Notes to the Consolidated Financial Statements

256 Pages·2016·6.24 MB·English

focusing on growth
annual report 2016
Arif Habib Group
is structured around Arif Habib
Corporation Limited (AHCL), a
holding company that primarily
manages strategic investments of the
Company. Whatever we do, we do it
with a clear intention to ensure that
nature and environment is being
taken care of; wherever we
manoeuvre, we strive to help society
achieve sustainable growth. Our
definition of sustainability
management is the integrated
expansion and escalation of our
economic, environmental and social
performance in a style that signifies
value for all our stakeholders.

s05 Corporate Structure
05 Vision
05 Mission
06 Corporate Strategy
t06 Objectives
06 Values
n
07 The Arif Habib Group
08 Arif Habib Corporation Limited
09 Company Information
e
11 Subsidiaries and Associates
14 Pakarab Fertilizers Limited
15 Fatima Fertilizer Company Limited
18 Arif Habib Limited
t19 MCB-Arif Habib Savings and Investments Limited
22 Sachal Energy Development (Pvt.) Limited
n23 Arif Habib Commodities (Pvt.) Limited
26 Other Companies Having Group’s Shareholding
26 Aisha Steel Mills Limited
27 Power Cement Limited
o
30 Javedan Corporation Limited
31 Arif Habib Dolmen REIT Management Limited
33 Governance and Management
c35 Board of Directors
45 Board and Management Committees
47 Criteria to Evaluate Board’s Performance
49 Chief Executive’s Performance Review
51 Directors’ Report 98 Audited Financial Statements
59 Statement Showing Shares Bought and Sold 99 Auditors’ Report to the Members
60 Statement Showing Attendance at Board Meetings 101 Balance Sheet
61 Pattern of Shareholding 103 Profit and Loss Account
104 Statement of Comprehensive Income
65 Sustainability Report 105 Cash Flow Statement
66 CEO’s message 106 Statement of Changes in Equity
67 Our Vision for Sustainability 107 Notes to the Financial Statements
68 Our Approach
152 Audited Consolidated Financial Statements
72 Financial Highlights 153 Auditors’ Report to the Members
73 AHCL at a Glance 155 Consolidated Balance Sheet
74 Key Figures and Highlights 157 Consolidated Profit and Loss Account
75 Financial and Business Highlights – Six Years 158 Consolidated Statement of Comprehensive
at a Glance Income
77 Graphical Representation 159 Consolidated Cash Flow Statement
79 Horizontal Analysis of Financial Statements 160 Consolidated Statement of Changes in Equity
81 Vertical Analysis of Financial Statements 161 Notes to the Consolidated Financial Statements
83 Summary of Cash Flow Statement
84 Statement of Value Added and its Distribution 229 Corporate Calendar of Major Events
85 Share Price/ Volume Analysis
87 Comments on the Result of Financial Performance 230 Notice of Twenty Second Annual General
88 Analysis on Quarterly Results Meeting
89 Shareholders’ Information
91 Corporate Memberships 234 Abstract under section 218(2) of the
Companies Ordinance, 1984
93 Report of the Audit Committee Appointment of Chief Executive Officer
95 Statement of Compliance with Code of Corporate 235 Statement Under Section 160(1)(B) of the
Governance Companies Ordinance, 1984
97 Auditors’ Review Report to Members on 244 Form of Proxy
Statement of Compliance
254 Directors’ Report in Urdu language
Forward Looking Statements
Statements in this report that are not historical facts are futuristic plans based on the current beliefs, estimates
and expectations of management and includes risks and uncertainties coupled with variations in economic or
market conditions, amendments in laws, regulations and policies.
Vision
To be Pakistan’s leading
Investment Company, which
delivers both competitive
financial returns, together
with having a positive
impact on the country’s
economy and its people
through responsible
investing.
Mission
Our mission is to excel in
conceiving, developing
and executing innovative
projects across business
sectors, with the aim of
maximising returns for
stakeholders, while
playing a significant role
in developing Pakistan’s
economy and its
integration into the world
markets.
05 Arif Habib Corp
Corporate Strategy
Our Corporate Strategy aims at creating value for all
stakeholders by maintaining and improving our competitive
position in the market.
This is achieved by continuously evaluating and acting in the
best interests of our stakeholders in response to the
changing market conditions, both domestically, as well as
internationally. Towards this end, we optimise our financial
and human capital while seeking partnerships with other
business houses having strong management teams to create
and expand viable business enterprises.
Objectives
• Maintain Industry Leadership
• Create new businesses to augment profitability for sustained
economic growth
• Maintain operational efficiency and to achieve synergies
within our resources
Values
AHCL is values-driven and this principle continues to direct the
business and the growth of the Arif Habib Group companies.
The core values which reinforce the way we do business are:
• Integrity - We conduct our business fairly, with honesty and
with transparency. Everything we do stands the test of public
scrutiny
• Excellence - We constantly strive to achieve the highest
possible standards in our day-to-day work and in the quality of
the goods and services we provide
• Unity – We work cohesively with our colleagues across the
group and with our customers and partners around the world,
building strong relationships based on tolerance,
understanding and mutual cooperation
• Responsibility – We continue to be responsible, as well as
sensitive to the geographies, communities and the
environment in which we work, always ensuring that what
comes from the people goes back to the people many times
over
Annual Report 2016 06
The Arif Habib Group
With its entrepreneurial spirit and passion to undertake business projects
that are transformational in nature, the Arif Habib Group has built and
continues to develop rewarding businesses in the areas of fertilisers,
cement, steel, renewable energy, real estate development, as well as
financial services.
Having started out in the financial services, the Group has, over time,
diversified into emerging business areas, with meaningful contribution to
Pakistan’s economy. The Group draws strength from its own human
resource, as well as, its ability to forge strong partnerships with other
business houses and benefit from collective strength. Striving for quality
and excellence are an integral part of the Group’s business model and
these are not merely corporate slogans but the formula for achieving
success. An important part of our strategy is to continue raising the bar.
The Group’s commitment to serve the community and all stakeholders is
what drives the team to reach its maximum potential by being able to
innovate and provide solutions and thereby converting challenges into
opportunities.
07 Arif Habib Corp
Arif Habib
Corporation Limited
Arif Habib Corporation Limited (AHCL) is the flagship company of the Arif Habib Group.
The company took over the sole proprietorship business set up by Mr. Arif Habib in
1990 and was incorporated in 1994 as a public limited company with a paid up capital
of PKR 40 million. AHCL was listed in 2001, with an initial public offering (IPO) of one
million shares, targeting to raise PKR 80 million in order to finance growth. Since its
listing in 2001, the Company has distributed PKR 8.67 billion as dividend (including
specie dividend) and PKR 720 million by buying back two million shares (having face
value of PKR 10 each) at a price of PKR 360 per share from its shareholders. Currently
the Company’s equity is PKR 29 billion built through retained earnings. Thus, by
30th June 2016, the initial investors in the IPO of the Company, have had a
compounded all annualized return of 36.91%(1994)/34.38%(2001).

The Arif Habib brand is today seen as the name that assures a commitment to best
practices and putting its stakeholders first, which they have come to expect of the
Company striving to be the best in its class.
Annual Report 2016 08
Company Information
Board of Directors
Asadullah Khawaja Chairman
Arif Habib Chief Executive Officer
Khawaja Jalaluddin Romi Independent Director
Sirajuddin Cassim Independent Director
Nasim Beg Non-Executive Director
Samad A. Habib Non-Executive Director
Kashif A. Habib Non-Executive Director
Muhammad Ejaz Non-Executive Director
Audit Committee
Khawaja Jalaluddin Roomi Chairman
Kashif A. Habib Member
Muhammad Ejaz Member
Management
Arif Habib Chief Executive Officer
Mohsin Madni Chief Financial Officer
Manzoor Raza Company Secretary

09 Arif Habib Corp