& COMPANY INDEPENDENT AUDITORS' REPORT TO THE TRUSTEES

RIAZ AHMAD & COMPANY Chartered Accountants INTERNATIONAL INDEPENDENT AUDITORS' REPORT TO THE TRUSTEES We have audited the annexed balance sheet of the SARGODHIAN SPIRIT TRUST PUBLIC SCHOOL (lithe School") as at 30 June 2014, the related income and expenditure account and statement of changes in fund together with the notes forming part thereof (here-in-after referred to as the financial statements for the year then ended). It is the responsibility of the trustees to establish and maintain a system of internal control, and prepare and present the financial statements in conformity with the approved accounting standards as applicable in Pakistan. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by the management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements present fairly in all material respects the financial position of the School as at 30 June 2014 and of its surplus and changes in fund for the year then ended in accordance with the approved accounting standards as applicable in Pakistan. i2.:~ d L_" -=----..)<:3.- ~ ~ RIAZ AHMAD AND COMPANY~ Chartered Accountants Name of engagement partner: Atif Bin Arshad Date: 0 3 FEB 2015 ISLAMABAD 2-A, ATS Centre, 30-West Fazal-ul-Haq Road, Blue Area Islamabad, Pakistan Telephones (92-51)22741 21-2 Riuz; Ahmad & Company is e ltli~rnber of Nexia Internationa\, a worldwide network of independent accounting and consulting firms. Fax (92-51) 2278859 racoisd@racopk.com www.racopk.com

SARGODHIAN SPIRITTRUST PUBLIC SCHOOL BALANCE SHEET AS AT 30 JUNE 2014 ASSETS 2014 2013 NOTE Ru!pees NON CURRENT ASSETS 2SJ73,QSQ Property and equipment 4 25,992,767 Intangible assets 5 3,397,396 3,815,3~44 29,390,163 29,488,394 CURRENT ASSETS Advances 6 6,636,719 3,290,4.39 Short term investment 7 6,427,948 Receivable from students 8,454,666 l,540.ed9 Other receivables 659,388 6,239 Cash and bank balances 8 96,505,968 67,591,137 118,684,689 72,428,S')4 TOTAL ASSETS 148,074,852 -- 101,916,EI'.18 FUND AND LIABILITIES FUND Accumulated surplus 11,515,489 9,462,679 LIABILITIES NON-CURRENT LIABILITIES Deferred credit - grants 9 10,724,165 12,329'1-~ Students' security deposits 10 10,854,550 8,720,000 21,578,715 21,049,1 73 CURRENT LIABILITIES Accrued and other payables 11 14,705,706 12,Q38'(;m Current portion of non-current liabilities 10 780,000 1,498,030 Payable to Sargodhian Spirit Trust 25,257,967 518,459 Advance fee 12 74,236,975 57,349,850 114,980,648 71,405,046 TOTAL LIABILITIES 136,559,363 -- 92,454,219 CONTINGENCIES AND COMMITMENTS TOTAL FUND AND LIABILITIES 148,074,852 101,916,898 The annexed notes form an integral part of these financial statements~/ ~~ C AIRMAN ~~-- 7 CHIEF EXECUTIVE

SARGODHIAN SPIRITTRUST PUBLIC SCHOOL INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 30 JUNE 2014 INCOME NOTE 2014 2013 Rutees Fee income Amortization of grants Liabilities written back Donations Other income EXPENDITURE 13 9 14 112,368,368 89,699,712 1,605,008 1,885,142 26,173 127,100 8,363,051 4,347,925 122,463,527 96,858,952 Salaries, wages and other benefits 15 Student's boarding, lodging and living 16 Uti lities Communication Repair and maintenance International General Certificate of Secondary Education fee Advertisement Traveling Staff professional development fee Printing Consumables Fuel charges Entertainment Staff uniforms and stationery Special functions Depreciation 4 Amortization 5.1 Auditors' Postage remuneration Receivables written off Bank charges Others SURPLUS / (DEFICIT) FOR THE YEAR 69,674,079 64,457,365 20,608,862 19,182,391 5,945,301 4,101,311 1,549,742 1,486,566 3,298,278 4,679,836 2,984,010 2,532,180 719,870 4,000 1,796,115 2,052,942 632,978 337,148 882,582 772,976 1,354,885 1,274,419 3,587,558 4,932,276 342,900 304,685 146,748 128,195 1,319,624 620,532 4,119,788 3,998,671 417,948 417,948 110,000 110,000 184,712 146,912 61,139 123,432 67,721 611,305 625,128 120,410,717 112,294,341 2,052,810 (15,435,389) The annexed notes form an integral part of these financial statement~~ CHAIRMAN CHIEF ~...-- EXECUTIVE

SARGODHIAN SPIRITTRUST PUBLIC SCHOOL STATEMENT OF CHANGES IN FUND FOR THE YEAR ENDED 30 JUNE 2014 I Balance as at 30 June 2012 Effect of prior years' error adjusted during the year Balance as at 30 June 2012 - restated Deficit for the year ended 30 June 2013 Balance as at 30 June 2013 Surplus for the year ended 30 June 2014 Balance as at 30 June 2014 27,6JO,06U (2J61,99~:) 24,898,06E: (15,4r,38~i 9A 2,679 2/0~2/81 0 11,5115,48i~ The annexed notes form an integral part of these financial statements. ~ ~~ A"b~--- CHAr RMAN./ CH IEF EXECUTIVE

SARGODHIAN SPIRIT TRUST PUBLIC SCHOOL NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014 LEGAL STATUS AND OPERATIONS Sargodhian Spirit Trust Public School (lithe School") is a project of Sargodhian Spirit Trust, Islamabad. The School commenced its operations from July, 2005 and was registered on 17 August 2005 with the District Education Department, Hyderabad under section 6 of jthe Sindh Private Educational Institutions (Regulation and Control) Ordinance, 2001. The objectives of the School are to offer courses of International standard and to undertake, organize, and disseminate knowledge in Rashidabad. 2 STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with approved accounting standards, as applicable in Pakistan. Approved accounting standards comprise of AFcounting and Financial Reporting Standards for Small-Sized Entities (SSEs) issued by the Iistituf<~ of Chartered Accountants of Pakistan. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated: 3.1 Basis of preparation a) Accounting convention These financial statements have been prepared under the historical cost convention, excep': for the certain financial instruments which are carried at their fair values. b) Critical accounting estimates and judgments The preparation of financial statements in conformity with the Accounting and Finar.cial Reporting Standards for Small-Sized Entities issued by The Institute of Chartered Accountams of Pakistan requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses, The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant areas requiring the use of management estimates in these financial statements re-late to the useful life of depreciable assets. However, assumptions and judgments made by' the management in the application of accounting policies that have significant effect or. the financial statements are not expected to result in material adjustment to the carrying amourr.s of assets and liabilities in the next year.

3.2 Property and equipment Cost Property and equipment are stated at cost less accumulated depreciation and ac1umuiated impairment losses, if any. Cost of property and equipment consists of historical cost and other directly attributable cost of bringing the asset to working condition. I Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated wit~ the item will flow to the School and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to income and expenditure account during the year in which they are incurred. Depreciation Depreciation on all property and equipment is charged to income and expenditure account on reducing balance method after taking into account residual value, if any, so as to write off the depreciable amount of an asset over its estimated useful life at the rates given in Note 4. Depreciation on additions is charged from the month the assets are available for use' while no depreciation is charged for the month in which the assets are disposed off. The residua] values and useful lives of assets are reviewed by the management at each financial year end and adjusted if impact on depreciation De-recognition is significant. An item of property and equipment is de-recognized upon disposal or when no future econcmic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in the income and expenditure account in the year the asset is de-recognized. 3.3 Intangible assets Intangible assets, which are non-monetary assets without physical substance, are recognized at cost, which comprise purchase price, non-refundable purchase taxes and other directly attributable expenditure relating to their implementation and customization. After initial recognition an intangible asset is carried at cost less amortization and impairment losses, if any. Intangible assets are amortized from the year, when these assets are available for use while no amortization is charged in the year of deletion, amortization is charged using the reducing balance method, whereby the cost of the intangible asset is amortized over its estimated useful life at the rate given in Note 5. The useful life and amortization method is reviewed and adjusted, if appropriate, 3.4 Investments at each balance sheet date. Classification of an investment is made on the basis of intended purpose for holding such investment. Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such designation on regular basis. Investments are initially measured at fair value plus transaction costs directly attributable to acquisition, except for "Investment at fair value through profit or loss" which is initally measured at fair value. I

Held-to-maturity Investments with fixed or determinable payments and fixed maturity are classified as held-tomaturity when the School has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other longterm investments that are intended to be held to maturity are subsequently measured at amortized cost. This cost is computed as the amount initially recognized minus I principal repayments, plus or minus the cumulative amortization, using the effective interest method, of any difference between the initially recognized amount and the maturity amount. For investments carried at amortized cost, gains and losses are recognized in income and expenditure account when the investments are de-recognized or impaired, as well ~s through the amortization process. 3.5 Deferred credit - grants Grants are recognized at their fair value where there is a reasonable assurance that the Igrant will be received and the School will comply with all attached conditions. Fair value signifies the amount received in cash and current market value in case of grant received in kind. Grants related to expenses are deferred and recognized in the income and expenditure account over the period necessary to match them with the expenses that they are intended to compensate. Grants related to assets are recognized as deferred credit. An amount equivalent to the depreciation for each year on such assets is credited to income and expenditure account in the same year in which the depreciation is charged. Amount equal to book value of assets relating to grant is also transferred to income and expenditure account in the same year in which asset is disposed off. 3.6 Revenue recognition - Tuition, processing and registration fee are recognized on accrual basis. - Donations are recognized on the receipt basis. - Return on investments is recognized on accrual basis at the rates specified in respective investment scheme assuming that such investment will be held till maturity. - Interest on bank deposits is recognized on time proportion basis taking into account the amo ints outstanding and rates applicable thereon. 3.7 Employee benefits Contributory provident fund The School operates contributory provident fund scheme for its regular employees. Equal contributions are made to the fund by the School and the employees at the rate of 7.5% of their basic salaries. The fund has not yet been approved under the provisions of Income Tax Ordinance, 2001. 3.8 Receivables Receivables are recognized and carried at cost less an allowance for any uncollectible amounts. Carrying amounts of receivables are assessed on regular basis and if, there is any doubt about reliability of these receivables, appropriate amount of provision is made.

3.9 Foreign currencies These financial statements are presented in Pak, which is the School's f.unctional currency. All monetary assets and liabilities denominated in foreign currencies are translated into Pak at the rates of exchange prevailing at the balance sheet date, while the transactions in foreign currencies during the year are initially recorded in functional clrrency at the rates of exchange prevailing at the transaction date. All non-monetary items are Itranslated into Pak at the exchange rates prevailing on the date of transaction or on the date when fair values are determined. Exchange gains and losses are recorded in the indome and expenditure account. I 3.10 Financial instruments Financial instruments carried on the balance sheet include investments, deposits, loans and advances, other receivables, cash and bank balances, interest accrued and other payables ete. Financial assets and liabilities are recognized when the School becomes a pa~ty to the contractual provisions of instrument. Initial recognition is made at fair value plus transaction costs directly attributable to acquisition. Financial assets are de-recognized when the School loses control of the contractual rights that comprise the financial asset. The School loses such control if it realizes the rights to benefits specified in contract, the rights expire or the School surrenders those rights. Financial liabilities are de-recognized when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on subsequent measurement and de-recognition is charged to the income and expenditure account. The particular measurement methods adopted are disclosed in the individual policy statements associated with each item and in the accounting polic, of investments. 3.11 Accrued and other liabilities Accrued and other liabilities payable are initially recognized at fair value which is normally the transaction cost. 3.12 Cash and cash equivalents Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values. 3.13 Provisions Provisions are recognized when the School has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. 3.14 Taxation Income of the School is exempt from tax under clause 59 and 60 of Part 1 of the Second Schedule to the Income Tax Ordinance, 2001. Accordingly, no provision for taxation is made in these financial 3.15 Offsetting statements. Financial assets and liabilities are offset and the net amount is reported in the balance shed, if the School has a legally enforceable right to set off the recognized amounts and the School intends to settle either on a net basis or realize the asset and settle the liability simultaneously.

PROPERTY AND EQUIPMENT At 30 June 2012 Furn iture and Office Computer Electrical fittings equipment equipment equipment Kitchen Science Library books utensils and laboratory equipment equipment Sports equipment Other equipment --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Cost 18,167,618 2,422,290 9,947,230 6,484,091 2,807,335 945,584 3,396,370 372,973 414,169 5,448,039 50,405,699 Accumulated depreciation (7,149,381) (1,102,829) (6,462,684) (3,854,713) (1,164,260) (447,934) (2,253,836) (183,072) (314,596) (3,205,992) (26,139,297) Net book value 11,018,237 1,319,461 3,484,546 2,629,3 78 1,643,075 497,650 1,142,534 189,901 99,573 2,242,047 24,266,402 Year ended 30 June 2013 Opening net book value 11,018,237 1,319,461 3,484,546 2,629,378 1,643,075 497,650 1,142,534 189,901 99,573 2,242,047 24,266,402 Additions 1,205,670 349,985 2,314,327 649,102 207,939 334,580 53,700 107,265 192,068 5,414,636 Disposals: Cost (34,816) Accumulated depreciation II II II II II II II 25,499 (9,317) Depreciation charge (1,180,559) (224,843) (634,436) (177,622) (151,173) (229,577) (46,923) (49,680) (448,409) (3,998,671) Closing net book value 11,043,348 1,444,603 2,644,044 1,673,392 681,057 966,657 250,243 241,961 1,793,638 25,673,050 At 30 June 2013 Cost 19,373,288 2,772,275 12,226,741 7,133,193 3,015,274 1,280,164 3,450,070 480,238 606,237 5,448,039 55,785,519 Accumulated depreciation (8,329,940) (1,327,672) (7,292,634) (4,489,149) (1,341,882) (599,107) (2,483,413) (229,995) (364,276) (3,654,401 ) (30,112,469) Net book value 11,043,348 1,444,603 4,934,107 2,644,044 1,673,392 681,057 966,657 250,243 241,961 1,793,638 25,673,050 Year ended 30 June 2014 Opening net book value 11,043,348 1,444,603 4,934,107 2,644,044 1,673,392 681,057 966,657 250,243 241,961 1,793,638 25,673,050 Additions 1,968,417 425,201 980,098 451,189 7,200 221,269 148,021 3,400 234,710 4,439,505 Depreciation charge (1,227,545) (234,649) (1,060,172) (580,922) (167,699) (155,529) (210,318) (50,218) (48,392) (384,344) (4,119,788) Closing net book value 11,784,220 1,635,155 4,854,033 2,514,311 1,512,893 746,797 904,360 203,425 193,569 1,644,004 25,992,767 At 30 June 2014 Cost 21,341,705 3,197,476 13,206,839 7,584,382 3,022,474 1,501,433 3,598,091 483,638 606,237 5,682,749 60,225,024 Accumulated depreciation (9,557,485) (1,562,321 ) (8,352,806) (5,070,071) {I,509,581) (754,636) (2,693,731) (280,213) (412,668) (4,038,745) (34,232,257) Net book value 11,784,220 1,635,155 4,854,033 2,514,311 1,512,893 746,797 904,360 203,425 193,569 1,644,004 25,992,767 Depreciation rate (%) 10 15 20 20 10 20 20 20 20 20

5 INTANGIBLE ASSETS 2014 2013 NOTE Rup~es Computer softwares 5.1 3,052,298 3,470,24(i Software in development 345,098 345,098 3,397,396 3,8115,344 5.1 At 30 June 2013 Cost Accumulated amortization Net book value Year ended 30 June 2014 Opening net book value Amortization charge Closing net book value At 30 June 2014 Cost Accumulated amortization Net book value Amortization rate (%) Learning management system Inventory management system English as a I secondary Total language system ---------------------------------------------------------------j---- 3,022,850 538,229 618,400 4,1179,479 (593,570) (53,823) (61,840) (709,23~L 2,429,280 484,406 556,560 3,470,246 2,429,280 484,406 556,560 3,470,246 (302,285) (53,823) (61,840) (417,94~L 2,126,995 430,583 494,720 3,052,29t 3,022,850 538,229 618,400 4,179,479 (895,855) (107,646) (123,680) (1,127,18!L 2,126,995 430,583 494,720 3,052,29t 10 10 10 2014 2013 NOTE I 6 ADVANCES - CONSIDERED GOOD Advances to employees - against expenses - Unsecured - against salaries - Secured 6.1 Advances to suppliers - Unsecured 6.1 These are secured against provident fund balances of the employees. 7 SHORT TERM INVESTMENT - HELD TO MATURITY 680,757 1,472,036 2,152,793 4,483,926 6,636,719 22,83, 1,192,81~~ 1,215,64'. 2,074,8413 3,290,489 It represents investment of provident fund in certificate of Islamic Investment of Meezan Bank Limited having maturity period of one year. It carries profit at the rate of 9.14% per annum.

8 CASH AND BANK BALANCES 2014 20P NOTE Cash in hand 8,807 4,246 Cash at bank: - On current accounts 520,139 6"1-3,89::8 - On saving accounts 8.1 & 8.2 95,977,022 66,942,99[1 96,497,161 67,5186,89! 96,505,968 ~7;- 8.1 The balances in saving accounts carry interest rates ranging from 4.51 % to 7% (2013: 6 1< to 8 0 /.») per annum. 8.2 These include funds in Askari Bank Limited, account no. 165-0010-4 and Meezan Bank Limited, account no. 0101104053, earmarked for contributory provident fund balances. NOTE 2014 2013 9 DEFERRED CREDIT - GRANTS Balance at the beginning of the year Amortization for the year Balance at the end of the year 12,329,173 (1,605,008) 10,724,165 14,214,3F; (1,885,14:0 12,329,1 n 10 STUDENTS' SECURITY DEPOSITS Students' security deposits 10.1 Less: Current portion shown under current liabilities 11,634,550 (780,000) 10,854,550 10,218,050 (1,498,05~!L 8,720,OO~~ 10.1 It represents security deposits received from students and are repayable upon leaving the School, after deducting any amount due from them. 11 ACCRUED AND OTHER PAYABLES 2014 2013 Accrued expenses 986,467 599,44:3 Due to students 445,935 1,091,7% Provident fund 12,528,759 10,119,9% Withholding tax payable 103,292 Others 641,253 227,44:~ 14,705,706 12,038,67~~ 12 ADVANCE FEE Tuition fee 62,089,475 46,102,850 Registration fee 7,691,000 7,200,000 Accommodation charges 3,806,500 3,570,0 0 Processing fee 650,000 477,000 74,236,975 57,349,850

13 FEE INCOME Tuition fee Registration fee Accommodation charges Application processing fee Fines and penalties 14 OTHER INCOME Income from financial assets: Profit on bank deposits Income from non-financial assets: 2014 99,686,200 8,040,000 3,930,000 501,000 211,168 112,368,368 2,798,131 2013 80,282,750 5,650,000 2,7eO,OOO 3f41,36H 725,594 89,699,71 ~ I Gain on sale of property Rental income Miscellaneous and equipment 2,667,960 2,896,960 5,68:: 2,479,7W 4195,374 8,363,051 4,3~7,92~i 15 SALARIES, WAGES AND OTHER BENEFITS Salaries, wages and other benefits include provident fund contribution of 2.232 million (2013: 1.993 million) by the School. 16 STUDENT'S BOARDING, LODGING AND LIVING Food Uniforms Study material Travelling Medical Others 17 DATE OF AUTHORIZATION FOR ISSUE 14,048,123 3,694,852 735,427 426,873 206,718 1,496,869 20,608,862 11,067,47i~ 4,929,2C!; 1,191,699 676,62() 129,050 1,188,337 19,182,39~~ These financial statements were authorized for issue on -~c...u'---l---l.,..j.,i..--l.v-j...j--- by the Board of Trustees. 18 CORRESPONDING FIGURES No significant reclassification / rearrangement of corresponding figures has been made. 19 GENERAL Figures in these financial statements have been rounded off to the nearest Rupee. \,,;..- ~~ ~~~ CHAIRMAN CHIEF EXECUTIVE