annual report2013 - dawood family takaful limited · 2016-12-05 · this refers to participation of...

ANNUAL

Partner for life

REPORT2013

Salamti

Financial Protection & Savings Growth

* Avail Income tax relief on paid contributions.

Sum Cover.

Net PIA value accumulated atthe time of death.

In the Event of Death

Net PIA Value accumulated atthe time of Maturity.

Distributable surplus from theWaqf Fund, if any.

Maturity Benefits

Sukoon

Endowment for Retirement


Sum Cover.



Sum Cover.

Net PIA Value accumulated atthe time of Maturity.


Maturity Benefits

Samar

Child Education & Marriage Plan


Plan Contribution Benefit.

Family Income Benefit.

Sum Cover, in case ofaccidental Death.


Net PIA Value available atMaturity.


Maturity Benefits

Sahulat

After 15 years

After 16 years

After 17 years

After 18 years

After 19 years+

Loyalty Reward

From 11th Year

Special Reward

@ 10th year

@ 15th year

@ 20th year

Every 5 years

3 Choose Term

3 Choose Amount



Sum Cover.

Higher of early maturity sumcover or PIA.



Higher of early maturity sumcover or PIA.


Early Maturity Benefits

Salary Saving

Salary Savings Plan


Sum Cover.

Net PIA value accumulated atthe time of death


Net PIA value accumulated atthe time of Maturity.


Maturity Benefits

Single Contribution



Sum Cover.




Net PIA value accumulated atthe time of Maturity.


Maturity Benefits

‘Silah’

Participants of the meetingof the Senior management

with the Regional and Senior Branch Managersheld in January 2014

This refers to participation of Takaful on group basis where the participant is a bona-fide legal entitiy (e.g.

companies, organizations etc.) representing its members whose lives are being covered. The term of coverage

is limited to one year only and subject to renewal.

The contrifbution paid by the participant is fully allocated into the Waqf fund as Tabarru’ (donation) from which

payment of defined benefits will be made in case of death/disablement of any member. Unlike Individual Takaful

plans it carries no cash value.

The distinctive features are affordable contribution per person and minimal underwriting for members. Optional

riders are also available for coverage enhancements.

Group Term

This plan is normally availed by an employer for the protection of its employees or by an organization for the

benefits of its members in the event of death. The amount of sum covered per person is determined either

according to categories of employment / membership or it may be leveled across the board.

Group Credit

This product protects a financial institution on the facilities provided to its customers. In the event of death or

disability of a customer, the financial institution will be indemnified on the amount of outstanding balance (including

profit) without the hassle of recovery from deceased family.

Gorup Accident

This product has been developed to provide economical coverage to participants where the scope of cover is

only accidental death / disablement. Under this cover if any person covered dies due to accidental means within

ninety (90) days of such accident and sustained injuries are solely and independently caused by external, violent

and purely accidental means, compensation will be paid to the participant for benefit of his/her beneficiaries.

GROUP TAKAFUL PLANS

Page No.

Vision and Mission Statements 01

Core Values 02

Corporate Information 03

Directors’ Report to the Shareholders 05

Shariah Audit Report 10

Auditors’ Report to the Members 11

Financial Statements 13

Statement of Directors 61

Certificate of Appointed Actuary 62

Pattern of Shareholding 63

Notice of Annual General Meeting 65

Proxy Form

CONTENTS

VisionThe Company will strive to become

the Takaful partner of choice in

Pakistan catering to the financial

protection, long term savings,

retirement and financial planning

needs of individuals, businesses

and the public sector, in full

conformity with Shariah principles.

Mission To be recognized as a reputable,

profitable, Shariah driven Family

Takaful operator offering innovative

financial solutions to its clients

through best in class talent,

technology and distribution power.

01

Core ValuesOur values transcend throughout the entire organization. These principleswill guide us to succeed in our business and will serve us well aheadinto the future, from day-to-day business operation to product developmentand customer service.

Islamic Values

We are establishing a fully moral and ethical Company whose peopleare strong in religious values and live by the highest ethical standards.

Our Company

We are building a Team that takes personal responsibility for the deliveryof our services and promises to our participants and business partners.We shall consciously seek to develop our staff and consultants in theirchosen careers and install in them a sense of pride and ownership in theCompany.

Financial Strength

We strive to earn the confidence of our participants by building areputation for fair and prompt claims services and ensuring the financialstability of the Company. We believe that these form the foundation oftheir security.

Customer – centric

We believe that by being pro-active and meeting the changing needs ofour participants through value-added products and services, we willmeet the aspirations of all stakeholders.

Quality Culture

We believe in doing the right things right the first time and every time.Quality and continuous improvements shall be the key drivers in all ourmanagement processes.

02

Board of Directors

Mr. Muhammad Rizwan-ul-Haque ChairmanMr. Rizwan Ahmed Farid Chief Executive OfficerMr. Syed Ishtiaq Hussain DirectorMr. Tahir Mehmood DirectorMr. Muhammad Munir DirectorMr. Muhammad Salah-ud-din Arif Director

Shariah Supervisory Board

Professor Mufti Munib-ur-Rehman ChairmanMufti Syed Zahid Siraj MemberMufti Syed Sabir Hussain Member

Audit Committee

Mr. Muhammad Munir ChairmanMr. Tahir Mehmood MemberMr. Syed Ishtiaq Hussain MemberMr. Fahad Alam Secretary

Investment Committee

Mr. Muhammad Rizwan-ul-Haque ChairmanMr. Tahir Mehmood MemberMr. Muhammad Salah-ud-din Arif MemberMr. Rizwan Ahmed Farid MemberMr. Ghazanfar ul Islam MemberMr. Syed Muhammad Salman MemberMr. Fahad Alam Secretary

Chief Financial Officer Mr. Ghazanfar ul Islam

Company Secretary Mr. Fahad Alam

Statutory Auditors Ernst & Young Ford Rhodes Sidat Hyder & CoChartered Accountants

Internal Auditors BDO Ebrahim & CoChartered Accountants

Appointed Actuary Mr. Shujat Siddiqui, MA, FIA, FPSAAkhtar & Hassan (Pvt.) Limited

Legal Advisor Nishtar & ZafarAdvocates and Legal Consultants

Share Registrar FD Registrar Services (SMC-Pvt) Limited1705, 17th Floor, Saima Trade Towers – A,I.I. Chundrigar RoadKarachi – 74000

Corporate Information

DAWOOD FAMILY TAKAFUL LIMITEDA n n u a l R e p o r t - 2 0 1 3 03

As on December 31, 2013

Bankers

Silk Bank Limited, Emaan Islamic BankingSoneri Bank Limited, Islamic BankingBurj Bank LimitedDubai Islamic Bank LimitedAl Baraka Bank (Pakistan) LimitedMeezan Bank LimitedBank Al-Falah LimitedUBL Ameen Islamic BankingFaysal Bank Limited Barkat Islamic BankingHabib Bank Limited, Islamic BankingBank Al Habib Limited, Islamic BankingHabib Metropolitan Bank Limited, Islamic Banking

Registered and Head Office 17th Floor, Saima Trade Towers – AI.I. Chundrigar RoadKarachi – 74000

Website www.dawoodtakaful.com

Management Committee

Mr. Rizwan Ahmed Farid Chief Executive OfficerMr. Ghazanfar ul Islam Chief Financial OfficerDr. Bakht Jamal Shaikh Chief Operating OfficerMr. Nasir Mahmood Head of Marketing – IndividualMr. Muhammad Asif Haq Head of Information TechnologyMr. Fahad Alam Company Secretary and VP FinanceMr. Masta Khan AVP – Group Marketing Mr. Syed Muhammad Salman AVP – ActuarialMr. Muhammad Khalid AVP – AdministrationMr. Tasawar Ali Manager TrainingMs. Sakina Qamar Manager Operations

Underwriting Committee

Mr. Rizwan Ahmed Farid ChairmanDr. Bakht Jamal Shaikh MemberMr. Ghazanfar ul Islam MemberMr. Syed Muhammad Salman MemberMs. Sakina Qamar Secretary

Claim Settlement Committee

Mr. Rizwan Ahmed Farid ChairmanMr. Ghazanfar ul Islam MemberDr. Bakht Jamal Shaikh MemberMr. Syed Muhammad Salman MemberMr. Muhammad Rafique Secretary

Re-takaful Committee

Mr. Rizwan Ahmed Farid ChairmanDr. Bakht Jamal Shaikh MemberMr. Ghazanfar ul Islam MemberAppointed Actuary MemberMr. Syed Muhammad Salman Secretary


DIRECTORS’ REPORT TO THE SHAREHOLDERS

Dear Shareholders,

The Directors of your company are pleased to present to you the 7th Annual Report of the Company for theyear ended 31st December 2013. By the grace of Allah the performance of the year was marked with manyimprovements.

Economic overview

The year 2013 was the election year marked by political uncertainty. Economy of the country continues tostruggle due to power shortages and law and order situation. Even after considerable time taking charge noclear economic direction has been given by the government which perhaps due to the fact that its attentiondiverted to more dire concerns of maintaining peace and control terrorism. Continuous depreciation of PakRupee against US Dollar from Pak Rs 97.08 to Pak Rs 108.58 during the year had a direct impact on the savingpropensity towards family Takaful business. State Bank’s Annual Report (on the state of economy) 2013 recordsNational GDP growth of 3.6% and continuous decline in the investment to GDP ratio since 2007.

Market overview

Our country still lacks awareness of Life insurance/Family Takaful and therefore we have low insurance penetrationwith Takaful share even lower nevertheless with passage of time we are witnessing improvements and overallvolume of Insurance/Takaful is increasing year by year owing to efforts of the market players by expandingbranch networks, training staff and spreading public awareness. As a predominantly Islamic country Takafulconcept is well receive by the masses hence in growth rate Shariah Compliant Family Takaful companies areoutperforming the conventional companies.

BUSINESS PERFORMANCE

Due to aforesaid market conditions the Company unable to meet its business targets but still able to achievea sizable growth of 27.25% over last year despite the above challenges and national trends. Gross contributionearned, during last five years is as follows,

2013 2012 2011 2010 2009

---------------------------------------------Rupees----------------------------------------------

Individual Takaful 630,844,716 485,832,201 298,721,386 180,202,774 29,453,906

Group Takaful 35,199,190 37,547,633 27,532,529 23,449,969 20,369,003

Total 666,043,906 523,379,834 326,253,915 203,625,743 49,822,909


1. New Products and Restructuring

1.1 During the year DFT has taken some very important strategic decisions in restructuring the product offeringsand introduction of new innovative plans which has added value to our customers and simultaneouslyreduced the cost of procurement of new business.

1.2 A new Unit linked Plan 'Sahulat' and ’ND’ version of “Sukoon” plan, introduced in 4th Qtr of last year,have shown positive results and now 'Sahulat" has acquired 20% of new certificates ( 13% new businesscontribution) and 70% of the rated applicants have accepted the company's counter offer of ND versionof existing “Sukoon” plan.

1.3 Single Contribution Unit linked Plan 'Silah' introduced during the 2nd Qtr of last year has become extremelypopular and got a market share of 16% of the new business contribution as against 4% in 2012.

2. Induction of Bancatakaful

The induction of Bancatakaful distribution channel in the second half of the year 2012 has established rootsand as such DFT has signed bancatakaful agreements with one more Bank in the last quarter of 2013 for whichthree new products were designed and got approval from the Shariah Supervisory Board and the SECP. Weexpect the launching of the new products in March 2014.

3. Expansion of Geographical Reach:

As of December 31, 2013 we have 38 branches throughout Pakistan.

4. Declaration of surplus

Actuarial valuation for the financial year 2012 has been carried out and in 2013 surpluses declared for bothindividual and group family takaful on contributory method of bonus distribution to the participants.

5. PACRA’s IFS Rating

Pakistan Credit Rating Agency (PACRA) has maintained Financial Strength (IFS) rating “A-” (Single A minus)to DFT which denotes our strong capacity to meet takaful contracts obligation.


2012 2011 2010 2009

PKR 700,000,000

PKR 500,000,000

PKR 300,000,000

PKR 100,000,000

(PKR 100,000,000)

GroupContribution

IndividualContribution

2013

6. Training

6.1 Senior management has facilitated several sessions on Underwriting and Claims Settlement across ourbranch network in 2013.

6.2 Training & Development Department arranged and delivered 54 training sessions. These trainings includedthe mandatory required Foundation training sessions, as well as Advance Level Consultant Developmentsessions and Managerial Development Program sessions – conducted across the three regions of IndividualMarketing branch network in Pakistan.

7. Information Technology

During 2013 the DFTL IT team successfully developed and rolled out the Group Takaful Operational Software.It has also undertaken the in-house development of Individual Takaful Software.

8. Re-takaful arrangements

To enhance the customers confidence and to secure the risk of takaful arrangements DFT has renegotiatedcomprehensive re-takaful arrangements with best international re-takaful companies “Munich Re-takaful” and“Hannover Re-takaful”, having strong credit rating “AA-“(Double A minus) and “A+” (Single A plus) respectively.

9. Claim settlements

DFT strive to be most efficient in claims processing, during the year 2013 DFT has successfully paid total claimsof Rs. 34 million.

FINANCIAL PERFORMANCE

2013 2012 ---------------- Rupees -------------------

Takaful Income 305,433,992 244,820,911

Investment income 29,911,826 41,428,854

Gain on redemption/sale of investments 2,022,800 23,687,700

Other income 1,963,901 493,980

Total Income 339,332,519 310,431,445

Management expenses 235,320,355 226,726,588

Commission expense 173,031,116 147,648,565

Total Expenses (408,351,471) (374,375,153)

Loss before tax (69,018,952) (63,943,708)

Taxation 21,237,219 20,950,300

Loss after tax (47,781,733) (42,993,408)

During the year the Company has earned Rs.305 millions from Takaful operations a 25% growth over last year.While commission expense to Takaful income ratio has improved from 60% to 56.6%, the investment incomehas gone down mainly due to principal redemption of Sukuks portfolio. The net loss after tax have increased


by Rs.4.7 million, however if we examine the last year performance Company had earned Rs. 23.7 million asgain on sale/redemption of investment which were nonrecurring events, if minus this impact we could see theimprovement of around Rs. 17 million during the year 2013. As stated in the earlier reports these are plannedlosses part of Family Takaful Company life cycle, your Company is in growth phase and poised to achieve break-even in near future.

RELATED PARTY TRANSACTIONS

All related party transactions during the year have been executed on an arm’s length basis. All such transactionshave been approved by the Board of Directors in their meeting.

INTERNAL CONTROL AND AUDIT FUNCTION

The Board is responsible for the effective implementation of sound internal controls systems including compliancewith the control procedures. The Audit Committee is assisted by the Internal Audit function which is outsourcedto a reputable Chartered Accountants firm which review both adequacy and operational effectiveness of theinternal controls.

MEETINGS OF THE BOARD

During the year four meetings of the Board of Directors have been held. The number of meeting attended byeach director is as follows,

Name of Directors AttendanceMr. Muhammad Rizwan-ul Haque 4 out of 4Mr. Tahir Mehmood 4 out of 4Mr. Rizwan Ahmed Farid 4 out of 4Mr. Muhammad Munir 4 out of 4Mr. Syed Ishtiaq Hussain 3 out of 4Mr. Muhammad Salah-ud-din Arif 1 out of 1

EXTERNAL AUDITORS

Ernst & Young Ford Rhodes Sidat Hyder & Co. Chartered Accountants are willing to continue and proposedto be appointed as Auditors of the Company for the year ending 2014 by the Board of Directors on recommendationof the Audit Committee.

PATTERN OF SHAREHOLDING

A statement showing the pattern of shareholding is attached with this report.

EVENTS AFTER BALANCE SHEET DATE

There have been no material changes since December 31, 2013 to date of this report and the Company hasnot entered into any material commitment during this period which would adversely affect the financial positionof the Company.


EARNINGS PER SHARE

The loss per share of the Company for the year 2013 is Rs.0.64 (2012: Rs.0.57) per ordinary share of Rs. 10each.

ACKNOWLEDGEMENT

We wish to recognize and acknowledge valuable support of our Directors, employee and clients.

On behalf of the Board

Rizwan Ahmed FaridChief Executive Office

Karachi, February 24, 2014


D A W O O D F A M I L Y T A K A F U L L I M I T E D

1701-A, Saima Trade Towers, I.I. Chundrigar Road, Karachi-74000UAN: 111-DFT-786 (111-338-786) Fax: (92-21) 3227-7188

www.dawoodtakaful.com


Authorised share capital

80,000,000 (2012: 80,000,000)

Ordinary shares of Rs.10 each 800,000,000 - - 800,000,000 800,000,000

Issued, subscribed and

paid-up share capital 6 750,000,000 - - 750,000,000 750,000,000

Accumulated deficit (278,304,852) - - (278,304,852) (230,523,119)

Contribution to takaful

business statutory funds (90,000) - - (90,000) (5,090,000)

Net shareholders' equity 471,605,148 - - 471,605,148 514,386,881

Balance of Takaful

Business Statutory Funds

Cede money - waqf - - 100,000 100,000 100,000

Participant Investment Fund 7 - 516,764,078 - 516,764,078 312,878,034

Participant Takaful Fund - 209,896,737 7,287,187 217,183,924 119,995,465

- 726,660,815 7,387,187 734,048,002 432,973,499

Creditors and accruals

Outstanding claims - 6,519,084 3,636,250 10,155,334 10,042,469

Contributions received in advance - 35,312,225 - 35,312,225 23,166,316

Amount due to agents 37,366,770 - - 37,366,770 31,786,572

Other creditors and accruals 8 25,777,619 37,146,312 854,646 63,778,577 59,706,898

63,144,389 78,977,621 4,490,896 146,612,906 124,702,255

Total liabilities 63,144,389 805,638,436 11,878,083 880,660,908 557,675,754

Total equity and liabilities 534,749,537 805,638,436 11,878,083 1,352,266,056 1,072,062,635

Contingencies and commitments 9

The annexed notes from 1 to 34 form an integral part of these financial statements.

Balance SheetAs at December 31, 2013

Takaful BusinessStatutory Funds Aggregate

Individual GroupShare Family Family

Holders' Fund Takaful Takaful 2013 2012Note ------------------------------------------------ (Rupees) -----------------------------------------------


____________ ______________________ ____________ ____________Chairman Chief Executive Officer Director Director

Balance SheetAs at December 31, 2013

Cash and bank deposits

Cash and stamps 1,028,919 - - 1,028,919 1,043,463

Current and other accounts 10 35,211,909 190,920,505 8,453,511 234,585,925 178,938,191

Deposits maturing within

twelve months 11 75,000,000 365,000,000 - 440,000,000 325,000,000

111,240,828 555,920,505 8,453,511 675,614,844 504,981,654

Investments 12

Government securities - 163,000,000 2,000,000 165,000,000 45,026,377

Sukuks 193,453,728 3,749,999 - 197,203,727 235,274,612

Listed shariah compliant shares - 23,705,545 - 23,705,545 6,408,212

193,453,728 190,455,544 2,000,000 385,909,272 286,709,201

Current assets - others

Contributions due but unpaid - - 573,426 573,426 1,529,538

Amount due from retakaful

companies - net - 584,893 642,640 1,227,533 1,046,884

Advances, deposits and

prepayments 13 6,971,664 - 75,973 7,047,637 10,158,740

Advance taxation - net 12,758,094 6,904,969 - 19,663,063 14,669,445

Investment income accrued 14 20,300,937 15,854,074 132,533 36,287,544 44,580,677

Sundry receivables 15 6,920,189 35,918,451 - 42,838,640 39,333,578

46,950,884 59,262,387 1,424,572 107,637,843 111,318,862

Deferred tax asset 16 131,529,261 - - 131,529,261 107,237,702

Fixed assets

Tangible and intangible assets

Capital work-in-progress 17 795,720 - - 795,720 3,920,220

Furniture, fixtures, office

equipment, computers

and motor vehicles 18 46,781,039 - - 46,781,039 48,987,749

Computer software 19 3,998,077 - - 3,998,077 8,907,247

51,574,836 - 51,574,836 61,815,216

Total assets 534,749,537 805,638,436 11,878,083 1,352,266,056 1,072,062,635



Individual GroupShare Family Family

Holders' Fund Takaful Takaful 2013 2012Note ------------------------------------------------ (Rupees) -----------------------------------------------



2013 2012Note ----------------- (Rupees) -----------------

Takaful operator feeWakala fee 285,027,025 230,431,740Mudarib share 1,979,103 1,350,167Tharawat fee 5,867,048 3,335,248Bid offer share 12,560,816 9,703,756Total takaful operator fee 305,433,992 244,820,911

Investment income not attributable to Takaful Business Statutory Funds

Income from non-trading investmentProfit on investment in sukuk 17,784,572 25,810,933Profit on term deposits 9,050,907 10,469,316Profit on saving accounts 3,076,347 5,151,733Total income from non-trading investment 29,911,826 41,431,982

Gain on redemption of investments 2,022,800 15,865,032Gain / (loss) on sale of investments - 7,822,668Total investment income 31,934,626 65,119,682

Investment related expenses - (3,128)Net investment income 31,934,626 65,116,554

Other income 20 1,963,901 493,980Total income 339,332,519 310,431,445

Less: Expenses not attributable toTakaful Business Statutory Funds

Management expenses 21 (235,320,355) (226,726,588)Commission expense (173,031,116) (147,648,565)Total expenditure (408,351,471) (374,375,153)Loss before tax (69,018,952) (63,943,708)

Taxation 22 21,237,219 20,950,300Loss after tax (47,781,733) (42,993,408)

Loss per share 23 (0.64) (0.57)


Profit and Loss AccountFor the year ended December 31, 2013



2013 2012 ----------------- (Rupees) -----------------

Loss after tax for the year (47,781,733) (42,993,408)

Other comprehensive income

Items of other comprehensive income not to be reclassifiedto profit and loss account in subsequent periods - -

Total comprehensive loss for the year (47,781,733) (42,993,408)


Statement of Comprehensive IncomeFor the year ended December 31, 2013



Reserves Issued, Capital

subscribed contributionsand paid-up Accumulated to Takaful Net

share capital deficit Business reserves Total---------------------------------------------------- (Rupees) ----------------------------------------------------

Statement of Changes in EquityFor the year ended December 31, 2013


Balance as at January 01, 2012 750,000,000 (187,529,711) (10,090,000) (197,619,711) 552,380,289

Changes in equity 2012

Transactions directly related toowner's equity

Capital redemption from participantinvestment fund - Islamic Income Fund - - 5,000,000 5,000,000 5,000,000

Total comprehensive incomefor the year

Loss for the year - (42,993,408) - (42,993,408) (42,993,408)

Other comprehensive income - - - - - - (42,993,408) - (42,993,408) (42,993,408)

Balance as at December 31, 2012 750,000,000 (230,523,119) (5,090,000) (235,613,119) 514,386,881

Balance as at January 01, 2013 750,000,000 (230,523,119) (5,090,000) (235,613,119) 514,386,881

Changes in equity 2013

Transactions directly related toowner's equity

Capital redemption from participantinvestment fund - Islamic Aggressive Fund - - 5,000,000 5,000,000 5,000,000

Total comprehensive incomefor the year

Loss for the year - (47,781,733) - (47,781,733) (47,781,733)

Other comprehensive Income - - - - - - (47,781,733) - (47,781,733) (47,781,733)

Balance as at December 31, 2013 750,000,000 (278,304,852) (90,000) (278,394,852) 471,605,148




GroupShare Holders' Individual Family

Fund Family Takaful Takaful 2013 2012 ------------------------------------------------------------ (Rupees) -------------------------------------------------------------

Statement of Cash FlowsFor the year ended December 31, 2013


Operating cash flows

Cash flow from takaful activitiesContributions received - 638,890,680 36,155,302 675,045,982 532,008,754Surrender / withdrawal paid - (68,807,366) - (68,807,366) (37,365,773)Claims paid - (7,891,343) (25,674,811) (33,566,154) (28,882,083)Retakaful paid - (7,360,117) (4,969,988) (12,330,105) (13,537,043)Wakala fee 292,881,827 (287,139,588) (5,742,239) - -Mudarib fee 2,620,717 (1,811,976) (808,741) - -Tharawat fee 5,903,057 (5,903,057) - - -Bid offer liability 5,563,235 (5,563,235) - - -Commission paid to agents (167,450,919) - - (167,450,919) (137,859,063)Net cash flows from takaful activities 139,517,917 254,413,998 (1,040,477) 392,891,438 314,364,792

Other operating cash flows

Income tax paid 4,965,691 (6,904,969) - (1,939,278) (4,765,628)General management expenses paid (216,434,075) (37,356) - (216,471,431) (210,690,469)Other operating payments (703,835) (4,376,908) (131,209) (5,211,952) (1,332,974)Other operating receipts 4,099,946 - - 4,099,946 1,032,798Sundry receivables - - - - 1,508,708Advances, deposits and prepayments 3,111,103 - - 3,111,103 (1,832,957)Net cash flows from other operating activities (204,961,170) (11,319,233) (131,209) (216,411,612) (216,080,522)

Net cash flows from / (used in) all operating activities (65,443,253) 243,094,765 (1,171,686) 176,479,826 98,284,270

Investment activities

Profit on investment received 42,454,096 41,781,512 818,044 85,053,652 53,262,448Proceeds from disposal of units of mutual fund - - - - 50,982,120Receipt against maturity of short-term musharika - 250,000,000 - 250,000,000 50,000,000Payment against short-term musharika - (365,000,000) - (365,000,000) (260,000,000)Payment against purchase of listed

shariah compliant shares - (17,549,851) - (17,549,851) (2,675,980)Receipts against sale of listed shariah compliant shares - 5,790,344 - 5,790,344 2,507,654Dividend received from listed shariah compliant shares - 360,532 - 360,532 244,468Redemption of sukuks 38,070,885 45,000,000 - 83,070,885 57,628,861Payment against purchase of sukuks - (163,000,000) (2,000,000) (165,000,000) -Proceeds from disposal of fixed assets 1,754,503 - - 1,754,503 381,499Payment against fixed capital expenditure (6,349,552) - - (6,349,552) (7,856,364)Net cash flows from / (used in) investing activities 75,929,932 (202,617,463) (1,181,956) (127,869,487) (55,525,294)

Financing activitiesCapital contribution from shareholders fund - - - - -Capital contribution redeemed from PIF fund 7,022,800 - - 7,022,800 7,401,950Net cash flows from financing activities 7,022,800 - - 7,022,800 7,401,950Net cash flows from / (used in) all activities 17,509,479 40,477,302 (2,353,642) 55,633,139 50,160,926Cash and cash equivalents at the beginning of the year 18,731,349 150,443,203 10,807,153 179,981,705 129,820,728Cash and cash equivalents at the end of the year 36,240,828 190,920,505 8,453,511 235,614,844 179,981,654

Cash and cash equivalentsCash and stamps 1,028,919 - - 1,028,919 1,043,463Current and other accounts 35,211,909 190,920,505 8,453,511 234,585,925 178,938,191

36,240,828 190,920,505 8,453,511 235,614,844 179,981,654




GroupIndividual Family

Family Takaful Takaful 2013 2012

Note --------------------------------------------- (Rupees) ---------------------------------------------

Revenue AccountFor the year ended December 31, 2013


Income

Contribution net off retakaful 361,781,750 12,083,984 373,865,734 291,226,992

Investment income 13,464,876 613,405 14,078,281 9,402,698

Net risk contribution/ANF contribution 3,646,231 - 3,646,231 1,587,317

Surplus from retakaful operator 4,984,070 262,859 5,246,929 2,435,638

Total net income 383,876,927 12,960,248 396,837,175 304,652,645

Less: Claims and expenditures

Claims net off retakaful recoveries 3,334,375 6,505,521 9,839,896 8,637,444

Wakala fee 280,356,092 5,388,945 285,745,037 230,160,685

Mudarib fee 1,549,720 429,383 1,979,103 1,350,167

Waqf direct expenses 245,781 1,500 247,281 355,756

Total claims and expenditures 285,485,968 12,325,349 297,811,317 240,504,052

Excess of income over expenditure 98,390,959 634,899 99,025,858 64,148,593

Technical reserve at the beginning of the year 93,578,466 3,654,078 97,232,544 47,585,707

Less: Technical reserve at the end of the year 24 176,079,873 4,642,038 180,721,911 97,232,544

Surplus before distribution 15,889,552 (353,061) 15,536,491 14,501,756

Net movement in technical reserves 82,501,407 987,960 83,489,367 49,646,837

Surplus distribution (1,699,691) (137,708) (1,837,399) (381,819)

Balance of Takaful Business Statutory Fund

at the beginning of the year 113,205,469 6,789,996 119,995,465 56,228,691

Balance of Takaful Business Statutory

Fund at the end of the year 209,896,737 7,287,187 217,183,924 119,995,465



Takaful Business Statutory Funds Aggregate

Individual GroupFamily Takaful Family Takaful 2013 2012

------------------------------------------------ (Rupees) ------------------------------------------------

Statement of ContributionsFor the year ended December 31, 2013


Gross contributions

Regular contributions on individual policies

- first year 280,379,820 - 280,379,820 237,954,902

- second year 142,770,363 - 142,770,363 107,213,330

- subsequent years 140,591,852 - 140,591,852 63,640,698

Top up contributions 20,593,402 - 20,593,402 43,817,364

Single contribution on individual policies 46,509,279 - 46,509,279 33,205,907

Group policies without cash values - 35,199,190 35,199,190 37,547,633

Total gross contributions 630,844,716 35,199,190 666,043,906 523,379,834

Gross contributions allocated as follows:

Participants' Investment Fund (PIF)

Regular contributions on individual policies 230,059,262 - 230,059,262 149,187,609

Top up contributions on individual policies 20,593,402 - 20,593,402 43,817,364

Total contributions allocated to PIF 250,652,664 - 250,652,664 193,004,973

Participants' Takaful Fund (PTF)

Regular contributions on individual policies 380,192,052 - 380,192,052 292,827,228


Total gross contributions allocated to PTF 380,192,052 35,199,190 415,391,242 330,374,861

Less: Retakaful contributions ceded

Regular individual policies (18,410,302) - (18,410,302) (13,229,846)

Group policies without cash values - (23,115,206) (23,115,206) (24,330,706)

Total retakaful ceded (18,410,302) (23,115,206) (41,525,508) (37,560,552)

Net risk contributed to PTF 361,781,750 12,083,984 373,865,734 292,814,309

Contributions allocation to shareholders' fund

Regular individual policies 280,356,092 - 280,356,092 223,810,708


Total contributions allocated to shareholders' fund 280,356,092 5,388,945 285,745,037 230,160,685

Net risk contributed to PTF 81,425,658 6,695,039 88,120,697 62,653,624





-------------------------------------------------- (Rupees) -------------------------------------------------

Statement of ClaimsFor the year ended December 31, 2013


Gross claims

- by death 8,872,737 21,850,558 30,723,295 28,831,955

- by event other than death 730,221 2,515,503 3,245,724 2,058,501

Total gross claims 9,602,958 24,366,061 33,969,019 30,890,456

Less: Retakaful recoveries (6,268,583) (17,860,540) (24,129,123) (22,253,012)

Net claims 3,334,375 6,505,521 9,839,896 8,637,444





-------------------------------------------------- (Rupees) -------------------------------------------------

Statement of ExpensesFor the year ended December 31, 2013

Wakala fee 280,356,092 5,388,945 285,745,037 230,160,685

Mudarib share 1,549,720 429,383 1,979,103 1,350,167

Waqf direct expenses 245,781 1,500 247,281 355,756

282,151,593 5,819,828 287,971,421 231,866,608






-------------------------------------------------- (Rupees) -------------------------------------------------

Statement of Investment IncomeFor the year ended December 31, 2013

Income from non-trading

investments

Return on sukuks 2,031,488 139,062 2,170,550 891,449

Return on term deposits 6,876,082 - 6,876,082 966,263

Return on saving accounts 4,583,683 474,343 5,058,026 7,607,576

Amortisation of premium

on sukuks (26,377) - (26,377) (62,590)

Net investment income 13,464,876 613,405 14,078,281 9,402,698




1. STATUS AND NATURE OF BUSINESS

Dawood Family Takaful Limited (the Company or DFTL) was incorporated in Pakistan as an unquoted public limited company onMay 04, 2007 under the Companies Ordinance, 1984. The Company received the certificate of registration on May 16, 2008 underSection 6 of the Insurance Ordinance, 2000. The registered office of the Company is situated at 1701-A, Saima Trade Towers, I. I.Chundrigar Road, Karachi. The principal business activity of the Company is to undertake family takaful business in accordancewith the Insurance Ordinance 2000, Securities and Exchange Commission (Insurance) Rules, 2002 and Takaful Rules, 2005.

To carry out the family takaful business, the Company has established the Takaful Business Statutory Fund with effect from December,01 2008 as per Rule 8 of the Takaful Rules, 2005 and Section 15 of the Insurance Ordinance, 2000. The Takaful Business StatutoryFund has the following components in accordance with the Waqf-Wakala Model adopted by the Company.

i) Participant Takaful Fund (PTF i.e. DFTL Waqf): The Company has formed a Waqf on 30 May 2008 to manage the risk relatedcontributions and payment of Takaful benefits. The Waqf shall support the following:

a) Group Family Takaful Business (both term and credit takaful).

b) Risk related contributions of Individual Takaful Products (mortality and morbidity charges) including supplementary ridercontributions.

ii) Participant Investment Fund (PIF): Investment component of the participants contributions are managed in PIF which representsthe aggregate of the individual Participant’s Investment Accounts (PIA).The Company has established three sub-investmentfunds under PIF, with cede money, having different investment objectives. During the year, the Company has withdrawn cedemoney from Islamic Aggressive Fund as per the written advice of the appointed actuary.

Name of sub-funds Effective dates

a) Islamic Income Fund December 01, 2008

b) Islamic Balanced Fund December 01, 2008

c) Islamic Aggressive Fund April 29, 2011

As per Section 21 of the Insurance Ordinance, 2000 capital contribution to a statutory fund is distributable back to the shareholders’fund subject to the written advice of the appointed actuary.

2. STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan.Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the InternationalAccounting Standards Board and Islamic Financial Accounting Standards issued by the Institute of Chartered Accountants of Pakistanas are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984,Insurance Ordinance, 2000, Securities and Exchange Commission (Insurance) Rules, 2002 and Takaful Rules, 2005. In case therequirements differ with the standards, the provisions or directives of the Companies Ordinance, 1984, Insurance Ordinance, 2000,Securities and Exchange Commission (Insurance) Rules, 2002 and Takaful Rules, 2005 shall prevail.

During 2012, the Securities and Exchange Commission of Pakistan (SECP) notified Takaful Rules, 2012 on July 16, 2012. TheCompany along with other takaful operators filed a constitutional petition in the Honorable High Court of Sindh (the Court) challengingthe said rules on various grounds. The Court vide its order dated August 01, 2012 has directed all parties to maintain status quo.The matter is currently pending with the Court. Accordingly, these financial statements have been prepared in compliance with theTakaful Rules, 2005.

3. BASIS OF PREPARATION

These financial statements have been prepared on the format of financial statements issued by SECP through Securities andExchange Commission (Insurance) Rules, 2002 with appropriate modifications based on the advice of the Shariah Board of theCompany.

Notes to the Financial StatementsFor the year ended December 31, 2013


3.1 Basis of measurement

These financial statements have been prepared on the basis of historical cost convention, except for certain investments which arecarried at fair value.

3.2 Functional and presentation currency

These financial statements are presented in Pak Rupees which is also the Company's functional currency.

3.3 Use of estimates and judgments

The preparation of financial statements in conformity with approved accounting standards requires management to make judgments,estimates and assumptions that effect the application of policies and reported amount of assets and liabilities, income and expenses.These estimates and associated assumptions are based on historical experience and various other factors that are believed to bereasonable under the circumstances, the result of which form the basis of making the judgments about the carrying values of assetsand liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only the periodof the revision and future period if the revision affects both current and future periods.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to thefinancial statements or judgments were exercised in application of accounting policies, are as follows:

a) Technical reserves

Technical reserves required to be setup in the Participants Takaful Fund as determined by the appointed actuary of the TakafulOperator. Technical reserves may consist of any or combination of the following reserves:

Group Family Takaful Individual Family Takaful

i) unearned contribution reserves i) net technical reserve

ii) incurred but not reported reserves ii) incurred but not reported reserves

iii) contribution deficiency reserves iii) contribution deficiency reserves

iv) contingency reserves iv) contingency reserves

v) reserve for qard-e-hasna v) reserve for qard-e-hasna

vi) surplus equalisation reserve vi) surplus equalisation reserve

vii) provision for outstanding claimsexceeding 12 months

b) Waqf participants’ liabilities

Waqf participants’ liabilities are calculated by the appointed actuary using appropriate discount rate and mortality assumptions.Actual investment returns and mortality charge is, by its nature, expected to be different from estimates.

Changes in the above would affect the technical reserve balance at the year end.

c) Claims

Calculation for claims incurred but not reported (IBNR) is made on the assumption that the claim lag pattern will follow the historicaltrend experience.



d) Fixed assets

The Company reviews the rate of depreciation, useful life and value of assets for possible impairment on an annual basis. Anychange in the estimates in future years might affect the carrying amounts of respective items of fixed assets with a correspondingeffect on the depreciation charge and impairment.

e) Deferred taxation

In recognising the deferred tax assets the management has carried out detailed review of projections of taxable profit for foreseeablefuture based upon information considered to be most reliable in the circumstances.

f) Impairment of available-for-sale investments

The Company recognises that available-for-sale investments are impaired when there has been a significant or prolonged declinein the fair value below the cost. In making this judgment the Company consider various market factors including projected profit rateand capital market performance.

4. STANDARDS, INTERPRETATIONS AND AMENDMENTS TO APPROVED ACCOUNTING STANDARDS THAT ARE NOT YETEFFECTIVE

The following revised standards, amendments and interpretations with respect to the approved accounting standards as applicablein Pakistan would be effective from the dates mentioned below against the respective standard or interpretation:

Effective date (annual periodsBeginning

Standard or Interpretation on or after)

IAS 32 – Offsetting Financial Assets and Financial liabilities – (Amendment) January 01, 2014

IAS 36 – Recoverable Amount for Non-Financial Assets – (Amendment) January 01, 2014

IAS 39 – Novation of Derivatives and Continuation of Hedge Accounting – (Amendment) January 01, 2014

IFRIC 21 – Levies January 01, 2014

The Company expects that the adoption of the above revision, amendments and interpretation of the standards will not affect theCompany's financial statements in the period of initial application.

In addition to the above, the following new standards have been issued by IASB which are yet to be notified by the SECP for thepurpose of applicability in Pakistan.

IASB Effective date (annual periodsbeginning

Standard on or after)

IFRS 9 - Financial Instruments: Classification and Measurement January 01, 2015

IFRS 10 - Consolidated Financial Statements January 01, 2013

IFRS 11 - Joint Arrangements January 01, 2013

IFRS 12 - Disclosure of Interests in Other Entities January 01, 2013

IFRS 13 - Fair Value Measurement January 01, 2013



5. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous financialyear except as described below in note 5.1.

5.1 New and amended standards and interpretations

The Company has adopted the following amendments to IFRSs which became effective during the current year:

IAS 1 – Presentation of Financial Statements – Presentation of items of other comprehensive income (Amendment)

IAS 19 – Employee Benefits – (Revised)

IFRS 7 – Financial Instruments: Disclosures – (Amendments)

– Amendments enhancing disclosures about offsetting of financial assets and financial liabilities

IFRIC 20 – Stripping Costs in the Production Phase of a Surface Mine

Improvements to Accounting Standards Issued by the IASB

IAS 1 – Presentation of Financial Statements - Clarification of the requirements for comparative information

IAS 16 – Property, Plant and Equipment – Clarification of Servicing Equipment

IAS 32 – Financial Instruments: Presentation – Tax Effects of Distribution to Holders of Equity Instruments

IAS 34 – Interim Financial Reporting – Interim Financial Reporting and Segment Information for Total Assets and Liabilities

The adoption of the above amendments did not have any effect on the financial statements.

5.2 Takaful contracts

The takaful contracts are based on the principles of Wakala Waqf Model. Takaful is a programme based on shariah compliant,approved concept founded on the principles of mutual cooperation, solidarity and brotherhood.

The Company maintains Takaful Business Statutory Funds for all classes of family takaful business. Assets, liabilities, revenuesand expenses are recorded in respective funds, if referable or, on the basis of actuarial advice if not referable. Other assets, liabilities,revenues and expenses are allocated to shareholders' fund.

Technical reserves included in the Takaful business statutory funds are determined based on appointed actuary’s valuation conductedat the balance sheet date, in accordance with section 50 of the Insurance Ordinance, 2000.

The obligation of Waqf for Waqf participants' liabilities is limited to the amount available in the waqf fund. In the event where thereis insufficient funds in waqf to meet their current payments less receipts, the deficit is funded by way of an interest free loan (Qard-e-Hasna) from the Shareholders' fund to the statutory fund (Takaful Business Statutory Funds). The amount of Qard-e-Hasna isrefundable to the shareholders' fund in event of the surplus balance in the statutory funds.

Principal actuarial assumptions used in computing technical reserves are:

a) the liability in respect of Group Family Takaful Business and riders of all types was set using the unearned premium method.Due provision was made for claims incurred but not reported (IBNR) and contingencies over the term of coverage.



b) the liability was calculated by summing up individual mathematical reserves for the policies. The mathematical reserves as atthe valuation date were calculated individually.

Group Takaful

The group family takaful contracts are issued typically on yearly renewable term basis (YRT). The Company offers group term lifeand group credit plans to its clients. For one or more of the takaful contracts following risks may be covered:

- Death due to any cause- Accidental Death Benefit- Accidental Permanent Total Disability (PTD-A)- Accidental Permanent Partial Disability (PPD-A)- Accidental Temporary Disability (TTD-A)- Natural Disability- Accidental Hospitalisation (AH) - Reimbursement of hospital expense due to accident with limits- Accidental Medical Expense Reimbursement (AMER) - Reimbursement of medical expense due to accident with limits- Critical Illness (CI)

Individual Takaful Contracts – unit linked

The Company offers Unit Linked Takaful Plans which provide Shariah compliant financial protection and investment vehicle toindividual participants. These plans carry cash value. The death benefit design is based on Constant Sum at Risk approach i.e. thesum cover is paid in addition to the cash value. The plans offer investment choices to the customer to direct their investment relatedcontributions based on their risk / return objectives. No investment guarantees are offered. The investment risk is borne by theparticipants.

The following riders are offered by the Company which can be added to the basic Unit Linked Takaful Plans.

Type of Contract Benefit Type

Accidental Death Benefit (ADB) Lump SumAccidental Death and Disability Benefit (ADDB) Lump SumFamily Income Benefit (FIB) AnnuityAdditional Takaful Benefit (ATB) Lump SumFuneral Expense Benefit (FEB) Lump SumTotal & Permanent Disability (TPD) Lump SumWaiver of Contribution (WOC) AnnuityFamily Protection Benefit (FPB) Lump SumCritical Illness (CI) Lump SumShareek-e-Zindagi Takaful Benefit (STB) Lump Sum

5.3 Technical reserve

Provision for outstanding claims including claims incurred but not reported (IBNR)

A liability for outstanding claims is recognised in respect of all claims incurred at the balance sheet date which represents theestimates of the claims intimated or assessed before the end of the accounting year and measured at the undiscounted value ofexpected future payments. Provision for outstanding claims include amounts in relation to unpaid reported claims, claims incurredbut not reported (IBNR) and expected claims settlement costs.

Provision for IBNR is made for the cost of settling claims incurred but not reported at the balance sheet date at a value determinedby the appointed actuary which takes into account the expected future patterns of claims and the claims of current period reportedsubsequent to the balance sheet date in Group Family Takaful. For Individual Family Takaful, a provision is made in respect of IBNRas a percentage of annual mortality costs.

Retakaful recoveries against outstanding claims and salvage recoveries are recognised as assets and measured at the amountexpected to be received.



Contribution deficiency reserve

The Company is required as per Takaful Rules, 2005 to maintain a provision in respect of contribution deficiency for the class of businesswhere the unearned contribution reserve is not adequate to meet the expected future liability, after retakaful claims and other supplementaryexpenses expected to be incurred after the balance sheet date in respect of the unexpired policies in that class of business at thebalance sheet date. The movement in the contribution deficiency reserve is recorded as an expense / income in the revenue account.

No provision has been made as the unearned contribution reserve for each class of business as at the year end is adequate to meetthe expected future liability after retakaful from claims and other expenses, expected to be incurred after the balance sheet date inrespect of policies in force at balance sheet date as per the advice of appointed actuary.

5.4 Commission

Commission expense incurred in obtaining and recording policies is deferred and recognised as an expense in accordance withthe pattern of recognition of contribution revenue.

5.5 Provision for claims

A liability for outstanding claims is recognised in respect of all claims incurred up to the balance sheet date and includes expected settlementcost, except for accident and health claims which are recognised as soon as reliable estimates of the claims amount can be made.

Claims where intimation of the event giving rise to the claim is received or in respect of investment linked business when the policyceases to participate in the earnings of the statutory funds are reported as claims in the revenue account. The liability for claimsincurred but not reported at the year end is determined by the appointed actuary and are included in technical reserves.

Claims recoveries receivable from the retakaful operator are recognised at the same time as the claim which gave rise to the rightof recovery and are measured at the amount expected to be recovered.

5.6 Retakaful

These contracts entered into by the Company with retakaful operator under which the Waqf cedes takaful risks assumed duringnormal course of its business and according to which the Waqf is compensated for losses on contracts issued byit are classified as retakaful contracts held.

Retakaful contribution

Retakaful contributions is recorded at the time the retakaful is ceded. Surplus from retakaful operator is recognised in the revenueaccount.

Retakaful assets and liabilities

Retakaful assets represent balances due from retakaful operator. Recoverable amounts are estimated in a manner consistent withthe outstanding claims provision and are in accordance with the retakaful treaties.

Retakaful liabilities represent balances due to retakaful companies. Amounts payable are calculated in a manner consistent withthe associated retakaful treaties.

Retakaful assets are not offset against related takaful liabilities. Income or expenses from retakaful contract are not offset againstexpenses or income from related takaful assets as required by Insurance Ordinance, 2000.

Retakaful assets or liabilities are derecognised when the contractual rights are extinguished or expired.

Impairment of retakaful assets

An impairment review of retakaful assets is performed at each balance sheet date. If there is an objective evidence exists that theasset is impaired, the Company reduces the carrying amount of the retakaful asset to its recoverable amount and recognises thatimpairment loss in the revenue account.

Retakaful expense is recognised as a liability in accordance with the pattern of recognition of related contribution.



5.7 Business segment

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks andreturns that are different from those of other business segments. The Company accounts for segment reporting using the classesor sub classes of business (Takaful Business Statutory Funds) as specified under the Insurance Ordinance, 2000 and Securitiesand Exchange Commission (Insurance) Rules, 2002 as the primary reporting format.

The Company has two primary business segments for reporting purposes; Individual Family Takaful (Unit linked), Group FamilyTakaful:

a) The Individual Family Takaful (unit linked) segment provides family takaful coverage to individuals under unit based policiesissued by the Company.

b) The Group Family Takaful business segment provides family takaful coverage to member of business enterprises, corporateentities and common interest groups under group family takaful schemes issued by the Company.

5.8 Investments

Investments are being categorised as follows:

5.8.1 Available-for-sale (AFS)

Investments which are intended to be held for an undefined period of time but may be sold in response to the need for liquidity,changes in profit rates, equity prices or exchange rates are classified as available-for-sale.

Quoted

Subsequent to initial recognition at cost, quoted investments are stated at the lower of cost or market value (market value on anindividual investment basis being taken as lower if the fall is other than temporary) in accordance with the requirements of the SEC(Insurance) Rules, 2002. The Company uses stock exchange quotations at the balance sheet date to determine the market value.

Available-for-sale investments relating to the units assigned to policies of investment linked business are subsequently measuredat their fair values and difference taken to respective revenue account.

Unquoted

Unquoted investments are recorded at cost less impairment, if any.

5.8.2 Financial instruments at fair value through profit or loss

An instrument is classified at fair value through profit or loss if it is held-for-trading or is designated as such upon initial recognition.Financial instruments are designated at fair value through profit or loss if the Company manages such investments and makespurchase and sale decisions based on their fair value in accordance with the Company's documented risk management or investmentstrategy. Financial assets which are acquired principally for the purpose of generating profit from short-term price fluctuation or arepart of the portfolio in which there is recent actual pattern of short-term profit taking are classified as held-for-trading or a derivative.

Upon initial recognition, attributable transaction cost is recognised in profit and loss account when incurred. Financial instrumentsat fair value through profit or loss are measured at fair value, and changes therein are recognised in profit and loss account.

5.8.3 Date of recognition

All purchases and sales of investments that require delivery within the time frame established by regulations or market conventionare recognised at the trade date. Trade date is the date on which the Company commits to purchase or sell the investments.

5.8.4 Derecognition

All investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferredand the Company has transferred substantially all risks and rewards of ownership.



5.9 Revenue recognition

Group Family Takaful contributions are recognised when due. A provision for unearned contribution is included in the technicalreserves.

First year Individual Family Takaful contributions are recognised once the related policies have been issued and the contributionsreceived. Renewal contributions are recognised upon receipt provided the policy is still in force. Single contributions recognised oncethe related policies are issued against the receipts of contribution.

Return on bank deposits and income on Islamic investment products is recorded on a time proportion basis taking into account theeffective yield on such investments.

Gain / loss on sale of AFS investment are included in profit and loss account in the period of sale.

Dividend income is recognised when right to receive such dividend is established.

Takaful operator fee (Wakala Fee) is recognised once the contribution is recognised in the books. The Company acts as Wakeelof the Waqf Fund. As such the Company is entitled for the wakala fee for the management of Takaful operation under Waqf Fundto meet its general and administrative expenses. For group, it is recognised over the period of policy and in case of individual takaful,it is recognised on the initiation of the policy as it represents cost of acquiring the policy. Mudarib fee is recognised on the basis ofshare of the investment profit of the Waqf.

Tharawat fee is recognised on time proportion basis on the net asset value of the participant investment Fund.

5.10 Waqf participants' liabilities

Waqf Participants' liabilities are stated at a value determined by the appointed actuary through an actuarial valuation carried outas at each balance sheet date. No valuation basis has been prescribed by the Commission under Sub-Section (5) of Section 50 ofthe Ordinance. Hence, in pursuance of Sub-Rule (2) of Rule 20 of the Insurance Rules, 2002, the valuation was carried out on theminimum valuation basis prescribed by the relevant rules made under the repealed Act.

5.11 Qard-e-Hasna

When the PTF including reserves are insufficient to meet the current payments less receipt the deficit, is funded by way of interestfree loan (qard-e-hasna) from the shareholder's fund.

5.12 Staff retirement benefits - Defined Contribution Plan

The Company operates a defined contribution plan for all permanent employees. Monthly contributions to the fund are made in accordancewith the employment rules by the employee and the Company. Contributions made to this fund are recognised as an expense.

5.13 Leave encashment

Liability in respect of provision for leave encashment is accounted for in the year in which these are earned on the basis of actuarialvaluation carried out using the Projected Unit Credit Method. Actuarial gain or losses if any, are recognised immediately.

5.14 Fixed assets and depreciation

Tangible

These are stated at cost less accumulated depreciation and impairment loss, if any. Depreciation is charged over the estimateduseful life of the asset on a systematic basis to income applying the straight line method, using the following rates:

Rates of Depreciation

Furniture and fixtures 10%Office equipments 10%Vehicles 20%Computer equipments 33%Leasehold Improvements 10%



Depreciation on additions is charged from the month in which the asset is available for use where as no depreciation is chargedfrom the month the asset is disposed off.

Subsequent cost are included in the assets' carrying amount or recognised as a separate asset, as appropriate, only when it ispossible that the future economic benefits associated with the items will flow to the Company and the cost of the item can bemeasured reliably. Maintenance and normal repairs are charged to profit and loss account currently.

An item of tangible asset is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and thecarrying amount of the asset) is included in the profit and loss in the year the asset is derecognised.

Intangible

These are stated at cost less accumulated amortisation and impairment loss, if any. Amortisation is charged over the estimateduseful life of the asset on a systematic basis to income applying the straight line method at the rates specified in note 20 to thefinancial statements.

Amortisation on additions is charged from the month in which the asset is acquired or capitalised whereas no amortisation is chargedfrom the month the asset is disposed off.

Capital work-in-progress

Capital work-in-progress is stated at cost less any impairment in value. It consists of advances made to suppliers in respect oftangible and intangible assets.

5.15 Ijarah

Ijarah rentals are recognised as an expense on accrual basis as and when the rentals become due.

5.16 Taxation

Current

Provision for current taxation is based on taxable income at the rates enacted or substantively enacted at the balance sheet dateafter taking into account available tax credits and rebates, if any.

Deferred

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences at the balance sheetdate between the tax bases and carrying amounts of assets and liabilities for financial reporting purposes. Deferred tax liabilitiesare generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probablethat taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can beutilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realisedor the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheetdate. Deferred tax is charged or credited in the profit and loss account, except in the case of items credited or charged to equity inwhich case it is included in equity.

5.17 Financial instruments

Financial assets and financial liabilities other than those arising out of takaful contracts are recognised at the time when the Companybecomes a party to the contractual provisions of the instrument. At the time of initial recognition, financial assets and liabilities aremeasured at fair values which is the cost of consideration given or received for it. Financial assets are derecognised when thecontractual right to future cash flows from the asset expire or is transferred along with the risk and reward of the asset. Financialliabilities are derecognised when obligation specified in the contract is discharged, cancelled or expired. Any gain or loss onderecognition of the financial asset and liabilities are recognised in the profit and loss account of the current period.



5.18 Off setting the financial assets and liabilities

Financial assets and liabilities are only offset and the net amount is reported in the financial statements when the Company has alegally enforceable right to set off the recognised amounts and it intends either to settle on the net basis or to realise the asset andsettle the liability simultaneously.

5.19 Foreign currency translations

Foreign currency transactions are translated into Pak Rupees (functional currency) using the exchange rates prevailing at the dateof the transactions. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees using the rate of exchangeruling at the balance sheet date. Exchange differences, if any, are transferred to profit and loss account.

5.20 Cash and cash equivalents

For the purpose of cash flow statement, cash and cash equivalents consist of cash and stamps in hand, balances with banks, short-term deposits maturing within three months of the year end, highly liquid short-term investments that are convertible to known amountof cash and are subject to insignificant risk of change in value.

5.21 Dividend and appropriation of reserves

Dividend and appropriation to reserves except appropriations required by the law or determined by actuary or allowed by InsuranceOrdinance, 2000 are recognised in the year in which these are approved.

5.22 Impairment

The carrying amount of assets (other than deferred tax asset) are reviewed at each balance sheet date to determine whether thereis any indication of impairment of any asset or group of assets. If such indication exists, the recoverable amount of the asset isestimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairmentlosses are recognised in profit and loss account / revenue account as appropriate.

5.23 Creditors and accruals

Liabilities for creditors and other amounts payable are carried at cost which is fair value of the consideration to be paid in future forgoods and / or services received, whether or not billed to the Company.

5.24 Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probablethat an out flow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of theamount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

5.25 Earnings per share

Earnings per share are calculated by dividing the profit / (loss) after tax attributable to Ordinary shareholders for the year by theweighted average number of shares outstanding during the year.

6. ISSUED SUBSCRIBED AND PAID-UP SHARE CAPITAL

2013 2012 2013 2012 (Number of shares) ---------- (Rupees) ----------

Ordinary shares of Rs.10 75,000,000 75,000,000 each fully paid in cash 750,000,000 750,000,000




7. PARTICIPANTS' INVESTMENT FUND

Opening balance 312,878,034 148,839,955

Allocated contributions 250,652,664 193,004,974

Withdrawals / refunds (62,910,759) (38,129,487)

Net risk contribution / ANF contribution (3,646,231) (1,587,317)

496,973,708 302,128,125

Investment income

Profit on Government Securities 11,439,003 6,464,534

Return on bank balances 12,631,168 12,078,209

Return on shariah compliant placements 8,700,242 3,677,540

Gain on disposal of listed Ordinary shares 965,419 248,737

Unrealised gain on revaluation of listed Ordinary shares 4,153,051 1,080,826

Dividend income 360,532 243,418

38,249,415 23,793,264

Expenditure

Bid offer expenses (12,560,816) (9,703,756)

Tharawat fee (on net assets related to participants) (5,867,048) (3,335,248)

Brokerage fee and other charges (31,181) (4,351)

(18,459,045) (13,043,355)

Net surplus for the year 19,790,370 10,749,909

Closing balance 516,764,078 312,878,034

Net asset value per units:

Income Fund

Units 413,265 333,686

Net asset value per unit 159.618 148.160

Balanced Fund

Units 2,504,849 1,622,142


Aggressive Fund

Units 305,345 159,281



2013 2012 ------------ (Rupees) ----------



8. OTHER CREDITORS AND ACCRUALS

Takaful Business Statutory Funds AggregateShare Holders' Individual Group Family

Fund Family Takaful Takaful 2013 2012Note

Wakala fee payable toshareholders' fund - - - - 11,236,736

Mudarib share payable toshareholders' fund - 609,697 98,856 708,553 1,350,167

Unearned wakala fee 2,772,259 - - 2,772,259 2,239,806Tharawat fee payable to

shareholders' fund - 84,961 - 84,961 120,970Payable to participant investment fund - 33,784,746 - 33,784,746 21,161,644Bid offer liability - 1,713,839 - 1,713,839 1,410,026Interfund payable 1,187,290 - 630,478 1,817,768 2,244,467Payable to suppliers 299,606 - - 299,606 1,062,168Salary payable 7,003,240 - - 7,003,240 4,498,331Provident fund payable 1,038,677 - - 1,038,677 2,663EOBI payable 249,080 - - 249,080 46,560Provision for bonus - - - - 193,307Provision for leave encashment 4,708,814 - - 4,708,814 4,646,585Accrued expenses 3,368,156 - - 3,368,156 3,020,449Audit fee payable 425,000 - - 425,000 400,000Consultancy fee payable 541,500 - - 541,500 596,500Withholding tax payable 1,463,444 - - 1,463,444 390,418Rent payable 117,575 - - 117,575 16,000Surplus distribution payable - 492,048 125,312 617,360 381,819Workers' welfare fund payable 648,593 - - 648,593 648,593Stale cheques payable 1,874,385 44,082 - 1,918,467 1,022,617Payable in respect of

purchase of shares 8.1 - 416,939 - 416,939 115,470Other payables 80,000 - - 80,000 2,901,602

25,777,619 37,146,312 854,646 63,778,577 59,706,898

8.1 These represent payable in respect of purchase of shares to Dawood Equities Limited, a related party.

9. CONTINGENCIES AND COMMITMENTS2013 2012

Ijarah lease rentals

Not later than one year 4,299,297 4,595,652Later than one year and not later than five years 5,083,560 7,008,525

9,382,857 11,604,177

10. CURRENT AND OTHER ACCOUNTSTakaful Business Statutory Funds Aggregate

Share holders' Individual Group FamilyFund Family Takaful Takaful 2013 2012

Note

Current accounts 2,624 7,254,228 - 7,256,852 14,826,324Saving accounts 10.1 35,209,285 164,990,042 - 200,199,327 150,234,122

Participant Takaful FundSaving accounts 10.1 - 18,676,235 8,453,511 27,129,746 13,877,745

35,211,909 190,920,505 8,453,511 234,585,925 178,938,191

10.1

11. DEPOSITS MATURING WITHIN TWELVE MONTHS

Takaful Business Statutory Funds AggregateShare Holders' Individual Group Family

Fund Family Takaful Takaful 2013 2012Note

Term deposits with islamic banks /islamic banking operations 11.1 & 11.2 75,000,000 365,000,000 - 440,000,000 325,000,000

75,000,000 365,000,000 - 440,000,000 325,000,000

------------------------------------------ (Rupees) ------------------------------------------

------------------------------------------ (Rupees) ------------------------------------------

------------------------------------------ (Rupees) ------------------------------------------

---------- (Rupees) ----------

These represent bank deposits maintained with Islamic banking operations of commercial banks under profit and loss sharing basis carryingprofit rates ranging from 5% to 9.20% (2012: 6% to 9%) per annum.


11.1

11.2

12. INVESTMENTS

Aggregate

2013 2012Note

Available-for-sale investments

Government securities 12.1 - 163,000,000 2,000,000 165,000,000 45,026,377Sukuks 12.2 193,453,728 3,749,999 - 197,203,727 235,274,612

193,453,728 166,749,999 2,000,000 362,203,727 280,300,989Held-for-trading investmentsListed shariah compliant shares 12.3 - 23,705,545 - 23,705,545 6,408,212

193,453,728 190,455,544 2,000,000 385,909,272 286,709,201

12.1 Government securities

Government of PakistanIjara sukuks 12.1.1 - 163,000,000 2,000,000 165,000,000 45,026,377

- 163,000,000 2,000,000 165,000,000 45,026,377

12.1.1

Aggregate

2013 201212.2 Sukuks Note 2013 2012

Amtex Limited 12.2.1 10,000 10,000 33,750,000 3,749,999 - 37,499,999 37,499,999Eden Housing Limited I 12,000 12,000 11,808,000 - - 11,808,000 29,232,000Eden Housing Limited II 3,000 3,000 3,937,500 - - 3,937,500 8,015,625Pak Elektron Limited I 10,000 10,000 21,428,567 - - 21,428,567 21,428,572Pak Elektron Limited II 5,000 5,000 25,000,000 - - 25,000,000 25,000,000New Allied Electronics

Industries (Private) Limited I 32,000 32,000 20,000,000 - - 20,000,000 20,000,000New Allied Electronics

Industries (Private) Limited II 4,000 4,000 9,375,000 - - 9,375,000 9,375,000B.R.R. Guardian Modaraba

- a related party 24,100 24,100 97,529,661 - - 97,529,661 114,098,416222,828,728 3,749,999 - 226,578,727 264,649,612

Provision for impairment 12.2.2 (29,375,000) - - (29,375,000) (29,375,000)193,453,728 3,749,999 - 197,203,727 235,274,612

12.2.1

GroupFamilyTakaful

Takaful Business

Statutory FundsGroupFamilyTakaful

IndividualFamily Takaful

This represent Sukuk Certificates issued on October 12, 2007 for a period of 5 years. These certificates are fully secured against bankguarantee of Bank of Punjab. During the year 2011, Amtex defaulted in its repayment. Consequently, the Company suspended the furtheraccrual of profit from the sukuk. The guarantee has been called by the investors through their trustee “BankIslami Pakistan Limited”. During2012, the said guarantee expired, however, the legal advisor of the investors is of the opinion that the amount will be recovered as theguarantee for the same had been called before its expiry.

Statutory Funds

----------------------------------- (Rupees) -----------------------------------

----------------------------------- (Rupees) -----------------------------------

Share holders'Fund

These represent Government of Pakistan sukuks having maturity period of 3 years and carrying profit rate of 9.05% to 9.15% (2012: 9.22%to 9.28%) per annum.

No. of certificates

Included herein are term deposits of Rs.75 million (2012: Rs.75 million) maintained with islamic banks under profit and loss sharing basis havingmaturity upto 1 year and marked as lien in favour of State Bank of Pakistan in compliance with section 29 of Insurance Ordinance, 2000 and Rule 21of Takaful Rules, 2005. The Company intends to rollover these deposits on maturity.

These represent term deposits maintained with islamic banks / islamic banking operations of commercial banks under profit and loss sharing basishaving maturity upto 1 year and carrying profit rates ranging from 8.90% to 13.75% (2012: 8.50% to 13.75%) per annum.

Share holders'Fund


Takaful Business




12.2.2 Movement in provision for impairment on investments is as follows:

2013 2012

Opening balance 29,375,000 41,052,081Charge for the year - -Provision written off during the year - (11,677,081)Closing balance 29,375,000 29,375,000

12.3 Listed shariah compliant shares

Face value Name of the investee entity 2013 20122012 per share

(Rupees)

Oil and gas3,550 10.00 Attock Refinery Limited 425,726 594,9093,652 10.00 Mari Petroleum Company Limited 882,826 359,174

- 10.00 National Refinery Limited 323,280 -Oil and Gas Development

1,800 10.00 Company Limited 635,631 346,6985,718 10.00 Pakistan Petroleum Limited 2,002,887 1,010,8856,220 10.00 Pakistan State Oil Company Limited 1,981,361 1,444,3463,212 10.00 Shell (Pakistan) Limited 1,430,509 437,442

Chemicals- 10.00 Fauji Fertilizer Bin Qasim Limited 1,599,065 -

4,925 10.00 Fauji Fertilizer Company Limited 3,014,522 576,91521,000 10.00 Lotte Chemical Pakistan Limited 154,140 154,350

Construction and materials- 10.00 Cherat Cement Company Limited 1,613,895 -

4,500 10.00 Lucky Cement Limited 1,649,278 681,930- 10.00 Maple Leaf Cement Factory Limited 1,371,500 -

General industrials500 10.00 Tripack Films Limited - 96,000

Food producers- 10.00 Engro Foods Limited 261,103 -

Personal goods3,000 10.00 Nishat Mills Limited 1,081,529 191,550

Pharma and bio techAbbott Laboratories

- 10.00 (Pakistan) Limited 393,500 -4,004 10.00 GlaxoSmithKline Pakistan Limited 3,528,471 293,613

Fixed line telecommunicationPakistan Telecommunication

1,000 10.00 Company Limited 412,391 17,350

ElectricityK-Electric Limited (formerly Karachi

- 3.50 Electric Supply Company Limited 248,600 -

Multiutilities (Gas and water)9,900 10.00 Sui Southern Gas Company Limited 695,331 203,050

23,705,545 6,408,212

2,050

---------- (Rupees) ----------

---------- (Rupees) ----------

This represents provision for impairment Rs.29.375 million (2012: Rs.29.375 million) against first andsecond issue of sukuks of New Allied Electronics Industries (Private) Limited.

Number of shares2013

5,500

14,500

4,1511,500

2,3009,3615,9647,512

36,50026,92521,000

25,500

44,000

28,900

50,000

-

2,500

8,500

1,00025,904



12.4 Terms of government securities / sukuk certificates

Issue date Tenor RatingPrincipalpayment

Principalredemption

starting fromCoupon rate(per annum)

Couponpayment

Government securitiesGovernment of Pakistan

Ijara Sukuk- XIII 3 years N/A Maturity 9.05% Semi annually

Government of PakistanIjara Sukuk- XIV 3 years N/A Maturity 9.15% Semi annually

SukuksAmtex Limited 5 years N/A Quarterly Quarterly

Eden Housing Limited I 7 years N/A Quarterly Quarterly

Eden Housing Limited II 6 years N/A Quarterly Quarterly

Pak Elektron Limited I 9 years N/A Quarterly Quarterly

Pak Elektron Limited II 11 years N/A Quarterly Quarterly

New Allied ElectronicsIndustries (Private) Limited I 5 years N/A Semi annually Semi annually

New Allied ElectronicsIndustries (Private) Limited II 5 years N/A Quarterly Quarterly

B.R.R. Guardian Modaraba- a related party 8 years N/A Monthly Monthly

12.4.1

13. ADVANCES, DEPOSITS AND PREPAYMENTS

Aggregate

2013 2012

AdvancesAdvance against expenses 618,348 - - 618,348 832,159Advance commission 203,098 - - 203,098 47,625

DepositsSecurity deposits 2,478,963 - 75,973 2,554,936 2,497,700

PrepaymentsPrepaid expenses 261,278 - - 261,278 455,009Prepaid rent 2,295,133 - - 2,295,133 4,635,063Prepaid takaful coverage 181,394 - - 181,394 455,329Prepaid computer expenses 933,450 - - 933,450 1,235,855

6,971,664 - 75,973 7,047,637 10,158,740

June 28, 2009

March 28,2016

September18, 2015

October 12,2007

December31, 2007

March 03,2008

September18, 2012

March 28,2013

June 30, 2009

September30, 09

June 30, 2013

December 02,2010

December03, 2007

1 monthKibor

3 monthKibor +2.2%

July 27,2007

October 30,2008

3 monthKibor +2.25%

to 2.6%

July 07,2008

Takaful BusinessStatutory Funds

-------------------------------- (Rupees) --------------------------------

Shareholders'

Fund

IndividualFamilyTakaful

Group FamilyTakaful

September28, 2007

As per the Company's accounting policy and SECP's accounting regulations for family takaful companies, certain available-for-sale instruments are stated at lower of cost or market value (market value on an individual investment basis being taken aslower if the fall is other than temporary). However, International Accounting Standard (IAS) 39, "Financial Instruments:Recognition and Measurements" dealing with the recognition and measurement of financial instruments requires that theseinstruments should be measured at fair value. Accordingly, had these investments been measured at fair value, the carryingvalues as on December 31, 2013 would have been lower by Rs. 5.332 million (2012: Rs. 34.831 million).

August 07,2011

3 monthKibor +2%

3 monthKibor +3%

3 monthKibor +3%

3 monthKibor +1.75%

3 monthKibor +1%

January 10,2010

March 31,2008



14. INVESTMENT INCOME ACCRUED

2013 2012

Accrued profit on sukuksAmtex Limited 1,603,000 178,583 - 1,781,583 1,781,583Eden Housing Limited 494,997 - - 494,997 2,426,604Pak Elektron Limited 1,274,252 - - 1,274,252 5,950,767B.R.R. Guardian Modaraba 16,122,598 - - 16,122,598 20,659,492

Government securities - 3,971,394 47,128 4,018,522 345,735

Accrued profit on saving accounts 354,829 6,607,357 85,405 7,047,591 12,415,639

Accrued profit on term depositsBurj Bank Limited - - - - 460,751Al Baraka Bank (Pakistan) Limited 451,261 - - 451,261 172,814Habib Metropolitan Bank Limited -

Islamic Banking - 12,637 - 12,637 -

Meezan Bank Limited - 351,370 - 351,370 -

Dubai Islamic Bank Limited - - - - 131,383United Bank Limited - Ameen - - - - 49,315Bank Al Habib Limited - Islamic Banking - - - - 46,575Faysal Bank Limited - Barkat Islamic - 1,122,937 - 1,122,937 46,575Habib Bank Limited - Islamic Banking - 26,712 - 26,712 46,448Silk Bank Limited -

Emaan Islamic Banking - 2,790,986 - 2,790,986Soneri Bank Limited - Islamic Banking - 792,098 - 792,098 46,996

20,300,937 15,854,074 132,533 36,287,544 44,580,677

15. SUNDRY RECEIVABLES

Aggregate

2013 2012

Receivable from executives 744,067 - - 744,067 872,189Receivable from employees 321,827 - - 321,827 30,000Receivabe from employees against

branch expenses - net 1,895,022 - - 1,895,022 -Receivable from agents 865,183 - - 865,183 522,670Takaful claim receivable 5,787 - - 5,787 -Wakala fee receivable - - - - 11,236,736Mudarib share receivable 708,553 - - 708,553 1,350,167Tharawat fee receivable 84,962 - - 84,962 120,970Bid offer receivable 1,713,839 - - 1,713,839 1,410,026Receivables against disposal

of assets 465,000 - - 465,000 -Allocated contribution receivable -

from individual - PTF - 33,784,746 - 33,784,746 21,161,644Interfund receivable - 1,817,776 - 1,817,776 2,244,467ANF / risk contribution receivable - net - 114,029 - 114,029 -Other receivables 115,949 201,900 - 317,849 384,709

6,920,189 35,918,451 - 42,838,640 39,333,578

Statutory FundsShare

Holders'Fund


GroupFamilyTakaful

-------------------------------- (Rupees) --------------------------------

Takaful BusinessStatutory Funds

Takaful Business

ShareHolders'

Fund


GroupFamilyTakaful

-------------------------------- (Rupees) --------------------------------

Aggregate



2013 2012

16. DEFERRED TAX ASSET

Deferred taxation - net 131,529,261 107,237,702

16.1 This comprises of the following

Taxable temporary differences:Tax depreciation allowance (3,719,682) (3,885,141)

Deductible temporary differences:Provision for impairment on sukuks 9,987,500 10,281,250Provision for leave encashment 1,600,997 1,626,305Unused tax losses 16.1.1 123,660,446 99,215,288

131,529,261 107,237,702

16.1.1

17. CAPITAL WORK-IN-PROGRESS

Advance against purchase of assets 459,565 2,959,065Renovation work of branches 336,155 961,155

795,720 3,920,220

18. FURNITURE, FIXTURES, OFFICE EQUIPMENT, COMPUTERS AND MOTOR VEHICLES

December 31, 2013 Rate

Lease hold improvements 16,066,615 3,414,802 19,415,417 3,781,770 1,865,755 5,625,525 13,789,892 10%(66,000) (22,000)

Vehicles 23,028,324 279,500 17,916,138 15,529,393 3,873,677 14,698,603 3,217,535 20%(5,391,686) (4,704,467)

Computer equipment 19,076,610 915,131 19,086,721 17,457,776 1,065,093 17,629,965 1,456,756 33.33%(905,020) (892,904)

Furniture and fixtures 16,335,363 2,223,310 18,483,923 4,084,360 1,759,779 5,811,612 12,672,311 10%(74,750) (32,527)

Office equipment 20,775,174 2,641,309 23,286,283 5,441,038 2,251,860 7,641,738 15,644,545 10%(130,200) (51,160)

95,282,086 9,474,052 98,188,482 46,294,337 10,816,164 51,407,443 46,781,039(6,567,656) (5,703,058)

December 31, 2012

Lease hold improvements 14,128,644 1,937,971 16,066,615 2,302,215 1,479,555 3,781,770 12,284,845 10%- -

Vehicles 23,881,824 178,000 23,028,324 11,661,553 4,643,290 15,529,393 7,498,931 20%(1,031,500) (775,450)

Computer equipment 18,123,205 1,087,405 19,076,610 14,416,838 3,174,938 17,457,776 1,618,834 33.33%(134,000) (134,000)

Furniture and fixtures 12,871,993 3,463,370 16,335,363 2,656,701 1,427,659 4,084,360 12,251,003 10%- -

Office equipment 18,731,158 2,083,016 20,775,174 3,478,509 1,968,441 5,441,038 15,334,136 10%(39,000) (5,912)

87,736,824 8,749,762 95,282,086 34,515,816 12,693,883 46,294,337 48,987,749(1,204,500) (915,362)

Closingbalance

Openingbalance

---------- (Rupees) ----------

COST ACCUMULATED DEPRECIATION

-------------------------------------------------------- (Rupees) --------------------------------------------------------

Openingbalance

For the year /(on disposals)

Closingbalance

Deferred tax asset amounting to Rs.9.276 million (2012: Rs.12.756 million) arising on unused tax losses has not been recognised in these financialstatements. Deferred tax asset is recognised only to the extent that it is probable that sufficient future taxable profits will be available against whichthe asset can be utilised.

Net BookValue

Additions /(disposals)



18.1 Disposal of property and equipment - (owned) - during the year

WrittenProperty and Accumulated down Disposal Gain / Mode of Particulars ofequipment Cost depreciation value proceed (Loss) disposal purchaser

----------------------------------- (Rupees) -----------------------------------

Vehicle 1,322,889 1,102,408 220,482 396,867 176,386 Syed Mehboob Shah (Employee)

Vehicle 40,000 34,000 6,000 6,000 - Syed Irfan (Employee)

Vehicle 70,500 62,275 8,225 8,225 - M. Hanif (Employee)

Vehicle 1,325,760 1,126,896 198,864 331,440 132,576

Vehicle 345,476 339,718 5,758 40,758 35,000 Adnan I Khan (Employee)

Vehicle 649,136 605,860 43,276 465,000 421,724 Inam Ullah

Vehicle 642,925 471,478 171,447 400,000 228,553 M. Arif Khan

Vehicle 995,000 961,833 33,167 116,086 82,919 Dr. Bakht Jamal (Employee)

Office equipment 130,200 51,160 79,040 67,780 (11,260) Pak Kuwait Takaful Limited

Computerequipment 750,020 737,903 12,117 345,552 333,435 Pak Kuwait Takaful Limited

Computerequipment 155,000 155,000 - - - Scraped

Lease holdimprovements 66,000 22,000 44,000 34,300 (9,700) Pak Kuwait Takaful Limited

Furniture and fixtures 74,750 32,527 42,223 7,500 (34,723) Scraped

2013 6,567,656 5,703,058 864,599 2,219,508 1,354,910

2012 1,204,500 915,362 289,138 381,499 109,500

19. COMPUTER SOFTWARE

December 31, 2013 Rate

Computer software 31,132,386 - 31,132,386 22,225,139 4,909,170 27,134,309 3,998,077 20%31,132,386 - 31,132,386 22,225,139 4,909,170 27,134,309 3,998,077

December 31, 2012

Computer software 31,132,386 - 31,132,386 15,998,662 6,226,477 22,225,139 8,907,247 20%31,079,104 - 31,132,386 9,772,612 6,226,477 22,225,139 8,907,247

Companypolicy

Companypolicy

Companypolicy

Companypolicy

Negotiation

COST ACCUMULATED AMORTISATION

-------------------------------------------------------- (Rupees) --------------------------------------------------------

Openingbalance

Additions /(disposals) Net book value

Openingbalance

For the year /(on disposals)

Closingbalance

Closingbalance

Insuranceclaim

Companypolicy

Companypolicy

Negotiation

Insuranceclaim

Companypolicy

Nasir Ali Rizvi (Employee)

Insuranceclaim

Negotiation



2013 2012Note

20. OTHER INCOME

Gain on disposal of fixed assets 1,354,910 109,500Other recoveries 608,991 384,480

1,963,901 493,980

21. MANAGEMENT EXPENSES

Salaries and other benefits 110,069,084 102,936,042Provident fund contributions 21.1 4,382,963 4,346,753Leave encashment 457,760 1,224,864Employee old age contribution 1,502,150 1,206,440Directors' meeting fees 215,000 245,000Actuarial services charges 2,376,000 2,376,000Legal and professional 556,711 1,306,500Advertisement and publicity 707,945 1,005,269Vehicle running 14,654,407 14,022,871Ijara rentals 5,059,569 3,699,053Shariah advisor fee 1,920,000 1,920,000Accommodation charges 476,692 415,785Printing and stationery 2,930,742 4,518,845Training and development 1,010,453 1,416,847Depreciation 18 10,816,164 12,693,883Amortisation 19 4,909,170 6,226,477Rent 20,732,080 17,864,088Auditors' remuneration 21.2 425,000 400,000Consultancy fees 1,026,750 705,000Takaful coverage 3,940,687 3,201,664Utilities 7,872,282 7,391,019Travelling 815,120 928,197Medical 2,089,944 2,241,096Fees and subscriptions 1,589,088 1,154,330Computer expenses 9,819,842 9,608,642Communication 7,968,459 7,352,312Entertainment 3,657,800 3,934,284Repair and maintenance 3,078,772 3,983,595Rates and taxes 916,482 691,455Sales promotion expenses 3,754,023 3,677,485Revenue stamps 5,061,112 3,710,303Others 528,104 322,489

235,320,355 226,726,588

21.1 Disclosures relating to Provident Fund

Size of the fund 23,822,258 17,051,740Cost of investments made 18,640,036 13,461,729Percentage of investments made 78% 79%Fair value of investments 18,640,036 13,461,729

Break-up of investmentsGOP Ijarah Sukuk 10,000,000 -Special account with an Islamic banks 8,640,036 12,161,729Mutual Fund Units - 1,300,000

---------- (Rupees) ----------



2013 2012

Break-up of investmentsGOP Ijarah Sukuk 42% -

Special account with an Islamic banks 36% 71%Mutual Fund Units - 8%

2013 2012

21.2 Auditors' remuneration

Audit fee 325,000 300,000Other certifications 100,000 100,000

425,000 400,000

22. TAXATION

Current 3,054,340 1,224,121Prior - 234,839Deferred (24,291,559) (22,409,260)

(21,237,219) (20,950,300)

22.1 Relationship between tax expense and accounting loss

Accounting loss before tax (69,018,952) (63,943,708)Tax rate in percentage 34% 35%Tax on accounting loss (23,466,444) (22,380,298)Turnover tax charge 3,054,340 1,224,121Prior year tax charge - 234,839Others (825,116) (28,962)Tax charge for the year (21,237,219) (20,950,300)

22.2

2013 201223. LOSS PER SHARE

Loss after tax Rupees (47,781,733) (42,993,408)

Weighted average number of shares Number 75,000,000 75,000,000

Loss per share Rupees (0.64) (0.57)

23.1

% age of size of the fund

The figures for 2013 are based on the un-audited financial statements of the Provident Fund. Investments out ofProvident Fund have been made in accordance with the provisions of section 227 of the Ordinance and the rulesformulated for this purpose.

---------- (Rupees) ----------

There were no convertible dilutive potential Ordinary shares outstanding as at December 31, 2013 and 2012.

Income tax assessments of the Company have been finalised upto and including tax year 2013 (income yearended December 31, 2012). The returns for the tax years 2012-2013 are being finalised under Universal SelfAssessment Scheme which provides that the returns filed are deemed as assessed unless opened forreassessment under section 120 of the Income Tax Ordinance, 2001.



24. MOVEMENT IN TECHNICAL RESERVES

2013 2012

Net off retakafulTechnical reserves at beginning

of the year- net technical reserves 87,103,685 2,564,078 89,667,763 42,028,071- incurred but not reported reserves 1,337,649 200,000 1,537,649 1,044,786- surplus equalisation reserves 3,622,850 390,000 4,012,850 4,012,850- provision for outstanding claims

exceeding 12 months 1,514,282 - 1,514,282 -- contingency reserves - 500,000 500,000 500,000

93,578,466 3,654,078 97,232,544 47,585,707

Technical reserves incurredduring the year

- net technical reserves 79,043,910 1,899,452 80,943,362 47,639,692- incurred but not reported reserves 243,450 (21,492) 221,958 492,863- surplus equalisation reserves 2,192,316 (390,000) 1,802,316 -- provision for outstanding claims

exceeding 12 months 1,021,731 - 1,021,731 1,514,282- contingency reserves - (500,000) (500,000) -

82,501,407 987,960 83,489,367 49,646,837

Technical reserves at the endof the year

- net technical reserves 166,147,595 4,463,530 170,611,125 89,667,763- incurred but not reported reserves 1,581,099 178,508 1,759,607 1,537,649- surplus equalisation reserves 5,815,166 - 5,815,166 4,012,850- provision for outstanding claims

exceeding 12 months 2,536,013 - 2,536,013 1,514,282- contingency reserves - - - 500,000

176,079,873 4,642,038 180,721,911 97,232,544

Net movement in technicalreserves 82,501,407 987,960 83,489,367 49,646,837

Gross off retakafulTechnical reserves at the end

of the year

- net technical reserves 175,352,746 14,390,885 189,743,631 105,692,207- incurred but not reported reserves 1,685,586 714,031 2,399,617 2,257,766- surplus equalisation reserves 5,815,166 - 5,815,166 4,012,850- provision for outstanding claims

exceeding 12 months 2,536,013 - 2,536,013 1,514,282- contingency reserves - - - 500,000

185,389,511 15,104,916 200,494,427 113,977,105

Takaful BusinessAggregate


Group FamilyTakaful

------------------------------ (Rupees) ----------------------------

Statutory Funds



25. REMUNERATION OF CHIEF EXECUTIVE,DIRECTORS AND EXECUTIVES

2013 2012 2013 2012 2013 2012 2013 2012

Remuneration 6,720,000 6,720,000 - - 23,218,155 25,257,133 29,938,155 31,977,133Motor vehicle and

medical expenses 368,905 396,762 - - 6,343,100 7,339,160 6,712,005 7,735,922Meeting fee - - 215,000 245,000 - - 215,000 245,000Bonus - - - - - - - -Provident fund

contribution 440,004 440,004 - - 2,149,416 2,362,544 2,589,420 2,802,5487,528,909 7,556,766 215,000 245,000 31,710,671 34,958,837 39,454,580 42,760,603

Number of persons 1 1 6 7 18 22

25.1 Directors are provided a fee of Rs.10,000 and 5,000 for attending the Board meetings and its committee meetings respectively.

25.2 In addition, the Chief Executive and Executives are provided with free use of Company maintained car for personal and business use.

26. TRANSACTIONS AND BALANCES WITH RELATED PARTIES

December 31, December 31,

Relationship with the Company Nature of transactions 2013 2012

Associated companies / other related partiesB.R.R. Guardian Modaraba Contribution received 122,420 89,360B.R.R. Guardian Modaraba Investment made - 49,395,292B.R.R. Guardian Modaraba Security deposits 726,600 487,000B.R.R. Guardian Modaraba Surplus distribution 9,567 -B.R.R. Guardian Modaraba Investment income 9,447,082 2,381,250B.R.R. Guardian Modaraba Ijarah rentals 1,169,878 616,532B.R.R. Guardian Modaraba Rent of premises 6,127,604 5,211,270B.R.R. Guardian Modaraba Purchase of assets - 85,000Crescent Standard Modaraba Security deposits 1,282,350 1,282,350Crescent Standard Modaraba Ijarah rentals 4,464,875 2,507,337Dawood Capital Management Limited Contribution received 11,865 22,035Dawood Capital Management Limited Surplus distribution 1,985 -First Dawood Investment Bank Limited Contribution received 71,813 72,078Dawood Islamic Fund Investment disposed off - (50,982,120)Dawood Equities Limited Brokerage expense 27,631 4,351Key management personnel - note 25 Salary 7,528,909 7,556,766

27. SEGMENT INFORMATION

2013 2012 2013 2012 2013 2012

SEGMENT ASSETSSegment assets 805,638,436 490,856,354 11,878,083 13,338,323 817,516,519 504,194,677Unallocated corporate assets 534,749,537 567,867,958Total assets 1,352,266,056 1,072,062,635

SEGMENT LIABILITIESSegment liabilities 805,638,436 490,856,354 11,878,083 13,338,323 817,516,519 504,194,677Unallocated corporate liabilities 534,749,537 567,867,958Total liabilities 1,352,266,056 1,072,062,635

These related parties comprise of group companies, entities under common management, directors, major shareholders and key management personnel andemployee retirement benefit funds. Transactions with related parties are entered into at rates negotiated with them.

------------------------------------------------------------ (Rupees) ------------------------------------------------------------

Class of business wise assets and liabilities have been disclosed in the balance sheet prepared in accordance with the requirement of Insurance Ordinance,2000 and the SECP (Insurance) Rules, 2002. The following table presents information regarding segment assets and liabilities as at December 31, 2013 andDecember 31, 2012.

Chief Executive Directors Executives Aggregate

------------- (Rupees) -------------

Details of the balances and transactions with related parties, other than those which have been specifically disclosed elsewhere in these financial statements,are as follows:

---------------------------------------------- (Rupees) ----------------------------------------------

Individual Family Takaful Group Family Takaful Total

28. MANAGEMENT OF TAKAFUL AND FINANCIAL RISK

The Company issues contracts that transfer Takaful risk or financial risk or both. This section summarises these risks and the waythe Company manages them.

28.1 Takaful risk

The principal risk the Company faces under Takaful contracts is the possibility that the risk event occurs and the uncertainty of theamount of the resulting claims i.e. the frequency and severity of claims. By the very nature of a Takaful contract, this risk is randomand therefore unpredictable. The objective of the Company is to ensure that sufficient reserves are available to cover these liabilities.

The Company strictly follows the underwriting policies as specified by Retakaful Operators. The focus is on issuing contracts topeople having moderate risk of mortality, and morbidity and having appropriate economic worth and source of earned income. TheCompany has designed procedures to promote objective reporting of medical information and qualitative as well as quantitative riskselection criterion.

In case of Group Family Takaful, special care is exercised while granting free cover limit. The Company has developed criterionfor minimum size and level of sophistication for the group clients to avoid moral hazard.

The Company has obtained Retakaful arrangements with prominent international Retakaful operators having high credit rating. Therisks exceeding reasonably low level of retention limits are transferred to Retakaful Operators. The Company has also obtainedcatastrophic cover to minimise risk accumulation in any one loss event.

The Company claims strategy is to settle all genuine claims promptly and fairly as per laid down rules and regulations. The Companybelieves in helping claimants and participants through quick response and empathic behaviour. To identify the fraudulent claimsand to protect the interest of genuine participants, all early claims are bound to pass through claims investigation process.

28.1.1 Categories of Takaful contracts

Takaful contracts issued by the Company are divided into

i) Long-term Takaful contractsii) Short-term Takaful contracts

i)Long-term Takaful contracts

a) Frequency and severity of claims

For contracts where death is the insured risk, the most significant factors that could increase the overall frequency of claims areepidemics or widespread changes in lifestyle, such as eating, smoking and exercise habits, resulting in earlier or more claims thanexpected.

In individual life business, the frequency and severity of claims is restricted because of underwriting strategies which do not permithigher sums covered to higher age groups. Secondly, high sums covered are shared with Retakaful Operators.

The mortality risk is well diversified because the lives covered are spread all over Pakistan where the Company has establishedbranches.





Benefits (Individual Family Takaful)Amount of Sum Covered Number of Before After

policies retakaful retakafulRupees Percentage Rupees Percentage

0 - 200,000 3,225 507,499,234 5% 253,749,617 7%200,000 - 400,000 4,764 1,546,456,356 16% 772,591,018 21%400,000 - 800,000 4,014 2,423,389,149 26% 1,187,998,272 33%800,000 - 1,000,000 1,138 1,160,168,113 12% 545,604,063 15%More than 1,000,000 1,787 3,917,011,533 41% 893,500,000 24%Total 14,928 9,554,524,385 100% 3,653,442,970 100%

Benefits (Individual Family Takaful)Amount of Sum Covered Number of Before After

policies retakaful retakafulRupees Percentage Rupees Percentage

0 - 200,000 2,047 307,248,067 5% 153,624,033 6%200,000 - 400,000 3,318 987,050,091 14% 493,525,046 19%400,000 - 800,000 2,284 1,141,219,124 17% 570,609,562 22%800,000 - 1,000,000 790 555,580,391 8% 277,790,196 10%More than 1,000,000 2,318 3,782,525,770 56% 1,133,411,944 43%Total 10,757 6,773,623,443 100% 2,628,960,781 100%

Group Family TakafulIndustry Sector Net

claimsRupees Percentage Rupees Percentage Rupees

Construction 16,000 0.07% - - 16,000Chemical industries 2,800,000 11.49% 2,150,000 12.0% 650,000Clothing 4,080,970 16.75% 2,555,456 14.3% 1,525,514Financial and professional 3,687,283 15.13% 2,490,440 13.9% 1,196,843Food and housekeeping industries 465,308 1.91% 330,000 1.8% 135,308Protection services 200,000 0.82% 150,000 0.8% 50,000Manufacturing 4,220,768 17.32% 3,242,750 18.2% 978,018Transportation and public utilities 2,767,333 11.36% 2,475,000 13.9% 292,333Educational services 17,756 0.07% 7,725 0.0% 10,031Trade and services 3,149,000 12.92% 2,100,000 11.8% 1,049,000Other 2,961,643 12.15% 2,359,169 13.2% 602,475

24,366,061 100% 17,860,540 100% 6,505,522

Group Family TakafulIndustry Sector Net

claimsRupees Percentage Rupees Percentage Rupees

Agriculture and farming 697,161 3% 450,000 3% 247,161Chemical 7,083,762 34% 5,030,341 34% 2,053,421Clothing 240,000 1% 150,000 1% 90,000Financial and professional 625,800 3% 450,000 3% 175,800Food and housekeeping industries 700,000 3% 525,000 4% 175,000Metal industries 2,396,524 11% 1,701,563 12% 694,961Trade and services 5,087,948 24% 3,402,239 23% 1,685,709Transportation and public utilities 106,524 1% 75,000 1% 31,524Educational services 3,813,493 18% 2,849,460 19% 964,033Others 209,118 1% 150,000 1% 59,118

20,960,330 100% 14,783,603 100% 6,176,727

Retakaful ceded

The table below presents the concentration of benefits across five bands of insured benefits per individual life assured. The benefitfigures are shown gross and net of the retakaful contracts described below. At year-end, none of these takaful contracts hadtriggered a recovery under the retakaful held by the Company.

The following tables disclose the concentration of liabilities of the short-term contracts by the industry sector in which theparticipant operates and by the maximum covered loss limit included in the terms of the contract. The amounts are the carryingamount of the liabilities (gross and net of retakaful) arising from short-term contracts.

Gross claims Retakaful ceded

Gross claims

2013

2012

2013

2012



b) Sources of uncertainty in the estimation of future benefit payments and contribution receipts

c) Process used to decide on assumptions

Mortality and morbidity experience:

Persistency rates for long-term individual policies:

Expense levels and inflation

Investment returns

Tax

There is no major impact of taxes on valuation of liabilities, future benefit payments and contribution receipts.

d) Change in assumptions

The Company did not change its assumptions for the takaful contracts disclosed in this note.

e) Sensitivity analysis

The valuation method does not take into account persistency of individual policies because of the prescribed basis.

The administrative charges (Wakala Fee, Tharawat Fee and Mudarib Fee) are fixed for each contract. All expenses arecharged to Share Holders’ Fund. Hence, the inflationary risk is borne by the Share Holders’ Fund.

Uncertainty in the estimation of future benefit payments and contribution receipts for long-term contracts arises from theunpredictability of long-term changes in overall levels of mortality and the variability in contract holder behaviour.

The Company uses appropriate base tables of standard mortality according to the type of contract being written and theterritory in which the insured person resides. An investigation into the actual experience of the Company over the few years iscarried out and statistical methods are used to adjust the crude mortality rates to produce a best estimate of expected mortalityfor the future. Where data is sufficient to be statistically credible, the statistics generated by the data are used withoutreference to an industry table. Where, this is not based on standard industry tables, it is adjusted for the Company’s overallexperience. For contracts that insure survival, an adjustment is made for future mortality improvements based on trendsidentified in the data and in the continuous mortality investigation bodies. The impact of any historical evidence of selectivetermination behaviour will be reflected in this experience. The Company maintains voluntary termination statistics toinvestigate the deviation of actual termination experience against assumptions. Statistical methods are used to determineappropriate termination rates. An allowance is then made for any trends in the data to arrive at a best estimate of futuretermination rates.

Mortality / Morbidity tables are based on the risk rates being charged by the Retakaful Operators supporting individualbusiness. These rates vary due to the age, sex, occupation and the nature of industry.

The following tables present the sensitivity of the value of takaful liabilities disclosed in this note to movements in theassumptions used in the estimation of takaful liabilities. For liabilities under long-term takaful contracts changes in assumptionswill not cause a change to the amount of the liability, unless the change is severe enough to trigger a liability adequacy testadjustment. No losses arose in either 2013 or 2012, based on the results of the liability adequacy test. The table belowindicates the level of the respective variable that will trigger an adjustment and then indicates the liability adjustment requiredas a result of a further deterioration in the variable.

The valuation of risk related benefits of Individual Family Takaful plans has been carried out using 3.75% discount rateassumption in accordance with valuation regulations.

The participant account values of these plans depend upon actual investment returns earned on these policies. No investmentguarantees are offered by the Company. Investment risk is borne by the policy holders.

The Company believes that the liabilities under the contracts provided for at the year end are adequate. The sensitivity tochanges in claim liabilities is determined separately for each class of business while keeping all assumptions constant.



Long-Term Individual Unit Linked Takaful Plans(Participants’ Liability in the Individual Family Takaful PTF)

Change in Change in Change invariable liability liability

2013 2012

Variables + 5% 805,833 725,780Worsening of mortality and / or

morbidity rates for risk policies + 10% 1,611,242 1,266,610

Improvement of mortality rates for annuities N/A N/A N/A

Worsening of persistency rates for long-term No assumption of persistency in estimatingindividual policies Policyholder's liability

Increase in expense levels and inflation No assumption of expenses in estimatingPolicyholder's liability

Decrease in investment returns - 1% 20,472,947 10,242,914 - 2% 44,943,835 22,537,887

- The process for estimation of IBNR and its provisioning mechanism:

Mortality assumption: SLIC (2001-2005) Table

Profit rate: 3.75% per annum

Expenses and Persistency: No explicit assumptions

ii) Short-duration family takaful contracts

a) Frequency and severity of claims

Due provision was made for claims Incurred But Not Reported (“IBNR”) by analysing claims incurred afterthe valuation date till the reporting date. The claims actually intimated in January 2014 which pertains tocalendar year 2013 were taken as IBNR reserve after adjusting the amount for unreported claimspertaining to 2013. Provision for claims not reported up to the reporting date was based on standardactuarial methods.

The assumptions are used only to value risk related components of the Unit Linked Individual FamilyTakaful Plans. These assumptions are fixed according to the valuation regulations.

The following table reports the year-end aggregated insured benefits for the in-force short-durationlife takaful contracts by industry sector. The analysis of such contractual exposures is deemed to bethe best indicator of the takaful risk concentration by industry for these contracts.

For contracts where death is the covered risk, the most significant factors that could increase theoverall frequency of claims are epidemics or widespread changes in lifestyle, such as eating,smoking and exercise habits, resulting in earlier or more claims than expected.

In Group Family Takaful business, the number of groups and number of lives covered are enough totreat the business as well diversified. Hence, frequency of claims is controlled through diversification.The severity of claims is restricted due to retakaful and requirement of medical underwriting for highsums covered in the groups.



Schedule of concentration of risk - short-term contracts

Industry(Rupees) Percentage (Rupees) Percentage

Construction 63,200,000 0.52% 15,800,000 0.60%Chemical industries 217,000,000 1.79% 48,825,000 1.87%Clothing 3,755,310,300 31.06% 930,750,000 35.64%Electrical equipment and supplies 128,400,000 1.06% 32,100,000 1.23%Financial and professional 4,845,858,135 40.08% 894,992,188 34.27%Food and housekeeping industries 403,700,000 3.34% 100,012,500 3.83%Protection services 24,800,000 0.21% 6,200,000 0.24%Manufacturing 1,058,816,279 8.76% 225,647,820 8.64%Trade and services 678,600,000 5.61% 165,568,000 6.34%Transportation and public utilities 51,800,000 0.43% 11,725,000 0.45%Educational services 624,601,559 5.17% 121,544,512 4.65%Other 238,324,167 1.97% 58,606,042 2.24%

12,090,410,439 100% 2,611,771,062 100%

Industry(Rupees) Percentage (Rupees) Percentage

Agriculture and farming 67,450,000 0.54% 16,862,500 0.60%Chemical industries 566,500,000 4.53% 131,275,000 4.68%Clothing 2,497,100,000 19.99% 619,125,000 22.09%Electrical equipment and supplies 59,700,000 0.48% 13,000,000 0.46%Financial and professional 2,812,394,620 22.51% 474,229,081 16.92%Food and housekeeping industries 187,750,000 1.50% 46,887,500 1.67%Metal industries 63,200,000 0.51% 15,800,000 0.56%Mining and quarrying 1,514,691,270 12.12% 369,659,781 13.19%Trade and services 2,383,088,872 19.07% 531,191,931 18.95%Transportation and public utilities 2,217,794,503 17.75% 553,698,626 19.76%Educational services 20,900,000 0.17% 5,225,000 0.19%Other 104,300,000 0.83% 25,850,000 0.92%

12,494,869,265 100% 2,802,804,419 100%

c) Process used to decide on assumptions

The assumptions used for these contracts are the same as for long-term contracts.

d) Change in assumptions

The Company did not change its assumptions during the year.

Break-up of total sum cover and risk ceded

2013 2012 2013 2012 2013 2012

Group FamilyTakaful 12,090,410,439 12,494,869,265 9,478,639,378 9,692,064,846 2,611,771,062 2,802,804,419

Individual FamilyTakaful 9,554,524,385 6,773,623,443 5,901,081,416 4,144,662,662 3,653,442,969 2,628,960,781

21,644,934,824 19,268,492,708 15,379,720,793 13,836,727,508 6,265,214,031 5,431,765,200

28.1.2 Claim development

2013 2012Aging of outstanding claims

Upto one year 9,509,534 6,285,969One to two years 445,800 3,756,500Two years to three years 200,000 -

10,155,334 10,042,469

2013

2012

---------------------------------------------------- (Rupees) ----------------------------------------------------

Gross sum covered Retakaful Net

Net of retakafulTotal sum covered before retakaful

Total sum covered before retakaful Net of retakaful

---------- (Rupees) ----------

The following table shows the development of claims over a period of time on gross basis. The Company maintains adequate reserves in respectof its Takaful business in order to protect against adverse future claims experience and developments. The uncertainties about the amount andtiming of claim payments are normally resolved within one year.

Other than for the testing of the adequacy of the liability representing the unexpired risk at the end of the reporting period, there is no need toestimate mortality rates or morbidity rates for future years because these contracts have short duration. However, for incurred disability incomeclaims, it is necessary to estimate the rates of recovery from disability for future years. Standard recovery tables produced by reinsurers areused as well as the actual experience of the Company. The influence of economic circumstances on the actual recovery rate for individualcontracts is the key source of uncertainty for these estimates.

b) Sources of uncertainty in estimates of future claims



29. ASSETS LIABILITIES MATCHING

Takafulcontracts

Investmentcontracts

Takafulcontracts

Investmentcontracts

Other financialassets Other assets

AssetsInvestments

Listed securities 23,705,545 - 23,705,545 - - - -Unlisted securities 197,203,727 - 3,749,999 - - 193,453,728 -Government securities 165,000,000 36,000,000 127,000,000 2,000,000 - - -

Amount due from retakaful 1,227,533 584,893 - 642,640 - - -Cash and bank deposits 675,614,844 240,876,790 315,043,715 8,453,511 - 111,240,828 -Contributions due but unpaid 573,426 - - 573,426 - - -Investments income accrued 36,287,544 6,093,937 9,760,137 132,533 - 20,300,937 -Advance deposits and prepayments 7,047,637 - - 75,973 2,478,963 4,492,701Advance taxation - net 19,663,063 1,127,118 5,777,851 - - - 12,758,094Sundry receivables 42,838,640 1,931,799 33,986,652 - - 6,920,189 -Fixed assets 51,574,836 - - - - - 51,574,836Deferred tax 131,529,261 - - - - - 131,529,261

1,352,266,056 286,614,537 519,023,899 11,878,083 - 334,394,645 200,354,892

Creditors and accrualsOutstanding claims 10,155,334 6,519,084 - 3,636,250 - - -Contribution received in advance 35,312,225 35,312,225 - - - - -Amount due to agents 37,366,770 - - - - 37,366,770 -Other creditors and accruals 63,778,578 34,930,573 2,215,740 854,646 - 21,292,836 4,484,783

146,612,907 76,761,882 2,215,740 4,490,896 - 58,659,606 4,484,783

Net 1,205,653,149 209,852,655 516,808,159 7,387,187 - 275,735,039 195,870,109337,844

Takafulcontracts

Investmentcontracts

Takafulcontracts

Investmentcontracts

Other financialassets Other assets

AssetsInvestments

Listed securities 6,408,212 - 6,408,212 - - - -Unlisted securities 235,274,612 - 3,749,999 - - 231,524,613 -Government securities 45,026,377 2,000,000 43,026,377 - - - -

Amount due from retakaful 1,046,884 382,425 - 664,459 - - `Cash and bank deposits 504,981,654 164,618,976 235,824,227 10,807,153 - 93,731,298 -Contributions due but unpaid 1,529,538 - - 1,529,538 - - -Investments income accrued 44,580,677 4,850,892 6,549,405 337,173 - 32,843,207 -Advance deposits and prepayments 10,158,740 - - - 2,497,700 7,661,040Advance taxation - net 14,669,445 - - - - - 14,669,445Sundry receivables 39,333,578 2,243,999 21,201,842 - - 15,887,737 -Fixed assets 61,815,216 - - - - - 3,920,220Deferred tax 107,237,702 - - - - - 107,237,702

1,072,062,635 174,096,292 316,760,062 13,338,323 - 376,484,555 191,383,403

Creditors and accrualsOutstanding claims 10,042,469 4,807,469 - 5,235,000 - - -Contribution received in advance 23,166,316 23,166,316 - - - - -Amount due to agents 31,786,572 - - - - 31,786,572 -Other creditors and accruals 59,706,898 32,917,038 3,882,028 1,213,327 - 19,017,721 2,676,784

124,702,255 60,890,823 3,882,028 6,448,327 - 50,804,293 2,676,784

Net 947,360,380 113,205,469 312,878,034 6,889,996 - 325,680,262 188,706,619

----------------------------------------------- (Rupees) -----------------------------------------------

2012

Total

Unit linked contracts Group contracts Corporate

----------------------------------------------- (Rupees) -----------------------------------------------

2013

Total

Unit linked contracts Group contracts Corporate



30. FINANCIAL RISK MANAGEMENT

30.1 Risk management framework

30.2 Credit risk

Exposure to credit risk

Retakaful is used to manage takaful risk. This does not, however, discharge the Company’s liability as primarytakaful operator. If a retakaful operator fails to pay a claim for any reason, the Company remains liable for thepayment to the participant. The creditworthiness of retakaful operators is considered on an annual basis byreviewing their financial strength prior to finalisation of any contract.

Exposures to individual participants and groups of participants are collected within the ongoing monitoring of thecontrols associated with regulatory solvency. Where there exists significant exposure to individual participants,or homogenous groups of participants, a financial analysis equivalent to that conducted for retakaful operators iscarried out by the Company risk department.

The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (includingcurrency risk, profit rate risk and price risk). The Company's overall risk management policy focuses on theunpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financialperformance. In particular, the key financial risk is that in the long-term its investment proceeds are not sufficient tofund the obligations arising from its takaful and investment contracts.

The Board of Directors has overall responsibility for establishment and over sight of the Company's riskmanagement framework. The Board is responsible for developing and monitoring the Company’s riskmanagement policies.

The Company’s risk management policies are established to identify and analyse the risks faced by theCompany, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Riskmanagement policies and systems are reviewed regularly to reflect changes in market conditions and theCompany’s activities. The Company, through its training and management standards and procedures, aims todevelop a disciplined and constructive control environment in which all employees understand their roles andobligations.

The audit committee oversees compliance by management with the Company’s risk management policies andprocedures, and reviews the adequacy of the risk management framework in relation to the risks faced by theCompany. The Audit Committee is assisted in its oversight role by a outsourced Internal Audit function. InternalAudit undertakes both regular and adhoc reviews of risk management controls and procedures, the results ofwhich are reported to the Audit Committee.

Credit risk is the risk, which arises with the possibility that one party to a financial instrument will fail to dischargeits obligation and cause the other party to incur a financial loss. The Company attempts to control credit risk bymonitoring credit exposures by undertaking transactions with a large number of counterparties in variousindustries and by continually assessing the credit worthiness of counterparties.

The Company structures the levels of credit risk it accepts by placing limits on its exposure to a singlecounterparty, or groups of counterparties, and to geographical and industry segments. Such risks are subject toan annual or more frequent review. Limits on the level of credit risk by category and territory are approvedquarterly by the Board of Directors.



The carrying amount of financial assets representing the maximum credit exposure are specified below:

2013 2012

Financial assets

Cash and bank deposits 675,614,844 504,981,654Investments 385,909,272 241,682,824Contributions due but unpaid 573,426 1,529,538Amount due from retakaful companies 1,227,533 1,046,884Investment income accrued 36,287,544 44,580,677Advance and deposits 2,554,936 2,497,700Sundry receivables 42,838,640 39,333,578

1,145,006,195 835,652,855

Financial assetsSecured 362,203,727 235,274,612Unsecured 782,802,468 600,378,243

1,145,006,195 835,652,855

Not past due 1,078,131,196 768,777,856Past due 66,874,999 66,874,999

1,145,006,195 835,652,855

The age analysis of financial assets is as follows:

Not past due 1,078,131,196 - 768,777,856 -Past dueUpto 1 year - - - -More than 1 year 66,874,999 (29,375,000) 66,874,999 (29,375,000)Total 1,145,006,195 (29,375,000) 835,652,855 (29,375,000)

RatingShort-term Long-term agency Rupees

2013Burj Bank Limited A-1 A JCR VIS 179,085,874Al Baraka Bank (Pakistan) Limited A-1 A JCR VIS 104,560,524Dubai Islamic Bank Limited A-1 A JCR VIS 10,228,944Meezan Bank Limited A-1 + AA JCR VIS 64,388,907Faysal Bank Limited (Islamic Division) A-1 + AA JCR VIS 50,036,713Habib Bank Limited (Islamic Division) A-1 + AAA JCR VIS 50,009,733UBL Ameen Islamic Banking A-1 + AA + JCR VIS 11,541Silk Bank Limited Emaan Islamic Banking A-2 A - JCR VIS 70,384,902Bank Alfalah Limited A-1 + AA PACRA 863,884Bank Al-Habib Limited (Islamic Division) AA + A-1 + PACRA 6,876Soneri Bank Limited (Islamic Division) A-1 + AA - PACRA 95,008,027Habib Metropolitan Bank Limited (Islamic Division) A-1 + AA + PACRA 50,000,000

` 674,585,925

---------- (Rupees) ----------

2013 2012

-------------------------------- (Rupees) --------------------------------

Carrying value Impairment

The credit quality of Company's bank balances can be assessed with reference to external credit ratings as follows:

Rating

Carrying value Impairment



Rating RupeesShort-term Long-term agency

2012Burj Bank Limited A-1 A JCR VIS 146,352,605Al Baraka Bank (Pakistan) Limited A-1 A JCR VIS 89,154,564Dubai Islamic Bank Limited A-1 A JCR VIS 5,511,541Meezan Bank Limited A-1+ AA- JCR VIS 10,826,045Faysal Bank Limited (Islamic Division) A-1 + AA JCR VIS 50,011,902Habib Bank Limited (Islamic Division) A-1 + AAA JCR VIS 50,000,391UBL Ameen Islamic Banking A-1 + AA+ JCR VIS 50,000,500Bank Alfalah Limited A-1 + AA PACRA 1,153,797Bank Al-Habib Limited (Islamic Division) AA + A-1 + PACRA 50,000,000Soneri Bank Limited (Islamic Division) A-1 + AA- PACRA 50,000,500

503,011,845

Concentration of credit risk

Rupees % Rupees %Textile 71,585 12.5% 435,778 28%Manufacturing 6,910 1.2% - -Food 308,846 53.9% 241,047 16%Cement - - 36,458 2%Financial 103,200 18.0% 772,370 50%Others 82,885 14.5% 43,885 3%

573,426 100% 1,529,538 100%

Amount due from retakaful operators in respect of retakaful recoveries against outstanding claims

RatingA or above 1,227,533 24,129,123 -BBB - - -Others - - -

1,227,533 24,129,123 -

The management monitors exposure to credit risk through regular review of credit exposure, assessing credit worthinessof counter parties and prudent estimates of provision for doubtful debts.

The Company enters into retakaful arrangements with retakaful operators having sound credit ratings accorded byreputed credit rating agencies. The Company is required to comply with the requirements of circular no. 32/2009 datedOctober 27, 2009 issued by SECP which requires a takaful company to place at least 80% of their outward treatycessions with retakaful companies rated 'A' or above by Standard & Poors with the balance being placed with entitiesrated at least 'BBB' by reputable ratings agency. An analysis of all retakaful assets relating to outward treaty cessionsrecognised by the rating of the entity from which it is due is as follows:

2013 2012

Concentration of credit risk occurs when a number of counterparties have a similar type of business activities. As aresult, any change in economic, political or other conditions would affect their ability to meet contractual obligations insimilar manner. Sector-wise analysis of contributions due but unpaid, amounts due from other retakaful operators,retakaful recovery against outstanding claims and prepaid retakaful contributions ceded at the reporting date is asfollows:

Rating

The credit quality of amount due from retakaful operators can be assessed with reference to external credit ratings asfollows:

2013

-------------------- (Rupees) ----------------------

Amounts duefrom retakaful

operators

Retakafulrecoveries

againstoutstanding

claims

Prepaidretakaful

contribution



RatingA or above 1,046,884 22,253,012 -BBB - - -Others - - -

1,046,884 22,253,012 -

30.3 Liquidity risk

Carrying amountContractual cash

flowsLess than one

yearOne year totwo years

Two years tothree years

Three years tofive years

Financial assetsCash and bank deposits 675,614,844 675,614,844 675,614,844 - - -Investments 385,909,272 385,909,272 101,427,564 92,514,287 177,904,921 14,062,500Contributions due but unpaid 573,426 573,426 573,426 - - -Amount due from retakaful companies - net 1,227,533 1,227,533 1,227,533 - - -Investment income accrued 36,287,544 36,287,544 36,287,544 - - -Advance and deposits 2,554,936 2,554,936 - - - 2,554,936Sundry receivables 42,838,640 42,838,640 42,838,640 - - -

1,145,006,195 1,145,006,195 857,969,551 92,514,287 177,904,921 16,617,436Financial liabilitiesOutstanding claims 10,155,334 10,155,334 9,509,534 445,800 200,000 -Contribution received in advance 35,312,225 35,312,225 35,312,225 - - -Amount due to agents 37,366,770 37,366,770 37,366,770 - - -Other creditors and accruals 63,778,577 63,778,577 63,778,577 - - -

146,612,906 146,612,906 145,967,106 445,800 200,000 -998,393,289 998,393,289 712,002,445 92,068,487 177,704,921 16,617,436

Carrying amountContractual cash

flowsLess than one

yearOne year totwo years

Two years tothree years

Three years tofive years

Financial assetsCash and bank deposits 504,981,654 504,981,654 504,981,654 - - -Investments 286,709,201 287,313,963 147,301,193 52,897,210 33,362,500 53,753,060Contributions due but unpaid 1,529,538 1,529,538 1,529,538 - - -Amount due from retakaful companies - net 1,046,884 1,046,884 1,046,884 - - -Investment income accrued 44,580,677 44,580,677 44,580,677 - - -Advance and deposits 2,497,700 2,497,700 - - - 2,497,700Sundry receivables 39,333,578 39,333,578 39,333,578 - - -

880,679,232 881,283,994 738,773,524 52,897,210 33,362,500 56,250,760Financial liabilitiesOutstanding claims 10,042,469 10,042,469 6,285,969 3,756,500 - -Contribution received in advance 23,166,316 23,166,316 23,166,316 - - -Amount due to agents 31,786,572 31,786,572 31,786,572 - - -Other creditors and accruals 59,706,898 59,706,898 59,706,898 - - -

124,702,255 124,702,255 120,945,755 3,756,500 - -755,976,976 756,581,739 617,827,769 49,140,710 33,362,500 56,250,760

-------------------------------------------- (Rupees) --------------------------------------------

2012

-------------------- (Rupees) ----------------------

The table below analyses the Company's financial assets liabilities into relevant maturity groupings based on the remaining period at the balance sheet date tothe maturity date.

2013

-------------------------------------------- (Rupees) --------------------------------------------

Liquidity risk is the risk that the Company is unable to meet its obligations when they fall due as a result of participants benefit payments, cash requirements fromcontractual commitments, or other cash outflows. Such outflows would deplete available cash resources for operational, trading and investments activities. Inextreme circumstances, lack of liquidity could result in an inability to fulfil participant commitments. The risk that the Company will be unable to do so is inherent inall takaful operations and can be affected by a range of institution-specific and market-wide events including, but not limited to, credit events, systemic shocks andnatural disasters.

The Company's liquidity management process includes day-to-day funding, managed by monitoring future cash flows to ensure that requirements can be met,maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow and monitoring theliquidity ratios against internal and regulatory requirements.

Monitoring and reporting take the form of cash flow measurement and projections for the next day, week and month respectively, as these are key periods forliquidity management. The starting point for those projections is an analysis of the contractual maturity of the financial liabilities and the expected collection date ofthe financial assets.

Amounts duefrom retakaful

operators

Retakafulrecoveries

againstoutstanding

claims

Prepaidretakaful

contribution

2012



30.4 Market risk

Currency risk

Profit rate risk

At the reporting date the profit rate profile of the Company's profit-bearing financial instruments was:

2013 2012 2013 2012

Variable rate instrumentsFinancial assetsTerm deposits 440,000,000 325,000,000 8.90-13.75 8.50-13.75PLS savings accounts 200,199,327 146,544,017 5 - 9.20 6 - 9Sukuks 362,203,727 280,300,989 1 month

Kibor to 3months Kibor

+ 3

1 month Kiborto 3 monthsKibor + 2.50

1,002,403,054 751,845,006

Cash flow sensitivity analysis for variable rate instruments

Shareholders' fund

Participant takaful fund

Cash flow sensitivity analysis for fixed rate instruments

---------- (Rupees) ----------

The Company is exposed to cash flow profit rate risk in respect of its deposits with banks and investment in sukuks. Incase of 100 basis points (bp) increase / decrease in profit rates at year end, assuming that all other variables remainconstant, the net income and equity would have been higher / lower by Rs.3,036,630 (2012: Rs.3,241,899).

The Company does not have any fixed rate financial assets and liabilities at fair value through profit or loss, therefore achange in profit rates at the reporting date would not affect profit or loss.

The Company is exposed to cash flow profit rate risk in respect of its deposits with banks. In case 100 basis points (bp)increase / decrease in profit rates at year end, assuming that all other variables remain constant, the net income andbalance of Waqf would have been higher / lower by Rs.2,800,761 (2012: Rs.1,518,152).

The sensitivity analysis prepared is not necessarily indicative of the effects on loss for the year and assets / liabilities ofthe Company.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantlydifferent amounts.

The Company manages liquidity risk by maintaining sufficient cash in bank accounts. At December 31, 2013, theCompany had financial assets of Rs.1,144.951 million (2012: Rs.835.652 million), which include Rs.675.614 million (2012:Rs.504.981 million) of cash in hand and deposits placed with banks.

Market risk is the risk that changes in market prices, such as foreign exchange rates, profit rates and equity prices willaffect the Company's income or value of its financial instruments. The objective of market risk management is to manageand control market risk exposures with acceptable parameters, while optimising the return. The Company is exposed tocurrency risk, profit rate risk and other price risk.

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changesin foreign exchange rates. Currency risk arises mainly where receivables and payables exist due to transactions based oncurrencies other than Pakistan Rupees. The Company is not exposed to currency risk.

Profit rate risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because ofchanges in market profit rates.

Carrying amount Effective profit rate in %



Mismatch of profit rate sensitive assets and liabilities / yield / profit rate risk

Upto one month

Over onemonth to three

months

Over threemonths to six

months

Over sixmonths to one

yearOver one yearto five years Over five years Sub total

Non profitbearing Total

Financial assetsCash and bank deposits 5-13.75 227,329,073 295,000,000 - 145,000,000 - - 667,329,073 8,285,771 675,614,844Investments 1,882,813 8,686,001 10,568,814 56,584,392 284,481,707 - 362,203,727 23,705,545 385,909,272

Amount due from retakafulcompanies - net - - - - - - - 1,227,533 1,227,533

Contribution due but unpaid - - - - - - - 573,426 573,426Investment income accrued - - - - - . - - 36,287,544 36,287,544Advance and deposits - - - - - - - 2,554,936 2,554,936Sundry receivables - - - - - - - 42,838,640 42,838,640Total 229,211,886 303,686,001 10,568,814 201,584,392 284,481,707 - 1,029,532,800 115,473,395 1,145,006,195

Financial liabilitiesOutstanding claims - - - - - - - 10,155,334 10,155,334Contribution received in advance - - - - - - - 35,312,225 35,312,225Amount due to agents - - - - - - - 37,366,770 37,366,770Other creditors and accruals - - - - - - - 63,778,577 63,778,577Total - - - - - - - 146,612,906 146,612,906Profit risk sensitivity gap 229,211,886 303,686,001 10,568,814 201,584,392 284,481,707 - 1,029,532,800 (31,139,511) 998,393,289

Upto one month

Over onemonth to three

months

Over threemonths to six

months

Over sixmonths to one

yearOver one yearto five years Over five years Sub total

Non profitbearing Total

Financial assetsCash and bank deposits 6 to 13.75 165,155,330 250,000,000 - 75,000,000 - - 490,155,330 14,826,324 504,981,654Investments 4,451,688 6,475,125 16,110,742 113,855,483 139,407,951 - 280,300,989 6,408,212 286,709,201

Amount due from retakafulcompanies - net - - - - - - - 1,046,884 1,046,884

Contribution due but unpaid - - - - - - - 1,529,538 1,529,538Investment income accrued - - - - - . - - 44,580,677 44,580,677Advance and deposits - - - - - - - 2,497,700 2,497,700Sundry receivables - - - - - - - 39,333,578 39,333,578Total 169,607,018 256,475,125 16,110,742 188,855,483 139,407,951 - 770,456,319 110,222,913 880,679,232

Financial liabilitiesOutstanding claims - - - - - - - 10,042,469 10,042,469Contribution received in advance - - - - - - - 23,166,316 23,166,316Amount due to agents - - - - - - - 31,786,572 31,786,572Other creditors and accruals - - - - - - - 59,706,898 59,706,898Total - - - - - - - 124,702,255 124,702,255Profit risk sensitivity gap 169,607,018 256,475,125 16,110,742 188,855,483 139,407,951 - 770,456,319 (14,479,342) 755,976,977

Effectiverate % per

annum

Profit bearing

---------------------------------------------------------------------------------- (Rupees) ----------------------------------------------------------------------------------

Effectiverate % per

annum

Profit bearing

1 monthKibor to 3monthsKibor +

2.50

---------------------------------------------------------------------------------- (Rupees) ----------------------------------------------------------------------------------

2012

2013

1 monthKibor to 3months

Kibor + 3



Other price risk

2013 2012

Effect on income statement, assets of the Company of an increase / decrease in KSE Index / Net Asset Value

Investments 1,185,277 320,411

Listed shariah compliant shares (note 12.3) 23,705,545 6,408,212

31.5 Fair value of financial instruments

Level 1:

Level 2:

Level 3:

The fair values of all the financial instruments are estimated to be not significantly different from their carryingvalues except for quoted investments, fair value of which have been stated in note 12.4.

Fair value is an amount for which an asset could be exchanged, or a liability settled, between knowledgeablewilling parties in an arm’s length transaction. Consequently, differences may arise between the carrying valuesand the fair value estimates.

Fair value measurements using inputs for the asset or liability that are not based on observablemarket data (i.e. unobservable inputs).

Other price risk is the risk of changes in the fair value of securities as the result of changes in the levels of netasset value of units and market value of shares and certificates listed on Karachi Stock Exchange (KSE) held bythe Company. The equity price risk exposure arises from the investment in equity securities. This arises frominvestments held by the Company for which prices in the future are uncertain.

The table below summarises the sensitivity of the market value of listed shares held by the Company as atDecember 31, 2013. The analysis is based on the assumption that market value of listed shares held by theCompany increases / decreases by 5% (2012: 5%) with all other variables held constant. This representsmanagement's best estimate of a reasonable possible shift in the net asset value of units held by the Company.

The impact below arises from the reasonable possible change in the fair value of listed equity securities.

The sensitivity analysis presented is based upon the portfolio position as at December 31, 2011. Accordingly,the sensitivity analysis prepared as at December 31 is not necessarily indicative of the effect on the Company'sassets of future movements in the net asset value of units held by the Company.

---------- (Rupees) ----------

Fair value measurements using inputs other than quoted prices included within Level 1 that areobservable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived fromprices).

Fair value measurements using quoted prices (unadjusted) in active markets for identical assets orliabilities.

The Company measures fair values using the following fair value hierarchy that reflects the significance of theinputs used in making the measurements:

The Company’s accounting policy on fair value measurements of its investments is discussed in note 5.7 tothese financial statements.



Financial instruments Level 1 Level 2 Level 3 Total

Listed shariah compliant shares 23,705,545 - - 23,705,545Government securities - 165,000,000 - 165,000,000Debt securities - 197,203,727 - 197,203,727

23,705,545 362,203,727 - 385,909,27231.6 Operational risk

-

- requirements for the reconciliation and monitoring of transactions;

- compliance with regulatory and other legal requirements;

- documentation of controls and procedures;

-

- ethical and business standards; and

- risk mitigation, including insurance where this is effective.

Capital risk management

The table below analyses financial instruments measured at the end of the reporting period by the level in thefair value hierarchy into which the fair value measurement is categorised:

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with theprocesses, technology and infrastructure supporting the Company’s operations either internally within theCompany or externally at the Company’s service providers, and from external factors other than credit, marketand liquidity risks such as those arising from legal and regulatory requirements and generally acceptedstandards of investment management behaviour. Operational risks arise from all of the Company’s activities.

The Company’s objective is to manage operational risk so as to balance limiting of financial losses and damageto its reputation with achieving its objective of generating returns for stakeholders.

The primary responsibility for the development and implementation of controls over operational risk rests withthe board of directors. This responsibility encompasses the controls in the following areas:

requirements for appropriate segregation of duties between various functions, roles and responsibilities;

--------------------- (Rupees) ---------------------

Senior management ensures that the Company's staff have adequate training and experience and fosterseffective communication related to operational risk management.

The Company's objective when managing capital is to safeguard the Company's ability to continue as a goingconcern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and tomaintain a strong capital base to support the sustained development of its businesses.

requirements for the periodic assessment of operational risks faced, and the adequacy of controls andprocedures to address the risks identified;




2013 2012 2011 2010 2009

Minimum paid-upcapital 500,000,000 500,000,000 500,000,000 500,000,000 450,000,000

The Company currently meets the externally imposed capital limit.

32. NUMBER OF EMPLOYEES

Number of employees as at December 31, 2013 are 393 (2012: 354).

33. GENERAL

33.1

December 31,2012

From To -- (Rupees) --

Balance sheetParticipant Takaful Fund - Saving accounts 3,690,105

Saving accounts

34. DATE OF AUTHORISATION FOR ISSUE

These financial statements were authorised for issue on February 24, 2014 by the Board of Director of the Company.

---------------------------------------- (Rupees) ----------------------------------------

The Company manages its capital structure by monitoring return on net assets and makes adjustments to it inthe light of changes in economic conditions. In order to maintain or adjust the capital structure, the Companymay adjust the amount of dividend paid to shareholders or issue new shares.

In accordance with SECP Circular no. 03 of 2007 of Securities and Exchange Commission of Pakistan (SECP),minimum paid-up capital requirement to be complied with by Insurance Companies / Takaful operators at theend of each year are as follows:

Figures have been re-arranged and re-classified, wherever necessary, for the purpose of better presentation.Reclassifications made are as under:

Statement of Directors

D A W O O D F A M I L Y T A K A F U L L I M I T E D

1701-A, Saima Trade Towers, I.I. Chundrigar Road, Karachi-74000UAN: 111-DFT-786 (111-338-786) Fax: (92-21) 3227-7188

www.dawoodtakaful.com


Number of Shareholdings Total NumberShareholders From To of Shares Held

Pattern of Shareholding as on December 31, 2013

7 101 - 500 3,50012 501 - 1000 12,00022 1001 - 5000 66,0007 5001 - 10000 57,5002 10001 - 15000 28,0003 15001 - 20000 60,0001 25001 - 30000 30,0001 35001 - 40000 40,0009 45001 - 50000 450,0001 65001 - 70000 70,0001 70001 - 75000 75,0001 90001 - 95000 94,000

10 95001 - 100000 999,9902 120001 - 125000 246,0001 130001 - 135000 135,0002 145001 - 150000 300,0006 195001 - 200000 1,200,0001 225001 - 230000 230,0003 245001 - 250000 750,0001 255001 - 260000 257,0004 295001 - 300000 1,200,0001 320001 - 325000 325,0008 495001 - 500000 4,000,0001 695001 - 700000 700,0001 745001 - 750000 747,5002 995001 - 1000000 2,000,0001 1995001 - 2000000 2,000,0001 2720001 - 2725000 2,722,5001 3495001 - 3500000 3,500,0001 3825001 - 3830000 3,825,5001 4235001 - 4240000 4,235,5001 6060001 - 6065000 6,064,0001 6465001 - 6470000 6,466,0101 7395001 - 7400000 7,400,0001 11245001 - 11250000 11,250,0001 13455001 - 13460000 13,460,000


120 75,000,000

Directors 6 7,000 0.01

Modarabas 2 7,500,000 10.00

Banks and Financial Institutions 4 30,932,500 41.24

Other Companies 13 7,769,500 10.36

Foreign Company 1 6,064,000 8.09

General Public - Local 90 16,010,500 21.35

- Foreign 1 1,000 0.00

Others 3 6,716,000 8.95

Categories of Shareholders as on December 31, 2013


Shareholder's Number of Number of

Category Shareholders Shares Held Percentage

120 75,000,000 100.00

NOTICE OF 7TH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that 7th Annual General Meeting of the shareholders of DawoodFamily Takaful Limited “the Company” will be held at 10:00 a.m. on Monday, March 31, 2014at 17th Floor, Saima Trade Towers – A, I.I. Chundrigar Road, Karachi to transact the followingbusiness;

ORDINARY BUSINESS:

1. To confirm the minutes of the last Annual General Meeting of the Company held onApril 26, 2013.

2. To receive, consider and adopt the Audited Financial Statements of the Company forthe year ended December 31, 2013 together with the Directors’ and Auditors’ Reportthereon.

3. To appoint auditors and fix their remuneration for the year ending December 31, 2014.

4. To elect seven (7) directors of the Company as fixed by the Board of Directors of theCompany. Following are the names of retiring directors who are eligible for re-election;

1. Mr. Muhammad Rizwan-ul Haque 2. Mr. Rizwan Ahmed Farid

3. Mr. Syed Ishtiaq Hussain 4. Mr. Tahir Mehmood

5. Mr. Muhammad Munir 6. Mr. Muhammad Salah-ud-din Arif

7. Mr. Nasir Mahmood*

*Appointed in the 38th Board meeting held on February 24, 2014. The appointment is subject to approval of the Securities &Exchange Commission of Pakistan (SECP) under Insurance Companies (Sound and Prudent Management) Regulation,2012, therefore has not assumed the charge.

5. To transact any other business as may be placed before the meeting with the permissionof the Chair.

By Order of the Board

Karachi Fahad AlamMarch 10, 2014 Company Secretary


Notes:

A member entitled to attend and vote at this meeting may appoint another member as his/her proxy to attendthe meeting and vote instead of him/her. Proxies in order to be effective must be received by the Share registrarof the Company “F.D. Registrar Services (SMC-Pvt.) Limited address: 1705, 17th Floor, Saima Trade Towers– A, I.I. Chundrigar Road, Karachi” not later than 48 hours before the meeting.

Election of Directors

The number of Directors to be elected at the Annual General Meeting has been fixed by the Board of Directorsat seven (7) in its meeting held on February 24, 2014.

Any member who seeks to contest election for directorship of the Company shall file with the Company at itsregistered office.

• A Notice of his/her intention to offer himself for election 14 days before the date of the above said AnnualGeneral Meeting, in terms of Section 178(3) of the Companies Ordinance 1984;

• Form 28 (consent to Act as Director) prescribed under Companies Ordinance, 1984

• Attested copy of CNIC.

• In case of nomination by a corporate entity, it should be supported by either, Board resolution or letterfrom authorized person(s) of the Board.

Procedure for Election of Directors

According to the Company’s Articles of Association and the Companies Ordinance 1984, the following procedureis to be followed for nomination and election of Directors.

1. The election of seven Directors will be for a term of three years.

2. The Directors shall be elected from members who offer themselves for election and are not ineligibleunder Section 187 of the Companies Ordinance, 1984.

3. Any member wishing to stand for election (including a retiring Director) is required to file with the company(not later than 14 days before the election date), a notice of his/her intention to stand for election, alongwith duly completed and signed Form 28 giving his/her consent to act as a Director of the Company.

4. The Company will file the candidates’ consents with the Registrar of Companies.

5. A member may withdraw his candidature any time before the election is held.

6. If the number of candidates equals the number of vacancies, no voting will take place and all thecandidates will be deemed to have been elected.

7. In case of voting, a Member shall have votes equal to the number of shares held by him multiplied byseven (i.e. the number of Directors to be elected).

8. A member may cast vote(s) in favor of a single candidate or for as many of the candidates and in suchproportion as the Member may choose.

9. The member receiving the highest number of votes will be declared elected, followed by the next highest,and so on, till all the vacancies are filled.


PROXY FORM

Folio/CDC Account No.

I/We _______________________________________________________________________ of

___________________________________________________________ being member(s) of

Dawood Family Takaful Limited (“the Company”) holding ______________________ ordinary

shares, hereby appoint __________________________________________________________

of ___________________________________________________________________ or failing

him/her _______________________________________________________________________

of ___________________________________________________________________________

member of the Company, as my/our proxy to vote for me/us, and on my/our behalf at the 7th

Annual General Meeting of the Company to be held on Monday, March 31, 2014 at 10:00 am and at

any adjournment thereof.

Witness:

Signature: _____________________________

Name: ________________________________

CNIC No: _____________________________

Address: ______________________________

______________________________________

Signature: _____________________________

Name: ________________________________

CNIC No: _____________________________

Address: ______________________________

______________________________________

(Member’s signature onRs.10/- Revenue Stamp)

Head Office:1701-A, Saima Trade Towers, I.I. Chundrigar Road, Karachi-74000

UAN: 111-DFT-786 (111-338-786) Fax: (92-21) 3227-7188

w w w . d a w o o d t a k a f u l . c o mDAWOOD FAMILY TAKAFUL LIMITED

Country WideBranch Network

Gulshan Branch (Karachi)1st Floor, FL 3/9, Block No.3, Scheme-24,Near Disco Bakery, Gulshan-e-Iqbal,Karachi PakistanPhone : (+92 21) 34970576 - 80Fax : (+92 21) 34970575 Bahadurabad Branch (Karachi)Office No. 302 & 303, 3rd Floor, MariumComplex, Bahadurabad, Karachi PakistanPhone : (+92 21) 34145441-6 Hyderabad BranchPlot No.325-D, 2nd Floor, Near HaseenShopping Mall, Block-C, Unit No. 7, LatifabadHyderabad PakistanPhone : (+92 22) 3865326-7, 3865330-1Fax : (+92 22) 3865318 Hyderabad Market BranchFirst Floor, Subhan Centre, Near HBL Bank,Market Road, Hyderabad, PakistanPhone : (+92 22) 2634976-78Fax : (+92 22) 2634974

Tando Adam BranchFirst Floor, Al-Rahim Plaza, above Bank-Alfalah, Hyderabad Road, Tando Adam,PakistanPhone : (+92 22) 022- 263 4974- 79Fax : (+92 23) 5576112-5 Nawabshah Location Branch2nd Floor, Plot No. B-599, above AskariBank, Katchery Road, Nawab Shah, PakistanPhone : (+92 022) 263 4974- 79Fax : (+92 23) 5576112-5 Sukkur BranchCity Survey No. 32/07A1/1, Ground Floor,Workshop Road, Near Hira Medical Centre,Sukkur, PakistanPhone : (+92 071) 5615751-6 Larkana BranchGround Floor, Plot No.19/2/2, Near ShaheedShahnawaz Children Park Road, Larkana,PakistanPhone : (+92 074) 4040383-6 Mirpurkhas BranchPlot No.864/5, 1st Floor, Adam Town, MainUmer Coat Road, Mirpurkhas, PakistanPhone : (+92 23) 3876126-28Fax : (+92 23) 3827129

Rahimyar Khan Branch15-A, 2ND Floor, Model Town,ShahiRoad,Rahimyar Khan, PakistanPhone : (+92 068) 5880192-5

Bahawalpur Branch2nd Floor, 1-A, Muhammadia Colony, NoorMehal Road, Bahawalpur, PakistanPhone : (+92 062) 2887680-5

Gulberg Branch-Lahore1st Floor, 57-B, Hussain Chowk Gulberg-III,Lahore PakistanPhone : (+92 42) 111-338-786Fax : (+92 42) 5772618

Pioneer Branch-Lahore2nd Floor, 57-B, Hussain Chowk Gulberg-III, Lahore, PakistanPhone : (+92 42) 111-338-786Fax : (+92 42) 5772618 Shaheen Branch-LahoreE-26, 3rd Floor, Paradise Centre, DefenseRoad, Walton Road, Lahore Cantt.Phone : (+92 42) 36688253-8Fax : (+92 42) 36626290

Faisalabad Branch871-B, 2nd Floor, Hassan Arcade, PeoplesColony No.1, Chen One Road, Faisalabad,PakistanPhone : (+92 41) 8554112-6Fax : (+92 41) 8554117

Gujrat BranchDawood Centre, Opp. UBL,G.T. Road, Gujrat,PakistanPhone : (+92 53) 3538073-6, 3538078-9,3538085-6Fax : (+92 53) 3538088

Gujrat Chenab Branch2nd Floor, Dawood Centre, Opp. UBL,G.T.Road, Gujrat, PakistanPhone : (+92 53) 3538073-6, 3538078-9,3538085-6Fax : (+92 53) 3538088

Sialkot Allama Iqbal BranchOfffice No.226, 2nd Floor, Karim Plaza,Defence Road, Sialkot, PakistanPhone :(+92 52) 3573033-44

Khariyan Branch1st Floor, Al- Bilal Plaza Jinnah Colony, Opp.Civil Hospital, G.T. Road, Khariyan, PakistanPhone : (+92 53) 7534347-8, 7534564-5

Lyallpur Branch1st Floor, 871-B, Hassan Arcade PeoplesColony No.1, Chen OneRoad,Faisalabad,PakistanPhone : (+92 22) 022- 263 4974- 79Fax : (+92 22) 3865318 Jhang Branch1st Floor, Sunny Heights, Church Road,Jhang Saddar, PakistanPhone : (+92 47) 7626648-49Fax : (+92 47) 7626691 Sargodha Branch1st Floor, Nizami Centre, Club Road, ShamaChowk, Sargodha, PakistanPhone : (+92 48) 3768774-5Fax : (+92 48) 3768773

Sahiwal Branch3rd Floor, Saeed Centre, Fareed Town Road,Sahiwal, PakistanPhone : (+92 40) 4221531-32Fax : (+92 40) 4221534 Haroonabad BranchGround Floor, 140/A,Timber Market,Haroonabad, PakistanPhone : (+92 63) 2250100-2Fax : (+92 63) 2250104

Mandi Bahauddin Branch2nd Floor, Qasim Plaza, Phalia Road, MandiBahauddin, PakistanPhone : (+92 54) 6502311-3Fax : (+92 54) 6502314

Multan Branch1st Floor, Khawar Centre, 92-Nusrat Road,SP Chowk Multan Cantt, Multan, PakistanPhone : (+92 61) 4581101-04 (4 Lines),Fax : (+92 61) 4541104

Rawalpindi Branch1st Floor, Suit No 1, Comer Allied CommercialPlaza, Chandni Chowk, Rawalpindi, PakistanPhone : (+92 51) 4851643-48, 4851650Fax : (+92 51) 4851649

Adiyala Road Branch Rawalpindi2nd Floor, Abdullaha & Broters Plaza,Khawaja Corporation, Adyala RoadRawalpindi, Pakistan

Kotli BranchHaji Basheer Plaza, Near DHQ Hospital,Main Gate, Pindi Road, Kotli, Azad Kashmir,PakistanPhone : (+92 5826) 448601-4

Islamabad Branch1st Floor, Shalimar Plaza, 99-west, BlueArea, Islamabad, PakistanPhone : (+92 51) 2278371-76 (6 Lines) (+9251) 2278378Fax : (+92 51) 2807081

Islamabad Margalla BranchOffice No. 20, 21, 2nd Floor, Beverly Center,Blue Area, IslamabadPhone : (+92 51) 22781095, 2274194-5

Peshawar Branch1st Floor, Jasmin's Arcade, Fakhar-e-AlamRoad, Peshawar Cantt, Peshawar, PakistanPhone : (+92 91) 5250533-39 (7Lines),5284219, 5284682Fax : (+92 91) 5250531 Peshawar Cantt. Branch2nd Floor, Jasmin's Arcade, Fakhar-e-AlamRoad, Peshawar Cantt, Peshawar, PakistanPhone : (+92 91) 5250533-39 (7Lines),5284219, 5284682Fax : (+92 91) 5250531 Swat Branch1st Floor, Shehzad Plaza, Makan Bagh,Saidu Sharif Road, Mingora Swat, PakistanPhone : (+92 946) 723972 , 721502Fax : (+92 946) 721503 Mardan BranchPoshak Centre Shaheen Market, Bank Road,Mardan, PakistanPhone : (+92 93) 7870300-01 (2Lines)Fax : (+92 93) 7870302

Abbotabad Branch1st Floor, Haidri Plaza, Near Army Burn HallCollege, Mansehra Road, Mandian,Abbotabad, PakistanPhone : (+92 992) 383216,383178Fax : (+92 992) 383191

Haripur KPK Branch2nd Floor, Aurangzeb Manzil, Opposite, Oldwater tank, Circular road, Haripur. KPK PakistanPhone : (+92 995) 613698

annual report2013 - dawood family takaful limited · 2016-12-05 · this refers to participation of...

Documents