TAKAFUL PAKISTAN LIMITED. Half Yearly Report June 30, 2017

Transcription

1 TAKAFUL PAKISTAN LIMITED Half Yearly Report June 30, 2017

2 Takaful Pakistan Limited Half Yearly Report June 2017 CONTENTS Corporation Information 03 Vision, Mission and Ambition 05 Management Team 06 Branches 06 Directors Report 07 Financial Statements 09 2

3 Takaful Pakistan Limited Half Yearly Report June 2017 CORPORATION INFORMATION Directors Chief Executive Officer Chief Financial Officer and Company Secretary Syed Abdul Razzaq (Chairman) Syed Tariq Husain Mr. Ahmad Shuja Kidwai Mr. Haseeb Ahmed Dr. Mumtaz A. Hashmi Mr. Saeed Khan Mr. Ashraf Ali Velji Syed Tariq Husain Muhammad Irfan Shariah Advisor Auditor Legal Advisors Mufti Sajjad Ashraf Usmani Riaz Ahmed and Co. Chartered Accountants K- Legal 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 : 3

4 Takaful Pakistan Limited Half Yearly Report June 2017 Bankers Meezan Bank Limited Bank Islami Pakistan Limited Dubai Islamic 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) NRSP Micro Finance Bank Limited (Islamic Banking Division) Summit Bank Limited (Islamic Banking Division) BOARD COMMITTEES Audit Committee Syed Abdul Razzaq (Chairman) Dr. Mumtaz A. Hashmi Mr. Ashraf Ali Velji Human Resource Committee Ashraf Ali Veilji (Chairman) Ahmed Shuja Kidwai Dr. Mumtaz A. Hashmi Investment Committee Syed Abdul Razzaq Syed Tariq Husain Mr. Ashraf Ali Velji 4

5 Takaful Pakistan Limited Half Yearly Report June 2017 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 Takaful Pakistan Limited Half Yearly Report June 2017 MANAGEMENT TEAM Syed Tariq Husain Muhammad Irfan Moeen ud Din Raza Ali Ghulam Mustafa Jawwad Bin Yousuf Muhammad Ayaz Ikram Ullah Khan Rana Muhammad Javed Tahera Fatima Chief Executive Officer Chief Financial Officer and Company Secretary Branch Head Lahore Branch Head Peshawar Branch Head Faisalabad Head of Motor & Accident Underwriting Head of Fire / Engineering Head of Marine Underwriting Head of Claims Head of Retakaful & Risk Management BRANCHES / OFFICES Branch Karachi Lahore Peshawar Faisalabad 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)

7 Plot No 19-1-A, 6th Floor, Business Centre, Block-6, P.E.C.H.S., Shahrah-e-Faisal, Karachi (Pakistan) UAN: (+92-21) Fax: (+92-21) Takaful Pakistan Limited Directors Report to the members On behalf of the Board of Directors, I am pleased to present the unaudited interim financial statements for the half year ended 30 th June Business overview: The results for the first six months are summarized below: 30 June 30 June (Rupees in Thousands) Gross Written Contribution 95, ,684 Net Contribution 72, ,968 Underwriting results 5,339 (9,566) PTF s Investment Income net of mudarib fee 4,009 4,847 Net Surplus Participant s Takaful Fund 9,375 (4,689) SHF s Investment Income 6,955 2,811 Mudarib Share of PTF Investment Income 1,336 1,615 Net Profit Share holders Fund 2,990 9,397 Earnings Per Share Share holders Fund (Rs.) The Gross Written Contribution (GWC) decreased by 34%, due to intense competition from Window Takaful Operations of conventional insurance companies. However, underwriting result has improved significantly as compared to previous corresponding half year. We are optimistic that on meeting the Minimum Capital Requirement, the existing credit rating will improve resulting in higher volume. During the period, Securities and Exchange Commission of Pakistan (SECP) issued Insurance Accounting Regulation 2017 and Insurance Rule Accordingly, the Condensed Interim Financial Information of the Company for the period ended 30 June 2017 have been prepared considering the presentation requirement of new Insurance Rules. This resulted in a change in accounting policy in relation to the available-for-sale investment investments to comply with the requirement of IAS 39 Financial Instruments Recognition and Measurement. The detail and impact of the change in accounting policy 7

8 Plot No 19-1-A, 6th Floor, Business Centre, Block-6, P.E.C.H.S., Shahrah-e-Faisal, Karachi (Pakistan) UAN: (+92-21) Fax: (+92-21) is disclosed in note 3 of the Condensed Interim Financial Information of the Company for the half year ended 30 June Paid up Capital As per the Securities and Exchange Commission of Pakistan s SRO 828(1)/2015 dated 18 th August 2015, the Minimum Paid up Capital Requirement for Non-Life Insurance/Takaful Companies should be Rs. 500 million by 31 st December, The Shareholders in the Annual General Meeting held on 28 th April 2017, have resolved to increase paid up capital by the end of The Company is now at an advanced stage of completing the deal to meet the minimum capital requirement. Your directors would like to record their appreciation to the officers and staff of the Company for dedicated efforts in a difficult operating environment. Your Directors would also like to thank the Securities and Exchange Commission of Pakistan and all re takaful operators for their continued guidance and support. On behalf of the Board of Directors, 8

9 TAKAFUL PAKISTAN LIMITED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 Note 30 June December Shareholders' Participants' Aggregate 2016 Fund Takaful Fund Aggregate (Rupees) Un-audited (Rupees) Audited (Restated) ASSETS Property and equipment 6,359,418-6,359,418 7,421,564 Intangible assets 356, ,938 - Investments Equity securities 7 50,822,933 89,148, ,971, ,981,344 Debt securities 8 24,344,165-24,344,165 24,488,055 Term deposits 9 84,400,000 47,100, ,500, ,109,000 Long term deposits 1,718,034-1,718,034 1,718,034 Loans and other receivables 19,108, ,351 19,706,525 36,829,212 Takaful / re-takaful receivables 10-34,366,345 34,366,345 22,618,132 Re-takaful recoveries against outstanding claims - 21,078,786 21,078,786 26,177,730 Salvage recoveries accrued - 645, , ,000 Wakala fees receivable 16,311,846-16,311,846 23,612,843 Mudarib fees receivable 4,789,256-4,789,256 3,452,972 Deferred wakala fees - 28,479,288 28,479,288 29,278,165 Deferred comission expense 2,729,930-2,729,930 3,722,575 Taxation-payment less provisions 6,864,539-6,864,539 7,893,844 Prepayments 3,462,381 8,225,147 11,687,528 18,899,381 Cash and Bank 12 10,674,898 51,378,988 62,053,886 25,022,974 TOTAL ASSETS 231,942, ,020, ,962, ,975,825 The annexed notes from 1 to 20 form an integral part of this condensed interim financial information. Chairman Director Director Chief Executive Officer 9

10 TAKAFUL PAKISTAN LIMITED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 Note 30 June December Shareholders' Participants' Aggregate 2016 Fund Takaful Fund Aggregate (Rupees) Un-audited (Rupees) Audited (Restated) SHARE CAPITAL AND RESERVES Issued, subscribed and paid-up share capital 300,000, ,000, ,000,000 Fair value reserve (351,577) - (351,577) 1,663,278 Accumulated losses (82,640,393) - (82,640,393) (85,630,515) Qarda-e-hasna to waqf (25,460,131) - (25,460,131) (34,835,319) 191,547, ,547, ,197,444 WAQF / PARTICIPANTS' TAKAFUL FUND (PTF) Ceded money - 500, , ,000 Accumulated deficit - (25,460,131) (25,460,131) (34,835,319) Qard-e-hasna from Shareholders' Fund - 25,460,131 25,460,131 34,835, , , ,000 LIABILITIES Underwriting provisions Outstanding claims (including IBNR) - 84,595,476 84,595, ,271,947 Unearned contribution reserves - 71,198,221 71,198,221 73,195,413 Contribution deficiency reserve - 1,444,442 1,444,442 2,305,153 Unearned re-takaful rebate - 2,388,402 2,388,402 3,345,497 Contributions received in advance - 1,595,394 1,595,394 1,073,312 Amounts due to takaful/re-takaful companies - 68,779,738 68,779,738 84,398,302 Unearned wakala fees 28,479,288-28,479,288 29,278,165 Wakala fees payable - 16,311,846 16,311,846 23,612,843 Mudarib fees payable - 4,789,260 4,789,260 3,452,972 Other creditors and accruals 13 11,915,325 29,417,523 41,332,848 47,344,777 Total Liabilities 40,394, ,520, ,914, ,278,381 TOTAL EQUITY AND LIABILITIES 231,942, ,020, ,962, ,975,825 CONTINGENCIES AND COMMITMENTS 14 The annexed notes from 1 to 20 form an integral part of this condensed interim financial information. Chairman Director Director Chief Executive Officer 10

11 TAKAFUL PAKISTAN LIMITED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 Note PARTICIPANTS' TAKAFUL FUND (PTF)-REVENUE ACCOUNT 17 Three months period Six months period ended ended 30 June 30 June (Rupees) (Rupees) Net contribution revenue 33,355,509 67,407,805 72,040, ,967,932 Net claims (10,221,538) (36,602,704) (27,955,154) (75,364,545) Wakala fee (18,356,638) (30,624,786) (38,897,880) (63,397,427) Contribution deficiency reversal 1,160,711 (1,511,193) 860,711 1,488,807 Retakaful rebate earned 2,742,975 2,824,298 5,595,695 5,615,703 Direct expenses (1,683,285) (8,408,344) (6,304,809) (16,876,344) Net underwriting results 6,997,734 (6,914,924) 5,338,941 (9,565,874) Investment income 3,696,907 4,529,032 5,345,141 6,462,472 Less: Mudarib's share (924,227) (1,132,258) (1,336,285) (1,615,618) Net investment income 2,772,680 3,396,774 4,008,856 4,846,854 Other income 52,858 30,074 57,669 43,962 Bank charges (28,724) (10,215) (30,278) (14,558) Total surplus transferred to balance of Participants' Takaful Fund 9,794,548 (3,498,291) 9,375,188 (4,689,616) SHAREHOLDERS' FUND (SHF)-REVENUE ACCOUNT Wakala fee 18,356,638 30,624,786 38,897,880 63,397,427 Commission expense (2,185,650) (3,380,471) (4,825,462) (7,117,938) Management expenses (12,802,518) (15,941,233) (23,979,978) (31,762,343) 3,368,470 11,303,082 10,092,440 24,517,146 Mudarib's share of PTF investment income 924,227 1,132,258 1,336,285 1,615,618 Investment income 3,101,693 (87,957) 6,954,878 2,810,884 Gain on sale of fixed assets 358, ,407 1,323,132 - Other income 86, , ,324 General and administration expenses (8,401,579) (9,183,024) (14,966,120) (18,066,317) Profit for the period before taxation (562,135) 3,367,766 5,159,855 11,357,655 Provision for taxation - Current (1,656,202) (1,162,290) (2,169,733) (1,961,124) Profit after tax (2,218,337) 2,205,476 2,990,122 9,396,531 Earnings (after tax) per share - Rupees 15 (0.07) The annexed notes from 1 to 20 form an integral part of this condensed interim financial information. Director Chief Executive Officer 11

12 TAKAFUL PAKISTAN LIMITED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 SHAREHOLDERS' FUND (SHF) Three months period ended Six months period ended 30 June 30 June 30 June 30 June Rupees Restated Restated Profit / (loss) after tax (2,218,337) 2,205,476 2,990,122 9,396,531 Other comprehensive income: Items that will subsequently be classified to profit and loss account Fair value adjustment on remeasurement of available for sale investmemt (351,577) 220,898 (351,577) 220,898 Fair value adjustment on disposal of available for sale investmemt (1,663,278) (261,695) (1,663,278) (261,695) Other comprehensive loss for the period (2,014,855) (40,797) (2,014,855) (40,797) Total comprehensive income for the period (4,233,192) 2,164, ,267 9,355,734 The annexed notes from 1 to 20 form an integral part of this condensed interim financial information. Chairman Director Director Chief Executive Officer 12

13 TAKAFUL PAKISTAN LIMITED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY / FUND FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 SHAREHOLDERS' FUND Capital reserve Revenue reserve Paid-up Fair value Accumulated Qard-e- Total share capital reserve loss Hasna (Rupees) Balance as at 31 December ,000,000 - (107,391,174) (20,238,961) 172,369,865 Effect of restatement on remeasurement of available-for-sale investment - 261, ,695 Balance as at 31 December Restated 300,000, ,695 (107,391,174) (20,238,961) 172,631,560 Profit for the six months period ended - - 9,396,531-9,396,531 Other comprehensive income - (40,797) - - (40,797) Total comprehensive income for the period - (40,797) 9,396,531-9,355,734 Transaction with owners - Qard-e-Hasna contributed to Waqf* (4,689,616) (4,689,616) Balance as at 30 June Restated 300,000, ,898 (97,994,643) (24,928,577) 177,297,678 Profit for the six months period ended ,364,128-12,364,128 Other comprehensive income - 1,442, ,442,380 Total comprehensive income for the period - 1,442,380 12,364,128-13,806,508 Transaction with owners - Qard-e-Hasna contributed to Waqf* (9,906,742) (9,906,742) Balance as at 31 December Restated 300,000,000 1,663,278 (85,630,515) (34,835,319) 181,197,444 Profit for the six months period ended - - 2,990,122-2,990,122 Other comprehensive income - (2,014,855) - - (2,014,855) Total comprehensive income for the period - (2,014,855) 2,990, ,267 Transaction with owners - Qard-e-Hasna returned to SHF* ,375,188 9,375,188 Balance as at 30 June Restated 300,000,000 (351,577) (82,640,393) (25,460,131) 191,547,899 WAQF / PARTICIPANTS' TAKAFUL FUND Revenue reserve Cede Accumulated Qard-e-Hasna Total Money deficit (Rupees) Balance as at 31 December ,000 (20,738,961) 20,238,961 - Deficit for the six months period ended - (4,689,616) - (4,689,616) Qard-e-Hasna contributed by Shareholders' fund* - - 4,689,616 4,689,616 Balance as at 30 June ,000 (25,428,577) 24,928,577 - Deficit for the six months period ended - (9,406,742) - (9,406,742) Qard-e-Hasna contributed by Shareholders' fund* - - 9,906,742 9,906,742 Balance as at 31 December ,000 (34,835,319) 34,835, ,000 Surplus for the six months period ended - 9,375,188-9,375,188 Qard-e-Hasna returned by Waqf* - - (9,375,188) (9,375,188) Balance as at 30 June ,000 (25,460,131) 25,460, ,000 * In compliance of Rule 20 of Takaful Rules, 2012 The annexed notes from 1 to 20 form an integral part of this condensed interim financial information. Chairman Director Director Chief Executive Officer 13

14 TAKAFUL PAKISTAN LIMITED CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2017 OPERATING ACTIVITIES For the six months period ended 30 June June Rupees a) Takaful activities Contributions received 84,545, ,898,594 Retakaful contribution paid (37,897,583) (17,406,845) Claims paid (66,170,942) (81,476,661) Ratakaful recoveries received 8,470,404 5,861,772 Commissions paid (3,851,851) (7,422,027) Retakaful rebate received 4,638,600 8,872,875 Other takaful payments 14,219,574 (13,596,586) Net cash flows from takaful activities 3,953,533 36,731,122 b) Other operating activities Income tax paid (1,140,428) (1,174,632) Payment of retirement benefits (500,000) (1,000,000) General administrative and management expenses paid (37,082,505) (50,310,224) Other operating receipts / payments 957,142 (2,054,958) Advances to employees and agents (322,608) (814,856) Net cash used in other operating activities (38,088,399) (55,354,670) Total cash used in all operating activities (34,134,866) (18,623,548) INVESTING ACTIVITIES Profit / return received 15,927,036 12,420,405 Investments made (313,066,353) - Proceeds from disposal of investments 287,061,510 - Recovery of Principal Ijarah Sukuks - 124,242 Investment in term deposits (143,000,000) (123,109,000) Proceeds from encashment of term deposits 224,609,000 21,600,000 Fixed capital expenditure (1,165,522) (603,413) Proceeds from disposal of fixed assets 1,323,132 - Total cash flow from / (used in) all investing activities 71,688,803 (89,567,766) FINANCING ACTIVITIES Security deposits paid - (645,180) Ijarah rentals paid (523,025) (350,548) Total cash used in all financing activities (523,025) (995,728) Net cash flows from / (used in) all activities 37,030,912 (109,187,042) Cash and cash equivalents at the beginning of year 25,022, ,154,458 Cash and cash equivalents at end of the period 62,053, ,967,416 14

15 30 June June Rupees Depreciation and Amortization (1,837,862) (1,908,112) Amortisation of intangibles - - Gain on disposal of fixed assets 1,323,132 - Impairment of Ijara Sukuks - - Ijarah rentals (523,025) (350,548) Provision for taxation (2,169,733) (1,961,124) Provision for staff retirement benefits (651,549) (1,500,000) Investment income 12,300,019 11,499,015 Increase in assets other than cash (83,652,777) 87,234,105 Decrease in liabilities other than running finance 50,023,168 19,884,893 Cash generated from investing activities 71,688,803 (89,567,766) Profit after taxation 12,365,310 4,706,915 Breakup of profit / (loss) after tax Participant's Takaful Fund 9,375,188 (4,689,616) Shareholders' Fund 2,990,122 9,396,531 12,365,310 4,706,915 The annexed notes from 1 to 20 form an integral part of this condensed interim financial information. 15

16 TAKAFUL PAKISTAN LIMITED NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS PERIOD ENDED 30 JUNE LEGAL STATUS AND NATURE OF BUSINESS Takaful Pakistan Limited ("the Company / Takaful operator") is an unlisted public limited company incorporated in Pakistan on 02 June 2006 under the Companies Ordinance, The Company is established with the objective to carry out General Takaful Business as specified under the Insurance Ordinance, 2000, Insurance Rules, 2017 and Takaful Rules, The Company commenced commercial operations from March 12, The registered office of the Company is at 6th Floor, Business Centre, 19-1-A, Block-6, P.E.C.H.S., Shahrah-e-Faisal, Karachi, in the province of Sindh. The Company operates with 4 (31 December 2016: 5) branches in Pakistan. 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 ceded money of Rs. 500,000. The cede money is required to be invested in Shariah compliant investments and profit thereon is utilized to pay benefits to participants or defray PTF expenses. 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. Securities and Exchange Commission of Pakistan (SECP) vide its SRO no. 828(1)/2015 dated 18th August 2015 (Now the Insurance Rules, 2017) increased the minimum paid up capital requirement for Non-Life Insurance/Takaful Companies from Rs. 300 million to Rs. 500 million as per the following schedule: By 30 June 2016 By 31 December 2016 By 30 June 2017 By 31 December 2017 Rupees 350 million 400 million 450 million 500 million As at 30 June 2017, the Company is short by Rupees 150 million with the minimum paid up capital requirement. The Company in its 11th Annual General Meeting (AGM) held on 28th April 2017, on renunciation of earlier right offer, has again resolved to increase the paid up capital by Rupees 200 million through issuance of ordinary shares of Rupees 10 each at discount by way of right issue under section 86 of the Companies Ordinance, The SECP has accorded its approval to the Company to issue shares at discount by way of right by maximum 31 July Subsequent to period end, the Company offered right issue of shares to the shareholders which has been renounced by all shareholders within the prescribed time limit. The Company is at final stage and deliberating with shortlisted potential investors for subscription and issue of such shares renounced by existing shareholders to raise paid-up capital to meet the gradually increasing minimum capital requirements. For this purpose, the Company has applied to SECP for extension in time, the response to which is awaited. 1.4 The admissible assets of the Participants' Takaful Fund (PTF) are not in excess of its total liabilities as at 30 June 2017 as required under Takaful Rules, The management believes that the requirement of PTF's admissible assets in excess of its total liabilities is confined to Window Takaful Operators only and the company being dedicated Takaful company is not subject to such requirement. 16

17 2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE This condensed interim financial information of the Company for the six months period ended 30 June 2017 has been prepared in accordance with the requirements of the International Accounting Standard 34 - 'Interim Financial Reporting', provisions of and directives issued under the Companies Ordinance, 1984, the Insurance Ordinance, 2000, the Insurance Rules, 2017, Takaful Rules, 2012 and the Insurance Accounting Regulations, In case requirements differ, the provisions or directives of the Companies Ordinance, 1984, Insurance Ordinance, 2000, the Insurance Rules, 2017, Takaful Rules, 2012 and the Insurance Accounting Regulations, 2017 shall prevail. The disclosures made in this condensed interim financial information have, however, been made on format prescribed in the Insurance Rules, 2017 with appropriate modifications. As required by the Takaful Rules, 2012 this condensed interim financial information reflects the financial position and results of operations of both Sharehoder Fund (SHF) and PTF in a manner that the assets, liabilities, income and expenses of the company and the PTF remain seperately identifiable. This condensed interim financial information does not include all the information and disclosures required in the full financial statements, and should be read in conjunction with the Company's annual financial statements for the year ended 31 December Previously, the Securities and Exchange Commission (Insurance) Rules, 2002 were being complied which has now been replaced by Insurance Rules, Accordingly, condensed interim statement of premiums, condensed interim statement of claims, condensed interim statement of expenses and condensed interim statement of investment income required under repealed Securities and Exchange Commission (Insurance) Rules, 2002, have not been presented in this condensed interim financial information. Furthermore, the Companies Ordinance, 1984 has been repealed after the enactment of the Companies Act, 2017 on 30 May SECP vide its Circular 17 of 2017 and its press release dated 20 July 2017 has clarified that the companies whose financial year, including quarterly and other interim period, closes on or before 30 June 2017 shall prepare their financial statements in accordance with the provisions of the repealed Companies Ordinance, The Companies Act, 2017 requires enhanced disclosures about Company's operations and has also enhanced the definition of related parties. This condensed interim financial information is being prepared and submitted to shareholders in accordance with the requirements of Code of Corporate Governance for Insurers, ACCOUNTING POLICIES The accounting policies and methods of computation followed in the preparation of this condensed interim financial information are the same as those applied in the preparation of the annual financial statements of the Company for the year ended 31 December 2016, except as follows: The accounting treatment of 'available for sale investments' prescribed in Securities and Exchange Commission (Insurance) Rules, 2002 stands repealed on promulgation of Insurance Rules, 2017 applicable during the period. Following the Insurance Rules, 2017, investments classified as 'available for sale' have been accounted for in this condensed interim financial information following the treatment prescribed in International Accounting Standard (IAS) 39 "Financial Instruments: Recognition and Measurement". Under the repealed Securities and Exchange Commission (Insurance) Rules, 2002, investments classified as 'available for sale' was previously being stated at the lower of cost or market value (market value being taken as lower if the reduction is other than temporary) subsequent to initial recognition at cost. The resultant impairment loss, if any, was being charged to profit and loss account. Following the application of International Accounting Standard (IAS) 39 "Financial Instruments: Recognition and Measurement", the Company's policy for treatment of 'avaialable for sale' investments stands amended as follows: Quoted 'available for sale' investments Subsequent to initial measurement, 'available for sale' investments in listed securities are re-measured to fair value on each reporting date. Net gains and losses arising on changes in fair values of these investments are taken to equity through other comprehensive income. When securities are disposed off or impaired, the related fair value adjustments previously taken to equity are transferred to profit and loss account. Fair values of listed securities are the quoted prices on the stock exchange at balance sheet date. 17

18 Unquoted 'available for sale' investments Unquoted equity securities are stated at cost less impairment loss, if any. The Company's condensed interim financial information is affected by the remeasurements of 'available for sale' investments relating to prior years. The effects have been summarized below: 31 December 31 December Impact on Statement of Financial Position - Shareholders' Fund Assets: Rupees Increase in investments Equity securities 1,663, ,695 Capital and reserves attributable to Company's equity holders: Increase in fair value reserve 1,401, ,695 Impact on Statement of Comprehensive Income Other comprehensive income Increase in fair value on remeasurement of 'available for sale' investments 1,401, ,695 Currently there is no impact on PTF cash flows and segment reporting as a result of the change in accounting policy. 4. ACCOUNTING ESTIMATES, JUDGEMENTS AND FINANCIAL RISK MANAGEMENT 4.1 The preparation of these condensed interim financial information in conformity with approved accounting standards requires management to make estimates, assumptions and use judgements that affect the application of policies and reported amounts of assets and liabilities and income and expenses. Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. Revisions to accounting estimates are recognised prospectively commencing from the period of revision The financial and takaful risk management objectives and policies of the Company are consistent with those disclosed in the financial statements as at and for the year ended 31 December The insurance and financial risk management objectives and policies are consistent with those disclosed in annual financial statements of the Company for the year ended 31 December ADDITIONS AND DELETIONS IN PROPERTY & EQUIPMENT Details of the cost of operating assets that have been acquired and disposed of during the six month period are as follows: 30 June June 2016 Additions Disposals Additions Disposals Rupees Un-audited Leasehold improvements ,000 - Furniture and fixtures Office equipment 324,140 35,943 42,500 - Computers 345, ,913 - Motor vehicles 73,846 2,000, ADDITIONS AND DELETIONS IN INTANGIBLE ASSETS 743,448 2,036, ,413 - During the six months period ended 30 June 2017, additions amounting to Rupees 422,074 were made. 18

19 7. INVESTMENTS IN EQUITY SECURITIES Available for sale 30 June December 2016 Fair value Carrying Fair value Carrying Cost adjustment market value Cost adjustment market value (Rupees) Un-audited Audited (Restated) Others Mutual Funds 140,322,907 (351,577) 139,971, ,318,066 1,663, ,981,344 Shareholders' Fund ABL Islamic Stock Fund ABL Islamic Income Fund Meezan Islamic Income Fund Meezan Asset Allocation Fund MCB Islamic Income Fund ABL Islamic Financial Planning Fund III MCB Pakistan Islamic Stock Fund Meezan Capital Preservation Plan II Participants' Takaful Fund Meezan Asset Allocation Fund ABL Islamic Income Fund 6,141,907 (379,694) 5,762, ,037,829 13,734 7,051,563 7,324,093 60,427 7,384, , ,851 13,249,724 67,529 13,317,253 11,855,002 (83,274) 11,771, ,000,000 48,232 16,048,232 20,008,386 67,709 20,076, ,178,720 29,763 5,208,483 4,000, ,345 4,110, ,415,797 1,376,745 11,792,542 51,174,510 (351,577) 50,822,933 50,989,614 1,663,278 52,652,892 7,093,060-7,093, ,037,829-7,037, Meezan Cash Fund Meezan Asset Allocation Plan II Al-Ameen Islamic Aggressive Income Fund Meezan Islamic Income Fund MCB Pakistan Islamic Stock Fund Faysal Islamic Asset Allocation Fund Faysal Islamic Saving Growth Fund Al-Ameen Islamic Asset Allocation Fund NAFA Islamic Stock Fund NAFA Riba Free Savings Fund ,526,454-5,526, , ,095 15,773,257-15,773,257 22,682,426-22,682,426 9,749,083-9,749, ,000,000-4,000, ,579,087-10,579, , , ,653,434-34,653,434 34,855,477-34,855,477 89,148,397-89,148,397 63,328,452-63,328, INVESTMENTS IN DEBT SECURITIES 30 June December 2016 Cost Impairment/ Provision Carrying value Carrying value Held to Maturity (Rupees) Others-Sukuk Certificates Agritech Limited - Sukuk Certificate ,000,000 15,000, Quetta Textile Mills Limited - Sukuk Certificates ,000,000 10,000, TPL Trakkar Limited - Sukuk Certificates 10,291,665-10,291,665 10,330,555 Pak Elektron Limited - Sukuk Certificates 14,052,500-14,052,500 14,157,500 49,344,165 25,000,000 24,344,165 24,488,055 No. of certificates Face value Value of certificates 30 June 31 December 30 June 31 December (Rupees) Others-Sukuk Certificates Un-audited Audited Agritech Limited - Sukuk Certificate 3,000 3,000 15,000, Quetta Textile Mills Limited - Sukuk Certificates 2,000 2,000 10,000, TPL Trakkar Limited - Sukuk Certificates ,000,000 10,291,665 10,330,555 Pak Elektron Limited - Sukuk Certificates ,000,000 14,052,500 14,157,500 24,344,165 24,488,055 19

20 30 June 31 December 8.1 Movement of provision for impairment against sukuk certificates Rupees Un-audited Audited Opening balance 19,839,403 15,998,125 Charge for the period - 3,841,278 Closing balance 19,839,403 19,839,403 This includes investment aggregated to Rs. 15 million (31 December 2016: 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 installment 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 2013.However, the investee company defaulted on the installment on due dates under restructuring agreement. 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. 9. INVESTMENTS IN TERM DEPOSITS Held to Maturity Note 30 June December Shareholders' Participants' Aggregate 2016 Fund Takaful Fund Aggregate Rupees Un-audited Audited Deposits maturing within 12 months ,400,000 47,100, ,500, ,109,000 Deposits maturing after 12 months ,400,000 47,100, ,500, ,109, These represent term deposits maintained with Islamic commercial banks under profit and loss sharing basis having maturity upto 1 year and carry expected profit at rates ranging from 5.3% to 7.8% (31 December 2016: 5% to 10%) per annum. These include term deposits amounting to Rs. 30,000,000 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 Takaful Rules,

21 30 June 31 December 10. TAKAFUL / RE-TAKAFUL RECEIVABLES- Unsecured and considered good Rupees Un-audited Audited Due from policy holders 34,212,132 22,009,853 Less: Provision for impairment of receivables from policy holders (2,664,580) (2,664,580) 31,547,552 19,345,273 Due from other takaful / re-takaful companies 7,502,300 7,956,366 Less: Provision for impairment of due from other takaful/retakaful companies (4,683,507) (4,683,507) 11. TAXATION 2,818,793 3,272,859 34,366,345 22,618, The Company files a consolidated return in respect of PTF and SHF in line with the practice followed by other takaful companies in Pakistan and hence a single charge in SHF has been recorded in this condensed interim financial information. The Company has filed income tax returns up to tax year 2016 which are deemed to be assessed under the provisions of section 120 of the Income Tax Ordinance, The Company has not recognised deferred tax asset amounting to Rs million as at 30 June 2017 on net deductible temporary differences aggregating to Rs million as a matter of prudence. 12. CASH AND BANK Note 30 June December Shareholders' Participants' Aggregate 2016 Fund Takaful Fund Aggregate Rupees Un-audited Audited Cash and other equivalents - Cash in hand 65,275-65,275 98,337 - Policy and revenue stamps, bond papers - 418, , ,510 65, , , ,847 Cash and bank - Current account 3, , ,965 44,309 - Savings accounts 10,606,505 50,035,441 60,641,946 24,446,818 10,674,898 51,378,988 62,053,886 25,022,974 21

22 13. OTHER CREDITORS AND ACCRUALS 30 June December Shareholders' Participants' Aggregate 2016 Fund Takaful Fund Aggregate Rupees Un-audited Audited Commission payable to agents 7,072,659-7,072,659 7,091,693 Federal excise duty - 929, , ,279 Federal insurance fee - 80,920 80, ,610 Withholding tax - 312, , ,521 Contribution due to other co-takaful/insurance companies - 493, , ,665 Payable to staff gratuity fund 932, , ,435 Provision for compensated absences 256, , ,054 Security deposit 941, , ,381 Tracker installation fee payable - 8,061,636 8,061,636 3,651,726 Accrued expenses 1,697,084-1,697, ,485 Payable to SHF - 15,469,654 15,469,654 28,902,215 Other payables 1,015,258 4,070,184 5,085,442 3,728,713 11,915,325 29,417,523 41,332,848 47,344, CONTINGENCIES AND COMMITMENTS 14.1 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 been 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 an amount aggregating Rs. 14,986,318 (31 December 2016: Rs. 23,083,378) and Karachi for an amount aggregating to Rs. 8,097,060 for the recovery of claims, contribution amounts and liquidated damages. 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 Commitments Commitments under Ijarah arrangements and the period in which these payments will become due are: 30 June 31 December Rupees Un-audited Audited Not later than one year 1,255,260 1,255,260 Later than one year but not later than five years 418,950 1,046,580 1,674,210 2,301,840 22

23 15. EARNINGS (AFTER TAX) PER SHARE - BASIC AND DILUTED There is no dilutive effect on the basic earnings per share which is based on: Three months period ended Six months period ended 30 June 30 June 30 June 30 June Rupees Net profit after tax for the period - Rupees (2,218,337) 2,205,476 2,990,122 9,396,531 Weighted average number of ordinary shares - Number 30,000,000 30,000,000 30,000,000 30,000,000 Basic earnings per share - Rupees (0.07) The Company has not issued any instrument which would dilute its basic earnings per share when exercised. 16. TRANSACTIONS AND BALANCES WITH RELATED PARTIES Related parties comprise of associated companies, entities under common control, entities with common Directors, major shareholders and key management personnel of the Company. Transactions with related parties are carried out at arm's length prices determined under "Comparable controlled price method". Transactions and balances with related parties have been disclosed in relevent notes to the financial statements. Other transactions and balances not elsewhere disclosed are summarized as follows: Six months period ended Transactions: Relationship with the Company 30 June 30 June Rupees Contribution written Associate 21,361,523 7,695,717 Contribution received Associate 17,827,618 5,591,000 Claims paid Associate 7,283, ,192 Claims paid Director 16,880 - Claims incurred / (reversed) Associate 20,455,045 (1,152,548) Profit on bank deposits Associate 34,157 58,227 Contribution to provident fund Associate 830,289 2,571,055 Contribution to gratuity fund Associate 500,000 1,000, June 31 December Balances: Rupees Un-audited Audited Contribution receivable Associate 10,594,666 7,060,761 Claims outstanding Associate 16,595,332 3,423,409 Claims outstanding Director 8,120 25,000 Gratuity asset / (liability) Associate (932,984) (781,435) Provident fund asset / (liability) Bank deposits Associate 1,231,695 77,151 23

24 17. SEGMENT INFORMATION There are segments under Participants' Takaful Fund only which are detailed below: Six months period ended 30 June 2017 Fire and Marine, Motor Health Miscellaneous Note property damage aviation and transport Aggregate (Rupees) PARTICIPANTS' TAKAFUL FUND Takaful / re-takaful receivables 13,953,044 14,541,693 74,344,623 15,972, , ,259,686 Less: Federal Excise Duty (1,677,913) (1,392,537) (7,807,545) (707) (54,772) (10,933,474) Federal Insurance Fee (120,693) (122,383) (546,255) (158,141) (3,885) (951,357) Stamp duty (5,780) (755,207) (59,870) (140) (610) (821,607) Tracker expense - - (11,305,740) - - (11,305,740) Gross written contribution 12,148,658 12,271,566 54,625,213 15,813, ,251 95,247,508 Gross direct contribution 12,148,658 12,271,566 54,625,213 15,813, ,251 95,247,508 Facultative inward contribution Administrative surcharge Contribution income earned 17,734,060 12,260,202 52,684,470 14,184, ,947 97,244,700 Retakaful expense (10,934,047) (7,845,137) (6,198,400) - (226,738) (25,204,322) Net contribution revenue 6,800,013 4,415,065 46,486,070 14,184, ,209 72,040,378 Retakaful rebate earned 3,071,668 2,461, ,032 5,595,695 Net underwriting income 9,871,681 6,877,060 46,486,070 14,184, ,241 77,636,073 Insurance claims 817,373 (1,323,230) (26,755,670) (12,400,148) 167,204 (39,494,471) Insurance claims recovered from retakaful operators (132,739) 948,426 10,806,022 - (82,392) 11,539,317 Net claims 684,634 (374,804) (15,949,648) (12,400,148) 84,812 (27,955,154) Wakala fee expense (7,093,624) (4,904,081) (21,073,788) (5,673,608) (152,779) (38,897,880) Other direct expenses (11,219) (21,560) (6,019,487) - (252,543) (6,304,809) Contribution deficiency reversal , ,711 Net claims and expenses (6,420,209) (5,300,445) (43,042,923) (17,213,045) (320,510) (72,297,132) Underwriting results 3,451,472 1,576,615 3,443,147 (3,029,024) (103,269) 5,338,941 Investment income 5,345,141 Less: Mudarib's share (1,336,285) Net investment income 4,008,856 Other income 57,669 Bank charges (30,278) Total surplus transferred to balance of Waqf / Participants' Takaful Fund 9,375,188 As at 30 June (Rupees)--- Segement assets 11,912,108 12,032,623 53,561,590 15,505, ,691 93,392,917 Unallocated assets 419,569, ,962,814 Segement liabilities 33,638,030 33,978, ,250,002 43,786,379 1,075, ,727,773 Unallocated liabilities 57,187, ,914,915 24

25 Note Fire and property damage Marine, aviation and transport Six months period ended 30 June 2016 Motor Health Miscellaneous Aggregate (Rupees) PARTICIPANTS' TAKAFUL FUND Takaful / re-takaful receivables 18,318,148 13,728, ,617,027 26,326, , ,440,154 Less: Federal Excise Duty (2,292,700) (1,366,311) (13,801,589) - (3,908) (17,464,508) Federal Insurance Fee (158,661) (122,213) (921,332) (260,657) (55,877) (1,518,740) Stamp duty (8,530) (681,835) (80,550) (790) (710) (772,415) Tracker expense Gross written contribution 15,858,257 11,557,836 91,813,556 26,064, , ,684,491 Gross direct contribution 15,327,044 11,557,836 91,593,057 26,064, , ,932,779 Facultative inward contribution 531, , ,277 Administrative surcharge Contribution income earned 17,408,947 12,340, ,075,842 27,472, , ,702,978 Retakaful expense (11,192,427) (7,954,076) (6,358,352) - (230,191) (25,735,046) Net contribution revenue 6,216,520 4,386, ,717,490 27,472, , ,967,932 Retakaful rebate earned 3,111,437 2,415,971 4,572-83,723 5,615,703 Net underwriting income 9,327,957 6,802, ,722,062 27,472, , ,583,635 Insurance claims (1,809,826) (329,669) (55,758,641) (26,105,699) (482,421) (84,486,256) Insurance claims recovered from retakaful operators 910, ,712 7,715, ,237 9,121,711 Net claims (898,854) (72,957) (48,042,851) (26,105,699) (244,184) (75,364,545) Wakala fee expense (6,963,579) (4,936,208) (42,830,336) (8,505,215) (162,089) (63,397,427) Other direct expenses (132,250) (15,113) (16,720,102) - (8,879) (16,876,344) Contribution deficiency reversal ,488,807-1,488,807 Net claims and expenses (7,994,683) (5,024,278) (107,593,289) (33,122,107) (415,152) (154,149,509) Underwriting results 1,333,274 1,778,138 (6,871,227) (5,649,663) (156,396) (9,565,874) Investment income 6,462,472 Less: Mudarib's share (1,615,618) Net investment income 4,846,854 Other income 43,962 Bank charges (14,558) Total deficit transferred to balance of Waqf / Participants' Takaful Fund (4,689,616) As at 31 December (Rupees)--- Segement assets 21,739,382 17,111,929 89,562,820 26,753, , ,721,013 Unallocated assets 405,254, ,975,825 Segement liabilities 42,880,503 33,752, ,660,899 52,770,984 1,091, ,156,631 Unallocated liabilities 72,121, ,278,381 25

26 18. CAPITAL RISK MANAGEMENT The Company's objective when managing capital is, to safeguard the Company's ability to continue as a going concern so that it can continue to provide returns to the shareholders and benefits to other stakeholders and to maintain a strong capital base to support the sustained development of its businesses. The Company manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to shareholders or issue new shares. As at 30 June 2017, the Company is short by Rupees 150 million to the minimum paid up capital requirement of Rupees 450 million set by the Securities and Exchange Commission of Pakistan (SECP) through its S.R.O. 828(1)/2015 dated 18 August 2015 (Now Insurance Rules, 2017) for insurance companies / takaful operator. The Company is in the process of raising capital through right issue more fully disclosed in note 1.3 to this condensed interim financial information. 19. DATE OF AUTHORIZATION FOR ISSUE These financial statements were approved and authorized for issue on 23rdAugust 2017 by the Board of Directors of the Company. 20. GENERAL - - Figures have been rounded to the nearest Rupees. Nomenclature of the certain statements and line items disclosed in the statements have been changed and corresponding figures have been re-arranged wherever considered necessary to ensure compliance with new promulgated format for reporting issued by SECP vide its order number S.R.O 89(I)/2017 dated 9 February Chairman Director Director Chief Executive Officer 26