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Arif Habib Corp: Quarterly Report - 30 September 2019

IM Insights
By IM Insights
1 month ago
Arif Habib Corp: Quarterly Report - 30 September 2019

Arif, Mark-Up, Provision, Receivables, Reserves, Sales

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  1. QUARTERLY REPORT 30TH SEPTEMBER 2019 Reinvesting in our Nation
  2. Contents 02 Company Information 04 Directors ’ Review Report 07 Condensed Interim Unconsolidated Financial Position 08 10 Condensed Interim Unconsolidated Statement of Financial Position Condensed Interim Unconsolidated Statement of Profit or Loss and Other Comprehensive Income (Unaudited) 11 12 Condensed Interim Unconsolidated Statement of Cash Flows (Unaudited) Condensed Interim Unconsolidated Statement of Changes in Equity (Unaudited) 13 Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) 25 Condensed Interim Consolidated Financial Position 26 Condensed Interim Consolidated Statement of Financial Position 28 29 30 31 Condensed Interim Consolidated Statement of Profit or Loss (Unaudited) Condensed Interim Consolidated Statement of Comprehensive Income (Unaudited) Condensed Interim Consolidated Statement of Cash Flows (Unaudited) Condensed Interim Consolidated Statement of Changes in Equity (Unaudited) 32 Notes to the Condensed Interim Consolidated Financial Information (Unaudited)
  3. Company Information Board of Directors Dr . Shamshad Akhtar Arif Habib Khawaja Jalaluddin Roomi Asadullah Khawaja Nasim Beg Samad A. Habib Kashif A. Habib Muhammad Ejaz Chairperson - Independent Director Chief Executive Officer Independent Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Audit Committee Khawaja Jalaluddin Roomi Kashif A. Habib Muhammad Ejaz Chairman Member Member Management Arif Habib Mohsin Madni Manzoor Raza 02 Arif Habib Corp Quarterly Report Sep 2019 Chief Executive Officer Chief Financial Officer Company Secretary
  4. Bankers Registered & Corporate Office Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Bank Al Habib Limited Bank Islami Pakistan Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited JS Bank Limited MCB Bank Limited MCB Islamic Bank Limited National Bank of Pakistan Standard Chartered Bank (Pakistan) Limited Sindh Bank Limited Summit Bank Limited Soneri Bank Limited The Bank of Khyber The Bank of Punjab United Bank Limited Arif Habib Centre, 23, M.T.Khan Road Karachi-74000 Phone: (021) 32460717-9 Fax: (021) 32468117, 32429653 Email: info@arifhaibcorp.com Company website: www.arifhabibcorp.com Group website: www.arifhabib.com.pk Auditors KPMG Taseer Hadi& Co. Chartered Accountants Legal Advisors Registrar & Share Transfer Agent CDC Share Registrar Services Limited Share Registrar Office CDC House, 99-B, Block-B, S.M.C.H.S, Main Shahrah-e-Faisal, Karachi Phone: (021) 111-111-500 Toll Free: 0800-23275 Fax: (021) 34326053 URL: www.cdcrsl.com Email: info@cdcrsl.com Corporate Memberships Pakistan Institute of Corporate Governance Management Association of Pakistan Pakistan Centre for Philanthropy Bawaney & Partners Akhund Forbes Hadi Reinvesting in our Nation 03
  5. Directors ’ Review Report Dear Shareholders The Directors of Arif Habib Corporation Limited (AHCL) present herewith the Director’s report of the Company together with condensed interim consolidated and unconsolidated financial statements for the quarter ended 30th September 2019. The Economy The slowdown in Pakistan’s economy continued into the period under review, largely due to rising inflation and higher interest rates, prompting negative growth in the Large Scale Manufacturing sector. Equities market, construction materials and automobiles were the worst sufferers. However, compression of imports during this period helped reduce Pakistan’s Current Account deficit which went down by 64% YoY. While recovery in the manufacturing sector will take some time, many key macroeconomic indicators signaling improving economic prospects. Financial Results During the quarter under review, on a consolidated basis, your Company posted a profit-after-tax (attributable to AHCL’s ownership) of PKR 539.19 million as opposed to PKR 361.51 million during corresponding period in 2018-19. This translates to an earning of PKR 1.26 per share as compared with PKR 0.80 in the corresponding period. During the quarter, on an unconsolidated basis, AHCL recorded operating revenue of PKR 37.47 million. After accounting for realised capital gain of PKR 853.24 million on sale of securities, and net unrealised loss on re-measurement of investments amounting to PKR 2.18 billion, and operating, administrative, financial and other expenses of PKR 61.54 million, the Company recorded a loss before tax of PKR 1.35 billion. The Company has reported an after-tax loss of PKR 1.35 billion for the quarter under review as compared with profit of PKR 1.5 billion for the corresponding quarter ended 30th September 2018. Loss per share during the quarter ended 30th September 2019 remained PKR 3.15 as compared to Earnings per share of PKR 3.31 in the corresponding quarter during 2018-19. Performance of Subsidiaries and Associates Securities brokerage subsidiary, Arif Habib Limited recorded a loss after tax of PKR 186.27 million, during the period under review as the Securities Market witnessed a major decline of 48% in traded volumes and 42% in traded values compared to first quarter of the corresponding year. Our asset management company, MCB-Arif Habib Savings & Investments Limited, an associate, has recorded a nominal profit after tax of PKR 12.87 million. Fertilisers, energy and real estate have done well. However, Pakarab Fertilizers Limited (an associate) remained a loss making entity due to non-supply of its raw material i.e. natural gas. Aisha Steel Mills has completed its expansion but has suffered due to slowdown in the economy and falling international steel prices. The delay in the COD of the expansion plants of Power Cement and the slowdown in overall cement demand put pressure on profitability and liquidity. 04 Arif Habib Corp Quarterly Report Sep 2019
  6. Future Outlook At the start of the second quarter , there have been some improvements in the demand of cement and steel. The Securities Market has also gained momentum in values and volumes. With completion of the expansion of steel and cement units, your Company is well placed to see improvements in performances of its subsidiaries and associated companies which were under pressure in the first quarter. Fertiliser, power and real estate are expected to continue their good performance in the quarter and going forward. Acknowledgement We are grateful to the Company’s shareholders for their continuing confidence and patronage. We record our appreciation and thank our Bankers, Business Partners, the Securities & Exchange Commission of Pakistan, the State Bank of Pakistan and the management of Pakistan Stock Exchange for their support and guidance. We acknowledge and appreciate the hard work put in by the employees of the Company during the period. For and on behalf of the Board Mr. Arif Habib Chief Executive Dr. Shamshad Akhtar Chairperson Karachi: 27th November 2019 Reinvesting in our Nation 05
  7. This Page is Intentionally Left Blank 06 Arif Habib Corp Quarterly Report Sep 2019
  8. Condensed Interim Unconsolidated Financial Information For the three months period ended 30th September 2019 Reinvesting in our Nation 07
  9. Condensed Interim Unconsolidated Statement of Financial PositioN As at 30th September 2019 Note Unaudited Audited 30 September 30 June 2019 2019 (Rupees) EQUITY AND LIABILITIES Share capital and reserves Authorised share capital Share capital Issued, subscribed and paid up share capital Revenue reserves General reserve Fair value reserve Unappropriated profit 5 10,000,000,000 10,000,000,000 5 4,083,750,000 4,537,500,000 4,000,000,000 9,222,411,384 17,306,161,384 4,000,000,000 11,340,451,283 19,877,951,283 - - 4,851,252 500,000,000 37,237,550 1,759,763,207 21,315,368 31,459,344 2,354,626,721 4,913,614,341 56,227,631 1,803,620,434 25,448,976 31,705,915 6,830,617,297 19,660,788,105 26,708,568,580 Non-current liabilities Current liabilities Trade and other payables Loan from sponsor Mark-up accrued on borrowings Short term borrowings Taxation - net Unclaimed dividend Contingencies and commitments 6 7 The annexed notes 1 to 23 form an integral part of this condensed interim unconsolidated financial information. Chief Executive Officer 08 Arif Habib Corp Quarterly Report Sep 2019 Chief Financial Officer Director
  10. Condensed Interim Unconsolidated Statement of Financial PositioN As at 30th September 2019 Note Unaudited Audited 30 September 30 June 2019 2019 (Rupees) ASSETS Non-current assets Operating fixed assets Long term investments Long term loan to related party Long term deposits 8 9 10 24,203,979 15,559,347,501 153,926,303 2,487,030 15,739,964,813 25,273,958 16,403,149,710 163,404,133 2,487,030 16,594,314,831 11 12 13 14 903,974,037 36,860,470 47,579,910 2,887,036,985 45,371,890 3,920,823,292 35,187,133 77,012,680 12,421,996 9,563,036,956 426,594,984 10,114,253,749 19,660,788,105 26,708,568,580 Current assets Loans and advances Mark-up receivable Prepayments, trade and other receivables Short term investments Cash and bank balances The annexed notes 1 to 23 form an integral part of this condensed interim unconsolidated financial information. Chief Executive Officer Chief Financial Officer Director Reinvesting in our Nation 09
  11. Condensed Interim Unconsolidated Statement of Profit or Loss and Other Comprehensive Income (Unaudited) For the three months period ended 30th September 2019 Three months period ended Note Operating revenue 15 (Loss) / gain on remeasurement of investments - net 30 September 30 September 2019 2018 (Rupees) 37,471,569 171,549,078 (2,180,596,782) 1,375,735,084 853,244,485 18,422,842 (1,289,880,728) 1,565,707,004 Operating and administrative expenses (24,826,845) (25,352,214) Finance cost (36,716,808) (41,464,074) Other income 5,292,432 3,666,114 Gain on sale of securities - net Other charges (Loss) / profit before tax Taxation 16 (Loss) / profit after tax Other comprehensive income Total comprehensive (loss) / income (Loss) / earnings per share - basic and diluted 17 - (5,800,000) (1,346,131,949) 1,496,756,830 (532,950) 7,026,609 (1,346,664,899) 1,503,783,439 - - (1,346,664,899) 1,503,783,439 (3.15) 3.31 The annexed notes 1 to 23 form an integral part of this condensed interim unconsolidated financial information. Chief Executive Officer 10 Arif Habib Corp Quarterly Report Sep 2019 Chief Financial Officer Director
  12. Condensed Interim Unconsolidated Statement of Cash Flows (Unaudited) For the three months period ended 30th September 2019 Three months period ended Note 30 September 30 September 2019 2018 (Rupees) CASH FLOWS FROM OPERATING ACTIVITIES Net cash generated from / (used in) operations 18 Income tax paid Finance cost paid Dividend received Interest received Net cash generated from / (used in) operating activities 370,579,175 (4,666,558) (55,706,889) 77,495,779 (424,895,763) (17,523,301) (23,575,209) 108,114,711 45,182,417 387,701,507 (312,697,145) 57,626 - 57,626 - 500,000,000 (1,225,125,000) (445,629,927) - (725,125,000) (445,629,927) (337,365,867) (758,327,072) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of operating fixed assets Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long term loan Loan from sponsor Buy-back of shares Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 19 (1,377,025,450) (1,222,999,632) (1,714,391,317) (1,981,326,704) The annexed notes 1 to 23 form an integral part of this condensed interim unconsolidated financial information. Chief Executive Officer Chief Financial Officer Director Reinvesting in our Nation 11
  13. Condensed Interim Unconsolidated Statement of Changes in Equity (Unaudited) For the three months period ended 30th September 2019 Issued, subscribed and paid up share capital General reserve Revenue Reserves Fair value Unappropriated reserve ** profit Other reserve * Total equity Sub total --------------------------------------------------------------------------------------- (Rupees) --------------------------------------------------------------------------------------Balance as at 1 July 2018 4,537,500,000 Adjustment on initial application of IFRS 9, net of tax Adjusted balance as at 1 July 2018 4,537,500,000 Total comprehensive income for the three months period ended 30 September 2018 - 4,000,000,000 4,000,000,000 - 64,036,984 (64,036,984) - - 21,301,928,003 25,365,964,987 8,154,172,653 (8,090,135,669) 8,154,172,653 13,211,792,334 25,365,964,987 29,903,464,987 1,503,783,439 1,503,783,439 1,503,783,439 - - - 29,903,464,987 - Transactions with owners of the Company recorded directly in equity Final cash dividend at the rate of Rs. 2 per share for the year ended 30 June 2018 - - - (907,500,000) (907,500,000) (907,500,000) 13,808,075,773 25,962,248,426 30,499,748,426 - 11,340,451,283 15,340,451,283 19,877,951,283 - - (1,346,664,899) (1,346,664,899) (1,346,664,899) - - (771,375,000) (771,375,000) - - 9,222,411,384 13,222,411,384 Balance as at 30 September 2018 4,537,500,000 4,000,000,000 - Balance as at 1 July 2019 4,537,500,000 4,000,000,000 - - - Total comprehensive income for the three months period ended 30 September 2019 - 8,154,172,653 Transactions with owners of the Company recorded directly in equity Buy-back of shares of Rs. 27 per shares (refer note 5.2.2) Balance as at 30 September 2019 (453,750,000) 4,083,750,000 4,000,000,000 * Other reserve comprises of unrealised appreciation / (diminution) on remeasurement of equity investments previously as classified as 'available for sale' under IAS 39. ** Fair value reserve comprises of the cumulative net change in the fair value of equity securities designated at FVOCI. The annexed notes 1 to 23 form an integral part of this condensed interim unconsolidated financial information. Chief Executive Officer 12 Arif Habib Corp Quarterly Report Sep 2019 Chief Financial Officer Director (1,225,125,000) 17,306,161,384
  14. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 1. STATUS AND NATURE OF BUSINESS Arif Habib Corporation Limited (“the Company”) was incorporated in Pakistan on 14 November 1994 as a public limited company under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). The Company is listed on the Pakistan Stock Exchange Limited. The principal activity of the Company is to make strategic investments in subsidiary companies and associates engaged in diversified sectors and investment in other securities. The registered office of the Company is situated at Arif Habib Centre, 2nd Floor, 23, M. T. Khan Road, Karachi, Pakistan. The Company is domiciled in the province of Sindh. This condensed interim unconsolidated financial information are separate financial information of the Company in which investments in subsidiaries and associates are accounted for on the basis of direct equity interest rather than on the basis of reported results. Consolidated condensed interim financial information is prepared separately. The Company has following long term investments and its underlying shareholding in respective investee companies: Name of Companies Effective holding Subsidiaries - Arif Habib Limited, a brokerage house Sachal Energy Development (Pvt) Limited, a wind power generation company Black Gold Power Limited, a coal power generation company 72.80% 85.83% 100.00% Associates - MCB-Arif Habib Savings and Investments Limited - a pension fund manager, asset management company and investment advisor Pakarab Fertilizers Limited - a fertilizer company Fatima Fertilizer Company Limited - a fertilizer company 30.09% 30.00% 15.19% Others - Khabeer Financial Services (Private) Limited Sunbiz (Private) Limited 5.00% 4.65% 1.1 Change in the composition of the Group Post Buy-Back and cancellation of shares by Arif Habib Limited (AHL), the Company’s shareholding in AHL has been increased from 65.52% to 72.80%. 2. BASIS OF PREPARATION 2.1 Statement of compliance This condensed interim financial statements has been prepared in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprises of; - International Accounting Standard (IAS) 34, Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and - Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; and - Provisions of and directives under the Companies Act, 2017. Reinvesting in our Nation 13
  15. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 Where the provisions of and directives issued under the Companies Act, 2017 differ with the requirements of IAS 34 or IFAS, the provisions of directives issued under the Companies Act, 2017 have been followed. This condensed interim unconsolidated financial information is unaudited and does not include all the information required for full annual financial statements and should be read in conjunction with the annual audited unconsolidated financial statements of the Company as at and for the year ended 30 June 2019. The comparative statement of financial position presented in this condensed interim unconsolidated financial information has been extracted from the audited annual unconsolidated financial statements of the Company for the year ended 30 June 2019, whereas the comparative condensed interim statement of profit or loss and other comprehensive income, condensed interim statement of cash flow and condensed interim statement of changes in equity are extracted from the unaudited condensed interim unconsolidated financial information for the period ended 30 September 2018. This condensed interim unconsolidated financial information is presented in Pakistan Rupees which is also the Company’s functional currency and all financial information presented has been rounded off to the nearest rupee. This condensed interim unconsolidated financial information has been prepared on the basis of a single reportable segment. 3. ACCOUNTING POLICIES 3.1 The accounting policies and the methods of computation adopted in the preparation of this condensed interim unconsolidated financial information are the same as those applied in the preparation of annual audited unconsolidated financial statements of the Company as at and for the year ended 30 June 2019. 4. ACCOUNTING ESTIMATES AND JUDGEMENTS 4.1 The preparation of this condensed interim unconsolidated financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reporting amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience. Actual results may differ from these estimates. 4.2 The significant judgements made by the management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual audited unconsolidated financial statements as at and for the year ended 30 June 2019. 14 Arif Habib Corp Quarterly Report Sep 2019
  16. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 5. SHARE CAPITAL 5.1 Authorised share capital 30 September 30 June Unaudited 30 September 30 June 2019 2019 2019 2019 (Number of shares) 1,000,000,000 1,000,000,000 5.2 Audited (Rupees) 10,000,000,000 10,000,000,000 Ordinary shares of Rs. 10 each Issued, subscribed and paid up share capital 5,000,000 5,000,000 450,750,000 450,750,000 455,750,000 455,750,000 (2,000,000) (2,000,000) Ordinary shares of Rs. 10 each bought (45,375,000) - Ordinary shares of Rs. 10 each bought 408,375,000 453,750,000 Ordinary shares of Rs. 10 each fully paid in cash 50,000,000 50,000,000 4,507,500,000 4,507,500,000 4,557,500,000 4,557,500,000 (20,000,000) (20,000,000) Ordinary shares of Rs. 10 each issued as fully paid bonus shares back at Rs. 360 per share back at Rs. 27 per share 5.2.1 5.2.2 (453,750,000) - 4,083,750,000 4,537,500,000 5.2.1 During financial year 2005-2006, the Company bought back two million shares of Rs. 10 each from its shareholders through tender notice at a price of Rs. 360 per share in accordance with section 95-A of the repealed Companies Ordinance, 1984 and Companies (Buy-back of shares) Rules, 1999. The acquisition resulted in reduction of capital and unappropriated profit by Rs. 20 million and Rs. 700 million respectively, in the relevant year. 5.2.2 During the year, the Company purchased and cancelled 45,375,000 ordinary shares (10% of existing share i.e. 453,750,000). The buy-back and cancellation of shares were approved by shareholders at the extra ordinary general meeting held on 3 July 2019. The shares were acquired at the purchase price of Rs. 27 per share. The purchase of shares were made in cash out of the distributable profits as required under Section 88(8) of the Companies Act, 2017 read with Listed Companies (Buy-Back of Shares) Regulations, 2019. Pursuant to Buy Back of Shares the ordinary share capital of the Company has been reduced by 45,375,000 ordinary shares amounting to Rs. 453,750,000. 5.2.3 Mr. Arif Habib held 70.11% (30 June 2019: 70.11%) of ordinary shares in the Company. 6. SHORT TERM BORROWINGS 6.1 Running finance facilities are available from various commercial banks, under mark-up arrangements, amounting to Rs. 3,000 million (30 June 2019: Rs. 3,000 million). These facilities have various maturity dates up to 30 June 2020, and need to be renewed after that. These arrangements are secured against pledge of marketable securities with minimum 30% margin (30 June 2019: 30% margin). These running finance facilities carry mark-up ranging from 1 month KIBOR + 1% to 3 month KIBOR + 2.25% per annum (30 June 2019: 1 month KIBOR + 1% to 3 month KIBOR + 2.25% per annum) calculated on a daily product basis, and is payable quarterly. The aggregate amount of these facilities which have not been availed as at the reporting date amounts to Rs. 1,240 million (30 June 2019: Rs. 1,196 million). Reinvesting in our Nation 15
  17. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 7. CONTINGENCIES AND COMMITMENTS 7.1 There is no other change in the status of contingencies and commitments as disclosed in the preceding annual audited unconsolidated financial statements as at and in the year ended 30 June 2019 except for the following: - The Company has issued Corporate Guarantee to the extent of USD 8.8 million in favour of Hangzhou Cogeneration (Hong Kong) Co. Ltd to secure payment obligations of Aisha Steel Mills Limited, associated concern. The Company has also obtained deed of indemnity from the said associated concern. - The Company has pledged shares with various banks for running finance facilities obtained by Arif Habib Limited. These facilities amount to Rs. 2,475 million. 8. OPERATING FIXED ASSETS Following is the cost / written down value of operating fixed assets that have been added / disposed off during the period: Three months period ended Three months period ended 30 September 2019 30 September 2018 Additions Disposals Additions Disposals (Unaudited) (Unaudited) (Rupees) Vehicle 9. - 57,626 57,626 - LONG TERM INVESTMENTS Unaudited Audited 30 September 30 June 2019 2019 (Rupees) Note Subsidiaries - at cost Associates - designated at FVTPL Associates - at FVOCI Other equity securities - at FVOCI 9.1 Subsidiaries - at cost Arif Habib Limited (AHL) Sachal Energy Development (Private) Limited (SEDPL) Black Gold Power Limited (BGPL) 16 Arif Habib Corp Quarterly Report Sep 2019 - 5,058,602,290 9,176,413,138 1,324,332,073 15,559,347,501 9.1 9.2 9.3 9.4 5,058,602,290 10,020,215,347 1,324,332,073 16,403,149,710 Carrying amount Unaudited Audited 30 September 30 June 2019 2019 (Rupees) 2,262,137,230 2,746,465,060 50,000,000 5,058,602,290 2,262,137,230 2,746,465,060 50,000,000 5,058,602,290
  18. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 9.2 Associates - designated at FVTPL Note MCB-Arif Habib Savings and Investments Limited (MCB-AH) Fatima Fertilizer Company Limited (FFCL) 9.2.1 Cost Carrying amount Unrealised appreciation / Unaudited Audited (diminution) on September 30 June remeasurement of 2019 2019 investments (Rupees) 477,694,882 (22,747,375) 454,947,507 498,059,199 3,512,782,225 3,990,477,107 5,208,683,406 5,185,936,031 8,721,465,631 9,176,413,138 9,522,156,148 10,020,215,347 9.2.1 Before loss of control, MCB-AH was stated at Rs. 81.948 million which is historical cost of investment as per IAS 27. However, due to loss of control the Company has designated remaining equity interest ‘at fair value through profit or loss’ and accordingly fair value on the date of loss of control is considered as deemed cost. 9.3 Associates - at FVOCI Pakarab Fertilizers Limited (PFL) 9.4 Cost Carrying amount Unrealised appreciation / Unaudited Audited (diminution) on September 30 June remeasurement of 2019 2019 investments (Rupees) 1,324,332,073 - 1,324,332,073 1,324,332,073 Other equity securities - at FVOCI The Company designated the investment shown below as equity securities at FVOCI. 30 September 2019 Shares Fair value (Number) (Rupees) 10,000 5,000 Sun Biz (Private) Limited (SBL) Al-Khabeer Financial Services (Private) Limited (AKFS) - 9.4.1 Investment in SBL (unquoted) and AKFS (unquoted) were fully impaired in previous year and no change in fair value is recognised in current period. 9.5 Fair value of long term investments pledged with banking companies against various financing facilities amounts to Rs. 4,047.69 million (30 June 2019: Rs. 4,357 million). 10. LONG TERM LOAN TO RELATED PARTY Note Secured Aisha Steel Mills Limited Less: Current portion of long term loan 11 Unaudited Audited 30 September 30 June 2019 2019 (Rupees) 172,881,963 (18,955,660) 153,926,303 182,359,793 (18,955,660) 163,404,133 Reinvesting in our Nation 17
  19. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 10.1 In 2017, the Company converted running finance to a long term loan. The loan is secured against first charge on all present and future fixed assets, accounts receivables and interest in any insurance claim and equitable mortgage of land and building. The mark-up rate in the said loan is 6 month KIBOR + 3.25% per annum (30 June 2019: 6 months KIBOR + 3.25% per annum). The rate of mark-up on the loan during the period was 16.38% per annum (30 June 2019: ranged between 10.29% to 14.05% per annum). Mark-up is payable on semi-annual basis. 10.2 Maximum balance due from related party during the period was Rs. 153.93 million (30 June 2019: Rs. 172.88 million). 11. LOANS AND ADVANCES Note Unsecured Advance against purchase of commercial property Loans to related parties - Black Gold Power Limited (BGPL) - Aisha Steel Mills Limited (ASML) - Power Cement Limited (PCL) - Javedan Corporation Limited (JCL) Secured Current portion of long term loan to Aisha Steel Mills Limited (ASL) Advance against salaries to employees 11.1 11.2 11.3 11.4 10.1 Unaudited Audited 30 September 30 June 2019 2019 (Rupees) 117,868,060 - 117,868,060 - 5,500,000 345,000,000 416,000,000 - 5,500,000 10,067,474 766,500,000 15,567,474 18,955,660 650,317 903,974,037 18,955,660 663,999 35,187,133 11.1 This represent amount paid to Javedan Corporation Limited for the purchase of commercial plots situated at Naya Nazimabad, Deh Manghopir, Gadap Town, Karachi. 11.2 The Company entered into an interest free financing agreement with BGPL to the extent of Rs. 10,000,000 in order to finance its working capital requirements and for any other business as may be mutually agreed between the parties to the agreement. The loan is repayable within 30 business days of notice of demand. 11.3 The Company entered into a loan agreement with ASML. The loan is repayable within 30 business days notice of demand. The mark-up rate on the said loan is 3 month KIBOR + 3% per annum. Mark-up is payable on quarterly basis. The effective mark-up charged during the period was 15.97% per annum (30 June 2019: ranged between 9.92% to 14.13% per annum). 11.4 The Company entered into a loan agreement with PCL. The loan is repayable within 30 business days notice of demand. The mark-up rate on the said loan is 3 month KIBOR + 2.25% per annum. Mark-up is payable on quarterly basis. The effective mark-up charged during the period was 15.22% per annum (30 June 2019: Nil). 18 Arif Habib Corp Quarterly Report Sep 2019
  20. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 11.5 Maximum balance due from related parties in respect of loans and advances as at the end of any month during the period was Rs. 785.46 million (30 June 2019: Rs. 2,915.96 million). 12. MARK-UP RECEIVABLE Note From related parties: - Aisha Steel Mills Limited - Javedan Corporation Limited - Power Cement Limited Others: Against term finance certificates Unaudited Audited 30 September 30 June 2019 2019 (Rupees) 25,096,288 624,487 9,300,462 35,352,227 40,567,881 - 1,839,233 36,860,470 1,092,572 77,012,680 12.1 The maximum amount due in respect of mark-up receivable as at the end of any month during the period was Rs. 36.86 million (30 June 2019: Rs. 75.92 million). Further, the said receivable from related parties are on account of loans provided to them which are current and not past due. 13. PREPAYMENTS, TRADE AND OTHER RECEIVABLES Prepayment Trade receivables 13.1 Guarantee commission receivable - Arif Habib Limited - Sachal Energy Development (Private) Limited - Aisha Steel Mills Limited - Power Cement Limited Dividend receivable Others 7,887,409 32,667,646 4,543,498 - 467,193 3,134,000 1,294,494 396,745 5,292,432 412,502 3,387,164 987,489 420,538 5,207,693 1,732,423 47,579,910 908,125 1,762,680 12,421,996 13.1 This represent amount receivable from Arif Habib Limited against sale of equity securities under T+2 mechanism. 13.2 The maximum amount due from related party as at the end of any month during the period was Rs. 37.96 million (30 June 2019: Rs. 5.208 million). 14. SHORT TERM INVESTMENTS Equity securities - at FVTPL Corporate debt securities - mandatorily at FVTPL 14.1 & 14.2 2,837,037,035 49,999,950 2,887,036,985 9,513,036,956 50,000,000 9,563,036,956 Reinvesting in our Nation 19
  21. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 14.1 This includes investments in associated concerns, Aisha Steel Mills Limited, Power Cement Limited and Javedan Corporation Limited. 14.2 Silkbank Limited’s sponsor has exercised the option granted to him to purchase Company’s entire investment in Silkbank Limited. Accordingly, the Company has derecognised its investment in Silkbank Limited and also set off relevant deposits and margin against this investment. The shares will be transferred as per the option agreement in due course in line with regulatory approvals. 14.3 Fair value of short term investments pledged with banking companies against various financing facilities amounts to Rs. 824.58 million (30 June 2019: Rs. 1,012 million). 15. OPERATING REVENUE Mark-up on loans and advances Mark-up on term finance certificates Dividend income Mark-up on bank deposits 16. TAXATION - Current - Deferred Three months period ended 30 September 30 September 2019 2018 (Rupees) 35,021,237 2,322,332 128,000 37,471,569 63,415,219 108,114,711 19,148 171,549,078 532,950 532,950 29,562,685 (36,589,294) (7,026,609) 16.1 The provision for current year tax represents tax on taxable income at the rate of 29% per annum (30 June 2019: 29% per annum). The rate of tax imposed on the taxable income of a company for the tax year 2020 and onwards is 29%. The Company computes current tax expense based on the generally accepted interpretation of the tax laws to ensure that the sufficient provision for the purpose of taxation is available. According to management, the tax provision made in this condensed unconsolidated interim financial information is sufficient. 17. (LOSS) / EARNINGS PER SHARE - BASIC AND DILUTED Basic (loss) / earnings per share is calculated by dividing the (loss) / profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. There is no dilutive effect on the basic earnings per share of the Company: (Loss) / profit for the period Weighted average number of ordinary shares (Loss) / earnings per share - basic and diluted 20 Arif Habib Corp Quarterly Report Sep 2019 Three months period ended 30 September 30 September 2019 2018 (Rupees) (1,346,664,899) 1,503,783,439 (Number) 427,610,054 453,750,000 (Rupees) (3.15) 3.31
  22. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 18. NET CASH GENERATED FROM / (USED IN) OPERATIONS Note (Loss) / profit before tax Adjustments for: Depreciation Dividend income Mark-up on loans and advances Mark-up on term finance certificates Loss / (gain) on remeasurement of investments - net Finance cost Changes in: Loans and advances Prepayments, trade and other receivables Short term investments Trade and other payables Unclaimed dividend Net cash generated from / (used in) operations 19. Three months period ended 30 September 30 September 2019 2018 (Rupees) (1,346,131,949) 1,496,756,830 1,012,353 (35,021,237) (2,322,332) 2,180,596,782 36,716,808 2,180,982,374 834,850,425 1,340,141 (108,114,711) (63,415,219) (1,375,735,084) 41,464,074 (1,504,460,799) (7,703,969) (859,309,074) (35,157,914) 5,339,205,398 (4,908,763,089) (246,571) (464,271,250) (715,170,327) 196,751 289,484,293 9,043,829 (746,340) (417,191,794) 370,579,175 (424,895,763) 45,371,890 (1,759,763,207) (1,714,391,317) 39,264,432 (2,020,591,136) (1,981,326,704) CASH AND CASH EQUIVALENTS Cash and bank balances Short term borrowings 6 20. FINANCIAL INSTRUMENTS The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. This condensed interim unconsolidated financial information does not include all financial risk management information and disclosures required in the annual audited unconsolidated financial statements; they should be read in conjunction with the Company’s annual audited unconsolidated financial statements as at 30 June 2019 as financial risk management objectives and policies are consistent with the prior year. 21. FAIR VALUE MEASUREMENTS The accounting policies and disclosure requirement for the measurement of fair values are consistent with those disclosed in the annual audited unconsolidated financial statements of the Company as at and for the year ended 30 June 2019. Reinvesting in our Nation 21
  23. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 22. TRANSACTIONS AND BALANCES WITH RELATED PARTIES Related parties comprise of group companies (including subsidiaries and associates), directors and their close family members, major shareholders of the Company, companies where directors also hold directorship, key management personnel and staff provident fund. Transactions with related parties are carried out at contractual / agreed rates. Remuneration and benefits to executives of the Company are in accordance with the terms of the employment while contribution to the provident fund is in accordance with staff service rules. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company. The Company considers its Chief Executive Officer, Chief Financial Officer, Company Secretary, Non-Executive Directors and Departmental Heads to be its key management personnel. There are no transactions with key management personnel other than their terms of employment / entitlement. Transactions and balances with related parties during the period other than those disclosed elsewhere in the condensed interim unconsolidated financial information are given below: Three months period ended 30 September 30 September 2019 2018 (Rupees) Subsidiaries Name of the related party Arif Habib Limited Transactions during the period 1,109,345 1,503,860 - 108,114,711 Guarantee commission income 467,193 - Guarantee commission received 412,502 - Loan repayment - 525,000,000 Mark-up income on loan and advance - 8,585,884 Mark-up income received - 6,544,521 Guarantee commission income 3,134,000 2,796,750 Guarantee commission received 3,387,164 2,802,814 18,241,042 Services availed Dividend income / received Sachal Energy Development (Private) Limited Associated companies by virtue of common directorship and related concern Name of the related party Transactions during the period Aisha Steel Mills Limited Mark-up on loan and advance 25,096,288 Mark-up received 35,352,227 9,670,362 Loan extended 1,060,000,000 825,000,000 Loan repayment 715,000,000 9,477,830 1,294,494 869,364 987,489 869,364 Guarantee commission income Guarantee commission received 22 Arif Habib Corp Quarterly Report Sep 2019
  24. Notes to the Condensed Interim Unconsolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 Three months period ended 30 September 30 September 2019 2018 (Rupees) Javedan Corporation Limited Mark-up on loan and advance Mark-up received Loan extended Loan repaid Power Cement Limited Mark-up on loan and advance Loan extended Guarantee commission income Guarantee commission received Rotocast Engineering Company (Private) Limited Payment of rent and sharing of utilities, insurance and maintenance charges Employees retirement benefit fund - Provident fund Company's Contribution Mr. Arif Habib Loan from sponsor 624,487 40,567,881 73,000,000 83,067,474 35,360,023 28,967,534 329,000,000 - 9,300,462 416,000,000 396,745 420,538 - 8,268,487 6,519,941 546,972 494,019 500,000,000 - 6,692,820 392,658 833,895 4,221,717 354,348 696,264 Remuneration of chief executive officer, directors, key management personnel and executives Managerial Remuneration Contribution to provident fund Other perquisites and benefits 23. Asadullah Khawaja Meeting fee paid - 25,000 Sirajuddin Cassim Meeting fee paid - 25,000 Khawaja Jalaluddin Roomi Meeting fee paid - 35,000 DATE OF AUTHORISATION FOR ISSUE This condensed interim unconsolidated financial information has been authorised for issue on 27 November 2019 by the Board of Directors of the Company. Chief Executive Officer Chief Financial Officer Director Reinvesting in our Nation 23
  25. This Page is Intentionally Left Blank 24 Arif Habib Corp Quarterly Report Sep 2019
  26. Condensed Interim Consolidated Financial Information For the three months period ended 30th September 2019 Reinvesting in our Nation 25
  27. Condensed Interim Consolidated Statement of Financial Position As at 30th September 2019 Note Unaudited Audited 30 September 30 June 2019 2019 (Rupees) EQUITY AND LIABILITIES Share capital and reserves Authorised share capital Share capital Issued, subscribed and paid-up share capital Capital reserves Surplus on revaluation of fixed assets Revenue reserves Equity attributable to owners of the Parent Company Non-controlling interest Total Equity 5 10,000,000,000 10,000,000,000 5 4,083,750,000 4,537,500,000 15,432,500 16,743,665,780 20,842,848,280 1,636,807,868 22,479,656,148 15,432,500 16,975,848,933 21,528,781,433 1,777,221,910 23,306,003,343 10,224,694,407 10,375,968 15,238,412 1,257,569,647 11,507,878,434 10,728,571,018 9,936,248 14,056,165 1,207,615,955 11,960,179,386 650,218,507 500,000,000 502,374,881 5,712,415,626 1,567,000,000 1,360,000 841,834,175 66,077,392 45,919,737 9,887,200,318 5,840,217,170 290,417,576 4,711,758,096 1,645,000,000 1,360,000 30,970,319 76,105,682 46,166,308 12,641,995,151 43,874,734,900 47,908,177,880 Non-current liabilities Long term loans - secured Land lease liability Deferred liability - gratuity Deferred taxation - net Current liabilities Trade and other payables Loan from Sponsor Mark-up accrued on borrowings Short term borrowings Current portion of long term loans Current portion of land lease liability Payable against purchase of investment - net Taxation - net Unclaimed dividend Contingencies and commitments 6 The annexed notes 1 to 19 form an integral part of this condensed interim consolidated financial information. Chief Executive Officer 26 Arif Habib Corp Quarterly Report Sep 2019 Chief Financial Officer Director
  28. Condensed Interim consolidated Statement of Financial Position As at 30th September 2019 Note Unaudited Audited 30 September 30 June 2019 2019 (Rupees) ASSETS Non-current assets Property, plant and equipment Intangible assets - others Goodwill Trading right entitlement certificate, membership cards and offices Investment properties Equity accounted investees Other long term investments Long term loan to related party Long term deposits and other receivables Current assets Trade debts Loans and advances Deposits and prepayments Accrued mark-up and other receivables Advance sales tax Short term investments Cash and bank balances 7 8 9 15,317,025,399 2,725,247 910,206,117 16,158,398,853 2,412,274 910,206,117 8,100,000 1,698,744,800 12,342,631,063 61,468,092 153,926,303 34,990,720 30,529,817,741 8,100,000 1,726,419,800 12,010,464,481 66,046,528 163,404,133 34,990,720 31,080,442,906 3,868,723,201 1,553,422,104 154,650,809 257,136,420 20,641,142 6,709,788,053 780,555,430 13,344,917,159 2,662,752,427 47,337,031 399,258,768 254,514,039 20,654,047 11,974,137,833 1,469,080,829 16,827,734,974 43,874,734,900 47,908,177,880 The annexed notes 1 to 19 form an integral part of this condensed interim consolidated financial information. Chief Executive Officer Chief Financial Officer Director Reinvesting in our Nation 27
  29. Condensed Interim Consolidated Statement of Profit or Loss (Unaudited) For the three months period ended 30th September 2019 Three months period ended Note Operating revenue Loss on remeasurement of investments - net Unrealised gain on remeasurement of investment property Gain on sale of investments - net Gain on sale of investments property 10 Operating and administrative expenses Other income Finance cost Other charges Share of profit of equity-accounted associates investees - net of tax Profit before tax Taxation Profit after tax 11 30 September 30 September 2019 2018 (Rupees) 1,761,197,360 (1,497,974,913) 132,500,000 759,215,296 775,000 1,121,289,435 (303,149,660) 117,100,000 111,680,302 - 1,155,712,743 1,046,920,077 (407,519,754) 37,867,129 (424,851,247) - (395,620,649) 25,358,505 (293,247,355) (5,875,472) 361,208,871 332,166,582 377,535,106 130,565,537 693,375,453 (63,597,648) 629,777,805 508,100,643 (28,423,291) 479,677,352 539,191,847 90,585,958 629,777,805 361,511,859 118,165,493 479,677,352 1.26 0.80 Profit attributable to: Equity holders of the Parent Company Non-controlling interests Earnings per share - basic & diluted 14 The annexed notes 1 to 19 form an integral part of this condensed interim consolidated financial information. Chief Executive Officer 28 Arif Habib Corp Quarterly Report Sep 2019 Chief Financial Officer Director
  30. Condensed Interim Consolidated Statement of Comprehensive Income (Unaudited) For the three months period ended 30th September 2019 Three months period ended 30 September 30 September 2019 2018 (Rupees) Profit after tax 629,777,805 479,677,352 Share of other comprehensive income of equity-accounted associates -net of tax - (15,703,502) Other comprehensive income for the period - (15,703,502) 629,777,805 463,973,850 539,191,847 90,585,958 629,777,805 345,808,357 118,165,493 463,973,850 Other comprehensive income Items that will not be reclassified subsequently to consolidated statement of profit or loss Total comprehensive income for the period Total comprehensive income attributable to: Equity holders of the Parent Company Non-controlling interests The annexed notes 1 to 19 form an integral part of this condensed interim consolidated financial information. Chief Executive Officer Chief Financial Officer Director Reinvesting in our Nation 29
  31. Condensed Interim Consolidated Statement of Cash Flow (Unaudited) For the three months period ended 30th September 2019 Three months period ended Note 30 September 30 September 2019 2018 (Rupees) CASH FLOWS FROM OPERATING ACTIVITIES Cash used in operations Income tax paid Finance cost paid Mark-up received Dividend received 12 Net cash used in operating activities (826,619,058) (23,672,246) (212,893,942) 127,060,847 4,855,725 (250,728,265) (14,686,853) (114,846,312) 38,476,661 512,300 (931,268,674) (341,272,469) (4,487,801) 83,090 160,950,000 (457,933) - (246,103,366) 20,000 (30,160,000) 257,092 156,087,356 (275,986,274) 42,123,389 500,000,000 (1,225,125,000) (231,000,000) - (166,334,355) (1,026,668) (56,885,289) (914,001,611) (224,246,312) (1,689,182,929) (3,242,677,267) (4,931,860,196) (841,505,055) (1,680,985,898) (2,522,490,953) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred Proceeds from sale of property, plant and equipment Proceeds from disposal of investment property Acquisition of intangible assets Expenditure incurred on investment properties Long term deposits - net Net cash generated from / (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Change in long term financing Loan from sponsor Buy-back of shares by Parent Company Buy-back of shares by Subsidiary Company Liability against assets subject to finance lease Distribution by subsidiary to non-controlling interest Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 13 The annexed notes 1 to 19 form an integral part of this condensed interim consolidated financial information. Chief Executive Officer 30 Arif Habib Corp Quarterly Report Sep 2019 Chief Financial Officer Director
  32. Condensed Interim Consolidated Statement of Changes in Equity (Unaudited) For the three months period ended 30th September 2019 Equity attributable to owners of the Parent Issued, subscribed and paid up share capital Non-controlling interests Revenue reserves Capital Reserve Surplus on revaluation Other reserve* Fair value reserve** General Unappropriated reserve profit Total equity Total -------------------------------------------------------------- (Rupees) -------------------------------------------------------------Balance as at 1 July 2018 4,537,500,000 15,432,500 168,678,393 - 4,019,567,665 13,594,583,030 22,335,761,588 1,743,177,429 24,078,939,017 Adjustment on initial application of IFRS 9, net of tax - Adjusted balance as at 1 July 2018 - 4,537,500,000 15,432,500 (151,741,709) (265,673) 16,936,684 (265,673) 4,019,567,665 124,300,177 (27,707,205) (14,580,959) (42,288,164) 13,718,883,207 22,308,054,383 1,728,596,470 24,036,650,853 361,511,859 361,511,859 118,165,493 479,677,352 Total comprehensive income for the three months period 30 September 2018 Profit for the three months period ended - - - Other comprehensive income - - - Reclassification adjustment - - 30 September 2018 (16,936,684) - - (15,703,502) - - - (15,703,502) 16,936,684 - - (15,703,502) - - Transactions with owners recorded directly in equity - Distributions Final cash dividend at the rate of Rs. 2 per share - - - - - - - Balance as at 30 September 2018 4,537,500,000 15,432,500 - (15,969,175) 4,019,567,665 13,189,831,750 Balance as at 1 July 2019 4,537,500,000 15,432,500 - (924,160) 4,019,567,665 for the year ended 30 June 2018 Distribution by Subsidiaries (16,936,684) (15,703,502) - - (907,500,000) (907,500,000) - (529,051,457) (561,691,643) - 118,165,493 (907,500,000) (443,526,150) (56,885,289) (56,885,289) 21,746,362,740 1,789,876,674 23,536,239,414 12,957,205,428 21,528,781,433 1,777,221,910 23,306,003,343 539,191,847 539,191,847 90,585,958 629,777,805 - - Total comprehensive income for the three months period 30 September 2019 Profit for the three months period ended 30 September 2019 Other comprehensive income - - - - - - - - - - - - - - Transactions with owners recorded directly in equity Buy-back of shares of Rs. 27 per shares (refer note 5.2.2) (453,750,000) - - - - (771,375,000) (1,225,125,000) (453,750,000) - - - - (232,183,153) (685,933,153) - - - 4,083,750,000 15,432,500 - 90,585,958 (1,225,125,000) (595,347,195) Buy-back of shares by Subsidiary Company of Rs. 35 per shares (refer note 1.1) Balance as at 30 September 2019 - (924,160) - 4,019,567,665 - - 12,725,022,275 20,842,848,280 (231,000,000) (231,000,000) 1,636,807,868 22,479,656,148 * Other reserve comprises of unrealised appreciation / (diminution) on remeasurement of equity investments previously as classified as 'available for sale' under IAS 39. ** Fair value reserve comprises of the cumulative net change in the fair value of equity securities designated at FVOCI. The annexed notes 1 to 19 form an integral part of this condensed interim consolidated financial information. Chief Executive Officer Chief Financial Officer Director Reinvesting in our Nation 31
  33. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 1. STATUS AND NATURE OF BUSINESS Arif Habib Corporation Limited (“the Parent Company”) was incorporated in Pakistan on 14 November 1994 as a public limited company under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). The Parent Company is listed on the Pakistan Stock Exchange Limited. The principal activity of the Parent Company is to make strategic investments in subsidiary companies and associates engaged in diversified sectors and investment in other securities. The registered office of the Parent Company is situated at Arif Habib Centre, 2nd Floor, 23 M.T. Khan Road, Karachi, Pakistan. The Parent Company is domiciled in the province of Sindh. This condensed interim consolidated financial information of Arif Habib Corporation Limited for the three months period ended 30 September 2019 comprise of the Parent Company and following subsidiary companies (here-in-after referred to as “the Group”). Name of companies Note Effective holding 1.1 72.80% 1.2 65.52% 1.3 1.4 1.5 65.52% 85.83% 100.00% 1.6 1.7 1.8 30.09% 15.19% 30.00% Subsidiaries - Arif Habib Limited, a brokerage house Arif Habib Commodities (Private) Limited, investment management of commodities [wholly owned subsidiary of Arif Habib Limited] Arif Habib 1857 (Private) Limited, investments and share brokerage company [wholly owned subsidiary of Arif Habib Limited] Sachal Energy Development (Private) Limited, a wind power generation Company Black Gold Power Limited, a coal power generation company Associates - MCB-Arif Habib Savings and Investments Limited - a pension fund manager, asset management company and investment advisor Fatima Fertilizer Company Limited, a fertilizer company Pakarab Fertilizers Limited, a fertilizer company 1.1 Arif Habib Limited (AHL) was incorporated in Pakistan on 07 September 2004 under the repealed Companies Ordinance, 1984 (now Companies Act, 2017), as a public limited company. The shares of AHL are quoted on Pakistan Stock Exchange Limited. The registered office of AHL is situated at Arif Habib Centre, 23, M.T. Khan Road, Karachi, Pakistan. It is domiciled in the province of Sindh. AHL holds Trading Right Entitlement Certificates of Pakistan Stock Exchange Limited. The principal activities of AHL are investments, share brokerage, inter-bank brokerage, Initial Public Offer (IPO) underwriting, advisory and consultancy services. Post Buy-Back and cancellation of shares by Arif Habib Limited (AHL), the Parent Company’s shareholding in AHL has been increased from 65.52% to 72.80%. The entire Buybackwas accepted by Non-Controlling Interest (NCI). 1.2 Arif Habib Commodities (Private) Limited (AHCPL) was incorporated on 2 April 2012 as a private limited company under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). The registered office of AHCPL is located at Arif Habib Centre, 23, M.T. Khan Road, Karachi. The principal activity of AHCPL is to effectively manage investment portfolios in commodities. AHCPL is a wholly owned subsidiary of Arif Habib Limited. AHCPL holds license of Pakistan Mercantile Exchange (PMEX). 1.3 Arif Habib 1857 (Private) Limited (AH1857) was incorporated on 17 July 2014 as a private limited company in Pakistan under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). The registered office of the AH1857 is located at Arif Habib Centre, 23, M.T. Khan Road, Karachi. The principal activities of AH1857 are investments and shares brokerage. AH1857 is a wholly owned subsidiary of Arif Habib Limited. AH1857 holds Trading Right Entitlement Certificate (TREC). 32 Arif Habib Corp Quarterly Report Sep 2019
  34. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 1.4 Sachal Energy Development (Private) Limited (SEDPL) was incorporated in Pakistan on 20 November 2006 under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). SEDPL’s registered office was located at House no 638-A, main double road, sector E-11/3, NPF, Islamabad, Pakistan. The principal activity of SEDPL upon commencement of commercial operation is to generate and sell electricity up to 49.5 MW. SEDPL has achieved Commercial Operation Date (“COD”) for its 49.5 MW wind power generation facility on 11 April 2017. The wind power plant is located in Jhampir, district Thatta, Sindh for which Alternative Energy Development Board (“AEDB”) has allocated 680 acres of land to SEDPL under a sublease agreement. 1.5 Black Gold Power Limited (BGPL) is a public unlisted limited company, incorporated on 8 December 2016 in Pakistan under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). BGPL’s registered office is situated at Arif Habib Centre, 23, M.T Khan Road, Karachi. The principle activity of BGPL is to carry on all or any of the business of generating, purchasing, importing, transforming, converting, distributing, supplying, exporting and dealing in electricity and all other forms of energy products or services. BGPL has been allocated with supply of coal for its 660 MW Thar Coal based power project to be constructed, commissioned and operated at Thar Block II. 1.6 MCB-Arif Habib Savings and Investments Limited (MCB-AH) was incorporated in the name of Arif Habib Investment Management Limited (AHIML) on 30 August 2000 as an unquoted public limited company under the requirements of the repealed Companies Ordinance, 1984 (now Companies Act, 2017). MCBAH is listed on the Pakistan Stock Exchange Limited. MCB-AH is registered as a pension fund manager under the Voluntary Pension System Rules, 2005 and as an Asset Management Company and an Investment Advisor under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003. MCB-AH’s registered office is situated at 24th Floor, Centre point, Off Shaheed-e-Millat Expressway, near K.P.T. Interchange, Karachi, Pakistan. MCB-AH has been assigned an Asset Manager rating of AM2++ by the Pakistan Credit Rating Agency Limited (PACRA). The rating was determined by PACRA on 8 October 2018. The fund under management is Rs. 80.45 billion (30 June 2019: Rs. 79.89 billion). 1.7 Fatima Fertilizer Company Limited (FFCL) and its wholly owned subsidiaries - Fatimafert Limited (FF) were incorporated in Pakistan under the repealed Companies Ordinance, 1984 (now Companies, Act 2017). FFCL is listed on Pakistan Stock Exchange Limited. The control of FF was transferred to FFCL on 1 July 2015. Buber Sher (Private) Limited (BSPL) was another wholly owned subsidiary of FFCL which owned “Buber Sher” brand. BSPL now stands dissolved without winding-up by the order of the Court. The principal activity of the FFCL and FF is manufacturing, producing, buying, selling, importing and exporting fertilizers and chemicals. Registered offices of the FFCL and FF are located in E-110, Khayaban-e-Jinnah, Lahore Cantt, Pakistan. The manufacturing facility of FFCL is located at Mukhtargarh, Sadiqabad, Pakistan and Multan, Pakistan and manufacturing facility of FF is located near Chichoki Mallian at Sheikhupura road. BOD of FFCL in their meeting held on 15 October 2018 have decided to amalgamate/merge wholly its owned subsidiary, FF into FFCL with effect from 1 January 2019 subject to receipt of all requisite corporate and regulatory authorizations, consents and approvals. 1.8 Pakarab Fertilizers Limited (PFL) was incorporated as a private limited company in Pakistan under the Companies Act, 1913, (now Companies Act, 2017). PFL changed to a non-listed public company from 7 June 2007. PFL Term Finance Certificates were listed at the Karachi Stock Exchange Limited (now merged as Pakistan Stock Exchange Limited) during the period from March 2008 to March 2013. Thereafter PFL is a non-listed public company. PFL on 12 April 2011; incorporated a wholly owned subsidiary company, Fatima Packaging Limited (FPL) (formerly Reliance Sacks Limited). PFL is principally engaged in the manufacturing and sale of chemical fertilizers while the FPL is principally engaged in the manufacturing and sale of polypropylene sacks, cloth, liners and cement bags. PFL and FPL registered address is E-110, Khayaban-e-Jinnah, Lahore Cantt. Manufacturing facility of PFL is located in Multan while manufacturing facility of FPL is located in Sadiqabad, Rahim Yar Khan. Reinvesting in our Nation 33
  35. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 2. BASIS OF PREPARATION 2.1 Statement of compliance This condensed interim financial statements has been prepared in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprises of; - International Accounting Standard (IAS) 34, Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and - Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; and - Provisions of and directives under the Companies Act, 2017. Where the provisions of and directives issued under the Companies Act, 2017 differ with the requirements of IAS 34 or IFAS, the provisions of directives issued under the Companies Act, 2017 have been followed. This condensed interim consolidated financial information is unaudited and does not include all the information required for full annual financial statements and should be read in conjunction with the annual audited consolidated financial statements of the Group as at and for the year ended 30 June 2019. The comparative statement of financial position presented in this condensed interim consolidated financial information has been extracted from the audited annual consolidated financial statements of the Company for the year ended 30 June 2019, whereas the comparative condensed interim consolidated statement of profit or loss, condensed interim consolidated other comprehensive income, condensed interim consolidated statement of cash flow and condensed interim consolidated statement of changes in equity are extracted from the unaudited condensed interim consolidated financial information for the period ended 30 September 2018. This condensed interim consolidated financial information is presented in Pakistan Rupees which is the Group’s functional currency and presentation currency. 3. ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of this condensed interim consolidated financial information are the same as those applied in the preparation of annual audited consolidated financial statements of the Group as at and for the year ended 30 June 2019. 4. ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of this condensed interim consolidated financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reporting amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience. Actual results may differ from these estimates. The significant judgements made by the management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual audited consolidated financial statements as at and for the year ended 30 June 2019. 34 Arif Habib Corp Quarterly Report Sep 2019
  36. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 5. SHARE CAPITAL 5.1 Authorised share capital Unaudited 30 September 30 September 30 June 2019 2019 (Number of shares) 1,000,000,000 5.2 1,000,000,000 Audited 30 June 2019 2019 (Rupees) 10,000,000,000 10,000,000,000 Ordinary shares of Rs. 10 each Issued, subscribed and paid up share capital 5,000,000 5,000,000 450,750,000 450,750,000 455,750,000 455,750,000 (2,000,000) (2,000,000) (45,375,000) 408,375,000 Ordinary shares of Rs. 10 each fully paid in cash Ordinary shares of Rs. 10 each issued as fully paid bonus shares Ordinary shares of Rs. 10 each bought back at Rs. 360 per share - Ordinary shares of Rs. 10 each bought back at Rs. 27 per share 453,750,000 50,000,000 50,000,000 4,507,500,000 4,557,500,000 4,507,500,000 4,557,500,000 5.2.1 (20,000,000) (20,000,000) 5.2.2 (453,750,000) 4,083,750,000 4,537,500,000 5.2.1 During financial year 2005-2006, the Parent Company bought back two million shares of Rs. 10 each from its shareholders through tender notice at a price of Rs. 360 per share in accordance with section 95-A of the repealed Companies Ordinance, 1984 and Companies (Buy-back of shares) Rules, 1999. The acquisition resulted in reduction of capital and unappropriated profit by Rs. 20 million and Rs. 700 million respectively, in the relevant year. 5.2.2 During the year, the Parent Company purchased and cancelled 45,375,000 ordinary shares (10% of existing share i.e. 453,750,000). The buy-back and cancellation of shares were approved by shareholders at the extra ordinary general meeting held on 3 July 2019. The shares were acquired at the purchase price of Rs. 27 per share. The purchase of shares were made in cash out of the distributable profits as required under Section 88(8) of the Companies Act, 2017 read with Listed Companies (Buy-Back of Shares) Regulations, 2019. Pursuant to Buy Back of Shares the ordinary share capital of the Parent Company has been reduced by 45,375,000 ordinary shares amounting to Rs. 453,750,000. 5.2.3 Mr. Arif Habib held 70.11% (30 June 2019: 70.11%) of ordinary shares in the Parent Company. 6. CONTINGENCIES AND COMMITMENTS There are no other changes in the status of contingencies and commitments as disclosed in the preceding annual audited consolidation financial statements as at and in the year ended 30 June 2019 except for the following: Parent Company - The Parent Company has issued Corporate Guarantee to the extent of USD 8.8 million in favour of Hangzhou Cogeneration (Hong Kong) Co. Ltd to secure payment obligations of Aisha Steel Mills Limited, associated concern. The Parent Company has also obtained deed of indemnity from the said associated concern. - The Parent Company has pledged shares with various banks for running finance facilities obtained by Arif Habib Limited. These facilities amount to Rs. 2,475 million. Reinvesting in our Nation 35
  37. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 AHL, Subsidiary Company Following commitments are outstanding as at the year end:. Unaudited Audited 30 September 30 June 2019 2019 (Rupees) - Outstanding Settlements against Marginal Trading contracts - Outstanding Settlements against sale / (purchase) of securities in regular market - Financial guarantee given by a commercial bank on behalf of AHL 7. PROPERTY, PLANT AND EQUIPMENT 8. EQUITY ACCOUNTED INVESTEES 70,462,619 183,844,159 112,711,600 67,513,807 250,000,000 250,000,000 Capital expenditure incurred during the period amounted to Rs. 4.487 million (30 June 2019: 11.67 million). The exchange loss of Rs. 624 million (30 June 2019: exchange gain of Rs. 3,594.25 million) has also been recognised. Further, assets having written down value of Rs. 0.08 million (30 June 2019: 1.07 million) were disposed off. Note Fatima Fertilizer Company Limited (FFCL) MCB-Arif Habib Savings and Investments Limited (MCB-AH) Pakarab Fertilizers Limited (PFL) Less: Provision for impairment 8.1 8.2 8.3 Unaudited Audited 30 September 30 June 2019 2019 (Rupees) 11,896,671,277 565,942,391 - 11,568,379,073 562,068,013 - 12,462,613,668 (119,982,605) 12,342,631,063 12,130,447,086 (119,982,605) 12,010,464,481 8.1 Investment in FFCL (quoted) represents 319 million (30 June 2019: 319 million) fully paid ordinary shares of Rs.10 each, representing 15.19% (30 June 2019: 15.19%) of FFCL’s paid up share capital as at 30 September 2019. Fair value per share as at 30 September 2019 is Rs. 27.34 (30 June 2019: Rs. 29.85) which is based on quoted share price on stock exchange at reporting date. 8.2 Investment in MCB-AH (quoted) represents 21.66 million (30 June 2019: 21.66 million) fully paid ordinary shares of Rs. 10 each, representing 30.09% (30 June 2019: 30.09%) of MCB-AH’s paid up share capital as at 30 September 2019. Market value per share as at 30 September 2019 was Rs. 21 (30 June 2019: Rs. 22.99) which is based on quoted share price on stock exchange at reporting date. 8.3 Investment in PFL (unquoted) represents 135 million (30 June 2019: 135 million) fully paid ordinary shares of Rs. 10 each, representing 30% (30 June 2019: 30%) of PFL’s paid up share capital as at 30 September 2019, having cost of Rs. 1,324.33 million (30 June 2019: Rs. 1,324.33 million). The Group’s has not recognised loss amounting to Rs 848.76 million in relation to its interest in PFL, because the Group has no obligation in respect of this loss. 36 Arif Habib Corp Quarterly Report Sep 2019
  38. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 9. SHORT TERM INVESTMENTS Note Equity securities - at FVTPL Corporate debt securities - mandatorily at FVTPL 9.1 9.2 9.3 10. 6,659,788,103 49,999,950 6,709,788,053 11,602,524,636 371,613,197 11,974,137,833 This includes investments in associated concerns, Aisha Steel Mills Limited (ASML), Power Cement Limited (PCL) and Javedan Corporation Limited (JCL). Silkbank Limited’s sponsor has exercised the option granted to him to purchase Parent Company’s entire investment in Silkbank Limited. Accordingly, the Parent Company has derecognised its investment in Silkbank Limited and also set off relevant deposits and margin against this investment. The shares will be transferred as per the option agreement in due course in line with regulatory approvals. Fair value of short term investments pledged with various banking companies against various finance facilities amounts of Rs. 7,814.46 million (30 June 2019: Rs. 6,909.79 million). OPERATING REVENUE Dividend income Mark-up income on loans and advances Mark-up income on term finance certificates Brokerage income Mark-up on bank deposits Underwriting, consultancy and placement commission Revenue from sale of energy - net 11. 9.1 & 9.2 Unaudited Audited 30 September 30 June 2019 2019 (Rupees) Three months period ended 30 September 30 September 2019 2018 (Rupees) 4,855,725 45,069,018 2,322,332 51,935,834 14,738,787 29,128,875 1,613,146,789 1,761,197,360 512,300 54,829,335 50,917,242 6,760,922 35,956,766 972,312,870 1,121,289,435 13,643,956 49,953,692 63,597,648 47,777,199 (19,353,908) 28,423,291 TAXATION - Current - Deferred Reinvesting in our Nation 37
  39. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 12. CASH USED IN OPERATIONS 693,375,453 508,100,643 Operating profit before working capital changes 221,778,165 144,960 (4,855,725) 4,578,436 (1,497,974,913) (132,500,000) (775,000) (332,166,582) (45,069,018) (2,322,332) 439,720 424,851,247 1,182,247 (1,362,688,795) (669,313,342) 182,114,027 149,997 (512,300) 75,472 3,581,548 (303,149,660) (117,100,000) (130,565,537) (54,829,335) 439,720 293,247,355 1,254,511 (125,294,202) 382,806,441 Changes in working capital: Decrease / (increase) in current assets Trade debts Loans and advances Deposits and prepayments Accrued mark-up and other receivables Advance sales tax Short term investments (1,205,970,774) (1,496,607,243) 244,607,959 (82,291,878) 12,905 6,762,324,693 (136,584,641) (1,064,062,618) (46,138,902) (181,901,607) 997,019,231 (5,189,998,663) 810,863,856 (246,571) (157,305,716) (142,596,554) (64,485,762) 5,216,147 (633,534,706) (826,619,058) (250,728,265) Profit before tax Adjustments for: Depreciation Amortisation Dividend income Loss on sale of property, plant and equipment Unrealised loss on remeasurement of other long term investment Unrealised gain on short term investments Unrealised gain on re-measurement of investment property Gain on sale of investment property Share of profit of equity-accounted associates - net of tax Mark-up on loans and advances Mark-up income on term finance certificates Amortisation of land lease rent Finance cost Provision for gratuity (Decrease) / increase in current liabilities Trade and other payables Payable against sale of securities - net Unclaimed dividend Cash used in operations 38 Three months period ended 30 September 30 September 2019 2018 (Rupees) Arif Habib Corp Quarterly Report Sep 2019
  40. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 13. CASH AND CASH EQUIVALENTS Three months period ended 30 September 30 September 2019 2018 (Rupees) Cash and bank balances Short term borrowings 780,555,430 (5,712,415,626) (4,931,860,196) 1,005,076,630 (3,527,567,583) (2,522,490,953) 14. EARNINGS PER SHARE - BASIC & DILUTED Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Parent Company by the weighted average number of ordinary shares in issue during the year. There is no dilutive effect on the basic earnings per share of the Parent Company: Profit after tax attributable to ordinary shareholders Weighted average number of ordinary shares Earnings per share - basic & diluted Three months period ended 30 September 30 September 2019 2018 (Rupees) 539,191,847 361,511,859 (Number) 427,610,054 453,750,000 (Rupees) 1.26 0.80 15. FINANCIAL INSTRUMENTS The financial risk management objectives and policies are consistent with those disclosed in the annual audited consolidated financial statements of the Group as at and for the year ended 30 June 2019. 16. FAIR VALUE MEASUREMENT The accounting policies and disclosure requirement for the measurement of fair values are consistent with those disclosed in the annual audited consolidated financial statements of the Group as at and for the year ended 30 June 2019. 17. TRANSACTIONS WITH RELATED PARTIES Related parties comprise of the Group companies, directors and their close family members, major shareholders of the Group, key management personnel and staff provident fund. Transactions with related parties are carried out at rates agreed under the agreement / contract. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The Group considers its Chief Executive Officer, Chief Financial Officer, Company Secretary, Non-executive Director and Departmental Heads to be its key management personnel. Remuneration and benefits to executives of the Group are in accordance with the terms of the employment while contribution to the provident fund is in accordance with staff service rules. Transactions with related parties during the period other than those disclosed elsewhere in this condensed interim consolidated financial information are given below: Reinvesting in our Nation 39
  41. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 Associated companies by virtue of common directorship and related concern Three months period ended 30 September 30 September 2019 2018 (Rupees) Name of the related party Transactions during the period Aisha Steel Mills Limited Mark-up on loan and advance 25,096,288 Mark-up received 35,352,227 9,670,362 Loan extended 1,360,000,000 825,000,000 Loan repayment 715,000,000 9,477,830 1,294,494 869,364 987,489 869,364 Guarantee commission income Guarantee commission received Javedan Corporation Limited Power Cement Limited 624,487 35,360,023 Mark-up received 40,567,881 28,967,534 Loan extended 73,000,000 329,000,000 Loan repaid 83,067,474 - Purchase of plots - 125,000,000 Development Charges Paid - 20,000,000 Mark-up on loan and advance 9,300,462 - 416,000,000 - Guarantee commission income 396,745 - Guarantee commission received 420,538 - 18,668,698 6,519,941 Company's Contribution 546,972 494,019 Company's Contribution 1,477,151 1,648,324 32,363,584 27,209,060 Mark-up on loan and advance Loan extended Rotocast Engineering Company (Private) Limited 18,241,042 Payment of rent and sharing of utilities, insurance and maintenance charges Arif Habib Securities Limited Employees Provident fund Arif Habib Limited Provident fund Remuneration of chief executive officer, directors, key management personnel and executives - Managerial Remuneration - Contribution to provident fund 507,491 354,348 - Other perquisites and benefits 833,895 696,264 Mr. Arif Habib Loan from sponsor (CEO of Parent Company) Brokerage commission earned 500,000,000 - 685,763 2,679,638 130,070,292 - Purchase consideration against shares bought by AHL 40 Arif Habib Corp Quarterly Report Sep 2019
  42. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 Three months period ended 30 September 30 September 2019 2018 (Rupees) Samad A. Habib Brokerage commission earned 4,054 3,703 Brokerage commission earned 3,963 - Meeting fee paid - 25,000 Meeting fee paid - 25,000 Meeting fee paid - 35,000 Meeting fee paid 25,000 25,000 749,227 1,305,389 (Director of Parent Company) Kashif A. Habib (Director of Parent Company) Asadullah Khawaja (Director of Parent Company) Sirajuddin Cassim (Director of Parent Company) Khawaja Jalaluddin Roomi (Director of Parent Company) Zafar Alam (Chairman of subsidiary company) Muhammad Shahid Ali Brokerage commission earned (CEO of Subsidiary Company) Muhammad Haroon Brokerage commission earned 1,650 34,545 (Director of Subsidiary Company) Meeting fee paid 25,000 25,000 Muhammad Sohail Salat Meeting fee paid 25,000 25,000 (Director of Subsidiary Company) Sharmin Shahid Brokerage commission earned (Director of Subsidiary Company) Meeting fee paid Nida Ahsan Brokerage commission earned 121,533 63,031 25,000 25,000 114,400 1,508,202 (Director of Subsidiary Company) Reinvesting in our Nation 41
  43. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 Three months period ended 30 September 30 June 2019 2019 (Rupees) Balances as at: Aisha Steel Mills Limited Loan (long-term and short-term) Mark-up receivable Commission on guarantee receivable Javedan Corporation Limited Loan Mark-up receivable 817,881,963 182,359,793 35,144,069 35,352,277 1,294,494 987,489 - 10,067,474 624,487 40,567,881 117,868,060 - 416,000,000 - Advance against purchase of commercial property Power Cement Limited Loan 9,300,462 - Commission on guarantee receivable 396,745 420,538 Receivable against transfer of assets - 42,680 29,928,446 25,972,102 Mark-up receivable Arif Habib Dolmen REIT Management Limited Key Management Personnel Muhammad Shahid Ali Balance payable (CEO of Subsidiary Company) Nida Ahsan Balance receivable 7,286 - (Director of Subsidiary Company) Balance payable - 12,182 Muhammad Haroon Balance payable 16,163 4,239 Balance payable 4,240 - (Director of Subsidiary Company) Samad A. Habib (Director of Parent Company) 18. REPORTABLE SEGMENTS 18.1 The group has four reportable segments: Capital Market Operations, Brokerage, Energy Development and Others. The capital market operations’ segment is principally engaged in trading of equity securities and maintaining strategic and trading portfolios. The brokerage segment is principally engaged in brokerage, underwriting, corporate consultancy, research and corporate finance services. The energy development is principally engaged in energy development. Others includes assets of multi commodities entities. 42 Arif Habib Corp Quarterly Report Sep 2019
  44. Notes to the Condensed Interim Consolidated Financial Information (Unaudited) For the three months period ended 30th September 2019 18.2 The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies in the annual audited consolidated financial statements for the year ended 30 June 2019. The group evaluates performance on the basis of profit or loss from operations before tax expense not including non-recurring gains and losses and foreign exchange gains and losses. The group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, i.e. at current market price unless disclosed otherwise. 18.3 The group’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology, professional skills and marketing strategies. Most of the businesses were acquired as individual units, and the management at the time of the acquisition was retained. 18.4 The group does not allocate tax expense / tax income or non-recurring gains and losses to reportable segments. In addition, not all reportable segments have material non-cash items other than depreciation, amortisation and remeasurement of equity and debt instruments in profit or loss. 19. DATE OF AUTHORISATION FOR ISSUE 19.1 This condensed interim consolidated financial information has been authorised for issue on 27 November 2019 by the Board of Directors of the Parent Company. Chief Executive Officer Chief Financial Officer Director Reinvesting in our Nation 43
  45. Designed by Crayons (021-34300786), Print by Firefly Arif Habib Centre, 23, M.T. Khan Road, Karachi - 74000 Tel: +92 21 32460717-9 Fax: +92 21 32468117, 32429653 Email: info@arifhabibcorp.com Company website: www.arifhabibcorp.com Group website: www.arifhabib.com.pk