Pakistan International Container Terminal Limited · Pakistan International Container Terminal...

1Pakistan International Container Terminal Limited

Pakistan International Container Terminal Limited

H A L F Y E A R L Y R E P O R T 2 0 1 2 (AUDITED)

1H A L F Y E A R L Y R E P O R T 2 0 1 2

Contents02 Vision & Mission Statements

05 Company Information

06 Board of Directors & Management Team

08 Notice of the 12th Annual General Meeting

12 Chairman’s Review

14 Directors’ Report

24 Key Operating & Financial Data

25 Statement of Value Added

26 Statement of Compliance with the Code of Corporate Governance

29 Review Report to the Members on Statement of Compliance with Best Practices of the Code of Corporate Governance

30 Financial Statements

31 Auditors’ Report to the Members

32 Balance Sheet

33 ProfitandLossAccount

34 Statement of Comprehensive Income

35 Cash Flow Statement

36 Statement of Changes in Equity

37 Notes to the Financial Statements

64 Pattern of Shareholding Form of Proxy

Operate a Container Terminal at Karachi Port that provides the highest level of quality services to its clients.

Vision

ACompany dedicated to fulfilling the Port Servicerequirements of Customers and Users of Karachi Port at an economic cost through optimum use of humanandfinancialresourcesandgivingafairreturnto investors.

Mission

Company InformationBoard of DirectorsChairmanCapt. Haleem A. Siddiqui

ChiefExecutiveOfficerCapt. Zafar Iqbal Awan

DirectorsEnrique K. Razon, Jr. Aasim A. SiddiquiEdgardo Q. AbesamisPaul T. SalangaJose Manuel M. De Jesus

ChiefFinancialOfficerM. Masood A. Usmani, FCA

Company SecretaryArsalan I. Khan

Audit CommitteeChairmanEdgardo Q. Abesamis

MembersAasim A. SiddiquiJose Manuel M. De Jesus

Chief Internal AuditorNoman Yousuf

SecretaryArsalan I. Khan

Human Resource and Remuneration CommitteeChairmanEdgardo Q. Abesamis

MembersAasim A. SiddiquiJose Manuel M. De Jesus

AuditorsErnst & Young Ford Rhodes Sidat Hyder Chartered Accountants 6th Floor, Progressive Plaza, Beaumont Road, P.O. Box 15541, Karachi-75530

Legal AdvisorsKabraji & Talibuddin, 64-A/1, Gulshan-e-Faisal, Bath Island, Karachi.

Usmani & Iqbal, 6th Floor, Business Centre, Mumtaz Hassan Road, Karachi.

The Continental Law Associates, Panorama Centre, Saddar, Karachi.

BankersFaysal Bank LimitedSamba Bank LimitedBank Islami Limited National Bank of PakistanHabib Bank LimitedJS Bank LimitedAskari Commercial Bank LimitedBarclays Bank PLCAlbaraka Islamic Bank Limited

Registered & Terminal OfficeBerth 6 to 9, East Wharf, Karachi Port,Karachi - PakistanTel: 92-91-32855701

Registrar / Transfer Agent Technology Trade (Pvt.) Ltd. 241-C, Block-2, P.E.C.H.S., Karachi.Tel: 92-21-34391316-7

Board of Directors & Management TeamCapt. Haleem A. SiddiquiChairman

Capt. Zafar Iqbal AwanChiefExecutiveOfficer

M. Masood A. Usmani, FCAChiefFinancialOfficer

DirectorsEnrique K. Razon, Jr. Aasim A. SiddiquiEdgardo Q. AbesamisPaul T. SalangaJose Manuel M. De Jesus

OPERATIONS

Mirza Mujeeb Baiq General Manager Operations

Capt. Afzal Shaikh Terminal Manager Operations

Safdar AbbasSr. Manager Terminal Operations

Nadeem Gulzar Manager Security

Capt. Ibraheem Zaheer Manager Customer Support

Waqar Ali KhanManager Customer Services

FINANCE Perveiz Ahmed Khan Chief Accountant

Kamran Samad Manager Accounts

Mohammad AtiqManager Corporate & Human Resources

Syed Muhammad Imran Moosa Manager Marketing & Commercial

Muhammad Kamal Manager Information Technology

Moazzam Ali Manager Stores

Mohsin Mushtaq Deputy Manager Payroll

RehanShafiqDeputy Manager Administration

ENGINEERING Salim Ahmad Siddiqui Executive Director Technical

Sharaf Basit AlaviGeneral Manager Engineering

Zahid AhmedManager Mechanical

Syed ZiauddinManager Electrical

Syed Asad Ali Manager Terminal Maintenance

Mobin Ahmed Manager Power House

Notice is hereby given that the 12th Annual General Meeting of Pakistan International Container Terminal Limited will be held at Beach Luxury Hotel, Karachi, on April 11, 2013 at 12:00 noon to transact the following business:

ORDINARY BUSINESS:

1. ToconfirmtheminutesofthelastAnnualGeneralMeetingoftheCompanyheldonOctober25,2012.

2. To receive, consider and adopt the Audited Financial Statements of the Company for the period ended December 31, 2012 together with Auditors` and Directors` Reports thereon.

3. ToappointAuditorsoftheCompanyforthefinancialyearendingDecember31,2013andtofixtheirremuneration. The present auditors, being eligible, have offered themselves for re-appointment.

4. To transact any other business with the permission of the Chair.

By order of the Board

Arsalan I. KhanMarch 21, 2013 Company Secretary Karachi.

NOTES:

1. The Share Transfer Books of the Company will be closed and no transfer will be accepted for registration from April 05, 2012 to April 11, 2012 (both days inclusive).

2. A Member of the Company, entitled to attend, speak and vote at the Annual General Meeting is entitled to appoint another person as his/her proxy to attend, speak and vote instead of him/her and a proxy so appointed shall have such rights, as respects attending, speaking and voting at the Annual General Meeting as are available to the Member. Proxy form, in order to be effective, must be received at the RegisteredOfficeoftheCompanynotlessthan48hoursbeforetheMeeting.TheproxyneednotbeaMember of the Company. The proxy shall produce his/her original Computerized National Identity Card (CNIC) or passport to prove his identity.

3. In case of corporate entity, the Board of Directors’/Trustees’ resolution/power of attorney with specimen signature of the nominee shall be submitted with the proxy form to the Company, and the same shall be produced in original at the time of the meeting to authenticate the identity.

4. Members are requested to notify any change in their addresses immediately to our Registrar Technology Trade (Pvt.) Ltd., 241-C, P.E.C.H.S., Block 2, Karachi.

Notice of the 12th Annual General Meeting

5. Members who have not yet submitted photocopy of their valid Computerized National Identity Card (CNIC) are requested to send the same to our Registrar at the above address at the earliest.

6. CDC Account Holders will further have to follow the under-mentioned guidelines as laid down in Circular 1 dated 26 January 2000 issued by the Securities and Exchange Commission of Pakistan.

A. FOR ATTENDING THE MEETING

i. In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations, shall authenticate his identity by showing his original Computerized National Identity Card (CNIC), or original passport at the time of attending the meeting. CDC account holders are also requested to bring their CDC participant ID number and account number.

ii. In case of corporate entity, the Board of Directors’/Trustees’ resolution/power of attorney with specimen signature of the nominee shall be produced (unless it has been provided earlier) at the time of the meeting.

B. FOR APPOINTING PROXIES

i. In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations, shall submit the proxy form as per the above requirement (note 2 above).

ii. The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form.

iii. AttestedcopiesofCNICorthepassportofthebeneficialownersandtheproxyshallbefurnishedwiththe proxy form.

iv. The proxy shall produce his original CNIC or original passport at the time of the meeting.

v. In case of corporate entity, the Board of Directors’/Trustees’ resolution/power of attorney with specimen signature of the nominee shall be produced (unless it has been provided earlier) alongwith proxy form to the Company.

Having completed all its development phases much within the stipulated BOT concession period, PICT now endeavours to maximize efficiencies and improve itsservices to its customers through our systems and to achieve higher standards of productivity.

Chairman,s Review

On behalf of the Board of Directors, Management and the staff, I am pleased to share the results of the Company for the period ended December 31, 2012.

The overall performance during the period was satisfactory, however comparing it with the performance throughout the last decade; short-term declining trend was observed due to the challenging business environment locally and globally. In order to retain and achieve more business volumes, the existing business strategy was reformulated to meet the challenges and ensure business enhancement keeping in view the sameprioritytoaddshareholdervalueandtoretainasignificantshareinthegrowthinPakistan’scontainerthroughput.

During the period the company handled 266,123 TEUs (Twenty Foot Equivalent Container Units). The revenues reducedby8%andconsequentlythenetprofitsbeforetaxhaveseenareductionof3%.

ICTSI Mauritius Limited (“ICTSI”) after acquiring, directly and indirectly, 63.59% shares in the holding of the Company has become the largest shareholder. This ingression of ICTSI as a globally recognized Container Terminal Operators and with the alignment of the local processes with the international standards will add to the productivity of the Company’s Operations.

AllthishasbeenaccomplishedbytheGraceofGodandwiththefulldedicationofourqualifiedandexperiencedteam of professionals.

OnbehalfofPICT,Iwouldliketothankallthestakeholderswhoalwaysshowedtheirsupportandconfidencein the Management of the Company.

Capt. Haleem A. SiddiquiChairman

Karachi: February 26, 2013

Our priority is to add shareholder value by reinvesting our earnings in the company to support our expansion plans in order

tocaptureasignificantshareinthegrowth in Pakistan’s container

throughout.

The Directors have pleasure in presenting the audited Financial Statements of the Company for the period ended December 31, 2012.

During the six month period, the company achieved the following:

• 8 percent decrease in the revenues to Rs. 3,083.200 (2011: Rs. 3,343.317) million;

• 14 percent decrease in container throughput to 266,123 TEUs (Twenty Foot Equivalent Container Units) (2011: 310,803 TEUs);

• 3 percent decrease in profits before tax toRs. 1,051.209 (2011: Rs. 1,079.658) million.

Future Plans:

Having completed all its development phases much within the stipulated BOT concession period, PICT nowendeavourstomaximizeefficienciesandimproveits services to its customers through our systems and to achieve higher standards of productivity

Future Outlook:

During the year, on March 6, 2012, ICTSI Mauritius Limited (ICTSIML) a company established under the

laws of Mauritius, expressed its interest to acquire 35% - 55% of the voting shares or control of the company making a public announcement of intention in accordance with the provisions of “Listed Companies (Substantial Acquisition of Voting Shares and take-overs) Ordinance, 2002” (the take over ordinance) in relation to that, on March 30, 2012, ICTSI has entered into a Share Purchase Agreement with the majority shareholders of the company (together the “sellers group”), pursuant to which the sellers group agreed to sell upto 35% of the shares to ICTSI, @ Rs. 150/- per share, subject to the acquisition of the shares from the public pursuant to a tender offer (“Tender Offer”). On August 10, 2012, ICTSIML commenced a public tender offer at the Karachi Stock Exchange (KSE) to purchase outstanding shares of the Company. On October 18, 2012, related conditions precedent for the completion of the transaction was complied with and ICTSIML completed its acquisition of 35 percent of the total issued capital of the company for a purchase price of US Dollar 60.3 million (Rs. 5.7 billion). With its acquisition of 35 percent of the total issued capital of the Company, International Container Terminal Services, Inc. (ICTSI), through ICTSIML, became the single biggest shareholder of the Company and thereby gained control over the Company effective October 19, 2012 with the acquisition giving ICTSI the majority board representation and the power to appoint the General Manager and Chief Financial

Directors, Report

Officer of the Company. As of the balance sheetdate, ICTSI held 63.59 percent shareholding of the Company. Consequently, ICTSI became the largest shareholder of the Company.

The Board of Directors of your company believes thatthisacquisitionofvotingshareswillsignificantlyadd value in terms of synergies and operational efficiencies from a globally recognised TerminalOperating Company.

During the six months period ended 31 December 2012, the financial year of the Company changedfrom June 30 to December 31. Accordingly, the annexedfinancial statementscover theperiod from01 July 2012 to 31 December 2012. This change has beenmadetobringthefinancialyearoftheCompanyin linewith thefinancialyear followedbytheParentCompany.

Thepermissionfortheabovechangeinfinancialyearwas obtained from Tax Authorities. The Company has also informed Securities and Exchange Commission of Pakistan (SECP) in this regard.

Operational Performance

The Company has shown a decline in terms of revenues as well as decrease in the containers handled during the period. Your company despite tough competition and the decrease in the volume of the containers in Pakistan has managed to retain its share in the container handling. During the period, the Company has handled 266,123 TEU’s as compared to 310,803 TEU’s in the corresponding period showing a decrease of 14%. This decrease in volume is mainly attributable to the current power crises and political uncertainties and deteriorating law and order situation of the country because of which exports of the country were dented and resultantly the containers handled volume were also decreased.

Financial Performance

The Company’s turnover was Rs. 3,083.200 million during the period showing a decrease of 8% in revenues as compared to the corresponding period i.e. from Rs. 3,343.317 million to Rs. 3,083.200 million.

Gross profit for the period has amounted toRs. 1,384.101 million (2011: Rs. 1,544.097 million).

Gross margins for the year have also shown a slight decline to be at 44.88% as compared to 46.18% last year due the increase in the direct costs.

The Company has posted a pre-tax profit ofRs. 1,051.209 million (2011: Rs. 1,079.658 million) showing a decrease of 2.63% from the corresponding period. During the period post-tax profits of thecompany stood at of Rs. 667.652 million (2011: Rs. 699.699 million) showing a decrease of 5% from thecorrespondingperiodfigures.

Financial ResultsFor the six month period ended December 31, 2012 are summarized below:

Rs in 000’sProfit before taxation 1,051,209Taxation (383,556)Profit after tax for the period 667,653Un-appropriated profit brought forward 2,436,469Un-appropriated profit carried forward 3,104,122EPS- Basic Rs. 6.12

During the year ended June 30, 2012 Board of Directors in its meeting held on April 30, 2012 has resolved, in terms of the SECP’s approval dated February 28, 2005 vide cause (g) of the terms and

conditions thereof for issue of 10% Redeemable Cumulative Series A Preference Shares to exercise the option to call and redeem the said 18,000,000 shares at Rs. 10/- (par value) along with the pro-rata dividend these preference shares on July 4, 2012. Accordingly, as per the provisions of section 85 of the Companies Ordinance, 1984, subsequent to the year end the company has made an equity adjustmentinthefinancialstatementsfortheperiodended December 31, 2012 transferring a sum equal to the amount to be applied in redeeming the shares from undistributed reserves to a reserve fund, called “Capital Redemption Reserve Fund”. The Preference Shares Redemption Warrants and the related pro-rata dividend warrants were dispatched on July 5, 2012.

Share Holders’ Equity & Capital Gearing

At the period end, the shareholders’ equity stood at Rs. 4,195.654 million (June 2012: Rs. 3,708.001 million). Debt to Equity ratio is 32:68 in the period ended December 31, 2012 as compared to 40:60 during the year ended June 30, 2012.

The interest coverage for the period is 8.41 times as compared to 5.48 times last year. Current ratio at the period-end stood at 2.28 as compared to 1.92 for the year ended June 30, 2012.

Integrated Management System (IMS)

PICT is the first Container Terminal in Pakistan tohaveanIMSCertificationfromBureauVeritasQualityInternational. IMS integrates the main parameter of ISO 9001:2008 (Quality Management System), ISO 14001:2008 (Environment Management System) and OHSAS 18001:2008 (Occupational Health and Safety Standards). By complying with all the three standards we are committed to follow the World Bank Guidelines on Quality, Environment, Health and Safety.

Health Safety & Environment

The Company has implemented the ISO 9001:2008 (Quality Management System), ISO 14001 (Environmental Management System) and OHSAS 18001 (Occupational Health and Safety Standards) certificationthrougharecognizedconsultant.

ISPS Code Compliant Terminal

PICT is compliant with the International Ship and Port Facility Security Code whereby the Terminal facility is well equipped to deal with security threats and respond to potential emergencies. Furthermore, the Terminal is equipped with a camera surveillance system and monitors the entry of all vehicles into the Terminal.

Credit Rating by JCR-VIS

JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned entity credit rating of A + (Single A Plus) and A-1 (A One) for the medium to long-term and short-term respectively to the Company with “Rating Watch-Positive” status.

Auditors

The auditors M/s Ernst & Young Ford Rhodes Sidat Hyder, Chartered Accountants retire and being eligible they have offered themselves for reappointment. The Audit Committee has recommended the reappointment of the retiring auditors for the year ending December 31, 2013 and the Board agrees to the recommendation of the Audit Committee.

Compliance with the Code of Corporate Governance

The compliance with the Code of Corporate Governance set out by the Karachi Stock Exchange in the listing regulations, relevant for the period ended December 31, 2012 have been duly complied with. A statement to this effect is annexed with the report.

Board of Directors

During the period 2 meetings of the Board of Directors of the Company were held. These were attended as follows:

Name of Directors Meetings Attended

Capt. Haleem A. Siddiqui 2 Enrique K. Razon, Jr.(*) 1 Aasim A. Siddiqui 2 Edgardo Q. Abesamis (*) 1 Paul T. Salanga (*) 1 Jose Manuel M. De Jesus (*) 1 Syed Nizam A. Shah (**) 2 Ali Raza Siddiqui (***) 2 Capt. Zafar Iqbal Awan (****) 2 M. Masood Ahmed Usmani (****) 2

(*) The Directors were appointed on the BOD on October19,2012tofillthecasualvacancy.(**) The Director resigned from the BOD on October 19, 2012.(***) The Director resigned from the BOD on November 5, 2012(****) Captain Zafar Iqbal Awan resigned from the directorship on October 19, 2012, of the company

however, continued to serve the company as Chief Executive Officer. Also M. Masood A. Usmaniresigned from the directorship on October 19, 2012 of the company however, continued to serve as the ChiefFinancialOfficeroftheCompany.

Audit Committee

During the year 2 meetings of Audit Committee were held.

Corporate Governance and Financial Reporting Framework:

• The financial statements, prepared by themanagement of the Company, present fairly its state of affairs, the result of its operations, cash flowsandchangesinequity.

• Proper books of account have been maintained by the Company.

• Appropriate accounting policies have been consistently applied in preparation of financialstatements and accounting estimates are based on reasonable and prudent judgment.

• International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financialstatements.

• The system of internal control is sound in design and has been effectively implemented and monitored.

• There are no significant doubts upon theCompany’s ability to continue as a going concern.

• There has been no material departure from the best practices of corporate governance, as detailed in the Listing Regulations.

• There has been no departure from the best practices of transfer pricing, as detailed in the Listing Regulations.

• Thekeyoperatingandfinancialdataisannexed.

• The value of investments of provident fund based on their audited accounts as on December 31, 2012 was Rs. 9.262 million.

• Details of purchase/sale of shares of the company by its directors, CEO, CFO, Company Secretary and their spouses and minor children are given on page 64.

• Pattern of shareholding is included in the annexed shareholders’ information.

Code of Ethics & Business Principles

The Board has adopted the Statement of Ethics and Business Principles, which is signed and acknowledged by all the Directors and employees of the Company and are required to abide by the Code.

CORPORATE SOCIAL RESPONSIBILITYThe development of an enterprise is inextricably linked to the welfare and well-being of the people associated with it. In order for a business to be sustainable in the long run, it must monitor and ensure its adherence to ethical standards and international norms. Corporate Social Responsibility (CSR) is a choice that an organization makes to implement strategies andprocesses thatwill producea lastingbeneficialimpact on society. It is a multi-layered process which involves the company’s relations with the people and the environment in the communities in which it operates.

PICT’s corporate responsibility strategy focuses on giving back to its environment by protecting and nourishing it and by looking after the comfort and security of its immediate workforce. Since its inception, PICT has undertaken various initiatives in the areas of health, safety, education, environmental protection and preservation, and other social activities of individuals and groups, attached directly or indirectly to its business activities.

Awards & Achievements

MAP’s 28th Corporate Excellence Award:PICT has won the 28th Corporate Excellence Award 2012. The award competition was organized by Management Association of Pakistan.

7th EFP OSH&E Award:PICT has won the 7th EFP Best Practices Award on OSH&E receiving 2nd prize in the Services Sector in 2012. The award competition was organized by Employers’ Federation of Pakistan.

NFEH 9th EEA Award 2012:PICT has also won the 9th Environment Excellence Award 2012 organized by National Forum for Environment & Health.

Social Responsibility StrategyAt PICT, we believe integrating evolving social and environmental dynamics into our business operations iscriticalforabusinesstoflourishandbecometrulysustainable. We pride in the scrupulous way we take care of the needs of all our stakeholders including our future generations to come. The following describe the scope of PICT’s CSR activities:

I. Environmental Protection MeasuresDue to the pressures of population and technology, our biophysical environment has deteriorated over the years, especially in urban areas which are highly industrialized. At PICT we believe that there is concrete value in taking initiatives that lead to environmental protection. PICT has an IMS policy which covers the following three standards: ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007. The following measures have been undertaken to ensure environmental protection:

• Reducing Emissions: A conversion project of 10 old diesel operated RTGs into electrically operated RTGs has been completed. In addition to this all the old RTGs have been converted to electrically operated RTGs with the indigenous efforts of our Engineering Team. This will reduce fuel consumption and ultimately emissions. In addition, necessary environmental monitoring including emission testing of terminal equipment is also being performed at set intervals.

• Sewerage Treatment Plant: 2 Sewage Treatment Plants have been installed; one at the new Executive Block and the second at the new expansion at the terminal. The capacities of these sewage treatment plants are roughly 20 and 22 m3/ day. Furthermore, effluent testing is alsobeingcarriedout regularly inorder to ensure compliance against the applicable requirements.

• Waste Management: Waste generated is segregated into hazardous and non-hazardous waste and stored in separate areas where access is controlled. Disposal of waste is carried out through Authorized Waste Contractor(s) according to the requirements.

• Oil Spill Control: PICT has a written procedure regarding oil spill control. A secondary containment tray and saw dust, however, are also available to control any spillage. Spill Drills are carried out regularly and in case of any leakage at seaside, response is sought from the Marine Pollution Control Department.

• PowerGenerationandSoundAttenuation:PICThas its own power house which generates around 10MW of electricity and fulfills the entire domesticneeds of the terminal. Louvers have been installed in the power house to achieve sound attenuation and the staff working inside the power house area, wear ear muffs as a part of personal protective equipment.In addition to this a Leaky Container Area been developed and designated at the terminal to contain the leakage of any cargo and a proper Work Permit System is in place for hot work and work at height etc.

PICT has also encouraged the formation of a green belt inside the terminal. In this respect, date trees were planted at the terminal this year.

II. Occupational Safety and HealthPICT would like to improve the occupational health of its employees and to eliminate or minimize any safety risks to its employees. We believe that the integration of OHSAS requirements with existing business processesachievessignificantefficiencies.

We implement, maintain and continually improve an Occupational Health and Safety system which covers the following areas of activity:

• Trainings: AspartofOHSAS,safetyawarenesssessions and trainings are carried out on a regular basis. A total of 60 training sessions were conducted related to Occupational Safety, Health and operations. These were attended by a total of 537 participants. The topics covered in these sessions included terminal and workplace safety, understanding firesafetyarrangements,firefightingandresponsetofireoperations,basicfirstaidandsafedrivingtechniquesetc. As a result of these trainings, there has also been a reduction in the number of injuries at the workplace and our management has noticed a better response to workplace safety guidelines among our employees

• Ambulance/Dispensary: PICT has arranged andmanages a 24 hour dispensary and ambulance at the terminal. Further, a casualty room with basic facilities hasbeensetuptoprovidefirstaidtreatmentonthespot. This emergency facility is available to all the persons directly or indirectly involved in the day to day activities being carried out within the premises.

• Staffsports:PICTbelievesthatpeoplewithhealthybodiesandmindcanworkwithmaximumefficiency.To improve the performance of staff members, an open opportunity was given to all, to participate and perform in extracurricular activities. For this, a PICT cricket team has been formed, which regularly participates and plays matches at professional cricket grounds.

III. Welfare spending for under privileged classesPICT provides educational and medical assistance for its lower income staff. All such staff is provided with the facility of getting reimbursement for the educational and related expenses of up to two children. To meet their medical expenses, the lower salaried staff has also been facilitated by providing an allowance for OPD visits within annual limits prescribed on the basis of their salary. The company has also provided hospitalization for daily wages workers through insurance covering up to Rs. 150,000/- per individual.In addition to this, PICT covers burial expenses for the lower salary staff in the case of the death of any family

member. Also, in order to support low-paid salary staff who cannot afford to perform Hajj, PICT provides this opportunity by holding a ballot for all such employees. Every year, two employees are picked through ballot and all the expenses pertaining to the holy journey are borne by the Company.

IV. Investing in Rural Pakistan for a Secure TomorrowOrganization for Social Development Initiatives (OSDI) was established with the support of PICT and other Marine Group companies as a think tank for poverty alleviation to produce research on sustainable development in the rural areas of Pakistan. By providing necessary resources and skills to rural communities, OSDI has improved lives through multi-faceted programs such as Livelihood Assistance, Community Development and Food Security.

The purpose of the Livelihood Assistance Programs is to enhance household incomes in rural Pakistan by meansofaffordablefinancingofagriculturalinputsandlivestock animals along with training and guidance on modern farming techniques. The program is carefully measured and documented to assess the impact on savings, asset creation, expenditure, and investment patterns in rural Pakistan. Community Development Programs, on the other hand, are designed to reduce expenditures by setting up affordable services and infrastructure related to Health, Education, Clean Water, and Sanitation in communities where none existed before. Together the two programs complement each other in increasing the overall standard of living in OSDI’s focus communities. Lastly, the Food Security Program meets immediate nutritional requirements, and the assets generated through it provide a safety nettovulnerablehouseholdsincaseoffluctuationsinincome in the future.

The impact of individual projects is monitored and documented in detail by OSDI so that research can influencenationalpolicyonpoverty throughprecisedata and quality research in the future. The outreach of on-going projects thus far is approximately 2,000 households covering a total number of 20,000 people in 15 villages across Sindh and Khyber-Pakhtunkhwa.

Besides the direct investment in programs, PICT also funds part of the administrative and running costs of OSDI. Between the period of July 2012 and December 2012 the total contribution of PICT to OSDI amounted to PKR 1.8 million.

Health PICT continues to invest in improving healthcare and hygiene standards through a range of projects under OSDI’s Community Development Program. This program has an outreach of nearly 20,000 individuals in District Shikarpur, Matiari and Khairpur in Sindh and District Mardan in Khyber-Pakhtunkhwa. The rural poor of Pakistan lack access to affordable, timely,goodqualityhealthcare.OSDIaimstofillgapswherever there is a lack of adequate healthcare, bringing doctors, dispensers, medicines, trained health staff, lady health workers, mobile camps, and primary healthcare clinics to rural communities. Some of the major initiatives are detailed below:

1. Primary Healthcare Center (PHC): A PHC was set up in March 2011 to provide quality healthcare includingqualifieddoctors,subsidizedmedicinesandbasic health infrastructure for 16 villages in District Shikarpur.

These centers are accessible to the entire population of these villages and cater to between 10 and 15 patients daily.

In 2012, a second PHC has become functional in District Mardan in Khyber-Pakhtoonkhwa. It is equipped with a pharmacy, a dispenser and a lady health worker, and a specialist doctor sets up medical camps every week.

Altogether, 438 patients have received treatment at OSDI’s PHCs.

2. Mobile Health Camps: OSDI has been conducting weekly camps in 6 villages in district Matiari and Mardan. Doctors appointed for this purpose are provided transport and equipment, and a full-time fieldstaffispresentinthevillagestoensurepatientsare brought in, referrals are followed through, and treatments are carried out.

Up till December 2012, OSDI has facilitated 66 weekly mobile health camps in which 1,249 patients have been treated and 44 referrals made.

3. Hepatitis B & C prevention and Control Program: In collaboration with the Chief Minister’s Initiative for Hepatitis Free Sindh, the Hepatitis Prevention and Control Program has successfully screened 6,482 individuals (including children) in 9 villages. It is designedtofirstscreentheentirepopulationfortheinfection to estimate the prevalence of Hepatitis B & C in the focus villages. Subsequently, OSDI facilitates the treatment of Hepatitis positive patients and vaccinates the remaining community in order ensure total control of the debilitating disease.

Out of these, 6,292 have been vaccinated against the virus and 95 infected patients have successfully been treated.

4. Polio Vaccination Campaign: OSDI has provided facilitation to the government’s anti-polio campaign by providing field staff, camp arrangements, andlogistical support. With the help of OSDI’s efforts, over 2000 children are inoculated on average every month.

5. Hygiene and Nutrition Campaign: A special Hygiene and Nutrition Campaign is being run with the support of PICT in the Temporary Learning Centers established by OSDI. The purpose of this campaign is to improve the nutrition and hygiene of the children in these communities. The campaign includes general medical check-ups, a de-worming campaign, along with provision of clean drinking water, milk and healthy biscuits for the 300 children in the focus villages.

PICT’s contribution towards OSDI’s Health program from July 2012 till December 2012 was PKR 1.43 million

EducationIn order to make development initiatives sustainable, it is critical to invest in education as without a literate workforce any attempt to reduce poverty in Pakistan will be hindered. OSDI is committed to bringing primary literacy to all its focus villages in Sindh and Khyber-Pakhtunkhwa.

OSDI is currently running 2 Temporary Learning Centers in districts Khairpur and Shikarpur, and has formally adopted 2 non-functional government schools in districts Matiari and Shikarpur. To run these schools, OSDI appointed teachers from the local communities, engaged the local government to provide textbooks, and has provided uniforms, shoes, stationery and other materials. Furthermore, OSDI has organized teacher trainings twice and conducted board exams with the assistance of the local government. Hygiene campaigns, polio vaccinations, and de-worming of students is also routinely carried to promote better health and sanitation in the focus villages.

Altogether, OSDI is educating over 300 students and is in the process of adopting 4 more non-functional government schools in Matiari and Mardan.

In 2012, OSDI began the process of converting its successful TLC in Shikarpur into a proper school by acquiring land from within the community and startingconstructionofafive-roomschoolbuilding.The community also participated in the inauguration of the construction by providing labor and rice bags for construction. The school is expected to be ready and functional by June 2013.

PICT’s contribution towards OSDI’s Education program from July 2012 till December 2012 was PKR 0.37 million.

Food SecurityOSDI provides households with seeds and fertilizer to grow seasonal vegetables along with training and guidance on cultivating kitchen gardens inside homes. These vegetables are consumed at home providing a balanced nutritious dietary intake for womenandchildrenorcanbesoldforaprofit.Thisnot only saves the household a significantmonthlyexpense on purchasing vegetables but also provides food security during low income seasons, natural disasters, and economic crises.

In October 2012, Kitchen Garden Phase III was implemented with 118 families who used the seeds, fertilizer, and training to grow spinach, turnip, cabbage, bitter gourd, and tomatoes inside their homes over four months.

PICT’s contribution towards the Food Security Program from July 2012 till December 2012 was PKR 62,242.

Disaster ReliefContinuous heavy rains during monsoon season in September wreaked havoc in villages across Shikarpur. Families lost their livestock and rice crop, and many had their homes broken down by the torrential downpour. To assist affected families in OSDI’s focus villages in Shikarpur, PICT donated 200 temporary shelters or tents worth PKR 0.9 million.

V. Community Investment and welfare schemesAdopted schools: In November 2009, Pakistan International Container Terminal Ltd. (PICT) adopted fiveschoolsattheHatimAliAlviCampusinKeamari.We provide ongoing assistance to these schools. The entire Hatim Ali Campus was repainted this year and 2 teacher training workshops on ‘Managing Challenging Behaviour’ in children and teaching a multi-grade classroom were organized. A sports weekwas also organized for all five schools of thecampus. In addition to this, PICT supports ongoing extracurricular activities throughout the school year at the campus.

Total donation in past year: PKR 1.2 million

The Karigar Training Institute: The Karigar Training Institute provides vocational skills training to young men who have studied up to 8th class or a higher level. Since November 2010, PICT has started a scholarship program in partnership with the Karigar Institute. Under this program, PICT covers the tuition cost for students who would like to complete a technical training course in one of the following four basic trades: motorcycle repair, plumbing, electrical wiring, and AC and Refrigerator repair. In the past year, PICT has sponsored 10 students through this program. Total donation in past year: PKR 120,000

VI. Corporate Philanthropy PICT believes in giving charitable donations as part of its broader social responsibility. Charitable giving forms a major link between an organization and the communities its serves and leads to the formation of healthier communities. Charitable donations have been made by PICT to the following organizations: Behbud Association, Citizens Police Liaison Committee, Dept of Orthopaedic Surgery, Nigahban Welfare Association, Pakistan Disabled Persons Welfare Organization, Pakturk International School & Colleges, Patients Behbud Society for AKUH, Poor Patients Aid Society, SZabist Student Council, The Karachi Oxford & Cambridge Society, Child Aid Association, The Indus Hospital, Kiran Patients Welfare Society, The National Institute for Cardiovascular Diseases, The Sindh Institute of Urology & Transplantation, SOS Children’s Villages of Sindh, Support fund for victims of Ashura CDGK, Fakhr-e-Imdad Foundation, Edhi Foundation, Ahmed E.H. Jaffer Foundation and the Rabia Azim Trust.

VII. Contribution to the national exchequerThis amount shall be provided at the finalization ofFinancial Statements

Corporate Philanthropy The impact of individual projects is monitored and documented in detail by OSDI so that research can influencenationalpolicyonpoverty throughprecisedata and quality research in the future. The outreach of on-going projects thus far is approximately 2,000 households covering a total number of 12,000 people in 15 villages across Sindh and Khyber-Pakhtunkhwa.PICT believes in giving charitable donations as part of its broader social responsibility. Charitable giving

forms a major link between an organization and the communities its serves and leads to the formation of healthier communities. PICT has made charitable donations to the following organizations:

Behbud Association, Citizens Police Liaison Committee, Department of Orthopaedic Surgery, Nigahban Welfare Association, Pakistan Disabled Persons Welfare Organization, Pak-Turk International School & Colleges, Patients Behbud Society for AKUH, Poor Patients Aid Society, SZabist Student Council, The Karachi Oxford & Cambridge Society, Child Aid Association, The Indus Hospital, Kiran Patients Welfare Society, The National Institute for Cardiovascular Diseases, The Sindh Institute of Urology & Transplantation, SOS Children’s Villages of Sindh, Support fund for victims of Ashura CDGK, Fakhr-e-Imdad Foundation, Edhi Foundation, Ahmed E.H. Jaffer Foundation and the Rabia Azim Trust.

Material Changes & Commitments:The Board of Directors in their board meeting held on January 24, 2013 have recommended an interim cash dividend of Rs. 12.50 per ordinary share amounting to Rs. 1,364.414 million for the year ending December 31, 2013. Dividend warrants in this respect has been dispatched to the shareholders of the company on February 19, 2013. The Companies Ordinance, 1984 requires that events subsequent to the balance sheet date including declaration of dividend should be incorporated in the year it is declared. Therefore, the cash dividend on ordinary shares declared by the directors in the meeting held on January 24, 2013 shallbe incorporated in thefinancial statements forthe year ending December 31, 2013.

For and on behalf of Board of Directors

Capt. Zafar Iqbal AwanChiefExecutiveOfficer

Karachi: February 26 , 2013

Key Operating & Financial Data

2012 2012 2011 2010 2009 2008 Half Yearly December June 31, 2012 30, 2012

TURNOVER & PROFITS

Revenue 3,083.43 6,692.31 6,123.78 5,125.12 4,564.26 3,134.06 GrossProfit 1,384.10 2,966.43 2,599.12 2,183.05 2,069.42 1,325.60 OperatingProfit 1,225.50 2,694.00 2,349.12 1,930.69 1,883.17 1,185.61 ProfitBeforeTaxation 1,051.21 2,170.82 2,128.81 1,520.96 1,174.53 740.99 ProfitAfterTaxation 667.65 1,410.04 1,253.86 907.81 935.69 529.26 ASSETS EMPLOYED

Operating Assets - net 4,909.67 5,158.01 5,434.61 5,346.13 4,724.75 2,970.58 Intangible Assets - net 30.78 37.63 51.31 64.99 0.25 14.41 Net Current Assets 1,673.71 1,320.74 1,661.49 1,213.80 785.08 811.85 FINANCED BY

Share Capital 1,091.53 1,271.53 1,271.53 1,271.53 1,089.61 1,089.61 Share Holder’s Equity 4,195.65 3,708.00 4,680.95 3,717.98 2,964.60 2,319.80 Long Term Loans 1,484.53 1,732.17 1,852.90 2,298.04 2,656.03 1,745.57 STATISTICS

Break up Value Per Ordinary Share (Rs.) 38.44 32.32 41.24 32.41 30.61 23.52 Market Value Per Ordinary Share (Rs.) 209.03 146.00 81.25 75.00 53.43 124.48 Earnings Per Ordinary Share (Rs.) 6.12 12.75 11.32 8.15 8.41 5.62 Total TEU’s for the Year (Numbers) 266,123 631,411 669,806 602,106 513,580 472,137 Total Boxes for the Year (Numbers) 190,423 461,055 497,389 453,108 388,511 357,942 CAPITAL MARKET ANALYSIS RATIOS

Price Earning Ratio 34.16 11.45 7.18 9.20 6.35 22.15 LIQUIDITY ANALYSIS RATIOS

Current Ratio 2.29 1.92 2.31 2.05 1.72 1.96 PROFITABILITY ANALYSIS RATIOS

Return on Assets (before tax) 13.07% 25.49% 24.54% 18.97% 17.43% 14.61% Return on Capital Employed (before tax) 26.60% 51.75% 50.69% 45.52% 44.45% 35.90% Return on Capital Employed (after tax) 16.89% 33.62% 29.86% 27.17% 35.41% 25.64% GrossProfitMargin 44.89% 44.33% 42.44% 42.60% 45.34% 42.30% NetProfitMargin-BeforeTax 34.09% 32.44% 34.76% 29.68% 25.73% 23.64% NetProfitMargin-AfterTax 21.65% 21.07% 20.48% 17.71% 20.50% 16.89%

CAPITAL STRUCTURE ANALYSIS RATIOS

Debt Ratio 26.07% 31.05% 28.26% 37.37% 45.15% 44.03% Debt Equity Ratio 32:68 40:60 35:65 46:54 54:46 52:48 Interest Coverage 8.41 6.21 14.45 9.18 6.62 4.70

Rupees in Millions

Statement of Value Added

Value Added Revenue 3,372,436 7,530,016 Net Cost of services rendered 989,672 2,391,609 2,382,764 5,138,407 Other Income 73,569 228,840 2,456,333 5,367,247 Distribution Employees - Salaries & Wages 352,833 680,192 Karachi Port Trust - Royalty & HMS Charges 315,901 676,535 Government - Taxes 686,844 1,599,181 Lenders - Mark up on Loans and Leased Assets 141,797 416,843 Preference Share Holders - Cash Dividend - 36,197 Ordinary Share Holders - Cash Dividend - 1,801,022 - Specie Dividend - 545,770 Retained in Business 958,958 (388,493) 2,456,333 5,367,247 Distribution - % Employees 14.36% 12.67% KPT 12.86% 12.60% Government 27.96% 29.80% Lenders 5.77% 7.77% Cash Dividend - Preference Share Holders 0% 0.67% Cash Dividend - Ordinary Share Holders 0% 33.56% Cash Dividend - Specie Dividend 0% 10.17% Retained in Business - For future Expansion 39.04% -7.24% 100% 100%

2012 2012 Half Yearly December 31, 2012 June 30, 2012 Rs. in ‘000

Employees 14%KPT 13%Government 28%Lenders 06%Retained in Business - For future Expansion 39%

Statement of Compliancewith the code of Corporate Governance for the period ended December 31, 2012

This statement is being presented to comply with the Code of Corporate Governance (the “Code”) contained in the Listing Regulations of Karachi Stock Exchange for the purpose of establishing a framework of good governance, whereby a listed Company is managed in compliance with the best practices of corporate governance. The Company has applied the principles contained in the Code in the following manner:

1. The Board of Directors of Pakistan International Container Terminal Limited (PICT) has always supported and re-confirms itscommitment tocontinuedsupportand implementationof thehighest standardsofCorporate Governance at all times.

2. The Company encourages representation of independent non-executive directors on its Board of Directors. At present the Board includes:

Category Name Independent Director Edgardo Q. Abesamis Executive Director Capt. Haleem A. Siddiqui Non-Executive Directors Enrique K. Razon, Jr. Aasim A. Siddiqui Jose Manuel M. De Jesus Paul T. Salanga The independent director meets the criteria of independence under clause i (b) of the Code.

3. The directors have confirmed that none of them is serving as a director on more than seven listedcompanies, including this Company.

4. All the resident directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange.

5. CasualvacanciesoccuredontheBoardandwerefilledupbythedirectorswithin30days.

6. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps have been taken to disseminate it throughout the Company along with its supporting policies and procedures.

7. TheCompanyhasdevelopedVision/MissionStatement,overallcorporatestrategyandsignificantpoliciesoftheCompany.Acompleterecordofparticularsofsignificantpoliciesalongwiththedatesonwhichtheywere approved or amended has been maintained.

8. All powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO have been taken by the Board.

9. The meetings of the Board were presided over by the Chairman and, in his absence, by a Director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

10.The Company arranged briefings for its Directors to apprise them of their duties and responsibilities.Independent Director of the company possesses 14 years of education and 15 years of experience on the board a listed company. Further, a director is attending the course held by Pakistan Institute of Corporate Governanceand thecertificationwillbecompleted induecourse. In future,arrangementswillalsobemadeforotherDirectorsforacquiringcertificationunderthedirectorstrainingprogram.

11.TheBoardhasapprovedappointmentofCFO,ChiefOperatingOfficer,CompanySecretaryandHeadof

Internal Audit, including their remuneration and terms and conditions of employment as determined by the CEO.

12. The Directors’ Report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed.

13.ThefinancialstatementsoftheCompanyweredulyendorsedbyCEOandCFObeforeapprovaloftheBoard.

14. The Directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.

15.TheCompanyhascompliedwithallthecorporateandfinancialreportingrequirementsoftheCode.

16. The Board has formed an Audit Committee. It comprises three members, one of them is independent director and the chairman of the committee whereas two are non-executive directors.

17. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and finalresultsoftheCompanyandasrequiredbytheCode.ThetermsofreferenceoftheCommitteehavebeen formed and advised to the Committee for compliance.

18.The Board has set-up an effective internal audit function that are considered suitably qualified andexperienced for the purpose and are conversant with the policies and procedures of the Company.

19. The Board has formed a Human Resources and Remuneration Committee. It also comprises of three members, one of them is independent director and the chairman of the committee, two are non-executive directors.

20.Thestatutoryauditorsof theCompanyhaveconfirmed that theyhavebeengivenasatisfactory ratingunder thequalitycontrol reviewprogramof the ICAP, that theyoranyof thepartnersof thefirm, theirspousesandminorchildrendonotholdsharesoftheCompanyandthatthefirmandallitspartnersarein compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.

21. The statutory auditors or the persons associated with them have not been appointed to provide other servicesexceptinaccordancewiththelistingregulationsandtheauditorshaveconfirmedthattheyhaveobserved IFAC guidelines in this regard.

22.The‘closedperiod’,priortotheannouncementof interim/finalresults,andbusinessdecisions,whichmay materially affect the market price of Company’s securities, was determined and intimated to directors, employees and stock exchange.

23. The related party transactions have been placed before the Audit Committee and approved by the Board of Directors.

24. Material / price sensitive information has been disseminated among all market participants at once through stock exchange.

25.WeconfirmthatallothermaterialprinciplesenshrinedintheCodehavebeencompliedwith.

Capt. Zafar Iqbal Awan Karachi:February26.2013 ChiefExecutiveOfficer

PICT is the first Container Terminal in Pakistan tohavean IMSCertification fromBureauVeritasQualityInternational. IMS integrates the main parameter of ISO 9001:2008 (Quality Management System), ISO 14001:2004 (Environment Management System) and OHSAS 18001:2007 (Occupational Health and Safety Standards).

We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of Pakistan International Container Terminal Limited (the Company) to comply with the Listing Regulation No. 37 of the Karachi Stock Exchange (Guarantee) Limited, where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether theStatementofCompliancereflectsthestatusoftheCompany’scompliancewiththeprovisionsoftheCodeandreport if it does not. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code.

Aspartofourauditof financial statementsweare required toobtainanunderstandingof theaccountingandinternalcontrolsystemssufficienttoplantheauditanddevelopaneffectiveauditapproach.Wearenotrequired to consider whether the Board’s statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Company’s corporate governance procedures and risks.

Further,Sub-Regulation (xiii)ofListingRegulations37notifiedbyTheKarachiStockExchange (Guarantee)Limited vide circular KSE/N-269 dated 19 January 2009 requires the company to place before the board of directors for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm’s length transactions and transactions which are notexecutedatarm’slengthpricerecordingproperjustificationforusingsuchalternatepricingmechanism.Further, all such transactions are also required to be separately placed before the audit committee. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the board of directors and placement of such transactions before the audit committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm’s length price or not.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of CompliancedoesnotappropriatelyreflecttheCompany’scompliance,inallmaterialrespects,withthebestpractices contained in the Code, effective for the period ended 31 December 2012.

Ernst & Young Ford Rhodes Sidat Hyder CHARTERED ACCOUNTANTS

Audit Engagement Partner: Shariq Ali ZaidiKarachi: February 26, 2013

Review Report to the Members on Statement of Compliance with the Best Practices of the Code of Corporate Governance

FinancialStatements

We have audited the annexed balance sheet of PAKISTAN INTERNATIONAL CONTAINER TERMINAL LIMITED (the Company)asat31December2012andtherelatedprofitandlossaccount,statementofcomprehensiveincome,cashflowstatementandstatementofchangesinequitytogetherwiththenotesformingpartthereof,fortheperiodthen ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Company’s management to establish and maintain a system of internal control and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresintheabovesaidstatements.Anauditalsoincludesassessingtheaccountingpoliciesandsignificantestimates made by management, as well as, evaluating the overall presentation of the above said statements. We believethatourauditprovidesareasonablebasisforouropinionand,afterdueverification,wereportthat:

a) in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984;

b) in our opinion:

i) thebalancesheetandprofitandlossaccounttogetherwiththenotesthereonhavebeendrawnupinconformitywith the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied, except for changes as stated in note 2.3 to the accompanyingfinancialstatementswithwhichweconcur;

ii) the expenditure incurred during the period was for the purpose of the Company’s business; and

iii) the business conducted, investments made and the expenditure incurred during the period were in accordance with the objects of the Company;

c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet,profit and lossaccount, statementof comprehensive income,cash flowstatementandstatementofchanges in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan and give the information required by the Companies Ordinance, 1984 in the manner so required and respectively give a true and fair view of the state of the Company’s affairs as at 31 December 2012 andoftheprofit,itscomprehensiveincome,cashflowsandchangesinequityfortheperiodthenended;and

d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

Ernst & Young Ford Rhodes Sidat HyderChartered Accountants

Review Engagement Partner: Shariq Ali ZaidiKarachi: February 26, 2013

Auditors, Report to the Members

Balance SheetAs at December 31, 2012

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 4 5,090,536 5,209,807Intangible assets 5 30,784 37,625Long-term deposits 675 675

5,121,995 5,248,107CURRENT ASSETS

Stores and spares 6 348,953 325,639Trade debts 7 219,141 206,418Advances 8 36,713 60,888Deposits and prepayments 9 142,597 184,942Other receivables 10 12,483 8,411Short term investments 11 614,239 595,458Taxation - net 47,891 82,203Cash and bank balances 12 1,548,065 1,287,694

2,970,082 2,751,653

TOTAL ASSETS 8,092,077 7,999,760

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorised capital 13.1 2,000,000 2,000,000

Issued, subscribed and paid-up capital 13.2 1,091,532 1,271,532Unappropriated profit 3,104,122 2,436,469

4,195,654 3,708,001

NON-CURRENT LIABILITIES

Long-term financing 14 1,484,532 1,732,173Deferred tax liability 15 1,073,029 1,086,605Staff compensated absences 16 42,494 42,069

2,600,055 2,860,847

CURRENT LIABILITIES

Trade and other payables 17 671,365 679,299Accrued interest 127,077 140,202Current portion of long - term financing 14 497,926 497,926Current portion of liabilities against assets subject

to finance lease - 113,485 1,296,368 1,430,912

CONTINGENCIES AND COMMITMENTS 18

TOTAL EQUITY AND LIABILITIES 8,092,077 7,999,760

The annexed notes from 1 to 34 form an integral part of these financial statements.

Capt. Zafar Iqbal Awan Aasim Azim SiddiquiCHIEF EXECUTIVE DIRECTOR

December 31, June 30,Note 2012 2012

(Audited) (Audited)Rs. in ‘000

Pakistan International Container Terminal Limited32

Profit and Loss AccountFor the period from July 01, 2012 to December 31, 2012

Turnover - net 19 3,083,425 3,343,317

Terminal operating costs 20 (1,699,324) (1,799,220)

Gross profit 1,384,101 1,544,097

Administrative expenses 21 (232,197) (279,039)

Other operating income 22 73,569 114,039

Finance costs 23 (141,797) (241,215)

Other charges 24 (32,467) (58,224) Profit before taxation 1,051,209 1,079,658

Taxation 25 (383,556) (379,959)

Profit after taxation 667,653 699,699

Earnings per ordinary share - Basic and diluted 26 Rs. 6.12 Rs. 6.33

December 31, December 31,Note 2012 2011

(Audited) (Un-Audited)

For the six monthperiod ended

Rs. in ‘000

H A L F Y E A R L Y R E P O R T 2 0 1 233

Statement of Comprehensive IncomeFor the period from July 01, 2012 to December 31, 2012

Profit for the period 667,653 699,699

Other comprehensive income - net of taxation - -

Total comprehensive income for the period 667,653 699,699

Rs. in ‘000

Cash Flow StatementFor the period from July 01, 2012 to December 31, 2012

CASH FLOWS FROM OPERATIONS 30 1,483,885 1,272,965Taxes paid (363,522) (433,192)Leave encashment paid (7,124) (499)Finance costs paid (152,790) (133,948)

Net cash generated from operating activities 960,449 705,326

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (27,125) (86,264)Proceeds from sale of property, plant and equipment 27,021 408Addition to intangible assets - (1,500)Payment in relation to capital work-in-progress (174,804) -Purchase of Investments - net - (120,765)Redemption of investment 3,000 1,000Interest received 40,559 86,369

Net cash used in investing activities (131,349) (120,752)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of long-term financing - net (247,641) (164,856)Repayment of preference shares at par (179,651) -Dividends paid on preference shares (18,398) (18,000)Dividend paid on ordinary shares - (436,613)Lease rentals paid (123,039) (29,955)

Net cash used in financing activities (568,729) (649,424)

Net (decrease) / increase in cash and cash equivalents 260,371 (64,850)Cash and cash equivalents at the beginning of the period 1,287,694 1,702,396

Cash and cash equivalents at the end of the year 12 1,548,065 1,637,546

Rs. in ‘000

Statement of Changes in EquityFor the period from July 01, 2012 to December 31, 2012

Balance as at July 01, 2011 1,091,532 180,000 - 3,409,418 3,409,418 4,680,950

Profit for the period - - - 699,699 699,699 699,699Other comprehensive income, net of tax - - - - - - Total comprehensive income - - - 699,699 699,699 699,699

Final dividend for the year ended June 30, 2011 - on preference shares @ Re. 1/-

per Share - - - (18,000) (18,000) (18,000)

Final dividend for the year ended June 30, 2011 - on ordinary shares @ Rs. 4/-

per Share - - - (436,613) (436,613) (436,613)

Specie dividend on ordinary shares in theratio of 1 ordinary share of PakistanInternational Bulk Terminal for every2 shares of the Company held - - - (545,764) (545,764) (545,764)

Balance as at December 31, 2011 1,091,532 180,000 - 3,108,740 3,108,740 4,380,272

Balance as at July 01, 2012 1,091,532 180,000 - 2,436,469 2,436,469 3,708,001

Profit for the period - - - 667,653 667,653 667,653Other comprehensive income, net of tax - - - - - - Total comprehensive income - - - 667,653 667,653 667,653

Transfer to capital redemption reserve fund - - 180,000 (180,000) - -

Redemption of redeemable preferenceshares - (180,000) - - - (180,000)

Balance as at December 31, 2012 1,091,532 - 180,000 2,924,122 3,104,122 4,195,654

Redeemable Capital Un-Ordinary preference redemption appropriated Sub Total Totalshares shares reserve fund profit

Issued, subscribedand paid-up capital Reserves

(Rs. in ‘000)

Notes to the Financial StatementsFor the period ended December 31, 2012

1. CORPORATE INFORMATION AND OPERATIONS

1.1. Pakistan International Container Terminal Limited (the Company) was incorporated in Pakistan as aprivate limited company in June 2002. Subsequently, it was converted to an unquoted public limitedcompany and later on, listed on the Karachi Stock Exchange on 15 October 2003. The registered officeof the Company is situated at berths 6 to 9, East Wharf, Kemari Road, Karachi Port.

1.2. The Company has a Build Operate Transfer (BOT) contract with Karachi Port Trust (KPT) for the exclusiveconstruction, development, operations and management of a common user container terminal at KarachiPort for a period of twenty-one years commencing 18 June 2002. After the expiry date, the Companywill transfer land and all the related concession assets to KPT as mentioned in note 33 to these financialstatements.

1.3. On March 30, 2012, ICTSI Mauritius Limited (ICTSIML) signed a Share Purchase Agreement (SPA) withthe controlling shareholders of the Company for the purchase of 35 percent of the shares of the Companywhich involved the conduct of a public tender offer in accordance with the Takeover Laws of Pakistan.On August 10, 2012, ICTSIML commenced a public tender offer at the Karachi Stock Exchange (KSE)to purchase outstanding shares of the Company. On October 18, 2012, related conditions precedentfor the completion of the transaction was complied with and ICTSIML completed its acquisition of 35percent of the total issued capital of the company for a purchase price of US Dollar 60.3 million (Rs. 5.7billion). With its acquisition of 35 percent of the total issued capital of the Company, International ContainerTerminal Services, Inc. (ICTSI), through ICTSIML, became the single biggest shareholder of the Companyand thereby gained control (directly and indirectly) over the Company effective October 19, 2012 withthe acquisition giving ICTSI the majority board representation and the power to appoint the GeneralManager and Chief Financial Officer of the Company. As of the balance sheet date, ICTSI held 63.59percent shareholding of the Company. Consequently, ICTSI became the Parent Company of the Company.

1.4. During the six months period ended 31 December 2012, the financial year of the Company changedfrom June 30 to December 31. Accordingly, these financial statements cover the period from 01 July2012 to 31 December 2012. This change has been made to bring the financial year of the Company inline with the financial year followed by the Parent Company. The comparative figures in the profit andloss account, other comprehensive income statement, cash flow statement and changes in equitystatement are un-audited but subject to l imited scope review by the auditors.

The permission for the above change in financial year was obtained from Tax Authorities. The Companyhas also informed Securities and Exchange Commission of Pakistan (SECP) in this regard.

2. BASIS OF PREPARATION

2.1. Statement of compliance

These financial statements have been prepared in accordance with approved accounting standards asapplicable in Pakistan. Approved accounting standards comprise of such International Financial ReportingStandards (IFRSs) issued by the International Accounting Standards Board (IASB) as are notified underthe Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance,1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shallprevail.

The Securities and Exchange Commission of Pakistan in pursuance of the Circular No. 21 dated 22June 2009 has given relaxation for the implementation of IFRIC 12 - “Service Concession Arrangements”due to the practical difficulties facing the companies till the conclusion of the agreements entered onor before 30 June 2010 with the Government or other authority/entity. However, the SECP made itmandatory to disclose the impact on the results due to application of IFRIC-12 (Refer note 33).

2.2. Accounting convention

These financial statements have been prepared under the historical cost convention except for certaininvestments which are carried at fair value as referred to in note 3.7 below.

2.3. Amended standards

The accounting policies adopted in the preparation of these financial statements are consistent withthose of previous financial year except as describe below:

The Company has adopted the following amendments to IFRSs which became effective during thecurrent period:

IAS 1 - Presentation of Financial Statements - Presentation of items of other comprehensive income (Amendment)

IAS 12 - Income Taxes - Recovery of Underlying Assets (Amendment)

The adoption of the above amendments did not have any material effect on the financial statements.

2.4. Standards, interpretations and amendments to approved accounting standards that are not yet effective:

The following revised standards, amendments and interpretations with respect to the approved accountingstandards as applicable in Pakistan would be effective from the dates mentioned below against therespective standard or interpretation:

7 Standards or interpretation Effective date(annual periods

Beginning on or after)

IFRS 7 - Financial Instruments : Disclosures - (Amendments) Amendments enhancing disclosures about offsetting of financial assets and financial liabilities 01 January 2013

IAS 19 - Employee Benefits -(Amendment) 01 January 2013

IAS 32 - Offsetting Financial Assets and Financial liabilities - (Amendment) 01 January 2014

The Company expects that the adoption of the above revisions, amendments and interpretations of thestandards will not affect the Company's financial statements in the period of initial application.

In addition to the above amendments, improvements to various accounting standards have also beenissued by the IASB. Such improvements are generally effective for accounting periods beginning on orafter 01 January 2013. The Company expects that such improvements to the standards will not haveany material impact on the Company's financial statements in the period of initial application.

Further, following new standards have been issued by IASB which are yet to be notified by the SECPfor the purpose of applicability in Pakistan.

IASB Effective date(annual periods

Beginning on or after)Standard

IFRS 9 - Financial Instruments: Classification and Measurement 01 January 2015

IFRS 10 - Consolidated Financial Statements 01 January 2013

IFRS 11 - Joint Arrangements 01 January 2013

IFRS 12 - Disclosure of Interests in Other Entities 01 January 2013

IFRS 13 - Fair Value Measurement 01 January 2013

2.5. Significant accounting judgments, estimates and assumptions

The preparation of the Company's financial statements requires management to make judgments,estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities,and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty aboutthese assumptions and estimates could result in outcomes that require a material adjustment to thecarrying amount of the asset or liability affected in future periods. The management continually evaluatesestimates and judgments which are based on historical experience and other factors, including expectationsof future events that are believed to be reasonable under current circumstances. Revisions to accountingestimates are recognised prospectively.

In the process of applying the accounting policies, management has made the following estimates andjudgments which are significant to the financial statements:

Property, plant and equipment and intangible assets

The Company reviews appropriateness of the rate of depreciation / amortisation, useful life and residualvalue used in the calculation of depreciation / amortisation. Further, estimate of the recoverable amountof assets is made for possible impairment on each reporting period. In making these estimates, theCompany uses the technical resources available with the Company. Any change in the estimates in thefuture might affect the carrying amount of respective item of property, plant and equipment and intangibleassets, with corresponding effects on the depreciation / amortisation charge and impairment.

Trade debts

The Company reviews it's doubtful trade debts at each reporting date to assess whether provision shouldbe recorded in the profit and loss account. In particular, judgment by management is required in theestimation of the amount and timing of future cash flows when determining the level of provision required.Such estimates are based on assumptions about a number of factors and actual results may differ,resulting in future changes to the provisions.

Taxation

In making the estimate for income tax payable by the Company, the Company takes into account theapplicable tax laws and the decision by appellate authorities on certain issues in the past.

Deferred tax assets are recognised for all unused tax losses and credits to the extent that it is probablethat taxable profit will be available against which such losses and credits can be utilized. Significantmanagement judgment is required to determine the amount of deferred tax assets that can be recognised,based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Provision for impairment

The Company reviews carrying amount of assets annually to determine whether there is any indicationof impairment. If any such indication exists, the assets recoverable amount is estimated and impairmentlosses are recognised in the profit and loss account.

Contingencies

The assessment of the contingencies inherently involves the exercise of significant judgment as theoutcome of the future events cannot be predicted with certainty. The Company, based on the availabilityof the latest information, estimates the value of contingent assets and liabilities which may differ on theoccurrence / non-occurrence of the uncertain future event(s).

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1. Fixed assets and depreciation

3.1.1. Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulatedimpairment losses, if any.

Depreciation is charged to profit and loss account using straight line method so as to write off thehistorical cost of the assets over their estimated useful lives at the rates specified in note 4.1 to thesefinancial statements. Depreciation on additions is charged from the month in which the asset is availableto use and on disposals up to the month the respective asset was in use. Assets residual values, usefullives and methods of depreciation are reviewed, and adjusted, if appropriate, at each reporting date.

The carrying values of property, plant and equipment are reviewed at each reporting date for indicationthat an asset may be impaired and carrying values may not be recovered. If any such indication existsand where the carrying values exceed the estimated recoverable amount, the assets or cash generatingunits are written down to their recoverable amount. The recoverable amount of property, plant andequipment is the greater of net selling price and value in use.

Maintenance and normal repairs are charged to profit and loss account as and when incurred. Majorrenewals and improvements, if any, are capitalised when it is probable that respective future economicbenefits will flow to the Company.

An item of property, plant and equipment is derecognised upon disposal or when no future economicbenefits are expected from its use. Gains and losses on disposals are determined by comparing proceedswith the carrying amount of the relevant assets. These are included in the profit and loss account in theperiod in which they arise.

Leased

Assets held under finance lease are stated at cost less accumulated depreciation and accumulatedimpairment losses, if any. These are accounted for by recording the asset at the lower of present valueof minimum lease payments under the lease agreements and the fair value of asset acquired. The relatedobligation under the lease is accounted for as liability. Financial charges are allocated to the accountingperiod in a manner so as to provide a constant periodic rate of charge on the outstanding liability.

Depreciation is charged to the profit and loss account using the same basis as for owned assets.

3.1.2. Capital work-in-progress

These are stated at cost less accumulated impairment losses, if any. All expenditure connected withspecific assets incurred during installation and construction period are carried under this head. Theseare transferred to specific assets as and when these assets are available for use.

3.2. Intangible assets

An intangible asset is recognised if it is probable that the future economic benefits that are attributableto the asset will flow to the enterprise and that the cost of such asset can also be measured reliably.

Costs incurred on the acquisition of intangibles are capitalised and are amortised on straight line basisover their estimated useful life. Amortization is charged in the month in which the asset is available foruse at the rates stated in note 5 to these financial statements.

Development expenditure incurred on the project is capitalised when its future recoverability can reasonablybe regarded as assured. These are amortised over its estimated useful life. As of balance sheet datethese are fully amortised.

Useful lives of intangible assets are reviewed, at each reporting date and adjusted if appropriate.

The carrying values of intangible assets are reviewed for impairment at each reporting date for eventsor changes in circumstances that indicate the carrying value may not be recoverable.

3.3. Borrowing costs

Borrowing costs that are directly attributable to the acquisition and construction of assets and incurredduring the period in connection with the activities necessary to prepare the asset for its intended useare capitalised as a part of the cost of related asset.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

3.4. Stores and spares

Stores, spares and loose tools, except items-in-transit, are valued at lower of net realizable value andcost, calculated on a weighted average basis. Items in-transit are valued at cost comprising invoice valueplus other charges accrued thereon to the balance sheet date. Provision is made annually in the financialstatements for slow moving and obsolete items if any.

3.5. Trade debts

Trade debts originated by the Company are recognised and carried at original invoice amounts less aprovision for doubtful debts. Provision for doubtful debts is based on the management's assessmentof customers' outstanding balances and creditworthiness. Bad debts are written-off when identified.

3.6. Loans, advances and other receivables

After initial measurement these are carried at amortised cost less any allowance for impairment.

Gains and losses are recognised in the profit or loss when the loans, advances and other receivablesare derecognised or impaired.

3.7. Investments

The investments of the Company, upon initial recognition, are classified as investment at fair value throughprofit or loss, held to maturity investment or available for sale investment, as appropriate. The Companydetermines the classification of its financial assets after initial recognition and, where allowed andappropriate, re-evaluates this designation at each financial year-end.

When investments are recognised initially, they are measured at fair value, plus, in the case of investmentsnot at fair value through profit or loss, directly attributable transaction costs.

Investments at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial assets held for trading and financialassets designated upon init ial recognit ion as at fair value through profit or loss.

Investments which are acquired principally for the purpose of generating profit from short term fluctuationsin price or dealer's margin are classified as held for trading. After initial recognition, these are stated atfair values with any resulting gains or losses recognised directly in the profit and loss account. Transactioncosts are charged to profit and loss account when incurred.

Held-to-maturity investments

Investments with fixed or determinable payments and fixed maturity where management has both thepositive intent and ability to hold to maturity are classified as held to maturity and are stated at amortisedcost using the effective interest method. Gains and losses are recognised in profit and loss accountwhen the investments are derecognised or impaired, as well as through the amortization process.

Available for sale investments

Investments which are intended to be held for an indefinite period of time but may be sold in responseto the need for liquidity or changes in interest rates are classified as available for sale. They are initiallymeasured at fair value plus directly attributable transaction costs. After initial measurement, these arestated at fair values (except for unquoted investments where active market does not exist) with unrealisedgains or losses recognised directly in other comprehensive income until the investment is disposed ordetermined to be impaired. At the time of disposal, the cumulative gain or loss previously recorded inother comprehensive income is recognised in the profit and loss account.

Fair value of investments

The fair value of investments that are actively traded in organized financial markets is determined byreference to quoted market bid prices at the close of business on the balance sheet date. For investmentswhere there is no active market, fair value is determined using valuation techniques.

3.8. Cash and cash equivalents

For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and balanceswith banks, cheques in hand, deposits held at call with banks and other short-term highly liquid investmentswith original maturities of three months or less.

3.9. Taxation

Current

The charge for current taxation is based on taxable income at the current rates of taxation after takinginto account applicable tax credits, rebates and exemptions available, if any or on 0.5 percent of turnoverunder Section 113 of the Income Tax Ordinance, 2001, whichever is higher.

Deferred

Deferred tax is recognised using the balance sheet liability method, on all temporary differences arisingat the balance sheet date between the tax base of assets and liabilities and their carrying amounts forfinancial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets arerecognised for all deductible temporary differences to the extent that it is probable that the future taxableprofits will be available against which the assets may be utilized. Deferred tax assets are reduced to theextent that it is no longer probable that the related tax benefit will be realized.

The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to theextent that it is no longer probable that sufficient taxable profits will be available to allow all or part ofthe deferred tax asset to be recognised. Unrecognised deferred tax assets are reassessed at eachbalance sheet date and are recognised to the extent that it has become probable that future taxableprofit will allow deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the periodwhen the asset is realised or the liability is settled, based on the tax rates (and tax laws) that have beenenacted or substantively enacted at the balance sheet date.

3.10. Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at fair value less directly attributable transaction costs,and have not been designated 'as at fair value through profit or loss'. After initial recognition, interestbearing loans and borrowings are subsequently measured at amortised cost using effective interest ratemethod.

Gains and losses are recognised in profit or loss account when the liabilities are derecognised as wellas through the amortisation process.

3.11. Trade and other payables

Liabilities for trade and other amounts payable are carried at cost which is the fair value of the considerationto be paid in future for goods and services render whether or not billed to the Company.

3.12. Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a resultof past events and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation and a reliable estimate of the amount can be made. Provision are reviewedat each balance sheet date and adjusted to reflect the current best estimate.

3.13. Transactions with related parties

All transactions with related parties are carried out by the Company using the methods prescribed underthe Ordinance.

3.14. Revenue

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Companyand the revenue can be measured reliably. Revenue is measured at the fair value of the considerationreceived or receivable, excluding discounts, rebates and government levies, if any. The following recognitioncriteria must be met before revenue is recognised:

• Revenues f rom port operat ions are recognised when serv ices are rendered;• Profit on deposits / saving accounts are recognised on time proportion basis; and• Dividend income is recognised when the Company's right to receive the same is established.

3.15. Staff retirement benefits

The Company operates an approved contributory provident fund for all eligible employees. Equal monthlycontributions are made by the Company and the employees to the fund at the rate of 8.33 percent ofthe basic salary.

Contributions from the Company are charged to profit and loss account for the year.

3.16. Staff compensated absences

The Company provides a facility to its employees for accumulating their annual earned leave under anunfunded scheme.

Provisions are made to cover the obligation under the scheme on accrual basis and are charged to profitand loss account. Accrual for compensated absences for employees is calculated on the basis of onemonth's gross salary. The amount of liability recognised in the balance sheet is calculated by the Companyusing the above basis as the difference in liability is not expected to be material using the Projected UnitCredit Method.

3.17. Financial Instruments

Financial assets and financial liabilities are recognised at the time when the Company becomes a partyto the contractual provisions of the instrument and are derecognised in case of assets, when thecontractual rights under the instrument are realised, expired or surrendered and in case of liability, whenthe obligation is discharged, cancelled or expired.

3.18. Offsetting of financial assets and financial liabilities

A financial asset and a financial liability is offset and the net amount reported in the balance sheet, if theCompany has the enforceable legal right to set off the transaction and also intends either to settle onnet basis or to realise the asset and settle the liability simultaneously. Income and expense arising fromsuch assets and liabilities are also offset accordingly.

3.19. Foreign currency translations

Foreign currency transactions are translated into Pakistani Rupee (functional currency) using the exchangerates ruling at the dates of the transactions. Monetary assets and liabilities in foreign currencies are re-translated into Pakistani Rupee using the exchange rate ruling at the balance sheet date. Foreignexchange gains and losses resulting from the settlement of such transactions and from the translationsat the year end exchange rates of monetary assets and liabilities denominated in foreign currencies aretaken to profit and loss account.

3.20. Dividend and other appropriation to reserves

Dividend and appropriation to reserves are recognised in the financial statements in the period in whichthese are approved.

3.21. Impairment

3.21.1. Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidencethat it is impaired. A financial asset is considered to be impaired if objective evidence indicates that oneor more events have had a negative effect of the estimated future cash flows of that asset.

3.21.2. Non-financial assets

The carrying value of non-financial assets other than inventories and deferred tax assets are assessedat each reporting date to determine whether there is any indication of impairment. If any such indicationsexist, then the recoverable amount is estimated. An impairment loss is recognised, as an expense inthe profit and loss account, for the amount by which an asset's carrying amount exceeds it recoverableamount. The recoverable amount is the higher of an asset's fair value less cost to sell and value in use.Value in use is determined through discounting of estimated future cash flows using a discount rate thatreflects current market assessments of the time value of money and risk specific to the assets. For thepurpose of assessing impairment, assets are grouped at the lowest levels for which they are separatelyidentifiable cash flows (cash generating units).

3.22. Functional and presentation currency

These financial statements are presented in Pakistani Rupee, which is the Company's functional andpresentation currency.

4.1. The following is a statement of operating fixed assets:

OwnedLeasehold improvements 419,656 11,960** - 431,616 190,270 43,619 - 233,889 197,727 20Port improvements 1,567,062 4,004** - 1,571,066 360,126 55,976 - 416,102 1,154,964 5-9.3Mobile Harbour Crane 101,819 - (101,819) - 101,819 - (101,819) - - 20Ship to Shore Cranes - STS 2,011,069 380,973* - 2,393,109 631,560 61,694 - 833,699 1,559,410 5-6-98

1,067** 11,543 128,902*Gantry tracks 12,254 - - 12,254 5,023 306 - 5,329 6,925 5Rubber Tyred Gantry 1,653,408 67,908* - 1,734,468 467,342 54,722 - 546,848 1,187,620 6-9.16Cranes - RTG 13,152** 2,037 22,747*Port equipment 823,519 11,910** - 835,429 344,547 33,416 - 377,963 457,466 7-20Port Power Generation 339,411 3,313** - 342,724 137,981 10,586 - 148,567 194,157 5- 10Vehicles 130,508 4,717 (50,447) 84,778 51,285 11,162 (27,987) 34,460 50,318 20Computers 76,010 21,917 - 97,927 60,191 7,458 - 67,649 30,278 33.33Furniture and fixtures 58,909 - - 58,909 19,785 2,942 - 22,727 36,512 10Office equipment 72,202 491 - 72,693 35,125 3,279 - 38,404 34,289 10-20

7,265,827 521,412 (152,266) 7,634,973 2,405,054 298,740 21,843 2,725,637 4,909,336

LeasedShip to Shore Cranes - STS 380,973 (380,973)* - 128,902 (128,902)* - - Rubber Tyred Gantry Cranes - RTG 67,908 (67,908)* - - 22,747 (22,747)* - -

448,881 (448,881)) - - 151,649 (151,649) - - Total - 2012 7,714,708 72,531 (152,266) 7,634,973 2,556,703 298,740 (129,806) 2,725,637 4,909,336

* Transfer from lease assets** Transfer from Capital work in progress

4. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 4.1 4,909,336 5,158,005Capital work-in-progress 4.2 181,200 51,802

5,090,536 5,209,807

December 31, 2012

COST ACCUMULATED DEPRECIATION

As atJuly 01,

Additions /*transfers Disposals

As atDecember31, 2012

As atJuly 01,

For theYear

Disposals /*transfers

As atDecember31, 2012

Writtendown value

as atDecember31, 2012

Deprate%

per annum

Rs. in ‘000

June 30, 2012

COST ACCUMULATED DEPRECIATION

As atJuly 01,

Additions /*transfers Disposals

As atJune 30,

As atJuly 01,

For theYear

Disposals /*transfers

As atJune 30,

Writtendown value

as atJune 30,

Deprate%

per annum

Rs. in ‘000Owned Leasehold improvements 371,858 57,798 (10,000) 419,656 116,268 75,335 (1,333) 190,270 229,386 20Port improvements 1,533,243 33,819 - 1,567,062 250,234 109,892 - 360,126 1,206,936 5-7.14Mobile Harbour Crane 101,819 - - 101,819 101,819 - - 101,819 - 20Ship to Shore Cranes - STS 2,007,164 3,905 - 2,011,069 508,204 123,356 - 631,560 1,379,509 5-6.98Gantry tracks 12,254 - - 12,254 4,410 613 - 5,023 7,231 5Rubber Tyred Gantry Cranes - RTG 1,592,200 61,208 - 1,653,408 361,461 105,881 - 467,342 1,186,066 6-6.98Port equipment 716,969 63,803 - 780,772 262,885 57,082 - 319,967 460,805 7-20

- 42,747* - 42,747 - - 24,580* 24,580 18,167Port Power Generation 329,376 10,035 - 339,411 117,263 20,718 - 137,981 201,430 5- 10Vehicles 109,766 43,196 (22,454) 130,508 41,969 23,684 (14,368) 51,285 79,223 20Computers 67,672 8,338 - 76,010 49,131 11,060 - 60,191 15,819 33.33Furniture and fixtures 56,853 2,056 - 58,909 14,088 5,697 - 19,785 39,124 10Office equipment 44,737 27,465 - 72,202 24,379 10,746 - 35,125 37,077 10-20

6,943,911 354,370 (32,454) 7,265,827 1,852,111 544,064 8,879 2,405,054 4,860,773LeasedShip to Shore Cranes - STS 380,973 - - 380,973 105,815 23,087 - 128,902 252,071 5-6.06Rubber Tyred Gantry Cranes - RTG 67,908 - - 67,908 18,672 4,075 - 22,747 45,161 6Port equipment 42,747 (42,747)* - - 24,331 249 (24,580)* - - 7-20

491,628 (42,747) - 448,881 148,818 27,411 (24,580) 151,649 297,232 Total - 2012 7,435,539 311,623 (32,454) 7,714,708 2,000,929 571,475 (15,701) 2,556,703 5,158,005

Rs. in ‘000

Mobile Harbour CranesPemier Mercantile Services

Mobile harbor Cranes 50,909 50,909 - 500 500 Negotiation (Pvt) Limited - related party Pemier Mercantile Services

Mobile harbor Cranes 50,910 50,910 - 500 500 Negotiation (Pvt) Limited - related party101,819 101,819 1,000 1,000

VehiclesHonda Civic VTI 500 500 - 437 437 Negotiation Mr Ahmed Ali (Third Party)Suzuki Bolan 379 354 25 25 - Company policy Mr.Masroor Ahmed Khan (Employee)Mercedez benz 11,953 11,355 598 1,000 402 Company policy Mr. Haleem SiddiquiSuzuki Cultus 591 493 98 98 - Company policy Capt. Muqaddas SharifHonda City 859 673 186 186 - Company policy Mr. Camran Samad (Employee)Suzuki Cultus 626 480 146 146 - Company policy Mr. Mohsin Mushtaq (Employee)Honda City 859 687 172 172 - Company policy Mr. Noman YousufHonda City 915 654 261 261 - Company Policy Mr Arsalan Iftikhar (Employee)Honda City 1,335 890 445 445 - Company policy Capt. Shaheen Pervaiz (Employee)Honda Civic 1,714 1,114 600 600 - Company Policy Mr Mirza MujeebSuzuki Cultus 719 395 324 800 476 Negotiation Mr Afzal Sheikh (Third Party)Toyota Corolla GLI 1,430 596 834 1,300 466 Insurance Claim M/S PICIC InsuranceToyota Corolla GLI 1,496 573 923 1,100 177 Negotiation Mr Ali Ahmed (Third Party)Toyota Hilux 3,322 2,104 1,218 1,350 132 Negotiation Pakistan International Bulk Terminal LimitedHonda Civic 1,511 805 706 1,000 294 Negotiation Pakistan International Bulk Terminal LimitedMercedez Benz 8,438 4,078 4,360 4,750 390 Negotiation Pakistan International Bulk Terminal LimitedAudi Q7 11,935 1,989 9,946 10,500 554 Negotiation Pakistan International Bulk Terminal LimitedToyota Corolla Altis 1,717 172 1,545 1,778 233 Company Policy Mr Nadir Shah(Third Party)Unique UD 70 30 25 5 5 - Company Policy Mr Ejaz (Employee)Unique CD 70 54 32 22 22 - Company Policy Mr Naeem (Employee)Honda CD 70 64 18 46 46 - Company Policy Mr Muhammad Asif (Employee)

Sub-Total 50,447 27,987 22,460 26,021 3,561

Total 152,266 129,806 22,460 27,021 4,561

4.1.1. Disposal of operating fixed assets:

Accu- WrittenCost mulated down Sale price Gain Mode of disposal Particulars of buyer

depreciation value(Rs. in ‘000)

4.1.2. Depreciation charge for the year has been allocated as under:

Terminal operating costs 20 270,474 514,328Administrative expenses 21 28,266 57,147

298,740 571,4754.2. Capital work-in-progress

Civil works 5,395 1,739Advances to suppliers and contractors 168,936 43,194Mobilization advance - for purchase of generators

and related equipments 6,869 6,869181,200 51,802

Rs. in ‘000

4.2.1. MovementAdvance forpurchase of

Advances to generatorsuppliers and related

Civil works contractors equipments Total(Rs. in ‘000)

Balance as at July 01, 2011 33,987 72,597 6,869 113,453

Capital expenditure incurred / advances made during the year 71,858 49,548 - 121,406Transfer from advances to suppliers and contractors to civil works 29,524 (29,524) - -Transfer to operating fixed assets (133,630) (49,427) - (183,057)

Balance as at June 30, 2012 1,739 43,194 6,869 51,802

Capital expenditure incurred / advances made during the period 17,586 157,218 - 174,804Transfer to operating fixed assets (13,930) (31,476) - (45,406)

Balance as at December 31, 2012 5,395 168,936 6,869 181,200

Charge Book value Amorti-As at As at As at for the As at as at zation

July 01, December July 01, period / December December rateNote 2012 Additions 31, 2012 2012 year 31, 2012 31, 2012 Percent

Computer software 5.1.1 105,767 - 105,767 68,142 6,841 74,983 30,784 20

Project development cost 37,889 - 37,889 37,889 - 37,889 - 20

December 2012 143,656 - 143,656 106,031 6,841 112,872 30,784June 2012 143,656 - 143,656 92,349 13,682 106,031 37,625

(Rs. in ‘000)

5. INTANGIBLE ASSETSCOST ACCUMULATED AMORTIZATION

5.1.1. Amortisation charge for the period/year has been allocated to terminal operating costs 20 6,841 13,682

6. STORES AND SPARES

Stores 7,636 91,179Spares 341,317 234,460

348,953 325,639

7. TRADE DEBTS - unsecured

Considered good 7.1 & 7.2 219,141 206,418Considered doubtful 1,475 1,475

220,616 207,893Less: Provision for doubtful debts 1,475 1,475

219,141 206,418

Rs. in ‘000

7.1. The aging of unimpaired trade debts at December 31 is as follows:

Neither past due nor impaired 207,932 138,928Past due but not impaired- within 90 days 10,232 63,526- 91 to 180 days 483 3,073- over 180 days 494 891

219,141 206,418

7.2. Includes Rs. 198 thousand (June 30, 2012: Rs. 0.3 million) due from Marine Services (Private) Limitedand Rs. Nil (June 30, 2012: Rs. Nil) due from Premier Mercantile Services (Private) Limited (relatedparties).

7.3. These are non-interest bearing and generally on an average term of 30 days.

8. ADVANCES - unsecured, considered good

- to employees 14,048 11,166 - to suppliers 22,665 49,722

36,713 60,888

9. DEPOSITS AND PREPAYMENTS

Security deposits 9.1 7,467 121,798Prepayments- Insurance 62,488 54,315

- Others 9.2 72,642 8,829142,597 184,942

9.1. Includes Rs. Nil (June 30, 2012: 83.53 million) as security deposits against leased assets. Thesefinance lease facilities have been expired during the period.

9.2. Includes Rs. 65.029 million (June 30, 2012: Nil) as prepayment to KPT against Handling, Marshallingand storage charges.

10. OTHER RECEIVABLES

Accrued profit on term deposits 650 625Accrued profit on certificate of investments 10.1 2,650 3,845Other receivables - considered good 9,183 3,941

12,483 8,411

10.1. Accrued profit on certificate of investments 24,504 22,699Less: Provision for impairment 10.2 21,854 18,854

2,650 3,845

Rs. in ‘000

10.2. Provision for impairment

Opening balance 18,854 2,166Provision for the period / year 3,000 16,688Closing balance 21,854 18,854

11. SHORT TERM INVESTMENTS

Designated at fair value through profit or loss 11.1 597,989 569,208Held to maturity 11.2 16,250 26,250

614,239 595,45811.1. Designated at fair value through profit or loss

11.2. Held to Maturity Investments

Saudi Pak Leasing Company - COI 11.2.1 49,500 52,500Less: Provision for impairment 11.2.2 33,250 26,250

16,250 26,250

11.2.1. Represents investments in Certificates of Investments (COIs) of Saudi Pak Leasing Company (relatedparty), having face value of Rs. 49.5 million (June 30, 2012: Rs.52.5 million) carrying interest at therate of 7 percent (2012: 7 percent) per annum.

Saudi Pak Leasing Company made default in repayment against COIs in August 2009 due to seriousfinancial and liquidity crunch reportedly being faced by it. During the period, the Company hasreceived Rs. 3 million (June 2012: Rs. 3.5 million) against the above investment. However, due touncertainties involved, the Company carries impairment provision in these financial statements, as amatter of prudence.

11.2.2. Movement for provision

Opening balance 26,250 17,750Add: Provision for the period / year 7,000 8,500

Closing balance 33,250 26,250

Listed - Mutual Funds(Open Ended)

1,293,402 1,230,883 ABL Cash Fund 12,339 12,951 11,091 12,3394,297,694 4,015,809 JS Cash Fund 418,246 439,052 374,456 418,246

129,317 123,019 PICIC Income Fund 12,404 13,058 11,070 12,404134,862 129,125 Atlas Money Market Fund 64,892 68,112 58,308 64,892

7,507 6,685 JS - Unit Trust of Pakistan 768 901 662 76840,601 40,601 UTP Large Cap Fund - Class B 2,446 2,887 2,129 2,446

608,594 579,084 UBL Liquidity Plus Fund - Class C 58,113 61,028 52,015 58,113569,208 597,989 509,731 569,208

Unrealised gain on revaluationof investments 28,781 - 59,477 -

597,989 597,989 569,208 569,208

December 31, 2012 June 30, 2012Number of units / shares

Cost Fair value Cost Fair valueDecember 31, June 30,

2012 2012 (Rs. in ‘000)

Rs. in ‘000

12. CASH AND BANK BALANCES

With banks:- in current accounts 248,264 227,843

- in saving accounts 12.1 &12.3 1,174,751 945,351 - in deposit accounts 12.2 100,000 100,000

1,523,015 1,273,194Cash in hand 25,050 14,500

1,548,065 1,287,694

12.1. These carry profit at the rates ranging from 6 to 10.50 percent (June 30, 2012: 6 to 11.95 percent)per annum.

12.2. These carry profit at the rates ranging from 6 to 11.25 percent (June 30, 2012: 10.00 to 12.90 percent)per annum having maturity upto 05 January 2013.

12.3. Included herein pay order of Rs.34.6 million issued in favor of Nazir of High Court of Sindh (note 18.1.2).

13. SHARE CAPITAL

13.1 Authorised capital

182,000,000 182,000,000 Ordinary shares of Rs.10/- each 1,820,000 1,820,00018,000,000 18,000,000 Preference shares of Rs. 10/- each 180,000 180,000

200,000,000 200,000,000 2,000,000 2,000,000

13.2. Issued, subscribed and paid-up capital

Ordinary shares of Rs.10/- each

63,761,200 63,761,200 - fully paid in cash 13.3 637,612 637,61233,352,352 33,352,352 - issued as bonus shares 333,524 333,52412,039,600 12,039,600 - issued for consideration other than cash 13.2.1 120,396 120,396

109,153,152 109,153,152 1,091,532 1,091,532 Preference shares of Rs.10/-

- 18,000,000 each - fully paid in cash 13.2.2 - 180,000109,153,152 127,153,152 1,091,532 1,271,532

13.2.1. Represents shares issued in consideration for mobile harbour cranes, port equipment and a vehicle.

December June December June31, 2012 30, 2012 31, 2012 30, 2012

(Number of shares) (Rs. in ‘000)

December June Note December June31, 2012 30, 2012 31, 2012 30, 2012

(Number of shares) (Rs. in ‘000)

13.2.2. The Board of Directors of the Company, in its meeting held on 30 April 2012, has resolved, in termsof the SECP's approval dated 28 February 2005 vide Clause-(g) of the terms and conditions thereof forissue of 10 percent Redeemable Cumulative Series A Preference Shares to exercise the option to calland redeem the said 18,000,000 shares at Rs. 10/- (par value) along with the pro rata dividend on thesepreference shares on 04 July 2012. Accordingly, as per the provisions of Section 85 of the CompaniesOrdinance, 1984, during the period, the Company has made an equity adjustment in the financialstatements transferring a sum equal to the amount to be applied in redeeming the shares from undistributedreserves to a reserve fund, called “the capital redemption reserve fund” and has dispatched the PreferenceShares Redemption Warrants and the related Pro Rata Dividend Warrants on 05 July 2012.

Rs. in ‘000

13.3. As of balance sheet date, the following are the major shareholders of the Company:

ICTSI - Parent Company (directly & indirectly) (63.59 percent) 69,407,874 -Premier Mercantile Services- Related Party (31.19 percent) 34,041,267 38,544,040

14. LONG-TERM FINANCING - secured

BankFaysal Bank Limited 14.1 1,991,703 2,240,666

Less:- Unamortised transaction costs 9,245 10,567- Current maturity of long-term financing 497,926 497,926

507,171 508,4931,484,532 1,732,173

14.1. This represents a long term local currency loan from a commercial bank for a period of 5 years repayablein 9 equal semi-annual installments commencing from July 2012. This loan carries mark-up at the rateof 6 months' KIBOR + 1.75 percent and is secured against all present and future plant and machinery,tools and equipments. From the proceeds of this local currency loan, the Company has fully paid offthe outstanding foreign currency loans of International Finance Corporation (IFC) and OPEC Fund forInternational Development (OFID) amounting to Rs. 2,356 million on 22 July 2011.

15. DEFERRED TAX LIABILITY

Taxable temporary differencesAccelerated tax depreciation / amortization allowance 1,091,173 1,141,526

Deductible temporary differencesProvision for compensated absences (14,873) (14,724)Provision for doubtful debts (516) (516)Others (2,755) (39,681)

1,073,029 1,086,605

16. STAFF COMPENSATED ABSENCES

Opening balance 42,069 34,928Accrual for the period/year 7,549 8,415Less: Encashments 7,124 1,274

Closing balance 42,494 42,069

December 31, June 30,2012 2012Number of shares

Rs. in ‘000

December 31, June 30,2012 2012

Rs. in ‘000

17. TRADE AND OTHER PAYABLES

Trade creditors 17.1 96,700 132,828

Due to Karachi Port TrustRoyalty 44,724 43,101Wharfage 39,910 43,831Handling and marshalling charges 17.2 & 18.1.2 34,554 34,554

119,188 121,486Accrued expenses

Legal and professional charges 1,910 1,453Salaries and wages 68,989 65,797Others 21,339 890

92,238 68,140Other liabilities

Advances from customers 113,896 42,005Retention money 1,913 4,875Sales tax payable 21,976 45,597Withholding Tax Payable 35 - Workers' Welfare Fund 24,486 45,465Dividend payable 199,127 217,525Preference shares dividend payable 262 - Others 1,544 1,378

363,239 356,845671,365 679,299

17.1. Includes Rs. 18.307 million (June 30, 2012: Rs. 24.585 million) payable to Premier Mercantile Services(Private) Limited - a related party.

17.2. Includes Rs. 34.6 million (June 30, 2012: Rs. 34.6 million) withheld by the Company from handling andmarshalling charges billed by KPT as fully explained in note 20.1.2.

18. CONTINGENCIES AND COMMITMENTS

18.1. Contingencies

18.1.1.During the year ended 30 June 2007, the Trustees of the Port of Karachi filed a civil suit against theCompany in the Honorable High Court of Sindh alleging mis-declaration of the category of goods uponimport of Quayside Container Crane and Rubber Tyred Gantry Cranes in the year 2004 and therebyclaiming a sum of Rs. 101.5 million being additional wharfage charges and Rs. 203 million as penalty,with interest.

As per the legal advisor of the Company “the Honorable High Court of Sindh is at the final stages asthe evidence has been completed. The case is next fixed for orders on the Commissioner's report(concluding evidence) and immediately the matter will proceed to final arguments leading toadjudication. That during arguments the Supreme Court Judgment will be brought for the perusal of theHonorable Court under which the wharfage charges have been held as illegal and without lawfulauthority. The conclusion regarding outcome of the case can be drawn only when the case is fixed forarguments before the Honorable High Court.” Further, the management is confident that there is nomerit in this claim and hence there is remote possibility that he case would be decided against theCompany. Therefore, no provision in respect of above has been made in these financial statements.

Rs. in ‘000

18.1.2. During the year ended 30 June 2007, the Company filed an interpleader civil suit against the DeputyDistrict Officer, Excise and Taxation and the Trustees of the Port of Karachi (KPT) in the HonorableHigh Court of Sindh against the demand raised by the Deputy District Officer, Excise and Taxationunder Section 14 of the Property Tax Act, 1958 to pay the property tax amounting to Rs. 34.6 millionfor the period from 2003 to 2007 out of the rent payable to KPT. The Honorable High Court of Sindhgranted a stay order to Company directing that no coercive action be taken against the Company indue course until the case has been finalized. During the year ended 30 June 2008, the Company haswithheld the amount of Rs. 34.6 million from the handling and marshalling charges billed by KPT forthe period from 01 July 2007 till 31 December 2007, in accordance with the Honorable High Court'sshort order dated 29 June 2007. According to the in-house legal counsel of the Company, there isfull merit in this case and the property tax imposed will be disallowed by the Honorable High Court.In view thereof, no provision for any liability has been made in these financial statements.

18.2. Commitments

18.2.1. Commitments for capital expenditureCivil works 4,935 14,247

18.2.2. Letter of guarantees 86,000 86,000

18.2.3. Letters of credit 5,144 116,241

18.2.4. Handling, Marshalling and Storage charges payable to Karachi Port Trust (KPT)

Not later than one year 133,310 128,444 Later than one year and not later than five years 950,650 758,241 Later five years 677,740 940,044

1,761,700 1,826,729

19. TURNOVER - net

Turnover 3,372,436 3,357,158Less: Discount 11,396 10,023

Federal Excise Duty - 1,665 Sales tax 277,615 2,153

3,083,425 3,343,317

Rs. in ‘000

December 31, December 31,2012 2011

(Audited) (Un-Audited)Rs. in ‘000

20. TERMINAL OPERATING COSTS

Salaries, wages and benefits 20.1 204,998 188,912Contracted labour 23,487 20,816Staff training 481 592Royalty 250,871 262,529Handling and Marshalling charges 65,030 63,721Crane usage charges 613 14,037Stevedoring 350,897 385,464Custom seals 5,044 2,100Stores, spares and other maintenance charges 117,760 169,605Fuel consumed 277,270 325,757Travelling and conveyance 3,351 696Office maintenance 20,798 19,794

Vehicles running expenses 9,341 6,559Insurance 49,142 44,237Printing and stationery 1,954 2,238Utilities 3,334 2,237Depreciation 4.1.2 270,474 245,655Amortisation 5.1.1 6,841 7,591Others 37,638 36,680

1,699,324 1,799,220

20.1. This includes Rs.5.2 (December 31, 2011: Rs. 4.49) million in respect of staff retirement benefits andRs.4.5 (December 31, 2011: Nil) in respect of compensated absences.

21. ADMINISTRATIVE EXPENSES

Salaries, wages and benefits 21.1 124,348 127,789Travelling and conveyance 5,817 3,666Advertising expense 1,538 2,180Auditors' remuneration 21.2 2,862 1,826Legal and professional charges 6,579 8,435Office maintenance 5,917 5,982Vehicles running expenses 7,664 7,312Security expenses 7,299 6,456Insurance expense 1,817 1,628Communication 2,900 2,719Printing and stationery 5,147 5,688Utilities 1,224 1,197Depreciation 4.1.2 28,267 36,590Amortisation 1,321 29,048Fees and subscription 4,702 2,498Entertainment 10,103 10,613Donations 21.3 8,274 17,613Others 6,418 7,799

232,197 279,039

21.1. This includes Rs. 4.023 (December 31, 2011: Rs. 3.837) million in respect of staff retirement benefitsand Rs.3 (December 31, 2011: NIL) in respect of compensated absences.

21.2. Auditors' remuneration

Statutory audit fee 1,450 -Audit fee for reporting pack 300 - Fee for review of compliance with Code of

Corporate Governance and half yearly accounts 150 365Tax, corporate advisory and other services 962 1,461

2,862 1,826

21.3. Includes Rs. 2.749 (December 31, 2011: Rs. 2.326) million paid to Rabia Azeem Trust in which Capt.Haleem A. Siddiqui, Mr. Aasim Azim Siddiqui and Mr. Sharique Azim Siddiqui are Trustees and Rs. 2.052(December 31, 2011: Rs. 3.3) million paid to Organization for Social Development Initiative in whichMr. Aasim Azim Siddiqui and Mr. Sharique Azim Siddiqui are Trustees. Mr. Sharique Azim Siddiqui ceasesto be director of the Company from 19 October 2012. No other directors or their spouseshave any interest in any donee's fund to which donation was made.

22. OTHER OPERATING INCOME

Income from financial assetsProfit on deposit accounts 39,389 81,792Gain on re-measurement of investments

designated at fair value through profit or loss 28,781 30,50268,170 112,294

Income from non financial assetsGain on disposal of fixed assets 4,561 224Liabilities no longer payable written back 758 1,516Others 80 5

5,399 1,745

73,569 114,03923. FINANCE COSTS

Interest on long-term financing 139,665 232,470Financial charges on leased assets 2,086 7,468Bank charges 46 1,277

141,797 241,21524. OTHER CHARGES

Exchange loss - 36,191Workers' Welfare Fund 22,467 22,033Provision for impairment against other receivable 10.2 3,000 -Provision for impairment in the value of investment 11.2.2 7,000 -

32,467 58,22425. TAXATION

Current 375,825 390,495Deferred (14,277) (10,536)Prior 22,009 -

25.1 383,556 379,959

25.1. Relationship between tax expense and accounting profit

Profit before tax 1,051,209 1,079,658

Tax at the applicable tax rate of 35 percent 367,924 377,881

Net effect of income tax provision relating to prior years 22,009 -

Tax effect of others (6,377) 2,078383,556 379,959

Average effective tax rate 36.49% 35.19 %

26. EARNINGS PER SHARE

26.1. Basic earnings per share

Profit after tax 667,653 699,699Preferred dividend on cumulative preference shares - (9,000)Profit after taxation attributable to ordinary shareholders 667,653 690,699Weighted average number of ordinary shares in issue

during the year Numbers 109,153 109,153

Basic earnings per share Rupees 6.12 6.33

26.2. Diluted earnings per share

As of December 31, 2012 there is no Dilutive effect on the basic earnings per share of the Company(June 30 2012: Diluted earnings per share is Rs.11.09)

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The main risks arising from the Company's financial instruments are credit risk, liquidity risk, foreigncurrency risk, interest rate risk and equity price risk. No changes made to the objectives and policiesduring the period ended 31 December 2012. The Board of Directors reviews and agrees policies formanaging each of these risks which are summarised below.

27.1. Credit Risk

Credit risk is the risk which arises with the possibility that one party to a financial instrument will fail todischarge its obligation and cause the other party to incur a financial loss. The Company attempts tocontrol credit risk by monitoring credit exposures, limiting transactions with specific counterparties andcontinually assessing the creditworthiness of counterparties.

Concentrations of credit risk arise when a number of counterparties are engaged in similar businessactivities or have similar economic features that would cause their ability to meet contractual obligationsto be similarly affected by changes in economic, political or other conditions. Concentrations of creditrisk indicate the relative sensitivity of the Company's performance to developments affecting a particularindustry.

The Company is exposed to credit risk on long-term deposits, trade debts, advances, deposits, otherreceivables, investments and bank balances. The Company seeks to minimize the credit risk exposure throughhaving exposures only to customers considered credit worthy and obtaining securities where applicable. Themaximum exposure to credit risk at the reporting date is:

Long-term deposits 675 675Trade debts - unsecured 219,141 206,418Advances - unsecured 36,713 60,888Deposits 142,597 121,798Other receivables - unsecured 12,483 8,411Investments 614,239 595,458Bank balances 1,523,015 1,273,194

2,548,863 2,266,842

Quality of financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by referenceto external credit ratings or the historical information about counter party default rates as shown below:

27.1.1. Trade debts

Customers with no defaults in the past one year - 146,389Customers with some defaults in past one year

which have been fully recovered - 60,029- 206,418

27.1.2. Investments

In Mutual Funds and COIs

Ratings by PACRA5 Star 3,788 3,215AA+(f) 68,112 64,890

71,900 68,105Ratings by JCRA+(f) 13,058 12,405AA+(f) 513,031 488,698D 16,250 26,250

542,339 527,353614,239 595,458

27.1.3. Cash with Banks

A1 978,651 534,120A1+ 544,364 737,996A2 - 1,078

1,523,015 1,273,194

Rs. in ‘000

Carrying Value

Rs. in ‘000

Carrying Value

27.2. Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they falldue. The Company applies the prudent risk management policies by maintaining sufficient cash andbank balances and by keeping committed credit lines. The table below summarises the maturity profileof the Company's financial liabilities at the following reporting dates:

27.3. Foreign Currency Risk

Foreign currency risk is the risk that the value of financial assets or a financial liability will fluctuate dueto a change in a foreign exchange rates. It arises mainly where receivables and payables exist due totransactions in foreign currency.

The following significant exchange rates have been applied at the reporting dates:

Exchange Rates 97.1 94.2

The foreign currency exposure is partly covered as the majority of the Company's billing is determinedin dollars which is converted into rupees at the exchange rate prevailing at the transaction date. Further,the Company has repaid its foreign currency borrowing during the period (see note 14.1). As of thebalance sheet, the Company is not materially exposed to foreign currency risk.

27.4. Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuatebecause of changes in market interest rates. The Company's exposure to the risk of changes in marketinterest rates relates primarily to the Company's long-term debt obligations with floating interest rates.

Sensitivity Analysis:

The following figures demonstrate the sensitivity to a reasonably possible change in interest rate, withall other variables held constant, of the Company's profit before tax:

Rs. in ‘000

Long-term financing - secured - 248,963 248,963 1,493,777 - 1,991,703Liabilities against assets subject to finance lease - - - - - -Trade and other payables 438,160 160,393 1,913 - - 600,466Accrued interest on long - term financing - 127,077 - - - 127,077

438,160 536,433 250,876 1,493,777 - 2,719,246

Long-term financing - secured - 248,963 248,963 1,742,740 - 2,240,666Liabilities against assets subject to finance lease - - 113,485 - - 113,485Trade and other payables 474,107 133,067 4,875 - - 612,049Accrued interest on long - term financing - 140,142 59 - - 140,201

474,107 522,172 367,382 1,742,740 - 3,106,401

Less than 3 to 12Period ended 31, December 2012 On demand 3 months months 1 to 5 years > 5 years Total

(Rs. in ‘000)

Less than 3 to 12Period ended 30, June 2012 On demand 3 months months 1 to 5 years > 5 years Total

(Rs. in ‘000)

December 2012KIBOR +100 (19,825)

KIBOR -100 19,825

June 2012KIBOR +100 (21,360)

KIBOR -100 21,360

Increase / Effect onNote decrease in profit

basis points before taxRs. in ‘000

27.5. Equity price risk

Equity price risk is the risk of loss arising from movements in prices of equity instruments. The Companyis not exposed to any equity price risk, as the Company does not have any investment in equity shares.

27.6. Capital risk management

The primary objective of the Company's capital management is to maintain healthy capital ratios, strongcredit rating and optimal capital structures in order to ensure ample availability of finance for its existingand potential investment projects, to maximise shareholder value and reduce the cost of capital.

The Company manages its capital structure and makes adjustment to it, in light of changes in economicconditions. In order to maintain or adjust the capital structure, the Company may adjust the amount ofdividends paid to shareholders, return capital to shareholders or issue new shares.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus netdebt. Net debt is calculated as total loans and borrowings including any finance cost thereon, trade andother payables, less cash and bank balances and investments. Capital signifies equity as shown in thebalance sheet plus net debt.

The gearing ratios as at 31 December 2012 and June 30, 2012 were as follows:

Long term financing 1,982,458 2,230,099Trade and other payables 671,365 679,299Accrued interest / mark-up on borrowings 127,077 140,202Liabilities against asset subject to finance lease - 113,485Total debt 2,780,900 3,163,085

Less: Cash and bank balances 1,548,065 1,287,694 Short term investments 614,239 595,458

Net debt 618,596 1,279,933

Share capital 1,091,532 1,271,532Unappropriated profit 3,104,122 2,436,469Equity 4,195,645 3,708,001

Capital 4,757,124 4,987,934

Gearing ratio 13.00% 25.66%

The Company finances its investment portfolio through equity, borrowings and management of itsworking capital with a view to maintaining an appropriate mix between various sources of finance tominimise risk.

Rs. in ‘000

27.7. Fair value of financial instruments

The fair value is the amount for which an asset will be exchanged or a liability settled betweenknowledgeable, willing parties at an arm's length. The carrying values of all financial assets and liabilitiesreflected in the financial statements approximate to their fair values.

Fair value hierarchy

The following table shows financial instruments recognised at fair value, analysed between those whosefair value is based on:

Level 1: Quoted prices in active markets for identical assets or liabilities,

Level 2: Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

Level 3: Those whose inputs for the asset or liability that are not based on observable market date (unobservable inputs).

28.2. The Chief Executive, some of directors and executives of the Company are also provided with the useof the Company maintained car, club memberships and medical benefits in accordance with their termsof service.

28.3. The aggregate amount paid to the Directors as a fee for attending the Board of Director's meetingsamount to Rs. 0.218 million (2011: Rs. 0.214 million).

31 December 2012

Investments designated at fair value through profit or loss 597,989 597,989 - -

597,989 597,989 - -30 June 2012

Investments designated at fair value through profit or loss 569,208 569,208 - -

569,208 569,208 - -

28. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

28.1. The aggregate amount, charged in the financial statements for the period/year is as follows:

Financial assets measured at fair valueTotal Level 1 Level 2 Level 3

(Rs. in ‘000)

Remuneration 8,700 26,573 35,870 24,368 79,985 50,115Housing rent 1,740 4,512 7,032 3,189 10,664 12,069Retirement benefits 483 1,362 1,750 886 2,961 2,934Medical Allowance 580 1,635 2,410 1,063 3,555 4,023Utilities 580 1,635 2,410 1,063 3,555 4,023Conveyance 196 695 1,078 317 1,786 2,028

12,279 36,412 50,550 30,886 102,506 75,192

Number 1 4 47 1 4 44

Chief ChiefExecutive Directors Executives Executive Directors Executives

(Rs. in ‘000)

December 31, 2012 June 30, 2012

29. RELATED PARTY TRANSACTIONS

The related parties include Parent Company, major shareholders, entities having directors in commonwith the Company, directors, staff retirement fund and other key management personnel. Transactionswith related parties, other than remuneration and benefits to key management personnel under theterms of their employment and transactions with such related parties reflected elsewhere in thesefinancial statements, are as under:

Major ShareholdersPremier Mercantile Services (Private) Limited

Stevedoring charges 274,529 288,400Storage charges 10,379 15,153Equipment charges - 13,800

Entities having directors in common with the CompanyPremier Software (Private) Limited Software maintenance charges 1,800 1,800

Marine Services (Private) Limited Revenue from container handling 3,568 12,333

Port Link International (Private) LimitedRevenue from container handling 4,972 3,180

AMI Pakistan (Private) LimitedRevenue from container handling 3,245 1,005

Travel Club (Private) Limited Traveling expenses 5,968 3,445

Rabia Azeem TrustDonation 2,749 2,326

Organization for Social Development InitiativeDonation 2,052 3,300

Pakistan International Bulk Terminal Limited WDV of sale of vehicles 16,230 -

Staff retirement contribution planContribution to staff provident fund 9,262 8,327

29.1. Balances outstanding with related parties have been disclosed in the respective notes to these financialstatements.

30. CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 1,051,209 1,079,658Adjustments for non-cash items:

Depreciation 298,740 282,244Amortisation 8,162 36,639Accrual for staff compensated absences 7,549 -Finance costs 141,751 241,215Unrealised exchange loss - 36,191Unrealised gain on investment (28,781) (30,501)Interest income (39,389) (81,792)Gain on disposal of fixed assets (4,561) (224)Impairment 10,000 -Liabilities no longer payable (758) -

392,713 483,772Operating profit before working capital changes 1,443,922 1,563,430

(Increase)/decrease in current assetsStores and spares (23,314) 29,085Trade debts (12,723) (122,060)Advances, deposits, prepayments and other receivables 62,448 (148,405)

26,411 (241,380)1,470,333 1,322,050

Increase/(decrease) in current liabilitiesTrade payables and other liabilities 13,552 (49,085)

Cash generated from operations 1,483,885 1,272,965

31. DATE OF AUTHORISATION FOR ISSUE

These financial statements have been authorised for issue by the Board of Directors of the Companyon February 26, 2013.

32. NON ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE

32.1 Dividends and Appropriations

The Board of Directors in their board meeting held on 24 January 2013 have recommended an interimcash dividend of Rs. 12.50 per ordinary share amounting to Rs. 1,364.414 million for the year ending31 December 2013 (30 June 2012: Cash Dividend Rs. Nil; Preference pro-rata Dividend Re. 1 - 10%).Dividend warrants in this respect has been dispatched to the sharehoders of the company on 19 February2013. The Companies Ordinance, 1984 requires that events subsequent to the balance sheet dateincluding declaration of dividend should be incorporated in the year it is declared. Therefore, the interimcash dividend on ordinary shares declared by the directors in the meeting held on 24 January 2013 shallbe incorporated in the financial statements for the year ending 31 December 2013.

33. EXEMPTION FROM APPLICABILITY OF IFRIC - 12 “SERVICE CONCESSION ARRANGEMENTS”

As explained in note 2.1, the required mandatory disclosure is as follows:

Under IFRIC-12, the consideration required to be made by operator (the Company) for the right to usethe asset is to be accounted for as an intangible asset under IAS - 38 “Intangible Assets”. If theCompany were to follow IFRIC-12, the effect on the financial statements would be as follows:

Reclassification from property, plant and equipment (including CWIP) to intangible assets (Port Concession Rights) - written down value 3,042,978 3,007,112

Reclassification from spares to intangible assets 175,025 183,431

Recognition of intangible assets (Port Concession

Rights) on account of handling and marshalling charges (HMS) 833,697 873,738

Recognition of present value of concession liability on account of intangibles (HMS) 1,283,875 1,233,129

Interest expense charged for the period / year on account of intangibles (HMS) 36,392 74,963

Amortisation expense charged for the period / year on account of intangibles (HMS) 40,042 79,431

Increase in profit before tax for the period / year onaccount of reversal of handling and marshalling charges 64,222 125,371

34. GENERAL

34.1. There were no material reclassifications that could affect the financial statements materially.

34.2. Amounts have been rounded off to the nearest thousand rupees unless otherwise stated.

34.3. Terminal maximum handling capacity in a year is 750,000 TeUs. Actual TeUs for six months 266,123TeUs (December 31, 2011: 310,803 TeUs)

Rs. in ‘000

As at December 31, 2012

Pattern of Shareholding

NUMBER OFSHAREHOLDERS

TOTALSHARES HELD

SHAREHOLDING

FROM TO

1037 1 100 17,012

429 101 500 92,768

797 501 1000 606,985

180 1001 5000 389,086

18 5001 10000 136,675

5 10001 15000 62,060

4 15001 20000 65,954

2 25001 30000 59,420

1 35001 40000 39,600

2 40001 45000 88,200

1 70001 75000 71,663

1 85001 90000 85,500

1 95001 100000 99,482

1 100001 105000 101,100

1 115001 120000 116,000

1 265001 270000 265,423

1 395001 400000 400,000

1 765001 770000 770,000

1 2235001 2240000 2,235,083

1 17155001 17160000 17,155,639

1 34040001 34045000 34,041,267

1 52250001 52255000 52,254,235

2,487 109,153,152

CATEGORIES OF NUMBER OF TOTAL PERCENTAGESHAREHOLDERS SHAREHOLDERS SHARES HELD

INDIVIDUALS 2437 36,048,605 33.03INSURANCE COMPANY 1 854 0.00FINANCIAL INSTITUTIONS 2 4,908 0.00MODARABA AND MUTUAL FUNDS 5 17,444 0.02FOREIGN INVESTORS 6 72,415,837 66.34OTHERS: 36 665,504 0.61

2,487 109,153,152 100.00

As at December 31, 2012

Pattern of Shareholding

CATEGORIES OF NUMBER OF NUMBER OF PERCENTAGESHAREHOLDERS SHAREHOLDERS SHARES HELD

Associated Companies, undertakings and 31.19related partiesPremier Mercantile Services (Pvt.) Ltd. 1 34,041,267

NIT and ICP Investment Companies - -

Directors, CEO and their spouseand minor children 0.00Capt. Haleem A.Siddiqui 1 500 Enrique K.Razon, Jr. 1 100Aasim A.Siddiqui 1 4,500 Edgardo Q. Abesamis 1 100 Jose Manual De Jesus 1 100 Paul T. Salanga 1 100

Executives 0.09Salim A. Siddiqui 1 101,100 Arsalan Iftikhar Khan 1 2,000

Public Sector Companies and Corporations - -

Banks, DFI's, NBFI's, Insurance Companies, 8 23,226 0.02Modarabas and Mutual Funds

Joint Stock Companies, Investment Companies

Foreign Investors and Others 42 73,081,341 66.95

Individuals 2428 1,898,818 1.74

TOTAL 2487 109,153,152 100

Shareholders holding 10% or more voting interest

ICTSI Mauritius Ltd. 1 52,258,443 47.88Premier Mercantile Services (Pvt.) Ltd. 1 34,041,267 31.19Aeolina Investments Ltd. 1 17,155,639 15.72

Details of Purchase/Sale of Shares ByDirectors, CEO, CFO, Company Secretary and their spousesor Minor Children during Period Ended December 31, 2012

Capt. Haleem A. Siddiqui Sale 19.10.2012 7,286,822 Rs. 150/-Purchase 30.10.2012 500 Rs. 150/-

Aasim Azim Siddiqui Sale 19.10.2012 1,179,145 Rs. 150/-Purchase 30.10.2012 500 Rs. 151/-

Enrique K. Razon, Jr. Purchase 19.10.2012 100 Rs. 150/-Edgardo Q. Abesamis Purchase 19.10.2012 100 Rs. 150/-Paul T. Salanga Purchase 19.10.2012 100 Rs. 150/-Jose Manuel M. De Jesus Purchase 19.10.2012 100 Rs. 150/-Saba Haleem Sale 19.10.2012 667,711 Rs. 150/-Sharique Azim Siddiqui Sale 19.10.2012 1,105,636 Rs. 150/-

Name Date of Purchase/Sale Number of Shares Rate

Form of Proxy

The Company SecretaryPakistan International Container Terminal LimitedBerths 6 to 9, East Wharf,Karachi Port, Karachi

I/We, of being

member of Pakistan International Container Terminal Limited and holder of Ordinary

Shares as per Share Register Folio No. and/or CDC Participant I. D. N o. hereby appoint

Mr./Mrs./Miss of (full address) as my/us proxy to attend, speak and vote for

me/us and on my/our behalf at the 12th Annual General Meeting of the Company to be held on April 11, 2013 and

at any adjournment thereof.

Signed this day of 2013

Witnesses:

1. NameAddressCNIC No.Signature

2. NameAddressCNIC No.Signature

Notes:

1. A member entitled to attend and vote at the meeting may appoint another member as his/her proxy who shallhave such rights as respects attending, speaking and voting at the meeting as are available to a member.

2. The proxy in order to be valid must be signed across Five Rupees Revenue Stamp and should be depositedwith the Company not later than 48 hours before the time of holding the Meeting.

3. The proxy shall authenticate his/her identity by showing his/her original CNIC or original passport and bring folionumber at the time of attending the meeting.

4. Signature should agree with the specimen signature registered with the Company.

5. CDC shareholders and their Proxies must attach either an attested photocopy of their Computerized NationalIdentity Card or Passport with this Proxy Form.

6. In case of proxy by a corporate entity, Board of Directors resolution/power of attorney with specimen signatureand attested copies of CNIC or Passport of the proxy shall be submitted along with the proxy form.

Signature onRs. 5/-

RevenueStamp

Pakistan InternationalContainer Terminal Limited

Registered and Terminal Office:Berths 6 to 9, East Wharf, Karachi Port, Karachi - Pakistan. UAN: (+9221) 111 11 PICT (7428) Fax: (+9221) 32855715Email: info@pict.com.pk Website: www.pict.com.pk

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