Page 229 - Interloop Annual Report 2018-2019

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

The following significant exchange rates were applied during the year : Loans and advances consist of loans to employees & director and Metis International (Pvt) Ltd. Loans to employees and director are secured against
their retirement benefits and loan to Metis International is also secured through an irrevocable lien/charge on total assets of the Metis International
(Pvt) Limited. Therefore, Company is not exposed to any significant credit risk on these loans.
2019 2018
Foreign Currency
Average Rate Reporting Date Rate Average Rate Reporting Date Rate Long term deposits have been mainly placed with suppliers of electricity, gas and telecommunication services and against rent of factory building.
Considering the financial position and credit quality of the institutions and counter parties, Company’s exposure to credit risk is not significant.
[ R U P E E S ] [ R U P E E S ]
US $ 142.70 164.00 113.10 121.40 Trade debts amounting to Rs. 4,277 million out of total debts are secured against letters of credit and insured contract. Furthermore, credit quality
of customers is assessed taking into consideration their financial position and previous dealings and on that basis, individual credit limits are set.
EUR 163.85 186.37 130.62 141.33 Moreover, the management regularly monitors and reviews customers’ credit exposure. Accordingly, the company is not exposed to any significant
GBP £ 183.80 208.45 147.78 159.14 credit risk.
CHF 145.07 168.03 115.83 122.11 Other receivables constitute mainly receivables from the related parties and mark up subsidy from banks. Considering the financial position of
related parties and credit quality of banks and insurance company exposure to credit risk is not significant.
CNY 21.29 23.85 - -
JPY ¥ 1.31 1.53 1.02 1.10 Short term investments are investments in mutual funds, TDRs and sales tax refund bonds. The credit risk on these investments is limited because
counter parties are fund management Companies, banks and Government with reasonably high credit ratings. The credit quality of mutual funds
Currency rate sensitivity analysis can be assessed by reference to external credit ratings or to historical information about counter party default rate.
If the functional currency, at reporting date, had weakened by 10% against the foreign currencies with all other variables held constant, the profit 2019 2018
before taxation would have increased for the year 2019 and 2018 by the following amounts:
Credit Ratings
Foreign Currency 2019 2018 Al Meezan Investment Management Limited
Rupees in ‘000 NBP Fund Management Limited AM1 AM1
Alfalah GHP Investment Management Limited AM1 AM1
UBL Fund Managers Limited AM2+ AM2+
US $ 746,684 662,390 AM1 AM1
EUR (2,019) (1,142)
CNY (2) -
CHF (7) (4) The credit quality of Company’s bank balances can be assessed by reference to external credit ratings or to historical information about counterparty
744,655 661,244 default rate:
A 10% strengthening of the functional currency against foreign currencies at June 30 would have had the equal but opposite effect of these amounts. Name of Bank Date Long term Short term Outlook Agency
Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. The analysis assumes that all other variables Allied Bank Limited 27-Jun-19 AAA A1+ Stable PACRA
remained constant. Askari Bank Limited 28-Jun-19 AA+ A1+ Stable PACRA
Bank Alfalah Limited 28-Jun-19 AA+ A1+ Stable PACRA
51.1.3 Other price risk: Burj Bank Limited 28-Jun-19 A A1 Stable PACRA
Dubai Islamic Bank Pakistan Limited 28-Jun-19 AA A-1+ Stable JCR-VIS
Price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices Faysal Bank Limited 27-Jun-19 AA A1+ Stable PACRA
(other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial Habib Bank Limited 28-Jun-19 AAA A-1+ Stable JCR-VIS
instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is exposed to price risk, because of Habib Metropolitan Bank Limited 27-Jun-19 AA+ A1+ Stable PACRA
the investments held by the Company in money market mutual funds, and classified on the balance sheet as fair value through profit and loss. To MCB Bank Limited 27-Jun-19 AAA A1+ Stable PACRA
manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. MCB Islamic Bank Limited 27-Jun-19 A A1 Stable PACRA
Meezan Bank Limited 28-Jun-19 AA+ A-1+ Stable JCR-VIS
Short term investments include fair value through profit and loss investments of Rs. 130.90 million (2018: Rs. 147.43 million) which were subject to National Bank of Pakistan 28-Jun-19 AAA A1+ Stable PACRA
price risk. Silk Bank Limited 27-Jun-19 A- A-2 Stable JCR-VIS
Standard Chartered Bank Pakistan Limited 25-Jun-19 AAA A1+ Stable PACRA
If redemption price on mutual funds, at the year end date, fluctuate by 5% higher / lower with all other variables held constant, profit after tax for the The Bank of Punjab 28-Jun-18 AA A1+ Stable PACRA
year would have been Rs. 6,218 thousand (2018: 7,003 thousand) higher / lower, mainly as a result of higher / lower redemption price on units of United Bank Limited 28-Jun-18 AAA A-1+ Stable JCR-VIS
mutual funds.
Due to Company’s long standing relationships with these counterparties and after giving due consideration to their strong financial standing, man-
51.2 Credit risk: agement does not expect non-performance by these counter parties on their obligations to the Company. Accordingly, the risk is minimal.
Credit risk is the risk representing accounting loss that would be recognized at the reporting date if one party to a financial instrument will fail 51.3 Liquidity risk
to discharge an obligation or its failure to perform duties under the contract as contracted. Concentration of credit risk arises when a number
of counterparties are engaged in similar business activities or have similar economic features that would cause their ability to meet contractual Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
obligations that is susceptible to changes in economic, political or other conditions. Concentration of credit risk indicates the relative sensitivity of
the Company’s performance to developments affecting a particular industry. The maximum exposure to credit risk at the reporting date is as follows :
The company’s approach to manage liquidity risk is to maintain sufficient level of liquidity by holding highly liquid assets and the availability of fund-
ing through an adequate amount of committed credit facilities. At June 30, 2019 the Company has Rs. 13,394.26 million (2018: Rs 4,381.563 million)
Long term loans unutilized borrowing limits available from financial institutions and Rs. 1,544.674 million (2018: Rs. 195.939 million) cash and bank balances. The
Long term deposits 73,262 60,747 management believes that the company is not exposed to any liquidity risk.
Trade debts 33,120 24,817
Loans and advances 8,274,062 7,293,008 The following are the contractual maturity analysis of financial liabilities as at June 30, 2019 and 2018: 2018 - 19
Other receivables
66,343
81,163
Interloop Limited Short term investments 11,263,529 7,937,728 Annual Report
146,680
94,421
1,207,251
Bank balances
147,425
183,888
1,515,070
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