———————————————————————————-

HALLMARK COMPANY LIMITED

(FORMERLY HALLMARK INSURANCE COMPANY LIMITED)

ANNUAL REPORT
———————————————————————————-

FOR THE YEAR ENDED

DECEMBER 31, 2016
TABLE OF CONTENTS

Contents Page No.

Vision - Mission Statement 2

Company Information 3

Notice of Annual General Meeting 4

Directors Report to Members 6

Pattern of Shareholding 10

Key Financial Data for the Last Six Years 12

Statement of Compliance with Code of Corporate Governance 13

Review Report to the Members on Statement of Compliance

16
With Best Practices of Code of Corporate Governance

Auditors’ Report to the Members 18

Balance Sheet 20

Profit and Loss Account 21

Statement of Comprehensive Income 22

Statement of Cash Flow 23

Statement of Changes in Equity 24

Notes to the Financial Statements 25

Form of proxy 34

Page 1
 VISION - MISSION STATEMENT

VISION

Our vision is to be the state of the art supplier of I.T. products and (I.T.) related services in the
market and to be a quality service oriented Company for the customers, shareholders and
employees. To achieve this we will be driven by an obsession even we are better than make
ourselves be the best not focusing on destination but make a continuous onward journey.

Quality service means a sustained commitment to meet and exceed stakeholder

expectations. A will to go the “Mile & Miles” to delight our customers with products and
services that exceed their expectations.

MISSION

The company aims to become one of the leading supplier of I.T related products and services
in the market through commitment to providing products and services that best suits needs of
our customers. We will manage our affairs through modern technology, collective wisdom and
institutionalized leadership and as result achieves zero defects in everything we do.

We will do good business, with good clients and of the highest integrity. We will not
compromise our principles and we will like to be known as a responsible corporate citizen
aware of our obligation to the Government, religion and the society we serve.

Page 2
COMPANY INFORMATION

Chairman
S. Muhammad Imran

Chief Executive
Mr. Muhammad Farrukh Bashir

Directors
Muhammad Farrukh Bashir
Saad Aftab Shamsi
Haris A. Shamsi – Non executive
Ahtesham Ashraf - Non executive
Naveed Hamid – Non executive
S. Muhammad Imran – Non executive
Zubair Ahmed Khan – Independent director

Audit Committee
Zubair Ahmed Khan Chairman and Member
Naveed Hamid Member
Haris A. Shamsi Member

HR Committee
Zubair Ahmed Khan Chairman and Member
Naveed Hamid Member
Ahtesham Ashraf Member

External Auditors
M/s. Muneef Ziauddin& Co.
Chartered Accountants

Legal Advisor
Sayeed A. Sheikh & Co., Advocates

Registrar
M/s. F.D. Registrar Services (SMC-Private) Limited

Bankers
Habib Bank Limited
National Bank of Pakistan
Muslim Commercial Bank Limited

OFFICE OF THE COMPANY

Registered Office Karachi
Suite # 1001, Uni Centre, 10th Floor,
I.I. Chundrigar Road,
Karachi. Pakistan.
Phone: 021-32414419, 37011105
Fax: 021-32416288
Email: [email protected]

Page 3
NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 36th Annual General Meeting of the Shareholders of Hallmark
Company Limited (Formerly Hallmark Insurance Company Limited) will be held on, Saturday April
29, 2017 at 12:00 P.M. at the Registered Office of the Company at Office # 1001, Uni Centre, 10th
Floor, I.I. Chundrigar Road, Karachi to transact the following business:

ORDINARY BUSINESS

1. To confirm the minutes of 35th Annual General Meeting held on April 30, 2016.
2. To receive, consider and adopt the Audited Financial Statements of the Company for the
year ended on December 31, 2016 together with the Directors’ and Auditors’ Reports
thereon.
3. To appoint Auditors for the year 2017 and fix their remuneration.
4. To transact any other business with the permission of the Chairman.

By Order of the Board

_________________________
SECRETARY
Karachi: April 07, 2017

Page 4
NOTES:

1. A member entitled to attend and vote at the Annual General Meeting may appoint another
member as his/her proxy to attend, speak and vote instead of him/her.

2. The Share Transfer Books of the Company will be closed from April 22, 2017 to April 29, 2017
(both days inclusive). Transfers received in order by our Shares Registrar, F. D. Registrar
Services (SMC-Private) Limited, 11th Floor, Trade Centre, I.I. Chundrigar Road, Karachi at the
close of business on April 22, 2017 will be considered in time to attend and vote at the
meeting and for the entitlement of Dividend (if any).

3. Forms of proxy, in order to be valid must be properly filled-in/executed and received at the
registered office of the Company not later than 48 hours before the time of the meeting.

4. Members are requested to notify Share Registrar of the Company promptly of any change in
their addresses.

5. Pursuant to the directive of the Securities & Exchange Commission of Pakistan (SECP), CNIC
numbers of shareholders are mandatorily required to be mentioned on dividend warrants.
Shareholders are therefore requested to submit a copy of their CNIC (if not already provided)
to the Share Registrar.

6. Members can also avail video conference facility in (name of cities where facility can be
provided keeping in view geographical dispersal of members). In this regard, please fill the
following and submit to registered address of the Company 10 days before holding of the
Annual General Meeting.

“I/We, ____________________ of _____________, being a member of Hallmark Company Limited,

holder of __________ ordinary share(s) as per registered Folio No. ______ hereby opt for video
conference facility at _____________.”

7. Pursuant to Notification vide SRO.43 (1)/2016 of January 22, 2016, the SECP has directed to
facilitate the members of the company for e-voting if the Company receives demand for poll
from at least five (5) members or by any member or members having not less than one tenth
of the voting power. In this regard, please fill the following and submit to registered address of
the Company 10 days before holding of the Annual General Meeting.

“I/We, ____________________ of _____________, being a member of Hallmark Company Limited,

holder of __________ ordinary share(s) as per registered Folio No. ______ hereby opt for e-
voting through Intermediary and hereby consent the appointment of execution officer as
proxy and will exercise e-voting as per the Companies (e-voting) Regulations, 2016 and
hereby demand for poll for resolutions.

My secured email address is _______________, please send login details, password and
electronic signature through email.”

8. Form of Proxy is enclosed with annual report.

Page 5
DIRECTORS REPORT TO THE MEMBERS

The Directors of the Company are pleased to present the 36thAnnual Report of the Company
for the year ended December 31, 2016.

Company’s Performance

During the year the Company has recorded a profit of Rs. 637,833. The profit resulted from the
rental income earned on investment property amounting to Rs. 450,000 during the year and
writing off of liability which is not expected to be claimed.

The Company was engaged in general insurance business comprising of fire, marine, motor,
engineering etc. With the promulgation of the Insurance Ordinance 2000, the requirement of
minimum paid up capital for an insurer to operate as an insurance company has been enhanced
to Rs. 350 million which is now Rs. 500 million as at Dec 31, 2016. The Company does not find itself in
a position to increase its paid up capital to the required minimum level and has ceased to
underwrite insurance business w.e.f. January 01, 2003.

Subsequently in the Annual General Meeting held on April 30, 2016, in which the Members have
resolved that they are not interested to inject the above mentioned huge amount of required
minimum paid up capital. Therefore, the Members and Directors decided in the meeting to
surrender the insurance license before the Insurance Division and remove the Company’s name
from the insurance ambit and in this respect, members of the Company have passed a resolution
to diversify the nature of business instead of Insurance business. The nature of the new business will
be trading subject to the approval of the Securities and Exchange Commission of Pakistan.

With our best efforts the company has now officially exit from the insurance ambit as the insurance
license of the company has been revoked by the SECP Insurance Division through
S.R.O.1079(I)/2016 dated 22 November, 2016 in pursuant to sub section (1) of Section 10 of the
Insurance Ordinance, 2000 (XXXIX of 2000).

Subsequent to year end the proposed principal business activity together with change of name
have been approved by SECP through issue of order to grant permission for alteration in
Memorandum and issuing amended certificate of incorporation to the company. As the company
is no more an insurance company therefore for change of year end from December to June has
been applied to SECP and its approval is in process and shall be granted shortly. Therefore as
special case our accounts of financial year 2017 shall be prepared for June 30, 2017 consisting of
activities for six months period ended and financial position as at June 30, 2017.

From now our business activity is to engage in trading of computer and allied I.T. equipments,
development and sale of software and provision of allied services. Based on the current growth
rate and profit margin in I.T. sector we are in expectation that new business shall recover the
Company from accumulated losses with average growth rate of 20%. Initially the finance shall be
arranged by the directors to commence activities of new business and within tenure of 3 years
total assets of the company shall exceeds Rs. 10.00 million and our current ratio shall be 2:1 also the
accumulated losses would be completely aired.

Page 6
Auditors Observations

In auditors’ report to the members of the Company, auditors have changed their disclaimer and
now auditors opinion of true and fair presentation is subject to only two observation which relate to
valuation of property and dormant bank accounts. Point wise justifications are as follows;

i- The property value has increasing trend in overall Sindh also the market value of the said
property is approximate to Rs. 1,800,000 however as the company was dormant and
revaluation cost would be an additional burden on the company therefore it was not
carried and consequently no report was available. We intend to revalue the property in
financial year 2017.

ii- We have just received the approval of new business therefore now we shall manage to
revive the bank accounts and shall provide required information in subsequent year to
resolve this observation too.

Chief Executive

Subsequent to year end chief executive Mr. Muhammad Adil has resigned due to some other
professional compulsions. He was holding the office since 2010 and successfully managed its affairs
and has continued to improve performances at our company which are essential for our future
growth. We wish him well in his future endeavor.

To fill the vacancy we have appointed Mr. Muhammad Farrukh Bashir as new Chief Executive. He is
remained with us since 2010 and has all the skills and abilities to match with the office of the Chief
Executive.

Appointment of Director

Subsequent to year end due to the resign of Mr. Muhammad Adil a casual vacancy has arisen
which is filled by a new director Mr. Zubair Ahmed Khan for remaining tenure of the resigning
director.

Auditors

The present Auditors M/s. Muniff Ziuddin & Co. Chartered Accountants shall retire, and eligible to
continue as Auditors of the Company. The retiring auditors have completed the term of 5 years
and as per Code of Corporate Governance, 2012 we need to change the engagement partner
for next year. Instead of only changing the engagement partner, on the suggestion of Audit
Committee we intend to change the audit firm and as suggested by the Audit Committee the
Board has recommended M/s S. M. Suhail and Co. Chartered Accountants for appointment as
Auditors of the Company for the ensuing year.

Compliance with the Code of Corporate Governance

The requirement of the Code of Corporate Governance set out by the Pakistan Stock Exchange in
its Listing Regulation, relevant for the year ended December 31, 2016 have mostly been complied
with. A statement to this effect is annexed with the report.

Page 7
Statement of Ethics and Business Practices

The Board has adopted the statement of Ethics and Business Practices; wherever practicable and
shall implement on revival of the Company.
Enlistment with CDC

The Company has complied with all the necessary requirements for induction of its Securities with
the Central Depository Company Limited (CDC) however due to Non-issuance of Insurance license
previously; the CDC has suspended the Company from CDS. The Directors of the Company have
communicated to CDC of revocation of insurance license and now hopeful that the securities will
be enlisted with the CDC amicably soon.

Audit Committee

During the year under review, the Board is also governing an Audit Committee comprising of the
following members:

Zubair Ahmed Khan Chairman and Member

Naveed Hamid Member
Haris A. Shamsi Member

Corporate and Financial Reporting Framework

a) The financial statements prepared by the management of the Company present fairly its
financial position, the result of its operations, cash flow and changes in equity.

b) Proper books of accounts have been maintained by the Company.

c) Appropriate accounting policies have been consistently applied in preparation of financial

statements and accounting estimates are based on reasonable and prudent judgment.

d) The International Accounting and Financial Reporting Standards, as applicable to the

Company in Pakistan have been followed in preparation of these financial statements.

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

f) There is no doubt upon the Company’s ability to continue as a going concern.

g) There has been no material departure from the best practices of Corporate Governance, as
detailed in the listing regulations.

h) The key operating and financial data for the last six years is annexed herewith.

i) There is no trading of shares by Chief Executive, Directors their spouses and minor children
during the year under report.

j) During the year four meetings of the Board of directors were held and the number of
meetings attended by each director is given hereunder:

Page 8
 NAME OF DIRECTOR MEETINGS ATTENDED

Mr. Muhammad Adil 4

Mr. Muhammad Farrukh Bashir 4

Mr. Saad A. Shamsi 3

Mr. Haris A. Shamsi 3

Mr. Ahtesham Ashraf 2

Mr. Naveed Hamid 4

Mr. S Muhammad Imran 4

k) The statement of pattern of shareholding in the Company as at December 31, 2016 is

included with the report.

l) Due to no substantial activities undertaken during the year, Company is not in position now to
declare any dividend.

Acknowledgements

The Directors of the Company are grateful to all Government institutions, Auditors, SECP for their
valuable support and cooperation throughout the year. The Directors thank the Company’s
management and supporting staff for their satisfactory performance and devotion to duty.

____________________
Mr. Muhammad Farrukh Bashir
Chief Executive

Page 9
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
Pattern of Shareholding as at December 31, 2016

Number of Shareholding Number of

Shareholders From To Shares Held

193 1 - 100 19,300

94 101 - 500 29,270

18 501 - 1000 14,600

30 1001 - 5000 79,110

5 5001 - 10000 33,320

1 15001 - 20000 16,500

3 20001 - 25000 66,000

1 25001 - 30000 26,000

1 30001 - 35000 35,000

1 35001 - 40000 39,400

1 40001 - 45000 43,000

2 45001 - 50000 98,500

350 500,000

Categories of Shareholders

Number of Number of Percentage

S.No. Shareholder's Category
Shareholders Shares %
1 Directors /Chief Executive Office 7 231,900 46.38
2 Individuals 341 267,800 53.56
3 NIT & ICP 1 200 0.04
4 Others 1 100 0.02
350 500,000 100.00

Page 10
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
Pattern of Shareholding under Code of Corporate Governance
As at December 31, 2016
Number of Number of Category Wise Percentage
S. No. Shareholder's Category
Shareholders Shares Held No. of Shares %

1 Directors/Chief Executive Office 7 218,500 43.7

Mr. Muhammad Adil 48,500
Mr. Muhammad Farrukh Bashir 43,000
Mr. Haris A. Shamsi 21,500
Mr. Saad A. Shamsi 24,000
Mr. Ahtesham Ashraf 20,500
Naveed Hamid 26,000
Mr. S. M. Imran 35,000

Banks, DFIs, NBFIs, Insurance,

2 Modarabas, Mutual Funds & 2 300 0.06
Others.

Investment Corporation of Pakistan 200

Karachi Investment Trust Limited 100

Shareholders holding 5% or more voting rights

Total Paid up Capital 500,000 Shares

5% of the Paid Up Capital 25,000 Shares
Holding %
Mr. Muhammad Adil 48,500 9.7
Mr. Muhammad Farrukh Bashir 43,000 8.6
Mr. Humayun Sayeed 39,400 7.9
Mr. S. M. Imran 35,000 7.0
Naveed Hamid 26,000 5.2

Page 11
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)

KEY FINANCIAL DATA FOR LAST SIX YEARS

December, December, December, December, December, December,

2011 2012 2013 2014 2015 2016

Other income - - 353,639 300,000 300,000 1,898,238

General and administration expenses (143,110) (119,550) (115,000) (144,192) (125,000) (1,260,405)
Profit before taxation (143,110) (119,550) 238,639 155,808 175,000 637,833
Taxation - net - - - - - -
Profit after taxation (143,110) (119,550) 238,639 155,808 175,000 637,833
Earning per share (0.29) (0.24) 0.48 0.31 0.35 1.28

Shareholders equity (28,425) (147,976) 90,663 246,471 421,471 1,059,304

Property - - 800,000 800,000 800,000 800,000

Cash and bank balances 141,679 141,679 127,373 212,373 487,373 192,691

Total debt 227,379 2,677,379 500,000 500,000 500,000 750,000

Total Assets at book value 2,198,255 4,648,255 2,824,515 2,990,323 3,165,323 2,318,164

Page 12
STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

This statement is being presented to comply with the Code of Corporate Governance
contained in the listing regulations of Pakistan 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 Company encourages representation of independent non-executive Directors on its

Board. At present the Board includes;

Independent director
Zubair Ahmed Khan

Executive directors
Muhammad Farrukh Bashir
Saad Aftab Shamsi

Non executive directors

Haris A. Shamsi
Ahtesham Ashraf
Naveed Hamid
S. Muhammad Imran

The independent directors meet the criteria of independence under clause 5.19.1 (b) of the
CCG.

2. The Directors have confirmed that none of them is serving as a Director in more than
seven listed companies including this Company.

3. 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.

4. During the year no casual vacancy has occurred in the Board of Directors.

5. The ‘Code of Conduct’ has to be drawn up on revival of the Company’s business as per
requirements of current rules and regulations and has been taken to disseminate it
throughout the company along with its supporting policies and procedures.

6. The board has developed a vision / mission statement, but not yet develop overall
corporate strategy and significant policies of the Company except risk management,
write off of bad debts, acquisition and disposal of fixed assets, investment.

7. All the powers of the Board have been duly exercised and decision on material
transactions including appointment and determination of remuneration and terms and
conditions of employment of the CEO and other Executive and Non Executive Directors
have been taken by the Shareholders.

Page 13
8. The meetings of the Board were presided over by the Chairman 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.

9. The Board has to start the process of orientation for its Directors to apprise them of their
duties and responsibilities on revival of the Company.

10. There was no appointment of CFO or head of Internal Audit during the year, as the
operations were remain suspended.

11. 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.

12. The financial statements of the Company were duly endorsed by Chief Accountant and
CEO before approval of the Board.

13. The Director, CEO and Executives do not hold any interest in the shares of the Company
other than that disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements
of the Code.

15. The Board has formed an Audit Committee it comprises of 3 members, of whom all are
non executive and chairman of the committee is an independent director.

16. The meeting of the audit committee were held at least once every quarter prior to
approval of interim and final results of the company and as required by the CCG. The
terms of reference of the committee have been formed and advised to the committee
for compliance.

17. The Board has formed an HR and Remuneration Committee. It comprises of 3 members,
of whom 2 are non executive directors and the chairman of the committee is an
independent director.

18. The Board has setup an effective internal audit function.

19. The statutory auditors of the Company have confirmed that they have been given a
satisfactory rating under the quality control review program of the Institute of Chartered
Accountants of Pakistan, that they or any of the partners of the firm, their spouses and
minor children do not hold shares of the Company and that the firm and all its partners
are in compliance with International Federation of Accountants of (IFAC) guidelines on
code of ethics as adopted by institute of Chartered Accountants of Pakistan.

20. The statutory auditors or the persons associated with them have not been appointed to
provide other services except in accordance with the listing regulations and the auditors
have confirmed that they have observed IFAC guidelines in this regard.

Page 14
21. The ‘closed period’, prior to the announcement of interim/final results was determined and
intimated to directors, employees and stock exchange. As the trading of the Company’s
securities is ceased therefore, no business decision is expected to materially affect the
market price of company’s securities.

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

23. The company has complied with the requirements relating to maintenance of register of
persons having access to inside information by designated senior management officer in
a timely manner and maintained proper record including basis for inclusion or exclusion of
names of persons from the said list.

24. Subject to the above, we confirm that all other material principles contained in the Code
have been complied with.

__________________________
Muhammad Farrukh Bashir
Chief Executive

Page 15
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
BALANCE SHEET
AS AT DECEMBER 31, 2016
2016 2015
ASSETS Note Rupees Rupees

Non Current Assets

Furniture, fixtures and office equipment 6 975,473 936,844
Investment Property 800,000 800,000
1,775,473 1,736,844
Current Assets
Sundry receivables - 591,106
Deposit with State Bank of Pakistan 350,000 350,000
Cash and bank balance 7 192,691 487,373
542,691 1,428,479

TOTAL ASSETS 2,318,164 3,165,323

EQUITY AND LIABILITIES

Share Capital And Reserves

Authorized Share Capital
1,000,000 (2015: 1,000,000) Ordinary Shares of Rs. 10/-
10,000,000 10,000,000
each
Issued, subscribed and paid-up capital 8 5,000,000 5,000,000
Accumulated loss (3,940,696) (4,578,529)
1,059,304 421,471
Non Current Liabilities
Payable to others 500,000 500,000
Due to Directors (for expenses) 250,000 -
750,000 500,000
Current Liabilities
Unclaimed dividends 9 23,150 23,150
Advance from customers 150,000 -
Amount due to reinsurer - 1,448,238
Accrued expenses 335,710 700,216
Taxation - net - 72,248
508,860 2,243,852
Contingencies and commitments 10 - -

TOTAL EQUITY AND LIABILITIES 2,318,164 3,165,323

The annexed notes from 1 to 20 form an integral part of these financial

information.

____________ ________________
Director Chief Executive

Page 20
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED DECEMBER 31, 2016

Note 2016 2015

Rupees Rupees
Revenue
Other income 11 1,898,238 300,000

Expenditures
General and administration expenses 12 (1,260,405) (125,000)
Profit before taxation 637,833 175,000
Taxation - net - -
Profit after taxation 637,833 175,000

Earning per share 13 1.28 0.35

The annexed notes from 1 to 20 form an integral part of these financial information.

____________ ________________
Director Chief Executive
Page 21
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016

2016 2015
Rupees Rupees

Profit after taxation 637,833 175,000

Other comprehensive income - -

Total comprehensive income for the year 637,833 175,000

The annexed notes from 1 to 20 form an integral part of these financial information.

____________ ________________
Director Chief Executive
Page 22
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2016
2016 2015
Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 637,833 175,000

Adjustments for:
Depreciation 116,261 -
Written off amount no more payable to reinsurer (1,448,238) -
Written off sundry receivable 591,106 -
Operating (Loss) / Profit Before Working Capital Changes (103,038) 175,000
Changes in working capital
Increase / (decrease) in current liabilities:
Advance from customers 150,000 -
Accrued expenses (364,506) -
Total Changes In Working Capital (317,544) 175,000
Taxes paid (72,248) -
Net Cash (Outflow) / Inflow From Operating Activities (389,792) 175,000

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed capital expenditure (154,890) -

Net Cash (Outflow) From Investing Activities (154,890) -

CASH FLOWS FROM FINANCING ACTIVITIES

Loan from director 250,000 -

Net Cash Inflow From Financing Activities 250,000 -
Net (decrease) / increase in cash and cash equivalents (294,682) 175,000
Cash and cash equivalents at the beginning of the year 487,373 312,373
Cash and cash equivalents at the end of the year 192,691 487,373

The annexed notes from 1 to 20 form an integral part of these financial information.

____________ ________________
Director Chief Executive
Page 23
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2016

Issued,
Accumulated
subscribed Total
loss
and paid-up
capital
--------------------------------- (Rupees) ----------------------------------

Balance as at Dec 31, 2014 5,000,000 (4,753,529) 246,471

Total comprehensive income for the year - 175,000 175,000

Balance as at Dec 31, 2015 5,000,000 (4,578,529) 421,471

Total comprehensive income for the year - 637,833 637,833

Balance as at Dec 31, 2016 5,000,000 (3,940,696) 1,059,304

The annexed notes from 1 to 20 form an integral part of these financial information.

____________ ________________
Director Chief Executive
Page 24
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
1 LEGAL STATUS AND BUSINESS ACTIVITIES OF THE COMPANY
1.1 Hallmark Company Limited (formerly "Hallmark Insurance Company Limited") was
incorporated as a Public Limited Company on 31 October 1981 under the repealed Companies Act,
1913 now the Companies Ordinance, 1984 and subsequently obtained registration under repealed
Insurance Act, 1938 now the Insurance Ordinance, 2000 as insurer. The registered office of the
Company is situated in Karachi.
1.2 The Company was engaged in general insurance business comprising of fire, marine, motor,
engineering etc. With the promulgation of the Insurance Ordinance 2000, the requirement of
minimum paid up capital for an insurer was enhanced to Rs. 350 million. The Company did not find
itself in a position to increase its paid up capital to the required minimum level and had ceased to
underwrite insurance business w.e.f. January 01, 2003.
1.3 During the year, the members of the Company have resolved in the Annual General Meeting held
on April 30, 2016, that they are not interested to inject the above huge amount of required
minimum paid up capital. Therefore, the Members and Directors resolved to surrender the
insurance license and remove the Company’s name from the insurance ambit and to diversify the
nature of business instead of insurance business. Thereafter the insurance license of the company
was revoked by the SECP Insurance Division through S.R.O.1079(I)/2016 dated 22 November,
2016 in pursuant to sub section (1) of Section 10 of the Insurance Ordinance, 2000 (XXXIX of
2000).
1.4 The proposed activity of the company is to engage in trading of computer and allied IT equipment,
development and sale of software and provision of allied services. Subsequent to the year end
renewed Certificate of Incorporation has been issued by the SECP as to giving effect to the change
of name. Moreover the change of principal activity, has also been approved by the SECP
subsequent to the year end.
1.5 The accumulated losses of the company as at balance sheet date reduced during the year to Rs.
3.94 million (2015: 4.58 million) and its current ratio has improved as the current assets increased
from current liabilities by Rs. 33,831 (2015: Rs. 1.32 million). These conditions are better in
contrast with the last year, however these events indicate a material uncertainty that may cast
significant doubt on the Company’s ability to continue as a going concern and therefore the
Company may be unable to realize its assets and discharge its liabilities in the normal course of
business.Meanwhile, the Company has also submitted a revivial plan before the SECP Karachi and
Islamabad. Therefore, the managment is confident that the Company shall continue as a going
concern, as the company is no more in the insurance ambit and management has reliable plan for
revival. Furthermore, required financing shall be made available by the directors therefore these
financials have been prepared on the basis going concern.
1.6 Due to suspended operations, register of members and fixed assets could not be timely updated.

2 BASIS OF PREPARATION
2.1 STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with approved accounting standards
as applicable in Pakistan. Approved accounting standards comprises of such International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified
under Companies Ordinance, 1984, provisions and directives issued under Companies Ordinance,
1984. In case requirements differ, the provisions and directives of Companies Ordinance, 1984
shall prevail.
The statements and disclosures required by Insurance Ordinance, 2000 and SEC (Insurance)
Rules, 2002 have not been presented as during the year no activity in respect of insurance
business is carried on. Furthermore, as mentioned above the company's registration under
Insurance Ordinance, 2000 has been revoked therefore the compliance of Insurance Ordinance,
2002 is no longer required.
Page 25
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
2.2 NEW AND REVISED STANDARDS AND INTERPRETATIONS
Standards, interpretations and amendments to published approved accounting standards
that are not yet effective
The following standards, amendments and interpretations of approved accounting standards will
be effective for accounting periods beginning on or after 01 January 2017:
– Amendments to IAS 12 ‘Income Taxes’ are effective for annual periods beginning on or after 1
January 2017. The amendments clarify that the existence of a deductible temporary difference
depends solely on a comparison of the carrying amount of an asset and its tax base at the end of
the reporting period, and is not affected by possible future changes in the carrying amount or
expected manner of recovery of the asset. The amendments further clarify that when calculating
deferred tax asset in respect of insufficient taxable temporary differences, the future taxable profit
excludes tax deductions resulting from the reversal of those deductible temporary differences. The
amendments are not likely to have an impact on financial statements
– Amendments to IAS 7 ‘Statement of Cash Flows’ are part of IASB’s broader disclosure initiative
and are effective for annual periods beginning on or after 1 January 2017. The amendments
require disclosures that enable users of financial statements to evaluate changes in liabilities
arising from financing activities, including both changes arising from cash flow and non-cash
changes.
– Amendments to IFRS 2 - Share-based Payment clarify the accounting for certain types of
arrangements and are effective for annual periods beginning on or after 1 January 2018. The
amendments cover three accounting areas (a) measurement of cash-settled share-based
payments; (b) classification of share-based payments settled net of tax withholdings; and (c)
accounting for a modification of a share-based payment from cash settled to equity-settled.
– Annual improvements to IFRS standards 2014-2016 cycle. The new cycle of improvements
addresses improvements to following approved accounting standards:
– IFRS 9 'Financial Instruments' (effective for annual periods beginning on or after 1 January 2018)
contains a new classification and measurement approach for financial assets and liabilities that
reflects the business model in which these are managed and their cash flow characteristics
– Amendments to IFRS 12 ‘Disclosure of Interests in Other Entities’ (effective for annual periods
beginning on or after 1 January 2017) clarify that the requirements of IFRS 12 apply to an entity’s
interests that are classified as held for sale or discontinued operations in accordance with IFRS 5 –
‘Non-current Assets Held for Sale and Discontinued Operations’. The amendments are not likely to
have an impact on financial statements.
– Amendments to IAS 28 ‘Investments in Associates and Joint Ventures’ (effective for annual
periods beginning on or after 1 January 2018) clarifies that a venture capital organization and other
similar entities may elect to measure investments in associates and joint ventures at fair value
through profit or loss, for each associate or joint venture separately at the time of initial recognition
of investment. Furthermore, similar election is available to non-investment entity that has an
interest in an associate or joint venture that is an investment entity, when applying the equity
method, to retain the fair value measurement applied by that investment entity associate or joint
venture to the investment entity associate's or joint venture's interests in subsidiaries. This election
is made separately for each investment entity associate or joint venture. The amendments are not
likely to have an impact on financial statements.
– IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’ (effective for annual
periods beginning on or after 1 January 2018) clarifies which date should be used for translation
when a foreign currency transaction involves payment or receipt in advance of the item it relates to.
The related item is translated using the exchange rate on the date the advance foreign currency is
received or paid and the prepayment or deferred income is recognized. The date of the transaction
for the purpose of determining the exchange rate to use on initial recognition of the related asset,
expense or income (or part of it) would remain the date on which receipt of payment from advance
consideration was recognized. If there are multiple payments or receipts in advance, the entity shall
determine a date of the transaction for each payment or receipt of advance consideration.
Page 26
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
Standards, interpretations, amendments to published approved accounting standards that
are effective in the current year
There are certain new and amended standards, interpretations and amendments that are
mandatory for the accounting periods beginning on or after January 1, 2016. These amendments
do not have any significant effect on these financial statements.

Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities

IFRS 10 and IAS 20 Investment in Associates and Joint Ventures - Investments Entities:
Applying the Consolidation Exception (Amendment)
Consolidated Financial Statements, and IAS 28 Investment in Associates and Joint
IFRS 10 Ventures - Sale or contribution of Assets between an Investor and its Associate or joint
Venture(Amendment)
IFRS 11 Joint Arrangements-According for Acquisition of Interest in Joint Operation
(Amendment)
IFRS 14 Revenue from contracts with customers
IAS 1 Presentation of Financial Statements - Disclosure Initiative (Amendment)
Property, Plant and Equipment and IAS 38 intangible assets - Clarification of
IAS 16 Acceptable Method of Depreciation and Amortization (Amendment) IAS 27-Seprate
Financial Statements-Equity Method in Separate Financial Statements (Amendment)
Separate Financial Statements-Equity Method in Separate Financial Statements
IAS 27
(Amendment)
Non-Current Assets Held for Sale and Discontinued Operations - Changes in methods
IFRS 5
of disposal
IFRS 7 Financial Instruments: Disclosures - Servicing contracts
Financial Instruments: Disclosures - Applicability of the off-setting disclosures to
IFRS 7
condensed interim financial statements
IAS 19 Employee Benefits - Discounts rate: regional market issue
Interim Financial Reporting - Disclosure of information 'elsewhere in the interim
IAS 34
financial report'

3 BASIS OF MEASUREMENT
This financial statements has been prepared under historical cost convention and on an accrual
basis of accounting.
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of these financial statements in conformity with approved accounting standards as
applicable in Pakistan requires management to make judgments, estimates and assumptions that
effect the reported amounts of assets and liabilities and income and expenses. It also requires
managements to exercise judgment in application of its accounting policies. The estimates and
associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstances. These estimates and assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision effects only that period, or in the period of revision
and future periods, if the revision affects both current and future periods. Areas where
assumptions and estimates are significant to the financial statements are provision for doubtful
debts, taxation and accruals.

5 SIGNIFICANT ACCOUNTING POLICIES

The principle accounting policies applied in the preparation of these financial statements are set
out below. These accounting policies have been consistently applied to all the years presented
unless otherwise stated.
Page 27
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
5.1 FIXED ASSETS

Subsequent to initial recognition, carrying values of property, plant and equipment are reviewed at
each reporting date for indication that an asset may be impaired and carrying values may not be
recovered. If any such indication exists and where the carrying values exceed the estimated
recoverable amount, the assets or cash generating units are written down to their recoverable
amount. The recoverable amount is the greater of net selling price and value in use.
Depreciation has been charged on reducing balance method at the rates mentioned in note 6 to
these financial statements.
Depreciation is charged from the month the assets is available for use, while in case of disposal it
is charged up to the month of disposal.

Normal repair and maintenance are charged to income currently.

Gains or losses on disposal of fixed assets are included in income currently.

5.2 CASH AND CASH EQUIVALENTS

For the purpose of cash flow statement , cash and cash equivalents comprise cash in hand, bank
balances and highly liquid short term investments.

5.3 TAXATION
Provision for current taxation is based on taxable income at current rate of taxation after taking
into account tax credit and rebates if any

5.4 INVESTMENT PROPERTY

Investment in property is recognized at cost being the fair value of the consideration given and
includes transaction cost.

5.5 TRADE DEBTS AND OTHER RECEIVABLES

Trade debts and other receivables are stated initially at fair value and subsequently measured at
amortized cost using the effective interest rate method, if applicable, less provision for
impairment, if any. A provision for impairment is established where there is objective evidence that
the company will not be able to collect all amounts due according to the original terms of
receivables are written off when considered irrecoverable.

5.6 TRADE CREDITORS AND OTHER PAYABLES

Trade and other payables are recognized initially at fair value plus directly attributable cost, if any,
and includes advances received and expenses accrued.

5.7 REVENUE RECOGNITION

Revenue is recognized, in case of services, when these are rendered and in case of goods when
these are dispatched to the customers.

5.8 EXPENSES
Expenses are charged when incurred even if not paid.

5.9 FUNCTIONAL AND PRESENTATION CURRENCY

These financial statements are presented in Pakistani Rupees, which is the Company’s functional
currency.

Page 28
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016

6. FIXED ASSETS
Opening Opening
Balance Balance W.D.V
Balance Balance Depreciation
Description Addition as at as at as at Rate
as at as at for The Year
31-12-2016 31-12-2016 31-12-2016
01-01-2016 01-01-2016

Furniture and fixture 2,716,043 45,500 2,761,543 2,056,870 70,467 2,127,337 634,206 10%
Office equipment 725,040 28,250 753,290 447,369 30,592 477,961 275,329 10%
Generator - 45,700 45,700 - 4,570 4,570 41,130 10%
Computer - 35,440 35,440 - 10,632 10,632 24,808 30%

Total 3,441,083 154,890 3,595,973 2,504,239 116,261 2,620,500 975,473

3,441,083 - 3,441,083 2,504,239 - 2,504,239 936,844

Page 29
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016

2016 2015
Rupees Rupees
7 CURRENT AND OTHER ACCOUNTS

Cash in hand 166,246 460,928

Cash at bank - operative accounts 19,484 19,484
Cash at bank - inoperative accounts 6,961 6,961
192,691 487,373

8 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL

500,000 (2015: 500,000) Ordinary Shares of

5,000,000 5,000,000
Rs. 10/- each fully paid in cash

9 UNCLAIMED DIVIDEND

For the year ended 31-12-98 5,150 5,150

For the year ended 31-12-95 18,000 18,000
23,150 23,150

10 CONTINGENCIES AND COMMITMENT

There were no contingency or commitment as at year end (2015: Nil)

11 OTHER INCOME

Rental income from investment property 450,000 300,000

Written off amount no more payable to reinsurer 1,448,238 -
1,898,238 300,000

12 GENERAL AND ADMINISTRATIVE EXPENSES

Salaries 172,000 -
Auditor remuneration 75,000 75,000
Listing fee Stock Exchange 200,000 -
Surcharge Stock Exchange 25,000 -
Entertainment 11,710 -
Stationery expenses 4,328 -
Legal and professional charges 65,000 50,000
Depreciation expense 116,261 -
Written off sundry receivable 591,106 -
1,260,405 125,000

13 BASIC AND DILUTED EARNING PER SHARE

Profit after taxation 637,833 175,000

Weighted average number of Ordinary shares 500,000 500,000
Earning per share 1.28 0.35
There is no dilutive impact on earning per share.

Page 30
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016

14 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS & EXECUTIVES

As the commercial activity is not yet commenced Directors and Chief Executive have consented to
act without any remuniration.

15 TRANSACTIONS WITH RELATED PARTIES

The related parties comprise associated undertakings and key management personnel.
The transactions between the Company and the related parties are carried out at arms
length. Amounts due from and to related parties and key management personnel, if any,
are shown under receivables and payables. Remuneration of key management personnel
is disclosed in note-14. No other significant transactions were made with related parties
during the year.

16 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

Financial risk management objectives
The company’s activities expose it to certain financial risks. Such financial risks emanate from
various factors that include, but not limited to, market risk, credit risk and liquidity risk. The
company’s overall risk management focuses on the unpredictability of financial markets and seeks
to minimize potential adverse effects on the company’s financial performance. Risk measured and
managed by the company are explained in notes 16.1 to 16.4

16.1 Credit risk

Credit risk represents the risk of loss that would be recognized at the reporting date if
counter parties failed to perform as contracted. The carrying amount of financial assets
represents the maximum credit exposure and the detail are as follows:
2016 2015
Rupees Rupees

Receivables - 591,106
Deposit with SBP 350,000 350,000
Cash at bank 26,445 26,445
376,445 967,551

16.2 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates
and equity prices will affect the Company’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimizing the return. The Company is exposed to
currency risk and interest rate risk only.

16.2.1 Currency risk

The Company is exposed to currency risk on long term loan that are denominated in a currency
other than the respective functional currency of the Company, primarily U.S. Dollar. The Company’s
is not exposure to any foreign currency risk.

16.2.2 Interest rate risk

Interest rate risk represents the risk that the future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. At the balance sheet date the interest rate
profile of the Company’s interest-bearing financial instrument is NIL.
Page 31
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016

16.3 Liquidity risk

Liquidity risk is the risk the Company will not be able to meet its financial obligations as
they fall due. The Company's approach to managing liquidity risk is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Company's reputation. Following are the carrying amount and maturities
of the Company's financial liabilities.

2016
|-------------------Rupees------------------|

Carrying
Non Interest Bearing Upto one year After one year
amount

Payable to others 500,000 - 500,000

Loan from directors 250,000 - 250,000
Unclaimed dividends 23,150 23,150 -
Accrued expenses 335,710 335,710 -
Total financial liabilities 1,108,860 358,860 750,000

2015
|------------------------Rupees-----------------------|

Carrying
Non Interest Bearing Upto one year After one year
amount

Payable to others 500,000 - 500,000

Unclaimed dividends 23,150 23,150 -
Amount due to reinsurer 1,448,238 1,448,238 -
Accrued expenses 700,216 700,216 -
Total financial liabilities 2,671,604 2,171,604 500,000

16.4 Fair value of financial assets and liabilities

The carrying values of financial assets and financial liabilities reported in balance sheet
approximate their fair values.

17 CAPITAL RISK MANAGEMENT

The Company's objectives when managing capital are to safeguard the Company's ability to
continue as a going concern in order to provide returns for shareholders and benefit for other
stake holders and to maintain an optimal capital structure to reduce the cost of capital.

During 2016, the Company's strategy was to maintain leveraged gearing. The gearing ratio as at
December 31, 2016 was as follows:

Page 32
HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016

17 CAPITAL RISK MANAGEMENT

2016 2015
Rupees Rupees

Total borrowing 750,000 500,000

Cash at bank 192,691 487,373
Net borrowing 557,309 12,627
Total shareholders' equity 1,059,304 421,471
Total capital 1,616,613 434,098

Gearing ratio 34% 3%

The Company finances its operations through equity, borrowings and management of working
capital with a view to maintaining an appropriate mix between various sources of finance to
minimise risk.

18 NUMBER OF EMPLOYEES

Number of employee as at December 31, 2016 was 3 (2015: 1).

Average number of employees during the year was 2 (2015: 1)

19 AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue in accordance with a resolution of the Board
of Directors on ___________________.

20 GENERAL

Figures in the financial statement has been rounded off to the nearest rupees.

____________ ________________
Director Chief Executive
Page 33
 HALLMARK COMPANY LIMITED
(Formerly Hallmark Insurance Company Limited)
Regd. Office: Office # 1001, 10th Floor, Uni Centre, I.I Chundrigar Road, Karachi, Pakistan.
Tel: 021-32414419, 021-37011105 Fax: 021-32416288

PROXY FORM

I/We ________________________________________________________________________________________________________
of __________________________________________________________________________________________________________
being a member of HALLMARK COMPANY LIMITED (Formerly Hallmark Insurance Company Limited) and
a holder of _____________________________________________________________________________________________
(Number of Shares)
Ordinary Shares, as per Share Register Folio No. _______________________________________________________________
hereby appoint _____________________________________ of ______________________________________________________
(Name)
Who is also member of HALLMARK COMPANY LIMITED, as my proxy to vote for me and on
my behalf at the Annual General Meeting of the Company to be held on the 29th day of
April, 2016 and at any adjournment thereof.
thereof.
signed this _________________________________day of ________________________________2016.

Revenue
Stamp

(Signature should agree with the specimen signature registered with the Company)

Note 1: The PROXY MUST BE SIGNED ACROSS revenue stamp and it should be deposited in the
Head Office of the Company not later than 48 hours before the time of holding the
meeting.

Note 2: No person shall act as proxy unless he is a member of the Company.

Page 34