TAKAFUL PAKISTAN LIMITED QUARTERLY REPORT SEPTEMBER 30, 2016

Transcription

1 QUARTERLY REPORT SEPTEMBER 30, 2016

2 CONTENTS Corporate Information 03 Vision, Mission and Ambition 05 Management Team 06 Branches 06 Director s Report 07 Financial Statements 09 2

3 CORPORATE INFORMATION Directors Chief Executive Officer Chief Finance Officer and Company Secretary Shariah Advisor Auditor Legal Advisors Syed Abdul Razzaq (Chairman) Syed Tariq Husain Mr. Ahmad Shuja Kidwai Mr. Haseeb Ahmed Dr. Mumtaz A. Hashmi Mr. Aadil Saleh Mr. Ashraf Ali Velji* Syed Tariq Husain Muhammad Irfan Mufti Imtaiz Alam Riaz Ahmed and Co. Chartered Accountants Surridge & Beecheno Advocates, Consultants, Attorneys Mohsin Tayebaly & Co. Corporate Legal Consultants, Barristers & Advocates High Courts & Supreme Court Head office 6th floor, Business Centre, Plot No 19-1-A, Block -6, P.E.C.H.S., Shahrah-e-Faisal, Karachi-75400, Pakistan. UAN : (021) Tel : (+92-21) (10 Lines) Fax : (+92-21) info@takaful.com.pk Website : * Sound and Prudent approval for appointment of director is pending with SECP. 3

4 Bankers Meezan Bank Limited Bank Islami Pakistan Limited Dubai Islamic Bank Limited Burj Bank Limited Al Baraka Bank (Pakistan) Limited Habib Bank Limited (Islamic Banking Division) Faysal Bank Limited (Islamic Banking Division) Askari Bank Limited ( Islamic Banking Division) Bank AlFalah Limited (Islamic Banking Division) Habib Metropolitan Bank (Islamic Banking Division) National Bank of Pakistan (Islamic Banking Division) Bank of Khyber (Islamic Banking Division) UBL (Islamic Banking Division) BOARD COMMITTEES Audit Committee Syed Abdul Razzaq (Chairman) Dr. Mumtaz A. Hashmi Mr. Ashraf Ali Velji Risk Management Committee Dr. Mumtaz A. Hashmi (Chairman) Mr. Aadil Saleh Ahmed Shuja Kidwai Human Resource Committee Aadil Saleh (Chairman) Ahmed Shuja Kidwai Dr. Mumtaz A. Hashmi Investment Committee Mr. Ashraf Ali Velji (Chairman) Syed Tariq Husain Syed Abdul Razzaq 4

5 OUR VISION To spread Takaful benefits beyond borders, beyond Time! OUR MISSION To deliver Takaful as a viable alternative to conventional insurance. To become the top-of-the-mind Takaful brand for our Participants in terms of competitiveness, service standards and business ethics To give value for money to our shareholders and make Takaful Pakistan their prized asset. To become an ideal organization for our employees that encourages them to achieve self-actualization and growth. To contribute positively and proactively for the welfare of our society at large as well as for the preservation of our environment. OUR AMBITION To be a role model for the contemporary insurance industry and eventually bring it in conformity with the Shariah compliant Takaful mode of insurance. 5

6 MANAGEMENT TEAM Syed Tariq Husain Muhammad Irfan Moeen ud Din Jawwad Bin Yousuf Shaikh Azeemuddin Muhammad Ayaz Chief Executive Officer Chief Financial Officer and Company Secretary Assistant General Manager (Marketing) Senior Manager & Head of Accident Underwriting Senior Manager & Head of Human Resources & Administration Senior Manager & Head of Fire & Property Underwriting BRANCHES / OFFICES Branch Karachi Lahore Peshawar Faisalabad Abbottabad Branch Address 6th floor, Business Centre, Plot No 19-1-A, Block -6, P.E.C.H.S., Shahrah-e-Faisal, Karachi. UAN: (021) Fax: (021) E/1, Main Boulevard Gulberg-III, Lahore. UAN: (042) Fax: (042) th Floor, State Life Building, 34-The Mall, Peshawar Cantt, Peshawar. UAN: (091) Fax: (091) Office # 3, 2nd floor, Wahab Centre, Main Susan Road, Faislabad. UAN: (041) Fax: (041) Al-Fateh Plaza Opposite Radio Station, Jhangi Abbottabad

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9 CONDENSED INTERIM BALANCE SHEET (UNAUDITED) AS AT SEPTEMBER 30, 2016 AS AT SEPTEMBER 30, 2016 December 31 Shareholders' Participants' 2015 Note Fund Takaful Fund Aggregate Aggregate (Rupees) SHARE CAPITAL AND RESERVES Authorised share capital [70,000,000 (2015: 50,000,000) ordinary shares of Rs. 10 each] 700,000, ,000, ,000,000 Paid-up share capital [30,000,000 (2015: 30,000,000) ordinary shares of Rs. 10 each] 300,000, ,000, ,000,000 Accumulated losses (92,510,046) - (92,510,046) (107,391,175) Qarda-e-hasna (30,102,293) - (30,102,293) (20,238,961) 177,387, ,387, ,369,864 PARTICIPANTS' TAKAFUL EQUITY (PTF) Cede money - 500, , ,000 Balance of Waqf / Participants' Takaful Fund (PTF) - (30,102,293) (30,102,293) (20,738,961) Qard-e-hasna from Shareholders' Fund - 30,102,293 30,102,293 20,238, , ,000 - LIABILITIES UNDERWRITING PROVISIONS Provision for outstanding claims (including IBNR) - 101,479, ,479,712 96,859,677 Provision for unearned contributions - 96,443,687 96,443, ,138,661 Provision for Contribution Deficiency Reserve - 3,196,027 3,196,027 4,684,834 Unearned re-takaful rebate - 3,540,660 3,540,660 3,212,086 Total underwriting provisions - 204,660, ,660, ,895,258 CREDITORS AND ACCRUALS Contributions received in advance - 206, , ,893 Amounts due to takaful/re-takaful companies - 76,007,969 76,007,969 59,684,818 Accrued expenses 1,153,381 1,153,381 1,352,615 Unearned wakala fees 38,577,475-38,577,475 57,255,465 Wakala fees payable and other account balances 8,755,067-8,755,067 10,137,095 Mudarib fees payable - 2,965,042 2,965,042 2,051,097 Other creditors and accruals 6 12,663,248 6,077,319 18,740,568 26,186,569 61,149,171 85,256, ,405, ,177,552 TOTAL LIABILITIES 61,149, ,916, ,065, ,072,810 TOTAL EQUITY AND LIABILITIES 238,536, ,416, ,953, ,442,674 CONTINGENCIES AND COMMITMENTS 7 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 9

10 CONDENSED INTERIM BALANCE SHEET (UNAUDITED) AS AT SEPTEMBER 30, 2016 Note AS AT SEPTEMBER 30, 2016 December 31 Shareholders' Participants' 2015 Fund Takaful Fund Aggregate Aggregate (Rupees) ASSETS CASH AND BANK DEPOSITS Cash and other equivalents 80, , , ,146 Current and other accounts 849,263 9,307,841 10,157,105 21,953,312 Deposits maturing within 12 months 155,750, ,358, ,109, ,610, ,680, ,043, ,723, ,754,458 LONG TERM DEPOSITS 1,718,034-1,718,034 1,523,034 INVESTMENTS 9 47,402,198 50,210,693 97,612,891 67,969,401 CURRENT ASSETS - OTHERS Contributions due but unpaid - 24,185,424 24,185,424 28,104,385 Amounts due from other takaful companies - 4,381,165 4,381,165 3,121,043 Salvage recoveries accrued - 750, , ,000 Taxation - payment less provision 7,728,884-7,728,884 8,695,445 Accrued investment income 3,596,295 2,732,501 6,328,796 5,392,810 Re-takaful recoveries against outstanding claims - 18,985,630 18,985,630 19,214,059 Wakala fees receivable and other account balances - 8,755,067 8,755,067 10,137,095 Mudarib fees receivable 2,965,042-2,965,042 2,051,094 Deferred wakala fees - 38,577,475 38,577,475 57,255,465 Deferred commission expense 4,628,432-4,628,432 5,833,341 Prepayments 3,226,208 20,538,213 23,764,421 29,033,921 Sundry receivables 2,515, ,344 2,772, ,155 24,660, ,162, ,822, ,961,813 FIXED ASSETS Tangibles and Intangibles Leasehold improvements 1,655,556-1,655,556 1,564,094 Furniture and Fixtures 2,367,425-2,367,425 3,323,553 Office Equipment 2,107,240-2,107,240 2,415,088 Computers 763, ,933 1,167,553 Motor vehicles 1,182,256-1,182,256 1,763, ,076,411-8,076,411 10,233,968 Computer software TOTAL ASSETS 238,536, ,416, ,953, ,442,674 1 (0) 0 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 10

11 CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 PARTICIPANTS' TAKAFUL FUND (PTF) Nine months period ended September 30, Fire and Marine, Motor Health Miscellaneous Aggregate Aggregate property aviation and damage transport (Rupees) Net contribution revenue 6,789,453 6,035, ,211,164 37,318, , ,620, ,471,084 Net claims (924,299) (72,245) (64,246,277) (36,537,571) (194,181) (101,974,573) (108,767,097) Wakala fee (9,205,144) (7,311,877) (60,672,043) (14,927,294) (243,752) (92,360,109) (97,005,716) Contribution deficiency reversal/(charge) ,488,807-1,488,807 1,200,000 Retakaful rebate earned 4,477,314 3,728, ,507 8,329,587 9,815,421 Direct expenses (143,393) (25,843) (23,874,768) - (8,879) (24,052,883) (25,130,383) Net underwriting results before participants' investment income 993,931 2,354,161 (6,581,924) (12,657,823) (57,517) (15,949,171) (19,416,691) Investment income 8,744,688 10,488,453 Less: Modarib's share (2,186,172) (2,622,113) Net investment income 6,558,516 7,866,340 Other income 46,712 3,653,996 Bank charges (19,389) (21,113) Total Surplus/(deficit) transferred to balance of Waqf / Participants' Takaful Fund (9,363,332) (7,917,468) SHAREHOLDERS' FUND (SHF) Wakala fee 92,360,109 97,005,716 Commission expense (10,296,717) (13,685,453) Management expenses (45,763,587) (41,524,550) 36,299,805 41,795,713 Modarib's share of PTF investment income 2,186,172 2,622,113 Investment income 5,308,065 8,768,847 Other income 752,414 5,163,090 General and administration expenses (27,042,230) (29,495,943) Profit before taxation 17,504,226 28,853,820 Provision for taxation - current (2,623,097) (2,425,143) Net profit after tax 14,881,129 26,428,677 Earning per share - basic and diluted The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 11

12 CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2016 PARTICIPANTS' TAKAFUL FUND (PTF) Quarter ended September 30, Fire and Marine, Motor Health Miscellaneous 2016 Aggregate property aviation and Aggregate damage transport (Rupees) Net contribution revenue 572,933 1,648,915 41,493,674 9,845,791 90,755 53,652,068 71,982,434 Net claims (25,445) 712 (16,203,426) (10,431,872) 50,003 (26,610,028) (38,226,493) Wakala fee (2,241,565) (2,375,668) (17,841,707) (6,422,079) (81,662) (28,962,680) (33,833,370) Contribution deficiency reversal/(charge) Retakaful rebate earned 1,365,877 1,312,795 (4,572) - 39,784 2,713,884 2,867,204 Direct expenses (11,143) (10,730) (7,154,666) - - (7,176,539) (9,218,946) Net underwriting results before participants' investment income (339,343) 576, ,303 (7,008,160) 98,880 (6,383,295) (6,429,171) Investment income 2,282,217 2,136,135 Less: Modarib's share (570,554) (534,033) Net investment income 1,711,663 1,602,102 Other income 2,750 3,487 Bank charges (4,831) (4,697) Total Surplus/(deficit) transferred to balance of Waqf / Participants' Takaful Fund (4,673,714) (4,828,279) SHAREHOLDERS' FUND (SHF) Wakala fee 28,962,682 33,833,370 Commission expense (3,178,779) (4,412,386) Management expenses (14,001,244) (14,834,593) 11,782,659 14,586,391 Modarib's share of PTF investment income 570, ,033 Investment income 2,497,181 2,534,483 Other income 272, ,676 General and administration expenses (8,975,913) (13,582,079) Profit before taxation 6,146,571 4,378,504 Provision for taxation - current (661,973) (845,978) Net profit after tax 5,484,598 3,532,526 Earning per share - basic and diluted The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 12

13 CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 SHAREHOLDERS' FUND (SHF) Quarter ended Nine months ended Sep 30, Sep 30, Sep 30, Sep 30, (Rupees) (Rupees) Profit for the period 5,484,598 3,532,526 14,881,129 26,428,677 Other comprehensive income Total comprehensive income for the period 5,484,598 3,532,526 14,881,129 26,428,677 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 13

14 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY / FUND (UN-AUDITED) FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 SHAREHOLDERS' FUND Issued, subscribed and paid-up capital Accumulated loss Qard-e-Hasna Total (Rupees) Balance at January 01, ,000,000 (136,877,696) (11,211,134) 151,911,170 Total comprehensive income for nine months period ended September 30, 2015 Profit for the period - 26,428,678-26,428,678 Balance at September 30, ,000,000 (110,449,018) (11,211,134) 178,339,848 Total comprehensive income for quarter ended December 31, 2015 Profit for the period - 3,997,807-3,997,807 Other compreshensive income - recognition of actuarial gain for the year 2 - (939,964) - (939,964) Transaction with owners Qard-e-Hasna contributed to Waqf - - (9,027,827) (9,027,827) Balance at December 31, ,000,000 (107,391,175) (20,238,961) 172,369,864 Total comprehensive income for nine months period ended September 30, 2016 Profit for the period - 14,881,129-14,881,129 Transaction with owners Qard-e-Hasna contributed to Waqf (9,863,332) (9,863,332) Balance at September 30, ,000,000 (92,510,046) (30,102,293) 177,387,661 WAQF / PARTICIPANTS' TAKAFUL FUND Cede Accumulated money (deficit) / surplus Qard-e-Hasna Total (Rupees) Balance at January 01, ,000 (11,711,134) 11,211,134 - Deficit for nine months period ended September 30, (7,917,468) - (7,917,468) Balance at September 30, ,000 (19,628,602) 11,211,134 (7,917,468) Deficit for the quarter ended December 31, (1,110,359) - (1,110,359) Qard-e-Hasna contributed by Shareholders' fund - - 9,027,827 9,027,827 Balance at December 31, ,000 (20,738,961) 20,238,961 - Deficit for nine months period ended September 30, (9,363,332) - (9,363,332) Qard-e-Hasna contributed by Shareholders' fund - - 9,863,332 9,863,332 Balance at September 30, ,000 (30,102,293) 30,102, ,000 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 14

15 CONDENSED INTERIM STATEMENT OF CASH FLOWS (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 Operating activities Nine months period ended September 30, (Rupees) (a) Takaful activities Contributions received 182,344, ,590,128 Net re-takaful payment (3,625,195) (2,002,952) Claims paid (108,022,707) (109,718,650) Commissions paid (9,103,303) (12,626,258) Other underwriting payments (24,694,630) (27,850,921) Net cash generated from underwriting activities 36,899, ,391,347 (b) Other operating activities Income tax paid (1,656,535) (2,687,095) General administrative and management expenses paid (70,307,480) (65,080,644) Other operating receipts / (payments) 132, ,279 Advances to employees and agents - net (514,102) (594,979) Net cash used in other operating activities (72,345,730) (67,929,439) Total cash generated/(used) in all operating activities (35,446,607) 36,461,908 Investment activities Profit / return received 16,963,045 25,076,396 Purchase of investments (30,000,000) (57,409,865) Recovery of principal ijara sukuks 124,242 10,551,724 Proceeds from disposal of investments - 5,387,184 Investment in term deposits (400,667,875) (450,500,000) Term deposits encashed 269,158, ,000,000 Fixed capital expenditure (603,418) (653,408) Proceeds from disposal of fixed assets - 138,863 Net cash generated from investing activities (145,025,131) (78,409,106) Financing activities Security deposits paid (195,000) - Ijarah rentals paid (873,573) (941,445) Total cash used in financing activities (1,068,573) (941,445) Net cash generated from all activities (181,540,312) (42,888,643) Cash and cash equivalents at beginning of the period 286,154, ,280,259 Cash and cash equivalents at end of the period 104,614, ,391,616 15

16 Nine months period ended September 30, (Rupees) Reconciliation to profit and loss account Operating cash flows (35,446,607) 36,461,908 Depreciation expense (2,874,491) (2,952,376) Loss on disposal of fixed assets - (5,390) Ijarah rentals (873,573) (941,445) Provision for taxation (2,623,097) (2,425,143) Provision for staff retirement benefits (1,500,000) (1,408,420) Investment income 17,899,031 19,257,300 Increase/(decrease) in assets other than cash 121,954, ,028,703 Decrease/(increase) in liabilities other than running finance 54,006,995 (86,094,820) Cash generated from investing activities (145,025,131) (78,409,106) Profit after taxation 5,517,798 18,511,211 Breakup of profit / (loss) after tax Participant's Takaful Fund (9,363,332) (7,917,468) Shareholders' Fund 14,881,129 26,428,678 5,517,798 18,511,210 (0) (1) Definition of cash and cash equivalents Cash and cash equivalents for the purposes of Statement of Cash Flows consist of cash and stamps in hand, balances with banks, short term deposits with maturities of three months or less from balance sheet date and highly liquid short-term investments that are convertible to known amount of cash and are subject to insignificant risk of change in value. Cash and other equivalents 457, ,179 Current and other accounts 10,157, ,017,436 Deposits maturing within 3 months 94,000,000 96,600,000 Cash and cash equivalents 104,614, ,391,615 Deposits maturing between 3 to 12 months 173,109, ,500, ,723, ,891,615 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements.. 16

17 CONDENSED INTERIM STATEMENT OF CONTRIBUTIONS (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 Business underwritten inside Pakistan Nine months period ended September 30, Gross Unearned contribution reserve Contribution Re-takaful Prepaid re-takaful Re-takaful Net Net Class written Opening Closing earned ceded contribution ceded expense contribution contribution contribution Opening Closing revenue revenue (Rupees) Direct and Facultative Fire and property damage 24,346,963 12,095,010 13,429,114 23,012,859 17,168,621 7,508,489 8,453,704 16,223,406 6,789,453 8,309,204 Marine, aviation and transport 18,010,792 4,200,552 3,931,653 18,279,691 12,046,020 2,493,674 2,295,363 12,244,331 6,035,360 4,964,028 Motor 107,726, ,711,381 65,757, ,680,109 9,468,945 45,722 45,722 9,468, ,211, ,979,401 Health 33,509,206 16,691,374 12,882,345 37,318, ,318,235 44,137,385 Miscellaneous 611, , , , , , , , ,788 81,066 Total 184,205, ,138,661 96,443, ,900,273 39,003,105 10,273,192 10,996,024 38,280, ,620, ,471,084 Treaty Proportional / non proportional Grand total 184,205, ,138,661 96,443, ,900,273 39,003,105 10,273,192 10,996,024 38,280, ,620, ,471,084 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 17

18 CONDENSED INTERIM STATEMENT OF CONTRIBUTIONS (UN-AUDITED) FOR QUARTER ENDED SEPTEMBER 30, 2016 Business underwritten inside Pakistan Quarter ended September 30, Gross Unearned contribution reserve Contribution Re-takaful Prepaid re-takaful Re-takaful Net Net Class written Opening Closing earned ceded contribution ceded expense contribution contribution contribution Opening Closing revenue revenue (Rupees) Direct and Facultative Fire and property damage 8,480,176 10,552,850 13,429,114 5,603,912 5,461,830 8,022,853 8,453,704 5,030, ,933 1,305,279 Marine, aviation and transport 5,771,121 4,099,702 3,931,653 5,939,170 3,714,823 2,870,795 2,295,363 4,290,255 1,648,915 1,879,894 Motor 15,832,572 94,529,645 65,757,950 44,604,267 3,156,315-45,722 3,110,593 41,493,674 53,793,805 Health 7,443,460 15,284,676 12,882,345 9,845, ,845,791 14,986,847 Miscellaneous 221, , , , , , , ,400 90,755 16,609 Total 37,748, ,892,589 96,443,687 66,197,295 12,448,062 11,093,189 10,996,024 12,545,227 53,652,068 71,982,434 Treaty Proportional / non proportional Grand total 37,748, ,892,589 96,443,687 66,197,295 12,448,062 11,093,189 10,996,024 12,545,227 53,652,068 71,982,434 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 18

19 CONDENSED INTERIM STATEMENT OF CLAIMS (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 Business underwritten inside Pakistan Nine months period ended September 30, Class Claims Outstanding claims Claims Re-takaful Re-takaful and other Re-takaful Net claims Net claims paid Opening Closing expense and other recoveries in respect of and other expense expense recoveries outstanding claims recoveries received Opening Closing revenue A B C D=A-B+C E F G H=E-F+G I=D-H (Rupees) Direct and Facultative Fire and property damage 2,558,127 13,659,414 12,979,701 1,878,414 1,810,097 11,953,601 11,097, , ,299 47,522 Marine, aviation and transport 1,132,292 4,331,157 3,570, , ,060 1,479,215 1,184, ,464 72, ,777 Motor 68,267,704 69,672,226 74,752,149 73,347,627 7,884,400 5,796,750 7,013,700 9,101,350 64,246,277 65,946,878 Health 35,851,841 8,335,894 9,021,624 36,537, ,537,571 41,983,630 Miscellaneous 212, ,986 1,155, , , , , , , ,290 Total 108,022,707 96,859, ,479, ,642,742 10,396,598 19,464,059 19,735,630 10,668, ,974, ,767,097 Treaty. Proportional / non proportional Grand total 108,022,707 96,859, ,479, ,642,742 10,396,598 19,464,059 19,735,630 10,668, ,974, ,767,097 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 19

20 CONDENSED INTERIM STATEMENT OF CLAIMS (UN-AUDITED) FOR THE QUARTER ENDED SEPTEMBER 30, 2016 Business underwritten inside Pakistan Quarter ended September 30, Class Claims Outstanding claims Claims Re-takaful Re-takaful and other Re-takaful Net claims Net claims paid Opening Closing expense and other recoveries in respect of and other expense expense recoveries outstanding claims recoveries received Opening Closing revenue A B C D=A-B+C E F G H=E-F+G I=D-H (Rupees) Direct and Facultative Fire and property damage 1,880,004 14,791,117 12,979,701 68,588 1,376,581 12,431,057 11,097,619 43,143 25,445 (602,756) Marine, aviation and transport - 3,528,534 3,570,574 42, ,139 1,269,006 1,184,619 42,752 (712) 878,777 Motor 16,300,575 73,463,738 74,752,149 17,588,986 (9,440) 5,618,700 7,013,700 1,385,560 16,203,426 23,129,612 Health 8,307,867 6,897,619 9,021,624 10,431, ,431,872 14,852,701 Miscellaneous 57,600 1,188,264 1,155,664 25,000 29, , ,692 75,003 (50,003) (31,841) Total 26,546,046 99,869, ,479,712 28,156,486 1,523,723 19,712,895 19,735,630 1,546,458 26,610,028 38,226,493 Treaty. Proportional / non proportional Grand total 26,546,046 99,869, ,479,712 28,156,486 1,523,723 19,712,895 19,735,630 1,546,458 26,610,028 38,226,493 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 20

21 CONDENSED INTERIM STATEMENT OF EXPENSES - PARTICIPANTS' TAKAFUL FUND (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 Business underwritten inside Pakistan Class Nine months period ended September 30, Retakaful Net Net Gross Deferred wakala fee Wakala fee Other direct earned Underwriting Underwriting wakala fee Opening Closing expired expenses rebate * expenses expenses A B C D=A+B-C E F G=D+E-F (Rupees) Direct and Facultative Fire and property damage 9,738,785 4,838,004 5,371,646 9,205, ,393 4,477,314 4,871,223 5,919,361 Marine, aviation and transport 7,204,317 1,680,221 1,572,661 7,311,877 25,843 3,728,766 3,608,954 2,932,793 Motor 43,090,671 43,884,552 26,303,180 60,672,043 23,874,768-84,546,811 85,585,558 Health 13,403,682 6,676,550 5,152,938 14,927, ,927,294 17,654,953 Miscellaneous 244, , , ,752 8, , , ,013 Total 73,682,120 57,255,465 38,577,475 92,360,109 24,052,883 8,329, ,083, ,320,678 Treaty Proportional / non proportional Grand total 73,682,120 57,255,465 38,577,475 92,360,109 24,052,883 8,329, ,083, ,320,678 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 21

22 CONDENSED INTERIM STATEMENT OF EXPENSES - PARTICIPANTS' TAKAFUL FUND (UN-AUDITED) FOR QUARTER ENDED SEPTEMBER 30, 2016 Business underwritten inside Pakistan Class Quarter ended September 30, Retakaful Net Net Gross Deferred wakala fee Wakala fee Other direct earned Underwriting Underwriting wakala fee Opening Closing expired expenses rebate * expenses expenses A B C D=A+B-C E F G=D+E-F (Rupees) Direct and Facultative Fire and property damage 3,392,070 4,221,140 5,371,646 2,241,565 11,143 1,365, ,831 1,285,174 Marine, aviation and transport 2,308,448 1,639,881 1,572,661 2,375,668 10,730 1,312,795 1,073,603 1,060,022 Motor 6,333,029 37,811,858 26,303,180 17,841,707 7,154,666 (4,572) 25,000,945 31,774,849 Health 8,190,533 3,384,484 5,152,938 6,422, ,422,079 5,994,739 Miscellaneous 88, , ,050 81,662-39,784 41,878 70,328 Total 20,312,506 47,227,649 38,577,475 28,962,680 7,176,539 2,713,884 33,425,335 40,185,112 Treaty Proportional / non proportional Grand total 20,312,506 47,227,649 38,577,475 28,962,680 7,176,539 2,713,884 33,425,335 40,185,112 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 22

23 CONDENSED INTERIM STATEMENT OF EXPENSES - SHAREHOLDERS' FUND (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 Business underwritten inside Pakistan Direct and Facultative Commission Net Other Net Net paid or Deferred commission commission management SHF SHF payable Opening Closing expense expenses Expenses Expenses A B C D=A+B-C E F=D+E (Rupees) Fire and property damage 2,917,132 1,482,660 1,925,636 2,474,156 6,048,710 8,522,866 7,608,291 Marine, aviation and transport 2,333, , ,437 2,392,723 4,474,564 6,867,287 4,729,971 Motor 3,072,356 3,093,593 1,922,497 4,243,452 26,763,395 31,006,847 33,505,823 Health 710, , ,268 1,127,991 8,324,959 9,452,950 9,175,956 Miscellaneous 58,249 42,740 42,594 58, , , ,961 Total 9,091,808 5,833,341 4,628,432 10,296,717 45,763,587 56,060,305 55,210,002 Treaty Proportional / non proportional Grand total 9,091,808 5,833,341 4,628,432 10,296,717 45,763,587 56,060,305 55,210,002 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. Nine months period ended September 30,

24 CONDENSED INTERIM STATEMENT OF EXPENSES - SHAREHOLDERS' FUND (UN-AUDITED) FOR QUARTER ENDED SEPTEMBER 30, 2016 Business underwritten inside Pakistan Nine months period ended September 30, 2016 Commission Net Other Net Net paid or Deferred commission commission management SHF SHF payable Opening Closing expense expenses Expenses Expenses 2015 Direct and Facultative A B C D=A+B-C E F=D+E (Rupees) Fire and property damage 1,001,902 1,812,448 1,925, ,714 2,607,654 3,496,369 2,880,420 Marine, aviation and transport 748, , , ,120 1,820,127 2,600,247 1,683,669 Motor 485,797 2,693,509 1,922,497 1,256,809 6,834,174 8,090,982 11,686,433 Health 65, , , ,481 2,672,039 2,905,520 2,918,381 Miscellaneous 21,929 40,320 42,594 19,655 67,250 86,906 78,077 Total 2,323,830 5,483,381 4,628,432 3,178,779 14,001,244 17,180,023 19,246,980 Treaty Proportional / non proportional Grand total 2,323,830 5,483,381 4,628,432 3,178,779 14,001,244 17,180,023 19,246,980 The annexed notes 1 to 12 form an integral part of these condensed interim financial statements. 24

25 CONDENSED INTERIM STATEMENT OF INVESTMENT INCOME (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016 Three months period ended Nine months period ended Income from non-trading investments 30 September 30 September 30 September 30 September Rupees PARTICIPANTS' TAKAFUL EQUITY (PTF) Profit on bank deposits and placement 1,907,743 2,180,739 5,660,646 8,765,399 Available for sale Gain/(loss) on sale of Islamic Mutual Fund Units 374,474 (44,603) 2,805,340 1,379,306 Held for trading Gain on sale of Islamic Mutual Fund Units Dividend income , , , ,749 Less: Mudarib's fee (570,554) (534,034) (2,186,172) (2,622,114) Net investment income 1,711,662 1,602,101 6,558,516 7,866,341 SHAREHOLDERS' FUND (SHF) Profit on bank deposits and placement 2,499,462 2,198,767 8,423,618 7,404,541 Held to maturity Return on government securities - 242, ,257 Return on other securities - 97, ,049 Gain on sale of Islamic Mutual Fund Units 2, ,401 - Dividend income ,323 - Provision for impairment of sukuk - - (3,841,278) - 2, ,716 (3,110,554) 1,372,306 Less: Investment related expenses (5,000) (5,000) (5,000) (8,000) Net investment income 2,497,181 2,534,483 5,308,065 8,768,847 The annexed notes from 1 to 18 form an integral part of this condensed interim financial information. 25

26 NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR NINE MONTHS PERIOD ENDED SEPTEMBER 30, STATUS AND NATURE OF BUSINESS Takaful Pakistan Limited (the Company) is an unlisted public limited company incorporated in Pakistan on 2 June 2006 under the Companies Ordinance, The Company has been established with the objective to carry out General Takaful Business as specified under the Insurance Ordinance 2000, Insurance Rules, 2002 and Takaful Rules, On 9 March 2007, the Securities and Exchange Commission of Pakistan's Insurance Division has issued "Certificate of Registration" to the Company under the provisions of section 6 of the Insurance Ordinance, Consequently, the Company has commenced commercial operations from 12 March The registered office of the Company is at Plot No A, 6th Floor, Business Centre, P.E.C.H.S., Shahrah-e-Faisal, Karachi. For the purpose of carrying on the Takaful business, the Company has formed a Waqf for Participants' equity. The Waqf, namely Takaful Pakistan Waqf (hereinafter referred to as the Participants' Takaful Fund or PTF) was formed on 22 January 2007 under the Trust deed executed by the Company with a seed money of Rs. 500,000. The seed money is required to be invested in Shariah compliant investments and any profit thereon can be utilized only to pay benefits to participants or defray PTF expenses. The accounts of the Waqf are maintained by the Company in a manner that the assets and liabilities of the Waqf remain separately identifiable. These financial statements have been prepared on an aggregate basis, duly including the financial position and results of operations of the Waqf. Waqf deed also governs the relationship of shareholders and participants for management of Takaful operations, investment of participants' funds and investment of shareholders' funds approved by the Shariah Board established by the Company. 2. BASIS OF PRESENTATION These condensed interim financial statements are unaudited and have been prepared in condensed form in accordance with the approved accounting standards as applicable to insurance companies in Pakistan for interim financial reporting and in the format requirement of prescribed by Securities and Exchange Commission (Insurance) Rules, 2002, with appropriate modifications based on the advice of the Shariah Board of the Company. These condensed interim financial statements do not include all of the information required for full financial statements and should be read in conjunction with financial statements for the year ended 31 December As required by the Code of Corporate Governance applicable to uslisted insurance companies, these financial statements are being submitted to the shareholders as well as to the Securities and Exchange Commission of Pakistan 3. ESTIMATES AND JUDGEMENTS The preparation of these condensed interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual result may differ from these estimates. The significant judgments made by the management in applying the accounting policies and key sources of estimation uncertainty were the same as those applied to financial statements for the year ended 31 December TAKAFUL AND FINANCIAL RISK MANAGEMENT The Company's takaful and financial risk management objectives and policies are consistent with that disclosed in the annual financial statements for the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES Accounting policies and matters of computation adopted for the preparation of these condensed interim financial statements are the same as those applied in the preparation of the financial statements for the year ended 31 December

27 6. OTHER CREDITORS AND ACCRUALS September 30, 2016 December 31, Shareholders' Participants' Aggregate 2015 Fund Takaful Fund Aggregate (Rupees) Commission payable to agents 7,310,616-7,310,616 7,322,111 Federal excise duty - 651, ,554 2,254,058 Federal insurance fee - 141, , ,952 Withholding Tax - 356, , ,233 Contribution due to other re-takaful/insurance companies - 669, ,893 4,588,189 Payable to staff gratuity fund 3,067,859-3,067,859 2,817,858 Provision against staff retirement benefit 256, , ,054 Security deposit 1,080,697-1,080, ,325 Other payables 948,023 4,258,212 5,206,235 7,984,789 12,663,248 6,077,319 18,740,568 26,186, CONTINGENCIES AND COMMITMENTS 7.1 Contingencies Travel Agents Association of Pakistan (TAAP) raised a demand for distribution of surplus in Amaan Travel Participation Takaful Fund (PTF) and the profit thereon aggregating to Rs. 120,000,000. TAAP filed a case on 10 October 2012 in the Insurance Tribunal of Sindh for recovery of Rs. 546,534,125 inclusive of compensation / damages for premature termination of the agreement of Rs. 386,534,125 in respect of Amaan Travel and Health Takaful Package. A commissioner has appointed for recording evidences of the parties which is yet to issue its report to Tribunal along-with evidence based on which the case shall be disposed off by the Tribunal. The management, based on the advice of its legal counsel, is confident that the Company has reasonable defence in the case and as such no loss is likely to arise from this litigation and accordingly, no provision has been made in this condensed interim financial information. There are few cases filed by policy holders against the Company before Insurance Tribunals at Lahore for the recovery of claims, contribution amounts and liquidated damages aggregating Rs. 14,986,318 (31 December 2015: Rs. 14,986,318). These claims are not acknowledged by the Company as the management, based on the advice of its legal advisors, is confident that the Company has good defence in these cases and as such no loss is likely to arise from these litigations and accordingly, no provision has been made in this condensed interim financial information. 7.2 Commitments Commitments under Ijarah arrangements and the period in which these payments will become due are: Not later than one year Later than one year but not later than five years 30 September 31 December Rupees Un-audited Audited 1,255,260 1,255,260 1,428,267 2,301,840 2,683,527 3,557,100 27

28 8. CASH AND BANK DEPOSITS September 30, December Shareholders' Participants' Aggregate 2015 Fund Takaful Fund Aggregate (Rupees) Cash and other equivalents - Cash 80,249-80,249 91,891 - Policy stamps and bond papers in hand 376, ,793 99,255 80, , , ,146 Current and other accounts - Current accounts 3, , , ,412 - PLS savings accounts 846,177 8,813,124 9,659,301 21,758, ,263 9,307,841 10,157,105 21,953,312 Deposits maturing within 12 months -Term deposits 155,750, ,358, ,109, ,610,000 Deposits maturing after 12 months -Term deposits ,680, ,043, ,723, ,754,458 These represent term deposits maintained with Islamic commercial banks under profit and loss sharing basis having maturity up to 1 year and carry profit at rates ranging from 5.02% to 7% (31 December 2015: 5% to 10.78%) per annum. These include term deposits amounting to Rs. 30 million maintained with Dubai Islamic Bank (Pakistan) Limited on which lien is marked in favour of State Bank of Pakistan in compliance of section 29 of Insurance Ordinance, 2000 and Rule 21 of Takaful Rules, INVESTMENTS September 30, December Shareholders' Participants' Aggregate 2015 Fund Takaful Fund Aggregate (Rupees) Held to maturity - Sukuks Certificates ,839,403-19,839,403 19,963,645 Less: Provision for impairment (19,839,403) - (19,839,403) (15,998,125) ,965,520 Available for sale - Quoted - Islamic Funds ,402,198 50,210,693 97,612,891 64,003,881 47,402,198 50,210,693 97,612,891 64,003,881 47,402,198 50,210,693 97,612,891 67,969,401 28

29 9.1 Sukuk Certificates Number of Certificates Maturity date Effective yield Profit Payment Market value Face value 30 September December Rupees Un-audited Audited Agritech Limited - Sukuk Certificate (note 9.1.1) 3, August months Semi-annually NPA* 15,000, KIBOR + 2% Quetta Textile Mills Limited - Sukuk Certificates (note 9.1.2) 2, March months Quarterly NPA* 10,000,000-3,965,520 KIBOR % This includes investment aggregated to Rs. 15 million (December 31, 2015: Rs. 15 million) in sukuks issued by Agritech Limited (the investee company) against which the investee company had not made payments at the contractual dates i.e. 06 August 2010 and 06 February In 2011, a restructuring agreement was signed between the investee company and the Investment Agent of the sukuk certificates, whereby, certain terms included in the original trust deed dated 22 July 2008 were amended, including the repayment period which was extended from 06 August 2015 to 06 August Further, in lieu of accrued overdue profit, zero coupon Term Finance Certificates (TFCs) were issued by Agritech Limited on 17 October 2011 which were to be repaid by the investee company within three and a half years from the date of issuance of such TFCs. However, the investee company defaulted on the instalment due based on the restructuring agreement as well as in making payments in respect of zero coupon term finance certificates. Therefore, the management has neither recorded TFCs issued in lieu of profit in the books of accounts nor accrued any profit on outstanding principal amount and has fully provided for the outstanding principal, on prudence basis. An agreement for restructuring of these sukuks was executed between the Investment Agent of these sukuks and Quetta Textile Mills Limited on 24 June According to the restructuring terms, repayment of principal of Rs. 8 million will be made to the Company over a period of 7 years till 26 March 2020 in twenty nine quarterly installments whereas the profit shall be received by the Company at the rate of 6 monthly KIBOR and a spread of 1.75% with effect from 26 March This amount has been fully provided till June 30, * Non performing assets 9.2 Units of Islamic Fund - Available for sale 30 September 31 December 30 September December 2015 Sector / name of investee scheme Cost Market value Cost Market value Number of Units Rupees Participants' Takaful Fund Un-audited Audited NAFA - Riba Free Savings Fund 3,300 2,996,520 33,861 34,008 30,602,197 31,313,930 NAFA - Islamic Stock Fund 8,940 1,015, , ,743 11,401,086 11,198,181 NAFA - Capital Protected Strategy NAFA - Aggressive Income Fund 2,080,040-20,000,000 20,002, NAFA Islamic Asset Allocation funds 1,501,238-24,539,993 24,967, Meezan Asset Allocation Plan II 108,990-5,526,454 6,314, Meezan Cash Fund - 103, ,193,043 5,313,281 50,210,693 51,434,325 47,196,326 47,825,392 Shareholders' Fund ABL Islamic Financial Planning Fund 65,531 67,925 6,986,401 7,190,268 6,800,000 6,799,694 ABL Islamic Income Fund Al Ameen Islamic Asset Allocation Fund 87,939-10,000,000 10,292, Meezan Asset Allocation Fund 382,827-20,000,000 20,190, Meezan Capital Preservation Plan II 209, ,601 10,415,796 11,006,373 10,007,555 10,269,556 47,402,198 48,679,621 16,807,555 17,069,250 29

30 10. FIXED ASSETS Detail of the cost of operating assets that have beed acquired/disposed off during the nine months period ended 30 September 2016 is as follows: Nine months period ended on September 30, Additions Disposals Additions Disposals (Rupees) Tangibles Building and related items 426, Furniture & Fixtures ,155 - Office equipment 100, ,850 74,520 Computer & accessories 147, , ,508 Total 674, , , DATE OF AUTHORIZATION These condensed interim financial statements were authorized for issue on 10th November, 2016 by the Board of Directors of the Company 12. GENERAL Figures in this condenced interim financial information has been rounded off the nearest Rupee. 30