate is revised and in any future periods affected. 2.5 Functional currency 2.4.1 Critical accounting judgements These financial statements have been prepared in Pak Rupees which is the Company's functional currency. Judgments made by management in the application of accounting and reporting standards that have significant effect on the financial statements and estimates with a risk of material adjustment in subsequent years are as follows: 2.6 Issue of financial statements (a) Business model assessment (see note 6.26.1) These financial statements were intially authorized for issue on March 27, 2020 by the Board of Directors of the Company. Subsequently, these financial statements were amended to disclose non-adusting event occuring after the reporting period The Company classifies its financial assets on the basis of the Company's business model for managing the financial assets (see note 57.2). The amendment is restricted to note 57.2 only and there were no amendments to the amounts reported in and the contractual cash flow characteristics of the financial asset. The Company determines the business model at a level the previously issued financial statements.. The amended financial statements were authorized for issue on May 02, 2020 by that reflects how financial assets are managed to achieve a particular business objective. This assessment includes the Board of Directors of the Company. judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed. 3 NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS EFFECTIVE DURING THE PERIOD. IAS 39 Classification IFRS 9 Classification

The following new and revised standards, interpretations and amendments are effective in the current period but are either Employees' provident fund Financial liabilities at amortized cost Financial liabilities at amortized cost not relevant to the Company or their application does not have any material impact on the interim financial statements of the Compensated absences Financial liabilities at amortized cost Financial liabilities at amortized cost Company other than presentation and disclosures. Unclaimed dividend Financial liabilities at amortized cost Financial liabilities at amortized cost Other payables Financial liabilities at amortized cost Financial liabilities at amortized cost 3.1 IFRS 9 - Financial Instruments Accrued interest/markup/profit Financial liabilities at amortized cost Financial liabilities at amortized cost IFRS 9 introduces new requirements for the classification and measurement of financial assets and financial liabilities, Short term borrowings Financial liabilities at amortized cost Financial liabilities at amortized cost impairment of financial assets and general hedge accounting. The Company has applied IFRS 9 in accordance transitions provision set out in the standard. Impairment of financial assets The date of initial application of IFRS 9 (the date on which the Company has assessed its existing financial assets and financial In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred liabilities in terms of the requirements of IFRS 9) is June 30, 2019. Accordingly, the Company has applied the requirements credit loss model under IAS 39. The expected credit loss model requires the Company to account for expected credit losses IFRS 9 to instruments that continue to be recognized as at June 30, 2019. Comparative amounts in relation to instruments that and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of continue to be recognized as at June 30, 2019 have not been restated as allowed by IFRS 9. the financial assets. Therefore, it is no longer necessary for a credit loss to have occurred before the same is recognized. Classification and measurement IFRS 9 requires the Company to measure the loss allowance for financial instrument at an amount equal to lifetime expected credit losses if the credit risk has increased significantly since initial recognition, or if the financial instrument is a purchased or The classification and measurement requirements for financial liabilities have been substantially carried forward from IAS 39. originated credit impaired financial asset. However, if the credit risk on a financial instrument has not increased significantly All recognized financial assets that are within the scope of IFRS 9 are required to be measured subsequently at amortized cost since initial recognition, except for a purchased or originated credit-impaired financial asset, the Company is required to or fair value on the basis of the Company's business model for managing the financial assets and the contractual cash flow measure the loss allowance for that financial asset at an amount equal to 12-months expected credit loss. IFRS also requires a characteristics of the financial assets. Specifically: simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit losses for trade receivables, contract assets and lease receivables in certain circumstances. - Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cashflows and the contractual terms of the financial asset give rise on specified dates to cash flows that are 3.2 IFRS 15 - Revenue from Contracts with Customers solely payments of principal and interest on the principal amount outstanding are subsequently measured at amortized cost and accordingly classified as 'financial assets at amortized cost’ IFRS 15 - Revenue from Contracts with Customers provides a single, principles based five-step model to be applied to all contracts with customer. - Financial assets that are held within a business model whose objective is achieved by both collecting contractual cashflows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash - Identify the contract with customer. flows that are solely payments of principal and interest on the principal amount outstanding subsequently measured at fair value through other comprehensive income and accordingly classified as 'financial assets at fair value through other - Identify the performance obligations in the contract. comprehensive income [FVTOCI]’ - Determine the transaction price. - All other financial instruments are subsequently measured at fair value through profit or loss and accordingly classified as 'financial assets at fair value through profit or loss [FVTPL]’ - Allocate the transaction price to the performance obligations in the contracts. Despite the foregoing, the Company may make an irrevocable election/designation at initial recognition of financial asset: - Recognized revenue when (or as) the entity satisfies a performance obligation. - To present subsequent changes in fair value of an equity instrument that is not held for trading nor contingent IFRS 15 - Revenue from Contracts with Customers' supersedes IAS 11 - Construction Contracts, IAS 18 - Revenue and related consideration recognized by an acquirer in a business combination in other comprehensive income and classify it as interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of FVTOCI other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be - To designate a debt instrument that meets the amortized cost or FVTOCI criteria as measured art FVTPL if doing so entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgment, eliminates or significantly reduces a measurement or recognition inconsistency. taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. When a financial asset measured at FVTOCI is derecognized, the cumulative gain or loss recognized in other comprehensive income is reclassified to profit or loss as a reclassification adjustment except for equity instruments measured at FVTOCI, The Company has applied IFRS 15 using the acculative effect method and therefore comparatives information has not been where the cumulative gain or loss previously recognized in other comprehensive income is subsequently transferred to restated and continues to be reported under IAS 8 and IAS 11. The accumulative effect of appling IFRS 15 has been accumulated profits. recognised as on January 01, 2019 with the corresponding adjustment to accumulated profit as on that date. The Company has reviewed and assessed the existing financial assets as at June 30, 2019 based on facts and circumstances 3.3 IFRS 16 - Leases (2016) that existed at that date and concluded that initial application of IFRS 9 has had the following impact on the Company's financial assets as regards their classification and measurement. IFRS 16 supersedes IAS 17 - Leases, IFRIC 4 - Determining whether an Arrangement contains a Lease, SIC-15 - Operating Leases- Incentives and SIC-27 - Evaluating the Substance of Transactions Involving the Legal Form of a Lease'. The standard IAS 39 Classification IFRS 9 Classification sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model. Lessor accounting under IFRS 16 is substantially unchanged Long term deposits Loans and receivables Financial assets at amortized cost from IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in IAS 17. Trade debts Loans and receivables Financial assets at amortized cost Whereas, for lessees all leases will be classified as finance leases only. However, as per relevant guidelines issued by Institute Short term deposits Loans and receivables Financial assets at amortized cost of Chartered Accountants of Pakistan, contracts under Ijarah will continue to be treated as operating leases under IFAS 2. Bank balances Loans and receivables Financial assets at amortized cost Short term investments Financial assets at fair value through Financial assets at fair value through The Company adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of profit or loss profit or loss January 01, 2019. Under this method, the standard is applied retrospectively with cumulative effect of initially applying standard recognised at the date of initial application and accordingly the Company is not required to restate prior year Redeemable capital Financial liabilities at amortized cost Financial liabilities at amortized cost results. Long term finances Financial liabilities at amortized cost Financial liabilities at amortized cost Lease liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost The Company assessed its existing contracts and concluded that right-of-use assets as disclosed these financial statements Trade creditors Financial liabilities at amortized cost Financial liabilities at amortized cost shall be recognised along with their corresponding lease liabilities. For other existing contracts, the Company elected to use Foreign bills payable Financial liabilities at amortized cost Financial liabilities at amortized cost the recognition exemptions for lease contracts that, at the commencement date, have a lease term of twelve months or less Accrued liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost and do not contain a purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of low value (‘lowvalue assets’). 3 NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS EFFECTIVE DURING THE PERIOD. IAS 39 Classification IFRS 9 Classification

The following new and revised standards, interpretations and amendments are effective in the current period but are either Employees' provident fund Financial liabilities at amortized cost Financial liabilities at amortized cost not relevant to the Company or their application does not have any material impact on the interim financial statements of the Compensated absences Financial liabilities at amortized cost Financial liabilities at amortized cost Company other than presentation and disclosures. Unclaimed dividend Financial liabilities at amortized cost Financial liabilities at amortized cost Other payables Financial liabilities at amortized cost Financial liabilities at amortized cost 3.1 IFRS 9 - Financial Instruments Accrued interest/markup/profit Financial liabilities at amortized cost Financial liabilities at amortized cost IFRS 9 introduces new requirements for the classification and measurement of financial assets and financial liabilities, Short term borrowings Financial liabilities at amortized cost Financial liabilities at amortized cost impairment of financial assets and general hedge accounting. The Company has applied IFRS 9 in accordance transitions provision set out in the standard. Impairment of financial assets The date of initial application of IFRS 9 (the date on which the Company has assessed its existing financial assets and financial In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred liabilities in terms of the requirements of IFRS 9) is June 30, 2019. Accordingly, the Company has applied the requirements credit loss model under IAS 39. The expected credit loss model requires the Company to account for expected credit losses IFRS 9 to instruments that continue to be recognized as at June 30, 2019. Comparative amounts in relation to instruments that and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of continue to be recognized as at June 30, 2019 have not been restated as allowed by IFRS 9. the financial assets. Therefore, it is no longer necessary for a credit loss to have occurred before the same is recognized. Classification and measurement IFRS 9 requires the Company to measure the loss allowance for financial instrument at an amount equal to lifetime expected credit losses if the credit risk has increased significantly since initial recognition, or if the financial instrument is a purchased or The classification and measurement requirements for financial liabilities have been substantially carried forward from IAS 39. originated credit impaired financial asset. However, if the credit risk on a financial instrument has not increased significantly All recognized financial assets that are within the scope of IFRS 9 are required to be measured subsequently at amortized cost since initial recognition, except for a purchased or originated credit-impaired financial asset, the Company is required to or fair value on the basis of the Company's business model for managing the financial assets and the contractual cash flow measure the loss allowance for that financial asset at an amount equal to 12-months expected credit loss. IFRS also requires a characteristics of the financial assets. Specifically: simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit losses for trade receivables, contract assets and lease receivables in certain circumstances. - Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cashflows and the contractual terms of the financial asset give rise on specified dates to cash flows that are 3.2 IFRS 15 - Revenue from Contracts with Customers solely payments of principal and interest on the principal amount outstanding are subsequently measured at amortized cost and accordingly classified as 'financial assets at amortized cost’ IFRS 15 - Revenue from Contracts with Customers provides a single, principles based five-step model to be applied to all contracts with customer. - Financial assets that are held within a business model whose objective is achieved by both collecting contractual cashflows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash - Identify the contract with customer. flows that are solely payments of principal and interest on the principal amount outstanding subsequently measured at fair value through other comprehensive income and accordingly classified as 'financial assets at fair value through other - Identify the performance obligations in the contract. comprehensive income [FVTOCI]’ - Determine the transaction price. - All other financial instruments are subsequently measured at fair value through profit or loss and accordingly classified as 'financial assets at fair value through profit or loss [FVTPL]’ - Allocate the transaction price to the performance obligations in the contracts. Despite the foregoing, the Company may make an irrevocable election/designation at initial recognition of financial asset: - Recognized revenue when (or as) the entity satisfies a performance obligation. - To present subsequent changes in fair value of an equity instrument that is not held for trading nor contingent IFRS 15 - Revenue from Contracts with Customers' supersedes IAS 11 - Construction Contracts, IAS 18 - Revenue and related consideration recognized by an acquirer in a business combination in other comprehensive income and classify it as interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of FVTOCI other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be - To designate a debt instrument that meets the amortized cost or FVTOCI criteria as measured art FVTPL if doing so entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgment, eliminates or significantly reduces a measurement or recognition inconsistency. taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. When a financial asset measured at FVTOCI is derecognized, the cumulative gain or loss recognized in other comprehensive income is reclassified to profit or loss as a reclassification adjustment except for equity instruments measured at FVTOCI, The Company has applied IFRS 15 using the acculative effect method and therefore comparatives information has not been where the cumulative gain or loss previously recognized in other comprehensive income is subsequently transferred to restated and continues to be reported under IAS 8 and IAS 11. The accumulative effect of appling IFRS 15 has been accumulated profits. recognised as on January 01, 2019 with the corresponding adjustment to accumulated profit as on that date. The Company has reviewed and assessed the existing financial assets as at June 30, 2019 based on facts and circumstances 3.3 IFRS 16 - Leases (2016) that existed at that date and concluded that initial application of IFRS 9 has had the following impact on the Company's financial assets as regards their classification and measurement. IFRS 16 supersedes IAS 17 - Leases, IFRIC 4 - Determining whether an Arrangement contains a Lease, SIC-15 - Operating Leases- Incentives and SIC-27 - Evaluating the Substance of Transactions Involving the Legal Form of a Lease'. The standard IAS 39 Classification IFRS 9 Classification sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model. Lessor accounting under IFRS 16 is substantially unchanged Long term deposits Loans and receivables Financial assets at amortized cost from IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in IAS 17. Trade debts Loans and receivables Financial assets at amortized cost Whereas, for lessees all leases will be classified as finance leases only. However, as per relevant guidelines issued by Institute Short term deposits Loans and receivables Financial assets at amortized cost of Chartered Accountants of Pakistan, contracts under Ijarah will continue to be treated as operating leases under IFAS 2. Bank balances Loans and receivables Financial assets at amortized cost Short term investments Financial assets at fair value through Financial assets at fair value through The Company adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of profit or loss profit or loss January 01, 2019. Under this method, the standard is applied retrospectively with cumulative effect of initially applying standard recognised at the date of initial application and accordingly the Company is not required to restate prior year Redeemable capital Financial liabilities at amortized cost Financial liabilities at amortized cost results. Long term finances Financial liabilities at amortized cost Financial liabilities at amortized cost Lease liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost The Company assessed its existing contracts and concluded that right-of-use assets as disclosed these financial statements Trade creditors Financial liabilities at amortized cost Financial liabilities at amortized cost shall be recognised along with their corresponding lease liabilities. For other existing contracts, the Company elected to use Foreign bills payable Financial liabilities at amortized cost Financial liabilities at amortized cost the recognition exemptions for lease contracts that, at the commencement date, have a lease term of twelve months or less Accrued liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost and do not contain a purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of low value (‘lowvalue assets’). The right-of-use assets were recognised based on the amount equal to their corresponding lease liabilities, adjusted for Effective date related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present (annual periods beginning value of the remaining lease payments. The Company did not have any sub-lease as on January 01, 2019. Accordingly, initial on or after) application of IFRS 16 did not have any impact on the opening retained earnings as of January 01, 2019 and on these financial statements, except for the recognition of right-of-use assets and corresponding lease liabilities as disclosed in these financial statements. Definition of a Business (Amendments to IFRS 3 - Business Combinations) January 01, 2020

3.4 IFRIC 23 - Uncertainty over Income Tax Treatments Definition of Material (Amendments to IAS 1 - First-time Adoption of January 01, 2020 International Financial Reporting Standards and IAS 8 - Accounting Policies, The interpretation addresses the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits Changes in Accounting Estimates and Errors) and tax rates, when there is uncertainty over income tax treatments under IAS 12. It specifically considers: Interest Rate Benchmark Reform (Amendments to IFRS 9 - Financial January 01, 2020 - Whether tax treatments should be considered collectively Instruments, IAS 39 - Financial Instruments: Recognition and Measurements, and IFRS 7 - Financial Instruments: Disclosures) - Assumptions for taxation authorities' examinations Other than afore-mentioned standards, interpretations and amendments, IASB has also issued the following standards - The determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates which have not been notified by the Securities and Exchange Commission of Pakistan ['SECP']:

- The effect of changes in facts and circumstances IFRS 1 - First Time Adoption of International Financial Reporting Standards IFRS 14 - Regulatory Deferral Accounts 3.5 Prepayment Features with Negative Compensation (Amendments to IFRS 9 - Financial Instruments) IFRS 17 – Insurance contracts (2017)

IFRS 9 - Financial Instruments have been amended regarding termination rights in order to allow measurement at amortised The Company intends to adopt these new and revised standards, interpretations and amendments on their effective dates, cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative subject to, where required, notification by Securities and Exchange Commission of Pakistan under section 225 of the compensation payments. Companies Act, 2017 regarding their adoption. The management anticipates that the adoption of the above standards, amendments and interpretations in future periods, will have no material impact on the Company's financial statements other 3.6 Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28 - Investments in Associates and Joint Ventures) than in presentation/disclosures.

IAS 28 - Investments in Associates and Joint Ventures have been amended to clarify that an entity applies IFRS 9 Financial 5 CHANGES IN ACCOUNTING POLICIES Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. The adoption of new and revised standards, interpretations and amendments effective during the year has resulted in changes to accounting policies as follows: 3.7 Annual Improvements to IFRS Standards 2015 – 2017 Cycle Previous accounting policy New accounting policy The annual improvements have made amendments to the following standards: Impairment of financial assets The Company recognizes a loss allowance for expected - IFRS 3 - Business Combinations and IFRS 11 - Joint Arrangements - The amendments to IFRS 3 clarify that when an entity credit losses on financial assets carried at amortized cost obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The A financial asset is assessed at each reporting date to on date of inital recognition. The amount of expected amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity determine whether there is any objective evidence that it is credit losses is updated on each reporting date to reflect does not remeasure previously held interests in that business. impaired. Individually significant financial assets are tested the changes in credit risk since initial recognition of the for impairment on an individual basis. The remaining respective financial asset. - IAS 12 - Income Taxes - The amendments clarify that the requirements in the former paragraph 52B (to recognise the financial assets are assessed collectively in Companys that Impairment is recognized at an amount equal to lifetime income tax consequences of dividends where the transactions or events that generated distributable profits are share similar credit risk characteristics. A financial asset is expected credit losses for financial assets for which credit recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A that considered to be impaired if objective evidence indicates risk has increased significantly since initial recognition. For only deals with situations where there are different tax rates for distributed and undistributed profits. that one or more events have had a negative effect on the financial assets for which credit risk is low, impairment is estimated future cash flows of the asset. recognized at an amount equal to twelve months' - IAS 23 - Borrowing Costs - The amendments clarify that if any specific borrowing remains outstanding after the related An impairment loss in respect of a financial asset measured expected credit losses, with the exception of trade debts, asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when at amortized cost is calculated as the difference between its for which the Company recognises lifetime expected calculating the capitalisation rate on general borrowings. carrying amount, and the present value of the estimated credit losses estimated using internal credit risk grading future cash flows discounted at the original effective based on the Company's historical credit loss experience, 3.8 Plan Amendment, Curtailment or Settlement (Amendments to IAS 19 - Employee Benefits) interest rate. Impairment loss in respect of a financial asset adjusted for factors that are specific to debtors, general measured at fair value is determined by reference to that economic conditions, and an assessment for both the IAS 19 - Employees Benefits has been amended to provide that: fair value. All impairment losses are recognized in profit or current as well as the forecast direction of conditions at the loss. An impairment loss is reversed if the reversal can be reporting date, including time value of money where - If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net related objectively to an event occurring after the appropriate. interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. In impairment loss was recognized. An impairment loss is All impairment losses are recognized in profit or loss. An addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the reversed only to the extent that the financial asset’s impairment loss is reversed if the reversal can be related requirements regarding the asset ceiling. carrying amount after the reversal does not exceed the objectively to an event occurring after the impairment loss carrying amount that would have been determined, net of was recognized. An impairment loss is reversed only to the 4 NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS NOT YET EFFECTIVE. amortization, if no impairment loss had been recognized. extent that the financial asset’s carrying amount after the Effective date reversal does not exceed the carrying amount that would (annual periods beginning have been determined, net of amortization, if no on or after) impairment loss had been recognized. The Company writes off a financial asset when there is information indicating that the counter-party is in severe IFRS 17 - Insurance contracts (2017) January 01, 2021 financial condition and there is no realistic prospect of Sale or contribution of assets between an Investor and its Associate or Joint Deferred Indefinitely recovery. Any recoveries made post write-off are Venture (Amendments to IFRS 10 - Consolidated Financial Statements and IAS recognized in profit or loss. 28 - Investments in Associates and Joint Ventures). Amendments to References to the Conceptual Framework in IFRS Standards January 01, 2020 The right-of-use assets were recognised based on the amount equal to their corresponding lease liabilities, adjusted for Effective date related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present (annual periods beginning value of the remaining lease payments. The Company did not have any sub-lease as on January 01, 2019. Accordingly, initial on or after) application of IFRS 16 did not have any impact on the opening retained earnings as of January 01, 2019 and on these financial statements, except for the recognition of right-of-use assets and corresponding lease liabilities as disclosed in these financial statements. Definition of a Business (Amendments to IFRS 3 - Business Combinations) January 01, 2020

3.4 IFRIC 23 - Uncertainty over Income Tax Treatments Definition of Material (Amendments to IAS 1 - First-time Adoption of January 01, 2020 International Financial Reporting Standards and IAS 8 - Accounting Policies, The interpretation addresses the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits Changes in Accounting Estimates and Errors) and tax rates, when there is uncertainty over income tax treatments under IAS 12. It specifically considers: Interest Rate Benchmark Reform (Amendments to IFRS 9 - Financial January 01, 2020 - Whether tax treatments should be considered collectively Instruments, IAS 39 - Financial Instruments: Recognition and Measurements, and IFRS 7 - Financial Instruments: Disclosures) - Assumptions for taxation authorities' examinations Other than afore-mentioned standards, interpretations and amendments, IASB has also issued the following standards - The determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates which have not been notified by the Securities and Exchange Commission of Pakistan ['SECP']:

- The effect of changes in facts and circumstances IFRS 1 - First Time Adoption of International Financial Reporting Standards IFRS 14 - Regulatory Deferral Accounts 3.5 Prepayment Features with Negative Compensation (Amendments to IFRS 9 - Financial Instruments) IFRS 17 – Insurance contracts (2017)

IFRS 9 - Financial Instruments have been amended regarding termination rights in order to allow measurement at amortised The Company intends to adopt these new and revised standards, interpretations and amendments on their effective dates, cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative subject to, where required, notification by Securities and Exchange Commission of Pakistan under section 225 of the compensation payments. Companies Act, 2017 regarding their adoption. The management anticipates that the adoption of the above standards, amendments and interpretations in future periods, will have no material impact on the Company's financial statements other 3.6 Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28 - Investments in Associates and Joint Ventures) than in presentation/disclosures.

IAS 28 - Investments in Associates and Joint Ventures have been amended to clarify that an entity applies IFRS 9 Financial 5 CHANGES IN ACCOUNTING POLICIES Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. The adoption of new and revised standards, interpretations and amendments effective during the year has resulted in changes to accounting policies as follows: 3.7 Annual Improvements to IFRS Standards 2015 – 2017 Cycle Previous accounting policy New accounting policy The annual improvements have made amendments to the following standards: Impairment of financial assets The Company recognizes a loss allowance for expected - IFRS 3 - Business Combinations and IFRS 11 - Joint Arrangements - The amendments to IFRS 3 clarify that when an entity credit losses on financial assets carried at amortized cost obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The A financial asset is assessed at each reporting date to on date of inital recognition. The amount of expected amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity determine whether there is any objective evidence that it is credit losses is updated on each reporting date to reflect does not remeasure previously held interests in that business. impaired. Individually significant financial assets are tested the changes in credit risk since initial recognition of the for impairment on an individual basis. The remaining respective financial asset. - IAS 12 - Income Taxes - The amendments clarify that the requirements in the former paragraph 52B (to recognise the financial assets are assessed collectively in Companys that Impairment is recognized at an amount equal to lifetime income tax consequences of dividends where the transactions or events that generated distributable profits are share similar credit risk characteristics. A financial asset is expected credit losses for financial assets for which credit recognised) apply to all income tax consequences of dividends by moving the paragraph away from paragraph 52A that considered to be impaired if objective evidence indicates risk has increased significantly since initial recognition. For only deals with situations where there are different tax rates for distributed and undistributed profits. that one or more events have had a negative effect on the financial assets for which credit risk is low, impairment is estimated future cash flows of the asset. recognized at an amount equal to twelve months' - IAS 23 - Borrowing Costs - The amendments clarify that if any specific borrowing remains outstanding after the related An impairment loss in respect of a financial asset measured expected credit losses, with the exception of trade debts, asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when at amortized cost is calculated as the difference between its for which the Company recognises lifetime expected calculating the capitalisation rate on general borrowings. carrying amount, and the present value of the estimated credit losses estimated using internal credit risk grading future cash flows discounted at the original effective based on the Company's historical credit loss experience, 3.8 Plan Amendment, Curtailment or Settlement (Amendments to IAS 19 - Employee Benefits) interest rate. Impairment loss in respect of a financial asset adjusted for factors that are specific to debtors, general measured at fair value is determined by reference to that economic conditions, and an assessment for both the IAS 19 - Employees Benefits has been amended to provide that: fair value. All impairment losses are recognized in profit or current as well as the forecast direction of conditions at the loss. An impairment loss is reversed if the reversal can be reporting date, including time value of money where - If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net related objectively to an event occurring after the appropriate. interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. In impairment loss was recognized. An impairment loss is All impairment losses are recognized in profit or loss. An addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the reversed only to the extent that the financial asset’s impairment loss is reversed if the reversal can be related requirements regarding the asset ceiling. carrying amount after the reversal does not exceed the objectively to an event occurring after the impairment loss carrying amount that would have been determined, net of was recognized. An impairment loss is reversed only to the 4 NEW AND REVISED STANDARDS, INTERPRETATIONS AND AMENDMENTS NOT YET EFFECTIVE. amortization, if no impairment loss had been recognized. extent that the financial asset’s carrying amount after the Effective date reversal does not exceed the carrying amount that would (annual periods beginning have been determined, net of amortization, if no on or after) impairment loss had been recognized. The Company writes off a financial asset when there is information indicating that the counter-party is in severe IFRS 17 - Insurance contracts (2017) January 01, 2021 financial condition and there is no realistic prospect of Sale or contribution of assets between an Investor and its Associate or Joint Deferred Indefinitely recovery. Any recoveries made post write-off are Venture (Amendments to IFRS 10 - Consolidated Financial Statements and IAS recognized in profit or loss. 28 - Investments in Associates and Joint Ventures). Amendments to References to the Conceptual Framework in IFRS Standards January 01, 2020 Liabilties against assets subject to finance lease / Lease liabilities Assets' residual values, if significant and their useful lives are reviewed and adjusted, if appropriate, at each reporting date.

Previous accounting policy New accounting policy When significant parts of an item of operating fixed assets have different useful lives, they are recognized as separate items.

Leases in terms of which the Company assumes At the commencement date of the lease, the Company Major renewals and improvements to operating fixed assets are recognized in the carrying amount if it is probable that the substantially all risks and rewards of ownership are recognises lease liabilities measured at the present value embodied future economic benefits will flow to the Company and the cost of renewal or improvement can be measured classified as finance leases. Assets subject to finance lease of lease payments to be made over the lease term. The reliably. The cost of the day-to-day servicing of operating fixed assets are recognized in profit or loss as incurred. are classified as 'operating fixed assets'. On initial lease payments include fixed payments (including in- recognition, these are measured at cost, being an amount substance fixed payments) less any lease incentives The Company recognizes depreciation in profit or loss by applying reducing balance method, with the exception of equal to the lower of its fair value and the present value of receivable, variable lease payments that depend on an computer hardware and allied items, which are depreciated using straight line method, over the useful life of each operating minimum lease payments. Subsequent to initial index or a rate, and amounts expected to be paid under fixed asset using rates specified in note 21 to the financial statements. Depreciation on additions to operating fixed assets is recognition, these are measured at cost less accumulated residual value guarantees. The lease payments also charged from the month in which the item becomes available for use. Depreciation is discontinued from the month in which it depreciation and accumulated impairment losses. include the exercise price of a purchase option reasonably is disposed or classified as held for disposal. Depreciation, subsequent expenditure, de-recognition, certain to be exercised by the Company and payments of and gains and losses on de-recognition are accounted for penalties for terminating a lease, if the lease term reflects An operating fixed asset is de-recognized when permanently retired from use. Any gain or loss on disposal of operating fixed in accordance with the respective policies for operating the Company exercising the option to terminate. The assets is recognized in profit or loss. fixed assets. Liabilities against assets subject to finance variable lease payments that do not depend on an index or lease are classified as 'financial liabilities at amortized cost' a rate are recognised as expense in the period on which the Increases in the carrying amounts arising on revaluation of property, plant and equipment are recognised, net of tax, in other ' respectively, however, since they fall outside the scope of event or condition that triggers the payment occurs. comprehensive income and accumulated in surplus on revaluation of property, plant and equipment in share capital and measurement requirements of IFRS 9, these are measured In calculating the present value of lease payments, the reserves. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first in accordance with the requirements of IAS 17. On initial Company uses if the interest rate implicit in the lease. After recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other recognition, these are measured at cost, being their fair the commencement date, the amount of lease liabilities is comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to value at the date of commencement of lease, less increased to reflect the accretion of interest and reduced profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to attributable transaction costs. Subsequent to initial for the lease payments made. In addition, the carrying profit or loss and depreciation based on the asset’s original cost, net of tax, is reclassified from the surplus on revaluation of recognition, minimum lease payments made under amount of lease liabilities is remeasured if there is a property, plant and equipment to accumulated profit. finance leases are apportioned between the finance modification, a change in the lease term, a change in the in- charge and the reduction of outstanding liability. The substance fixed lease payments or a change in the 6.1.2 Capital work in progress finance charge is allocated to each period during the lease assessment to purchase the underlying asset. term so as to produce a constant periodic rate of interest Capital work in progress is stated at cost less identified impairment loss, if any, and includes the cost of material, labour and on the remaining balance of the liability. Deposits against appropriate overheads directly relating to the construction, erection or installation of an item of operating fixed assets. These finance leases, subsequent to initial recognition are carried costs are transferred to operating fixed assets as and when related items become available for intended use. at cost. 6.2 Intangible assets The follwing table summerises the impact of application of new and revised standards, interpretations and amendments effective during the year, on the Company's financial statements, for the year ended December 31, 2019. 6.2.1 Goodwill

Without As Goodwill represents the excess of the cost of business combination over the acquirer's interest in the net fair value of the adoption Adjustment reported identifiable assets, liabilities and contingent liabilities of the acquiree. This is stated at cost less any accumulated impairment Rupees '000 Rupees '000 Rupees '000 losses, if any.

6.2.2 Technology transfer Impact on equity The intangible assets in respect of technology transfer are amortized over the useful life of plant and machinery involved in Accumulated profits 7,635,497 (357,915) 7,277,582 use of such technology. Amortization of intangible commences when it becomes available for use. Impact on liabilities 6.2.3 Computer software and ERP Warranty obligations - 357,915 357,915 Computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by Impact on profit or loss the Company, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as Warranty period services 188,441 44,960 233,401 intangible assets. These costs are amortized over their estimated useful lives. Amortization of intangible commences when it becomes available for use. Impact on earnings per share 6.3 Right-of-use assets Decrease in earnings per share 0.18 0.09 0.27 The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is 6 SIGNIFICANT ACCOUNTING POLICIES available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities The accounting policies set out below have been applied consistently to all periods presented in these financial statements recognised, initial direct costs incurred (if any), and lease payments made at or before the commencement date less lease except of the change referred to in note 5. incentives received (if any). Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated 6.1 Property, plant and equipment useful life and the lease term. Right-of-use assets are subject to impairment.

6.1.1 Operating fixed assets 6.4 Stores, spares and loose tools

Operating fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses with the These are generally held for internal use and are valued at cost. Cost is determined on the basis of moving average except for exception of land, building and plant and machinery. Land, building and plant and machinery are measured at revalued items in transit, which are valued at invoice price plus related cost incurred up to the reporting date. For items which are amounts less accumulated depreciation and accumulated impairment losses, if any. Cost comprises purchase price, considered obsolete, the carrying amount is written down to nil. Spare parts held for capitalization are classified as property, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, and includes other plant and equipment through capital work in progress. costs directly attributable to the acquisition or construction, erection and installation. Liabilties against assets subject to finance lease / Lease liabilities Assets' residual values, if significant and their useful lives are reviewed and adjusted, if appropriate, at each reporting date.

Previous accounting policy New accounting policy When significant parts of an item of operating fixed assets have different useful lives, they are recognized as separate items.

Leases in terms of which the Company assumes At the commencement date of the lease, the Company Major renewals and improvements to operating fixed assets are recognized in the carrying amount if it is probable that the substantially all risks and rewards of ownership are recognises lease liabilities measured at the present value embodied future economic benefits will flow to the Company and the cost of renewal or improvement can be measured classified as finance leases. Assets subject to finance lease of lease payments to be made over the lease term. The reliably. The cost of the day-to-day servicing of operating fixed assets are recognized in profit or loss as incurred. are classified as 'operating fixed assets'. On initial lease payments include fixed payments (including in- recognition, these are measured at cost, being an amount substance fixed payments) less any lease incentives The Company recognizes depreciation in profit or loss by applying reducing balance method, with the exception of equal to the lower of its fair value and the present value of receivable, variable lease payments that depend on an computer hardware and allied items, which are depreciated using straight line method, over the useful life of each operating minimum lease payments. Subsequent to initial index or a rate, and amounts expected to be paid under fixed asset using rates specified in note 21 to the financial statements. Depreciation on additions to operating fixed assets is recognition, these are measured at cost less accumulated residual value guarantees. The lease payments also charged from the month in which the item becomes available for use. Depreciation is discontinued from the month in which it depreciation and accumulated impairment losses. include the exercise price of a purchase option reasonably is disposed or classified as held for disposal. Depreciation, subsequent expenditure, de-recognition, certain to be exercised by the Company and payments of and gains and losses on de-recognition are accounted for penalties for terminating a lease, if the lease term reflects An operating fixed asset is de-recognized when permanently retired from use. Any gain or loss on disposal of operating fixed in accordance with the respective policies for operating the Company exercising the option to terminate. The assets is recognized in profit or loss. fixed assets. Liabilities against assets subject to finance variable lease payments that do not depend on an index or lease are classified as 'financial liabilities at amortized cost' a rate are recognised as expense in the period on which the Increases in the carrying amounts arising on revaluation of property, plant and equipment are recognised, net of tax, in other ' respectively, however, since they fall outside the scope of event or condition that triggers the payment occurs. comprehensive income and accumulated in surplus on revaluation of property, plant and equipment in share capital and measurement requirements of IFRS 9, these are measured In calculating the present value of lease payments, the reserves. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first in accordance with the requirements of IAS 17. On initial Company uses if the interest rate implicit in the lease. After recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other recognition, these are measured at cost, being their fair the commencement date, the amount of lease liabilities is comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to value at the date of commencement of lease, less increased to reflect the accretion of interest and reduced profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to attributable transaction costs. Subsequent to initial for the lease payments made. In addition, the carrying profit or loss and depreciation based on the asset’s original cost, net of tax, is reclassified from the surplus on revaluation of recognition, minimum lease payments made under amount of lease liabilities is remeasured if there is a property, plant and equipment to accumulated profit. finance leases are apportioned between the finance modification, a change in the lease term, a change in the in- charge and the reduction of outstanding liability. The substance fixed lease payments or a change in the 6.1.2 Capital work in progress finance charge is allocated to each period during the lease assessment to purchase the underlying asset. term so as to produce a constant periodic rate of interest Capital work in progress is stated at cost less identified impairment loss, if any, and includes the cost of material, labour and on the remaining balance of the liability. Deposits against appropriate overheads directly relating to the construction, erection or installation of an item of operating fixed assets. These finance leases, subsequent to initial recognition are carried costs are transferred to operating fixed assets as and when related items become available for intended use. at cost. 6.2 Intangible assets The follwing table summerises the impact of application of new and revised standards, interpretations and amendments effective during the year, on the Company's financial statements, for the year ended December 31, 2019. 6.2.1 Goodwill

Without As Goodwill represents the excess of the cost of business combination over the acquirer's interest in the net fair value of the adoption Adjustment reported identifiable assets, liabilities and contingent liabilities of the acquiree. This is stated at cost less any accumulated impairment Rupees '000 Rupees '000 Rupees '000 losses, if any.

6.2.2 Technology transfer Impact on equity The intangible assets in respect of technology transfer are amortized over the useful life of plant and machinery involved in Accumulated profits 7,635,497 (357,915) 7,277,582 use of such technology. Amortization of intangible commences when it becomes available for use. Impact on liabilities 6.2.3 Computer software and ERP Warranty obligations - 357,915 357,915 Computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by Impact on profit or loss the Company, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as Warranty period services 188,441 44,960 233,401 intangible assets. These costs are amortized over their estimated useful lives. Amortization of intangible commences when it becomes available for use. Impact on earnings per share 6.3 Right-of-use assets Decrease in earnings per share 0.18 0.09 0.27 The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is 6 SIGNIFICANT ACCOUNTING POLICIES available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities The accounting policies set out below have been applied consistently to all periods presented in these financial statements recognised, initial direct costs incurred (if any), and lease payments made at or before the commencement date less lease except of the change referred to in note 5. incentives received (if any). Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated 6.1 Property, plant and equipment useful life and the lease term. Right-of-use assets are subject to impairment.

6.1.1 Operating fixed assets 6.4 Stores, spares and loose tools

Operating fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses with the These are generally held for internal use and are valued at cost. Cost is determined on the basis of moving average except for exception of land, building and plant and machinery. Land, building and plant and machinery are measured at revalued items in transit, which are valued at invoice price plus related cost incurred up to the reporting date. For items which are amounts less accumulated depreciation and accumulated impairment losses, if any. Cost comprises purchase price, considered obsolete, the carrying amount is written down to nil. Spare parts held for capitalization are classified as property, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, and includes other plant and equipment through capital work in progress. costs directly attributable to the acquisition or construction, erection and installation. 6.5 Stock in trade 6.7.4 Derecognition

These are valued at lower of cost and net realizable value, with the exception of stock of waste which is valued at net realizable A financial asset is derecognized when the Company's contractual rights to the cash flows from the financial assets expire or value. Cost is determined using the following basis: when the Company transfers the financial asset to another party without retaining control of substantially all risks and rewards of the financial asset. A financial liability is derecognized when the Company's obligations specified in the contract expire or a Raw materials Moving average cost discharged or cancelled. Work in process Average manufacturing cost Finished goods Average manufacturing cost 6.7.5 Off-setting Stock in transit Invoice price plus related cost incurred up to the reporting date A financial asset and financial liability is offset and the net amount reported in the statement of financial position if the Average manufacturing cost in relation to work in process and finished goods consists of direct material, labour and an Company has legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to appropriate proportion of manufacturing overheads. realize the asset and settle the liability simultaneously. Net realizable value signifies the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. 6.7.6 Regular way purchases or sales of financial assets

6.6 Employee benefits Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place. Regular way purchases or sales of financial assets are 6.6.1 Short-term employee benefits recognized and derecognized on a trade date basis.

The Company recognizes the undiscounted amount of short term employee benefits to be paid in exchange for services 6.8 Ordinary share capital rendered by employees as a liability after deducting amount already paid and as an expense in profit or loss unless it is included in the cost of inventories or property, plant and equipment as permitted or required by the approved accounting Ordinary share capital is recognized as equity. Transaction costs directly attributable to the issue of ordinary shares are and reporting standards as applicable in Pakistan. If the amount paid exceeds the undiscounted amount of benefits, the recognized as deduction from equity. excess is recognized as an asset to the extent that the prepayment would lead to a reduction in future payments or cash refund. 6.9 Preference share capital

The Company provides for compensated absences of its employees on un-availed balance of leaves in the period in which Preference share capital is recognized as equity in accordance with the interpretation of the provision of the repealed the leaves are earned. Companies Ordinance, 1984, including those pertaining to implied classifications of preference shares.

6.6.2 Post-employment benefits 6.10 Loans and borrowings

The Company operates an approved funded contributory provident fund for all its permanent employees who have Loans and borrowings are classified as 'financial liabilities at amortized cost'. On initial recognition, these are measured at completed the minimum qualifying period of service as defined under the respective scheme. Equal monthly contributions cost, being fair value at the date the liability is incurred, less attributable transaction costs. Subsequent to initial recognition, are made both by the Company and the employees at the rate of ten percent of basic salary and cost of living allowance, these are measured at amortized cost with any difference between cost and value at maturity recognized in the profit or loss where applicable, to cover the obligation. Contributions are charged to profit or loss. over the period of the borrowings on an effective interest basis.

6.7 Financial instruments 6.11 Investments in equity securities

6.7.1 Recognition 6.11.1 Investments in associates

A financial instrument is recognized when the Company becomes a party to the contractual provisions of the instrument. Investments in associates are accounted for using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post acquisition changes in 6.7.2 Classification the Company's share of net assets of the associate, less any impairment in the value of investment. Losses of an associate in excess of the Company's interest in that associate (which includes any long term interest that, in substance, form part of the The Company classifies its financial assets on the basis of the Company's business model for managing the financial assets Company's net investment in the associate) are recognized only to the extent that the Company has incurred legal or and the contractual cash flow characteristics of the financial asset. Financial liabilities are classified in accordance with the constructive obligation or made payment on behalf of the associate. substance of contractual provisions. The Company determines the classification of its financial instruments at initial recognition as follows: 6.11.2 Investments in other quoted equity securities

(a) Financial assets at amortized cost Investments in quoted equity securities are classified as 'financial assets at fair value thorugh profit or loss'. On initial recognition, these are measured at fair value on the date of acquisition. Subsequent to initial recognition, these are measured These are financial assets held within a business model whose objective is to hold financial assets in order to collect at fair value. Changes in fair value are recognized in profit or loss. Gains and losses on de-recognition are recognized in profit contractual cashflows and the contractual terms of the financial asset give rise on specified dates to cash flows that are or loss. Dividend income is recognized in profit or loss when right to receive payment is established. solely payments of principal and interest on the principal amount outstanding. 6.12 Lease liabilities (b) Financial assets at fair value through profit or loss At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease These are financial assets which have not been classified as 'financial assets at amortized cost' or as 'financial assets at fair payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed value through other comprehensive income', are mandatorily measured at fair value through profit or loss or for which payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts the Company makes an irrevocable election at initial recognition to designate as 'financial asset at fair value through expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase profit or loss' if doing so eliminates or significantly reduces a measurement or recognition inconsistency. option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or (c) Financial liabilities at amortized cost a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

These are financial liabilities which are not derivates, financial guarantee contracts, commitments to provide loans at In calculating the present value of lease payments, the Company uses if the interest rate implicit in the lease. After the below-market interest rate, contingent consideration payable to an acquirer in a business combination or financial commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease liabilities that arise when transfer of a financial asset does not qualify for derecognition. payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying 6.7.3 Measurement asset.

The particular measurement methods adopted are disclosed in individual policy statements associated with each financial instrument. 6.5 Stock in trade 6.7.4 Derecognition

These are valued at lower of cost and net realizable value, with the exception of stock of waste which is valued at net realizable A financial asset is derecognized when the Company's contractual rights to the cash flows from the financial assets expire or value. Cost is determined using the following basis: when the Company transfers the financial asset to another party without retaining control of substantially all risks and rewards of the financial asset. A financial liability is derecognized when the Company's obligations specified in the contract expire or a Raw materials Moving average cost discharged or cancelled. Work in process Average manufacturing cost Finished goods Average manufacturing cost 6.7.5 Off-setting Stock in transit Invoice price plus related cost incurred up to the reporting date A financial asset and financial liability is offset and the net amount reported in the statement of financial position if the Average manufacturing cost in relation to work in process and finished goods consists of direct material, labour and an Company has legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to appropriate proportion of manufacturing overheads. realize the asset and settle the liability simultaneously. Net realizable value signifies the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. 6.7.6 Regular way purchases or sales of financial assets

6.6 Employee benefits Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place. Regular way purchases or sales of financial assets are 6.6.1 Short-term employee benefits recognized and derecognized on a trade date basis.

The Company recognizes the undiscounted amount of short term employee benefits to be paid in exchange for services 6.8 Ordinary share capital rendered by employees as a liability after deducting amount already paid and as an expense in profit or loss unless it is included in the cost of inventories or property, plant and equipment as permitted or required by the approved accounting Ordinary share capital is recognized as equity. Transaction costs directly attributable to the issue of ordinary shares are and reporting standards as applicable in Pakistan. If the amount paid exceeds the undiscounted amount of benefits, the recognized as deduction from equity. excess is recognized as an asset to the extent that the prepayment would lead to a reduction in future payments or cash refund. 6.9 Preference share capital

The Company provides for compensated absences of its employees on un-availed balance of leaves in the period in which Preference share capital is recognized as equity in accordance with the interpretation of the provision of the repealed the leaves are earned. Companies Ordinance, 1984, including those pertaining to implied classifications of preference shares.

6.6.2 Post-employment benefits 6.10 Loans and borrowings

The Company operates an approved funded contributory provident fund for all its permanent employees who have Loans and borrowings are classified as 'financial liabilities at amortized cost'. On initial recognition, these are measured at completed the minimum qualifying period of service as defined under the respective scheme. Equal monthly contributions cost, being fair value at the date the liability is incurred, less attributable transaction costs. Subsequent to initial recognition, are made both by the Company and the employees at the rate of ten percent of basic salary and cost of living allowance, these are measured at amortized cost with any difference between cost and value at maturity recognized in the profit or loss where applicable, to cover the obligation. Contributions are charged to profit or loss. over the period of the borrowings on an effective interest basis.

6.7 Financial instruments 6.11 Investments in equity securities

6.7.1 Recognition 6.11.1 Investments in associates

A financial instrument is recognized when the Company becomes a party to the contractual provisions of the instrument. Investments in associates are accounted for using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post acquisition changes in 6.7.2 Classification the Company's share of net assets of the associate, less any impairment in the value of investment. Losses of an associate in excess of the Company's interest in that associate (which includes any long term interest that, in substance, form part of the The Company classifies its financial assets on the basis of the Company's business model for managing the financial assets Company's net investment in the associate) are recognized only to the extent that the Company has incurred legal or and the contractual cash flow characteristics of the financial asset. Financial liabilities are classified in accordance with the constructive obligation or made payment on behalf of the associate. substance of contractual provisions. The Company determines the classification of its financial instruments at initial recognition as follows: 6.11.2 Investments in other quoted equity securities

(a) Financial assets at amortized cost Investments in quoted equity securities are classified as 'financial assets at fair value thorugh profit or loss'. On initial recognition, these are measured at fair value on the date of acquisition. Subsequent to initial recognition, these are measured These are financial assets held within a business model whose objective is to hold financial assets in order to collect at fair value. Changes in fair value are recognized in profit or loss. Gains and losses on de-recognition are recognized in profit contractual cashflows and the contractual terms of the financial asset give rise on specified dates to cash flows that are or loss. Dividend income is recognized in profit or loss when right to receive payment is established. solely payments of principal and interest on the principal amount outstanding. 6.12 Lease liabilities (b) Financial assets at fair value through profit or loss At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease These are financial assets which have not been classified as 'financial assets at amortized cost' or as 'financial assets at fair payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed value through other comprehensive income', are mandatorily measured at fair value through profit or loss or for which payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts the Company makes an irrevocable election at initial recognition to designate as 'financial asset at fair value through expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase profit or loss' if doing so eliminates or significantly reduces a measurement or recognition inconsistency. option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or (c) Financial liabilities at amortized cost a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

These are financial liabilities which are not derivates, financial guarantee contracts, commitments to provide loans at In calculating the present value of lease payments, the Company uses if the interest rate implicit in the lease. After the below-market interest rate, contingent consideration payable to an acquirer in a business combination or financial commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease liabilities that arise when transfer of a financial asset does not qualify for derecognition. payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying 6.7.3 Measurement asset.

The particular measurement methods adopted are disclosed in individual policy statements associated with each financial instrument. 6.13 Short-term leases Nature and timing of satisfaction of performance Product/service obligations, including significant payment terms Revenue recognition policies The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of twelve months or less from the commencement date and do not contain a purchase option). Lease payments on Electrical capital Performance obligation are satisfied when customers Revenue is recognised when the goods short-term leases are recognised as expense on a straight-line basis over the lease term. goods obtain control of electrical capital goods when the these are delivered and have been accepted are delivered to and have been accepted at their by customers at their premises. 6.14 Ijarah transactions premises. Invoices are generated at that point in time. Transformers, Invoices, where customer is the Federal/Provincial Ujrah payments under an Ijarah are recognized as an expense in the profit or loss on a straight-line basis over the Ijarah terms switchgears, energy Government, are payable in accordance with the tender unless another systematic basis are representative of the time pattern of the user's benefit, even if the payments are not on meters documents, usually upto 90 days. For private customers, that basis. invoices are paid for in advance. These products do not carry any discounts. There are no customer loyalty 6.15 Trade and other payables programs. These contracts do not permit the customer to return any item. However, there are warranty provisions 6.15.1 Financial liabilities in place which provide for the Company's obligations for service/replacement of products where these do not These are classified as 'financial liabilities at amortized cost'. On initial recognition, these are measured at cost, being their fair meet the agreed specifications or otherwise do not value at the date the liability is incurred, less attributable transaction costs. Subsequent to initial recognition, these are perform as guaranteed by the Company. measured at amortized cost using the effective interest method, with interest recognized in profit or loss. Construction contracts The Company contructs power grid stations for Revenue is recognised over time using 6.15.2 Non-financial liabilities Government as well as private customers. Performance t h e o u t p u t m e t h o d b a s e d o n obligations are satisfied over time by reference to stage measurements of the value of services These, both on initial recognition and subsequently, are measured at cost. Engineering, of completion of contract activity at the balance sheet transferred to date, relative to the procurement and date. Invoices are issued according to contractual terms remaining services promised under the 6.16 Provisions and contingencies construction services and are usually payable within a period ranging from 30 contract. days to 90 days, except for those contracts for which Provisions are recognized when the Company has a legal and constructive obligation as a result of past events and it is transaction price has been received in advance. A probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable percentage of transaction price is retained by estimate can be made of the amount of obligation. Provision is recognized at an amount that is the best estimate of the Government customers as 'retention money' from expenditure required to settle the present obligation at the reporting date. Where outflow of resources embodying payments to the Company, which is released on expiry of economic benefits is not probable, or where a reliable estimate of the amount of obligation cannot be made, a contingent an agreed period after completion of contract activity.] liability is disclosed, unless the possibility of outflow is remote. Uninvoiced amounts are presented as contract assets.

6.17 Trade and other receivables 6.18.2 Contract assets

6.17.1 Financial assets A contract asset is the right to consideration in exchange for goods or services transferred to the customer. The Company recognizes a contract asset for the earned consideration that is conditional if the Company performs by transferring goods or These are classified as 'financial assets at amortized cost'. On initial recognition, these are measured at fair value at the date of services to a customer before the customer pays consideration or before payment is due. transaction, plus attributable transaction costs, except for trade debts that do not have a significant financing compenent, which are measured at undiscounted invoice price. Subsequent to initial recognition, these are measured at amortized cost 6.18.3 Contract liabilities using the effective interest method, with interest recognized in profit or loss. A contract liability is the obligation to transfer goods or services to a customer for which the Company has received 6.17.2 Non-financial assets consideration from the customer. A contract liability is recognized at earlier of when the payment is made or the payment is due if a customer pays consideration before the Company transfers goods or services to the customer. These, both on initial recognition and subsequently, are measured at cost. 6.18.4 Warranty obligations 6.18 Contracts with customers The Company accounts for its warranty obligations when the underlying product or service is sold or rendered. The provision 6.18.1 Revenue is based on historical warranty data and weighing-in various possible outcomes against their associated probabilities.

Revenue is measured based on the consideration specified in a contract with a customer. The Company recognises revenue 6.19 Comprehensive income from a contract with customer when the Company satisfies a specified in that contract. The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including Comprehensive income is the change in equity resulting from transactions and other events, other than changes resulting significant payment terms, and the related revenue recognition policies. from transactions with shareholders in their capacity as shareholders. Total comprehensive income comprises all components of profit or loss and other comprehensive income ['OCI']. OCI comprises items of income and expense, Nature and timing of satisfaction of performance including reclassification adjustments, that are not recognized in profit or loss as required or permitted by approved Product/service obligations, including significant payment terms Revenue recognition policies accounting and reporting standards as applicable in Pakistan, and is presented in 'statement of other comprehensive income'. Home appliances Performance obligation are satisfied when customers Revenue is recognised over time using obtain control of home appliances when the these are t h e o u t p u t m e t h o d b a s e d o n 6.20 Borrowing costs Refrigerators, deep delivered to and have been accepted at their premises. measurements of the value of services freezers, air Invoices are generated at that point in time. Invoices are transferred to date, relative to the Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that conditioners, usually payable within a period ranging from 30 days to remaining services promised under the necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, microwave ovens, 90 days, except for retail sales which are payable at the contract. until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the washing machines, time of purchase. Discounts are allowed based on the temporary investment of specific borrowings pending their expenditure on qualifying asset is deducted from the borrowing water dispensers and payment terms and volume of sales. There are no costs eligible for capitalization. All other borrowing costs are recognized in profit or loss as incurred. other home customer loyalty programs. These contracts do not appliances. permit the customer to return any item. However, there 6.21 Income tax are warranty provisions in place which provide for the Company's obligations for service/replacement of Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in profit or loss except to the products where these do not meet the agreed extent that it relates to items recognized directly in other comprehensive income, in which case it is recognized in other specifications or otherwise do not perform as comprehensive income. guaranteed by the Company. 6.13 Short-term leases Nature and timing of satisfaction of performance Product/service obligations, including significant payment terms Revenue recognition policies The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of twelve months or less from the commencement date and do not contain a purchase option). Lease payments on Electrical capital Performance obligation are satisfied when customers Revenue is recognised when the goods short-term leases are recognised as expense on a straight-line basis over the lease term. goods obtain control of electrical capital goods when the these are delivered and have been accepted are delivered to and have been accepted at their by customers at their premises. 6.14 Ijarah transactions premises. Invoices are generated at that point in time. Transformers, Invoices, where customer is the Federal/Provincial Ujrah payments under an Ijarah are recognized as an expense in the profit or loss on a straight-line basis over the Ijarah terms switchgears, energy Government, are payable in accordance with the tender unless another systematic basis are representative of the time pattern of the user's benefit, even if the payments are not on meters documents, usually upto 90 days. For private customers, that basis. invoices are paid for in advance. These products do not carry any discounts. There are no customer loyalty 6.15 Trade and other payables programs. These contracts do not permit the customer to return any item. However, there are warranty provisions 6.15.1 Financial liabilities in place which provide for the Company's obligations for service/replacement of products where these do not These are classified as 'financial liabilities at amortized cost'. On initial recognition, these are measured at cost, being their fair meet the agreed specifications or otherwise do not value at the date the liability is incurred, less attributable transaction costs. Subsequent to initial recognition, these are perform as guaranteed by the Company. measured at amortized cost using the effective interest method, with interest recognized in profit or loss. Construction contracts The Company contructs power grid stations for Revenue is recognised over time using 6.15.2 Non-financial liabilities Government as well as private customers. Performance t h e o u t p u t m e t h o d b a s e d o n obligations are satisfied over time by reference to stage measurements of the value of services These, both on initial recognition and subsequently, are measured at cost. Engineering, of completion of contract activity at the balance sheet transferred to date, relative to the procurement and date. Invoices are issued according to contractual terms remaining services promised under the 6.16 Provisions and contingencies construction services and are usually payable within a period ranging from 30 contract. days to 90 days, except for those contracts for which Provisions are recognized when the Company has a legal and constructive obligation as a result of past events and it is transaction price has been received in advance. A probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable percentage of transaction price is retained by estimate can be made of the amount of obligation. Provision is recognized at an amount that is the best estimate of the Government customers as 'retention money' from expenditure required to settle the present obligation at the reporting date. Where outflow of resources embodying payments to the Company, which is released on expiry of economic benefits is not probable, or where a reliable estimate of the amount of obligation cannot be made, a contingent an agreed period after completion of contract activity.] liability is disclosed, unless the possibility of outflow is remote. Uninvoiced amounts are presented as contract assets.

6.17 Trade and other receivables 6.18.2 Contract assets

6.17.1 Financial assets A contract asset is the right to consideration in exchange for goods or services transferred to the customer. The Company recognizes a contract asset for the earned consideration that is conditional if the Company performs by transferring goods or These are classified as 'financial assets at amortized cost'. On initial recognition, these are measured at fair value at the date of services to a customer before the customer pays consideration or before payment is due. transaction, plus attributable transaction costs, except for trade debts that do not have a significant financing compenent, which are measured at undiscounted invoice price. Subsequent to initial recognition, these are measured at amortized cost 6.18.3 Contract liabilities using the effective interest method, with interest recognized in profit or loss. A contract liability is the obligation to transfer goods or services to a customer for which the Company has received 6.17.2 Non-financial assets consideration from the customer. A contract liability is recognized at earlier of when the payment is made or the payment is due if a customer pays consideration before the Company transfers goods or services to the customer. These, both on initial recognition and subsequently, are measured at cost. 6.18.4 Warranty obligations 6.18 Contracts with customers The Company accounts for its warranty obligations when the underlying product or service is sold or rendered. The provision 6.18.1 Revenue is based on historical warranty data and weighing-in various possible outcomes against their associated probabilities.

Revenue is measured based on the consideration specified in a contract with a customer. The Company recognises revenue 6.19 Comprehensive income from a contract with customer when the Company satisfies a specified in that contract. The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including Comprehensive income is the change in equity resulting from transactions and other events, other than changes resulting significant payment terms, and the related revenue recognition policies. from transactions with shareholders in their capacity as shareholders. Total comprehensive income comprises all components of profit or loss and other comprehensive income ['OCI']. OCI comprises items of income and expense, Nature and timing of satisfaction of performance including reclassification adjustments, that are not recognized in profit or loss as required or permitted by approved Product/service obligations, including significant payment terms Revenue recognition policies accounting and reporting standards as applicable in Pakistan, and is presented in 'statement of other comprehensive income'. Home appliances Performance obligation are satisfied when customers Revenue is recognised over time using obtain control of home appliances when the these are t h e o u t p u t m e t h o d b a s e d o n 6.20 Borrowing costs Refrigerators, deep delivered to and have been accepted at their premises. measurements of the value of services freezers, air Invoices are generated at that point in time. Invoices are transferred to date, relative to the Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that conditioners, usually payable within a period ranging from 30 days to remaining services promised under the necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, microwave ovens, 90 days, except for retail sales which are payable at the contract. until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the washing machines, time of purchase. Discounts are allowed based on the temporary investment of specific borrowings pending their expenditure on qualifying asset is deducted from the borrowing water dispensers and payment terms and volume of sales. There are no costs eligible for capitalization. All other borrowing costs are recognized in profit or loss as incurred. other home customer loyalty programs. These contracts do not appliances. permit the customer to return any item. However, there 6.21 Income tax are warranty provisions in place which provide for the Company's obligations for service/replacement of Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in profit or loss except to the products where these do not meet the agreed extent that it relates to items recognized directly in other comprehensive income, in which case it is recognized in other specifications or otherwise do not perform as comprehensive income. guaranteed by the Company. 6.21.1 Current taxation The Company writes off a financial asset when there is information indicating that the counter-party is in severe financial condition and there is no realistic prospect of recovery. Any recoveries made post write-off are recognized in profit or loss. Current tax is the amount of tax payable on taxable income for the year and any adjustment to the tax payable in respect of previous years. Provision for current tax is based on current rates of taxation in Pakistan after taking into account tax credits, 6.26.2 Non-financial assets rebates and exemptions available, if any. The amount of unpaid income tax in respect of the current or prior periods is recognized as a liability. Any excess paid over what is due in respect of the current or prior periods is recognized as an asset. The carrying amount of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s 6.21.2 Deferred taxation recoverable amount is estimated. The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present Deferred tax is accounted for using the' balance sheet approach' providing for temporary differences between the carrying values using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. In this regard, the to the asset or cash generating unit. effects on deferred taxation of the portion of income that is subject to final tax regime is also considered in accordance with the treatment prescribed by The Institute of Chartered Accountants of Pakistan. Deferred tax is measured at rates that are An impairment loss is recognized if the carrying amount of the asset or its cash generating unit exceeds its estimated expected to be applied to the temporary differences when they reverse, based on laws that have been enacted or recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash substantively enacted by the reporting date. A deferred tax liability is recognized for all taxable temporary differences. A generating units are allocated to reduce the carrying amounts of the assets in a unit on a pro rata basis. Impairment losses deferred tax asset is recognized for deductible temporary differences to the extent that future taxable profits will be available recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer against which temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced exists. An impairment loss is reversed if there has been a change in the estimates used in determining the recoverable to the extent that it is no longer probable that the related tax benefit will be realized. amount. An impairment loss is reversed only to that extent that the asset’s carrying amount after the reversal does not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment loss had been 6.22 Government grants recognized.

Government grants that compensate the Company for expenses or losses already incurred are recognized in profit or loss in 6.27 Dividend distribution to ordinary shareholders the period in which these are received and are deducted in reporting the relevant expenses or losses. Grants relating to property, plant and equipment are recognized as deferred income and an amount equivalent to depreciation charged on Dividend to ordinary shareholders is recognized as a deduction from accumulated profit in statement of changes in equity such assets is transferred to profit or loss. and as a liability, to the extent it is unclaimed/unpaid, in the Company’s financial statements in the year in which the dividends are approved by the Company’s shareholders. 6.23 Earnings per share ['EPS'] 6.28 Basis of allocation of common expenses Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Distribution, administrative and finance cost are allocated to PEL Marketing (Private) Limited ['PMPL'] on the basis of percentage of resources used by PMPL, under the interservices agreement between the Company and PMPL. Diluted EPS is calculated by adjusting basic EPS by the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares and post-tax effect of changes in profit or loss 6.29 Segment reporting attributable to ordinary shareholders of the Company that would result from conversion of all dilutive potential ordinary shares into ordinary shares. Segment reporting is based on the operating segments that are reported in the manner consistent with internal reporting of the Company. An operating segment is a component of the Company that engages in business activities from which it may 6.24 Cash and cash equivalents earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. An operating segment’s operating results are reviewed regularly by the Chief Executive Officer to make Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand and cash at banks. Interest income decisions about resources to be allocated to the segment and assess its performance and for which discrete financial on cash and cash equivalents is recognized using effective interest method. information is available.

6.25 Foreign currency transactions and balances Segment results that are reported to the Chief Executive Officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly other operating income and expenses, Transactions in foreign currency are translated to the functional currency of the Company using exchange rate prevailing at share of profit/(loss) of associates, finance costs, and provision for taxes. the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency at exchange rate prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment. The currency that are measured at fair value are translated to the functional currency at exchange rate prevailing at the date the business segments are engaged in providing products or services which are subject to risks and rewards which differ from fair value is determined. Non-monetary assets and liabilities denominated in foreign currency that are measured at historical the risk and rewards of other segments. cost are translated to functional currency at exchange rate prevailing at the date of initial recognition. Any gain or loss arising on translation of foreign currency transactions and balances is recognized in profit or loss. 7 AUTHORIZED CAPITAL

6.26 Impairment 2019 2018 2019 2018 6.26.1 Financial assets No. of shares No. of shares Rupees '000 Rupees '000

The Company recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date of 500,000,000 500,000,000 Ordinary shares of Rs. 10 each 5,000,000 5,000,000 inital recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in credit risk since initial recognition of the respective financial asset. 62,500,000 62,500,000 'A' class preference shares of Rs. 10 each 625,000 625,000 37,500,000 37,500,000 'B' class preference shares of Rs. 10 each 375,000 375,000 mpairment is recognized at an amount equal to lifetime expected credit losses for financial assets for which credit risk has increased significantly since initial recognition. For financial assets for which credit risk is low, impairment is recognized at an 100,000,000 100,000,000 1,000,000 1,000,000 amount equal to twelve months' expected credit losses, with the exception of trade debts, for which the Company recognises lifetime expected credit losses estimated using internal credit risk grading based on the Company's historical 600,000,000 600,000,000 6,000,000 6,000,000 credit loss experience, adjusted for factors that are specific to debtors, general economic conditions, and an assessment for both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

All impairment losses are recognized in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. An impairment loss is reversed only to the extent that the financial asset’s carrying amount after the reversal does not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized. 6.21.1 Current taxation The Company writes off a financial asset when there is information indicating that the counter-party is in severe financial condition and there is no realistic prospect of recovery. Any recoveries made post write-off are recognized in profit or loss. Current tax is the amount of tax payable on taxable income for the year and any adjustment to the tax payable in respect of previous years. Provision for current tax is based on current rates of taxation in Pakistan after taking into account tax credits, 6.26.2 Non-financial assets rebates and exemptions available, if any. The amount of unpaid income tax in respect of the current or prior periods is recognized as a liability. Any excess paid over what is due in respect of the current or prior periods is recognized as an asset. The carrying amount of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s 6.21.2 Deferred taxation recoverable amount is estimated. The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present Deferred tax is accounted for using the' balance sheet approach' providing for temporary differences between the carrying values using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. In this regard, the to the asset or cash generating unit. effects on deferred taxation of the portion of income that is subject to final tax regime is also considered in accordance with the treatment prescribed by The Institute of Chartered Accountants of Pakistan. Deferred tax is measured at rates that are An impairment loss is recognized if the carrying amount of the asset or its cash generating unit exceeds its estimated expected to be applied to the temporary differences when they reverse, based on laws that have been enacted or recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash substantively enacted by the reporting date. A deferred tax liability is recognized for all taxable temporary differences. A generating units are allocated to reduce the carrying amounts of the assets in a unit on a pro rata basis. Impairment losses deferred tax asset is recognized for deductible temporary differences to the extent that future taxable profits will be available recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer against which temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced exists. An impairment loss is reversed if there has been a change in the estimates used in determining the recoverable to the extent that it is no longer probable that the related tax benefit will be realized. amount. An impairment loss is reversed only to that extent that the asset’s carrying amount after the reversal does not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment loss had been 6.22 Government grants recognized.

Government grants that compensate the Company for expenses or losses already incurred are recognized in profit or loss in 6.27 Dividend distribution to ordinary shareholders the period in which these are received and are deducted in reporting the relevant expenses or losses. Grants relating to property, plant and equipment are recognized as deferred income and an amount equivalent to depreciation charged on Dividend to ordinary shareholders is recognized as a deduction from accumulated profit in statement of changes in equity such assets is transferred to profit or loss. and as a liability, to the extent it is unclaimed/unpaid, in the Company’s financial statements in the year in which the dividends are approved by the Company’s shareholders. 6.23 Earnings per share ['EPS'] 6.28 Basis of allocation of common expenses Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Distribution, administrative and finance cost are allocated to PEL Marketing (Private) Limited ['PMPL'] on the basis of percentage of resources used by PMPL, under the interservices agreement between the Company and PMPL. Diluted EPS is calculated by adjusting basic EPS by the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares and post-tax effect of changes in profit or loss 6.29 Segment reporting attributable to ordinary shareholders of the Company that would result from conversion of all dilutive potential ordinary shares into ordinary shares. Segment reporting is based on the operating segments that are reported in the manner consistent with internal reporting of the Company. An operating segment is a component of the Company that engages in business activities from which it may 6.24 Cash and cash equivalents earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. An operating segment’s operating results are reviewed regularly by the Chief Executive Officer to make Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand and cash at banks. Interest income decisions about resources to be allocated to the segment and assess its performance and for which discrete financial on cash and cash equivalents is recognized using effective interest method. information is available.

6.25 Foreign currency transactions and balances Segment results that are reported to the Chief Executive Officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly other operating income and expenses, Transactions in foreign currency are translated to the functional currency of the Company using exchange rate prevailing at share of profit/(loss) of associates, finance costs, and provision for taxes. the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency at exchange rate prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment. The currency that are measured at fair value are translated to the functional currency at exchange rate prevailing at the date the business segments are engaged in providing products or services which are subject to risks and rewards which differ from fair value is determined. Non-monetary assets and liabilities denominated in foreign currency that are measured at historical the risk and rewards of other segments. cost are translated to functional currency at exchange rate prevailing at the date of initial recognition. Any gain or loss arising on translation of foreign currency transactions and balances is recognized in profit or loss. 7 AUTHORIZED CAPITAL

6.26 Impairment 2019 2018 2019 2018 6.26.1 Financial assets No. of shares No. of shares Rupees '000 Rupees '000

The Company recognizes a loss allowance for expected credit losses on financial assets carried at amortized cost on date of 500,000,000 500,000,000 Ordinary shares of Rs. 10 each 5,000,000 5,000,000 inital recognition. The amount of expected credit losses is updated on each reporting date to reflect the changes in credit risk since initial recognition of the respective financial asset. 62,500,000 62,500,000 'A' class preference shares of Rs. 10 each 625,000 625,000 37,500,000 37,500,000 'B' class preference shares of Rs. 10 each 375,000 375,000 mpairment is recognized at an amount equal to lifetime expected credit losses for financial assets for which credit risk has increased significantly since initial recognition. For financial assets for which credit risk is low, impairment is recognized at an 100,000,000 100,000,000 1,000,000 1,000,000 amount equal to twelve months' expected credit losses, with the exception of trade debts, for which the Company recognises lifetime expected credit losses estimated using internal credit risk grading based on the Company's historical 600,000,000 600,000,000 6,000,000 6,000,000 credit loss experience, adjusted for factors that are specific to debtors, general economic conditions, and an assessment for both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

All impairment losses are recognized in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. An impairment loss is reversed only to the extent that the financial asset’s carrying amount after the reversal does not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized. 8 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL Note 2019 2018 Rupees '000 Rupees '000 2019 2018 2019 2018 No. of shares No. of shares Rupees '000 Rupees '000 10 SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT

Ordinary shares of Rs. 10 each As at beginning of the year 6,579,049 4,274,019

372,751,051 372,751,051 Issued for cash 3,727,511 3,727,511 Surplus recognized during the year Issued for other than cash: Surplus for the year - 3,045,215

Deferred taxation - (672,091) 137,500 137,500 - against machinery 1,375 1,375 408,273 408,273 - against acquisition of PEL Appliances Limited 4,083 4,083 - 2,373,124

6,040,820 6,040,820 - against conversion of preference shares 60,408 60,408 Incremental depreciation transferred to accumulated profits 118,343,841 118,343,841 - as fully paid bonus shares 1,183,439 1,183,439 Incremental depreciation for the year (716,624) (280,450)

Deferred taxation 187,960 80,626 497,681,485 497,681,485 4,976,816 4,976,816 (528,664) (199,824) 'A' class preference shares of Rs. 10 each Other adjustments 44,957,592 44,957,592 Issued for cash 449,576 449,576 Deferred tax adjustment attributable to changes in proportion 542,639,077 542,639,077 5,426,392 5,426,392 of income taxable under final tax regime (26,753) 79,462 Deferred tax adjustment attributable to changes in tax rates - 52,268 8.1 'A' class preference shares (26,753) 131,730 8.1.1 Current status of original issue As at end of the year 6,023,632 6,579,049 The Company, in the December 2004, issued 'A' class preference shares to various institutional investors amounting to Rs. 605 million against authorized share capital of this class amounting to Rs. 625 million. In Januray 2010, the Company sent out 11 REDEEMABLE CAPITAL notices to all preference shareholders seeking conversion of outstanding preference shares into ordinary shares of the Company in accordance with the option available to the investors under the original terms of the issue. As at the reporting These represent interest/markup/profit based debt securities issued to institutional and other investors. The details are as date, the outstanding balance of preference shares amounts to Rs. 449.58 million representing investors who did not opt to follows: convert their holdings into the ordinary shares of the Company. Subsequently, the Company offered re-profiling of Description 2019 2018 Pricing Security Arrangements and repayment preference shares to these remaining investors. See note 8.1.2. Rupees '000 Rupees '000 Shariah compliant The Securities and Exchange Commission of Pakistan ['SECP'] issued order to Pakistan Stock Exchange Limited ['the Sukuk Funds - 101,875 Three months KIBOR plus 1% Charge on present and These were issued for the purpose of refinance of existing machinery with Exchange'] dated February 6, 2009 for delisting of these preference shares. However, the Company took up the matter with per annum (2018: Three future operating fixed diminishing musharaka facility. months KIBOR plus 1% per assets of the Company. Later, the Company entered into restructuring arrangement, whereby, the the honorable Lahore High Court which, through order dated October 10, 2017, accepted the appeal of Company and set annum) subject to floor and outstanding principal was deferred till June 2015 with the outstanding liability aside the SECP order and the appellate order. cap of 8% and 16% payable in sixteen equal quarterly installments commencing from June 2015. The respectively. Company has fully redeemed these Sukuk Funds during the year. Total - 101,875 8.1.2 Re-profiling of preference shares Current portion presented under current liabilities - (101,875) - - The Company offered re-profiling of preference shares to investors, who did not convert their preference shares into ordinary shares in response to the conversion notices issued by the Company. The investors to the instrument had, in principle, agreed to the re-profiling term sheet and commercial terms and conditions therein. Further, SECP had allowed the Company to proceed with the re-profiling subject to fulfillment of legal requirements. The legal documentation was prepared and circulated amongst the concerned investors which was endorsed by the said investors except for National Bank of Pakistan, as a result of which the original time frame for reprofiling has lapsed. The Company is in the process of finalising another reprofiling exercise based on mutual agreement to be made amongst the existing investors.

8.1.3 Accumulated preference dividend

As at reporting date, an amount of approximately Rs. 427.098 million (2018: Rs. 384.39 million) has been accumulated on account of preference dividend which is payable if and when declared by the Board, to be appropriated out of the distributable profits for that year. In case the preference dividend continues to be accumulated it would be settled at the time of exercising the redemption or conversion option in accordance with the under process reprofiling exercise.

As per the opinion of Company's legal counsel, the provision of cumulative dividend at 9.5% p.a. will prevail on account of preference dividend, as the approval process of the revised terms of reprofiling from different quarters is not yet complete.

9 CAPITAL RESERVE

This represents premium on issue of right ordinary shares recognized under Section 83(1) of the repealed Companies Ordinance, 1984. 8 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL Note 2019 2018 Rupees '000 Rupees '000 2019 2018 2019 2018 No. of shares No. of shares Rupees '000 Rupees '000 10 SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT

Ordinary shares of Rs. 10 each As at beginning of the year 6,579,049 4,274,019

372,751,051 372,751,051 Issued for cash 3,727,511 3,727,511 Surplus recognized during the year Issued for other than cash: Surplus for the year - 3,045,215

Deferred taxation - (672,091) 137,500 137,500 - against machinery 1,375 1,375 408,273 408,273 - against acquisition of PEL Appliances Limited 4,083 4,083 - 2,373,124

6,040,820 6,040,820 - against conversion of preference shares 60,408 60,408 Incremental depreciation transferred to accumulated profits 118,343,841 118,343,841 - as fully paid bonus shares 1,183,439 1,183,439 Incremental depreciation for the year (716,624) (280,450)

Deferred taxation 187,960 80,626 497,681,485 497,681,485 4,976,816 4,976,816 (528,664) (199,824) 'A' class preference shares of Rs. 10 each Other adjustments 44,957,592 44,957,592 Issued for cash 449,576 449,576 Deferred tax adjustment attributable to changes in proportion 542,639,077 542,639,077 5,426,392 5,426,392 of income taxable under final tax regime (26,753) 79,462 Deferred tax adjustment attributable to changes in tax rates - 52,268 8.1 'A' class preference shares (26,753) 131,730 8.1.1 Current status of original issue As at end of the year 6,023,632 6,579,049 The Company, in the December 2004, issued 'A' class preference shares to various institutional investors amounting to Rs. 605 million against authorized share capital of this class amounting to Rs. 625 million. In Januray 2010, the Company sent out 11 REDEEMABLE CAPITAL notices to all preference shareholders seeking conversion of outstanding preference shares into ordinary shares of the Company in accordance with the option available to the investors under the original terms of the issue. As at the reporting These represent interest/markup/profit based debt securities issued to institutional and other investors. The details are as date, the outstanding balance of preference shares amounts to Rs. 449.58 million representing investors who did not opt to follows: convert their holdings into the ordinary shares of the Company. Subsequently, the Company offered re-profiling of Description 2019 2018 Pricing Security Arrangements and repayment preference shares to these remaining investors. See note 8.1.2. Rupees '000 Rupees '000 Shariah compliant The Securities and Exchange Commission of Pakistan ['SECP'] issued order to Pakistan Stock Exchange Limited ['the Sukuk Funds - 101,875 Three months KIBOR plus 1% Charge on present and These were issued for the purpose of refinance of existing machinery with Exchange'] dated February 6, 2009 for delisting of these preference shares. However, the Company took up the matter with per annum (2018: Three future operating fixed diminishing musharaka facility. months KIBOR plus 1% per assets of the Company. Later, the Company entered into restructuring arrangement, whereby, the the honorable Lahore High Court which, through order dated October 10, 2017, accepted the appeal of Company and set annum) subject to floor and outstanding principal was deferred till June 2015 with the outstanding liability aside the SECP order and the appellate order. cap of 8% and 16% payable in sixteen equal quarterly installments commencing from June 2015. The respectively. Company has fully redeemed these Sukuk Funds during the year. Total - 101,875 8.1.2 Re-profiling of preference shares Current portion presented under current liabilities - (101,875) - - The Company offered re-profiling of preference shares to investors, who did not convert their preference shares into ordinary shares in response to the conversion notices issued by the Company. The investors to the instrument had, in principle, agreed to the re-profiling term sheet and commercial terms and conditions therein. Further, SECP had allowed the Company to proceed with the re-profiling subject to fulfillment of legal requirements. The legal documentation was prepared and circulated amongst the concerned investors which was endorsed by the said investors except for National Bank of Pakistan, as a result of which the original time frame for reprofiling has lapsed. The Company is in the process of finalising another reprofiling exercise based on mutual agreement to be made amongst the existing investors.

8.1.3 Accumulated preference dividend

As at reporting date, an amount of approximately Rs. 427.098 million (2018: Rs. 384.39 million) has been accumulated on account of preference dividend which is payable if and when declared by the Board, to be appropriated out of the distributable profits for that year. In case the preference dividend continues to be accumulated it would be settled at the time of exercising the redemption or conversion option in accordance with the under process reprofiling exercise.

As per the opinion of Company's legal counsel, the provision of cumulative dividend at 9.5% p.a. will prevail on account of preference dividend, as the approval process of the revised terms of reprofiling from different quarters is not yet complete.

9 CAPITAL RESERVE

This represents premium on issue of right ordinary shares recognized under Section 83(1) of the repealed Companies Ordinance, 1984. 12 LONG TERM FINANCES 13.2 The amount of future payments under the finance lease arrangements and the period in which these payments will become due are as follows: These represent long term finances utilized under interest/markup/profit arrangements from banking companies and financial institutions. The details are as follows: Note 2019 2018

Description 2019 2018 Pricing Security Arrangements and repayment Rupees '000 Rupees '000 Rupees '000 Rupees '000 Shariah compliant Diminishing Musharakah 642,857 750,000 Three months KIBOR plus 1% Charge over operating The finance has been obtained from Faysal Bank Limited for the purpose of per annum (2018: Three fi x e d a s s e t s o f t h e balancing modernization and replacement requirements. The finance is Not later than one year 133,420 50,351 months KIBOR plus 1% per Company and personal repayable in fourteen equal quarterly installments commencing from August annum). g u a r a n t e e s o f 2019. Later than one year but not later than five years 152,359 64,573 sponsoring directors of the Company. Total future minimum lease payments 285,779 114,924 Diminishing Musharakah 1,000,000 - Three months KIBOR plus Charge over present and The finance has been obtained from Faysal Bank Limited for the purpose of Finance charge allocated to future periods (44,685) (12,556) 1.5% per annum. future fixed assets of the working capital rquirement and for construction of washing machine unit and Company and personal warehouse/godown. The finance is repayable in fifteen equal quaterly g u a r a n t e e s o f installments commencing from February 2020. Present value of future minimum lease payments 241,094 102,368 sponsoring directors of Interest based arrangements the Company. Not later than one year 19 (103,708) (42,590) Term Finance 208,333 375,000 Three months KIBOR plus Charge over fixed assets The finance has been obtained from Pak Oman InvestmentCompany Limited for 3.8% per annum (2018:Three of the Company and the purpose of financing capital expenditure. The finance is repayable in twelve Later than one year but not later than five years 137,386 59,778 months KIBOR plus 3.8% per personal guarantees of equal quarterly installments commencing from April 2018. annum). sposoring directos of the Company. 14 WARRANTY OBLIGATIONS Term Finance 1,071,429 1,928,571 Three months KIBOR plus Charge over operating The finance has been obtained from Bank Alfalah Limited for the purpose of 1.25% per annum (2018: fi x e d a s s e t s o f t h e financing the repayment of existing long term loans of the PEL. The finance is Three months KIBOR plus Company and personal repayable in fourteen equal quarterly installments commencing from December 1.25% per annum). guarantees of sposoring 2017. This represents provision for warranties related to goods sold during the current and previous years. The Company expects d i r e c t o s o f t h e to settle majority of the liability over the next three years. Company.

Term Finance - 14,517 Three months KIBOR plus Charge over operating The finance was obtained from The Bank of Punjab for the purpose of financing 2.10% per annum. (2018: fi x e d a s s e t s o f t h e capital expenditure. The finance has been fully repaid during the year. Three months KIBOR plus Company and personal Note 2019 2018 2.10% per annum). g u a r a n t e e s o f sponsoring directors of Rupees '000 Rupees '000 the Company. Term finance 130,122 - Three months KIBOR plus Charge over operating The finance has been obtained from The Bank of Punjab for the purpose of Present value of warranty obligations 357,915 - 1.5% per annum. fi x e d a s s e t s o f t h e erection of new power transformer manufacturing facility. The finance is Company and personal repayable in sixteen equal quarterly installments commencing from September Current portion presented under current liabilities 17 (237,905) - g u a r a n t e e s o f 2020. sponsoring directors of the Company. 120,010 -

Term Finance 131,250 - Three months KIBOR plus 2% Charge over operating The finance has been obtained from Pak Oman InvestmentCompany Limited for per annum. fi x e d a s s e t s o f t h e the purpose of financing capital expenditure. The finance is repayable in sixteen Company and personal equal quarterly installments commencing from August 2019. 14.1 Movement in warranty obligations g u a r a n t e e s o f sponsoring directors of As at beginning of the year - - the Company. Term Finance 500,000 - Three months KIBOR plus Charge over operating The finance has been obtained from Saudi Pak Industrial and Agricultural Impact of application of IFRS 15 14.1.1 312,955 - 2.25% per annum. fi x e d a s s e t s o f t h e Investment Company Limited for the purpose of refinancing capital expenditure. Company and personal The finance is repayable in sixteen equal quarterly installments commencing g u a r a n t e e s o f from October 2020. As at beginning of the year - as adjusted 312,955 -

sponsoring directors of Amounts charged against the provision (188,441) - the Company. Demand Finance 315,769 568,384 Three months KIBOR plus 2% Charge over operating This represents demand finance facility sanctioned by National Bank of Pakistan Unwinding of the discount/changes in discount rate 9,479 - per annum (2018: Three fi x e d a s s e t s o f t h e against an upfront payment of 1,650 million against Private Placed Term Finance months KIBOR plus 2% per Company and personal Certificates. The finance is repayable in sixteen equal quarterly installments Addition during the year 237,345 - annum). g u a r a n t e e s o f commencing from April 2017. sponsoring directors of Excess provision reversed (13,423) - the Company. Demand Finance 407,643 679,406 Three months KIBOR plus Charge over pr esent and The finance has obtained from National Bank of Pakistan for settlement of long As at end of the year 357,915 - 2.25% per annum (2018: future current assets of term finances obtained from NIB Bank Limited. The finance is repayable in twenty Three months KIBOR plus t h e C o m p a n y a n d three equal quarterly installments commencing from September 2015. 2.25% per annum). personal guarantees of sponsoring directors of 14.1.1 The group has recognized the cummulative effect of initially applying IFRS 15 as adjustment to opening balance as at January the Company. 01, 2019. Accordingly, the comparative information has not been restated. 2,764,546 3,565,878 Total 4,407,403 4,315,878 Current portion presented under current liabilities (2,245,249) (1,669,846) Note 2019 2018 2,162,154 2,646,032 Rupees '000 Rupees '000 Note 2019 2018 Rupees '000 Rupees '000 15 DEFERRED TAXATION

Deferred tax liability on taxable temporary differences 15.1 3,982,402 3,708,750 13 LEASE LIABILITIES Deferred tax asset on deductible temporary differences 15.1 (1,497,931) (1,284,805) Present value of minimum lease payments 13.1 & 13.2 241,094 102,368 2,484,471 2,423,945 Current portion presented under current liabilities 13.1 & 13.2 (103,708) (42,590) 137,386 59,778

13.1 These represent vehicles and machinery acquired under finance lease arrangements. The leases are priced at rates ranging from three months KIBOR to six months KIBOR plus 1.5% to 3% per annum (2018: six months to one year KIBOR plus 1.5% to 4.5% per annum). Lease rentals are payable monthly over a tenor ranging from 3 to 4 years. Under the terms of agreement, taxes, repairs, replacements and insurance costs in respect of assets subject to finance lease are borne by the Company. The Company also has the option to acquire these assets at the end of their respective lease terms by adjusting the deposit amount against the residual value of the asset and intends to exercise the option. 12 LONG TERM FINANCES 13.2 The amount of future payments under the finance lease arrangements and the period in which these payments will become due are as follows: These represent long term finances utilized under interest/markup/profit arrangements from banking companies and financial institutions. The details are as follows: Note 2019 2018

Description 2019 2018 Pricing Security Arrangements and repayment Rupees '000 Rupees '000 Rupees '000 Rupees '000 Shariah compliant Diminishing Musharakah 642,857 750,000 Three months KIBOR plus 1% Charge over operating The finance has been obtained from Faysal Bank Limited for the purpose of per annum (2018: Three fi x e d a s s e t s o f t h e balancing modernization and replacement requirements. The finance is Not later than one year 133,420 50,351 months KIBOR plus 1% per Company and personal repayable in fourteen equal quarterly installments commencing from August annum). g u a r a n t e e s o f 2019. Later than one year but not later than five years 152,359 64,573 sponsoring directors of the Company. Total future minimum lease payments 285,779 114,924 Diminishing Musharakah 1,000,000 - Three months KIBOR plus Charge over present and The finance has been obtained from Faysal Bank Limited for the purpose of Finance charge allocated to future periods (44,685) (12,556) 1.5% per annum. future fixed assets of the working capital rquirement and for construction of washing machine unit and Company and personal warehouse/godown. The finance is repayable in fifteen equal quaterly g u a r a n t e e s o f installments commencing from February 2020. Present value of future minimum lease payments 241,094 102,368 sponsoring directors of Interest based arrangements the Company. Not later than one year 19 (103,708) (42,590) Term Finance 208,333 375,000 Three months KIBOR plus Charge over fixed assets The finance has been obtained from Pak Oman InvestmentCompany Limited for 3.8% per annum (2018:Three of the Company and the purpose of financing capital expenditure. The finance is repayable in twelve Later than one year but not later than five years 137,386 59,778 months KIBOR plus 3.8% per personal guarantees of equal quarterly installments commencing from April 2018. annum). sposoring directos of the Company. 14 WARRANTY OBLIGATIONS Term Finance 1,071,429 1,928,571 Three months KIBOR plus Charge over operating The finance has been obtained from Bank Alfalah Limited for the purpose of 1.25% per annum (2018: fi x e d a s s e t s o f t h e financing the repayment of existing long term loans of the PEL. The finance is Three months KIBOR plus Company and personal repayable in fourteen equal quarterly installments commencing from December 1.25% per annum). guarantees of sposoring 2017. This represents provision for warranties related to goods sold during the current and previous years. The Company expects d i r e c t o s o f t h e to settle majority of the liability over the next three years. Company.

Term Finance - 14,517 Three months KIBOR plus Charge over operating The finance was obtained from The Bank of Punjab for the purpose of financing 2.10% per annum. (2018: fi x e d a s s e t s o f t h e capital expenditure. The finance has been fully repaid during the year. Three months KIBOR plus Company and personal Note 2019 2018 2.10% per annum). g u a r a n t e e s o f sponsoring directors of Rupees '000 Rupees '000 the Company. Term finance 130,122 - Three months KIBOR plus Charge over operating The finance has been obtained from The Bank of Punjab for the purpose of Present value of warranty obligations 357,915 - 1.5% per annum. fi x e d a s s e t s o f t h e erection of new power transformer manufacturing facility. The finance is Company and personal repayable in sixteen equal quarterly installments commencing from September Current portion presented under current liabilities 17 (237,905) - g u a r a n t e e s o f 2020. sponsoring directors of the Company. 120,010 -

Term Finance 131,250 - Three months KIBOR plus 2% Charge over operating The finance has been obtained from Pak Oman InvestmentCompany Limited for per annum. fi x e d a s s e t s o f t h e the purpose of financing capital expenditure. The finance is repayable in sixteen Company and personal equal quarterly installments commencing from August 2019. 14.1 Movement in warranty obligations g u a r a n t e e s o f sponsoring directors of As at beginning of the year - - the Company. Term Finance 500,000 - Three months KIBOR plus Charge over operating The finance has been obtained from Saudi Pak Industrial and Agricultural Impact of application of IFRS 15 14.1.1 312,955 - 2.25% per annum. fi x e d a s s e t s o f t h e Investment Company Limited for the purpose of refinancing capital expenditure. Company and personal The finance is repayable in sixteen equal quarterly installments commencing g u a r a n t e e s o f from October 2020. As at beginning of the year - as adjusted 312,955 - sponsoring directors of Amounts charged against the provision (188,441) - the Company. Demand Finance 315,769 568,384 Three months KIBOR plus 2% Charge over operating This represents demand finance facility sanctioned by National Bank of Pakistan Unwinding of the discount/changes in discount rate 9,479 - per annum (2018: Three fi x e d a s s e t s o f t h e against an upfront payment of 1,650 million against Private Placed Term Finance months KIBOR plus 2% per Company and personal Certificates. The finance is repayable in sixteen equal quarterly installments Addition during the year 237,345 - annum). g u a r a n t e e s o f commencing from April 2017. sponsoring directors of Excess provision reversed (13,423) - the Company. Demand Finance 407,643 679,406 Three months KIBOR plus Charge over pr esent and The finance has obtained from National Bank of Pakistan for settlement of long As at end of the year 357,915 - 2.25% per annum (2018: future current assets of term finances obtained from NIB Bank Limited. The finance is repayable in twenty Three months KIBOR plus t h e C o m p a n y a n d three equal quarterly installments commencing from September 2015. 2.25% per annum). personal guarantees of sponsoring directors of 14.1.1 The group has recognized the cummulative effect of initially applying IFRS 15 as adjustment to opening balance as at January the Company. 01, 2019. Accordingly, the comparative information has not been restated. 2,764,546 3,565,878 Total 4,407,403 4,315,878 Current portion presented under current liabilities (2,245,249) (1,669,846) Note 2019 2018 2,162,154 2,646,032 Rupees '000 Rupees '000 Note 2019 2018 Rupees '000 Rupees '000 15 DEFERRED TAXATION

Deferred tax liability on taxable temporary differences 15.1 3,982,402 3,708,750 13 LEASE LIABILITIES Deferred tax asset on deductible temporary differences 15.1 (1,497,931) (1,284,805) Present value of minimum lease payments 13.1 & 13.2 241,094 102,368 2,484,471 2,423,945 Current portion presented under current liabilities 13.1 & 13.2 (103,708) (42,590) 137,386 59,778

13.1 These represent vehicles and machinery acquired under finance lease arrangements. The leases are priced at rates ranging from three months KIBOR to six months KIBOR plus 1.5% to 3% per annum (2018: six months to one year KIBOR plus 1.5% to 4.5% per annum). Lease rentals are payable monthly over a tenor ranging from 3 to 4 years. Under the terms of agreement, taxes, repairs, replacements and insurance costs in respect of assets subject to finance lease are borne by the Company. The Company also has the option to acquire these assets at the end of their respective lease terms by adjusting the deposit amount against the residual value of the asset and intends to exercise the option. 15.1 Recognized deferred tax assets and liabilities Note 2019 2018 Deferred tax assets and liabilities are attributable to the following: Rupees '000 Rupees '000

2019 17 TRADE AND OTHER PAYABLES As at Recognized in Recognized on As at January 01 profit or loss balance sheet December 31 Trade creditors 468,541 414,995 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Foreign bills payable 17.1 101,960 108,823 Deferred tax liabilities Accrued liabilities 121,036 121,826 Advances from customers 70,125 77,154 Operating fixed assets - owned 3,678,339 241,572 26,753 3,946,664 Employees' provident fund 6,774 11,247 Operating fixed assets - leased 30,411 5,327 - 35,738 Compensated absences 33,902 34,162 3,708,750 246,899 26,753 3,982,402 Warranty obligations 14 237,905 - Deferred tax assets Workers' Profit Participation Fund 17.2 11,431 26,765 Workers' Welfare Fund 17.3 4,344 10,173 Provisions (189,804) (88,073) - (277,877) Other payables 18,531 18,705 Unused tax losses and credits (1,087,859) (132,195) - (1,220,054) 1,074,549 823,850 Long term investments (7,142) 7,142 - - (1,284,805) (213,126) - (1,497,931) 17.1 Foreign bills payable are secured against bills of exchange accepted by the Company in favour of suppliers. 2,423,945 33,773 26,753 2,484,471 Note 2019 2018 2018 Rupees '000 Rupees '000 As at Recognized in Recognized on As at January 01 profit or loss balance sheet December 31 17.2 Workers' Profit Participation Fund Rupees '000 Rupees '000 Rupees '000 Rupees '000 As at beginning of the year 26,765 82,450 Deferred tax liabilities Interest on funds utilized by the Company 40 1,516 4,940 Operating fixed assets - owned 3,351,793 (213,815) 540,361 3,678,339 Charged to profit or loss for the year 39 11,431 26,772 Operating fixed assets - leased 27,223 3,188 - 30,411 Paid during the year (28,281) (87,397) 3,379,016 (210,627) 540,361 3,708,750 As at end of the year 11,431 26,765 Deferred tax assets 17.2.1 Interest on funds utilized by the Company has been recognized at 13.59% (2018: 9%) per annum. Provisions (217,668) 27,864 - (189,804) Unused tax losses and credits (1,236,102) 148,243 - (1,087,859) Note 2019 2018 Long term investments (6,863) (279) - (7,142) Rupees '000 Rupees '000 (1,460,633) 175,828 - (1,284,805) 1,918,383 (34,799) 540,361 2,423,945 17.3 Workers' Welfare Fund As at beginning of the year 10,173 30,972 15.2 Deferred tax arising from the timing differences pertaining to income taxable under normal provisions and as a separate Charged to profit or loss for the year 39 4,344 10,173 block of the Income Tax Ordinance, 2001 ['the Ordinance'] has been calculated at 29% and 15 % (2018: 29% and 15%) Paid/adjusted during the year (10,173) (30,972) respectively of the timing differences based on tax rates notified by the Government of Pakistan for future tax years for such

income. As at end of the year 4,344 10,173

2019 2018 18 SHORT TERM BORROWINGS Rupees '000 Rupees '000 Secured 16 DEFERRED INCOME Short term finances utilized under interest/markup/profit arrangements from

As at beginning of the year 36,781 38,717 - Banking companies - Interest based arrangements 18.1 9,149,436 10,788,911

Recognized in profit or loss (1,839) (1,936) - Banking companies - Shariah compliant 18.1 1,756,054 1,854,937 - Non Banking Finance Companies ['NBFC's'] 18.2 50,000 200,000 As at end of the year 34,942 36,781

10,955,490 12,843,848 16.1 The UNIDO vide its contract number 2000/257 dated December 15, 2000, out of the multilateral fund for the implementation of the Montreal Protocol, has given grant-in-aid to the Company for the purpose of phasing out ODS at the Refrigerator and 18.1 These facilities have been obtained from various banking companies for working capital requirements and carry Chest Freezer Plant of the Company. The total grant-in-aid of USD 1,367,633 (Rs. 91,073,838) comprises the capital cost of interest/markup/profit at rates ranging from 8.03% to 16.86% (2018: 7.11% to 12.3%) per annum. These facilities are secured the project included in fixed assets amounting to USD 1,185,929 (Rs. 79,338,650) and grant recoverable in cash of USD by pledge / hypothecation of raw material and components, work-in-process, finished goods, imported goods, machinery, 181,704 (Rs. 11,735,188) being the incremental operating cost for six months. spare parts, charge over book debts and personal guarantees of the sponsoring directors of the Company. These facilities are generally for a period of one year and renewed at the end of the period. The grant received in cash amounting to Rs.11,735,188 was recognized as income in the year of receipt i.e. year ended June 30, 2001. The value of machinery received in grant was capitalized in year 2001 which started its operation in January 2003. 18.2 These facilities have been obtained from NBFCs for working capital requirements and carry interest/markup at rates ranging The grant amounting to Rs. 1.839 million (2018: Rs. 1.936 million) has been included in other income in proportion to from 11.60% to 12.05% (2018: 7.12% to 11.55%) per annum. These facilities are secured by charge over operating fixed depreciation charged on related plant and machinery keeping in view the matching principle. assets of the Company and personal guarantees of the directors of the Company.

18.3 The aggregate un-availed short term borrowing facilities as at the reporting date amounts to Rs. 9,566 million (2018: Rs. 10,464 million). 15.1 Recognized deferred tax assets and liabilities Note 2019 2018 Deferred tax assets and liabilities are attributable to the following: Rupees '000 Rupees '000

2019 17 TRADE AND OTHER PAYABLES As at Recognized in Recognized on As at January 01 profit or loss balance sheet December 31 Trade creditors 468,541 414,995 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Foreign bills payable 17.1 101,960 108,823 Deferred tax liabilities Accrued liabilities 121,036 121,826 Advances from customers 70,125 77,154 Operating fixed assets - owned 3,678,339 241,572 26,753 3,946,664 Employees' provident fund 6,774 11,247 Operating fixed assets - leased 30,411 5,327 - 35,738 Compensated absences 33,902 34,162 3,708,750 246,899 26,753 3,982,402 Warranty obligations 14 237,905 - Deferred tax assets Workers' Profit Participation Fund 17.2 11,431 26,765 Workers' Welfare Fund 17.3 4,344 10,173 Provisions (189,804) (88,073) - (277,877) Other payables 18,531 18,705 Unused tax losses and credits (1,087,859) (132,195) - (1,220,054) 1,074,549 823,850 Long term investments (7,142) 7,142 - - (1,284,805) (213,126) - (1,497,931) 17.1 Foreign bills payable are secured against bills of exchange accepted by the Company in favour of suppliers. 2,423,945 33,773 26,753 2,484,471 Note 2019 2018 2018 Rupees '000 Rupees '000 As at Recognized in Recognized on As at January 01 profit or loss balance sheet December 31 17.2 Workers' Profit Participation Fund Rupees '000 Rupees '000 Rupees '000 Rupees '000 As at beginning of the year 26,765 82,450 Deferred tax liabilities Interest on funds utilized by the Company 40 1,516 4,940 Operating fixed assets - owned 3,351,793 (213,815) 540,361 3,678,339 Charged to profit or loss for the year 39 11,431 26,772 Operating fixed assets - leased 27,223 3,188 - 30,411 Paid during the year (28,281) (87,397) 3,379,016 (210,627) 540,361 3,708,750 As at end of the year 11,431 26,765 Deferred tax assets 17.2.1 Interest on funds utilized by the Company has been recognized at 13.59% (2018: 9%) per annum. Provisions (217,668) 27,864 - (189,804) Unused tax losses and credits (1,236,102) 148,243 - (1,087,859) Note 2019 2018 Long term investments (6,863) (279) - (7,142) Rupees '000 Rupees '000 (1,460,633) 175,828 - (1,284,805) 1,918,383 (34,799) 540,361 2,423,945 17.3 Workers' Welfare Fund As at beginning of the year 10,173 30,972 15.2 Deferred tax arising from the timing differences pertaining to income taxable under normal provisions and as a separate Charged to profit or loss for the year 39 4,344 10,173 block of the Income Tax Ordinance, 2001 ['the Ordinance'] has been calculated at 29% and 15 % (2018: 29% and 15%) Paid/adjusted during the year (10,173) (30,972) respectively of the timing differences based on tax rates notified by the Government of Pakistan for future tax years for such income. As at end of the year 4,344 10,173

2019 2018 18 SHORT TERM BORROWINGS Rupees '000 Rupees '000 Secured 16 DEFERRED INCOME Short term finances utilized under interest/markup/profit arrangements from

As at beginning of the year 36,781 38,717 - Banking companies - Interest based arrangements 18.1 9,149,436 10,788,911

Recognized in profit or loss (1,839) (1,936) - Banking companies - Shariah compliant 18.1 1,756,054 1,854,937 - Non Banking Finance Companies ['NBFC's'] 18.2 50,000 200,000 As at end of the year 34,942 36,781

10,955,490 12,843,848 16.1 The UNIDO vide its contract number 2000/257 dated December 15, 2000, out of the multilateral fund for the implementation of the Montreal Protocol, has given grant-in-aid to the Company for the purpose of phasing out ODS at the Refrigerator and 18.1 These facilities have been obtained from various banking companies for working capital requirements and carry Chest Freezer Plant of the Company. The total grant-in-aid of USD 1,367,633 (Rs. 91,073,838) comprises the capital cost of interest/markup/profit at rates ranging from 8.03% to 16.86% (2018: 7.11% to 12.3%) per annum. These facilities are secured the project included in fixed assets amounting to USD 1,185,929 (Rs. 79,338,650) and grant recoverable in cash of USD by pledge / hypothecation of raw material and components, work-in-process, finished goods, imported goods, machinery, 181,704 (Rs. 11,735,188) being the incremental operating cost for six months. spare parts, charge over book debts and personal guarantees of the sponsoring directors of the Company. These facilities are generally for a period of one year and renewed at the end of the period. The grant received in cash amounting to Rs.11,735,188 was recognized as income in the year of receipt i.e. year ended June 30, 2001. The value of machinery received in grant was capitalized in year 2001 which started its operation in January 2003. 18.2 These facilities have been obtained from NBFCs for working capital requirements and carry interest/markup at rates ranging The grant amounting to Rs. 1.839 million (2018: Rs. 1.936 million) has been included in other income in proportion to from 11.60% to 12.05% (2018: 7.12% to 11.55%) per annum. These facilities are secured by charge over operating fixed depreciation charged on related plant and machinery keeping in view the matching principle. assets of the Company and personal guarantees of the directors of the Company.

18.3 The aggregate un-availed short term borrowing facilities as at the reporting date amounts to Rs. 9,566 million (2018: Rs. 10,464 million). 19 20.2.1 20.2 20.1.6 20.1.5 20.1.4

20.1.3 20.1.1 20.1 20.1.2 20

F Custom guar Advance guar P T Liabilities againstassetssubjecttofinancelease L R CURRENT C C pending. terms judgement losses 350.821 T management Appeals [‘CIR(A)’]. Appeal judgement C pr 4B T the No of Section the securing V C T C ender bonds ong termfinances erformance bonds or edeemable capital he he he arious ommitments underirr ommitments our ontingencies ONTINGENCIES stor

ovision forSuper its eign guar pr to management C C F C af t. ompany es, inance ovision ompany ompany

the of sustained ter T of banking 5A spar he

million the have T Section

POR tax the Or

he imposes of C of debts Act antees dinance antees e par ompany for pr

C as expects afor antees issues the may been TION OFNON-CURRENT claimed ompany ofits income in detailed 2015 and in of esaid Lahor 113(2)(c). ts andr AND tax of have the

T the as tax filed involve

insur ax hasbeenmadefortaxyears2015to2019asthema the wher to is intr year cash evocable let T C r Apex e C adjustment for tax ax a to get not C below: ompany OMMITMENTS High te aw ma oduced ance by ompany eby indemnify Y the 2015 dividend

on a adequa ears T in in t C Superior he 5% , undistributed ompany C tax

companies these a a terial our t aggr 2010 Depar position of expects Super years r , a

ters of in

t te for the tes with has appeals its case ega r C to elief tment the as accounting r our 2009, Dir T anging LIABILITIES conclude in 2015. ax ting cr a to the well have ectors t.

favour six minimum fr edit forimpor for pr om sta

wer 2016 C to and months ofits,

as r T ompany issued te ehabilita fr the Rs. he for e able om the tha about C mostly and pr

has CIR(A) 550.751 Appella ompany any ofit tax 2% t Depar of outcome. guar in 2017 been defaults.

losses the tion befor view the paid to t of those placing antees, te end 3% tment million.

wer made of outcome has Authority if e amounting tha

tempor the of tax of concerning e filed t

decided

let r the the befor may as eliance of loses

Minimum ters

the a tax income arily of appeals public arise and e

sustained ma of year the to the by on

displaced cr no t t allowance/disallowance due ter issubjudicebefor Rs. ter edit the . ma Appella company the tax additional Note equal

befor 12 13 11 is 150.925 t to C ter and subjudice decisions of ommissioner the personal

,

Rs. e to which persons te discounted Appellant the

tha or 725.575 T tax million ribunal excedding t honor befor of does R R is R liability guar upees '000 upees '000 upees '000

vide entir 2,245,249 2,638,598 2,348,957 the Inland 390,174 103,708 416,312 682,628 in million is antees which e not able 87,670 91,598 r e Honour Appella eceivables ely Lahor - newly entitled tax 2019 2019

2019 is of distribute expected Rs. dependent R tribunal

year various ar evenue given was

e

inser 500 e te High able Supr to R R pending. R 2017 paid T upees '000 upees '000 upees '000

on tax ribunal 2,012,639 by 2,863,884 1,669,846 ted million. 1,814,311

a expences. which C to (Appeals) 647,033 488,314 101,875 tlest

behalf them our 80,682 72,064 cr 42,590 despite arise. and section on 2018 edit 2018 2018 t eme

20% and and T

the ar No Rs. for he

of in e

20.2.2 - paymentsla - paymentsnotla follows: T C he ommitments aggr ega te ter thanoneyear under amount ter thanoneyear ijar of

ah

ujr contr

ah payments

acts

for

ijar ah

financing

and

the

period in

which

these

payments R upees '000 249,550 169,728 79,822 2019 will

become R upees '000 due 29,434 16,139 13,295 2018 ar e as

19 20.2.1 20.2 20.1.6 20.1.5 20.1.4

20.1.3 20.1.1 20.1 20.1.2 20

F Custom guar Advance guar P T Liabilities againstassetssubjecttofinancelease L R CURRENT C C pending. terms judgement losses 350.821 T management Appeals [‘CIR(A)’]. Appeal judgement C pr 4B T the No of Section the securing V C T C ender bonds ong termfinances erformance bonds or edeemable capital he he he arious ommitments underirr ommitments our ontingencies ONTINGENCIES stor

ovision forSuper its eign guar pr to management C C F C af t. ompany es, inance ovision ompany ompany

the of sustained ter T of banking 5A spar he

million the have T Section

POR tax the Or

he imposes of C of debts Act antees dinance antees e par ompany for pr

C as expects afor antees issues the may been TION OFNON-CURRENT claimed ompany ofits income in detailed 2015 and in of esaid Lahor 113(2)(c). ts andr AND tax of have the

T the as tax filed involve

insur ax hasbeenmadefortaxyears2015to2019asthema the wher to is intr year cash evocable let T C r Apex e C adjustment for tax ax a to get not C below: ompany OMMITMENTS High te aw ma oduced ance by ompany eby indemnify Y the 2015 dividend

on a adequa ears T in in t C Superior he 5% , undistributed ompany C tax

companies these a a terial our t aggr 2010 Depar position of expects Super years r , a

ters of in

t te for the tes with has appeals its case ega r C to elief tment the as accounting r our 2009, Dir T anging LIABILITIES conclude in 2015. ax ting cr a to the well have ectors t.

favour six minimum fr edit forimpor for pr om sta

wer 2016 C to and months ofits,

as r T ompany issued te ehabilita fr the Rs. he for e able om the tha about C mostly and pr

has CIR(A) 550.751 Appella ompany any ofit tax 2% t Depar of outcome. guar in 2017 been defaults.

losses the tion befor view the paid to t of those placing antees, te end 3% tment million.

wer made of outcome has Authority if e amounting tha

tempor the of tax of concerning e filed t

decided

let r the the befor may as eliance of loses

Minimum ters

the a tax income arily of appeals public arise and e

sustained ma of year the to the by on

displaced cr no t t allowance/disallowance due ter issubjudicebefor Rs. ter edit the . ma Appella company the tax additional Note equal

befor 12 13 11 is 150.925 t to C ter and subjudice decisions of ommissioner the personal

,

Rs. e to which persons te discounted Appellant the

tha or 725.575 T tax million ribunal excedding t honor befor of does R R is R liability guar upees '000 upees '000 upees '000

vide entir 2,245,249 2,638,598 2,348,957 the Inland 390,174 103,708 416,312 682,628 in million is antees which e not able 87,670 91,598 r e Honour Appella eceivables ely Lahor - newly entitled tax 2019 2019

2019 is of distribute expected Rs. dependent R tribunal

year various ar evenue given was

e

inser 500 e te High able Supr to R R pending. R 2017 paid T upees '000 upees '000 upees '000

on tax ribunal 2,012,639 by 2,863,884 1,669,846 ted million. 1,814,311

a expences. which C to (Appeals) 647,033 488,314 101,875 tlest

behalf them our 80,682 72,064 cr 42,590 despite arise. and section on 2018 edit 2018 2018 t eme

20% and and T

the ar No Rs. for he

of in e

20.2.2 - paymentsla - paymentsnotla follows: T C he ommitments aggr ega te ter thanoneyear under amount ter thanoneyear ijar of

ah

ujr contr

ah payments

acts

for

ijar ah

financing

and

the

period in

which

these

payments R upees '000 249,550 169,728 79,822 2019 will

become R upees '000 due 29,434 16,139 13,295 2018 ar e as

t t

23,664 63,385 96,527 32,259 85,001

111,776 147,490 154,930 218,315 744,250 125,618 290,413 375,414 621,281 558,163 Net book 1,035,256 3,444,504 2,433,970 3,178,220 Net book 1,035,256 5,771,302 1,179,444 value as a value as a 13,797,790 18,560,480 21,957,015 14,323,240 21,384,202 22,939,060 upees '000 upees '000 R R December 31 December 31

t t

------

As a As a

6,434 6,711

85,180 36,754 43,188 61,690 28,655 35,366 102,750 153,633 116,537 177,483 2,238,728 8,010,621 2,425,643 8,722,207 e and Plot # 302-303, 10,590,912 10,634,100 11,503,560 11,538,926 upees '000 upees '000

R R December 31 December 31 Lahor ------

8,836 5,431 (8,956) (5,959) (6,869) (6,734)

(44,530) (25,019) (11,387) (72,100) (10,191) (19,147) (91,247) (35,371) (42,768) (20,326) (27,060) (69,828) oad,

upees '000 upees '000 Adjustment Adjustment R R

------tion tion ozepur R er 458,091 TION TION F

1,078,489 1,536,580 1,536,580 . evalua evalua upees '000 upees '000 R R R R

DEPRECIA DEPRECIA ------ompany 4,637 7,011 t 14 - K.M, C 10,767 17,797 34,622 14,130 18,767 11,881 19,746 30,719 12,227 19,238 144,194 614,754 822,134 840,901 186,915 706,155 955,416 974,654 or the year or the year the upees '000 upees '000

F F R R

of

t t

use ------As a As a 6,434 anals) and a in 10,753 32,815 43,568 85,180 36,754 43,188 118,943 109,972 130,398 102,750 153,633 1,636,443 6,308,542 8,304,298 8,347,866 2,238,728 8,010,621

still January 01 January 01 10,590,912 10,634,100 upees '000 upees '000 R R e

ar

te te - - 5 5 5 5 5 5 a a % % 10 30 20 20 10 30 20 20 R R 2018 2019

which t t anals (2018: 511 K Marla). As a As a

196,956 126,414 301,123 161,364 100,139 261,503 744,250 158,217 148,796 303,101 297,124 113,656 410,780 621,281 558,163 million) 15 1,035,256 5,683,232 2,433,970 3,178,220

1,035,256 8,196,945 1,179,444 21,808,411 29,151,392 32,591,115 23,045,447 32,887,762 34,477,986

upees '000 upees '000 511 K R

R

December 31 December 31 anals 64.54

K

ea of ------Rs. 52,068 19,133 71,201 322 34,914 (52,068) (19,133) (71,201) (51,420) (34,914) (86,334) ansfers ansfers r r T T 2,513,713 1,134,546 3,683,173 (2,513,713) (1,083,126) (3,596,839)

upees '000 upees '000 R R (2018: (2018:

------million (6,015) e with a total ar

(52,506) (26,736) (45,906) Marla (52,723) (49,775) (114,785) (239,933) (239,933) (313,602) (422,115) (422,115) Disposals AMOUNT Disposals AMOUNT 15 upees '000 upees '000 70.2 R

R Lahor UED UED

Rs.

AL AL anals ------of ------K

tion

tion oad,

/ REV / REV 482,768

T T 322 1,162,909 2,936,118 4,581,795 4,581,795

evalua evalua upees '000 upees '000 OS assets OS R

R

of R R C C ea ozepur R ted ar er - - - -

F ecia 35,208 11,918 18,583 16,438 13,984 28,397 16,839 48,431 391,790 457,499 109,944 126,382 488,706 416,092 475,312 187,180 235,611 701,024 897,039 total 1,423,087 1,911,793 2,495,674 1,598,063 2,308,986 Additions Additions

a upees '000 upees '000 depr R R

with

t 34 - K.M, t fully a, - As a As a 552,488 214,254 141,232 309,313 103,488 102,834 206,322 255,544 196,956 126,414 301,123 161,364 100,139 261,503 744,250 4,520,323 1,010,883 1,266,427 1,035,256 5,683,232 2,433,970 3,178,220 Amazai January 01 18,543,220 24,280,830 25,753,579 January 01 21,808,411 29,151,392 32,591,115 upees '000 upees '000 R R includes ot Islampur Gadoon

es es ea, AND EQUIPMENT equipment

Ar ompany ompany t Mouza K ess ess ail e and allied items e and allied items and ogr ogr ted a PLANT dwar dwar , Y plant

Industr T , ty

fice equipment and fixtur fice equipment and fixtur oper omputer har apital work in pr omputer har apital work in pr ehicles ehicles ehicles ehicles

r Assets owned by the C Land Building Plant and machinery Of C V Right-of-use assets Plant and machinery V C Building Plant and machinery Assets owned by the C Land Building Plant and machinery Of C V Right-of-use assets Plant and machinery V C Building Plant and machinery PROPER P Land is loca Gadoon

21.1 21.2 21

t t

23,664 63,385 96,527 32,259 85,001

111,776 147,490 154,930 218,315 744,250 125,618 290,413 375,414 621,281 558,163 Net book 1,035,256 3,444,504 2,433,970 3,178,220 Net book 1,035,256 5,771,302 1,179,444 value as a value as a 13,797,790 18,560,480 21,957,015 14,323,240 21,384,202 22,939,060 upees '000 upees '000 R R December 31 December 31

t t

------

As a As a

6,434 6,711

85,180 36,754 43,188 61,690 28,655 35,366 102,750 153,633 116,537 177,483 2,238,728 8,010,621 2,425,643 8,722,207 e and Plot # 302-303, 10,590,912 10,634,100 11,503,560 11,538,926 upees '000 upees '000

R R December 31 December 31 Lahor ------

8,836 5,431 (8,956) (5,959) (6,869) (6,734)

(44,530) (25,019) (11,387) (72,100) (10,191) (19,147) (91,247) (35,371) (42,768) (20,326) (27,060) (69,828) oad,

upees '000 upees '000 Adjustment Adjustment R R

------tion tion ozepur R er 458,091 TION TION F

1,078,489 1,536,580 1,536,580 . evalua evalua upees '000 upees '000 R R R R

DEPRECIA DEPRECIA ------ompany 4,637 7,011 t 14 - K.M, C 10,767 17,797 34,622 14,130 18,767 11,881 19,746 30,719 12,227 19,238 144,194 614,754 822,134 840,901 186,915 706,155 955,416 974,654 or the year or the year the upees '000 upees '000

F F R R

of

t t

use ------As a As a 6,434 anals) and a in 10,753 32,815 43,568 85,180 36,754 43,188 118,943 109,972 130,398 102,750 153,633 1,636,443 6,308,542 8,304,298 8,347,866 2,238,728 8,010,621

still January 01 January 01 10,590,912 10,634,100 upees '000 upees '000 R R e

ar

te te - - 5 5 5 5 5 5 a a % % 10 30 20 20 10 30 20 20 R R 2018 2019

which t t anals (2018: 511 K Marla). As a As a

196,956 126,414 301,123 161,364 100,139 261,503 744,250 158,217 148,796 303,101 297,124 113,656 410,780 621,281 558,163 million) 15 1,035,256 5,683,232 2,433,970 3,178,220

1,035,256 8,196,945 1,179,444 21,808,411 29,151,392 32,591,115 23,045,447 32,887,762 34,477,986

upees '000 upees '000 511 K R

R

December 31 December 31 anals 64.54

K

ea of ------Rs. 52,068 19,133 71,201 322 34,914 (52,068) (19,133) (71,201) (51,420) (34,914) (86,334) ansfers ansfers r r T T 2,513,713 1,134,546 3,683,173 (2,513,713) (1,083,126) (3,596,839)

upees '000 upees '000 R R (2018: (2018:

------million (6,015) e with a total ar

(52,506) (26,736) (45,906) Marla (52,723) (49,775) (114,785) (239,933) (239,933) (313,602) (422,115) (422,115) Disposals AMOUNT Disposals AMOUNT 15 upees '000 upees '000 70.2 R

R Lahor UED UED

Rs.

AL AL anals ------of ------K

tion tion oad,

/ REV / REV 482,768

T T 322 1,162,909 2,936,118 4,581,795 4,581,795

evalua evalua upees '000 upees '000 OS assets OS R

R

of R R C C ea ozepur R ted ar er - - - -

F ecia 35,208 11,918 18,583 16,438 13,984 28,397 16,839 48,431 391,790 457,499 109,944 126,382 488,706 416,092 475,312 187,180 235,611 701,024 897,039 total 1,423,087 1,911,793 2,495,674 1,598,063 2,308,986 Additions Additions

a upees '000 upees '000 depr R R

with

t 34 - K.M, t fully a, - As a As a 552,488 214,254 141,232 309,313 103,488 102,834 206,322 255,544 196,956 126,414 301,123 161,364 100,139 261,503 744,250 4,520,323 1,010,883 1,266,427 1,035,256 5,683,232 2,433,970 3,178,220 Amazai January 01 18,543,220 24,280,830 25,753,579 January 01 21,808,411 29,151,392 32,591,115 upees '000 upees '000 R R includes ot Islampur Gadoon

es es ea, AND EQUIPMENT equipment

Ar ompany ompany t Mouza K ess ess ail e and allied items e and allied items and ogr ogr ted a PLANT dwar dwar , Y plant

Industr T , ty

fice equipment and fixtur fice equipment and fixtur oper omputer har apital work in pr omputer har apital work in pr ehicles ehicles ehicles ehicles

r Assets owned by the C Land Building Plant and machinery Of C V Right-of-use assets Plant and machinery V C Building Plant and machinery Assets owned by the C Land Building Plant and machinery Of C V Right-of-use assets Plant and machinery V C Building Plant and machinery PROPER P Land is loca Gadoon

21.1 21.2 21 21.3 Disposal of operating fixed assets Note 2019 2018 Rupees '000 Rupees '000 2019 Accumulated Net Disposal Gain/(loss) Mode of Particulars Cost depreciation book value proceeds on disposal disposal Particulars of buyer 21.4 The depreciation charge for the year has been allocated as follows: Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Plant and machinery Lamination Cutting Line TBA300 131,237 - 131,237 131,237 - Negotiation Orix modaraba, Lahore Cost of sales 35 910,818 772,241 Step Lap Lamination DTR 7,246 - 7,246 - (7,246) Negotiation Orix modaraba, Lahore Administrative and general expenses 38 63,836 68,660 138,483 - 138,483 131,237 (7,246) Office equipment and fixtures 974,654 840,901 Table and chairs 31,975 21,914 10,061 199 (9,862) Negotiation Scr ap sale Mobile sets 1,018 280 738 - (738) Negotiation Scrap sale Miscellaneous office items 18,561 12,349 6,212 2,875 (3,337) Negotiation Scrap sale 21.5 Revaluation of property, plant and equipment Assets having net book value less than Rs. 500,000 each 1,169 828 341 156 (185) Negotiation Scrap sale Most recent valuation of land, building and plant and machinery was carried out by an independent valuer, Maricon 52,723 35,371 17,352 3,230 (14,122) Consultants (Private) Limited, on December 31, 2018 and was incorporated in the financial statements for the year ended Computer hardware and allied items December 31, 2018. For basis of valuation and other fair value measurement disclosures refer to note 49. Assets having net book value less than Rs. 500,000 each 6,015 5,959 56 62 6 Negotiation Scrap sale Had there been no revaluation, the cost, accumulated depreciation and net book value of revalued items would have been as Vehicles follows: Audi A6 11,910 7,082 4,828 10,500 5,672 As Per Company Policy Synergy Technology, Lahore. Toyota Fortuner 6,229 2,126 4,103 3,229 (874) As Per C ompany Policy Amer Hamza (employee), Lahore. Suzuki Jimny 2,293 1,579 714 1,409 695 Insurance claim Adamjee Insurance Company Limited, Lahore. 2019 Honda Civic 2,254 929 1,325 1,674 349 As P er Company Policy Muhammad Raza (employee), Lahore. Honda Civic 2,113 986 1,127 1,319 192 As Per Company Policy Qazi Nisar (employee), Lahore. Accumulated Net Toyota Corolla 1,992 232 1,760 2,356 596 Negotiation First Habib Modaraba, Lahore. Cost depreciation book value Toyota Corolla 1,735 1,232 503 465 (38) As Per Company Policy Liaqat Ali (employee), Lahore. Toyota Corolla 1,731 1,177 554 477 (77) As Per Company Policy Rehmat ali (employee), Lahore. Rupees '000 Rupees '000 Rupees '000 Toyota Corolla 1,543 636 907 1,198 291 As Per Company Policy Rafique Ahmed (employee), Lahore. Suzuki Cultus 1,085 302 783 1,300 517 As Per Company Policy Gulzaib (employee), Lahore. Suzuki Cultus 981 434 547 587 40 As Per Company Policy Asif Ilyas (employee), Lahore. Land 189,184 - 189,184 Assets having net book value Building 5,816,039 1,434,921 4,381,118 less than Rs. 500,000 each 15,909 10,480 5,429 8,958 3,529 As Per Company Policy Various emploees 49,775 27,195 22,580 33,472 10,892 Plant and machinery 12,135,143 3,494,328 8,640,815

246,996 68,525 178,471 168,001 (10,470)

2018 2018 Accumulated Net Accumulated Net Disposal Gain/(loss) Mode of Particulars Cost depreciation book value proceeds on disposal disposal P ar ticulars of buyer Cost depreciation book value Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Office equipment and fixtures Table and chairs 5,246 3,995 1,251 256 (995) Negotiation Various individuals Air conditioners 6,719 5,268 1,451 328 (1,123) Negotiation Various individuals Land 189,184 - 189,184 Mobile sets 566 299 267 - (267) As Per C ompany Policy V arious individuals Building 3,302,326 1,321,029 1,981,297 Miscellaneous office items 39,975 34,968 5,007 1,949 (3,058) Negotiation Various individuals

52,506 44,530 7,976 2,533 (5,443) Plant and machinery 10,898,107 3,426,343 7,471,764 Computer hardware and allied items Computer and printers 10,961 10,961 - 512 512 Negotiation Various individuals 21.5.1 As per most recent valuation, forced sale values of land, building and plant and machinery are as follows: Laptops 4,441 2,792 1,649 2,901 1,252 Negotiation V arious individuals Mobile sets 427 359 68 39 (29) As Per Company Policy Various individuals Allied items 10,907 10,907 - 382 382 Negotiation V arious individuals Rupees Vehicles Rupees '000

Audi A3 4,060 460 3,600 4,750 1,150 As Per Company Policy Mehdi Hassan (employee), Lahore. BMW X1 5,217 591 4,626 5,737 1,111 As Per Company Policy Mehdi Hassan (employee), Lahore. Honda City 1,494 971 523 747 224 As Per Company Policy Atif Imtiaz (employee), Lahore. Land 919,800 Honda Civic 2,439 1,505 934 642 (292) As Per Company Policy Waseem Ishaq (employee), Lahore. Building 2,927,828 Honda Civic 2,489 1,460 1,029 539 (490) As Per Company Policy Iftikhar Ahmed (employee), Lahore. Honda Civic 2,469 1,448 1,021 560 (461) As Per Company Policy Tariq Irani (employee), Lahore. Plant and machinery 11,998,078 Honda Civic 2,448 1,277 1,171 470 (701) As Per Company Policy Javed A Khan (employee), Rawalpindi. Honda Civic 2,164 793 1,371 1,456 85 As Per Company Policy Atif Ali (employee), Lahore. 15,845,706 Honda Civic 2,521 892 1,629 328 (1,301) As Per Company Policy Sadiq Munir (employee), Lahore. Porsche 1,202 439 763 3,000 2,237 Negotiation Performance Automotive, Lahore. Suzuki Mehran 578 10 568 222 (346) As Per Company Policy Shees Butt (employee), Faisalabad. Toyota Corolla 1,731 1,015 716 600 (116) As Per Company Policy Javed Iqbal (employee), Lahore. 22 INTANGIBLE ASSETS Toyota Corolla 1,771 924 847 831 (16) As Per Company Policy Rizwan Cheema (employee), Lahore. Assets having net book value less than Rs. 500,000 each 15,323 9,793 5,530 10,039 4,509 As Per Company Policy Various employees Note 2019 Cost Accumulated Amortization Net book 45,906 21,578 24,328 29,921 5,593 As at As at As at For the As at value as at 125,148 91,127 34,021 36,288 2,267 January 01 Additions December 31 January 01 period December 31 December 31 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000'

Technology transfer agreement 22.1 117,054 - 117,054 42,888 3,708 46,596 70,458 Goodwill 22.2 312,341 - 312,341 91,859 - 91,859 220,482 Software 22.3 17,006 3,802 20,808 6,911 4,273 11,184 9,624 Enterprise Resour ce Planning system 22.4 31,675 - 31,675 23,066 2,841 25,907 5,768 478,076 3,802 481,878 164,724 10,822 175,546 306,332 21.3 Disposal of operating fixed assets Note 2019 2018 Rupees '000 Rupees '000 2019 Accumulated Net Disposal Gain/(loss) Mode of Particulars Cost depreciation book value proceeds on disposal disposal Particulars of buyer 21.4 The depreciation charge for the year has been allocated as follows: Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Plant and machinery Lamination Cutting Line TBA300 131,237 - 131,237 131,237 - Negotiation Orix modaraba, Lahore Cost of sales 35 910,818 772,241 Step Lap Lamination DTR 7,246 - 7,246 - (7,246) Negotiation Orix modaraba, Lahore Administrative and general expenses 38 63,836 68,660 138,483 - 138,483 131,237 (7,246) Office equipment and fixtures 974,654 840,901 Table and chairs 31,975 21,914 10,061 199 (9,862) Negotiation Scr ap sale Mobile sets 1,018 280 738 - (738) Negotiation Scrap sale Miscellaneous office items 18,561 12,349 6,212 2,875 (3,337) Negotiation Scrap sale 21.5 Revaluation of property, plant and equipment Assets having net book value less than Rs. 500,000 each 1,169 828 341 156 (185) Negotiation Scrap sale Most recent valuation of land, building and plant and machinery was carried out by an independent valuer, Maricon 52,723 35,371 17,352 3,230 (14,122) Consultants (Private) Limited, on December 31, 2018 and was incorporated in the financial statements for the year ended Computer hardware and allied items December 31, 2018. For basis of valuation and other fair value measurement disclosures refer to note 49. Assets having net book value less than Rs. 500,000 each 6,015 5,959 56 62 6 Negotiation Scrap sale Had there been no revaluation, the cost, accumulated depreciation and net book value of revalued items would have been as Vehicles follows: Audi A6 11,910 7,082 4,828 10,500 5,672 As Per Company Policy Synergy Technology, Lahore. Toyota Fortuner 6,229 2,126 4,103 3,229 (874) As Per C ompany Policy Amer Hamza (employee), Lahore. Suzuki Jimny 2,293 1,579 714 1,409 695 Insurance claim Adamjee Insurance Company Limited, Lahore. 2019 Honda Civic 2,254 929 1,325 1,674 349 As P er Company Policy Muhammad Raza (employee), Lahore. Honda Civic 2,113 986 1,127 1,319 192 As Per Company Policy Qazi Nisar (employee), Lahore. Accumulated Net Toyota Corolla 1,992 232 1,760 2,356 596 Negotiation First Habib Modaraba, Lahore. Cost depreciation book value Toyota Corolla 1,735 1,232 503 465 (38) As Per Company Policy Liaqat Ali (employee), Lahore. Toyota Corolla 1,731 1,177 554 477 (77) As Per Company Policy Rehmat ali (employee), Lahore. Rupees '000 Rupees '000 Rupees '000 Toyota Corolla 1,543 636 907 1,198 291 As Per Company Policy Rafique Ahmed (employee), Lahore. Suzuki Cultus 1,085 302 783 1,300 517 As Per Company Policy Gulzaib (employee), Lahore. Suzuki Cultus 981 434 547 587 40 As Per Company Policy Asif Ilyas (employee), Lahore. Land 189,184 - 189,184 Assets having net book value Building 5,816,039 1,434,921 4,381,118 less than Rs. 500,000 each 15,909 10,480 5,429 8,958 3,529 As Per Company Policy Various emploees 49,775 27,195 22,580 33,472 10,892 Plant and machinery 12,135,143 3,494,328 8,640,815

246,996 68,525 178,471 168,001 (10,470)

2018 2018 Accumulated Net Accumulated Net Disposal Gain/(loss) Mode of Particulars Cost depreciation book value proceeds on disposal disposal P ar ticulars of buyer Cost depreciation book value Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Rupees '000 Office equipment and fixtures Table and chairs 5,246 3,995 1,251 256 (995) Negotiation Various individuals Air conditioners 6,719 5,268 1,451 328 (1,123) Negotiation Various individuals Land 189,184 - 189,184 Mobile sets 566 299 267 - (267) As Per C ompany Policy V arious individuals Building 3,302,326 1,321,029 1,981,297 Miscellaneous office items 39,975 34,968 5,007 1,949 (3,058) Negotiation Various individuals

52,506 44,530 7,976 2,533 (5,443) Plant and machinery 10,898,107 3,426,343 7,471,764 Computer hardware and allied items Computer and printers 10,961 10,961 - 512 512 Negotiation Various individuals 21.5.1 As per most recent valuation, forced sale values of land, building and plant and machinery are as follows: Laptops 4,441 2,792 1,649 2,901 1,252 Negotiation V arious individuals Mobile sets 427 359 68 39 (29) As Per Company Policy Various individuals Allied items 10,907 10,907 - 382 382 Negotiation V arious individuals Rupees Vehicles Rupees '000

Audi A3 4,060 460 3,600 4,750 1,150 As Per Company Policy Mehdi Hassan (employee), Lahore. BMW X1 5,217 591 4,626 5,737 1,111 As Per Company Policy Mehdi Hassan (employee), Lahore. Honda City 1,494 971 523 747 224 As Per Company Policy Atif Imtiaz (employee), Lahore. Land 919,800 Honda Civic 2,439 1,505 934 642 (292) As Per Company Policy Waseem Ishaq (employee), Lahore. Building 2,927,828 Honda Civic 2,489 1,460 1,029 539 (490) As Per Company Policy Iftikhar Ahmed (employee), Lahore. Honda Civic 2,469 1,448 1,021 560 (461) As Per Company Policy Tariq Irani (employee), Lahore. Plant and machinery 11,998,078 Honda Civic 2,448 1,277 1,171 470 (701) As Per Company Policy Javed A Khan (employee), Rawalpindi. Honda Civic 2,164 793 1,371 1,456 85 As Per Company Policy Atif Ali (employee), Lahore. 15,845,706 Honda Civic 2,521 892 1,629 328 (1,301) As Per Company Policy Sadiq Munir (employee), Lahore. Porsche 1,202 439 763 3,000 2,237 Negotiation Performance Automotive, Lahore. Suzuki Mehran 578 10 568 222 (346) As Per Company Policy Shees Butt (employee), Faisalabad. Toyota Corolla 1,731 1,015 716 600 (116) As Per Company Policy Javed Iqbal (employee), Lahore. 22 INTANGIBLE ASSETS Toyota Corolla 1,771 924 847 831 (16) As Per Company Policy Rizwan Cheema (employee), Lahore. Assets having net book value less than Rs. 500,000 each 15,323 9,793 5,530 10,039 4,509 As Per Company Policy Various employees Note 2019 Cost Accumulated Amortization Net book 45,906 21,578 24,328 29,921 5,593 As at As at As at For the As at value as at 125,148 91,127 34,021 36,288 2,267 January 01 Additions December 31 January 01 period December 31 December 31 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000'

Technology transfer agreement 22.1 117,054 - 117,054 42,888 3,708 46,596 70,458 Goodwill 22.2 312,341 - 312,341 91,859 - 91,859 220,482 Software 22.3 17,006 3,802 20,808 6,911 4,273 11,184 9,624 Enterprise Resour ce Planning system 22.4 31,675 - 31,675 23,066 2,841 25,907 5,768 478,076 3,802 481,878 164,724 10,822 175,546 306,332

2018 24.3 These have been deposited with various customers against EPC and other contracts and are refundable on completion of Cost Accumula ted Amor tiza tion Net book projects in accordance with term of contracts. These are classified as 'financial assets at amortized cost' under IFRS 9 which As at As at As at For the As at value as at are required to be carried at amortized cost. However, due to uncertainties regarding dates of refund of these deposits, these January 01 Additions December 31 January 01 period December 31 December 31 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' have been carried at cost.

Technology transfer agreement 22.1 117,054 - 117,054 38,984 3,904 42,888 74,166 Goodwill 22.2 312,341 - 312,341 91,859 - 91,859 220,482 2019 2018 Software 22.3 8,976 8,030 17,006 4,853 2,058 6,911 10,095 Rupees '000 Rupees '000 Enterprise Resource Planning system 22.4 31,675 - 31,675 18,825 4,241 23,066 8,609 470,046 8,030 478,076 154,521 10,203 164,724 313,352 25 STORES, SPARES AND LOOSE TOOLS

22.1 The Company has obtained technology of single phase meters, three phase digital meters and also of power transformers from different foreign companies. These are amortized on the same rate as of the depreciation of the relevant plant. Stores 279,668 290,865 Spares 455,386 452,987 22.2 Goodwill represents the difference between the cost of the acquisition (fair value of consideration paid) and the fair value of Loose tools 132,117 134,117 the net identifiable assets acquired at the time of acquisition of PEL Appliances Limited and PEL Daewoo Electronics Limited 867,171 877,969 by the Company. In view of cancelation of LG license, goodwill related to PEL Daewoo Electronics Limited was fully impaired

by providing impairment loss of Rs. 140.569 million in December 31, 2011. The carrying value represents goodwill related to Impairment allowance for slow moving and obsolete items (18,824) (18,824)

PEL Appliances Limited for which there is no indication of impairment. 848,347 859,145

22.3 The Company has acquired different software for its business purpose. These are being amortized at 33% per annum on reducing balance method. 25.1 There are no spare parts held exclusively for capitalization as at the reporting date.

22.4 These are being amortized at 33% per annum on reducing balance method. 2019 2018 Rupees '000 Rupees '000 23 LONG TERM INVESTMENTS 26 STOCK IN TRADE These represent investments in ordinary shares of related parties and are carried at cost less accumulated impairment. The details are as follows: Raw material - in stores 3,992,761 5,130,566

Note 2019 2018 - in transit 1,315,147 2,110,833

Rupees '000 Rupees '000 Write-down to net realisable value (39,060) (37,037)

PEL Marketing (Private) Limited - Unquoted 5,268,848 7,204,362

10,000 (2018: 10,000) ordinary shares of Rs. 10 each 100 100 Work in process 656,835 758,928

Relationship: wholly-owned subsidiary Finished goods 1,871,490 417,843

Ownership Interest: 100% Write-down to net realisable value (7,876) (7,022)

1,863,614 410,821 Kohinoor Power Company Limited - Quoted 7,789,297 8,374,111 2,910,600 (2018: 2,910,600) ordinary shares of Rs. 10 each 23.1 5,763 6,985 Relationship: associate Ownership Interest: 23.1% 26.1 Stock in trade valued at Rs. 1,849 million (2018: Rs. 1,754 million) is pledged as security with providers of debt Market value: Rs. 1.98 (2018: Rs. 2.40) per share Notes 2019 2018 5,863 7,085 Rupees '000 Rupees '000

23.1 Details of investment are as follows: 27 TRADE DEBTS Cost of investment 54,701 54,701 Accumulated impairment (48,938) (47,716) Gross amount due - against sale of goods 1,896,136 2,402,718 5,763 6,985 - against execution of construction contracts 27.1 1,206,697 3,054,705 24 LONG TERM DEPOSITS 3,102,833 5,457,423 Impairment allowance for expected credit loss 38 (612,535) (587,301)

Financial institutions 24.1 27,601 7,858 2,490,298 4,870,122 Utility companies and regulatory authorities 24.2 167,734 42,351 Customers 24.3 164,845 315,748 27.1 These include retention money for construction contracts in progress amounting to Rs. 551.251 million (2018: Rs. 617.648 360,180 365,957 million) held by the customers in accordance with contract terms.

24.1 These represent security deposits against Ijarah financing.

24.2 These have been deposited with various utility companies and regulatory authorities. These are classified as 'financial assets at amortized cost' under IFRS 9 which are required to be carried at amortized cost. However, these, being held for an indefinite period with no fixed maturity date, are carried at cost.

2018 24.3 These have been deposited with various customers against EPC and other contracts and are refundable on completion of Cost Accumula ted Amor tiza tion Net book projects in accordance with term of contracts. These are classified as 'financial assets at amortized cost' under IFRS 9 which As at As at As at For the As at value as at are required to be carried at amortized cost. However, due to uncertainties regarding dates of refund of these deposits, these January 01 Additions December 31 January 01 period December 31 December 31 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' have been carried at cost.

Technology transfer agreement 22.1 117,054 - 117,054 38,984 3,904 42,888 74,166 Goodwill 22.2 312,341 - 312,341 91,859 - 91,859 220,482 2019 2018 Software 22.3 8,976 8,030 17,006 4,853 2,058 6,911 10,095 Rupees '000 Rupees '000 Enterprise Resource Planning system 22.4 31,675 - 31,675 18,825 4,241 23,066 8,609 470,046 8,030 478,076 154,521 10,203 164,724 313,352 25 STORES, SPARES AND LOOSE TOOLS

22.1 The Company has obtained technology of single phase meters, three phase digital meters and also of power transformers from different foreign companies. These are amortized on the same rate as of the depreciation of the relevant plant. Stores 279,668 290,865 Spares 455,386 452,987 22.2 Goodwill represents the difference between the cost of the acquisition (fair value of consideration paid) and the fair value of Loose tools 132,117 134,117 the net identifiable assets acquired at the time of acquisition of PEL Appliances Limited and PEL Daewoo Electronics Limited 867,171 877,969 by the Company. In view of cancelation of LG license, goodwill related to PEL Daewoo Electronics Limited was fully impaired by providing impairment loss of Rs. 140.569 million in December 31, 2011. The carrying value represents goodwill related to Impairment allowance for slow moving and obsolete items (18,824) (18,824)

PEL Appliances Limited for which there is no indication of impairment. 848,347 859,145

22.3 The Company has acquired different software for its business purpose. These are being amortized at 33% per annum on reducing balance method. 25.1 There are no spare parts held exclusively for capitalization as at the reporting date.

22.4 These are being amortized at 33% per annum on reducing balance method. 2019 2018 Rupees '000 Rupees '000 23 LONG TERM INVESTMENTS 26 STOCK IN TRADE These represent investments in ordinary shares of related parties and are carried at cost less accumulated impairment. The details are as follows: Raw material - in stores 3,992,761 5,130,566

Note 2019 2018 - in transit 1,315,147 2,110,833

Rupees '000 Rupees '000 Write-down to net realisable value (39,060) (37,037)

PEL Marketing (Private) Limited - Unquoted 5,268,848 7,204,362

10,000 (2018: 10,000) ordinary shares of Rs. 10 each 100 100 Work in process 656,835 758,928

Relationship: wholly-owned subsidiary Finished goods 1,871,490 417,843

Ownership Interest: 100% Write-down to net realisable value (7,876) (7,022)

1,863,614 410,821 Kohinoor Power Company Limited - Quoted 7,789,297 8,374,111 2,910,600 (2018: 2,910,600) ordinary shares of Rs. 10 each 23.1 5,763 6,985 Relationship: associate Ownership Interest: 23.1% 26.1 Stock in trade valued at Rs. 1,849 million (2018: Rs. 1,754 million) is pledged as security with providers of debt Market value: Rs. 1.98 (2018: Rs. 2.40) per share Notes 2019 2018 5,863 7,085 Rupees '000 Rupees '000

23.1 Details of investment are as follows: 27 TRADE DEBTS Cost of investment 54,701 54,701 Accumulated impairment (48,938) (47,716) Gross amount due - against sale of goods 1,896,136 2,402,718 5,763 6,985 - against execution of construction contracts 27.1 1,206,697 3,054,705 24 LONG TERM DEPOSITS 3,102,833 5,457,423 Impairment allowance for expected credit loss 38 (612,535) (587,301)

Financial institutions 24.1 27,601 7,858 2,490,298 4,870,122 Utility companies and regulatory authorities 24.2 167,734 42,351 Customers 24.3 164,845 315,748 27.1 These include retention money for construction contracts in progress amounting to Rs. 551.251 million (2018: Rs. 617.648 360,180 365,957 million) held by the customers in accordance with contract terms.

24.1 These represent security deposits against Ijarah financing.

24.2 These have been deposited with various utility companies and regulatory authorities. These are classified as 'financial assets at amortized cost' under IFRS 9 which are required to be carried at amortized cost. However, these, being held for an indefinite period with no fixed maturity date, are carried at cost. 2019 2018 31 SHORT TERM INVESTMENTS Rupees '000 Rupees '000 These represent investments in listed equity securities classified as 'financial assets at fair value through profit or loss'. The details are as follows: 27.2 Movement in impairment allowance for expected credit loss

As at beginning of the year 587,301 576,971 Note 2019 2018 Recognized during the year 25,234 10,330 Rupees '000 Rupees '000 As at end of the year 612,535 587,301 Standard Chartered Bank (Pakistan) Limited 915,070 (2018: 915,070) ordinary shares of Rs. 10 each 28 CONSTRUCTION WORK IN PROGRESS Market value: Rs. 23.60 (2018: Rs. 24.12) per share As at beginning of the year 22,071 21,824 This represents unbilled construction work in progress. Changes in fair value 36 & 39 (475) 247

Note 2019 2018 As at end of the year 21,596 22,071

Rupees '000 Rupees '000 32 ADVANCE INCOME TAX/INCOME TAX REFUNDABLE 29 SHORT TERM ADVANCES Advance income tax/income tax refundable 2,603,652 3,132,528 Advances to suppliers and contractors Provision for taxation 41 - - Gross amount due 620,050 622,554 2,603,652 3,132,528 Impairment allowance for doubtful advances (32,730) (32,730)

587,320 589,824 33 CASH AND BANK BALANCES Advances to employees

Gross amount due 29.1 508,286 377,239 Cash in hand 9,539 8,102 Impairment allowance for doubtful advances (1,449) (1,449) Cash at banks 370,194 349,808

506,837 375,790 379,733 357,910 1,094,157 965,614

29.1 These include advances for 34 NET REVENUE

- purchases 225,807 189,350 This represents revenue recognized from contracts with customers - expenses 125,672 105,524 - traveling 155,358 80,916 Sale of goods

506,837 375,790 - local 25,724,814 23,394,059 - exports 606,054 888,957 26,330,868 24,283,016 30 SHORT TERM DEPOSITS AND PREPAYMENTS Construction contracts 1,365,601 2,899,882

Security deposits 27,696,469 27,182,898 Gross amount due 336,231 313,512 Sales tax and excise duty and discounts (5,346,720) (3,710,466) Impairment allowance for expected credit losses (5,379) (5,379) 22,349,749 23,472,432 330,852 308,133 Margin deposits 207,323 421,671 35 COST OF SALES Prepayments 46,211 52,865 Sales tax refundable 979,702 - Finished goods at the beginning of the year 417,843 360,059 Letters of credit 327,510 322,510 Cost of goods manufactured 35.1 19,328,681 18,343,599

Finished goods at the end of the year (1,871,490) (417,843) 1,891,598 1,105,179 Cost of goods sold 17,875,034 18,285,815 Cost of construction contracts 1,146,012 2,433,581 19,021,046 20,719,396 2019 2018 31 SHORT TERM INVESTMENTS Rupees '000 Rupees '000 These represent investments in listed equity securities classified as 'financial assets at fair value through profit or loss'. The details are as follows: 27.2 Movement in impairment allowance for expected credit loss

As at beginning of the year 587,301 576,971 Note 2019 2018 Recognized during the year 25,234 10,330 Rupees '000 Rupees '000 As at end of the year 612,535 587,301 Standard Chartered Bank (Pakistan) Limited 915,070 (2018: 915,070) ordinary shares of Rs. 10 each 28 CONSTRUCTION WORK IN PROGRESS Market value: Rs. 23.60 (2018: Rs. 24.12) per share As at beginning of the year 22,071 21,824 This represents unbilled construction work in progress. Changes in fair value 36 & 39 (475) 247

Note 2019 2018 As at end of the year 21,596 22,071

Rupees '000 Rupees '000 32 ADVANCE INCOME TAX/INCOME TAX REFUNDABLE 29 SHORT TERM ADVANCES Advance income tax/income tax refundable 2,603,652 3,132,528 Advances to suppliers and contractors Provision for taxation 41 - - Gross amount due 620,050 622,554 2,603,652 3,132,528 Impairment allowance for doubtful advances (32,730) (32,730)

587,320 589,824 33 CASH AND BANK BALANCES Advances to employees

Gross amount due 29.1 508,286 377,239 Cash in hand 9,539 8,102 Impairment allowance for doubtful advances (1,449) (1,449) Cash at banks 370,194 349,808

506,837 375,790 379,733 357,910 1,094,157 965,614

29.1 These include advances for 34 NET REVENUE

- purchases 225,807 189,350 This represents revenue recognized from contracts with customers - expenses 125,672 105,524 - traveling 155,358 80,916 Sale of goods

506,837 375,790 - local 25,724,814 23,394,059 - exports 606,054 888,957 26,330,868 24,283,016 30 SHORT TERM DEPOSITS AND PREPAYMENTS Construction contracts 1,365,601 2,899,882

Security deposits 27,696,469 27,182,898 Gross amount due 336,231 313,512 Sales tax and excise duty and discounts (5,346,720) (3,710,466) Impairment allowance for expected credit losses (5,379) (5,379) 22,349,749 23,472,432 330,852 308,133 Margin deposits 207,323 421,671 35 COST OF SALES Prepayments 46,211 52,865 Sales tax refundable 979,702 - Finished goods at the beginning of the year 417,843 360,059 Letters of credit 327,510 322,510 Cost of goods manufactured 35.1 19,328,681 18,343,599

Finished goods at the end of the year (1,871,490) (417,843) 1,891,598 1,105,179 Cost of goods sold 17,875,034 18,285,815 Cost of construction contracts 1,146,012 2,433,581 19,021,046 20,719,396 Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000

35.1 Cost of goods manufactured 37 DISTRIBUTION COST Work-in-process at beginning of the year 758,928 848,453 Salaries and benefits 37.1 166,821 151,963 Raw material and components consumed 16,289,944 15,556,700 Traveling and conveyance 68,591 59,254 Direct wages 859,985 799,473 Rent, rates and taxes 12,012 9,812 Factory overheads: Electricity, gas, fuel and water 4,055 3,162 - salaries, wages and benefits 460,306 422,952 Repairs and maintenance 1,511 1,302 - traveling and conveyance 29,023 27,930 Vehicles running and maintenance 21,258 18,228 - electricity, gas and water 355,619 339,186 Printing and stationery 3,918 3,368 - repairs and maintenance 72,215 68,323 Postage, telegrams and telephones 4,221 4,469 - vehicles running and maintenance 31,406 30,060 Entertainment and staff welfare 12,304 11,763 - insurance 36,990 35,855 Advertisement and sales promotion 195,236 191,524 - depreciation 21.4 910,818 772,241 Insurance 10,618 7,524 - amortization of intangible assets 22 10,822 10,203 Freight and forwarding 170,589 121,588 - impairment alloawance for obsolete and slow moving stock 26 & 27 2,877 2,522 Contract and tendering 1,352 1,355 - carriage and freight 26,022 23,742 Warranty period services 233,401 111,565 - erection and testing 125,106 151,605 Others 47,814 35,463 - other factory overheads 15,455 13,282

953,701 732,340 2,076,659 1,897,901 19,985,516 19,102,527 37.1 These include charge in respect of employees retirement benefits amounting to Rs. 7.563 million (2018: Rs. 6.145 million). Work-in-process at end of the year (656,835) (758,928) 19,328,681 18,343,599 Note 2019 2018 35.2 These include charge in respect of employees retirement benefits amounting to Rs. 37.005 million (2018: Rs. 39.401 million). Rupees '000 Rupees '000

38 ADMINISTRATIVE AND GENERAL EXPENSES Note 2019 2018 Rupees '000 Rupees '000 Salaries and benefits 38.1 235,232 203,176

Traveling and conveyance 17,159 14,318 36 OTHER INCOME Rent, rates and taxes 38,746 30,020

Ujrah payments 28,203 21,620 Gain on financial instruments Legal and professional 63,708 49,258

Changes in fair value of short term investments at fair Electricity, gas and water 31,430 27,215

value through profit and loss 31 - 247 Auditor's remuneration 38.2 4,850 4,827

Gain on sale and lease back activities 13,364 - Repairs and maintenance 13,373 10,562

Gain on disposal of property, plant and equipment - 2,267 Vehicles running and maintenance 14,535 14,782

Printing, stationery and periodicals 3,430 3,150 13,364 2,514 Postage, telegrams and telephones 8,251 7,553 Other income Entertainment and staff welfare 12,596 10,012 Amortization of grant-in-aid 16 1,839 1,936 Advertisement 6,133 8,168 Others 17,100 12,934 Insurance 9,449 8,882

18,939 14,870 Impairment allowance for expected credit loss 25,234 10,330 Depreciation 21.4 63,836 68,660 32,303 17,384 Others 35,479 24,351 611,644 516,884

38.1 These include charge in respect of employees retirement benefits amounting to Rs. 20.09 million (2018: Rs. 13.848 million).

2019 2018 Rupees '000 Rupees '000

38.2 Auditor's remuneration

Annual statutory audit 3,300 3,300 Limited scope review 800 800 Review report under corporate governance 500 500 Out of pocket expenses 250 227 4,850 4,827 Note 2019 2018 Note 2019 2018 Rupees '000 Rupees '000 Rupees '000 Rupees '000

35.1 Cost of goods manufactured 37 DISTRIBUTION COST Work-in-process at beginning of the year 758,928 848,453 Salaries and benefits 37.1 166,821 151,963 Raw material and components consumed 16,289,944 15,556,700 Traveling and conveyance 68,591 59,254 Direct wages 859,985 799,473 Rent, rates and taxes 12,012 9,812 Factory overheads: Electricity, gas, fuel and water 4,055 3,162 - salaries, wages and benefits 460,306 422,952 Repairs and maintenance 1,511 1,302 - traveling and conveyance 29,023 27,930 Vehicles running and maintenance 21,258 18,228 - electricity, gas and water 355,619 339,186 Printing and stationery 3,918 3,368 - repairs and maintenance 72,215 68,323 Postage, telegrams and telephones 4,221 4,469 - vehicles running and maintenance 31,406 30,060 Entertainment and staff welfare 12,304 11,763 - insurance 36,990 35,855 Advertisement and sales promotion 195,236 191,524 - depreciation 21.4 910,818 772,241 Insurance 10,618 7,524 - amortization of intangible assets 22 10,822 10,203 Freight and forwarding 170,589 121,588 - impairment alloawance for obsolete and slow moving stock 26 & 27 2,877 2,522 Contract and tendering 1,352 1,355 - carriage and freight 26,022 23,742 Warranty period services 233,401 111,565 - erection and testing 125,106 151,605 Others 47,814 35,463 - other factory overheads 15,455 13,282

953,701 732,340 2,076,659 1,897,901 19,985,516 19,102,527 37.1 These include charge in respect of employees retirement benefits amounting to Rs. 7.563 million (2018: Rs. 6.145 million). Work-in-process at end of the year (656,835) (758,928) 19,328,681 18,343,599 Note 2019 2018 35.2 These include charge in respect of employees retirement benefits amounting to Rs. 37.005 million (2018: Rs. 39.401 million). Rupees '000 Rupees '000

38 ADMINISTRATIVE AND GENERAL EXPENSES Note 2019 2018 Rupees '000 Rupees '000 Salaries and benefits 38.1 235,232 203,176

Traveling and conveyance 17,159 14,318 36 OTHER INCOME Rent, rates and taxes 38,746 30,020

Ujrah payments 28,203 21,620 Gain on financial instruments Legal and professional 63,708 49,258

Changes in fair value of short term investments at fair Electricity, gas and water 31,430 27,215

value through profit and loss 31 - 247 Auditor's remuneration 38.2 4,850 4,827

Gain on sale and lease back activities 13,364 - Repairs and maintenance 13,373 10,562

Gain on disposal of property, plant and equipment - 2,267 Vehicles running and maintenance 14,535 14,782

Printing, stationery and periodicals 3,430 3,150 13,364 2,514 Postage, telegrams and telephones 8,251 7,553 Other income Entertainment and staff welfare 12,596 10,012 Amortization of grant-in-aid 16 1,839 1,936 Advertisement 6,133 8,168 Others 17,100 12,934 Insurance 9,449 8,882

18,939 14,870 Impairment allowance for expected credit loss 25,234 10,330 Depreciation 21.4 63,836 68,660 32,303 17,384 Others 35,479 24,351 611,644 516,884

38.1 These include charge in respect of employees retirement benefits amounting to Rs. 20.09 million (2018: Rs. 13.848 million).

2019 2018 Rupees '000 Rupees '000

38.2 Auditor's remuneration

Annual statutory audit 3,300 3,300 Limited scope review 800 800 Review report under corporate governance 500 500 Out of pocket expenses 250 227 4,850 4,827 Note 2019 2018 Unit 2019 2018 Rupees '000 Rupees '000 42 EARNINGS PER SHARE - BASIC AND DILUTED 39 OTHER EXPENSES Earnings Loss on financial instruments Profit after taxation Rupees '000 177,842 528,345

Preference dividend for the year Rupees '000 (42,710) (42,710) Changes in fair value of short term investments at fair 31 475 - value through profit and loss Profit attributable to ordinary shareholders Rupees '000 135,132 485,635 Loss on disposal of property, plant and equipment 10,470 - Loss on sale and lease back activities - 4,721 Shares Impairment allowance on long term investments 1,222 1,863 Weighted average number of ordinary shares outstanding during the year No. of shar es 497,681,485 497,681,485 12,167 6,584 Others Earnings per share

Workers' Profit Participation Fund 17.2 11,431 26,772 Basic and diluted Rupees 0.27 0.98 Workers' Welfare Fund 17.3 4,344 10,173 Donations 4,655 7,674 42.1 As per the opinion of the Company's legal counsel, the provision for dividend at 9.5% per annum, under the original terms of Others 11,830 - issue of preference shares, will prevail on account of preference dividend.

32,260 44,619 42.2 There is no diluting effect on the basic earnings per share of the Company as the conversion rights pertaining to outstanding 44,427 51,203 preference shares, under the original terms of issue, are no longer exercisable.

Note 2019 2018 40 FINANCE COST Rupees '000 Rupees '000

Interest/markup/profit on borrowings: 43 CASH GENERATED FROM OPERATIONS redeemable capital 1,958 19,655

long term finances 650,503 443,864 Profit before taxation 211,336 493,546 leased liabilities 25,223 6,362 short term borrowings 700,180 209,057 Adjustments for non-cash and other items 1,377,864 678,938 Interest/markup/profit on borrowings 1,377,864 678,938 Interest on Workers' Profit Participation Fund 17.2 1,516 4,940 Loss/(gain) on disposal of property, plant and equipment 10,470 (2,267) Bank charges and commission 160,518 292,569 Amortization of grant-in-aid (1,839) (1,936) Amortization of intangible assets 10,822 10,203 1,539,898 976,447 Impairment of long term investments 1,222 1,863

41 TAXATION Changes in fair value of financial assets at fair value through profit or loss 475 (247) Impairment allowance for expected credit loss 25,234 10,330

Provision for taxation Impairment allowance for obsolete and slow moving stock 2,877 2,522

for current year 32 & 41.1 - - (Gain)/loss on sale and lease back activities (13,364) 4,721

for prior years (279) - Depreciation 974,654 840,901

(279) - 2,388,415 1,545,028 Deferred taxation 2,599,751 2,038,574

adjustment attributable to origination and reversal Changes in working capital of temporary differences 33,773 (46,705) Stores, spares and loose tools 10,798 (112,737) adjustment attributable to changes in tax rates 15.1 - 11,906 Stock in trade 581,937 (1,987,854)

33,773 (34,799) Trade debts 2,354,590 604,247 Contract assets (161,774) (142,550) 33,494 (34,799) Short term advances (128,543) (139,398) Short term deposits and prepayments (786,419) 4,053 41.1 The Company is taxable under section 59AA of the Income Tax Ordinance, 2001 along with its subsidiary as a single unit. The provision for the year has been allocated to the Company on proportionate basis. Provision for the current year is nil due to Other receivables (40,892) (49,872)

utilization of available tax credits. There is no relationship between aggregate tax expense and accounting profit. Warranty obligations 44,960 - Accordingly no numerical reconciliation has been presented. Long term deposits 5,777 5,979 Trade and other payables 771,243 (51,332) 41.2 Assessments upto Tax Year 2019 have been finalized under the relevant provisions of the Ordinance execpt for Tax Year 2009, 2016 and 2017. See note 20.1.5. 2,651,677 (1,869,464)

Cash generated from operations 5,251,428 169,110

44 CASH AND CASH EQUIVALENTS

Cash and bank balances 33 379,733 357,910

379,733 357,910 Note 2019 2018 Unit 2019 2018 Rupees '000 Rupees '000 42 EARNINGS PER SHARE - BASIC AND DILUTED 39 OTHER EXPENSES Earnings Loss on financial instruments Profit after taxation Rupees '000 177,842 528,345

Preference dividend for the year Rupees '000 (42,710) (42,710) Changes in fair value of short term investments at fair 31 475 - value through profit and loss Profit attributable to ordinary shareholders Rupees '000 135,132 485,635 Loss on disposal of property, plant and equipment 10,470 - Loss on sale and lease back activities - 4,721 Shares Impairment allowance on long term investments 1,222 1,863 Weighted average number of ordinary shares outstanding during the year No. of shar es 497,681,485 497,681,485 12,167 6,584 Others Earnings per share

Workers' Profit Participation Fund 17.2 11,431 26,772 Basic and diluted Rupees 0.27 0.98 Workers' Welfare Fund 17.3 4,344 10,173 Donations 4,655 7,674 42.1 As per the opinion of the Company's legal counsel, the provision for dividend at 9.5% per annum, under the original terms of Others 11,830 - issue of preference shares, will prevail on account of preference dividend.

32,260 44,619 42.2 There is no diluting effect on the basic earnings per share of the Company as the conversion rights pertaining to outstanding 44,427 51,203 preference shares, under the original terms of issue, are no longer exercisable.

Note 2019 2018 40 FINANCE COST Rupees '000 Rupees '000

Interest/markup/profit on borrowings: 43 CASH GENERATED FROM OPERATIONS redeemable capital 1,958 19,655 long term finances 650,503 443,864 Profit before taxation 211,336 493,546 leased liabilities 25,223 6,362 short term borrowings 700,180 209,057 Adjustments for non-cash and other items 1,377,864 678,938 Interest/markup/profit on borrowings 1,377,864 678,938 Interest on Workers' Profit Participation Fund 17.2 1,516 4,940 Loss/(gain) on disposal of property, plant and equipment 10,470 (2,267) Bank charges and commission 160,518 292,569 Amortization of grant-in-aid (1,839) (1,936) Amortization of intangible assets 10,822 10,203 1,539,898 976,447 Impairment of long term investments 1,222 1,863

41 TAXATION Changes in fair value of financial assets at fair value through profit or loss 475 (247) Impairment allowance for expected credit loss 25,234 10,330

Provision for taxation Impairment allowance for obsolete and slow moving stock 2,877 2,522 for current year 32 & 41.1 - - (Gain)/loss on sale and lease back activities (13,364) 4,721 for prior years (279) - Depreciation 974,654 840,901

(279) - 2,388,415 1,545,028 Deferred taxation 2,599,751 2,038,574 adjustment attributable to origination and reversal Changes in working capital of temporary differences 33,773 (46,705) Stores, spares and loose tools 10,798 (112,737) adjustment attributable to changes in tax rates 15.1 - 11,906 Stock in trade 581,937 (1,987,854)

33,773 (34,799) Trade debts 2,354,590 604,247 Contract assets (161,774) (142,550) 33,494 (34,799) Short term advances (128,543) (139,398) Short term deposits and prepayments (786,419) 4,053 41.1 The Company is taxable under section 59AA of the Income Tax Ordinance, 2001 along with its subsidiary as a single unit. The provision for the year has been allocated to the Company on proportionate basis. Provision for the current year is nil due to Other receivables (40,892) (49,872) utilization of available tax credits. There is no relationship between aggregate tax expense and accounting profit. Warranty obligations 44,960 - Accordingly no numerical reconciliation has been presented. Long term deposits 5,777 5,979 Trade and other payables 771,243 (51,332) 41.2 Assessments upto Tax Year 2019 have been finalized under the relevant provisions of the Ordinance execpt for Tax Year 2009, 2016 and 2017. See note 20.1.5. 2,651,677 (1,869,464)

Cash generated from operations 5,251,428 169,110

44 CASH AND CASH EQUIVALENTS

Cash and bank balances 33 379,733 357,910

379,733 357,910 45 TRANSACTIONS AND BALANCES WITH RELATED PARTIES 46 CONTRACTS WITH CUSTOMERS

Related parties from the Company's perspective comprise subsidiary, associated companies, key management personnel 46.1 Disaggregation of revenue and post employment benefit plan. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, and includes the Chief Executive and The table below provides disaggregation of revenue and its relationship with revenue information disclosued for the Directors of the Company. The details of Company's related parties, with whom the Company had transactions during the Company's Operating Segments presented in note 52. year or has balances outstanding as at the reporting date are as follows: Power Division Appliances Division Total Name of related party Nature of relationship Basis of relationship Aggregate 2019 2018 2019 2018 2019 2018 %age of Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' shareholding in the Product/service lines Company Home appliances - - 17,862,538 15,468,152 17,862,538 15,468,152 Pak Elektron Limited Electrical capital goods 8,468,330 8,814,864 - - 8,468,330 8,814,864 Employees Provident Fund Trust Provident Fund Trust Contribution to providend fund 0.00% PEL Marketing (Private) Limited Subsidiary Investment 0.00% Construction contracts 1,365,601 2,899,882 - - 1,365,601 2,899,882 Kohinoor Power Company Limited Associated company Investment 0.00% 9,833,931 11,714,746 17,862,538 15,468,152 27,696,469 27,182,898 Red Comminication Arts (Private) Limited Associated company Common directorship 0.00% Timing of revenue Mr. M. Murad Saigol Key management personnel Chief executive 0.0025% recognition Mr. M. Zeid Yousuf Saigol Key management personnel Director 2.9637% Mr. Syed Manzar Hassan Key management personnel Director 0.0004% Products transferred at a point in time 8,468,330 8,814,864 17,862,538 15,468,152 26,330,868 24,283,016 Transactions with key management personnel are limited to payment of short term and post employment benefits, advances Products/services against issue of ordinary shares and dividend payments. Transactions with post employment benefits plan are limited to transferred over time 1,365,601 2,899,882 - - 1,365,601 2,899,882 employers' contribution made. The Company in the normal course of business carries out various transactions with its subsidiary and associated companies and continues to have a policy whereby all such transactions are carried out on 9,833,931 11,714,746 17,862,538 15,468,152 27,696,469 27,182,898 commercial terms and conditions which are equivalent to those prevailing in an arm's length transaction. 46.2 Contract balances Details of transactions and balances with related parties are as follows:

The information about receivables, contract assets and contract liabilties from contracts with customers is as follows: Note 2019 2018 Rupees '000 Rupees '000 Nature of balance Presented in financial statements as Note 2019 2018

45.1 Transactions with related parties Rupees '000' Rupees '000'

Nature of relationship Nature of transactions Receivables Trade debts 27 2,490,298 4,870,122 Contract assets Construction work in progress 28 1,697,509 1,535,735 Provident Fund Trust Contribution for the year 64,658 59,394 Contract liabilties Advances from customers 17 70,125 77,154

Subsidiary Sale of goods 10,716,095 14,159,484 4,257,932 6,483,011 Allocation of common expenses - 1,379,621 46.3 Changes in contract assets and liabilities Associated companies Purchase of services 48,866 50,304 Significant changes in contract assets and contract liabilities during the Key management personnel Short term employee benefits 51 47,974 50,125 year are as follows:

Post employment benefits 51 1,760 1,600 Contract Contract assets liabilities

Directors and sponsors Dividend paid 3,598 295,933 Rupees '000' Rupees '000'

45.2 Balances with related parties As at beginning of the year 1,535,735 77,154 Revenue recognized against contract liabilty as at beginning of the year - (77,154)

Nature of relationship Nature of balances Net increase due to cash received in excess of revenue recognized - 70,125 Transfers from contracts assets recognized at the beginning of the year to receivables (1,535,735) -

Provident Fund Trust Contribution payable 6,774 11,247 Net increases as a result of contract activity 1,697,509 -

Key management personnel Short term employee benefits payable 1,356 2,805 As at end of the year 1,697,509 70,125

Associated companies Creditors 11,921 - 47 FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments by class and category are as follows: 45 TRANSACTIONS AND BALANCES WITH RELATED PARTIES 46 CONTRACTS WITH CUSTOMERS

Related parties from the Company's perspective comprise subsidiary, associated companies, key management personnel 46.1 Disaggregation of revenue and post employment benefit plan. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, and includes the Chief Executive and The table below provides disaggregation of revenue and its relationship with revenue information disclosued for the Directors of the Company. The details of Company's related parties, with whom the Company had transactions during the Company's Operating Segments presented in note 52. year or has balances outstanding as at the reporting date are as follows: Power Division Appliances Division Total Name of related party Nature of relationship Basis of relationship Aggregate 2019 2018 2019 2018 2019 2018 %age of Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' shareholding in the Product/service lines Company Home appliances - - 17,862,538 15,468,152 17,862,538 15,468,152 Pak Elektron Limited Electrical capital goods 8,468,330 8,814,864 - - 8,468,330 8,814,864 Employees Provident Fund Trust Provident Fund Trust Contribution to providend fund 0.00% PEL Marketing (Private) Limited Subsidiary Investment 0.00% Construction contracts 1,365,601 2,899,882 - - 1,365,601 2,899,882 Kohinoor Power Company Limited Associated company Investment 0.00% 9,833,931 11,714,746 17,862,538 15,468,152 27,696,469 27,182,898 Red Comminication Arts (Private) Limited Associated company Common directorship 0.00% Timing of revenue Mr. M. Murad Saigol Key management personnel Chief executive 0.0025% recognition Mr. M. Zeid Yousuf Saigol Key management personnel Director 2.9637% Mr. Syed Manzar Hassan Key management personnel Director 0.0004% Products transferred at a point in time 8,468,330 8,814,864 17,862,538 15,468,152 26,330,868 24,283,016 Transactions with key management personnel are limited to payment of short term and post employment benefits, advances Products/services against issue of ordinary shares and dividend payments. Transactions with post employment benefits plan are limited to transferred over time 1,365,601 2,899,882 - - 1,365,601 2,899,882 employers' contribution made. The Company in the normal course of business carries out various transactions with its subsidiary and associated companies and continues to have a policy whereby all such transactions are carried out on 9,833,931 11,714,746 17,862,538 15,468,152 27,696,469 27,182,898 commercial terms and conditions which are equivalent to those prevailing in an arm's length transaction. 46.2 Contract balances Details of transactions and balances with related parties are as follows:

The information about receivables, contract assets and contract liabilties from contracts with customers is as follows: Note 2019 2018 Rupees '000 Rupees '000 Nature of balance Presented in financial statements as Note 2019 2018

45.1 Transactions with related parties Rupees '000' Rupees '000'

Nature of relationship Nature of transactions Receivables Trade debts 27 2,490,298 4,870,122 Contract assets Construction work in progress 28 1,697,509 1,535,735 Provident Fund Trust Contribution for the year 64,658 59,394 Contract liabilties Advances from customers 17 70,125 77,154

Subsidiary Sale of goods 10,716,095 14,159,484 4,257,932 6,483,011 Allocation of common expenses - 1,379,621 46.3 Changes in contract assets and liabilities Associated companies Purchase of services 48,866 50,304 Significant changes in contract assets and contract liabilities during the Key management personnel Short term employee benefits 51 47,974 50,125 year are as follows:

Post employment benefits 51 1,760 1,600 Contract Contract assets liabilities

Directors and sponsors Dividend paid 3,598 295,933 Rupees '000' Rupees '000'

45.2 Balances with related parties As at beginning of the year 1,535,735 77,154 Revenue recognized against contract liabilty as at beginning of the year - (77,154)

Nature of relationship Nature of balances Net increase due to cash received in excess of revenue recognized - 70,125 Transfers from contracts assets recognized at the beginning of the year to receivables (1,535,735) -

Provident Fund Trust Contribution payable 6,774 11,247 Net increases as a result of contract activity 1,697,509 -

Key management personnel Short term employee benefits payable 1,356 2,805 As at end of the year 1,697,509 70,125

Associated companies Creditors 11,921 - 47 FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments by class and category are as follows: 2019 2018 The Company reviews the recoverable amount of each financial asset on an individual basis at each reporting date to ensure Rupees '000 Rupees '000 that adequate loss allowance is made in accordnace with the assessment of credit risk for each financial asset.

The Company considers a financial asset to have low credit risk when the asset has reasonably high external credit rating or if 47.1 Financial assets an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has Cash in hand 9,539 8,102 no past due amounts or otherwise there is no significant increase in credit risk if the amounts are past due in the normal course of business based on history with the counterparty. Financial assets at amortized cost Long term deposits 332,579 358,099 In assessing whether the credit risk on a financial asset has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial asset at the reporting date with the risk of a default occurring on the Trade debts 2,490,298 4,870,122 financial asset at the date of initial recognition. In making this assessment, the Company considers both quantitative and Short term deposits 207,323 421,671 qualitative information that is reasonable and supportable, including historical experience and forward-looking information Bank balances 370,194 349,808 that is available without undue cost or effort. Irrespective of the outcome of the above assessment, the Company presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are 3,400,394 5,999,700 more than 30 days past due, unless the Company has reasonable and supportable information that demonstrates otherwise. Financial assets mandatorily measured at fair value This is usually the case with various customers of the Company where the Company has long standing business relationship through profit or loss with these customers and any amounts that are past due by more than 30 days in the normal course of business are considered 'performing' based on history with the customers. Therefore despite the foregoing, the Company considers Short term investments 21,596 22,071 some past due trade debts to have low credit risk where the customer has a good history of meeting its contractual cash flow obligations and is expected to maintain the same in future. 3,431,529 6,029,873 The Company regularly monitors the effectiveness of the criteria used to identify whether there has been a significant 47.2 Financial liabilities increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk. Financial liabilities at amortized cost Redeemable capital - 101,875 The Company considers 'default' to have occurred when the financial asset is credit-impaired. A financial asset is ocnsidered Long term finances 4,407,403 4,315,878 to be credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Leased liabilities 241,094 102,368

Trade creditors 468,541 414,995 The Company writes off a financial asset when there is information indicating that the counter-party is in severe financial Foreign bills payable 101,960 108,823 condition and there is no realistic prospect of recovery. Accrued liabilities 121,036 121,826 Employees' provident fund 6,774 11,247 The Company's credit risk grading framework comprises the following categories: Compensated absences 33,902 34,162 Unclaimed dividend 15,052 18,650 Category Description Basis for recognizing ECL Other payables 18,531 18,705 Performing The counterparty has low credit risk Trade debts: Lifetime ECL Accrued interest/markup/profit 488,912 390,172 Other assets: Twelve month ECL Short term borrowings 10,955,490 12,843,848 Doubtful Credit risk has increased significantly since initial recognition Lifetime ECL 16,858,695 18,482,549 In default There is evidence indicating the assets is credit-impaired Lifetime ECL 48 FINANCIAL RISK EXPOSURE AND MANAGEMENT Write-off There is no realistic prospect of recovery Amount is written-off

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency 48.1.2 Exposure to credit risk risk, interest rate risk and price risk). These risks affect revenues, expenses and assets and liabilities of the Company. Credit risk principally arises from debt instruments held by the Company as at the reporting date. The maximum exposure to The Board of Directors has the overall responsibility for establishment and oversight of risk management framework. The credit risk as at the reporting date is as follows: Board of Directors has developed a risk policy that sets out fundamentals of risk management framework. The risk policy focuses on unpredictability of financial markets, the Company's exposure to risk of adverse effects thereof and objectives, policies and processes for measuring and managing such risks. The management team of the Company is responsible for administering and monitoring the financial and operational financial risk management throughout the Company in Note 2019 2018 accordance with the risk management framework. Rupees Rupees

The Company’s exposure to financial risks, the way these risks affect the financial position and performance, and forecast Financial assets at amortized cost transactions of the Company and the manner in which such risks are managed is as follows: Long term deposits 24 332,579 358,099 48.1 Credit risk Trade debts 27 3,102,833 5,457,423 Short term deposits 30 207,323 421,671 Credit risk is the risk of financial loss to the Company, if the counterparty to a financial instrument fails to meet its obligations. Cash at banks 33 370,194 349,808

48.1.1 Credit risk management practices 4,012,929 6,587,001

In order to minimise credit risk, the Company has adopted a policy of only dealing with creditworthty counterparties and 48.1.3 Credit quality and impairment limiting significant exposure to any single counterparty. The Company only transacts with counterparties that have reasonably high external credit ratings. Where an external rating is not available, the Company uses an internal credit risk Credit quality of financial assets is assessed by reference to external credit ratings, where available, or to internal credit risk grading mechanism. Particularly for customers, a dedicated team responsible for the determination of credit limits uses a grading. The credit quality of the Company’s financial assets exposed to credit risk is as follows: credit scoring system to assess the potential as well as existing customers' credit quality and assigns or updates credit limits accordingly. The ageing profile of trade debts and individually significant balances, along with collection activities are reviewed on a regular basis. High risk customers are identified and restrictions are placed on future trading, including suspending future shipments and administering dispatches on a prepayment basis or confirmed letters of credit. 2019 2018 The Company reviews the recoverable amount of each financial asset on an individual basis at each reporting date to ensure Rupees '000 Rupees '000 that adequate loss allowance is made in accordnace with the assessment of credit risk for each financial asset.

The Company considers a financial asset to have low credit risk when the asset has reasonably high external credit rating or if 47.1 Financial assets an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has Cash in hand 9,539 8,102 no past due amounts or otherwise there is no significant increase in credit risk if the amounts are past due in the normal course of business based on history with the counterparty. Financial assets at amortized cost Long term deposits 332,579 358,099 In assessing whether the credit risk on a financial asset has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial asset at the reporting date with the risk of a default occurring on the Trade debts 2,490,298 4,870,122 financial asset at the date of initial recognition. In making this assessment, the Company considers both quantitative and Short term deposits 207,323 421,671 qualitative information that is reasonable and supportable, including historical experience and forward-looking information Bank balances 370,194 349,808 that is available without undue cost or effort. Irrespective of the outcome of the above assessment, the Company presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are 3,400,394 5,999,700 more than 30 days past due, unless the Company has reasonable and supportable information that demonstrates otherwise. Financial assets mandatorily measured at fair value This is usually the case with various customers of the Company where the Company has long standing business relationship through profit or loss with these customers and any amounts that are past due by more than 30 days in the normal course of business are considered 'performing' based on history with the customers. Therefore despite the foregoing, the Company considers Short term investments 21,596 22,071 some past due trade debts to have low credit risk where the customer has a good history of meeting its contractual cash flow obligations and is expected to maintain the same in future. 3,431,529 6,029,873 The Company regularly monitors the effectiveness of the criteria used to identify whether there has been a significant 47.2 Financial liabilities increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk. Financial liabilities at amortized cost Redeemable capital - 101,875 The Company considers 'default' to have occurred when the financial asset is credit-impaired. A financial asset is ocnsidered Long term finances 4,407,403 4,315,878 to be credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Leased liabilities 241,094 102,368

Trade creditors 468,541 414,995 The Company writes off a financial asset when there is information indicating that the counter-party is in severe financial Foreign bills payable 101,960 108,823 condition and there is no realistic prospect of recovery. Accrued liabilities 121,036 121,826 Employees' provident fund 6,774 11,247 The Company's credit risk grading framework comprises the following categories: Compensated absences 33,902 34,162 Unclaimed dividend 15,052 18,650 Category Description Basis for recognizing ECL Other payables 18,531 18,705 Performing The counterparty has low credit risk Trade debts: Lifetime ECL Accrued interest/markup/profit 488,912 390,172 Other assets: Twelve month ECL Short term borrowings 10,955,490 12,843,848 Doubtful Credit risk has increased significantly since initial recognition Lifetime ECL 16,858,695 18,482,549 In default There is evidence indicating the assets is credit-impaired Lifetime ECL 48 FINANCIAL RISK EXPOSURE AND MANAGEMENT Write-off There is no realistic prospect of recovery Amount is written-off

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency 48.1.2 Exposure to credit risk risk, interest rate risk and price risk). These risks affect revenues, expenses and assets and liabilities of the Company. Credit risk principally arises from debt instruments held by the Company as at the reporting date. The maximum exposure to The Board of Directors has the overall responsibility for establishment and oversight of risk management framework. The credit risk as at the reporting date is as follows: Board of Directors has developed a risk policy that sets out fundamentals of risk management framework. The risk policy focuses on unpredictability of financial markets, the Company's exposure to risk of adverse effects thereof and objectives, policies and processes for measuring and managing such risks. The management team of the Company is responsible for administering and monitoring the financial and operational financial risk management throughout the Company in Note 2019 2018 accordance with the risk management framework. Rupees Rupees

The Company’s exposure to financial risks, the way these risks affect the financial position and performance, and forecast Financial assets at amortized cost transactions of the Company and the manner in which such risks are managed is as follows: Long term deposits 24 332,579 358,099 48.1 Credit risk Trade debts 27 3,102,833 5,457,423 Short term deposits 30 207,323 421,671 Credit risk is the risk of financial loss to the Company, if the counterparty to a financial instrument fails to meet its obligations. Cash at banks 33 370,194 349,808

48.1.1 Credit risk management practices 4,012,929 6,587,001

In order to minimise credit risk, the Company has adopted a policy of only dealing with creditworthty counterparties and 48.1.3 Credit quality and impairment limiting significant exposure to any single counterparty. The Company only transacts with counterparties that have reasonably high external credit ratings. Where an external rating is not available, the Company uses an internal credit risk Credit quality of financial assets is assessed by reference to external credit ratings, where available, or to internal credit risk grading mechanism. Particularly for customers, a dedicated team responsible for the determination of credit limits uses a grading. The credit quality of the Company’s financial assets exposed to credit risk is as follows: credit scoring system to assess the potential as well as existing customers' credit quality and assigns or updates credit limits accordingly. The ageing profile of trade debts and individually significant balances, along with collection activities are reviewed on a regular basis. High risk customers are identified and restrictions are placed on future trading, including suspending future shipments and administering dispatches on a prepayment basis or confirmed letters of credit. External Internal credit 12-month or Gross carrying Loss 48.1.6 Changes in impairment allowance for expected credit losses Note rating risk grading life-time ECL amount allowance The changes in impairment allowance for expected credit losses have been presented in note 27.

Long term deposits 24 N/A Performing 12-month 332,579 - 48.2 Liquidity risk ECL Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Trade debts 27 N/A Performing Lifetime ECL 1,902,997 - N/A Doubtfull Lifetime ECL 612,535 48.2.1 Liquidity risk management N/A In-default Lifetime ECL 587,301 (612,535) The Company's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to 3,102,833 (612,535) meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking Short term deposits 30 N/A Performing 12-month 207,323 - damage to the Company's reputation. The Company monitors cash flow requirements and produces cash flow projections ECL for the short and long term. Typically, the Company ensures that it has sufficient cash on demand to meet expected operational cash flows, including servicing of financial obligations. This includes maintenance of balance sheet liquidity Cash at banks 33 A3 - A1+, P 2 N/A 12-month 370,194 - ratios, debtors and creditors concentration both in terms of overall funding mix and avoidance of undue reliance on large ECL individual customer. The Company also maintains various lines of credit with banking companies.

4,012,929 (612,535) 48.2.2 Exposure to liquidity risk

(a) Long term deposits The following presents the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The analysis have been drawn up based on the undiscounted cash flows of financial liabilities based on These include deposits placed with various utility companies and regulatory authorities and those place with customers the earliest date on which the Company can be required to pay and includes both interest/markup/profit and principal cash of construction contracts. Deposits with utlity companies and regulatory authorities are substiantially perpatual in flows. To the extent that interest/markup/profit flows are floating rate, the undiscounted amount is derived from nature and therefore no credit risk is associated there with. Deposits with customers are against construction contracts interest/markup/profit rate curves at the reporting date. with government departments placed in accoradance with the terms of tender documents and do not carry any significant credit risk. Accordingly no loss allownace has been made. 2019 Carrying Contractual One year One to More than (b) Trade debts amount cash flows or less three years three years For trade debts, the Company has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime Rupees Rupees Rupees Rupees Rupees ECL. The Company determines the expected credit losses on trade debts by using internal credit risk gradings. As at the reporting date, trade debts amounting to Rs 587.301 million and Rs. 612.535 million are concidered 'doubtfull' and 'in- Redeemable capital - - - - - defult' repectively. Othre trade debts are considered 'performing' including those past due as there is no significant Long term finances 4,407,403 5,320,079 2,753,784 2,448,023 118,272 increase in credit risk in respect of these receivables since initial recognition. The ageing analysis of trade debts as at the Lease liabilities 241,094 285,779 133,420 152,359 - reporting date is as follows: Trade creditors 468,541 468,541 468,541 - - Foreign bills payable 101,960 101,960 101,960 - - Note 2019 2018 Accrued liabilities 121,036 121,036 121,036 - - Rupees Rupees Employees' provident fund 6,774 6,774 6,774 - - Compensated absences 33,902 33,902 33,902 - - Neither past due nor impaired 1,861,700 3,274,454 Unclaimed dividend 15,052 15,052 15,052 - - Past due by upto 30 days 372,340 654,891 Other payables 18,531 18,531 18,531 - - Past due by 31 days to 180 days 276,258 940,777 Accrued interest/markup/profit 488,912 488,912 488,912 - - Past due by 180 days or more 592,535 587,301 Short term borrowings 10,955,490 10,955,490 10,955,490 - - 3,102,833 5,457,423 16,858,695 17,816,056 15,097,402 2,600,382 118,272

(d) Short term deposits 2018 Carrying Contractual One year One to More than These are placed with financial institutions with reasonably high credit ratings and therefore no credit loss is expected. amount cash flows or less three years three years Accordingly no loss allowance has been made. Rupees Rupees Rupees Rupees Rupees (d) Bank balances Redeemable capital 101,875 103,885 103,885 - - Long term finances 4,315,878 4,962,564 2,059,357 2,903,207 - The bankers of the Company have reasonably high credit ratings as determined by various indpendent credit rating Lease liabilities 102,368 114,924 50,351 64,573 - agencies. Due to long standing business relationships with these counterparties and considering their strong financial Trade creditors 414,995 414,995 414,995 - - standing, management does not expect any credit loss. Foreign bills payable 108,823 108,823 108,823 - - 48.1.4 Concentrations of credit risk Accrued liabilities 121,826 121,826 121,826 - - Employees' provident fund 11,247 11,247 11,247 - - There are no significant concentrations of credit risk, except for trade debts. The Company's one (2018: two) significant Compensated absences 34,162 34,162 34,162 - - customers account for Rs. 325.41 million (2018: Rs. 930.603 million) of trade debts as at the reporting date, apart from which, Unclaimed dividend 18,650 18,650 18,650 - - exposure to any single customer does not exceed 10% (2018: 10%) of trade debts as at the reporting date. These significant Other payables 18,705 18,705 18,705 - - customers have long standing business relationships with the Company and have a good payment record and accordingly Accrued interest/markup/profit 390,172 390,172 390,172 - - non-performance by these customers is not expected. Short term borrowings 12,843,848 13,126,746 13,126,746 - - 48.1.5 Collateral held 18,482,549 19,426,699 16,458,919 2,967,780 - The Company does not hold any collateral to secure its financial assets. External Internal credit 12-month or Gross carrying Loss 48.1.6 Changes in impairment allowance for expected credit losses Note rating risk grading life-time ECL amount allowance The changes in impairment allowance for expected credit losses have been presented in note 27.

Long term deposits 24 N/A Performing 12-month 332,579 - 48.2 Liquidity risk ECL Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Trade debts 27 N/A Performing Lifetime ECL 1,902,997 - N/A Doubtfull Lifetime ECL 612,535 48.2.1 Liquidity risk management N/A In-default Lifetime ECL 587,301 (612,535) The Company's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to 3,102,833 (612,535) meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking Short term deposits 30 N/A Performing 12-month 207,323 - damage to the Company's reputation. The Company monitors cash flow requirements and produces cash flow projections ECL for the short and long term. Typically, the Company ensures that it has sufficient cash on demand to meet expected operational cash flows, including servicing of financial obligations. This includes maintenance of balance sheet liquidity Cash at banks 33 A3 - A1+, P 2 N/A 12-month 370,194 - ratios, debtors and creditors concentration both in terms of overall funding mix and avoidance of undue reliance on large ECL individual customer. The Company also maintains various lines of credit with banking companies.

4,012,929 (612,535) 48.2.2 Exposure to liquidity risk

(a) Long term deposits The following presents the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The analysis have been drawn up based on the undiscounted cash flows of financial liabilities based on These include deposits placed with various utility companies and regulatory authorities and those place with customers the earliest date on which the Company can be required to pay and includes both interest/markup/profit and principal cash of construction contracts. Deposits with utlity companies and regulatory authorities are substiantially perpatual in flows. To the extent that interest/markup/profit flows are floating rate, the undiscounted amount is derived from nature and therefore no credit risk is associated there with. Deposits with customers are against construction contracts interest/markup/profit rate curves at the reporting date. with government departments placed in accoradance with the terms of tender documents and do not carry any significant credit risk. Accordingly no loss allownace has been made. 2019 Carrying Contractual One year One to More than (b) Trade debts amount cash flows or less three years three years For trade debts, the Company has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime Rupees Rupees Rupees Rupees Rupees ECL. The Company determines the expected credit losses on trade debts by using internal credit risk gradings. As at the reporting date, trade debts amounting to Rs 587.301 million and Rs. 612.535 million are concidered 'doubtfull' and 'in- Redeemable capital - - - - - defult' repectively. Othre trade debts are considered 'performing' including those past due as there is no significant Long term finances 4,407,403 5,320,079 2,753,784 2,448,023 118,272 increase in credit risk in respect of these receivables since initial recognition. The ageing analysis of trade debts as at the Lease liabilities 241,094 285,779 133,420 152,359 - reporting date is as follows: Trade creditors 468,541 468,541 468,541 - - Foreign bills payable 101,960 101,960 101,960 - - Note 2019 2018 Accrued liabilities 121,036 121,036 121,036 - - Rupees Rupees Employees' provident fund 6,774 6,774 6,774 - - Compensated absences 33,902 33,902 33,902 - - Neither past due nor impaired 1,861,700 3,274,454 Unclaimed dividend 15,052 15,052 15,052 - - Past due by upto 30 days 372,340 654,891 Other payables 18,531 18,531 18,531 - - Past due by 31 days to 180 days 276,258 940,777 Accrued interest/markup/profit 488,912 488,912 488,912 - - Past due by 180 days or more 592,535 587,301 Short term borrowings 10,955,490 10,955,490 10,955,490 - - 3,102,833 5,457,423 16,858,695 17,816,056 15,097,402 2,600,382 118,272

(d) Short term deposits 2018 Carrying Contractual One year One to More than These are placed with financial institutions with reasonably high credit ratings and therefore no credit loss is expected. amount cash flows or less three years three years Accordingly no loss allowance has been made. Rupees Rupees Rupees Rupees Rupees (d) Bank balances Redeemable capital 101,875 103,885 103,885 - - Long term finances 4,315,878 4,962,564 2,059,357 2,903,207 - The bankers of the Company have reasonably high credit ratings as determined by various indpendent credit rating Lease liabilities 102,368 114,924 50,351 64,573 - agencies. Due to long standing business relationships with these counterparties and considering their strong financial Trade creditors 414,995 414,995 414,995 - - standing, management does not expect any credit loss. Foreign bills payable 108,823 108,823 108,823 - - 48.1.4 Concentrations of credit risk Accrued liabilities 121,826 121,826 121,826 - - Employees' provident fund 11,247 11,247 11,247 - - There are no significant concentrations of credit risk, except for trade debts. The Company's one (2018: two) significant Compensated absences 34,162 34,162 34,162 - - customers account for Rs. 325.41 million (2018: Rs. 930.603 million) of trade debts as at the reporting date, apart from which, Unclaimed dividend 18,650 18,650 18,650 - - exposure to any single customer does not exceed 10% (2018: 10%) of trade debts as at the reporting date. These significant Other payables 18,705 18,705 18,705 - - customers have long standing business relationships with the Company and have a good payment record and accordingly Accrued interest/markup/profit 390,172 390,172 390,172 - - non-performance by these customers is not expected. Short term borrowings 12,843,848 13,126,746 13,126,746 - - 48.1.5 Collateral held 18,482,549 19,426,699 16,458,919 2,967,780 - The Company does not hold any collateral to secure its financial assets. 48.3 Market risk (d) Sensitivity analysis

48.3.1 Currency risk A five percent appreciation in Pak Rupee against foreign currencies would have incresed profit for the year and equity as at the reporting date by Rs. 5.1 million (2018: Rs. 5.44 million). A five percent depreciation in Pak Rupee would have had Currency risk is the risk that fair values or future cash flows of a financial instrument will fluctuate because of changes in an equal but opposite effect on profit for the year and equity. The analysis assumes that all other variables, in particular foreign exchange rates. Currency risk arises from transactions and resulting balances that are denominated in a currency interest rates, remain constant and ignores the impact, if any, on provision for taxation for the year. other than functional currency. 48.3.2 Interest rate risk (a) Currency risk management Interest rate risk is the risk that fair values or future cash flows of a financial instrument will fluctuate because of changes in The Company manages its exposure to currency risk through continuous monitoring of expected/forecast committed interest rates. and non-committed foreign currency payments and receipts. Reports on forecast foreign currency transactions, receipts and payments are prepared on monthly basis, exposure to currency risk is measured and appropriate steps are (a) Interest rate risk management taken to ensure that such exposure is minimized while optimizing return. This includes matching of foreign currency liabilities/payments to assets/receipts and using source inputs in foreign currency. The Company manages interest rate risk by analysing its interest rate exposure on a dynamic basis. Cash flow interest rate risk is managed by simulating various scenarios taking into consideration refinancing, renewal of existing positions (b) Exposure to currency risk and alternative financing. Based on these scenarios, the Company calculates impact on profit after taxation and equity of defined interest rate shift, mostly 100 basis points. The Company's exposure to currency risk as at the reporting date is as follows: (b) Interest/markup/profit bearing financial instruments

2019 2018 The effective interest/markup/profit rates for interest/markup/profit bearing financial instruments are mentioned in Rupees Rupees relevant notes to the financial statements. The Company's interest/markup/profit bearing financial instruments as at the reporting date are as follows: Financial assets - - 2019 2018 Financial liabilities Rupees Rupees Foreign bills payable Fixed rate instruments - - - USD (86,161) (92,204) CNY (2,617) (16,619) Variable rate instruments EUR (11,391) - Financial liabilities 15,603,987 17,363,969 AUD (1,791) (101,960) (108,823) (c) Fair value sensitivity analysis for fixed rate instruments

Net balance sheet exposure (101,960) (108,823) The Company does not have any fixed rate instruments. Foreign currency commitments (d) Cash flow sensitivity analysis for variable rate instruments CHF (19,546) (17,235) CNY (85,928) (28,496) An increase of 100 basis points in interest rates as at the reporting date would have decreased profit for the year and EUR (114,229) (156,714) equity as at the reporting date by Rs. 156.04 million (2018: Rs. 173.64 million). A decrease of 100 basis points would GBP - (1,059) have had an equal but opposite effect on profit and equity. The analysis assumes that all other variables, in particular foreign exchange rates, remain constant and ignores the impact, if any, on provision for taxation for the year. USD (460,502) (1,809,135) AED (2,423) - 48.3.3 Other price risk (682,628) (2,012,639) Other price risk represents the risk that the fair value or future cash flows of financial instrument will fluctuate because of Net exposure (784,588) (2,121,462) changes in market prices, other than those arising from interest rate risk or currency risk, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments. The (c) Exchange rates applied as at the reporting date Company is exposed to price risk in respect of its investments in equity securities. However, the risk is minimal as these investments are held for strategic purposes rather than trading purposes. The Company does not actively trade in these The following spot exchange rates were applied as at the reporting date. investments.

2019 ,2018 49 FAIR VALUE MEASUREMENTS Rupees Rupees The Company measures some of its assets at fair value at the end of each reporting period. Fair value measurements are GBP - 176.5100 classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements and has the EUR 173.5841 159.1000 following levels. USD 154.8476 139.1000 CHF 159.8674 141.2700 Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. CNY 22.2409 20.2100 Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly AED 42.1566 - (that is, as prices) or indirectly (that is, derived from prices). AUD 108.4785 - Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The fair value hierarchy of financial instruments measured at fair value and the information about how the fair values of these financial instruments are determined are as follows:

49.1 Financial instruments measured at fair value 48.3 Market risk (d) Sensitivity analysis

48.3.1 Currency risk A five percent appreciation in Pak Rupee against foreign currencies would have incresed profit for the year and equity as at the reporting date by Rs. 5.1 million (2018: Rs. 5.44 million). A five percent depreciation in Pak Rupee would have had Currency risk is the risk that fair values or future cash flows of a financial instrument will fluctuate because of changes in an equal but opposite effect on profit for the year and equity. The analysis assumes that all other variables, in particular foreign exchange rates. Currency risk arises from transactions and resulting balances that are denominated in a currency interest rates, remain constant and ignores the impact, if any, on provision for taxation for the year. other than functional currency. 48.3.2 Interest rate risk (a) Currency risk management Interest rate risk is the risk that fair values or future cash flows of a financial instrument will fluctuate because of changes in The Company manages its exposure to currency risk through continuous monitoring of expected/forecast committed interest rates. and non-committed foreign currency payments and receipts. Reports on forecast foreign currency transactions, receipts and payments are prepared on monthly basis, exposure to currency risk is measured and appropriate steps are (a) Interest rate risk management taken to ensure that such exposure is minimized while optimizing return. This includes matching of foreign currency liabilities/payments to assets/receipts and using source inputs in foreign currency. The Company manages interest rate risk by analysing its interest rate exposure on a dynamic basis. Cash flow interest rate risk is managed by simulating various scenarios taking into consideration refinancing, renewal of existing positions (b) Exposure to currency risk and alternative financing. Based on these scenarios, the Company calculates impact on profit after taxation and equity of defined interest rate shift, mostly 100 basis points. The Company's exposure to currency risk as at the reporting date is as follows: (b) Interest/markup/profit bearing financial instruments

2019 2018 The effective interest/markup/profit rates for interest/markup/profit bearing financial instruments are mentioned in Rupees Rupees relevant notes to the financial statements. The Company's interest/markup/profit bearing financial instruments as at the reporting date are as follows: Financial assets - - 2019 2018 Financial liabilities Rupees Rupees Foreign bills payable Fixed rate instruments - - - USD (86,161) (92,204) CNY (2,617) (16,619) Variable rate instruments EUR (11,391) - Financial liabilities 15,603,987 17,363,969 AUD (1,791) (101,960) (108,823) (c) Fair value sensitivity analysis for fixed rate instruments

Net balance sheet exposure (101,960) (108,823) The Company does not have any fixed rate instruments. Foreign currency commitments (d) Cash flow sensitivity analysis for variable rate instruments CHF (19,546) (17,235) CNY (85,928) (28,496) An increase of 100 basis points in interest rates as at the reporting date would have decreased profit for the year and EUR (114,229) (156,714) equity as at the reporting date by Rs. 156.04 million (2018: Rs. 173.64 million). A decrease of 100 basis points would GBP - (1,059) have had an equal but opposite effect on profit and equity. The analysis assumes that all other variables, in particular foreign exchange rates, remain constant and ignores the impact, if any, on provision for taxation for the year. USD (460,502) (1,809,135) AED (2,423) - 48.3.3 Other price risk (682,628) (2,012,639) Other price risk represents the risk that the fair value or future cash flows of financial instrument will fluctuate because of Net exposure (784,588) (2,121,462) changes in market prices, other than those arising from interest rate risk or currency risk, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments. The (c) Exchange rates applied as at the reporting date Company is exposed to price risk in respect of its investments in equity securities. However, the risk is minimal as these investments are held for strategic purposes rather than trading purposes. The Company does not actively trade in these The following spot exchange rates were applied as at the reporting date. investments.

2019 ,2018 49 FAIR VALUE MEASUREMENTS Rupees Rupees The Company measures some of its assets at fair value at the end of each reporting period. Fair value measurements are GBP - 176.5100 classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements and has the EUR 173.5841 159.1000 following levels. USD 154.8476 139.1000 CHF 159.8674 141.2700 Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. CNY 22.2409 20.2100 Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly AED 42.1566 - (that is, as prices) or indirectly (that is, derived from prices). AUD 108.4785 - Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The fair value hierarchy of financial instruments measured at fair value and the information about how the fair values of these financial instruments are determined are as follows:

49.1 Financial instruments measured at fair value 49.1.1 Recurring fair value measurements 50 CAPITAL MANAGEMENT

Financial instruments Hierarchy Valuation techniques and key inputs 2019 2018 The Company's objective when measuring capital is to safeguard the Company's ability to continue as going concern while Rupees '000 Rupees '000 providing returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure through debt and equity balance. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends Financial assets at fair value paid to shareholders or issue of new shares. Consistent with others in industry, the Company monitors capital on the basis of through profit or loss gearing ratio which is debt divided by total capital employed. Debt comprises long term finances, redeemable capital and lease liabilities, including current maturity. Total capital employed includes total equity plus debt. The gearing ratios as at the Investments in quoted reporting date are as follows: equity securities Level 1 Quoted bid prices in an active market 21,596 22,071 Unit 2019 2018 49.1.2 Non-recurring fair value measurements

There are no non-recurring fair value measurements as at the reporting date. Total debt Rupees '000' 4,648,497 4,520,121 Total equity Rupees '000' 23,007,553 23,169,419 49.2 Financial instruments not measured at fair value Total capital employed Rupees '000' 27,656,050 27,689,540 The management considers the carrying amount of all financial instruments not measured at fair value at the end of each Gearing ratio % age 16.81 16.32 reporting period to approximate their fair values as at the reporting date. The Company is not subject to externally imposed capital requirements, except those related to maintenance of debt 49.3 Assets and liabilities other than financial instruments covenants, commonly imposed by the providers of debt finance.

49.3.1 Recurring fair value measurements 51 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

For recurring fair value measurements, the fair value hierarchy and information about how the fair values are determined is as The aggregate amount charged to profit or loss in respect of chief executive, directors and executives on account of follows: managerial remuneration, allowances and perquisites, post employment benefits and the number of such directors and executives is as follows: Level 1 Level 2 Level 3 2019 2018 Rupees '000 Rupees '000 Chief Executive Directors Executives 2019 2018 2019 2018 2019 2018 Land - 1,035,256 - 1,035,256 1,035,256 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Building - 5,771,302 - 5,771,302 3,444,504 Plant and machinery - 14,323,240 - 14,323,240 13,797,790 Remuneration 12,046 12,046 29,641 28,042 195,917 156,009 House rent 1,205 1,205 1,908 1,844 43,196 33,930 For fair value measurements categorised into Level 2 and Level 3 the following information is relevant: Utilities 1,205 1,205 1,205 1,205 19,592 15,601 Bonus - - - - 11,159 7,481 Valuation technique Significant inputs Sensitivity Post employment benefits - - 1,760 1,600 19,178 14,889 Meeting fee - - 435 345 - - Land Market comparable Estimated purchase price, A 5% increase in estimated approach that reflects including non-refundable purchase price, including non- Reimbursable expenses recent transaction prices for purchase taxes and other refundable purchase taxes and Motor vehicles expenses - - - - 18,045 15,501 similar properties costs directly attributable to other costs directly Medical expenses - - 329 224 8,608 6,008 the acquisition. attributable to the acquisition 14,456 14,456 35,278 33,260 315,695 249,419 would result in a significant

increase in fair value of Number of persons 1 1 2 2 87 73 buildings by Rs. 51.763 51.1 Chief executive, directors and executives have been provided with free use of the Company's vehicles. Building Cost approach that reflects Estimated construction costs A 5% increase in estimated the cost to the market and other ancillary construction and other 51.2 No remuneration has been paid to non-executive directors participants to construct expenditure. ancillary expenditure would assets of comparable utility result in a significant increase 52 SEGMENT INFORMATION and age, adjusted for in fair value of buildings by Rs. An operating segment is a component of an entity: obsolescence and 288.565 million (2018: depreciation. There was no Rs.172.225 million). (a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and change in valuation expenses relating to transactions with other components of the same entity), Plant and machinery Cost approach that reflects Estimated purchase price, A 5% increase in estimated (b) whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about the cost to the market including import duties and purchase price, including resources to be allocated to the segment and assess its performance, and participants to acquire non-refundable purchase import duties and non- assets of comparable utility taxes and other costs directly refundable purchase taxes and (c) for which discrete financial information is available. and age, adjusted for attributable to the acquisition other directly attributable obsolescence and or construction, erection and costs would result in a Information about the Company's reportable segments as at the reporting date is as follows: depreciation. There was no installation. significant increase in fair Segments Nature of business change in valuation value of plant and machinery technique during the year. by Rs. 716.162 million (2018: Power Division Manufacturing and distribution of Transformers, Switch Gears, Energy Meters, Power Transformers, Rs. 689.89 million). Engineering, Procurement and Construction Contracting. 49.1.1 Recurring fair value measurements 50 CAPITAL MANAGEMENT

Financial instruments Hierarchy Valuation techniques and key inputs 2019 2018 The Company's objective when measuring capital is to safeguard the Company's ability to continue as going concern while Rupees '000 Rupees '000 providing returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure through debt and equity balance. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends Financial assets at fair value paid to shareholders or issue of new shares. Consistent with others in industry, the Company monitors capital on the basis of through profit or loss gearing ratio which is debt divided by total capital employed. Debt comprises long term finances, redeemable capital and lease liabilities, including current maturity. Total capital employed includes total equity plus debt. The gearing ratios as at the Investments in quoted reporting date are as follows: equity securities Level 1 Quoted bid prices in an active market 21,596 22,071 Unit 2019 2018 49.1.2 Non-recurring fair value measurements

There are no non-recurring fair value measurements as at the reporting date. Total debt Rupees '000' 4,648,497 4,520,121 Total equity Rupees '000' 23,007,553 23,169,419 49.2 Financial instruments not measured at fair value Total capital employed Rupees '000' 27,656,050 27,689,540 The management considers the carrying amount of all financial instruments not measured at fair value at the end of each Gearing ratio % age 16.81 16.32 reporting period to approximate their fair values as at the reporting date. The Company is not subject to externally imposed capital requirements, except those related to maintenance of debt 49.3 Assets and liabilities other than financial instruments covenants, commonly imposed by the providers of debt finance.

49.3.1 Recurring fair value measurements 51 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

For recurring fair value measurements, the fair value hierarchy and information about how the fair values are determined is as The aggregate amount charged to profit or loss in respect of chief executive, directors and executives on account of follows: managerial remuneration, allowances and perquisites, post employment benefits and the number of such directors and executives is as follows: Level 1 Level 2 Level 3 2019 2018 Rupees '000 Rupees '000 Chief Executive Directors Executives 2019 2018 2019 2018 2019 2018 Land - 1,035,256 - 1,035,256 1,035,256 Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Rupees '000' Building - 5,771,302 - 5,771,302 3,444,504 Plant and machinery - 14,323,240 - 14,323,240 13,797,790 Remuneration 12,046 12,046 29,641 28,042 195,917 156,009 House rent 1,205 1,205 1,908 1,844 43,196 33,930 For fair value measurements categorised into Level 2 and Level 3 the following information is relevant: Utilities 1,205 1,205 1,205 1,205 19,592 15,601 Bonus - - - - 11,159 7,481 Valuation technique Significant inputs Sensitivity Post employment benefits - - 1,760 1,600 19,178 14,889 Meeting fee - - 435 345 - - Land Market comparable Estimated purchase price, A 5% increase in estimated approach that reflects including non-refundable purchase price, including non- Reimbursable expenses recent transaction prices for purchase taxes and other refundable purchase taxes and Motor vehicles expenses - - - - 18,045 15,501 similar properties costs directly attributable to other costs directly Medical expenses - - 329 224 8,608 6,008 the acquisition. attributable to the acquisition 14,456 14,456 35,278 33,260 315,695 249,419 would result in a significant increase in fair value of Number of persons 1 1 2 2 87 73 buildings by Rs. 51.763 51.1 Chief executive, directors and executives have been provided with free use of the Company's vehicles. Building Cost approach that reflects Estimated construction costs A 5% increase in estimated the cost to the market and other ancillary construction and other 51.2 No remuneration has been paid to non-executive directors participants to construct expenditure. ancillary expenditure would assets of comparable utility result in a significant increase 52 SEGMENT INFORMATION and age, adjusted for in fair value of buildings by Rs. An operating segment is a component of an entity: obsolescence and 288.565 million (2018: depreciation. There was no Rs.172.225 million). (a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and change in valuation expenses relating to transactions with other components of the same entity), Plant and machinery Cost approach that reflects Estimated purchase price, A 5% increase in estimated (b) whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about the cost to the market including import duties and purchase price, including resources to be allocated to the segment and assess its performance, and participants to acquire non-refundable purchase import duties and non- assets of comparable utility taxes and other costs directly refundable purchase taxes and (c) for which discrete financial information is available. and age, adjusted for attributable to the acquisition other directly attributable obsolescence and or construction, erection and costs would result in a Information about the Company's reportable segments as at the reporting date is as follows: depreciation. There was no installation. significant increase in fair Segments Nature of business change in valuation value of plant and machinery technique during the year. by Rs. 716.162 million (2018: Power Division Manufacturing and distribution of Transformers, Switch Gears, Energy Meters, Power Transformers, Rs. 689.89 million). Engineering, Procurement and Construction Contracting. Appliances Division Manufacturing, assembling and distribution of Refrigerators, Air conditioners, Deep Freezes, 2019 2018 Microwave ovens, Washing Machines, Water Dispensers and other Home Appliances Size of the fund - total assets Rupees '000' 471,337 389,017 2019 Fair value of investments Rupees '000' 429,787 351,027 Power Appliances Percentage of investments made % age 91.18 90.23 Division Division Total Rupees '000' Rupees '000' Rupees '000' The break-up of investments is as follows: 2019 2018 Revenue 9,833,931 17,862,538 27,696,469 Rupees '000' % age Rupees '000' % age Finance cost 791,153 748,745 1,539,898 Government securities 134,496 31.29 118,131 33.65 Depreciation and amortization 453,387 532,089 985,476 Deposit accounts with commercial banks 295,291 68.71 232,896 66.35 Segment profit 141,135 77,670 218,805 429,787 100.00 351,027 100.00 Segment assets 18,809,516 21,388,849 40,198,365 54 PLANT CAPACITY AND ACTUAL PRODUCTION 2018 Power Appliances 2019 2018 Division Division Total Actual Actual Rupees '000' Rupees '000' Rupees '000' Annual production Annual production production during the production during the Revenue 11,714,746 15,468,152 27,182,898 Unit capacity year capacity year Finance cost 688,585 287,862 976,447 Transformers/Power Transformers MVA 7,000 2,229 7,000 2,397 Depreciation and amortization 393,077 458,027 851,104 Switch gears Nos. 12,000 4,126 12,000 4,805 Energy meters Nos. 1,700,000 662,833 1,700,000 826,007 Segment profit 279,840 239,851 519,691 Air conditioners Tonnes 200,000 94,808 200,000 103,220 Segment assets 19,668,173 21,396,929 41,065,102 Refrigerators/deep freezers Cfts. 6,950,000 4,072,399 6,950,000 5,075,992 Microwave ovens Litres 2,500,000 707,249 2,500,000 1,945,097 2019 2018 LED TVs Sets 200,000 41,710 200,000 24,190 Washing machines Kgs 150,000 104,754 50,000 7,005 Rupees '000' Rupees '000'

54.1 Under utilization of capacity is mainly attributable to consumer demand. 52.1 Reconciliation of segment profit

Total profit for reportable segments 218,805 519,691 55 NUMBER OF EMPLOYEES Un-allocated other expenses (7,469) (26,145) Profit before taxation 211,336 493,546 2019 2018

52.2 Reconciliation of segment assets Total number of employees 4,321 4,838

Total assets for reportable segments 40,198,365 41,065,102 Average number of employees 4,546 5,107 Other corporate assets 2,631,111 3,161,684 Total assets 42,829,476 44,226,786 56 RECOVERABLE AMOUNTS AND IMPAIRMENT As at the reporting date, recoverable amounts of all assets/cash generating units are equal to or exceed their carrying 52.3 Information about major customers amounts, unless stated otherwise in these financial statements. Revenue derived from PEL Marketing (Private) Limited 10,716,095 14,159,484 57 EVENTS AFTER THE REPORTING PERIOD Revenue derived from Multan Electric Power Company - 2,650,670 57.1 The Board of Directors of Pak Elektron Limited ['PEL'] and PEL Marketing (Private) Limited ['PMPL'] in their respective 53 EMPLOYEES PROVIDENT FUND TRUST meetings held on March 27, 2020 have approved the scheme of arrangement for amalgamation of PMPL, a wholly owned subsidiary of PEL, with and into PEL with effect from April 30, 2020. The amalgamation is pending approval by the Securities The following information is based on the un-audited financial statements of the Pak Elektron Limited Employees Provident and Exchange Commission of Pakistan. Once the amalgamation is approved, the entire issued, subscribed and paid-up Fund Trust for the year ended December 31, 2019. capital of PMPL, comprising of Rs. 10,000 ordinary shares of Rs. 10 each shall stand cancelled without any payment or other consideration, from effective date.

57.2 COVID-19 pandemic started at the end of December 19 and broke out in China in January 2020. The material imports from China remain suspended due to lock down, Financial impact and materiality of which is not quantified at present, although the management believes to have sufficient production capacity. The economic impact of local slow down started from February 2020 and a lock down commenced in March 2020 is in progress. The Prime Minister of Pakistan announced a package of Rs. 1,250 billion for general public and industries to mitigate the COVID-19 miseries and announced reduction of Policy Rate to 9% along with the deferral of due principal and mark up payments for period from upto one year as State Bank of Pakistan decided in consultation with commercial banks. The impact on financial statements of the foregoing is not quantified at this stage. Appliances Division Manufacturing, assembling and distribution of Refrigerators, Air conditioners, Deep Freezes, 2019 2018 Microwave ovens, Washing Machines, Water Dispensers and other Home Appliances Size of the fund - total assets Rupees '000' 471,337 389,017 2019 Fair value of investments Rupees '000' 429,787 351,027 Power Appliances Percentage of investments made % age 91.18 90.23 Division Division Total Rupees '000' Rupees '000' Rupees '000' The break-up of investments is as follows: 2019 2018 Revenue 9,833,931 17,862,538 27,696,469 Rupees '000' % age Rupees '000' % age Finance cost 791,153 748,745 1,539,898 Government securities 134,496 31.29 118,131 33.65 Depreciation and amortization 453,387 532,089 985,476 Deposit accounts with commercial banks 295,291 68.71 232,896 66.35 Segment profit 141,135 77,670 218,805 429,787 100.00 351,027 100.00 Segment assets 18,809,516 21,388,849 40,198,365 54 PLANT CAPACITY AND ACTUAL PRODUCTION 2018 Power Appliances 2019 2018 Division Division Total Actual Actual Rupees '000' Rupees '000' Rupees '000' Annual production Annual production production during the production during the Revenue 11,714,746 15,468,152 27,182,898 Unit capacity year capacity year Finance cost 688,585 287,862 976,447 Transformers/Power Transformers MVA 7,000 2,229 7,000 2,397 Depreciation and amortization 393,077 458,027 851,104 Switch gears Nos. 12,000 4,126 12,000 4,805 Energy meters Nos. 1,700,000 662,833 1,700,000 826,007 Segment profit 279,840 239,851 519,691 Air conditioners Tonnes 200,000 94,808 200,000 103,220 Segment assets 19,668,173 21,396,929 41,065,102 Refrigerators/deep freezers Cfts. 6,950,000 4,072,399 6,950,000 5,075,992 Microwave ovens Litres 2,500,000 707,249 2,500,000 1,945,097 2019 2018 LED TVs Sets 200,000 41,710 200,000 24,190 Washing machines Kgs 150,000 104,754 50,000 7,005 Rupees '000' Rupees '000'

54.1 Under utilization of capacity is mainly attributable to consumer demand. 52.1 Reconciliation of segment profit

Total profit for reportable segments 218,805 519,691 55 NUMBER OF EMPLOYEES Un-allocated other expenses (7,469) (26,145) Profit before taxation 211,336 493,546 2019 2018

52.2 Reconciliation of segment assets Total number of employees 4,321 4,838

Total assets for reportable segments 40,198,365 41,065,102 Average number of employees 4,546 5,107 Other corporate assets 2,631,111 3,161,684 Total assets 42,829,476 44,226,786 56 RECOVERABLE AMOUNTS AND IMPAIRMENT As at the reporting date, recoverable amounts of all assets/cash generating units are equal to or exceed their carrying 52.3 Information about major customers amounts, unless stated otherwise in these financial statements. Revenue derived from PEL Marketing (Private) Limited 10,716,095 14,159,484 57 EVENTS AFTER THE REPORTING PERIOD Revenue derived from Multan Electric Power Company - 2,650,670 57.1 The Board of Directors of Pak Elektron Limited ['PEL'] and PEL Marketing (Private) Limited ['PMPL'] in their respective 53 EMPLOYEES PROVIDENT FUND TRUST meetings held on March 27, 2020 have approved the scheme of arrangement for amalgamation of PMPL, a wholly owned subsidiary of PEL, with and into PEL with effect from April 30, 2020. The amalgamation is pending approval by the Securities The following information is based on the un-audited financial statements of the Pak Elektron Limited Employees Provident and Exchange Commission of Pakistan. Once the amalgamation is approved, the entire issued, subscribed and paid-up Fund Trust for the year ended December 31, 2019. capital of PMPL, comprising of Rs. 10,000 ordinary shares of Rs. 10 each shall stand cancelled without any payment or other consideration, from effective date.

57.2 COVID-19 pandemic started at the end of December 19 and broke out in China in January 2020. The material imports from China remain suspended due to lock down, Financial impact and materiality of which is not quantified at present, although the management believes to have sufficient production capacity. The economic impact of local slow down started from February 2020 and a lock down commenced in March 2020 is in progress. The Prime Minister of Pakistan announced a package of Rs. 1,250 billion for general public and industries to mitigate the COVID-19 miseries and announced reduction of Policy Rate to 9% along with the deferral of due principal and mark up payments for period from upto one year as State Bank of Pakistan decided in consultation with commercial banks. The impact on financial statements of the foregoing is not quantified at this stage. 58 GENERAL

58.1 Figures have been rounded off to the nearest thousands.

58.2 Comparative figures have been rearranged and reclassified, where necessary, for the purpose of comparison. However, there were no significant reclassifications during the year.

M. MURAD SAIGOL M. ZEID YOUSUF SAIGOL SYED MANZAR HASSAN Chief Executive Officer Director Chief Financial Officer www.pel.com.pk

PAK ELEKTRON LIMITED 17-Aziz Avenue, Canal Bank, Gulberg-V, Lahore Ph: (042) 35718274-5, 35717364-5