PTC Annual Report 2022

A JOURNEY OF
GROWTH &
TRANSFORMATION
With a legacy that extends over seven and a half decades, our journey has
been defined by a relentless pursuit of progress and evolution. Driven by our
determination and willingness to adapt and change, today we celebrate 75
years and the most transformative period in the history of our Company.
PAKISTAN TOBACCO
COMPANY LIMITED
TOP EMPLOYER 2023
We take great pride in being acknowledged as a Top Employer among five
other markets in Middle East, South Asia, and North Africa. This recognition
is a testament to our continuous efforts in developing our people and cultural
environment through fostering diversity and promoting an inclusive and
flexible work environment in 2022.
As we continue our journey of growth and transformation, we remain

committed to introducing policies and initiatives that prioritize employee
well-being and development, further cementing our goal of building A Better
Tomorrow™.
Top Employer Award 2023

TABLE OF CONTENTS
04 05 06 07 08 09
BAT's Geographical BAT Group Pakistan Tobacco Our Footprint Our Purpose Our Ethos
Spread Overview Company Limited
10 11
Corporate Product Portfolio
Information
Our Achievements
12 14 15 16 17 18
Step Change FMC Performance Illicit Trade Enhancing Our Sustainability Front Accelerating Our
in Modern Oral Operational and Centre ESG Agenda
Journey Brilliance
20 21 22
Leaf Transitioning into Our People
Transformational the Future Our Pride
Journey
Management
24 26 30 35 38 39
Organisational Board of Directors Committees of Standards of Chairman's Review MD/CEO's Message
Structure Board Business Conduct
and Ethical
Principles
40 50 51 52 53 54
Directors' Report Summary of Cash Flow Analysis Performance Analysis of Notice of the
Statement of Profit Indicators Ratios for Performance Annual General
or Loss, Financial 6 Years Indicators Meeting
Position & Cash
Flows
58 60
Statement of Independent
Compliance Auditors' Review
Report
A JOURNEY OF
GROWTH &
02 TRANSFORMATION Annual Report 2022
Financial Statements
62 66 67 68 69 70
Independent Statement of Statement of Statement of Statement of Statement of
Auditors' Report Profit or Loss Comprehensive Financial Position Changes in Equity Cash Flows
Income
71
Notes to the
Financial
Statements
Consolidated Financial Statements
116 117 126 130 131 132

Chairman’s Review Directors’ Report Independent Consolidated Consolidated Consolidated
(Consolidated (Consolidated Auditors’ Report Statement of Profit Statement of Statement of
Accounts) Accounts) (Consolidated or Loss Comprehensive Financial Position
Accounts) Income
133 134 135 179 188 191

Consolidated Consolidated Notes to the Pattern of Directors’ Report Notice of the
Statement of Statement of Cash Consolidated Shareholding (Urdu) Annual General
Changes in Equity Flows Financial Meeting (Urdu)
Statements
192 195 196

Glossary and Form of Proxy Form of Proxy
Definitions (Urdu)
03
BAT'S
GEOGRAPHICAL
SPREAD
Map is accurate as at 31 Dec 2022 and is representative of general
geographic regions and does not suggest that the Group operates in
each country of every region.
United States of
America (U.S.)
Key Markets:
United States of America
Americas and Sub-Saharan Africa (AmSSA) Europe

Key Markets: Key Markets:
Argentina, Brazil, Canada, Chile, Colombia, Nigeria, Mexico and
Belgium, Bulgaria, Czech Republic, Denmark, France, Germany,
South Africa
Greece, Hungary, Italy, Kazakhstan, Netherlands, Poland,
Romania, Russia, Spain, Switzerland, Turkey, Ukraine and United
Kingdom.
Russia will remain in the list of key markets until the transfer of the Russian business
is complete.
Asia-Pacific and Middle East (APME) From 1 January 2022, Algeria, Sudan, Morocco, Libya, Tunisia and
Egypt moved from Europe and North Africa (now Europe) to APME. No
Key Markets: restatement of prior year figures has been made as the impact was not
Algeria, Australia, Bangladesh, Egypt, Gulf Cooperation Council material to either Europe or APME.
(including Saudi Arabia), Japan, Malaysia, Morocco, New
Zealand, Pakistan, South Korea, Taiwan and Vietnam.
A JOURNEY OF
GROWTH &
BAT GROUP
OVERVIEW
BAT is a leading multi-category consumer goods business dedicated to stimulating the senses of adult
consumers worldwide. As a global business, the Group strives to understand its diverse consumers
and develop products to satisfy their preferences and ultimately distribute them across 170+ markets.
BAT’s portfolio comprises combustible tobacco products, alongside a range of non-combustible reduced risk alternatives* which make
up the New Category portfolio and includes Vapour, Tobacco Heating and Modern Oral products. As a global business, the Group aims
to deliver sustainable value and ultimately build A Better Tomorrow™.
4
Revenue by Region
Regions
£12,639Mn
170+
U.S.
Revenue by Region
AmSSA £4,203Mn
£27,655Mn APME £4,467Mn Markets
Total Revenue
Europe £6,346Mn
138
Employee Nationalities
Revenue by Product Category

50,000+
Employees
Revenue by New Categories £2,894Mn 10.4%
Product Category
£27,655Mn
Traditional Oral
Combustibles
£1,209Mn
£23,030Mn
4.4%
83.3%
5
Total Revenue Major Product Categories
Other £522Mn 1.9%
81,000
Farmers Contracted Through
BAT Leaf Operations
Effective from 2023, the Group will revise its regional

structure and report on three regions, being:
– the United States of America;
22.5Mn
Non-Combustibles
– Asia-Pacific, Middle East and Africa (APMEA);
– and Americas and Europe (AME). Product Consumer
*Based on the weight of evidence and assuming a complete switch from cigarette smoking.
These products are not risk free and are addictive. 05
PAKISTAN
TOBACCO
COMPANY
LIMITED
As a Company, we hold a significant place in the
history of Pakistan as the first multinational
corporation to be founded in the country after
the partition of the Subcontinent in 1947. As a
subsidiary of BAT Group, we have grown from a
single warehouse near Karachi port, to becoming
one of the largest Fast-Moving Consumer Goods
(FMCG) companies in the country.
By actively designing and implementing cutting-edge agricultural

and industrial processes, we have maintained a strong and resilient
supply chain and our relentless drive to modernize has resulted in the
introduction of innovative concepts and transformative products.
A rich history that spans over decades, today, we find ourselves in one of
the most dynamic periods of change our industry has ever encountered.
Rapid product innovation, along with advances in societal attitudes and
public health awareness, we have seized the opportunity to make a
substantial leap forward in our long-held ambition to positively impact
the lives of millions of our consumers by providing them reduced risk
products*. Through this strategy, we aim to build A Better Tomorrow™.
In 2022, we celebrated our 75th anniversary, characterized by an

unprecedented period of growth and strategic transformation. Under the
guidance of a steadfast commitment to excellence, we have achieved
new levels of success through our prized product portfolio, strategic
partnerships across crop-to-consumer operations, state-of-the-art
manufacturing facilities and have also garnered recognition for our highly
sought-after talent pool. These strengths are what set us apart and have
positioned us as a leader in the FMCG industry in Pakistan.
*Based on the weight of evidence and assuming a complete switch from cigarette
smoking. These products are not risk free and are addictive.
A JOURNEY OF
GROWTH &
OUR
FOOTPRINT
04
10 Regional
17
Trade Offices
Lahore, Multan, Karachi
Warehouses and Rawalpindi
Jhelum, Islamabad,
Sales Gujranwala, Lahore,

Faisalabad, Multan,
Offices Karachi, Hyderabad,
Sukkur and Quetta
Quetta, Sukkur,
Hyderabad,
Nawabshah,
Sahiwal, Bhawalpur,
Gujranwala,
Faisalabad,
Peshawar, Jhelum,
Sargodha, Karachi,
Multan, Lahore,
Islamabad, Northern
Area and D.G Khan
15
Leaf Depots
Shergarh, Jamalgarhi,
Sharifabad, Mandani,
Roshanpura, Faujoon,
Yarhussain, Firdousabad,
Baffa, Bherkund, Buner,
Chamla, Paikhel, Okara
and Kunjah
03 04
Factories
Jhelum and Akora Khattak Regional Leaf
(Cigarette Factory)
Jhelum
Offices
(Modern Oral Factory) Mardan, Swabi, Buner
and Mianwali
07
OUR
PURPOSE
By stimulating the senses of new adult generations, our purpose is to create A Better
Tomorrow™ for all our stakeholders.
We will create A Better Tomorrow™ for:
Consumers Employees
By responsibly offering enjoyable and By creating a dynamic, inspiring and
stimulating choices for every mood and every purposeful place to work
moment, today and tomorrow
Society Shareholders & Investors

By reducing the health impact of our business By delivering sustainable and superior
by offering a range of alternative products, returns
as well as by reducing our environmental and
social impacts
OUR
MISSION
Stimulating the senses of new adult generations
Today, we see opportunities to capture consumer moments which have, over time, become limited by societal and
regulatory shifts, and to satisfy evolving consumer needs and preferences. Our mission is to anticipate and satisfy this
ever-evolving consumer: provide pleasure, reduce risk, increase choice and stimulate the senses of adult consumers
worldwide.
A JOURNEY OF
GROWTH &
OUR
ETHOS
BOLD
Dream big – with innovative ideas.
Make tough decisions quickly and proudly stand accountable for them.
Resilient & fearless to beat the competition.
FAST
Speed Matters. Set clear direction and move fast.
Keep it simple. Focus on outcomes.
Learn quickly and share learnings.
EMPOWERED
Set the context for our teams and trust their expertise.
Challenge each other. Once in agreement, we commit collectively.
Collaborate and hold each other accountable to deliver.
DIVERSE
Value different perspectives.
Build on each others' ideas, knowledge and experiences.
Challenge ourselves to be open-minded and recognising unconscious bias.
RESPONSIBLE
Take action to reduce the health impact of our business.
Ensure the best quality products for our consumers, the best place to work for our people and the best
results for our shareholders.
Act with integrity, never compromising our standards and ethics.
09
CORPORATE INFORMATION
Registered Office Company Velo Factory
Pakistan Tobacco Company Limited Secretary G.T Road, Kala Gujran, Jhelum
T: +92 (544) 646500-7
Serena Business Complex, Khayaban-e- F: +92 (544) 646524
Suhrwardy Madeeha Arshad Chaudhry
P.O. Box 2549 Islamabad – 44000 T: +92 (51) 2083200
T: +92 (51) 2083200, 2083201 Auditors
Factories
F: +92 (51) 2604516
www.ptc.com.pk KPMG Taseer Hadi & Co.
6th Floor, State Life Building No. 5, Jinnah
Akora Khattak Factory
Bankers
Avenue, Blue Area, Islamabad 44000
T: +92 (51) 2823558
P.O Akora Khattak F: +92 (51) 2822671
Tehsil and District Nowshera
Conventional Banks Khyber Pakhtunkhwa
MCB Bank Limited T: +92 (923) 561561-72 Share Registrar
Habib Bank Limited F: +92 (923) 561502
National Bank of Pakistan Famco Associates (PVT) LTD 8-F,
Citibank N.A
Standard Chartered Bank (Pakistan)
Jhelum Factory Near Hotel Faran Nursery, Block 6,
P.E.C.H.S. Shahrah-e-Faisal, Karachi
Limited G.T Road, Kala Gujran, Jhelum T: +92 (21) 34380101-5
Deutsche Bank AG T: +92 (544) 646500-7
F: +92 (544) 646524
Islamic Banks
MCB Islamic Bank Limited
REGIONAL AND
AREA SALES OFFICES
Central Punjab House #50 Ganj Shaker Colony 2nd Floor Marina Mall Opposite Chief
Muhammad Pur Road Sahiwal Burger Near Abdara Chowk Main
200-FF Block, Central Commercial Area, T: +92 (40) 4500216-7 University Road Peshawar
Phase 4, DHA, Lahore Cantt T: +92 (91) 5702649-50
T: +92 (42) 35899351-55 Bungalow No. A/31 Akhuwat Nagar,
The Orion, 2nd Floor, Office # 1,2,3

Shikarpur Road, Sukkur
T: +92 (71) 5807225 - 5807224
Sindh & Balochistan
8-G,7-B Kohinoor City, Faisalabad Office No. 903, 9th Floor, Emerald
T: +92 (41) 8740892-4 Tower (Plot No. G - 19), Main Clifton Road,
North Clifton Block 5,
G.T Road, Rahwali, Gujranwala Cantt 1st Floor, Faran-101, Civic Centre, Phase Karachi 75600
T: +92 (55) 3864297 IV, Bahria Town, Islamabad T: +92 (21) 35147690-94
T: +92 (51) 5734207-10
Southern Punjab Office No. 5 & 6, Second Floor, Dawood
Cigarette Factory, G.T Road, Jhelum Centre, Main Auto Bahn Road, Hyderabad
Office No. 601/602, 6th Floor, T: +92 (544) 646500-11 T: +92 (22) 3813636
The United Mall, Main Abdali Road, F: +92 (541) 646529
Multan Bunglow No. A-17, Housing Society, (Near
T: +92 (61) 4512553, 4585992 MM Plaza, Plot # 110-111, Soni Pura Chak SSGC Regional Office), Nawabshah
47 Road, Shaheen Park, Sargodha T: +92 (244) 364463-364458
House No. 42/3, Tipu Shaheed Road, T: +92 (48) 3769921
Model Town A, Bahawalpur B-604, 2nd Floor, (Serena Bazar), Serena
T: +92 (62) 2877576 Hotel Quetta, Quetta
T: +92 (81) 2832012 – 13
A JOURNEY OF
GROWTH &
PRODUCT PORTFOLIO
Non-Combustible
• Polar Mint
• Berry Frost
• Urban Vibe
Launched in 2019, our tobacco free alternatives come in 3 flavours
varying in nicotine content i.e. 6mg,10mg,14mg for Polar Mint and
Berry Frost and 10mg for Urban Vibe.
Combustible
• Dunhill Lights • Benson & Hedges (Red)

• Dunhill Switch • Benson & Hedges (Blue)
• Dunhill Special Benson and Hedges was launched after Richard Benson & William
Hedges started a partnership in London in 1873. The brand was
Dunhill, our global drive brand and a true international premium
later launched in Pakistan in 2003.
offer, has been leading innovations in the market since its launch in
2008.
Launched in 2018, John Player is the most contemporary

Aspirational Premium brand for the downtrading premium
consumer.
The story of John Player Gold Leaf starts from the story of its
founder John Player, who started a small tobacco selling business
in 1877 and turned it into a company: John Player & Sons. John
Player Gold Leaf is the leading premium offer in the country.
• Gold Flake
• Gold Flake Soft Cup
Gold Flake enjoys a rich history and legacy in the market and is still
among the most popular offerings in Pakistan.
• Capstan Filter
• Capstan by Pall Mall
• Capstan International
Capstan is our global drive brand and currently the leading & most
popular brand in the country.
Embassy has built its heritage over a number of years & thrives
on its brand loyalty.
11
STEP CHANGE IN
MODERN ORAL JOURNEY
Leveraging our 75 years of history and expertise, 2022 was the year we successfully
transformed ourselves into a sustainable multi-category business, all the while
overcoming challenging economic situations, natural calamities and rising political
instability to establish a Modern Oral Category in Pakistan.
We successfully embarked on the modern oral journey in 2019 through which we were able to establish the VELO
Factory in Jhelum in a record time of 9 months during the COVID lockdown. Since then we have transformed the
business into one which would then be able to produce Modern Oral locally, thus driving speed of delivery as well
as improved cost efficiency. Our guiding principles helped us target the right consumer, focus on relevant consumer
channels, and create impactful conversations through generating contemporary content. Through these efforts we are
able to deliver Lowest Cost of Goods Sold (COGS) in the Group.
2Mn 88%
Productivity Brand Power
Savings Score
Championing Tobacco Harm Reduction

Tobacco Harm Reduction (THR) is a public health strategy geared at minimizing the health impact of combustible
tobacco. THR entails offering adult consumers who do not wish to quit an alternative source of nicotine through
scientifically substantiated reduced risk products*. THR endorses the widely accepted insight that majority of the harm
associated with tobacco is caused by the process of combustion, and products that do not involve tobacco combustion
are likely to emit far fewer levels of toxicants.
Our business launched a THR campaign for VELO, which aimed to educate our adult nicotine consumers on reduced
risks associated with the category compared to combustible cigarettes. The campaign was launched in Q4 of 2021
and remained a primary focus throughout 2022, whereby both online and offline channels were engaged to create
brand advocacy. Different phases of the campaign were able to achieve an overall improved “product apprehension”
and aided in forwarding the idea of “unafraid to challenge the norms”. The campaign successfully increased consumer
consideration and significantly improved Consumer Disposition Funnel (CDF).
6%
Total Increased Consideration
Consumer Centric Strategies

We are marching forward on our journey of growth and transformation like never before. With the introduction of local-
based flavors: Elaichi Blast, Paan Rush and Exotic Black (Limited Edition Pack and Product) we have successfully
established VELO as the category for the masses, while creating excitement among our adult nicotine consumers. It is a
result of these consumer facing campaigns that we have been able to transform ourselves into a major contributor in the
Modern Oral category in such a short period of time, with a growth projection helping us to stay on track to becoming
the #1 VELO market amongst Top 40 markets globally.
*Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.
A JOURNEY OF
GROWTH &
Our Achievements Management Financial
VELO Digital Footprint

Transitioning from conventional execution to agile and fit for consumer activations, we showed our evolving approach to
target consumers in ways never done before in the history of our Company. The emergence of digital as a gateway to
the consumer has led to us creating one of the most successful digital brands within BAT, with digital platforms of VELO
Pakistan and VELO Sound Station bringing in staggering numbers from our consumers.
VELO Pakistan
3.5Bn+ 400K+ 44%

Impressions Followers of the total global
VELO Followership
VELO Sound Station
1.5Bn+ 470K+ 459Mn

Impressions Followers Views
13
FMC PERFORMANCE
Economic and political instability across the country in 2022 presented our business with unprecedented challenges,
driving us to adapt our ways of working and inculcate agility and boldness to take advantage of any opportunity present
in the market.
In 2022, we were forced to take multiple excise driven pricings in the year across our FMC portfolio. This added to the
affordability pressure on consumers and thus, the prime importance of our business became the retention of our core
franchises through consistent equity injections and tactical interventions while delivering on our value agenda.
Our Market Share 2022
78.4% 49.7%
Legit market share Total market share
The Year of Pall Mall

Capstan by Pall Mall (CbPMO) is Pakistan’s
biggest brand with a market share of 32.26% as
of December 2022. Ensuring CbPMO remained
the market leader in the years to follow, in 2022 we
celebrated “The Year of Pall Mall” by launching
Pakistan’s biggest FMCG led LEP (Limited Edition
Pack) campaign. The objective of the campaign
was to reinforce the key messages that make
Capstan by Pall Mall the No.1 brand of Pakistan.
The campaign was a huge success and

significantly improved brand image while assuring
the brand remained resilient to the unprecedented
pricing and retained its position in the market.
Cementing the Legacy

of Gold Flake
Gold Flake by Rothmans of London is Pakistan’s
4th biggest brand with a market share of 6.3%
as of December 2022. The brand dominates the
rural smoker base with the mammoth distribution
across Pakistan. To celebrate the legacy of the
brand and continue with the momentum, a series of
progressive LEPs were launched in 2022 tying 130
years of heritage and trust to unwavering optimism
for the future, and a true symbol of quality.
A JOURNEY OF
GROWTH &
ILLICIT TRADE
Historically, illicit trade has been directly proportional to IREN also set up numerous check posts to curtail the
irrational increase in FED. As the market is highly price flow of illicit cigarettes and tobacco. IREN must identify
sensitive, an increase in excise leads to an increase in the illicit hotspots and proceed against those involved in
price gap between legitimate and illegitimate cigarettes, the trade of tax evaded cigarettes. Unless certainty of
forcing the average consumer to shift to lower priced punishment is ensured, illicit trade will continue unabated.
and tax evaded products. The slightest increase in illicit It is expected that with a firm resolve, the Government can
trade deprives the Government of Pakistan of invaluable curb illicit trade of cigarettes by sustained enforcement
revenue and hampers its efforts of providing a level activities across the cigarette supply chain.
playing field to all manufacturers.
The Government needs to ensure implementation of Track
In 2022, the Government of Pakistan implemented and Trace System across the board to be able to reap
Track and Trace system in the Tobacco sector. Only 2 the benefits and ensure tax compliance by all cigarette
manufacturers implemented the system in letter and spirit, manufacturers. Only once it is implemented at all cigarette
whereas, the other manufacturers continued to delay factories and enforced strictly at the retail level, will it
implementation on one pretext or the other, finally getting yield the desired results for the Government. It is likely to
a restraining order from Islamabad High Court (IHC). provide much needed revenue to the Government and
The initiative was designed to aid in the identification of ensure a level playing field for all stakeholders.
authentic tax paid packs in the markets as well as monitor
volume of production electronically to control tax evasion.
Additionally, the Government has signed an MoU with

the Government of Azad Jammu & Kashmir (AJK) for
implementation of the Track and Trace System at AJK
based factories, however, execution is still awaited. It
was our contention that until the Track & Trace System is
implemented across the board and enforced at the retail
level in letter and spirit, it will not yield the desired results.
Lack of enforcement is allowing illicit manufacturers to
continue their operations unhindered.
The Inland Revenue Enforcement Network (IREN) was

reorganized and reinvigorated nationwide to carry out
raids and seizures against illicit cigarettes and tobacco.
15
ENHANCING OUR
OPERATIONAL BRILLIANCE
2022 was a historical year in which our end-to-end operations were challenged in
different capacities, including but not limited to: recovering from the pandemic,
natural calamities, increased volume demand and capability building of Modern Oral
plant. As a result, both Jhelum and Akora Khattak Factories had to shift gears and
accelerate their efforts towards achieving new levels of success.
to lessen the effects of industrial effluents, we are driving Effluent

Integrated Work System Treatment Plant (ETP), Reverse Osmosis (RO) and Ultra
(IWS) Phase 2 Certification Filtration (UF) Plant, which helps in 100% removal of all industrial
effluents, and ensures re-use of that water in our processes.
Integrated Work System (IWS) is a recognized platform that BAT

adopted to drive business excellence, encouraging a zero-loss Digital Enablement
of Operations
mindset with the slogan – more with less. Continuing with the
IWS Journey and post successful qualification for both AKF and
JF sites on Phase 1, IWS remained at the core of our operations.
Attaining IWS Phase 2 Certification in May 2022, our operations Keeping up with BAT's vision of a faster and simpler organization,
once again demonstrated their capacity and achieved operational digitization has been at the core of our operations in 2022.
excellence by becoming the 3rd site in BAT to acquire this Initiatives such as ENERCON (Green Energy Conservation and
accreditation, alongside Korea and Indonesia. This transition has Optimization), Digitron 2.0 (Online Tobacco Waste Tracking
been made possible only as a result of our shop floor employees' System), Data Catalyst (Data Analysis at EO level highlighting
massive capability building and significant advancements in loss capability hotspots), Primary Manufacturing Department
analysis and subunit-level equipment comprehension. Phase (PMD)’s SCADA 2.0 (Supports Machine Learning and Predictive
2 also ensured breaking the 50 Minutes Mean Time Between Analysis) and Modern Oral's Equata Application (Capability
Failure (MTBF) barrier which helped with reduced wastages, Enhancement on Product Defects) have helped us reducing
improved product quality and more importantly, created an avenue significant man-hours and cost, while also allowing us to perform
for Equipment Owners (EOs) and factories to focus on other losses loss analysis in a more efficient manner and improving the overall
and value their time in loss driven activities. Way of Working (WoW).
Capability Building of
2022 Big Wins
Modern Oral Plant
Pakistan’s Modern Oral plant located in Jhelum, began to create its Modern Oral plant powered renewably
impact in the New Categories (NC) quite rapidly and was able to through I-RECS purchase
make its mark in the Group through delivering extraordinary results
and setting global benchmarks. With operations focus not limited
only to the performance end, the team took an immense leap Achieving zero waste-to-landfill status
through cost reduction at multiple fronts. across all our manufacturing sites
Localization of the product itself helped us to tap into a

new market sector and helped to save costs through local Earning Alliance for Water Stewardship
manufacturing. Localization of wrapping materials further helped (AWS) certification for AKF
in reducing the overall manufacturing cost for Modern Oral.
Additionally, Pakistan has a potential for significant increase in the

Total solar footprint increased to 3.4MW
upcoming volume through expansion projects while maintaining
across JF and AKF
lowest manufacturing cost in the Group. These efforts will help
New Category to grow further and open up export opportunities.
Waste recycling increased to more than

Driving Our ESG Agenda 90%
In 2022, our operations continued their efforts towards sustainable

growth by supporting several initiatives on the Environment Social
Governance (ESG) front to reduce environmental impact. In order
A JOURNEY OF
GROWTH &
SUSTAINABILITY
FRONT AND CENTRE
We have always shown steadfast determination to drive growth, unlock new
opportunities, and set benchmarks for our industry. As our Company celebrated 75
years in business, we achieved new milestones in 2022 that act as a testament to our
commitment to excellence in the years past and those to come.
AWS Certification
Akora Khattak Complex became the first site in MESA & NA Area such as limited knowledge about I-RECS and the absence of
and the first integrated site in BAT to earn the prestigious AWS registered suppliers, we were able to drive the registration of
(Alliance for Water Stewardship) Core Certification, which is a the consultants through ardent market research and efficient
globally applicable framework that helps water users understand stakeholder management.
their water consumption and impact. Having completed the AWS
Audit, Jhelum Factory is expected to receive certification in 2023, This achievement has paved the way for other businesses in
making our market the first multi-site to earn AWS Certification in Pakistan to follow suit and reduce their own environmental impact.
Asia-Pacific and Middle East (APME). This helps in contributing to the goal of combating climate change
under Sustainable Development Goal 13: Combating Climate,
AWS Certification paves the way to work collaboratively and which requires concerted efforts to speed up climate action.
transparently for sustainable water management to create a water-
secure world. We aim to reduce freshwater demand by recycling
water and improving the efficiency of our water infrastructure, with Collaborating with
the effluent treatment plants playing a crucial role in this effort, as
the treated water is used to substitute freshwater in utilities and Academia
ancillary services. AWS certification not only brings our company
closer to our goal of creating A Better Tomorrow™, but also We signed our first-ever Memorandum of Understanding (MoU)
reflects our history of commitment to environmental sustainability. with an academic institution, pioneering a new era of collaboration
to create alliances to help our mission of A Better Tomorrow™.
Drip irrigations units have also been deployed in Akora Khattak's The MoU was signed with National University of Science and
catchment areas through our Farmer Support Program which aids Technology (NUST), Ranked No.1 in Pakistan and No. 4 by Times
in reduced water usage at the farm level. Both our sites showed Higher Education Impact Ranking Globally (2022) for United
their commitment to water stewardship through their high-water Nation’s SDG #7: Affordable & Clean Energy. The objective of this
recycling rates, with Akora Khattak Factory closing 2022 at 41% MoU was to collaborate on joint R&D projects with focus on areas
water recycling, Jhelum Factory at 46% (FMC & MO) and our of Climate Change, Waste Management, and Water Stewardship.
Company having the overall highest in MESA & NA.
The MoU was a culmination of a series of engagements between
staff from NUST’s Centre for Advanced Studies in Energy (CASE),
41.59%
who shared the cutting-edge innovations and research being
undertaken and how they can support and contribute to our goal
of carbon neutrality, while we shared our Company’s sustainability
Highest Water Recycling journey in recent years and highlighted our key priorities for 2025.
Percentage in MESA & NA
Both parties recognized the importance of building industry-
academia linkages to tackle global environmental challenges and
First Ever I-RECS

explored avenues of mutual collaboration to help resolve these
issues.
Purchase of Pakistan
Throughout our history, sustainability and carbon neutrality have
been the core focus and key requirement for our Company.
To accelerate our efforts towards keeping manufacturing
operations environmentally sustainable, we purchased the first
ever International Renewable Energy Certificates (I-RECS) in
2022. I-RECS represent 1 MWh of renewable energy produced
which is added to the national grid, thus helping to reduce the
environmental impact of a company's operations.
Our Jhelum Factory recently made the first ever local I-RECS
purchase in Pakistan, setting the standard for carbon neutrality and
spearheading the agenda across the country. Despite challenges
17
ACCELERATING OUR
ESG AGENDA
Afforestation Drive Farmer Livelihood

Sustainability is at the front and center of our business and excelling We encourage our farmers to improve their livelihood through
in environmental management has always been our top priority. We profitable combination of crops, enabling our farmers to have income
have the oldest and largest private sector afforestation program in the above minimum living wage.
country, with 6 nurseries across Pakistan, running since 1981.
We provide profitable combination crops such as seed for Mustard,
Through strategic partnerships, we are committed to increasing the Maize and Mushroom Spawns to augment farmer income thus making
forest covers of Pakistan. We have partnered with the National Rural them sustainable in the long run.
Support Program (NRSP) and over the past 10 years have carried out
afforestation drives in the most impacted areas of forest loss. In 2022, our business provided seed for Mustard to 400 farms and
Mushroom Spawns to 300 farms.
We have also worked with multiple Government departments to ensure
our value chain sources sustainable wood fuel for tobacco production
with 100% traceability.
To-date we have provided upwards of 150Mn saplings and in 2022

we planted and distributed more than 2.5Mn saplings of different
indigenous species.
Achieving Zero Waste-To-Landfill
Status
2022 was a historic year for us as Akora Khattak Factory, Jhelum
Factory (FMC & MO) and Green Leaf Threshing (GLT) achieved
zero waste-to-landfill status. All waste from the origin to the waste
Community Development processing unit is handled through an integrated waste management
system under Project Terranova, which ensures reduced waste
In 2022, in collaboration with National Rural Support Program (NRSP), landfill. Reduce, Re-Use and Recycle is ensured by utilizing waste to
we were able to train 7,000 plus families across all leaf growing areas make several useable items using expertise of waste management
and help them develop awareness regarding child education, farm specialists.
economics, farm safety and kitchen gardening.
We provided 2500 kitchen gardening packs to families in 2022 and

are aiming to train 100% of our farmers' families in 2023 with the
provision of 3000 Kitchen Gardening seeds.
Affordable Mechanization and

Modernization of Tobacco
For the last 75 years, we have successfully transferred skills, new
Summer Camps technologies, and best agricultural practices to our farmers. We work
to cater for labor availability challenges and cost optimization through
While targeting to achieve zero child labor in tobacco supply chain, introduction of modern cultivation tools and affordable technologies
we have further enhanced our Summer Camps Program to mitigate like float seedling technology, mechanical inter-cultivators, fertilizer
the risk of underage involvement in tobacco production activities and applicators and mechanical transplanters. We have also introduced
encourage our farmers on the importance of child education. stitching machines for tobacco stick tying to address the challenge of
potential child labor.
In 2022, we collaborated with Idara e Taleem o Agahi, a non-profit
organization with expertise in poverty alleviation and rights awareness,
to conduct 20 summer camps. 158 ambitious learners were enrolled
in these camps, engaging them in arts, science, and math activities.
A JOURNEY OF
GROWTH &
Crop Input Support 1000KVA Genset Support

In the last 5 years, we have extended farmer support to aid in crop We also provided 1000 KVA genset support for the Government’s lift
productivity. Our Company also provides subsidy for other loaning irrigation scheme which was out of operation due to extreme power
items such as pesticides, hybrid seed, barn flue pipes and is currently outage. With this genset support 1,000 Ha of land benefited which
providing end to end farmer facilitation for yield, quality improvement included tobacco and other food crops.
and mechanization services.
Mobile Doctor Units

Hazardous Waste Reduction Since 1985, we have been providing free of cost medication and
consultations to the less privileged sector of the society. In 2021, we
We have a Hazardous Farm Waste Recycling Program through which
farmers are incentivized to bring empty CPA containers to depots. The expanded our MDUs fleet from 7 to 13 and equipped all the vehicles
empty containers are collected by a certified vendor and recycled. In with leading modern basic health care equipment. We also expanded
2022, 7 Tons of hazardous waste was recycled. our MDUs routes and included 5 new cities i.e. Muzaffarabad,
Sargodha, Bahawalpur, DG Khan and Jhang. A total of 150,000
patients were given free of cost basic health care consultations,
treatment, and medication in 12 different districts of KPK & Punjab in
2022.
Turbo Barns
We aim to achieve environmental excellence through fuel efficient
barns: Turbo Barns. These Turbo Barns reduce the wood fuel cost of
Water Filtration Plants

farmers and also reduce the impact on environment through efficient
fuel usage. So far, we have converted 41% of our farmers’ barns into
Turbo Barns.
To combat incidence of waterborne diseases, our Company has built
and continues to maintain 27 water filtration plants across 9 districts,
providing safe and clean drinking water to the less privileged sections
of the society. Each plant has a capacity to provide 20,000 liters of
clean drinking water per day. To ensure the optimal water quality and
Farm Safety sustainability of the initiative, a monthly operations and maintenance
regime has been established for all 27 water filtration plants.
We are leading sustainable agriculture in Pakistan where farm
safety is embedded in the pulse of our farmers by inculcating safety
mindset. For this purpose, free of cost Personal Protective Equipment
(PPE) were provided to 100% of our contracted farmers in 2019, 2021
and 2022.
E-Invoicing Initiative
We managed to cut down on all paper invoices and moved to
E-invoicing nationally, effectively saving an estimated 50,000 trees.
While this is just the start, our business is on target to substitute 35Mn
potential paper invoices with the digital E-invoicing solution already
executed.
19
LEAF TRANSFORMATIONAL
JOURNEY
Bank to Bank Farmer Project AgBot – Drone
Payments Technology
With the aim to simplify payments to our farmers Our leaf operations, in line with digitization strategy and
and move away from manual voucher issuance and our ESG agenda, took the first of its kind initiative of
reconciliation, we carried out massive transition to Bank- Crop Protective Agents (CPA) application using drone
to-Bank Payments. technology.
Proof of Concept on 55 Hectares was carried out in 2021,
In 2022, through extensive engagements with Pakistan following which we increased the Scope of drone CPA
Tobacco Board (PTB), approval was taken to execute application and achieved 150 Hectares coverage in 2022.
payment migration for farmers from manual vouchers to
online payment. This initiative has the potential to save 30% of CPA during
application and 70% water usage. Additionally, this
Through external stakeholder engagement, we also practice will also ensure safe farm practices.
facilitated our farming community in opening more than
2,000 bank accounts within a period of three months.
Benefits of doing this were:
1. Accelerating agriculture sector towards digitization.

2. Paperless transactions aiding reduced carbon
footprint.
3. Ease of facilitation for farmers.
4. Mitigating payment compliance risks with guaranteed
payment to contracted farmers.
A JOURNEY OF
GROWTH &
TRANSITIONING INTO
THE FUTURE
In 2022, we embarked upon digitalization, automation, and simplification of different
platforms for faster and stronger delivery of processes, supporting our agenda of
future transformation to ensure business efficiency.
We were selected as a lead market to conduct User Acceptance Test (UAT) in which Business Impact Analysis (BIA)
which previously used to be conducted on complex spreadsheets was upgraded to Power App, providing end user an
interactive experience while conducting their BIAs. Additionally, we embarked upon the process through which Business
Continuity Plans, which were previously hosted over SharePoint, will now be hosted over the Business Continuity
Management App.
To optimize resources, country Security Manager visited our major sites to identify posts that could be secured with
electronic devices, which was followed by ensuring implementation. This resulted in cost-effective security services
throughout Pakistan.
We also developed a Business Continuity Management (BCM) exercise which acts as a benchmark training deck for
Crisis Management Team (CMT) training for all end markets across MESA & NA. Sessions on investigation training were
also held with MESA & NA security leadership team, which covered topics such as the Methodology of Investigation,
Reporting of Incidents, and Writing Investigation Reports - this was undertaken to create a better understanding of
methods and standards for reporting complex investigations.
21
OUR PEOPLE
OUR PRIDE
In the past 75 years, a historic momentum has been laid out to
revolutionize our workplace, with an enhanced focus on our people
along with Diversity, Equity and Inclusion.
Battle of the Minds 2022

Starting as a humble initiative in 2004 with only 16 graduates
20 Universities Across
Pakistan Reached
05
across 4 universities, Battle of Minds (BOM) has transformed into a
household label for thousands of talented minds across the nation.
In-person Drives
Fast-forward to 18 years, the platform has now created a legacy
of grooming young leaders. Battle of Minds 2022 was the biggest
it has ever been in our history, with over 4,500 students who
participated. The event saw a revival of in-person campus drives
which included engaging activities, marking the first time such
events have taken place since the pandemic. This year's Battle of
06 Virtual Campus Drives
71
Minds had an innovative approach, tying the global theme to our
Company’s focus on Sustainability and ESG agenda. Hundreds Campuses Attracted
of groundbreaking pitches surrounding Digitalization, Blockchain, Nationwide
and Sustainability challenge were formulated and shortlisted.
Dynamic and interactive social media campaigns were also

launched on various platforms to celebrate BOM throughout the
Transforming Our
country, reaching a large audience of 4 million users, making
BOM'22 one of the most successful digital campaigns launched
Workplace
by our Company. With a steadfast commitment to our employees, we have taken
decisive actions throughout our long-standing history to empower
We also had the second-highest number of registrations in the our workforce. In response to the heightened need for flexibility
region with 100% expression of interest, and with more than 200 in 2022, we pro-actively transformed ourselves to meet the needs
teams who made the final cut. of our employees through initiatives which provided flexible work
options and comprehensive learning programs that promote
A JOURNEY OF
GROWTH &
We are Global
personal development. One such initiative was the implementation
of a Flexible Workplace Model, which allows employees to better
balance their work and personal commitments.
As Pakistan's oldest and one of the largest multinational
We have also made significant investments in employee learning companies, we have a proud legacy of providing our employees
and development programs, which provide employees with with opportunities for international exposure. The number of
opportunities to build new skills and advance their careers. In- employees who have taken advantage of this has steadily grown,
line with this goal, we launched Eureka, an in-house capability resulting in a diverse and experienced talent pool. Over the years,
development program, which ensures the right talent for each role our International Assignees have been a part of various projects in
and allows us to strengthen and uplift our talent pool to accelerate multiple functions, delivering disruptive changes. Currently, about
transformation. 35% of International Assignees are from 2022 talent exports alone.
To support our ongoing transformation efforts, we encourage

our employees to partake in a wide range of training programs Together, We Care
available on our learning platform, the GRID, such as Leadership
Skills, Team Management, People Management, Self-Awareness, Throughout the years, we have remained steadfast in our
Tolerance of Ambiguity and more. commitment to talent retention and diversity. This has been a
guiding principle for us as we continually adapt to changing times
With well-being at the heart of what we do, we deployed the first and provide our employees with the space, freedom, and support
ever online well-being platform, OLADOC, enabling employees they need to grow and learn. Through our industry-leading policies
to access online consultations from a network of nationwide we ensure employee well-being and provision of a safe and secure
renowned doctors. Our Happy Basket Initiative, run by the People work environment.
& Culture Committee, provides monthly doorstep delivery of
menstrual care products to our female employees across Pakistan. Our Childcare Policy encourages the facilitation of employees
who are single parents or working mothers, by providing them
She Returns was a unique program initiated in 2021, through with child-care facilities, child-care support, and business travel
which we aimed to tap into a highly capable, skilled, and motivated support. The pre-existing policy was extended to include nanny
workforce comprising of individuals who had taken an extended support in addition to child-care options to better serve the
break from their careers and were eager to return to their chosen broad group of working mothers at our Company. We recently
profession. 2022 was the year for our Returners to shine, all inaugurated a daycare center in a Leaf Depot in Faujoon, located
of whom have now successfully integrated themselves into the in the remote area of Yar Hussain region, to provide support to
workforce. With a successful blueprint to draw on, we are looking working mothers with infants and ensure their comfort and well-
forward to bigger and better programs in the future, creating a being.
more balanced workforce, and ensuring our Company continues to
grow onwards and upwards in the years to come. In order to improve service experience and maximize satisfaction,
initiatives to elevate and empower men have also been
In 2022 we launched Women Inclusion Network (WIN) and introduced. Following the birth of their child, male employees are
Mentors Corner, an exclusive community for women which aimed given more time off work to assist them in playing their role in
to Connect, Collaborate, and Empower. This initiative provides domestic duties under the revised paternity leave policy, which
opportunities for our female employees to engage in meaningful went into effect in January 2021.
and insightful discussions with female leaders both within BAT and
outside of the Company. Pregnancy Loss Policy is also in effect through which we
offer support to employees who have experienced the loss of a
We are also immensely proud of the fact that our Executive pregnancy, whether it was their own or their spouse's.
Committee comprises 40% female and female attrition continues
to drop year-on-year.
This year, our commitment to fostering our

workforce and developing our workplace has
received acknowledgement through prestigious
awards which serve as a testament to our
Company's efforts in 2022.
Overseas Investors Chamber of Global Diversity, Equity &

Commerce & Industry (OICCI) Inclusion Benchmarks
Women Empowerment (GDEIB) Award 2023
Award 2022
23
ORGANISATIONAL
STRUCTURE
Chairman and
Board of Directors
Audit Human Resource MD/CEO Share Transfer

Committee & Remuneration Committee
Committee
Finance Head of
Director Human Resources
Head of Corporate Finance Sr. HRBP OPS

Internal Audit Controller (AKF)
Area Commercial Finance Sr. HRBP OPS

Controller – Operations (JF)
Sr. Commercial Finance Sr. HRBP -

Manager – Marketing Marketing
Executive HRBP
Assistant Corporate
HR Services
Manager
Executive
Assistant
A JOURNEY OF
GROWTH &
Executive Area Director

Committee Ops MESA
(ExCo)
Legal & External Head of

Affairs Director Marketing
Head of Trade
Head of Supply Chain
Marketing & Distribution
External Affairs Manager
Head of
Company Factory
Activations
Secretary Manager – JF
As at 31st December 2022

Head of Planning Factory
Legal - PK Manager – PK Manager – AKF
Country Security Sr. Brand Area Quality

Manager Deployment Manager Manager
Executive Executive Area Sustainability

Assistant Assistant Manager
25
BOARD OF
DIRECTORS
Zafar Mahmood Syed Ali Akbar Kelly Louise Burtenshaw

(Chairman and Independent Director) (Managing Director and CEO) (Finance Director)
Mr. Mahmood holds a Master’s degree Mr. Ali Akbar brings a strong legacy of over Ms. Kelly Burtenshaw is a Certified
in Economics, LL.B. and Post Graduate two decades of multi-faceted professional Chartered Accountant from the Institute
Diploma in Development Administration experience with various multinational of Chartered Accountants, Australia. Prior
from Manchester University, UK. He has organizations and Fortune 500 companies to joining British American Tobacco (BAT),
served the Government of Pakistan for 38 not just in Pakistan but also the Middle she has over 12 years of experience with
years in multiple roles including Secretary East, North Africa and North America. PricewaterhouseCoopers in Sydney and
Textile, Secretary Industries, Secretary During his professional journey, he has Tokyo. She has over 9 years of experience
Water & Power, Secretary Petroleum & held various senior leadership roles in working with BAT Group having joined
Natural Resources, Secretary Commerce General Management, Sales & Marketing, the Group in 2013 and has held various
and Secretary Cabinet. He has also served Business Development, Supply Chain and senior positions in the Finance function of
as Chairman, Punjab Public Service Mergers & Acquisitions. Mr. Akbar has various BAT companies. In 2017, she was
Commission, Consul General Istanbul, also served as Director for different public appointed as Financial Controller, BAT in
Vice Chairman Export Promotion Bureau, and private organizations. He embarked Greater North Asia Area, before taking
Secretary Punjab Education Schools. His on his career journey as a Management up the role of Finance Director for Taiwan
last assignment was Chairman WAPDA. Trainee at Unilever Bestfoods and grew Cluster in February 2019. In January 2020,
He joined the PTC Board in 2016. He was quickly taking up leadership roles in Engro she assumed the role of Finance Director,
re-appointed as Chairman following his re- Corporation, British American Tobacco Korea where she led the Finance team and
election to the Board of Directors in April, and the Coca-Cola Company. He has was part of the Leadership Team driving
2022. led large and diverse teams in multiple the strategic agenda for Korea.
countries with unique business challenges Kelly moved to Pakistan as Finance
and complex business structures. During Director in April 2022 and she has joined
his career, he has received various local the Board of Pakistan Tobacco Company in
& global accolades for his contribution June 2022.
towards organizational strategy and
disruptive marketing initiatives. His focus
on Strategic Innovation won him one of
the most coveted honors at the Coca-Cola
Company in 2018 – the Global Award by
the Chairman & the Board of Directors.
Mr. Akbar joined PTC as the Marketing
Director in 2019 and was appointed to the
Board of Directors the same year. He was
subsequently appointed Managing Director
and CEO on March 1, 2021.
A JOURNEY OF
GROWTH &
Belinda Ross Wael Sabra Usman Zahur

(Non-Executive Director) (Non-Executive Director) (Non-Executive Director)
Ms. Belinda completed her LLB and B. Mr. Wael Sabra holds a Master’s degree in Mr. Usman Zahur joined Pakistan Tobacco
Com at the University of Otago, New Finance from University of Florida and is Company Limited (PTC) as a Management
Zealand and is registered as a Barrister a Certified Management Account (CMA). Trainee in 1997. During his career in
and Solicitor in the High Court of New He has 20 years of experience with BAT, BAT, he has acquired extensive global
Zealand. Before joining BAT, she has since 2003 he has held various key senior experience in various Marketing positions
worked as a private practitioner at one positions in the finance function across in Brands, Trade and SP&I in markets like
of Auckland’s leading firms and has also Middle East, Africa and South Asia. In Kenya, United Kingdom and Bangladesh,
provided advisory services to various New 2010, he was appointed as Finance amongst others. He returned to Pakistan
Zealand and South Pacific Businesses. Director, Democratic Republic of Congo in 2017 as the Area Marketing Director
Belinda has 20 years of experience within before moving to South Africa in 2012, for South Asia Cluster and in 2019, he
BAT and her current role encompasses where he was assigned to take up the was appointed as the Managing Director
Legal Affairs, Corporate Affairs and role of Finance Director, Southern African & Chief Executive Officer of Pakistan
Security matters across Asia Pacific and Markets. In July 2014, he moved to Cairo Tobacco Company Limited and also joined
Middle East region. She is a member of as Finance Director, North Africa Area. the Board of Directors as an executive
the leadership teams of Asia Pacific and In August 2016, he moved to Pakistan as Director. From 1st March 2021, Usman
Middle East regions and the Global Legal Finance Director, South Asia Cluster and was moved to the role of Area Director,
and External Affairs team. She joined the subsequently to Dubai as Finance Director Asia Pacific Area (APA) based out of Hong
PTC Board in 2019 and was re-elected to Middle East, South Asia and North Africa. Kong. He re-joined the Board of Directors
the Board in April 2022. In his 20 years with BAT, he has been an in 2022.
Executive board member in several BAT
operating companies.
Presently, he is serving as Area Director,

Middle East, South Asia & North Africa. He
was previously appointed to PTC’s board
in 2016 and served till 2019. He was re-
appointed to PTC’s board in 2021.
27
BOARD OF
DIRECTORS
Syed Asad Ali Shah Asif Jooma Gary Tarrant

(Legal and External Affairs Director) (Independent Director) (Non-Executive Director)
Mr. Shah holds a master’s degree Mr. Asif Jooma began his career in the Mr. Gary Tarrant joined the BAT Group in
from Cranfield University School of corporate sector with Lucky Core Industries 2004 in Globe House, United Kingdom and
Management. He has more than 21 Limited (Formerly ICI Pakistan Limited) back his career at BAT Group includes multiple
years of experience in Pakistan Tobacco in 1983. He has over 35 years of extensive positions within the Legal & External Affairs
Company Limited. He has worked in experience in senior commercial and department as Head of LEX, Korea &
several managerial roles in different leadership roles. Following his early years with Taiwan Cluster, Head of Commercial Legal
functions including Marketing, Supply the Company and subsequently, Pakistan PTA UK, Head of Legal West Africa and Legal
Limited, he was appointed Managing Director
Chain and Corporate & Regulatory Affairs. Counsel for GCC amongst others.
of Abbott Laboratories Pakistan Limited in
He has previously served as the Head of
2007. After serving there for nearly six years,
Government Affairs and in August 2018, Gary is currently the Head of Legal and
he returned to Lucky Core Industries Limited
he was appointed as Director, Legal and (Formerly ICI Pakistan Limited) as Chief
External Affairs (LEX), Middle East, South
External Affairs. He joined the PTC Board Executive in February 2013. Asia and North Africa, a role that he moved
in 2019 and was re-elected to the Board of into in 2019, and a member of the Area
Directors in April 2022. Mr. Jooma has previously served as the Leadership Team. In his current functional
President of the American Business Council, role, Gary is responsible for leading the
President of the Overseas Investors Chamber Legal and External Affairs team providing
of Commerce and Industry (OICCI) and support and advice in relation to all
Chairman of the Pharma Bureau. He has also aspects of legal and compliance advice
served as a Director on NIB Bank Limited, and managing the external affairs team for
Engro Fertilisers Limited and Director and the BAT Group companies in Middle East,
Member Executive Committee of the Board of South Asia and North Africa. As of 1st April
Investment (BOI) – Government of Pakistan and 2023, Gary will be taking on the role of
currently serves on the Board of National Bank Regional Head of Legal & External Affairs
of Pakistan, Systems Limited, Pakistan Tobacco and Regional Legal Counsel, Asia Pacific
Company Limited and International Industries Middle East Africa. Gary was appointed to
Limited. Mr. Jooma is also the Chief Executive PTC’s Board of Directors in October 2022.
of NutriCo Morinaga (Private) Limited.
Additionally, Mr. Jooma is on the Board

of Governors of the Lahore University of
Management Sciences (LUMS) and a Trustee
of the Duke of Edinburgh’s Awards Program,
whilst previously also serving on the Board of
Indus Valley School of Art and Architecture
(IVSAA). He himself graduated cum laude
from Boston University with a Bachelor of Arts
in Development Economics and attended
Executive Development program at INSEAD
and Harvard Business School thereafter.
A JOURNEY OF
GROWTH &
Oliver Engels Mohammad Riaz Lt. General Najib Ullah Khan (Retd)
(Non-Executive Director) (Independent Director) (Independent Director)
Mr. Oliver Engels completed a Master of Mr. Mohammad Riaz holds a Master’s Lt. General (Retd) Najib Ullah Khan served
Business & Economics at the University degree in Development Economics from in Pakistan Army for 40 years. A graduate
of Hannover, Germany. He has extensive Williams College, Massachusetts, USA with from Military College of Engineering,
experience in the consumer goods a Post Graduate diploma in Mathematics Staff College Camberley (UK) and the
industry. After 18 years of having worked and Economics from University of National Defense University, he had an
at Unilever in Local, Regional and Global Colorado, Boulder, USA. He also has a illustrious career in Army. During his
Marketing, Oliver joined British American Master’s degree in Defense and Strategic commendable service to the country,
Tobacco in 2014. He held several roles as Studies from National Defense University he held various command, Staff and
Marketing Director Germany, Global Group Islamabad. He has over 36 years of Instructional appointments. He has served
Head of Brands Combustibles as well as experience and has held senior level jobs as the Quarter Master General, Engineer
Area Director for Central Europe North. in various ministries and departments of in Chief, Commanded Pakistan Army’s
Government of Pakistan both within and Strike Division besides being Director
His current role encompasses the outside the country. His jobs involved General, Frontier Works Organization. Post
accountability for Marketing & Sales across policy making, diplomacy, negotiations of retirement from Pakistan Army, he served
the Asia Pacific & Middle East region, and trade, customs, finance, investments and as the Managing Director of Army Welfare
is based in Singapore. economic related laws and rules. He has Trust. Lt General Najib continues to make
served in the Federal Board of Revenue, valuable contributions to Cadet College
Oliver is a member of the leadership teams the Prime Minister’s office, and the National Hasan Abdal while remaining on its Board
of the Asia Pacific & Middle East Region Assembly Secretariat. He was Trade and for last 7 years. He was appointed to the
as well as the Global Marketing Executive Commercial Counsellor in the embassy of PTC Board in 2022.
team of BAT. He was appointed to PTC’s Pakistan Paris, France and also remained
Board of Directors in October 2022. as Counsel General Istanbul, Turkey. He
has served on the Board of State Bank of
Pakistan as a Director and also served as
Member of the Monetary Policy Committee.
His last assignment was as Secretary of
the National Assembly of Pakistan before
he joined the PTC Board in 2019. He was
re-elected to PTC’s Board of Directors
in April, 2022 and is the Chairman of the
Audit Committee.
29
COMMITTEES
OF BOARD
The Board has a number of committees, which assist the Board in the
performance of its functions.
Executive Committee
The Executive Committee of the Board (ExCo) comprises of Executive Directors of the Company and heads of
departments. The ExCo drives to achieve the strategic targets set by the Board of Directors.
Syed Ali Akbar Syed Asad Ali Shah Sayeed Salam Kelly Burtenshaw
MD/CEO Legal & External Affairs Director Head of Marketing Finance Director
Faiza Imtiaz Patrick Bejjani Madeeha Arshad Chaudhry

Head of Human Resources South Asia Supply Chain Manager Company Secretary
Matters Delegated to the Management

It is the responsibility of management to conduct the routine business operations of the Company in an effective and
ethical manner in accordance with the strategies and goals as approved by the Board and to identify and administer the
key risks and opportunities which could impact the Company in the ordinary course of execution of its business.
Management is also concerned with keeping the Board members updated regarding any changes in the operating
environment. It is also the responsibility of management, with the oversight of the Board and its Audit Committee, to
prepare financial statements that fairly present the financial position of the Company in accordance with applicable
accounting standards and requirements of the Companies Act, 2017.
A JOURNEY OF
GROWTH &
Board of Directors Audit Committee

During the year 2022, 4 meetings held on February 24, In 2022, 4 meetings held on February 24, April 21, July 28
April 21, July 28 and October 20. Attendance of members and October 20. Attendance of its members is as follows:
is as follows:
Members Attendance Members Attendance

Mr. Zafar Mahmood Mohammad Riaz
Chairman 4/4 Chairman 4/4
Syed Ali Akbar Lt. Gen.(R) M. Masood Aslam
Managing Director and CEO 3/4 (Retired) 1/4
William Francis Pegel Asif Jooma
Director Finance & IT (resigned w.e.f 14-06-2022) 2/4 Independent Director 4/4
Syed Asad Ali Shah Lt. Gen (R) Najib Ullah Khan
Director Legal and External Affairs 4/4 Independent Director 3/4
Kelly Burtenshaw Belinda Joy Ross
Director Finance (joined w.e.f 15-06-2022) 2/4 Non-Executive Director 3/4
Belinda Joy Ross Wael Sabra
Non-Executive Director 3/4 Non-Executive Director 4/4
Syed Javed Iqbal
Non-Executive Director (Retired) 1/4
Lt. Gen.(R) M. Masood Aslam Human Resources &
1/4
Independent Director (Retired)
Remuneration Committee
Mohammad Riaz
Independent Director 4/4 In 2022, 2 meetings held on February 22, and October
Asif Jooma 20. Attendance of its members is as follows:
Independent Director 4/4
Members Attendance
Wael Sabra
4/4 Lt. Gen.(R) M. Masood Aslam
Non-Executive Director
(Chairman) (Retired) 1/2
Shannon McInnes
1/4 Lt. Gen.(R) Najib Ullah Khan
Non-Executive Director (resigned w.e.f.4-10-2022)
(Chairman) 1/2
Ozsan Ozbas
0/4 Asif Jooma
Non-Executive Director (resigned w.e.f.14-10-2022)
Usman Zahur
3/4 Mohammad Riaz
Non-Executive Director (elected w.e.f. 21-04-2022)
Lt. Gen (R) Najib Ullah Khan
Gary Tarrant
Non-Executive Director (joined w.e.f. 04-10-2022) 1/4
Oliver Engels
31
Shares Transfer Committee ii) Commercial committee
In 2022, 10 meetings held. Attendance of its members is In 2022, 12 meetings held. Attendance of its members is
as follows: as follows:
Members Attendance
Members Attendance
Syed Ali Akbar 11/12
Syed Ali Akbar 5/10
William Pegel
William Pegel 5/12
(resigned w.e.f 14-06-2022) 5/10 (Left in June 2022)
Syed Asad Ali Shah 4/12

Syed Asad Ali Shah 10/10
Ahsan Irshad
Kelly Burtenshaw 6/12
(joined w.e.f 15-06-2022) 4/10 (Left in Sep 2022)
Waqas Ahmad Khan

(Left in Sep 2022) 3/12
Sub Committees of ExCo. Kelly Burtenshaw
(Joined in June 2022) 7/12
i) Governance committee
Sayeed Salam
(Joined in Sep 2022) 4/12
In 2022, 12 meetings held. Attendance of its members is
as follows: Faiza Imtiaz
(Joined in Sep 2022) 4/12
Members Attendance
William Pegel
(Left in May 2022) 4/12
Syed Asad Shah 10/12
Waqas Ahmed Khan
(Left in Aug 2022) 6/12
Kelly Burtenshaw
(Joined in May 2022) 8/12
Syed Ali Akbar
(Joined in July 2022) 4/12
Ahsan Irshad
(Joined in June 2022 & Left in August 2022) 2/12
Sayeed Salam
(Joined in August 2022) 5/12
Faiza Imtiaz
(Joined in August 2022) 5/12
A JOURNEY OF
GROWTH &
TORs of Board Committees

Committee Functions
1 Audit Committee The Audit Committee functions within the scope of the
terms of reference approved by the Board, which sets out
the roles and responsibilities of the Committee, as well
as the requirements of the Listed Companies (Code of
Corporate Governance) Regulations, 2019. The role and
responsibilities of the Audit Committee include:
• Seeking assurance on the measures taken by the
management in identification, evaluation and mitigation
of relevant business risks.
• Reviewing quarterly, half-yearly and annual financial
statements of the Company and preliminary
announcements of results before approval by the
Board and publication.
• Reviewing the Company’s statement on internal control
systems, prior to their approval by the Board.
• Ascertaining that the internal control systems including
financial and operational controls, accounting system
and reporting structure, are adequate and effective.
• Monitoring compliance with the best practices of
corporate governance and instituting special projects
and investigations on matters deemed appropriate by
the Committee or desired by the Board.
• Review and approve the scope and extent of internal
audit, including the annual Internal Audit Plan, and
regularly monitors the progress of the internal audit
engagements.
2 Human Resources and Remuneration (HR&R) The Committee is responsible for:
• Recommending human resources management
policies to the Board;
• Recommending to the Board the selection, evaluation,
compensation (including retirement benefits) and
succession planning of the MD/CEO;
• Recommending to the Board, the selection, evaluation,
compensation (including retirement benefits) of CFO,
Company Secretary and Head of Internal Audit; and
• Consideration and approval on recommendations
of MD/CEO on such matters for key management
positions who report directly to MD/CEO.
3 Share Transfer Committee The Committee is responsible for dealing with the day
to day matters relating to the shares of the Company.
4 Executive Committee of the Board (ExCo) The Executive Committee of the Board (ExCo) is the
central working nucleus of the organisation. Comprising
of Executive Directors and Heads of Departments of the
Company, the ExCo drives to achieve the strategic targets
set by the Board of Directors.
33
Sub Committees of ExCo.
Committee Functions
i Governance Committee The Governance Committee (the Committee) is a sub-
committee of the Executive Committee (ExCo).
The objective of the Committee is to assist the PTC ExCo
to discharge their corporate governance responsibilities to
exercise due care, diligence and skill in relation to:
• Achievement of PTC goals within an appropriate
framework of internal control and risk management;
• Process simplification with empowered teams leading
to smarter and faster decision making;
• Internal control system;
• Risk management and analysis;
• Business policies and practices;
• Compliance with the SoBC standards and policies;
• Compliance with applicable laws and regulations; and
• Monitoring and controlling of business and other
risks while recognising that the primary responsibility
for corporate governance resides with the Board, it
has been delegated to the Committee, which has a
representation of the ExCo and their direct reports
The Committee does not replace or replicate established
management responsibilities and delegations or the
reporting lines and responsibilities of internal audit or
external audit functions and nor does the delegation to the
Committee fragment or diminish the responsibilities of the
Board as a whole.
ii Commercial Committee The committee is also sub- committee of ExCo. The
objective is to assist the ExCo in reviewing key business
metrics on a monthly basis which include market overview,
current business performance, proposed plans, financial
performance, latest estimates, operational performance and
supply plans.
The commercial forum is responsible for the following:
• Seamlessly drive the commercial agenda for PTC
• Monitor progress and facilitate delivery for ongoing
projects and workstreams (Star Charts)
• Provide organizational support to and approval for
ongoing projects
• Operational decision making and business cases for
key projects and budgetary approvals
• Detailed PIRs of completed projects
• Necessary Escalations and approvals if required for
ASOP and ALT Commercial
This is an approving forum for all budgets for business plans
as per the SoDA governance.
A JOURNEY OF
GROWTH &
STANDARDS OF BUSINESS
CONDUCT AND ETHICAL
PRINCIPLES
will be treated. The Speak Up policy allows employees (and
Business Ethics & Anti- third parties) to report their concerns on any breach of the
Corruption Measures SoBC.
The Company is committed to operate the business fairly The actions that can be reported include (among others):
and ethically in line with applicable laws. Conducting
business ethically and with integrity entails avoiding all • Criminal Acts
forms of corrupt practices. As an organisation we have • Putting Health or Safety at Risk
a “zero tolerance” approach to corrupt practices and in
• Environmental Damage
no circumstances will such conduct be tolerated. The
Company’s Standards of Business Conduct (SoBC) form the • Bullying, Harassment or Disrespect at the Workplace
framework for the Company’s comprehensive compliance • Accounting Malpractices
program. The Company ensures all employees across
various levels of the organisation understand and uphold • Failing to Comply with Legal Obligations
the SoBC. In order to ensure corporate sustainability, the • Concealing any of the above activities
Company further stresses and encourages its contractors,
agents or consultants, to act consistently with the SoBC by The Speak Up Policy ensures the highest level of
applying similar standards within their own organisations. confidentiality for those who speak up and the investigation
process. Additionally, in order to encourage people to
Whistleblowing speak up, the Speak Up Policy also mandates no reprisal

against the individual (who may also report the concern
anonymously). All employees of the Company are made
Any employee of the Company who suspects a wrongdoing
aware of the Speak Up Policy and the safeguards it provides
at work is strongly encouraged to report such wrongdoing
to those who speak up.
through the whistleblowing procedure. The Company's
whistleblowing Policy (Speak Up Policy) gives employees
(and third parties) trust and confidence in how their concerns
35
The various avenues for raising concerns are provided below: Human Rights and the Company’s
operations
Informal reporting
The Company is committed to ensuring that its operations
Voice concern(s) with line manager or any other senior are always conducted in a way that respects the human
manager. rights of its employees, the people it works with and the
communities in which it operates. The Company’s due
Formal reporting diligence procedures enable it to monitor the effectiveness of,
and compliance with, its policy commitments and its Supplier
Report the matter formally for investigation with line manager
Code of Conduct, as well as to identify, prevent and mitigate
or any of the designated officer(s) either verbally or in writing.
human rights risks, impacts and abuses.
Designated officer(s) Health, safety & welfare

Referred to by the individual directly or by the line manager
The Company places a high value on the health, safety and
for investigation but matter is kept confidential and
welfare of its employees, and are committed to providing a
investigated as such.
safe working environment, to prevent accidents and injury,
and to minimise occupational health risks.
Anonymous reports
Individuals may raise concerns anonymously. Environment
The Company is committed to excellence in environmental
Reporting a wrongdoing management across its business operations and
If someone has a concern they wish to raise, they may throughout its supply chain and compliance with applicable
write to any of the Designated Officers or contact them via environmental laws and regulations.
telephone or fax.
Personal And Business
The designated officers are:
Integrity
Legal and External Affairs Director
Company Secretary Conflicts of interest
Compliance Manager A conflict of interest will arise in any situation where an
employee’s position or responsibilities within the Company
Number of incidences reported in 2022 presents an opportunity for him/her or any close relative
12 whistle blowing incidences were reported in the said year. to obtain a personal gain or benefit (apart from the normal
rewards of employment), or where there is a scope for
them to prefer their personal interests, or those of any close
Investors’ Grievance Policy relative, above their duty to act in the best interests of the
Company.
The Company provides on its website a direct email address,
as well as a postal address, on which investor complaints
and/or grievances can be communicated directly to the
Actual and perceived conflicts of interest
Company Secretary. As a means of redressal against any It is a part of the Company’s SoBC that all employees must
complaints/grievances that the Company may not have avoid situations where their personal interests might, or might
addressed, the Company website also stipulates that contact appear to, be in conflict with the interests of the Company. In
can be made with the Securities and Exchange Commission the case of any Board member of the Company, disclosures
of Pakistan for the same. are made to, and approval is sought from, the Board of the
Company at its next meeting and the decision is recorded
Social And Environment

in the minutes. The Company Secretary is responsible for
maintaining the ‘conflicts log’ of the Board of Directors of the
Respect in the workplace Company.
All Company employees must treat all of their colleagues and
business partners inclusively, with dignity and with respect.
The Company is committed to maintaining a workplace free
from bullying, intimidation and/or harassment.
A JOURNEY OF
GROWTH &
Anti-bribery and corruption protect and maintain the confidentiality of all commercially
sensitive information, trade secrets and other confidential
Corruption causes distortion in markets and harms information relating to the Company and its business.
economic, social and political development, particularly
in developing countries. It is wholly unacceptable for the
Company and its employees to be involved or implicated in
Insider dealing and market abuse
any way in corrupt practices. The Company applies similar The Company is committed to supporting fair and open
standards on the third parties it works with and ensures they securities markets. Accordingly, employees are prohibited
have in place policies like Supplier Code of Conduct and from dealing on the basis of insider information or engaging
Third Party Anti Financial Crime Procedure. in other forms of market abuse.
Gifts and entertainment National And

The exchange of entertainment and gifts with business
partners can build goodwill in business relationships and, International Trade
within limits, is perfectly acceptable. However, some gifts Competition and anti-trust
and entertainment can create improper influence (or the
appearance of improper influence) and might even be seen The Company believes in free and fair competition. The
as bribes. The Company's Gifts and Entertainment Policy Company requires its employees to compete fairly and
prohibits giving and receiving of such gifts that may create ethically and within the framework of applicable ‘competition’
any improper influence. laws (or ‘anti-trust’ laws, as they are known in certain
countries).
External Stakeholders Sanctions and export controls

Community investment Various sanctions regimes exist throughout the world,
The Company recognizes the role of business as a corporate ranging from comprehensive economic and trade sanctions
citizen and the Company works towards supporting local to more specific measures such as arms embargoes, travel
communities and charitable projects. It thus has in place a bans and financial or diplomatic restrictions. Economic and
comprehensive policy framework for Community Investment. trade sanctions impact the business of the Company by
restricting the extent to which they can operate within certain
jurisdictions. The Company is committed to upholding all
Corporate Assets & lawful sanctions regimes.
Financial Integrity
Anti-illicit trade
Accurate accounting and The Company engages only in lawful trade in its products
record keeping and maintains controls to prevent and deter illicit trade in
Honest, accurate and objective recording and reporting of its products. Illicit trade, involving smuggled or counterfeit
information, both financial and non-financial, is essential to products, harms the business and devalues the Company’s
the Company’s credibility and reputation, its ability to meet its brands.
legal, tax, audit and regulatory obligations and informing and
supporting business decisions and actions by the Company. Tax evasion and anti-money laundering
Money laundering involves the possession of, or any dealing
Protection of corporate assets with, the proceeds of criminal activity. It includes the process
Employees are responsible for safeguarding and making of concealing the identity of illegally obtained money so that
appropriate use of the Company assets which they are it appears to have come from a lawful source. The Company
entrusted with in order to do their jobs and meet the does not condone, facilitate or support tax evasion and
Company’s business objectives. money laundering and requires its employees to abide by its
anti-money laundering policy.
Data privacy, confidentiality and

information security
The Company is committed to handling personal data
responsibly, in compliance with privacy laws and the global
minimum standard of governance. The employees must
37
CHAIRMAN’S
REVIEW
I am pleased to share the Annual
Report for the year 2022.
2022 Performance framework and governance environment has further strengthened. The Company’s
compliance with SOx controls and other policies & procedures is monitored by the
Group’s internal controls team and also tested by external auditors (KPMG) from time
The Company’s performance faced multitude of headwinds including high inflation, to time.
considerable local currency devaluation, multiple excise increases and shortage of
foreign currency in the banking system. PTC navigated through these challenges with a The Company also mandates its employees to operate and deliver with integrity and
clear aim of continued value delivery to consumers and of enhanced value generation strongly discourages malpractice. This message is reinforced through face-to-face
for shareholders. Implementation of Track and Trace system and sporadic enforcements and online trainings conducted throughout the year as part of Standards of Business
by Law Enforcement Agencies somewhat helped to temporarily reduce price disparity Conduct (SoBC) refreshers. Furthermore, channels have been established and
between legitimate industry and duty-not-paid tobacco sector (DNP) resulting in flat year made available for anyone working in or with the Company to raise their concerns in
on year volume. confidence and without fear of reprisal.
As a result of the Company’s clear strategy, PTC was able to deliver EPS growth of
13% for 2022 versus same period last year. Further, the Company was able to deliver a
122% volume growth for its non-tobacco nicotine product (VELO) versus same period Business Sustainability
last year. Furthermore, the Company’s contribution to National Exchequer increased by
14.2% to Rs. 154.0 billion during 2022 versus same period last year. In line with BAT Group’s harm reduction agenda under vision of A Better Tomorrow™,
PTC continues to invest behind its tobacco-free nicotine products. As a result, Pakistan
has become 3rd largest VELO market across BAT Group within 3 years of the product’s
Environment, Social and launch. Amidst severe foreign currency shortage, the Company continued to pursue
its ambition to enhance exports with 2022 turnover of $27.6 million. PTC made
Governance (ESG) Agenda

considerable investment in Track and Trace System which is expected to protect the
interests of legitimate tobacco sector and ensure rightful tax contribution to National
Exchequer by tobacco Industry. The Company also continued investing in operations
As a responsible corporate citizen, PTC believes in giving back to the society and the including Integrated Work System and ESG initiatives to enhance productivity and
very environment it operates in. During 2022, the Company undertook various initiatives achieve operational efficiencies.
towards sustainability and to combat climate crisis.
In the absence of full-scale implementation of Track and Trace system and sporadic
The Company invested heavily in energy conservation in Jhelum Factory and Akora enforcements by Law Enforcement Agencies, multiple excise-increases during 2022
Khattak Factory making them the highest and third-highest on-site power generation have created a considerable price disparity between legitimate industry and local
sites across BAT Group respectively. The CO2 emissions reduction of 5000 tons over DNP sector. This is an area of grave concern since it continues to put pressure on
two years is a testament to the Company’s commitment towards environmentally legitimate industry’s sustainability and has caused leakage of estimated Rs. 87 billion
sustainable operations. The Company also continued to focus on water recycling of Government tax revenue. Thus, it is imperative that stringent action is taken by
initiatives while being the second largest water-recycling operation across BAT Group. the relevant law enforcing authorities to curb DNP sector in the best interest of all
stakeholders. Also, shortage of foreign currency in banking system poses a serious
Among other initiatives, PTC continued to provide free medical advice and medicines threat to business continuity across manufacturing sector. Timely intervention by
under its Mobile Doctor Unit program. In 2022, more than 150,000 patients were given relevant Government authorities is pertinent for sustainability of manufacturing sector
free of cost medical consultations and medication under this program. To ensure and associated job creation that ensues.
local community is protected from waterborne diseases, the Company provided clean
drinking water to the less privileged segments of the society through 27 water filtration PTC has a strong belief in its people and their capabilities. The senior management
plants, each providing up to 20,000 liters of clean drinking water per day. and I have full confidence that our people possess right capabilities and attitude to
navigate the Company through these testing times. Looking ahead, we remain focused
PTC runs one of the largest private sector afforestation programs. Under this flagship on delivering value offers to our consumers and driving long-term sustainable growth for
program running since 1981, the Company has successfully distributed and planted our shareholders while creating a positive impact around us.
more than 150 million saplings free of cost with 2.5 million saplings distributed during
2022.
Corporate Governance
The Company takes pride in its compliance with good corporate governance practices.
A comprehensive system of controls, governance and risk management is in place to
ensure that the Company’s assets and the interests of the shareholders are protected.
Zafar Mahmood
With the acquisition of Reynolds American Inc. by the BAT Group and subsequent
adherence to all the Sarbanes-Oxley regulations (SOx), the Company’s control Chairman
A JOURNEY OF
GROWTH &
MD/CEO'S
MESSAGE
I am pleased to present the
performance of the Company
for the year 2022.
Business Performance Our Processes

The Company navigated through volatile macro-economic conditions during the year Simplification and automation of processes has been a key strategic pillar of the
with focus on delivering value to existing consumers, while onboarding new consumers Company during 2022. PTC invested heavily in the implementation of Track and Trace
for its tobacco-free nicotine product (VELO). System which enables law enforcement agencies to effectively separate duty-paid
cigarettes from duty-not-paid (DNP) brands and helps curtail spread of DNP brands
The Company’s strategy helped deliver gross revenue growth of 16.6% versus same while protecting Government revenues. PTC achieved another major milestone during
period last year. Despite multiple excise-increases during the year, imposition of Super 2022 and has been accredited Integrated Work System (IWS) Phase 2 across all
Tax by Government, rampant inflation and sizeable currency devaluation, the Company manufacturing sites.
delivered an EPS growth of 13% by maintaining the right balance between consumer
affordability and driving a cost-conscious culture. The Company was able to deliver This efficiency drive has resulted in increased business productivity and has generated
122% growth in VELO volume while tripling its net turnover versus same period last cost savings across the value chain. As a result, value proposition of the Company's
year. portfolio was enhanced for consumers while generating additional savings for the
shareholders.
Our 2022 business results are testament to the commitment of our people and their
Our Future
passion to consistently deliver excellence.
Our Brands PTC believes in delivering value to its consumers and shareholders and reducing the
health impact of its business underpinned by simpler and faster organization made up of
The Company remains committed to differentiating its portfolio by investing across all best-in-class talent.
market segments and strengthening brand equity. Dunhill remains our ace international
offer while John Player Gold Leaf continues to lead Premium segment in the market. Economic and Industry specific challenges are expected to continue through 2023.
Capstan by Pall Mall strengthened its position as biggest brand in the industry, enabling The delay in industry-wide implementation of Track and Trace system and lack of
the Company to increase its share of legitimate industry to 78.4%, up by 0.4% versus enforcements against DNP segment by Law Enforcement Agencies create space for
same period last year. DNP sector to grow. This is not only detrimental to interests of duty-paid sector but
also compromises Government’s ability to generate rightful tax revenues. Shortage of
As part of BAT Group’s agenda for A Better TomorrowTM, to reduce health impact of its foreign currency in banking system has also put pressure on manufacturing sector to
business, the Company continued to invest in VELO. During 2022, the Company sold sustain operations smoothly. It is therefore imperative for the Government to introduce
over 420 million nicotine pouches within third year of its launch in Pakistan and has structural reforms and ensure that manufacturing sector is facilitated in playing its role in
thus been awarded with “A Better TomorrowTM” award by BAT Group for demonstrating economic uplift of the country as well as masses at large.
excellent business results. The aforementioned business delivery by PTC also makes
Pakistan 3rd largest VELO market by volume across BAT Group. The Company will continue to invest behind potentially reduced risk product portfolio in
line with its agenda of A Better TomorrowTM and reduce the health impact of its business.
Our People
I strongly believe that the Company is well-equipped to manage aforementioned
challenges and will continue to deliver on shareholder expectations during 2023 and
beyond.
The Company believes in building a dynamic talent pool, capable of fully delivering
on business objectives. Attracting best-in-class talent and investing in future-fit teams
remains one of the key strategic pillars of the Company. Consequently, the Company’s
talent pool is preferred across BAT Group as a resource of choice, with many Pakistanis
taking up key leadership roles internationally across the Group.
On account of the Company’s focus on creating a diverse and inclusive work

environment, PTC has been awarded with “Global Diversity, Equity & Inclusion
Benchmarks Award” by Global Diversity, Equity and Inclusion Benchmarks, “Top
Employer Award” by Top Employers Institute and “Women Empowerment Award” for
Gender Inclusion Policies by Overseas Investors Chamber of Commerce and Industry.
Ali Akbar MD/CEO
39
DIRECTORS’ REPORT
The Directors present the Annual Report of Pakistan Tobacco Company limited (PTC)
along with the audited financial statements of the Company for the year ended
December 31, 2022.
Macroeconomic
Environment
As global economy continued to slow down during 2022, Consequently, there should be enhanced focus on
Pakistan had its fair share of economic challenges during enforcements by Government, which should also amend
the period under review. Locally, political uncertainty and the law to declare selling of duty-evaded cigarettes
natural disasters added further pressure on the domestic a cognizable offense with exemplary punishment.
economy resulting in double digit inflation, currency immediate implementation of Track and Trace System
devaluation, and dwindling foreign exchange reserves. remains a key pillar to protect interests of the legitimate
To manage the current account deficit, State Bank of industry whilst also protecting Government revenues.
Pakistan increased import restrictions which negatively
impacted manufacturing activity and led to multiple price Regulatory environment
increases during the year, all of which added pressure to
consumers' disposable income. In 2022, the Government promulgated Track & Trace
System across the tobacco industry followed up by
Industry Overview active enforcement. PTC ensured compliance of its

operations with the Track & Trace System by Q3 2022.
Fiscal environment The Government is also legislating Track & Trace System
for other product categories related to tobacco/nicotine
During 2022, Government of Pakistan imposed multiple and has also issued a Statutory Regulatory Order (SRO)
Federal Excise Duty (excise) increases on factory pertaining to the same.
manufactured cigarettes (cumulative Rs. 26 per pack for
tier 1 and Rs. 8 per pack for Tier 2). The excise increases
further incentivized Duty-Not-Paid (DNP) segment as the
Company Performance
price gap with the legitimate industry widened to an all- Sales volume declined by 1% during the year versus
time high. Consequently, prices of DNP brands were not 2021. This is primarily attributable to the multiple price
just lower than the Government mandated minimum price increases on account of excise increases, inflation and
of Rs. 70.13 per pack, but even lower than the minimum rupee devaluation. The Company continued to maintain
excise and sales tax payable on a pack of 20 cigarettes its market share leadership in the legitimate segment
i.e. Rs. 51.19 per pack. growing market share by 0.4% in 2022 to 78.4%. In
2022, PTC contributed Rs. 154.0 billion to the National
Increase in duties and taxes, and need Exchequer in the form of excise and various regulatory
for rigorous enforcement duties.
Frequent and high increases in excise and duties by the The Company’s cost base remained under pressure
Government carries inherent risk of furthering price gap throughout 2022 in the wake of the currency devaluation
between legitimate industry and DNP sector. This disparity and inflation. Despite these challenges, PTC continued
further incentivizes DNP sector towards duty-evasion to focus on effective cost management and delivered
which not only impacts the sustainability of the tax-paying multiple efficiency improvement projects, thereby allowing
legitimate industry but also results in loss of Government it to keep costs in check. The Company continued to
revenue estimated at Rs. 87 billion per annum. focus on enhancing productivity across its value chain by
ensuring effective cost management, lean operations, and
modernization of machinery infrastructure.
A JOURNEY OF
GROWTH &
BAT Group is driving the agenda for A Better TomorrowTM

by reducing health impact of its business. The Group
Financial Review
invests over $430 million per year in research and Rs. (million)
development of New Category Products. In line with
the Group’s agenda for tobacco harm reduction, PTC FY 2022 FY 2021
continued to build its venture into New Categories of Gross Turnover 232,600 199,469
tobacco-free nicotine products (VELO). During 2022, PTC FED & Sales Tax 137,738 124,481
tripled the net turnover of its New Category business,
lowered the cost base and sold 420 million nicotine Net Turnover 94,862 74,988
pouches within third year of its launch in Pakistan, and Cost of Sales 49,706 39,092
has thus been awarded with “A Better TomorrowTM” award
Gross Profit 45,156 35,896
by BAT Group for demonstrating excellent business
results. The aforementioned business delivery by PTC also Operating Profit 32,787 25,500
makes Pakistan the third largest VELO market in terms of Profit Before Tax – PBT 34,734 26,207
volume across BAT Group.
Profit After Tax – PAT 21,321 18,862
PTC’s export initiative “Made in Pakistan”, in its third Earnings Per Share – EPS (Rs) 83.45 73.83
year of full-scale operation, has resulted in exports of
$27.6 million during the year. PTC’s export initiatives
have significant potential to grow in the coming years,
Profit & loss analysis
generating additional valuable foreign currency inflows for The Company contributed 66% of gross turnover
the country. (Rs. 154.0bn vs Rs. 134.8bn for 2021) as revenue to
the Government while retaining 9% of revenues for
With people at the core of its delivery, PTC has a strong distribution amongst shareholders and reinvestment in
focus on people by attracting and retaining the best the business. Cost of Sales and Operating Expenses
talent in the country. For its drive and consistent focus on accounted for 21% and 5% of gross turnover respectively.
Diversity and Inclusion, the Company was awarded the
“Global Diversity, Equity & Inclusion Benchmarks Award” Domestic gross turnover increased by 18% vs SPLY
by Global Diversity, Equity and Inclusion Benchmarks, despite a 1% volume reduction on account of sustained
“Top Employer Award” by Top Employers Institute and consumer base through multiple price increases. Exports
“Women Empowerment Award” for Gender Inclusion Turnover decreased by 18% vs SPLY driven by loss of
Policies by Overseas Investors Chamber of Commerce certain export markets. The Company is taking measures
and Industry. to ensure healthy exports pipeline going forward and
expects to deliver robust export growth. The Company
PTC runs one of the largest private sector afforestation exported 1.4 billion cigarette sticks, 2.5 million Kgs of
programs and a Mobile Doctor Unit (MDU) program. cut-rag tobacco, and 1.9 million Kgs of unmanufactured
Under its flagship afforestation program running since tobacco in 2022 with a turnover amounting to $27.6
1981, the Company has successfully planted and million. PTC also exported human resource services
distributed more than 150 million saplings free of cost worth $1.5 million during 2022.
(2.5 million saplings distributed during 2022).
Cost of Sales increased primarily due to devaluation
Under the MDU program, the Company dispensed of local currency, global inflation on imported materials
medical advice and medicines free of cost to more than and local inflationary pressure. These headwinds were
150,000 patients. To ensure that the local community mitigated through multiple productivity saving initiatives
is protected from waterborne diseases, the Company and focused cost management to reduce the overall cost
is providing clean drinking water to the less privileged base. Administrative expenses had a 3% increase due
segments of society through 27 water filtration plants,
providing 20,000 liters of water per plant per day.
41
to higher information technology costs, in line with BAT’s Profit distribution & reserve analysis
strategy of simplification through automation.
The Company started the year with reserves of Rs
Net Finance Income increased by 175% in 2022, 15.4 billion. During the year, final dividend of Rs. 28
attributable to surplus funds available for Treasury Bill per share related to year ended 2021 was approved
investments on account of better cash position and higher by shareholders and was subsequently paid. In 2022,
interest rates. the Company earned a net profit of Rs 21.3 billion and
declared two interim dividends of Rs. 10 per share in Q2
Statement of financial position analysis 2022 and Rs. 10 per share in Q3 2022. The net reserves
position of the Company at year end stands at Rs 24.1
Property, plant and equipment increase in 2022 was billion. Details of appropriation are also elaborated in the
primarily driven by upgrades to existing manufacturing table below:
capacities and infrastructure to support better product
quality, innovation, higher operating efficiencies and Rs. (million) Rs. Per Share
regulatory requirements.
Opening Reserves 15,418
Stock in Trade increase is attributable to impact of Final Dividend 2021 (7,154) 28.00
currency devaluation and inflation. Net Profit 2022 21,321 83.45
Other Receivables mainly includes balances related to Other Comprehensive Income (406)
cash margins withheld by banks to comply with State Available for appropriation 29,179
Bank import regulation to deposit 100% cash margin
Interim Dividends 2022 (5,110) 20.00
against arrangements/contracts for import of raw
material. Balance under this head increased in 2022 due Closing Reserves 24,069
to more import orders in Q4 2022.
Final dividend
Short term investments in Government treasury bills
recorded an increase vs SPLY due to higher availability of The Board of Directors of PTC in its meeting being held
surplus funds. on February 23, 2023 recommended a final cash dividend
of Rs. 0/- per share for the year ended December 31,
Current Liabilities increased due to higher outstanding 2022 (2021: 28 per share), for the shareholders’ approval.
payables to internal and external suppliers on account of This recommendation is subject to approval of the
lesser access to foreign currency. shareholders in the Annual General Meeting, scheduled
on May 2, 2023.
Liquidity management
Consolidated financial statements
PTC’s Treasury function is responsible for raising and segmental review
finances for the Company as required, managing its cash
resources and mitigating the financial risks that arise Consolidated financial statements, combine performance
during its business operations. Clear parameters have of Pakistan Tobacco Company Limited and its wholly
been established, including levels of authority as well owned subsidiary, Phoenix (Private) Limited. The
as the type and use of financial instruments. All treasury subsidiary company is dormant and has not commenced
related activities are executed as per defined policies, commercial operations.
procedures and limits. These are reviewed and approved
by the Board or the delegated authority to the Finance
Director/Treasury Committee.
A JOURNEY OF
GROWTH &
Subsequent events review be the highest and third-highest on-site power generation
sites across BAT Group respectively.
The Management has assessed events arising after the
end of the financial year of the Company till the date of Additionally, the Company continues to focus on water
the report and hereby, confirms that no material changes recycling initiatives while being the second largest water-
and commitments affecting the financial position of the recycling operation across BAT Group. The CO2 emissions
Company have occurred during this period. reduction of 5000 tons over two years is a testament to
our commitment towards environmentally sustainable
Operations Review operations. PTC’s operation has been recognized by
BAT Group for its efforts and outstanding delivery on the
PTC has a full seed-to-smoke business encapsulating subject.
two factories and one of the largest leaf operations in
the BAT Group. To enhance productivity throughout the
value chain, the Company has a sharp focus on effective
Marketing Review
cost management, lean operations, and continuous Consumer affordability remained under stress in 2022
modernization of the machinery infrastructure. In line due to the ongoing macro-economic challenges. Despite
with this overarching objective, PTC became the first inflationary headwinds, focused investments were made
“Integrated Work System” (IWS) Phase-2 certified multi- for a future-fit brands portfolio.
site and multi-category operation in BAT Group.
As part of BAT Group’s harm reduction agenda, PTC laid
As part of the tobacco harm reduction agenda, PTC special focus on developing a New Category of tobacco-
runs an independent factory at Jhelum site to produce free nicotine products in Pakistan under the VELO brand
tobacco-free nicotine pouches. This factory is the first providing consumers with broader spectrum of choices
of its kind in the Asia Pacific and Middle East Region for for nicotine consumption. The focus on driving VELO
BAT Group. It is producing nicotine pouches for both local market penetration resulted in 122% increase in VELO
consumption and export, thus enabling PTC to further its volume vs 2021.
agenda towards tobacco harm reduction and cement its
position as an export hub for BAT Group. The Company Capstan by Pall Mall retained its standing as the best
aims to invest considerably over the next 5 years in performing brand in the value-for-money segment. To
developing PTC’s New Category portfolio. reinforce the place of this brand as the flagship value-for-
money product, one of the largest ever limited-edition-
In compliance with local regulations, PTC has invested pack campaigns was launched in 2022 which culminated
significantly for implementation of Track and Trace System in sales of 10 billion+ cigarette sticks.
which enables law enforcement agencies to effectively
separate duty-paid cigarettes from DNP brands and Additionally, value-for-money segment witnessed
helps curtail spread of DNP brands while protecting reinforcement campaigns during the year to further
Government revenues. enhance Gold Flake's equity. This was a strategic
intervention which helped the brand significantly capture
EH&S – Environment, lost volume and market share to become the fourth
largest brand in the market (by volume).
Health & Safety
Significant awareness and infrastructural improvements Risk Management &
have been made concerning Environment, Health &
Safety processes and procedures across the Company.
Internal Controls
Keeping in view the energy crisis in Pakistan, multiple The Board is responsible for managing the risks and
energy conservation initiatives were undertaken in 2022 challenges faced by the Company in its course of
which led Jhelum Factory and Akora Khattak Factory to operations, while maintaining a strong internal control
environment. The Company’s risk management and
43
internal controls framework is aimed at safeguarding the consumer touchpoints. This will aid the Company in
shareholders’ investment and the Company’s assets, building and maintaining a robust brand portfolio,
while minimizing impact of the risks that may impede enabling it to continuously outperform the competition
delivery of the Company’s objectives. and lead in the marketplace. By adhering to this plan, the
Company will be well positioned to drive volume growth
Comprehensive policies and procedures, structured and gain market share. Thus, the Company remains
governance mechanisms and a conducive organizational confident to retain its market share leadership of the
culture have facilitated a strong compliance and control industry in the future.
environment across the Company. All heads of functions
are required to carry out a comprehensive assessment of Maintain adequate access to foreign
globally defined key controls that are expected to be in
currency
place and operating effectively. Any non-compliances and
material weaknesses are reported along with action plans On account of increasing current account deficit in
to address them. Additionally, all employees are required Pakistan, and ensuing scarcity of foreign currency in
to sign off an annual Statement of Compliance to the the banking system, one of the key priorities of the
Company’s Standards of Business Conduct. Further, Company is to sustain its operations independently by
the Company is fully compliant to all the requirements of timely settlement of its foreign currency obligations and
Sarbanes Oxley Act (SOx) which has further strengthened disbursement of dividends to its foreign shareholders.
the internal controls environment of the Company.
While the Government is expected to intervene and
Forward Looking Approach protect interests of manufacturing sector which employs
significant portion of Pakistan’s workforce, the Company
Looking ahead, 2023 is expected to remain a highly in parallel will be accelerating its export agenda to self-
challenging year for the Company as it will need to fund raw material imports as much as possible.
counter the challenges presented not only by a tough
macro-economic environment but also by the unique Drive effective resource allocation
dynamics of the tobacco industry coupled with highly and cost management
regressive excise environment. In future, the Company
aims to drive business growth by focusing on delivering Rising inflation continues to put pressure on the
the following objectives and by countering the related Company’s cost base; the Management intends to take
challenges. effective measures to mitigate its adverse impacts.
Drive growth agenda It is expected that the local currency will remain weak with
minimal value appreciation, if any. This will ultimately lead
The Company’s strategic objective is to deliver to an increase in the cost base and cause the operating
sustainable growth for its shareholders. The Company margins to shrink.
will focus on increasing its volume base and market
share enabled by the implementation of the Track and Rapid devaluation also adds to inflationary pressures
Trace System and associated enforcement by the Law and dilutes the purchasing power of consumers, forcing
Enforcement Agencies. Further, marketing investment them to reprioritize their share of wallet, hence impacting
will be aimed at strengthening the brand equity of the overall industry sales.
Company’s portfolio among consumers of all segments.
Therefore, the Company will need to take effective
This will be achieved through product innovations measures to mitigate the impact of currency devaluation
developed to address the evolving consumer preferences in the future.
and creation of maximum brand awareness through
innovative campaigns directed at relevant and effective
A JOURNEY OF
GROWTH &
Drive operating and a) The financial statements, prepared by the

manufacturing efficiencies management of the Company, present fairly its state
of affairs, the result of its operations, cash flows and
The Company is geared to continue investing in changes in equity.
enhancement of its operating and manufacturing b) Proper books of accounts of the Company have
efficiencies. This will be achieved through investment in been maintained.
modern and upgraded equipment and machinery that
not only delivers better efficiencies and quality but is c) Appropriate accounting policies have been
also capable of supporting future product innovations, consistently applied in preparation of financial
necessary to maintain competitive advantage in the statements and the accounting estimates are based
marketplace. on reasonable and prudent judgement.
d) International Financial Reporting Standards, as
The Company is already geared to cater for any surge applicable in Pakistan, have been followed in
in market demand. At the same time, the Company is preparation of the financial statements and any
committed to investing in its machinery footprint to ensure departures therefrom have been adequately
compliance to any future regulatory requirements. disclosed and explained.
e) The system of internal controls is sound in design
Additionally, the operating infrastructure is continuously
and has been effectively implemented & monitored.
being upgraded with the best EH&S equipment, systems
and processes to ensure a safe working environment for f) There are no significant doubts about the Company’s
all employees. ability to continue as a going concern.
g) There has been no material departure from the best
Environment, Social & Governance (ESG) practices of corporate governance, as detailed
in the Code of Corporate Governance and listing
The Company will continue to support initiatives aimed regulations.
at the betterment and uplifting of communities in which
h) All major Government levies in the normal course
PTC operates. Additionally, other initiatives will also be
of business, payable as at December 31, 2022
supported to continue driving the ESG agenda of the
have been disclosed in the notes to the financial
Company.
statements.
Invest in human capital i) Key operating and financial data for last six years
in summarized form is provided separately in the
To maintain its competitive advantage, the Company will Company’s Annual Report.
continue investing in its people to develop a diverse and
j) Value of investments in employee’s retirement funds
highly competitive talent pool, fully capable of managing
for the year ended December 31, 2022 are as
the future challenges of the business. Attracting,
follows. Further details are provided in Note 33 to the
developing and retaining the best talent will continue to
financial statements.
be rooted in the organization.
Corporate Governance Fund name (Rs. million)

Staff Pension Fund 6,430
Good corporate governance Employees Gratuity Fund 1,424
The Directors confirm compliance with the Corporate Management Provident Fund 1,019
and Financial Reporting Framework of the Securities and
Employees Provident Fund 519
Exchange Commission of Pakistan’s Listed Companies
(Code of Corporate Governance) Regulations, 2019 (“the Defined Contribution Pension Fund 1,006
Code of Corporate Governance”) for the following:
45
Composition of the Board
The Board comprises a total of 12 directors: 4 are Directors’ detailed profiles including their names, status
independent directors, 5 non-executive directors and 3 (independent, executive, non-executive), in addition to
executive directors. industry experience and directorship of other companies,
have been provided separately in the Annual Report.
The current composition of the Board is as below: The status of directorship (independent, executive, non-
executive) is indicated in the Statement of Compliance
with the Code of Corporate Governance.
No. of
Name of Director
Directors
• Male Directors 10
Changes in the Board
The following changes took place in the Board:
• Female Director 2
a. Independent Directors 4 i. Mr. William Francis Pegel (resigned w.e.f. 14-06-2022)
was replaced by Ms. Kelly Louise Burtenshaw;
(i) Mr. Zafar Mahmood (Chairman)
ii. Mr. Syed Javed Iqbal (retired) was replaced by Mr.
(ii) Lt. Gen. (R) Najib Ullah Khan
Usman Zahur (w.e.f. 21-4-2022);
(iii) Mr. Mohammad Riaz
iii. Lt. Gen. (R) M. Masood Aslam (retired) was replaced
(iv) Mr. Asif Jooma by Lt. Gen. (R) Najib Ullah Khan (w.e.f. 21-4-2022);
b. Non- Executive Directors 5 iv. Mr. Shannon McInnes (resigned w.e.f. 04-10-2022)
was replaced by Mr. Gary Tarrant;
(i) Mr. Wael Sabra
v. Mr. Ozsan Ozbas (resigned w.e.f. 14-10-2022) was
(ii) Ms. Belinda Joy Ross replaced by Mr. Oliver Engels.
(iii) Mr. Usman Zahur
(iv) Mr. Gary Tarrant Meetings of the Board
(v) Mr. Oliver Engels
Under the applicable regulatory framework, the Board is
c. Executive Directors 3 legally required to meet at least once in every quarter to
ensure transparency, accountability, and monitoring of
(i) Mr. Syed Ali Akbar
the Company’s performance. Special meetings are also
(ii) Ms. Kelly Burtenshaw held during the year to discuss important matters, as
(iii) Syed Asad Ali Shah and when required. In 2022, four Board meetings were
convened as per applicable regulations, out of which the
1st meeting was held on 24th February 2022.
There is female representation on the Board in
compliance with the regulatory requirement.
The notices/agendas of the meetings were circulated
in advance, in a timely manner and in compliance with
The overall effectiveness of the Board is enhanced by
applicable laws. All meetings of the Board held during
the diversity and breadth of perspective of its members.
the year surpassed the minimum quorum requirements of
The members have sufficient financial acumen and
attendance, as prescribed by the applicable regulations.
knowledge through combination of their professional and
The Company Secretary acts as the Secretary to the
academic skills, and local and international experience.
Board. All decisions made by the Board during the
PTC conforms to the regulatory requirements on the
meetings were clearly documented in the minutes of the
composition and qualification of the Board of Directors.
meetings maintained by the Company Secretary and were
duly circulated to all the Directors for endorsement and
were approved in the subsequent Board meetings.
A JOURNEY OF
GROWTH &
Members Attendance Committees of the Board

Mr. Zafar Mahmood
Chairman 4/4 The Board has four committees namely the Executive
Committee, Audit Committee, Human Resources &
Syed Ali Akbar Remuneration Committee and Share Transfer Committee,
Managing Director and CEO 3/4 which assist the Board in the performance of its functions.
William Francis Pegel Details of all Board Committees, including attendance
Director Finance & IT (resigned w.e.f 14-06-2022) 2/4 and their functions, are provided separately in the
Syed Asad Ali Shah Company’s Annual Report.
Director Legal and External Affairs 4/4
Kelly Burtenshaw
2/4
Directors' Remuneration
Director Finance (joined w.e.f 15-06-2022)
Belinda Joy Ross As per the requirements of the Code of Corporate

Non-Executive Director 3/4 Governance, there is a formal and transparent procedure
in place for fixing the remuneration packages of individual
Syed Javed Iqbal
Non-Executive Director (Retired) 1/4 Directors. No Director is involved in deciding his/her own
remuneration.
Lt. Gen.(R) M. Masood Aslam
Independent Director (Retired) 1/4
These remuneration packages are approved as per
Mohammad Riaz requirements of the regulatory framework and internal
Independent Director 4/4 procedures, while ensuring that they are not at a level that
Asif Jooma could be perceived to compromise the independence of
Independent Director 4/4 non-executive directors.
Wael Sabra
Non-Executive Director 4/4 The remuneration of executive directors including the
CEO, key management personnel and other executives is
Shannon McInnes
Non-Executive Director (resigned w.e.f. 4-10-2022) 1/4 given in note 37 to the financial statements.
Ozsan Ozbas
Non-Executive Director (resigned w.e.f.14.10-2022) 0/4 Evaluation of Board's
Usman Zahur
3/4
Performance
Non-Executive Director (elected w.e.f. 21-04-2022)
Lt. Gen (R) Najib Ullah Khan The Company has designed an “Evaluation Tool” to assist
Independent Director 3/4 the Board to:
Gary Tarrant
Non-Executive Director (joined w.e.f. 04-10-2022) 1/4 • Understand and recognise what is working well;
Oliver Engels • Identify areas for improvement;

Non-Executive Director (joined w.e.f. 14-10-2022) 1/4 • Discuss and agree on priorities for change, which
can be addressed in the short and long term;
Meetings Held Outside • Agree on an action plan.
Pakistan The Evaluation Tool comprises an evaluation

questionnaire, which is circulated to all the Directors in
In 2022, PTC conducted all its Board meetings in
which each Director must evaluate himself/herself as
Pakistan.
well as the Board. In order to encourage open and frank
evaluations, as well as to ensure anonymity, the evaluation
process is directed by the Company Secretary, who mails
the questionnaire to each Director and then collates the
47
results into a report including a summary of the results, Performance for the year 2022 is demonstrated by
and recommendations to the Board. The Report is then achievement of the corporate plan and compliance with
discussed in the next Board Meeting to address the areas the applicable regulatory requirements.
of concern and improve the Board’s performance.
Formal Orientation at
Offices of the Chairman & Induction
CEO
Newly inducted Board members are taken through an
To promote transparency and good governance, the Induction Plan for their orientation and familiarization
offices of the Chairman of the Board of Directors and the towards the Company’s vision, organizational structure,
Chief Executive Officer are held by separate individuals roles and responsibilities of senior executives, major
with clear segregation of roles and responsibilities. pending or threatened litigation, policies relating to
dividends, whistleblowing, summary of Company’s major
Brief Roles & assets, liabilities and noteworthy contracts etc. As part
of the Induction Plan, senior executives of the Company
Responsibilities of the present the performance of their respective department
Chairman & CEO to the newly inducted Directors.
Roles and responsibilities of the Chairman and the CEO Directors' Training Program
have been clearly and distinctly defined by the Board.
The Chairman is basically a leader and mediator to head PTC has ensured compliance with the applicable
the meeting of the Board of Directors effectively and regulatory requirements regarding Director’s training.
take decisions after a free and open sharing of views More than half of the Directors have obtained certification
within a limited time quickly and efficiently. The Chairman under Directors’ Training Program (DTP) approved by
is responsible for the overall discharge of the Board’s SECP.
duties.
The CEO is the executive head of the Company, who

Last AGM
heads all facets of the Company through respective The Company’s 75th AGM (Annual General Meeting) was
heads of functions and manages the day-to-day held on April 21, 2022. All shareholders, including minority
operations of the Company and provides leadership shareholders, were proactively sent out invites informing
towards the achievement of the Corporate Plan. The CEO them about the time and place of the meeting, well in
is responsible for leading, developing and executing the advance. High quality and comfortable arrangements,
Company's short and long term strategies with a view to aimed at facilitating the shareholders of the Company,
enhance shareholders' value. The CEO liaises with the were made to conduct the AGM.
Board and communicates on behalf of the Management.
During the meeting, general clarifications on the
CEO's Performance published financial statements and the impact of illicit
trade were sought by the shareholders and investors. No
Evaluation by the Board issues were reported in that meeting.
The Board appoints the CEO for a term of 3 years, in

compliance with applicable laws. His performance Auditors
is reviewed annually, based on the yearly corporate
plan, besides his responsibilities under the regulatory Statutory Audit for the Company for the financial year
framework. ended December 31, 2022 has been concluded and the
Auditors have issued their Audit Reports on the Company
Financial Statements, Consolidated Financial Statements
A JOURNEY OF
GROWTH &
and the Statement of Compliance with the Code of • Proactively plan and prepare in the case of an
Corporate Governance. The Auditors, Messers KPMG incident.
Taseer Hadi & Co., shall retire at the conclusion of the • Understand how to respond should an incident occur.
Annual General Meeting, and they have indicated their
willingness to continue as Auditors for PTC. They have • Know how to manage the situation effectively; and
confirmed to have achieved satisfactory rating by the • Return to Business as Usual (BAU) as quickly as
Institute of Chartered Accountants of Pakistan (ICAP) and possible to minimize the negative impact on the
compliance with the Guidelines on the Code of Ethics business.
of the International Federation of Accountants (IFAC) as
adopted by ICAP. The Board proposes their appointment The Board reviews compliance with the BCM Manual
as Auditors for the financial year ending December 31, on an annual basis. Responsibility and accountability
2023 on the recommendation of the Audit Committee. for ensuring compliance with the Standards and for the
This shall be subject to the approval of the shareholders implementation of the BCM process has been delegated
in their meeting scheduled for May 02, 2023. to the Managing Director. Operational management of
BCM is delegated to the Head of Security who is the lead
Pattern of Shareholding for BCM in the Company. Heads of Functions are the risk
owners and are responsible for enabling and maintaining
Our holding company, British American Tobacco an effective BCM capability within their respective
(Investments) Limited (BAT-IL), incorporated in United functions. The Business Continuity Manager facilitates
Kingdom holds 94.34% shares of the Company at the and coordinates the BCM process in the Company.
year end. The remaining shareholding is spread across By implementing a BCM process, the Company ensures
associated company, institutions and general public. that:
The pattern of shareholding as at December 31, 2022
alongside the disclosure as required under Code of • Its people, assets and information are protected,
Corporate Governance is provided separately in this and employees receive adequate support and
Annual Report. communications in the event of a disruption.
• The relationships with other organizations, relevant
Trading in Shares by regulators or Government departments, local
authorities and the emergency services are properly
Directors and Executives developed and documented, and stakeholder
requirements are understood and can be delivered;
The Directors, Chief Executive Officer, Chief Financial
and
Officer, Company Secretary and their spouses and minors
have reportedly not performed any trading in the shares • The Company has an enhanced capacity to protect
of the Company. its reputation and remains compliant with its legal
and regulatory obligations.
Review of BCM
PTC recognizes the importance of Business Continuity
Management (BCM) as the means to ensure that the
business continues to succeed in times of crisis and
during the recovery process. To this end, the Company
has established a BCM Manual as per International
Standards which enables the Company to:
Zafar Mahmood Chairman Ali Akbar MD/CEO
49
SUMMARY OF STATEMENT OF
PROFIT OR LOSS, FINANCIAL
POSITION & CASH FLOWS
Rs. in million 2022 2021 2020 2019 2018 2017
Statement of Profit or Loss
Gross turnover* Rs. million 232,600 199,469 166,258 149,025 137,116 111,485
Excise duties/Sales Tax Rs. million (137,738) (124,481) (105,368) (97,050) (84,004) (68,206)
Net turnover Rs. million 94,862 74,988 60,891 51,975 53,112 44,318
Cost of Sales Rs. million (49,706) (39,092) (29,329) (25,765) (29,829) (23,075)
Profit for the Year Rs. million 21,321 18,862 16,492 12,889 10,338 9,574
Earning per share Rs./share 83.45 73.83 64.55 50.45 40.46 37.47
*Gross revenue figure has been adjusted as per IFRS-15 methodology. Certain marketing costs have been deducted from total revenues from 2017 onwards.
Statement of Financial Position
Property Plant & Equipment/Advances for Capital Expenditure Rs. million 17,334 16,929 15,819 12,499 10,090 8,631
Working Capital (Current Assets-Current Liabilities) Rs. million 11,067 3,462 6,124 7,744 8,512 9,611
Share Capital & Reserves Rs. million 26,624 17,973 19,513 18,291 17,766 16,911
Non - Current Liabilities Rs. million 1,805 2,451 2,462 1,988 874 1,368
Statement of Cash Flows
Cash flow from Operating Activities Rs. million 24,917 18,973 22,215 8,564 12,810 12,280
Cash flow from Investing Activities Rs. million 742 (1,020) (3,192) (835) (1,359) (740)
Cash flow from Financing Activities Rs. million (12,906) (14,548) (15,317) (13,110) (9,688) (5,418)
Net Change in Cash and Cash Equivalents Rs. million 12,753 3,404 3,707 (5,380) 1,763 6,122
Beginning Cash and Cash Equivalents Rs. million 10,648 7,244 3,537 8,917 7,154 1,032
Ending Cash and Cash Equivalents Rs. million 23,401 10,648 7,244 3,537 8,917 7,154
Total Cash and Cash Equivalents comprise

Cash and Bank Balances/Short Term Investments Rs. million 23,401 10,648 7,244 3,537 8,993 7,154
Short Term Borrowings Rs. million - - - - (76) -
Rs. million 23,401 10,648 7,244 3,537 8,917 7,154
Free cash flows
Profit before tax Rs. million 34,734 26,207 22,388 18,285 15,280 13,011
Adjustment non-cash items Rs. million 1,372 1,520 1,819 1,369 600 1,300
Changes in working capital Rs. million 1,106 (1,006) 3,717 (5,293) 2,954 2,666
Cash flows from operating activities Rs. million 37,212 26,721 27,924 14,361 18,833 16,977
Capital expenditure Rs. million (1,939) (2,421) (4,201) (1,947) (2,275) (1,163)
Free Cash flows Rs. million 35,274 24,300 23,723 12,414 16,558 15,814
A JOURNEY OF
GROWTH &
CASH FLOW ANALYSIS
The cash flows of the Company demonstrate the strength and efficiency of its operations and particularly, its highly
efficient working capital management systems and processes.
1. Net Cash Generated from Operating Activities
Cash flows from operating activities has shown a healthy trend over the years. The increase of 31% from Rs 19.0 Bn
in 2021 to Rs 24.9 Bn in 2022 was primarily driven by increase in turnover, improved profitability and effective cash
management strategy.
2. Net Cash Generated from Investing Activities
During the year 2022, the Company generated net cash from investing activities due to increased investments in
Treasury bills generating finance income of Rs 2.3 Bn (2021: Rs 1.0 Bn). When coupled with proceeds generated
from sales of property, plant and equipment, net cash from investing activities remained positive despite increased
investment in Property, plant and equipment during the year (Rs 2.5 Bn in 2022 vs Rs 2.0 Bn in 2021).
3. Net Cash Used in Financing Activities
Cash outflows on financing activities have decreased from 14.5 Bn in 2021 to Rs 12.9 Bn in 2022. During the year
the company paid out dividend of Rs 11.5 Bn (Rs 48/share) compared to Rs 15.8 Bn in 2021 (Rs 80/share).
51
PERFORMANCE INDICATORS
RATIOS FOR 6 YEARS
2022 2021 2020 2019 2018 2017
Profitability Ratios
1 *Gross Profit ratio % 47.6 47.9 51.8 50.4 43.8 46.7
2 *Net Profit to Sales % 22.5 25.2 27.1 24.8 19.5 22.1
3 *EBITDA Margin to Sales % 36.9 36.3 38.3 36.6 29.2 32.2
4 Operating leverage ratio Times 1.7 0.8 2.0 2.5 0.6 1.0
5 Return on Equity % 95.6 100.6 87.3 71.5 59.6 64.1
6 Return on Capital employed % 115.3 124.8 99.4 87.2 78.2 70.2
*Gross revenue figure has been adjusted as per IFRS-15 methodology from 2017 and onwards. Certain marketing costs have been deducted from total revenues
Liquidity Ratios
1 Current ratio Times 1.3 1.1 1.3 1.4 1.4 1.7
2 Quick / Acid Test Ratio Times 0.7 0.4 0.4 0.3 0.5 0.6
3 **Cash and cash equivalents to Current Liabilities Times 54.9 33.3 31.5 17.5 41.2 51.6
4 Cash flow from operations to Sales Times 26.3 25.3 36.5 16.5 24.1 28.4
**This includes short term investments as well
Activity/Turnover Ratios
1 Inventory turnover ratio Times 2.0 1.8 1.5 1.2 1.6 1.6
2 No. of Days in Inventory Days 182.9 205.8 242.5 303.5 226.2 228.7
3 Debtor turnover ratio Times 0.0 0.0 0.0 0.0 0.0 0.0
4 No. of Days in Receivables Days 0.0 0.0 0.0 0.0 0.0 0.0
5 Creditor turnover ratio Times 1.7 2.3 2.4 2.4 2.0 2.4
6 No. of Days in Payables Days 209.0 160.9 152.7 150.9 179.6 149.5
7 Total Assets turnover ratio Times 1.3 1.4 1.4 1.3 1.3 1.3
8 Fixed Assets turnover ratio Times 5.5 4.4 3.8 4.2 5.3 5.0
9 Operating cycle Days (26) 45 90 153 47 79
Investment/Market Ratios
1 Earnings per share After Tax (EPS) and diluted EPS Rs 83.4 73.8 64.6 50.4 40.5 37.5
2 Price-Earning Ratio Times 11.5 16.2 24.9 48.4 71.7 57.3
3 Dividend Yield ratio % 5.0 6.7 3.6 2.0 1.3 1.4
4 Dividend Payout ratio % 57.5 108.4 89.9 95.1 96.4 80.1
5 Dividend Cover ratio Times 1.7 0.9 1.1 1.1 1.0 1.2
6 Dividend Per Share Rs 48.0 80.0 58.0 48.0 39.0 30.0
7 Stock Dividend per share Rs 0.0 0.0 0.0 0.0 0.0 0.0
8 Market value per share at year end Rs 963 1,198 1,610 2,441 2,900 2,148
9 Highest Market value per share during the year Rs 1,185 1,700 2,320 2,999 3,000 2,148
10 Lowest Market value per share during the year Rs 750 971 1,450 2,186 1,692 1,081
11 Break-up value per share Rs 104.2 70.3 76.4 71.6 69.5 66.2
12 Breakup value per share including investment in
related party at fair value and also the effect
of Surplus on Revaluation of Fixed Assets Rs 104.2 70.3 76.4 71.6 69.5 66.2
13 Price to Book Ratio Times 9.2 17.0 21.1 34.1 41.7 32.5
Capital Structure Ratios

1 Financial leverage ratio Times 2.8 2.6 2.3 2.2 2.1 1.9
2 ***Weighted average cost of debt % 0.0 0.0 0.0 0.0 0.0 0.0
3 ***Debt to Equity ratio (as per book
value/market value) % 0.1 0.1 0.0 0.0 0.0 0.0
4 Interest Cover/Time interest earned ratio Times 107.0 96.5 94.0 91.3 452.7 232.0
***The company does not have any long term financing arrangement
A JOURNEY OF
GROWTH &
ANALYSIS OF PERFORMANCE
INDICATORS
Profitability Ratios Investment/Market Ratios
The Company has been able to maintain its profitability The Company aims to generate maximum value for its
ratios during the year 2022, despite multiple excise- shareholders, both in the short and the long term. This
increases, imposition of Super Tax by Government, is reflected in the consistent improvement of investment
increasing inflation and substantial currency devaluation ratios over the years and in particular, the growth of EPS
in the country. Gross turnover recorded an increase of which depicts promising returns for our shareholders.
17% in 2022 and net turnover increased by 27%. This The Company’s share price witnessed a decline of 20%
demonstrates Company’s ability to generate value in face versus 2021 while P/E ratio declined by 29% owing to
of adversity showing consumer’s belief in the Company’s deteriorating macroeconomic conditions in the Country.
brands.
Capital Structure Ratios

Liquidity Ratios
The capital structure ratios reflect the Company’s ability
The Company’s liquidity ratios present a healthy position to meet its financing needs organically, including those
over the years. PTC’s cash-advance sales model coupled related to capital investment funded primarily through
with effective resource allocation enabled it to meet its cash generated from its operations. As a result, there
liquidity requirements including capital expenditures. is no requirement for long-term financing, though,
the Company avails a relatively small lease facility for
Further, slow down in foreign currency payments towards financing vehicles provided to its employees and exports
end of 2022 also contributed towards overall improvement refinancing facility of Rs. 2.3 billion. The finance leverage
in current and quick ratio by 14% and 66% respectively ratio and interest coverage ratio has improved by 10%
versus 2021. and 11% respectively mainly due to profits generated
during the year 2022.
Activity Ratios
The activity ratios have improved on account of effective
working capital approach followed by the Company over
the years resulting in consistent decline in inventory days.
Increase in creditor days by 30% versus 2021 is mainly
on account of slow-down in foreign currency payment
towards end of 2022.
53
NOTICE OF THE
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Seventy Sixth (76th) Annual General Meeting
(the Meeting) of Pakistan Tobacco Company Limited (“the Company”) will be
held physically at the Serena Hotel, Khayaban-e- Suhrwardy, Islamabad as well as
electronically on Tuesday, the 2nd May 2023 at 10.00 am to transact the following
business:
Ordinary Business: registered addresses. For download, a copy is being

uploaded on our website www.ptc.com.pk. Shareholders
1. To receive, consider and adopt the Audited Accounts for who wish to obtain a hard copy of the Annual Report are
the year ended 31st December 2022, and the Report of the requested to inform us at PTC_AGM@bat.com, a hard copy
Directors and Auditors thereon. of the Annual Report will be duly sent to them.
2. To consider and approve the Final Dividend @ Rs. 0/- as 2. Closure of Share Transfer Books
recommended by the Board of Directors for the year ended
The Share Transfer Books of the Company will be closed
on 31st December, 2022.
from 26th April to 2nd May 2023, both days inclusive.
Transfers received at the office of the Company's Share
3. To appoint Auditors and to fix their remuneration.
Registrar, FAMCO Associates (Pvt.) Ltd, 8-F, Near Hotel
Faran, Nursery, Block-6, P.E.C.H.S., Shahrah-e-Faisal,
Karachi by the close of business on Tuesday, the 25th
April 2023, will be in time to be entitled to vote and for the
entitlement of dividend.
By order of the Board

3. Participation in the Annual General
Meeting through Online Platform/
Facility
A member of the Company entitled to attend and vote at the
Meeting is entitled to appoint a proxy who will have the right
Madeeha Arshad Chaudhry to attend, speak and vote in place of that member.
Company Secretary
Forms of proxy must be deposited at Company's Share

Islamabad: April 11, 2023 Registrar’s office not less than 48 hours before the time of
the Meeting (i.e 2nd May 2023 at 10.00 a.m). Proxy form(s)
received after the said 48 hours i.e. after 10:00 am on 27th
NOTES:
April, 2023 will not be treated as valid.
Attendance of members who have deposited their shares

1. Annual Report into Central Depository Company of Pakistan Limited
A soft copy of the Annual Report for the year ended on shall be in accordance with the following mandatory
December 31, 2022 is being sent through email to the requirements:
shareholders who have given their email address and a
CD of the same is being sent to the shareholders at their
A JOURNEY OF
GROWTH &
A) In Person:
i) Individual members must bring their participant’s ID Individuals including all joint holders holding physical
number and account/sub-account number along with certificates are therefore requested to submit a copy of their
original Computerized National Identity Card (CNIC) or valid CNIC to the Company or its Registrar, if not already
original Passport at the time of attending the Meeting. provided. The shareholders while sending CNIC must quote
their respective folio numbers.
ii) In the case of a corporate entity, presentation of a
certified copy of the Board of Directors’ Resolution/ In cases of non-receipt of the copy of a valid CNIC, the
Power of Attorney with specimen signatures of the Company would be constrained under Section 243 (3)
nominee at the time of the Meeting. of the Companies Act, 2017 to withhold divided of such
shareholders.
B) By Proxy:
i) In case of individuals, the submission of proxy form as 5. Electronic Credit Mandate for
per the requirement notified in Note 3 above. Dividend (Mandatory)
Pursuant to the provisions of Section 242 of the Companies
ii) The proxy must be witnessed by two persons whose
Act, 2017, it is mandatory for a listed Company to pay cash
names, addresses and CNIC numbers should be
dividend to its shareholders only through electronic mode
stated on the form.
by making direct remittance into their respective bank
account designated by the entitled shareholder(s) (“the
iii) Attested copies of CNIC or the passport of the
bank account”). Therefore, in order to receive dividends
beneficial owners and the proxy shall be furnished with
directly into their bank account, shareholders holding
the proxy form.
shares in physical form are requested to fill in “Electronic
Credit Mandate Form” available on Company’s website i.e.
iv) In case of a corporate entity, the Board of Directors’
www.ptc.com.pk and send the completed form along with
Resolution/Power of Attorney with specimen signatures
a copy of a valid CNIC or provide the following information
shall be submitted with the proxy form to the
to the registrar of the Company M/s. FAMCO Associates
Company’s Share Registrar.
(Private) Limited, 8-F, Near Hotel Faran, Nursery, Block-6,
P.E.C.H.S., Shahrah-e-Faisal, Karachi latest by 25th April,
v) The proxy shall produce his/her original CNIC or
2023.
original passport at the time of the Meeting.
vi) A form of proxy is attached to the notice and is also Folio Number
available on Company’s website.
Name of Shareholder
For any shareholders who want to attend the Annual Title of the Bank Account
General Meeting via online connectivity, it is requested to International Bank Account (IBAN) (24 digits)
please send an email to PTC_AGM@bat.com, by 10:00 am,
April 27th 2023, so a connection link may be communicated Name of Bank
to such shareholder. Name of Bank Branch and Address
Cellular Number of Shareholder
4. Submission of CNIC/NTN Details
Landline Number of Shareholder
(Mandatory)
Email Address
The CNIC number/NTN details are mandatory and are also
required for checking the tax status as per the Active Tax CNIC/NTN Number, in case of corporate shareholder
Payers List (ATL) issued by the Federal Board of Revenue (Attach Copy)
(FBR) from time to time. Signature of Member
55
6. Deduction of Income Tax from Principal Shareholder Joint Shareholder
Dividend under Section 150 of Company
Folio/CDS
Account
Total
Name Shareholding Name Shareholding
Name Shares
the Income Tax Ordinance, 2001 # and
CNIC #
Proportion
(No. of Share)
and
CNIC #
Proportion
(No. of Share)
(Mandatory)
(i) The rates of deduction of income tax from dividend The required information must reach our Share Registrar
payments under the Income Tax Ordinance are as follows: within 10 days of this Notice; otherwise, it will be assumed
that the shares are equally held by Principal shareholder
1. Rate of tax deduction for shareholders appearing in and Joint Holder(s).
Active Taxpayers List (ATL): 15%
(iv) The corporate shareholders having CDC accounts are
2. Rate of tax deduction for shareholders not appearing required to have their National Tax Number (NTN) updated
in Active Taxpayers List (ATL): 30% with their respective participants, whereas corporate
physical shareholders should send a copy of their NTN
To enable the Company to make tax deduction on certificate to the company or FAMCO Associates (Pvt.) Ltd.
the amount of cash dividend @ 15% instead of 30%, The shareholders while sending NTN or NTN certificates,
shareholders whose names are not entered into the as the case may be, must quote company name and their
Active Tax-payers List (ATL) provided on the website of respective folio numbers.
FBR, despite the fact that they are filers, are advised to
immediately make sure that their names are entered in ATL, 7. Intimation for Non-Resident
otherwise tax on their cash dividend will be deducted @
Individual Sharholders
30% instead of 15%.
Non-resident individual shareholders shall submit
(ii) Withholding Tax exemption from the dividend income, shall declaration or undertaking with copy of valid passport
only be allowed if a copy of valid tax exemption certificate under definition contained in Section 82 of the Income Tax
is made available to FAMCO Associates (Pvt) Ltd., by the Ordinance, 2001 for determination of residential status for
first day of Book Closure. the purposes of tax deduction on dividend to the Share
Registrar (M/s. FAMCO Associates (Private) Limited at 8-F,
(iii) Further, according to clarification received from Federal near Hotel Faran, Nursery, Block-6, P.E.C.H.S, Shahrah-e-
Board of Revenue (FBR), with-holding tax will be Faisal, Karachi or email at info.shares@famco.com.pk at the
determined separately on ‘Filer/Non-Filer’ status of Principal latest by 20th April 2023. The copy of declaration form can
shareholder as well as joint-holder(s) based on their be downloaded at Shares Registrar website:
shareholding proportions, in case of joint accounts. https://famco.com.pk/share-registration-services/
In this regard all shareholders either holding shares in 8. Zakat Deductions

physical form or in CDC, who hold shares jointly are
To claim exemption from compulsory deduction of Zakat,
requested to provide shareholding proportions of Principal
shareholders are requested to submit a notarised copy of
shareholder and Joint holder(s) in respect of shares held by
Zakat Declaration Form "CZ-50" on NJSP of Rs.50/- to the
them (only if not already provided) to our Share Registrar, in
Share Registrar.
writing as follows:
9. E-Voting
Members can exercise their right to demand a poll subject
to meeting requirements of Section 143-145 of Companies
Act, 2017 and applicable clauses of Companies (Postal
Ballot) Regulation 2018.
A JOURNEY OF
GROWTH &
10. Video-Link Facility 13. Conversion of Shares from Physical

Pursuant to Section 134 (1) (b) of the Companies Act Form to Book-Entry-Form
2017 and SECP’s circular No. 10 of 2014 dated May 21, The Securities and Exchange Commission of Pakistan
2014, if the Company receives consent from members (SECP) has issued a letter No. CSD/ED/Misc./2016-639-640
holding in aggregate 10% or more shareholding residing dated March 26, 2021 addressed to all listed companies
in a geographical location to participate in the meeting drawing attention towards the provision of Section 72 of the
through video conference at least 10 days prior to the date Companies Act, 2017 (Act) which requires all companies
of Annual General Meeting, the Company will arrange video to replace shares issued by them in physical form with
conference facility in that city subject to availability of such shares to be issued in the Book-Entry-form within a period
facility in that city. To avail this facility, please provide the not exceeding four years from the date of the promulgation
following information to the Shares Registrar: of the Act. In order to ensure full compliance with the
provisions of the aforesaid Section 72 and to benefit from
I/We, ___________________being a member of Pakistan the facility of holding shares in the Book-Entry-Form, the
Tobacco Company Limited holding _______ of Ordinary shareholders who still hold shares in physical form are
Shares (s) as per Register Folio No.--------------------------- requested to convert their shares in the Book-Entry-Form.
hereby opt for the video Conference facility at (Please insert
name of the City).
14. Contact Details
11. Change of Address Company Contact:
Members are requested to notify any change in their Company Secretary, Pakistan Tobacco Company Limited,
addresses immediately. Serena Business Complex, Khayaban-e-. Suhrwardy,
Islamabad
A. Members holding shares in physical form are Phone: (051) 2083200.
requested to notify the Company’s Share Registrar Email address: ptc_company_secretary@bat.com
promptly of changes in their address.
Share Registrar:
B. Members holding shares in electronic form with CDC
must notify change of address to their participants or FAMCO Associates (Pvt) Ltd. 8-F, Near Hotel Faran, Nursery,
CDC Investor Account Services with whom the account Block-6, P.E.C.H.S., Shahrah-e-Faisal, Karachi
is maintained. Phone: (021) 34380101-5
Email address: info.shares@famco.com.pk
12. Unclaimed Dividend / Shares U/S 244

of the Companies Act, 2017
An updated list for unclaimed dividend/shares of the
Company, which have remained unclaimed or unpaid for a
period of three years from the date these have become due
and payable, is available on the Company’s website: https://
www.ptc.com.pk/
Claims can be lodged by shareholders on Claim Form as is

available on the Company’s website. Claim Forms must be
submitted to the Company’s Share Registrar for receipt of
dividend/shares.
57
STATEMENT OF COMPLIANCE
with the Listed Companies (Code of Corporate Governance)
Regulations, 2019
Name of Company: Pakistan Tobacco Company Limited

Year ended: December 31, 2022
The Company has complied with the requirements of the 3. The Directors have confirmed that none of them
Regulations in the following manner: is serving as a Director on more than seven listed
companies, including this Company.
1. Total number of Directors are twelve as per the
following: 4. 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
10 Male 2 Female
5.
its supporting policies and procedures.
The Board has developed a vision/mission statement,

2. The Board’s composition is as follows: overall corporate strategy and significant policies of
the Company. The Board has ensured that complete
Independent Directors record of particulars of significant policies along with
the dates of approval or updating is maintained by
Zafar Mahmood (Chairman) the company.
Lt. Gen. (R) Najib Ullah Khan
6. All the powers of the Board have been duly exercised
Mohammad Riaz and decisions on relevant matters have been taken
Asif Jooma by Board/shareholders as empowered by the relevant
provisions of the Act and the Regulations.
Non- Executive Directors 7. The meetings of the Board were presided over by
the Chairman and, in his absence, by a Director
Wael Sabra elected by the Board for this purpose. The Board
Belinda Joy Ross has complied with the requirements of Act and the
Regulations with respect to frequency, recording and
Usman Zahur circulating minutes of the meeting of the Board.
Gary Tarrant
8. The Board has a formal policy and transparent
Oliver Engels
procedures for remuneration of Directors in
accordance with the Act and these Regulations.
Executive Directors
9. Seven out of twelve have already attended the
Syed Ali Akbar (Managing Director and CEO) Directors' Training Program.
Kelly Burtenshaw
10. The Board has approved appointment of CFO,
Syed Asad Ali Shah Company Secretary and Head of Internal Audit,
including their remuneration and terms and
conditions of employment, and complied with
Female Directors relevant requirements of the Regulations.
Belinda Joy Ross 11. CFO and CEO duly endorsed the financial statements
before approval of the Board.
Kelly Burtenshaw
A JOURNEY OF
GROWTH &
12. The Board has formed Committees comprising of 16. The statutory auditors of the Company have
members given below: confirmed that they have been given a satisfactory
rating under the quality control review program of
a) Audit Committee the Institute of Chartered Accountants of Pakistan
(ICAP) and registered with Audit Oversight Board
Mohammad Riaz Member & Chairman of Pakistan, that they and all their partners are
in compliance with International Federation of
Lt. Gen. (R) Najib Ullah Khan Member
Accountants (IFAC) guidelines on code of ethics
Belinda Joy Ross Member
as adopted by the ICAP and that they and the
Wael Sabra Member partners of the firm involved in the audit are not a
close relative (spouse, parent, dependent and non-
Asif Jooma Member
dependent children) of the Chief Executive Officer,
Chief Financial Officer, Head of Internal Audit,
b) HR and Remuneration Committee Company Secretary or Director of the Company.
Lt. Gen. (R) Najib Ullah Khan Member & Chairman

17. The statutory auditors or the persons associated
Mohammad Riaz Member with them have not been appointed to provide other
services except in accordance with the Act, these
Asif Jooma Member
regulations or any other regulatory requirement and
the auditors have confirmed that they have observed
13. The terms of reference of the aforesaid Committees IFAC guidelines in this regard.
have been formed, documented and advised to the
Committees for compliance. 18. We confirm that all requirements of Regulations 3, 6,
7, 8, 27,32, 33 and 36 of the regulations have been
14. The frequency of meetings (quarterly/half yearly/ complied with.
yearly) of the Committees were as per the following:
a) The Audit Committee: Four (4) quarterly meetings

were held during the year ended 31 December 2022.
b) HR and Remuneration Committee: Two (2) meetings

were held during the year ended 31 December 2022.
15. The Board has set up an effective internal audit

function that is suitably staffed with qualified and Zafar Mahmood Chairman Ali Akbar MD/CEO
experienced personnel, who are conversant with the

policies and procedures of the Company.
59
INDEPENDENT AUDITORS’
REVIEW REPORT
To the members of Pakistan Tobacco Company Limited
Review Report on the Statement of Compliance contained in Listed Companies
(Code of Corporate Governance) Regulations, 2019
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance)
Regulations, 2019 (the Regulations) prepared by the Board of Directors of Pakistan Tobacco Company Limited
(“the Company”) for the year ended 31 December 2022 in accordance with the requirements of regulation 36 of the
Regulations.
The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our
responsibility is to review whether the Statement of Compliance reflects the status of the Company’s compliance with
the provisions of the Regulations and report if it does not and to highlight any non-compliance with the requirements of
the Regulations. A review is limited primarily to inquiries of the Company’s personnel and review of various documents
prepared by the Company to comply with the Regulations.
As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to
consider whether the Board of Directors’ 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.
The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit
Committee, place before the Board of Directors for their review and approval, its related party transactions. We are only
required and have ensured compliance of this requirement to the extent of the approval of the related party transactions
by the Board of Directors upon recommendation of the Audit Committee.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance
does not appropriately reflect the Company's compliance, in all material respects, with the requirements contained in the
Regulations as applicable to the Company for the year ended 31 December 2022.
KPMG Taseer Hadi & Co.

Chartered Accountants
Islamabad
11 April 2023
UDIN: CR2022102407sWVDrXjA
A JOURNEY OF
GROWTH &
PAKISTAN TOBACCO COMPANY LIMITED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
INDEPENDENT AUDITORS’ REPORT
Report on the Audit of the Financial Statements
Opinion
We have audited the annexed financial statements of Pakistan Tobacco Company Limited (the Company), which comprise the
statement of financial position as at 31 December 2022, and the statement of profit or loss, and the comprehensive income,
the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies and other explanatory information, 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 purpose of the audit.
In our opinion and to the best of our information and according to the explanations given to us, the statement of financial position,
the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and the statement of
cash flows together with the notes forming part thereof conform with the accounting and reporting standards as applicable in
Pakistan and give the information required by the Companies Act, 2017 (XIX of 2017), 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 2022 and of the profit, the comprehensive
income, the changes in equity and its cash flows for the year then ended.
Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of
our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’
Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we
have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
62
Following are the Key audit matters:
S. No. Key audit matters How the matters were addressed in our audit
1 Revenue recognition Our audit procedures in respect of recognition of revenue,
amongst others, included the following:
Refer notes 7.1 and 8 to the financial statements.
• Obtaining an understanding of the process relating
The Company is engaged in the production and sale of
to recognition of revenue and testing the design,
tobacco and tobacco products. The Company recognized
implementation and operating effectiveness of key
net revenue from the sales of cigarettes/tobacco/velo of Rs
internal controls over recording of revenue;
94,862 million for the year ended December 31, 2022.
• Comparing a sample of revenue transactions recorded
We identified recognition of revenue as a key audit matter
during the year with sales orders, sales invoices, delivery
because revenue is one of the key performance indicators of
documents and other relevant underlying documents;
the Company and gives rise to an inherent risk that revenue
could be subject to misstatement to meet expectations or • Comparing a sample of revenue transactions recorded
targets. around the year- end with the sales orders, sales invoices,
delivery documents and other relevant underlying
documentation to assess if the related revenue was
recorded in the appropriate accounting period;
• Assessing whether the accounting policies for revenue

recognition complies with the requirements of IFRS 15
Revenue from Contracts with Customers;
• Comparing the details of a sample of journal entries

posted to revenue accounts during the year, which met
certain specific risk-based criteria, with the relevant
underlying documentation; and
• Assessing the appropriateness of disclosures in the

financial statements.
2 Valuation of stock-in-trade Our audit procedures in respect of valuation of stock-in-
trade, amongst others, included the following:
Refer notes 7.12 and 20 to the financial statements.
• Assessing the design, implementation and operating
As at 31 December 2022, stock-in-trade is stated at Rs. 24,905
effectiveness of key internal controls over valuation of
million. Stock-in-trade is measured at the lower of cost and net
stock-in-trade including determination of net realizable
realizable value.
values;
We identified valuation of stock-in-trade as a key audit
• Attending inventory counts and reconciling the count
matter due to its size, representing 35% of total assets of
results to the inventory listings;
the Company as at December 31, 2022, and the judgment
involved in valuation. • Assessing the accuracy of cost of stock in trade in
accordance with the accounting policy;
• Assessing the net realizable value of stock-in-trade by

comparing, on a sample basis, management’s estimation
of future selling prices for the products and selling prices
achieved subsequent to the end of the reporting period;
and
• Comparing the net realizable value to the cost of a sample

of stock-in-trade and comparison to the associated
provision to assess whether stock-in-trade provisions are
complete.
63
Information Other than the Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. Other information comprises the information included in the annual report for
the year ended December 31, 2022 but does not include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the Other Information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this Other Information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting
and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017 (XIX of 2017) and for such
internal control as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Board of Directors are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
64
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
b) the statement of financial position, the statement of profit or loss and other comprehensive income, the statement of
changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity with the
Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company’s
business; and
d) 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.
The engagement partner on the audit resulting in this independent auditor’s report is Muhammad Ubbaid Ullah.

Islamabad Chartered Accountants
Date: 11 April 2023
UDIN: AR202210240dLfi6IqNl
65
STATEMENT OF PROFIT OR LOSS
For the year ended December 31, 2022
2022 2021
Note Rs. ‘000 Rs. ‘000
Gross turnover 8 232,600,278 199,469,017

Excise duties (103,232,916) (95,177,089)
Sales tax (34,505,124) (29,304,177)
Net turnover 94,862,238 74,987,751
Cost of sales 9 (49,705,748) (39,091,727)
Gross profit 45,156,490 35,896,024
Selling and distribution costs 10 (5,708,254) (5,002,183)

Administrative expenses 11 (4,026,820) (3,988,963)
Other operating expenses 12 (3,298,042) (2,129,084)
Other income 13 663,879 724,132
(12,369,237) (10,396,098)
Operating profit 32,787,253 25,499,926
Finance income - interest income on T-bills 25 2,274,037 981,404

Finance cost 14 (327,683) (274,282)
Net finance income 1,946,354 707,122
Profit before income tax 34,733,607 26,207,048
Income tax expense 15 (13,412,676) (7,344,961)
Profit for the year 21,320,931 18,862,087
Earnings per share (basic and diluted) - (Rupees) 16 83.45 73.83
The annexed notes 1 to 42 form an integral part of these financial statements.
Syed Ali Akbar Kelly Burtenshaw

Chief Executive Officer Chief Financial Officer / Director
66
STATEMENT OF COMPREHENSIVE INCOME
2022 2021
Note Rs. ‘000 Rs. ‘000
Other comprehensive income:
Items that will not be reclassified to profit or loss
- Remeasurement loss/gain on defined benefit pension

and gratuity plans 33 (638,453) 53,341
- Tax credit/charge related to remeasurement loss on

defined benefit pension and gratuity plans 15.2 232,239 (15,469)
(406,214) 37,872
Total comprehensive income for the year 20,914,717 18,899,959

67
STATEMENT OF FINANCIAL POSITION
As at December 31, 2022
2022 2021
Note Rs. ‘000 Rs. ‘000
Non current assets

Property, plant and equipment 17 16,801,940 15,813,540
Advance for capital expenditure 532,106 1,115,233
Long term investment in subsidiary company 18 5,000 5,000
Long term deposits and prepayments 19 23,604 28,661
17,362,650 16,962,434
Current assets
Stock-in-trade 20 24,905,320 22,044,653
Stores and spares 21 561,046 646,230
Trade debts 22 2,876 2,142
Loans and advances 23 832,795 88,916
Short term prepayments 139,961 33,346
Other receivables 24 3,852,686 1,933,242
Short term investments 25 21,522,111 9,402,598
Cash and bank balances 26 1,878,796 1,245,068
53,695,591 35,396,195
Current liabilities
Trade and other payables 27 27,197,561 20,586,440
Other liabilities 28 4,092,981 2,496,927
Short term running finance/export refinance 29 2,354,312 2,313,141
Lease liability 30 802,531 577,272
Unpaid dividend 31 5,391,129 4,663,641
Unclaimed dividend 106,330 77,006
Current income tax liabilities 2,683,837 1,219,431
(42,628,681) (31,933,858)
Net current assets 11,066,910 3,462,337

Non current liabilities
Lease liability 30 (935,335) (1,421,913)
Deferred income tax liabilities 32 (869,898) (1,029,546)
(1,805,233) (2,451,459)
Net assets 26,624,327 17,973,312
Share capital and reserves

Share capital 34 2,554,938 2,554,938
Revenue reserve - Unappropriated profit 24,069,389 15,418,374
26,624,327 17,973,312
Contingencies and commitments 35


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STATEMENT OF CHANGES IN EQUITY
Share Revenue Reserve - Total

capital unappropriated
profit
Rs. ‘000 Rs. ‘000 Rs. ‘000
Balance at January 1, 2021 2,554,938 16,957,919 19,512,857
Total Comprehensive income for the year:
Profit for the year – 18,862,087 18,862,087

Other comprehensive income for the year - income – 37,872 37,872
Total Comprehensive income for the year – 18,899,959 18,899,959
Transactions with owners of the Company:
Final dividend of Rs. 28.00 per share relating to the

year ended December 31, 2020 – (7,153,826) (7,153,826)
Interim dividend of Rs. 26.00 per share relating to the
Total transactions with owners of the Company – (20,439,504) (20,439,504)
Balance at December 31, 2021 2,554,938 15,418,374 17,973,312

Other comprehensive income for the year - loss – (406,214) (406,214)
Total comprehensive income for the year – 20,914,717 20,914,717


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STATEMENT OF CASH FLOWS
2022 2021
Note Rs. ‘000 Rs. ‘000
Cash flows from operating activities
Cash generated from operations 39 37,212,147 26,720,933

Finance cost paid (62,082) (261,724)
Income tax paid (11,875,679) (6,912,195)
Contribution to retirement benefit funds (357,542) (574,464)
Net cash generated from operating activities 24,916,844 18,972,550
Cash flows from investing activities
Purchases of property, plant and equipment (2,521,652) (2,022,139)

Advance for capital expenditure 583,127 (398,369)
Proceeds from sale of property, plant and equipment 406,736 419,059
Interest received 2,274,037 981,404
Net cash generated from / (used) in investing activities 742,248 (1,020,045)
Cash flows from financing activities
Dividends paid (11,506,890) (15,861,094)

Lease payments (1,398,961) (987,256)
Proceeds from export refinance facility – 2,300,000
Net cash used in financing activities (12,905,851) (14,548,350)

Net increase in cash and cash equivalents 12,753,241 3,404,155
Cash and cash equivalents at beginning of year 10,647,666 7,243,511
Cash and cash equivalents at end of year 23,400,907 10,647,666
Cash and cash equivalents comprise:

23,400,907 10,647,666

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NOTES TO THE FINANCIAL STATEMENTS
1 Corporate and general Information
The Company and its operations
Pakistan Tobacco Company Limited (the Company) is a public limited company incorporated in Pakistan on November 18, 1947
under the Companies Act, 1913 (now the Companies Act, 2017) and its shares are quoted on the Pakistan Stock Exchange
Limited. The Company is a subsidiary of British American Tobacco (Investments) Limited, United Kingdom, whereas its ultimate
parent company is British American Tobacco p.l.c, United Kingdom. The principal activity of the Company is to manufacture and
sell cigarettes, tobacco and velo.
The registered office of the Company is situated at Serena Business Complex, Khayaban-e-Suharwardy, Islamabad, Pakistan. The
Company has two manufacturing plants located at Akora Khattak and Jhelum.
These financial statements are the separate financial statements of the Company in which investment in subsidiary is carried at
cost. Consolidated financial statements are prepared separately.
Capacity and production
Against an estimated manufacturing capacity of 51,800 million cigarettes (2021: 47,728 million cigarettes) actual production
was 41,976 million cigarettes (2021: 46,080 million cigarettes). For modern oral manufacturing capacity was 650 million pouches
(2021: 330 million) and actual production was 451 million pouches (2021: 172 million). The split from each industrial unit is given
below.
Manufacturing Capacity
FMC 2022 2021
Site (Units in Millions) (Units in Millions)
Akora Khattak Factory 24,500 22,710

Jhelum Factory 27,300 25,018
Total 51,800 47,728
Modern Oral
Site
Jhelum Factory 650 330
Actual Production
FMC 2022 2021

Total 41,976 46,080
Modern Oral
Site
Actual production is less than the installed capacity due to market demand. Increase in production capacity is primarily due to
upgrades in technology that allow more production per hour, ceteris paribus.
Number of employees
Total number of employees as at December 31, 2022 were 1,050 (2021: 1,066). Out of the total number of employees, the number
of factory employees as at December 31, 2022 were 394 (2021: 390). Average number of employees during the year were 1,051
(2021: 1,043), whereas average factory employees during the year were 391 (2021: 377)
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2 Statement of compliance
These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in
Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:
– International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board
(IASB) as notified under the Companies Act, 2017; and
– Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions of and
directives issued under the Companies Act, 2017 have been followed.
3 Basis of measurement
These financial statements have been prepared under the historical cost convention except as otherwise stated in the respective
accounting policies notes.
4 Functional and presentation currency
Items included in these financial statements are measured using the currency of the primary economic environment in which the
Company operates (the functional currency), which is the Pakistan rupee (Rs.).
5 Use of estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application
of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognized, prospectively.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
Significant estimates
• Note 7.9 & 17 – useful lives, residual values and depreciation method of property, plant and equipment
• Note 33 – Retirement benefits
Other estimates
• Note 20 and 21 – Provision for obsolescence of stock in trade and stores and spares
• Notes 15 and 32 – Provision for income tax and calculation of deferred tax
• Note 36 – Financial instruments – fair values
• Note 35 – Contingencies
• Note 30 - Leases
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and
non-financial assets and liabilities.
Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to
measure fair values, then management assesses the evidence obtained from the third parties to support its conclusion that these
valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified.
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When measuring fair value of an asset or a liability, the Company uses observable and available market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as
follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1, which are observable and available for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable and available market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair
value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level of input that is
significant to the entire measurement. The Company recognises transfers between levels of the fair value hierarchy at the end of
the reporting period during which the change has occurred.
6 New accounting standards, amendments and IFRIC interpretations that are not yet effective
The following International Financial Reporting Standards (IFRS Standards) as notified under the Companies Act, 2017 and the
amendments and interpretations thereto will be effective for accounting periods beginning on or after 1 January 2023:
• Classification of liabilities as current or non-current (Amendments to IAS 1 in January 2020) apply retrospectively for
the annual periods beginning on or after 1 January 2024 (as deferred vide amendments to IAS 1 in October 2022) with
earlier application permitted. These amendments in the standards have been added to further clarify when a liability is
classified as current. Convertible debt may need to be reclassified as ‘current’. The standard also amends the aspect of
classification of liability as non-current by requiring the assessment of the entity’s right at the end of the reporting period to
defer the settlement of liability for at least twelve months after the reporting period. An entity’s expectation and discretion at
the reporting date to refinance or to reschedule payments on a long-term basis are no longer relevant for the classification
of a liability as current or non-current. An entity shall apply those amendments retrospectively in accordance with IAS 8.
• Non-current Liabilities with Covenants (amendment to IAS 1 in October 2022) aims to improve the information an entity
provides when its right to defer settlement of a liability for at least twelve months is subject to compliance with conditions.
The amendment is also intended to address concerns about classifying such a liability as current or non-current. Only
covenants with which a company must comply on or before the reporting date affect the classification of a liability as
current or non-current. Covenants with which the company must comply after the reporting date (i.e. future covenants)
do not affect a liability’s classification at that date. However, when non-current liabilities are subject to future covenants,
companies will now need to disclose information to help users understand the risk that those liabilities could become
repayable within 12 months after the reporting date. The amendments apply retrospectively for annual reporting periods
beginning on or after 1 January 2024, with earlier application permitted. These amendments also specify the transition
requirements for companies that may have early-adopted the previously issued but not yet effective 2020 amendments to
IAS 1 (as referred above).
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) – the Board has issued
amendments on the application of materiality to disclosure of accounting policies and to help companies provide useful
accounting policy disclosures. The key amendments to IAS 1 include:
– requiring companies to disclose their material accounting policies rather than their significant accounting policies.
– clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves
immaterial and as such need not be disclosed; and
– clarifying that not all accounting policies that relate to material transactions, other events or conditions are
themselves material to a company’s financial statements.
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The Board also amended IFRS Practice Statement 2 to include guidance and two additional examples on the application
of materiality to accounting policy disclosures. The amendments are effective for annual reporting periods beginning on
or after 1 January 2023 with earlier application permitted.
• Definition of Accounting Estimates (Amendments to IAS 8) introduce a new definition for accounting estimates clarifying
that they are monetary amounts in the financial statements that are subject to measurement uncertainty. The amendments
also clarify the relationship between accounting policies and accounting estimates by specifying that an entity develops
an accounting estimate to achieve the objective set out by an accounting policy. The amendments are effective for periods
beginning on or after 1 January 2023, with earlier application permitted, and will apply prospectively to changes in
accounting estimates and changes in accounting policies occurring on or after the beginning of the first annual reporting
period in which the company applies the amendments.
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) narrow the scope
of the initial recognition exemption (IRE) so that it does not apply to transactions that give rise to equal and offsetting
temporary differences. As a result, companies will need to recognize a deferred tax asset and a deferred tax liability
for temporary differences arising on initial recognition of a lease and a decommissioning provision. For leases and
decommissioning liabilities, the associated deferred tax asset and liabilities will need to be recognized from the beginning
of the earliest comparative period presented, with any cumulative effect recognized as an adjustment to retained earnings
or other components of equity at that date. The amendments are effective for annual reporting periods beginning on or
after 1 January 2023 with earlier application permitted.
• Lease Liability in a Sale and Leaseback (amendment to IFRS 16 in September 2022) adds subsequent measurement
requirements for sale and leaseback transactions that satisfy the requirements to be accounted for as a sale. The
amendment confirms that on initial recognition, the seller-lessee includes variable lease payments when it measures a
lease liability arising from a sale-and-leaseback transaction. After initial recognition, the seller-lessee applies the general
requirements for subsequent accounting of the lease liability such that it recognizes no gain or loss relating to the
right of use it retains. A seller-lessee may adopt different approaches that satisfy the new requirements on subsequent
measurement. The amendments are effective for annual reporting periods beginning on or after 1 January 2024 with
earlier application permitted. Under IAS 8, a seller-lessee will need to apply the amendments retrospectively to sale-
and-leaseback transactions entered into or after the date of initial application of IFRS 16 and will need to identify and
re-examine sale-and-leaseback transactions entered into since implementation of IFRS 16 in 2019, and potentially restate
those that included variable lease payments. If an entity (a seller-lessee) applies the amendments arising from Lease
Liability in a Sale and Leaseback for an earlier period, the entity shall disclose that fact.
• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
amend accounting treatment on loss of control of business or assets. The amendments also introduce new accounting
for less frequent transaction that involves neither cost nor full step-up of certain retained interests in assets that are not
businesses. The effective date for these changes has been deferred indefinitely until the completion of a broader review.
The above mentioned amendments are not likely to have an impact on the Company’s Financial Statements.
7 Summary of significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements
Significant accounting policies of the Company are as follows:
7.1 Revenue recognition
Revenue comprises the invoiced value for the sale of goods net of sales taxes, rebates and discounts. Certain marketing
costs are deducted from the gross amount of sales. Revenue from the sale of goods is recognised when control of the
goods passes to customers and the customers can direct the use of and substantially obtain all the benefits from the
goods. Revenue is recognized when specific criteria have been met for each of the Company’s activities as described
below:
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Revenue from contracts with customers
Sale of goods
The Company manufactures and sells cigarettes to its appointed distributors. Sale of goods is recognized when the
Company has transferred control of the products to the distributor and there is no unfulfilled obligation that could affect
the distributor’s acceptance of the products.
Contract assets
Contract assets arise when the Company performs its performance obligations by transferring goods to a customer before
the customer pays its consideration or before payment is due.
Contract liabilities
A contract liability is the obligation of the Company to transfer goods to a customer for which the Company has received
consideration from the customer. If a customer pays consideration before the Company transfers goods, a contract liability
is recognised when the payment is made. Contract liabilities are recognised as revenue when the Company performs its
performance obligations under the contract.
Income on bank deposits
Income on bank deposits is accounted for on the time proportion basis using the applicable rate of return.
Income on short term investments
Short term investments, classified as financial assets at fair value through profit or loss, are re-measured to fair value
at each reporting date until the assets are de-recognised. The gains and losses arising from changes in fair value are
included in the statement of profit or loss in the period in which they occur.
Others
Scrap sales and miscellaneous receipts are recognized on realized amounts. All other income is recognized on accrual
basis.
7.2 Income tax
Income tax expense for the year comprises current and deferred income tax, and is recognized in the statement of profit
or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in the equity. In
this case, income tax is also recognized in other comprehensive income or directly in equity, respectively.
Current
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment
to the tax payable or receivable in respect of previous years. The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred
Deferred income tax is recognized, using the balance sheet method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred income tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized
to the extent that it is probable that taxable profits will be available against which the deductible temporary differences,
unused tax losses and tax credits can be utilized.
Deferred income tax is calculated at the rates that are expected to apply to the period when the differences reverse.
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Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income tax levied by
the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle
the balance on a net basis.
7.3 Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount could be reliably estimated.
Provisions are not recognized for future operating losses. All provisions are reviewed at each statement of financial position
date and adjusted to reflect current best estimate.
7.4 Earnings per share
The Company presents earnings per share (EPS) data for its ordinary shares. EPS is calculated by dividing the profit or
loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding
during the year.
7.5 Contingent assets
Contingent assets are disclosed when the Company has a possible asset that arises from past events and whose existence
will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Company. Contingent assets are not recognized until their realization becomes certain.
7.6 Contingent liabilities
Contingent liability is disclosed when the Company has a possible obligation as a result of past events whose existence
control of the Company. Contingent liabilities are not recognised, only disclosed, unless the possibility of a future outflow
of resources is considered remote. In the event that the outflow of resources associated with a contingent liability is
assessed as probable, and if the size of the outflow can be reliably estimated, a provision is recognized in the financial
statements.
7.7 Employee benefits
(a) Retirement benefit plans
The Company operates various retirement benefit schemes. The schemes are generally funded through payments to
trustee-administered funds, determined by periodic actuarial calculations or up to the limit allowed as per the Income Tax
Ordinance, 2001. The Company has both defined contribution and defined benefit plans.
A defined contribution plan is a plan under which the Company pays fixed contributions into a separate fund. The Company
has no further legal or constructive obligation to pay contributions if the fund does not hold sufficient assets to pay all
employees, the benefits relating to employees’ service in the current and prior periods.
A defined benefit plan is a plan that is not a defined contribution plan. Typically, defined benefit plans define an amount
of benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of
service and compensation.
The Company operates:
(i) Defined benefit, approved funded pension scheme for management and certain grades of business support officers and
approved gratuity scheme for all employees. Employees also contribute to the pension scheme. The liability recognized in
the balance sheet in respect of pension and gratuity schemes is the present value of the defined benefit obligation of the
Company at the balance sheet date less the fair value of plan assets.
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The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using
interest rates of government bonds denominated in Pakistan rupee and have terms to maturity approximating to the terms
of the related liability.
The current service cost of the defined benefit plan, recognised in the income statement in employee benefit expense,
except where included in the cost of an asset, reflects the increase in the defined benefit obligation resulting from employee
service in the current year, benefit changes curtailments and settlements. Past-service costs are recognised immediately
in income.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the
fair value of plan assets. This cost is included in employee benefit expense in the income statement.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or
credited to equity in other comprehensive income in the period in which they arise.
(ii) Approved contributory provident fund for all employees is administered by trustees and approved contributory pension
fund for the new joiners. The contributions of the Company are recognized as employee benefit expense when they are
due. Prepaid contributions, if any, are recognized as an asset to the extent that a cash refund or a reduction in the future
payments is available.
(b) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date or
whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination
benefits when it is demonstrably committed to either terminating the employment of current employees according to
a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made
to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the termination
benefits are measured based on the number of employees expected to accept the offer.
(c) Medical benefits
The Company maintains a health insurance policy for its entitled employees and their dependents and pensioners and
their spouses. The Company contributes premium to the policy annually. Such premium is recognised as an expense in the
statement of profit or loss.
(d) Bonus plans
The Company recognizes a liability and an expense for bonuses based on a formula that takes into consideration the profit
attributable to the Company’s shareholders after certain adjustments and performance targets. The Company recognizes
a provision where it is contractually obliged or where there is a past practice that has created a constructive obligation.
(e) Share-based payments
The Company has two cash-settled share-based compensation plans. Share options are granted to key management
personnel which vest over a period of three years. A liability equal to the portion of the services received is recognised at
its current fair value determined at each statement of financial position date.
Where applicable, the Company recognises the impact of revisions to original estimates in the statement of profit or loss,
with a corresponding adjustment to current liabilities for cash-settled schemes.
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(i) Long Term Incentive Plan (LTIP)
Nil-cost option exercisable after three years from date of grant with a contractual life of ten years. Pay-out is subject to
performance conditions based on earnings per share, operating cash flow, total shareholder return and net turnover of the
British American Tobacco (BAT) group. Total shareholder return combines the share price and dividend performance of
the BAT group by reference to one comparator group.
(ii) Deferred Share Bonus Scheme (DSBS)
Free ordinary shares released three years from date of grant and may be subject to forfeit if a participant leaves employment
before the end of the three years holding period. Participants receive a separate payment equivalent to a proportion of the
dividend payment during the holding period. Share options are granted in March each year.
7.8 Lease liability
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease
term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index
or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment
(i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered
of low value (i.e. below Rs. 100,000). Lease payments on short-term leases and leases of low-value assets are recognized
as expense on a straight-line basis over the lease term.
7.9 Property, plant and equipment
Owned assets
These are stated at cost less accumulated depreciation and any accumulated impairment losses, except freehold land and
capital work in progress which are stated at cost less impairment losses, if any. Cost includes expenditure that is directly
attributable to the acquisition of the asset.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item
can be measured reliably. The carrying amount of the replaced part is derecognized.
All other repairs and maintenance expenses are recognized in the statement of profit or loss during the financial period in
which they are incurred.
Free-hold land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their
cost less residual value over their estimated useful lives at the following annual rates:
• Buildings on freehold and leasehold land 3%

• Plant and machinery 5%
• Air conditioners (included in plant and machinery) 20%
• Office and household equipment 20% to 33.3%
• Furniture and fittings 10% to 20%
• Vehicles – owned and leased 16%
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Depreciation on additions and deletions during the year is charged on a pro rata basis from the month when the asset is
put into use or up to the month when asset is disposed/written off.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Gains and losses on disposals of operating fixed assets are recognized in the statement of profit or loss.
Right of use assets
Right of use asset is calculated as the initial amount of the lease liability in terms of property rentals and vehicle rentals at
the lease contract commencement date. The right of use asset is subsequently depreciated using the straight-line method
for a period of lesser of useful life or actual lease term.
7.10 Impairment of non-financial asset
Assets that have an indefinite useful life are not subject to depreciation and are tested annually for impairment. Assets that
are subject to depreciation are reviewed for impairment at each statement of financial position date or whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized
for the amount for which assets carrying amount exceeds its recoverable amount. Recoverable amount is the higher of
an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that
suffered an impairment are reviewed for possible reversal of the impairment at each balance sheet date. Reversals of
the impairment losses are restricted to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortization, if impairment losses had not been recognised. An
impairment loss or reversal of impairment loss is recognised in the statement of profit or loss.
7.11 Long term investment in subsidiary
The investment in subsidiary company is carried at cost less any impairment losses. The profit or loss of the subsidiary
company is carried in the financial statements of the subsidiary company and is not dealt with for the purpose of the
separate financial statements of the Company except to the extent of dividend declared (if any) by the subsidiary company.
7.12 Stock in trade
Stock-in-trade is stated at the lower of cost and net realizable value. Cost is determined using the weighted average
method. The cost of finished goods and work in process comprises design costs, raw materials, direct labour, other
direct costs and related production overheads. Net realizable value is the estimated selling price in the ordinary course of
business, less cost of completion and costs necessary to be incurred to make the sale.
7.13 Stores and spares
Stores and spares are stated at cost less allowance for obsolete and slow moving items. Cost is determined using weighted
average method. Items in transit are valued at cost comprising invoice value and other related charges incurred up to the
statement of financial position date.
7.14 Financial Instruments
Financial assets
i. Recognition and de-recognition
The Company initially recognises financial assets on the date when they are originated. Financial liabilities are initially
recognised on the trade date when the entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are offset, and the net amount presented in the statement of financial position
when, and only when, the Company currently has a legally enforceable right to offset the amounts and intends either to
settle them on a net basis or to realise the asset and settle the liability simultaneously.
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ii. Classification
On initial recognition, a financial asset is classified as measured at:
• amortised cost;
• fair value through other comprehensive income (FVOCI); or
• fair value through profit or loss (FVTPL)
The classification of financial assets is based on the business model in which a financial asset is managed and its
contractual cash flow characteristics.
(a) Amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at
FVTPL: (i) it is held within a business model whose objective is to hold assets to collect contractual cash flows; and (ii)
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Fair value through other comprehensive income (FVOCI)
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: (i) it
is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets; and (ii) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
(b) Fair value through profit or loss (FVTPL)
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL.
iii. Subsequent measurement
Financial assets Measured at fair value. Net gains and losses, including any interest or dividend income, are recognised
at FVTPL in profit or loss.
Financial assets Measured at amortised cost using the effective interest method. The amortised cost is reduced by
at amortised impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised
cost in profit or loss. Any gain or loss on de-recognition is recognised in profit or loss.
Debt These assets are subsequently measured at fair value. Interest income calculated using the effective
investments interest method, foreign exchange gains and losses and impairment are recognised in profit or loss.
at FVOCI Other net gains and losses are recognised in OCI. On de-recognition, gains and losses accumulated
in OCI are reclassified to profit or loss.
Equity These assets are subsequently measured at fair value. Dividends are recognised as income in profit
investments or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other
at FVOCI net gains and losses are recognised in OCI and are never reclassified to profit or loss.
Subsequent to initial recognition, financial liabilities are measured at amortized cost using the effective interest method.
80
iv. De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards
of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and
rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognized financial
assets that is created or retained by the Company is recognised as a separate asset or liability.
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.
Any gain / (loss) on the recognition and de-recognition of the financial assets and liabilities is included in the statement of
profit or loss for the period in which it arises.
v. Impairment of financial assets
The Company recognizes loss allowance for Expected Credit Losses (ECLs) on financial assets measured at amortized
cost and contract assets. The Company measures loss allowance at an amount equal to lifetime ECLs.
Lifetime ECLs are those that result from all possible default events over the expected life of a financial instrument. The
maximum period considered when estimating ECLs is the maximum contractual period over which the Company is
exposed to credit risk.
At each reporting date, the Company assesses whether the financial assets carried at amortized cost are credit-impaired.
A financial asset is ‘credit-impaired when one or more events that have detrimental impact on the estimated future cash
flows of the financial assets have occurred.
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the
assets. The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations
of recovering a financial asset in its entirety or a portion thereof.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL
are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other
financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognized in statement of profit or loss. Any gain or loss on de-recognition is also
included in statement of profit or loss.
7.15 Borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised
in the statement of profit or loss over the period of the borrowings using the effective interest method.
Borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalized as part of the cost of that asset. All other borrowing costs are charged to statement of profit or loss.
7.16 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the financial statements in the period
in which the dividend is approved by the Company’s shareholders at the Annual General Meeting, while interim dividend
distributions are recognised in the period in which the dividends are declared by the Board of Directors.
81
7.17 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks and highly liquid investments with
less than three months maturity from the date of acquisition. Short term finance facilities availed by the Company, which
are repayable on demand and form an integral part of the Company’s cash management are included as part of cash and
cash equivalents in the statement of cash flows.
7.18 Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing on the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency
using the exchange rate prevailing at the statement of financial position date. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates are recognized in the
statement of profit of loss.
7.19 Fair value measurement
‘Fair value’ is the price that would be received by selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the principal or, in its absence, the most advantageous market to
which the Company has access at that date. The fair value of a liability reflects its non-performance risk.
A number of the Company’s accounting policies and disclosures require the measurement of fair values, both for financial
and non-financial assets and liabilities (See Note 5). When one is available, the Company measures the fair value of an
instrument using the quoted price in an active market for that instrument. If there is no quoted price in an active market,
then the Company uses valuation techniques that maximize the use of relevant observable inputs and minimize the use
of unobservable inputs. The best evidence of the fair value of a financial instrument on initial recognition is normally the
transaction price – i.e. the fair value of the consideration given or received.
7.20 Operating segment
The Board of Directors of the Company, which is chief operating decision-maker, is responsible for allocating resources
and assessing Company’s performance and operations has identified one reportable segment. Accordingly, these
financial statements have been prepared on the basis of single reportable segment. Revenue from external customers
along with local and export sales is disclosed in note 8. Revenue from transaction with a single customer did not exceed
10% of Company’s total revenue. All the assets of the Company are based in Pakistan.
2022 2021

Rs. ‘000 Rs. ‘000
8 Gross turnover
- Domestic 227,459,685 193,211,473

- Export 5,140,593 6,257,544
232,600,278 199,469,017
Revenue is measured based on the consideration specified in a contract with a customer. The transaction prices are generally
fixed as per the contract with customers. The payment terms are governed by the contractual rights and obligations as defined in
the contracts with customers and payments are generally received in advance of delivering goods sold.
Revenue recognised during the year that was included in the contract liability balance at the beginning of year is Rs. 246,718
thousand (2021: Rs. 12,034 thousand).
82
2022 2021

Rs. ‘000 Rs. ‘000
9 Cost of sales
Raw material consumed

Opening stock of raw materials and work in process 18,261,871 16,977,657
Raw material purchases and expenses - note 9.2 38,300,912 31,952,909
Closing stock of raw materials and work in process (21,904,030) (18,261,871)
34,658,753 30,668,695
Government taxes and levies
Customs duty and surcharges 2,328,775 2,534,866
Provincial and municipal taxes and other duties 396,399 369,137
Excise duty on royalty 85,035 59,917
2,810,209 2,963,920
37,468,962 33,632,615
Royalty - note 9.3 850,354 598,658
Provision for severance benefits 1,411,660 136,772
Production overheads
Salaries, wages and benefits 3,272,129 2,310,885
Stores, spares and machine repairs 1,876,288 1,024,182
Fuel and power 1,530,364 851,283
Insurance 91,642 43,396
Repairs and maintenance 1,135,903 742,371
Postage, telephone and stationery 15,726 14,974
Information technology 37,699 32,726
Depreciation / Impairment - note 9.1 & 17.3 1,026,868 873,665
Provision for damaged stocks / stock written off 91,428 98,476
Provision for slow moving items / stores written off 660 8,896
Sundries 62,909 53,705
9,141,616 6,054,559
Cost of goods manufactured 48,872,592 40,422,604

Cost of finished goods
Opening stock 3,963,744 2,632,867
Closing stock (3,130,588) (3,963,744)
833,156 (1,330,877)
Cost of sales 49,705,748 39,091,727
9.1 This includes impairment on property, plant & equipment amounting to Rs. 893 thousand (2021: Rs. 4,237 thousand).
83
2022 2021

Rs. ‘000 Rs. ‘000
9.2 Raw material purchases and expenses:
Materials 35,049,848 28,151,668

Stores, spares and machine repairs 485,303 539,583
Fuel and power 381,298 875,804
Property rentals 16,492 80,685
Insurance 14,708 29,412
Repairs and maintenance 143,081 86,818
Depreciation / impairment - note 9.2.1 & 17.3 511,337 255,483
Sundries 652,039 589,267
38,300,912 31,952,909
9.2.1 This includes impairment on property, plant & equipment amounting to Rs. 217,069 thousand (2021: nil).
9.3 This represents royalty payable to the associated companies namely BAT (Brands) Limited, Benson & Hedges (Overseas)
Limited, Nicoventures Trading Limited and BAT Exports Limited having registered office at Globe House, 1 Water Street,
London WC2R 3LA, United Kingdom.
2022 2021

Rs. ‘000 Rs. ‘000
10 Selling and distribution costs

Selling expenses 3,721,683 3,066,565
Freight 198,202 157,392
Travelling 99,072 89,906
Insurance 31,849 31,634
Finished goods / wrapping material stock written off 10,720 143,587
Depreciation / impairment - note 10.1 & 17.3 225,981 221,745
5,708,254 5,002,183
10.1 This includes impairment on property, plant & equipment amounting to Rs. nil (2021: Rs. 2,160 thousand).
84
2022 2021

Rs. ‘000 Rs. ‘000
11 Administrative expenses
Salaries, wages and benefits 1,093,837 875,897

Insurance 7,831 2,343
Legal and professional charges 97,028 82,927
Donations - note 11.1 12,300 300
Information technology 2,307,046 2,509,088
Depreciation / impairment - note 17.3 383,943 355,962
Auditor’s remuneration and expenses - note 11.2 15,829 13,825
Sundries 7,454 26,452
4,026,820 3,988,963
11.1 Details of donations exceeding Rs 1,000 thousand are as follows:

Name of Donee
Gottfried Thoma Benevolent Trust 12,000 –
12,000 –
There were no donations in which the directors, or their spouses, had any interest.
2022 2021

Rs. ‘000 Rs. ‘000
11.2 Auditor’s remuneration and expenses include:

- Statutory audit fee 2,926 2,675
- Group reporting, review of half yearly accounts, audit of
consolidated accounts, audit of staff retirement
benefit funds and other certifications and review of
Statement of Compliance with Code of Corporate Governance 12,093 10,600
- Out-of-pocket expenses 810 550
15,829 13,825
85
2022 2021

Rs. ‘000 Rs. ‘000
12 Other operating expenses
Workers’ Profit Participation Fund - 27.7 1,865,392 1,407,468

Workers’ Welfare Fund - note 27.6 658,709 485,656
Bank charges and fees 52,717 45,801
Interest to Workers’ Profit Participation Fund 1,082 36,700
Foreign exchange loss 720,142 153,459
3,298,042 2,129,084
13 Other income
Income from services rendered to associated companies:

- BAT Middle East DMCC - UAE 551,559 581,565
Recharges / other payable to associated companies written back:
-BAT ASPAC Service Center Sdn Bhd - Malaysia – 53,048
-BAT (Holdings) Limited - UK – 4,098
Gain on disposal of property, plant and equipment 108,401 81,741
Miscellaneous 3,919 3,680
663,879 724,132
14 Finance cost
Interest expense on:

Bank borrowings 103,253 45,261
Lease liability 224,430 229,021
327,683 274,282
15 Income tax expense
Current:
For the year 11,089,731 6,868,461
For prior years 2,420,747 297,351
13,510,478 7,165,812
Deferred (97,802) 179,149
13,412,676 7,344,961
86
15.1 Effective tax rate reconciliation:
Numerical reconciliation between the average effective income tax rate and applicable income tax rate is as follows:
2022 2021
% %
Applicable tax rate 29.00 29.00

Tax effect of:
Super tax - current year 3.87 –
Prior year charge 7.33 1.14
Income taxed at different rate (1.85) (2.08)
Others 0.27 (0.03)
Average effective tax rate 38.62 28.03
2022 2021

Rs. ‘000 Rs. ‘000
15.2 Tax on items directly credited to statement

of other comprehensive income
Current tax (credit)/charge on defined benefit plans (170,393) 53,578

Deferred tax charge/(credit) on defined benefit plans (61,846) (38,109)
(232,239) 15,469
2022 2021

Rs. ‘000 Rs. ‘000
16 Earnings per share
Profit after tax (Rs. ‘000) 21,320,931 18,862,087
Number of fully paid weighted average ordinary shares (‘000) 255,494 255,494
Earnings per share - Basic (Rs.) 83.45 73.83

There is no dilutive effect on the basic earnings per share of the Company.
2022 2021

Rs. ‘000 Rs. ‘000
17 Property, plant and equipment
Operating assets - note 17.1 15,756,223 14,879,640

Capital work in progress - note 17.2 1,045,717 933,900
16,801,940 15,813,540
87
17.1 Operating assets
Right of use assets

Free-hold Buildings on Plant and Office and Furniture and Vehicles Land and Factory Vehicles Sub- Total
land free-hold machinery household fittings building vehicles-fork total
land equipment lifter trucks
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
At January 1, 2021
Cost 30,570 1,039,621 17,698,534 2,242,202 551,113 70,068 1,765,829 367,164 1,510,957 3,643,950 25,276,058
Accumulated Depreciation / impairment – (325,938) (9,073,544) (1,542,913) (341,702) (53,283) (668,865) (87,040) (504,634) (1,260,539) (12,597,919)
Net book amount January 1, 2021 30,570 713,683 8,624,990 699,289 209,411 16,785 1,096,964 280,124 1,006,323 2,383,411 12,678,139
Year ended December 31, 2021

Net book amount at January 1, 2021 30,570 713,683 8,624,990 699,289 209,411 16,785 1,096,964 280,124 1,006,323 2,383,411 12,678,139
Additions – 58,696 622,332 206,321 80,446 – 315,591 – 418,228 733,819 1,701,614
Transfer from CWIP – 526,275 1,841,199 110,338 66,248 – – – – – 2,544,060
Disposals – (2,652) (193,667) (126) (17) (1,018) (22,182) – (117,656) (139,838) (337,318)
Depreciation charge / impairment – (30,967) (685,398) (259,180) (36,227) (3,357) (414,987) (60,475) (216,264) (691,726) (1,706,855)
Net book amount at December 31, 2021 30,570 1,265,035 10,209,456 756,642 319,861 12,410 975,386 219,649 1,090,631 2,285,666 14,879,640
At December 31, 2021

Cost 30,570 1,621,697 20,206,115 2,531,831 697,594 69,050 1,995,764 367,164 1,655,236 4,018,164 29,175,021
Accumulated depreciation / impairment – (356,662) (9,996,659) (1,775,189) (377,733) (56,640) (1,020,378) (147,515) (564,605) (1,732,498) (14,295,381)
At January 1, 2022
Cost 30,570 1,621,697 20,206,115 2,531,831 697,594 69,050 1,995,764 367,164 1,655,236 4,018,164 29,175,021
Accumulated Depreciation / impairment – (356,662) (9,996,659) (1,775,189) (377,733) (56,640) (1,020,378) (147,515) (564,605) (1,732,498) (14,295,381)
Net book amount January 1, 2022 30,570 1,265,035 10,209,456 756,642 319,861 12,410 975,386 219,649 1,090,631 2,285,666 14,879,640

Net book amount at January 1, 2022 30,570 1,265,035 10,209,456 756,642 319,861 12,410 975,386 219,649 1,090,631 2,285,666 14,879,640
Additions – 61,523 932,181 74,241 10,864 313 322,031 24,492 566,689 913,212 1,992,334
Disposals – (365) (13,082) (34,947) (626) (138) (106,207) – (142,970) (249,177) (298,335)

Cost 30,570 1,686,158 22,130,632 2,669,093 841,811 68,177 2,144,667 391,656 1,913,363 4,449,686 31,876,127
88
17.1.1 Particulars of immovable property (land and building) in the name of the Company are as follows:
Location Total Area
Production Plants
Jhelum 58.3 Acres

Akora 61.0 Acres
Warehouses
Faujoon 163,970 Sq ft.

Shergarh 65,227 Sq ft.
Takht Bhai 54,593 Sq ft.
Umerzai 87,464 Sq ft.
Mianwali 878,694 Sq ft.
Okara 71,723 Sq ft.
2022 2021

Rs. ‘000 Rs. ‘000
17.2 Capital work in progress
Carrying value at the beginning of the year 933,900 2,423,616

Additions during the year 1,442,530 1,054,344
2,376,430 3,477,960
Transferred to operating fixed assets (1,330,713) (2,544,060)
Carrying value at the end of the year - note 17.2.1 1,045,717 933,900

17.2.1 Capital work in progress includes capital expenditure on projects relating to enhancement of already installed machinery.
2022 2021

Rs. ‘000 Rs. ‘000
17.3 Depreciation / impairment charge has been allocated as follows:
Cost of sales 1,026,868 873,665

Raw material purchases and expenses 511,337 255,483
Selling and distribution expenses 225,981 221,745
Administrative expenses 383,943 355,962
2,148,129 1,706,855
89
17.4 Details of property, plant and equipment disposed off during the year, having book value of Rs. 500,000 or more are as
follows:
Cost Book Sale Gain/ Particulars of buyers Relationship

value proceeds (loss) on
less selling sale
expenses
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Plant & machinery

- by negotiation 9,714 9,552 9,552 – BAT SAA Service.(Pvt) Ltd Associated company
16,884 6,124 6,421 297 Scrap Buyers Contractor

Vehicles
- as per Company’s policy 2,399 642 601 (41) Amna Farouk Executive
2,414 582 480 (102) Noor Aftab Executive
2,514 972 969 (3) Rabia Abro Ex-Executive
2,584 517 515 (2) Waqas Ali khan Executive
2,654 1,132 1,093 (39) Javeria Aftab Executive
2,846 1,328 1,401 73 Sarah Khan Executive
3,483 2,183 2,507 324 Haris Ahmed Executive
3,483 2,136 1,984 (152) Syed Anas Shah EX-Executive
3,483 2,090 2,048 (42) Kamran Qureshi Ex-Executive
3,483 1,950 1,953 3 Marium Waqar Executive
3,547 2,128 1,939 (189) Furqan Anis Ex-Executive
3,547 1,750 1,135 (615) Muhammad Usman Ex-Executive
3,613 3,179 3,068 (111) Ahmer Rais Khan Ex-Executive
3,658 2,829 2,553 (276) Shahroze Wasif Ex-Executive
3,658 2,926 2,553 (373) Shahroze Ali Executive
3,663 2,833 2,814 (19) Madeeha Chaudhry Executive
3,663 2,637 2,306 (331) Ali Zeeshan Mirza Executive
3,733 3,036 3,191 155 Sughra Sadaf Ex-Executive
3,733 2,887 2,642 (245) Aftab Ahmed Khan Executive
3,907 2,448 2,218 (230) Sarmad Abbasi Ex-Executive
3,913 3,704 3,365 (339) Arslan Chawla Ex-Executive
3,913 3,861 3,334 (527) Saad Abid Ex-Executive
3,937 2,310 2,208 (102) M.Ismail Ahmed Executive
4,219 4,163 3,536 (627) Zain Mughal Ex-Executive
5,283 1,057 987 (70) Syed Hammad Ali Naqvi Ex-Executive
5,283 1,057 1,055 (2) M.Idries Ahmed Ex-Executive
6,483 2,766 2,738 (28) Syed Ali Ex-Executive
8,689 4,982 4,869 (113) Khurram Rajput Ex-Executive
8,689 5,213 4,937 (276) Uzair Qazi Ex-Executive
9,189 8,086 8,400 314 Imran Sharif Ex-Executive
10,500 8,120 8,199 79 Sami Zaman Ex-Executive
21,500 12,040 11,284 (756) Waqas Ahmed Khan Ex-Executive

- by auction 3,444 689 4,060 3,371 Through bidding in auction Auction agent
3,663 3,028 3,950 922 Through bidding in auction Auction agent
3,733 2,887 4,810 1,923 Through bidding in auction Auction agent
3,879 776 3,910 3,134 Through bidding in auction Auction agent

- by insurance claim 3,668 2,983 3,663 680 EFU General Insurance Ltd. Insurance agent
3,733 2,986 3,613 627 EFU General Insurance Ltd. Insurance agent
13,970 4,843 13,970 9,127 EFU General Insurance Ltd. Insurance agent
90
18 Long term investment in subsidiary company
This represents 500,001 (2021: 500,001) fully paid ordinary shares of Rs. 10 each in Phoenix (Private) Limited, a wholly owned
subsidiary of the Company. The break up value of shares calculated by reference to net assets worked out to be Rs.10 per share
(2021: Rs. 10 per share) based on financial statements for the year ended December 31, 2022.
Phoenix (Private) Limited is dormant company and has not commenced commercial production. Investment in subsidiary has
been made in accordance with the requirements under the repealed Companies Ordinance, 1984 (now the Companies Act,
2017).
2022 2021

Rs. ‘000 Rs. ‘000
19 Long term deposits and prepayments
Security deposits 23,604 28,661
23,604 28,661
20 Stock-in-trade
Raw materials 20,758,494 16,762,002

Raw materials in transit 1,044,440 1,411,372
Work in process 101,096 88,497
Finished goods 3,130,588 3,963,744
25,034,618 22,225,615
Provision for damaged / obsolete stocks - note 20.1 (129,298) (180,962)
24,905,320 22,044,653
20.1 Movement in provision for damaged stocks is as follows:
Balance as at January 1 180,962 127,848

Provision for the year 169,387 243,684
Written off during the year (221,051) (190,570)
Balance as at December 31 129,298 180,962
21 Stores and spares
Stores and spares 641,009 725,533

Provision for slow moving items - note 21.1 (79,963) (79,303)
561,046 646,230
21.1 Movement in provision for slowing moving items is as follows:

Provision/(Reversal) during the year- note 9 660 8,896
22 Trade debts
These are unsecured, considered good.
91
2022 2021

Rs. ‘000 Rs. ‘000
23 Loans and advances
Related parties:
Advances to key management personnel for
house rent and expenses - note 23.1 1,300 3,774
Others:
Advances to executives for house rent and expenses 32,539 32,383
Advances to other parties 798,956 52,759
832,795 88,916
23.1 The following advances were outstanding as at December 31:
Mir Faraz 900 –

Bushra Rehman 400 –
Haroon Saleem – 3,139
Uzair Qazi – 635
1,300 3,774
The maximum aggregate amount of advances to key management personnel outstanding at the end of any month during
the year was Rs. 2,397 thousand (2021: Rs. 3,902 thousand).
These loans and advances are unsecured and considered good. Advances extended to key management personnel,
executives and other employees are deducted from the individuals’ monthly payroll as per Company’s policy.
2022 2021

Rs. ‘000 Rs. ‘000
24 Other receivables
Related parties - unsecured:

Due from holding company / associated companies - note 24.1 555,280 514,075
Due from subsidiary company - note 24.1 20,021 20,021
Workers’ profit participation fund - note 27.7 154,608 –
Staff pension fund - note 33 – 501,307
Staff pension fund - defined contribution 1,682 –
Management provident fund 106,373 39,663
Employees’ provident fund 57,468 35,682
Others:
Claims against suppliers 6,576 6,576
Cash margin with banks - imports 2,848,389 771,605
Others 102,289 44,313
3,852,686 1,933,242
92
24.1 Ageing analysis of the amounts due from holding company / associated companies comprises:
Upto 1 1 to 6 More than

month months 6 months 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Holding company:
British American Tobacco p.l.c. - UK – – – – 11,533
Associated companies:
BAT SAA Service (Private) Ltd. - Pakistan 113,889 264 139,454 253,607 199,812
BAT (GLP) Limited - UK 75,049 8,682 – 83,731 3,356
BAT Nigeria Ltd-Nigeria – 7,003 65,190 72,193 50,828
BAT M.E DMCC - UAE 24,271 47,087 – 71,358 49,832
BAT (Investments) Ltd-UK 20,108 3,590 – 23,698 35,969
BAT M.E SPC - Bahrain 11,725 – 679 12,404 530
BAT Asia Pacific Ltd, Hongkong 12,254 – – 12,254 –
Nicoventures Trading Limited - UK 10,991 – – 10,991 26,530
RAI Services Company-U.S – 8,204 – 8,204 –
Ceylon Tobacco Co. Ltd - SriLanka – 4,363 – 4,363 2,951
BAT Aspac Service Centre Sdn Bhd-Malaysia 1,549 – – 1,549 5,182
BAT Bangladesh Co. Limited-Bangladesh – 928 – 928 –
BASS Europe SRL - Romania – – – – 53,138
BAT Exports Limited - UK – – – – 36,655
BAT Marketing (S) Pte Ltd - Singapore – – – – 12,222
BAT Korea Limited - Korea – – – – 11,608
BAT (Singapore) Pte Ltd-Singapore – – – – 10,492
BAT PNG Ltd - Papua New Guinea – – – – 2,538
Central Manufacturing Co. Ltd-Fiji Islands – – – – 899
269,836 80,121 205,323 555,280 514,075

Subsidiary company:
Phoenix (Pvt) Limited – – 20,021 20,021 20,021
Total 269,836 80,121 225,344 575,301 534,096
24.1.1 The maximum aggregate amount of receivable from related parties at the end of any month during the year was Rs.
575,301 thousand (2021: Rs. 825,967 thousand).
2022 2021

Rs. ‘000 Rs. ‘000
25 Short term investments
At fair value through profit or loss (FVTPL):

- Market treasury bills 21,522,111 9,402,598
This represents short term investment in treasury bills issued by the Government of Pakistan and carries effective interest rate of
15.75% ( 2021 : 10.10%) per annum and are held for trading. These treasury bills have less than three months maturity from the
date of acquisition and have been disposed off subsequent to the year-end.
93
2022 2021

Rs. ‘000 Rs. ‘000
26 Cash and bank balances
Deposit account - note 26.1 7,513 17,687

Current accounts:
Local currency - note 26.2 427,250 442,149
Foreign currency 1,444,033 785,232
Total 1,878,796 1,245,068
26.1 These are security deposits being kept in separate bank account.
26.2 This includes balance amounting to Rs 0.47 million (2021: Rs 3.74 million) held with National Bank of Pakistan
(an associated company).
2022 2021

Rs. ‘000 Rs. ‘000
27 Trade and other payables

Due to holding company / associated companies - note 27.1 4,859,598 816,919
Others:
Creditors 11,886,109 7,914,318
Federal excise duty - note 27.2 6,291,182 8,655,007
Sales tax 1,892,655 1,820,898
Workers’ welfare fund - note 27.6 708,849 534,838
Workers’ profit participation fund - note 27.7 – 10,968
Other accrued liabilities 182,385 97,837
Employee incentive schemes - note 27.4 112,668 124,332
Employees’ gratuity fund - note 33 272,269 219,441
Staff pension fund - note 33 122,112 –
Staff pension fund - defined contribution – 13,395
Tobacco excise duty / Tobacco development cess - note 27.3 146,337 114,834
Security deposits - note 27.5 7,513 16,935
Contract liability 715,884 246,718
27,197,561 20,586,440
94
27.1 The amount due to holding company / associated companies comprises:
2022 2021

Rs. ‘000 Rs. ‘000
Holding company:
British American Tobacco p.l.c. - UK 796,862 180,013
BAT GLP Ltd - UK - note 27.1.1 1,817,169 125,773
BASS GSD Ltd. - UK 1,256,749 11,655
BAT M.E DMCC - UAE - note 27.1.1 368,833 202,881
BAT Saudia for Trading, Saudi Arabia - note 27.1.1 137,862 66,784
BAT Exports Limited - UK 127,529 81,327
BAT Nicoventures Trading Ltd-UK 101,677 3,007
BAT South Africa SA. - South Africa 78,974 –
BAT Asia Pacific Ltd - HongKong 47,715 21,269
BAT M.E SPC - Bahrain - note 27.1.1 37,240 24,915
BAT Souza Cruz Ltd - Brazil 19,964 17,527
BAT Australia Ltd-Australia 19,242 2,023
PT Bentoel Prima - Indonesia 15,175 23,484
BAT Jordan Ltd - Jordan - note 27.1.1 12,745 –
BAT Singapore (Pte) Ltd - Singapore 12,210 9,516
BAT GSD (KL) SDN BHD - Malaysia 3,542 3,066
Fielder & Lundgren AB. - Sweden 3,028 –
BAT Korea Manufacturing - South Korea 2,611 2,408
BAT Romania Investments Ltd - Romania 471 584
BAT Mexico Ltd - Mexico – 31,669
BAT Myanmar Ltd - Myanmar - note 27.1.1 – 4,981
BAT Chile Tobacco - Chile – 2,882
BAT Tutun Mamulleri - Turkey – 435
BAT Vranje - Serbia – 285
BAT Nigeria Ltd - Nigeria – 283
Ceylon Tobacco Company Plc - Sri Lanka – 152
4,859,598 816,919
27.1.1 Rs. 742,497 thousand (2021: Rs. 299,561 thousand) relates to unsecured export advance.
95
2022 2021

Rs. ‘000 Rs. ‘000
27.2 Federal excise duty
Balance as at January 1 8,655,007 7,314,335

Charged during the year 103,232,916 95,177,089
Payment to the Government during the year (105,596,741) (93,836,417)
Balance as at December 31 6,291,182 8,655,007
27.3 Tobacco excise duty / tobacco development cess:

Charge for the year 253,040 222,869
Payment to the Government during the year (221,537) (226,169)
27.4 Employee incentive schemes
These represent liability for unvested portion of cash-settled share-based payment schemes available to certain
employees. Such schemes require the Company to pay the intrinsic value of these share based payments to the employee
at the vesting date.
2022 2021

Rs. ‘000 Rs. ‘000
Long Term Incentive Plan (LTIP) - note 27.4.1

Share options exercised (26,660) (18,170)
Deferred Share Bonus Scheme (DSBS) - note 27.4.2

112,668 124,332
27.4.1 Long Term Incentive Plan (LTIP)
Details of the options movement for cash-settled LTIP scheme during the year were as follows:
2022 2021
Number of options
Outstanding as at January 1 11,794 15,399

Granted during the year 892 1,885
Exercised during the year (7,994) (5,490)
Outstanding as at December 31 4,692 11,794
There are no exercisable options as at 31st December, 2022.
96
27.4.2 Deferred Share Bonus Scheme (DSBS)
Details of the options movement for cash-settled DSBS scheme during the year were as follows:
2022 2021
Number of options

Granted during the year 5,342 7,515
27.5 These represent amounts received as security deposits from dealers and suppliers, which are non-utilisable for the
purpose of the business in accordance with their agreements. These security deposits are being held in a separate bank
account.
2022 2021

Rs. ‘000 Rs. ‘000
27.6 Movement in Workers’ Welfare Fund is as follows:

Charged during the year 658,709 485,656
Payment to government /reversal during the year (484,698) (407,714)
27.7 Movement in Workers’ Profit Participation Fund is as follows:

Allocation for the year 1,865,392 1,407,468
Payments during the year (2,030,968) (2,251,857)
Balance as at December 31 (154,608) 10,968
28 Other liabilities
This relates to provisions for employee benefits, litigation and restructuring consequent to modernization of production processes.
During the year, the Company has utilized amounts aggregating Rs. 728 million (2021: Rs. 502 million) and recorded further
obligations of Rs. 2,324 million (2021: Rs. 925 million).
29 Short term running finance/export refinance - secured
(a) Short term running finance/export refinance
Short term running finance facilities available under mark-up arrangements with banks amount to Rs. 6,500 million (2021:
Rs. 6,500 million), out of which the amount unavailed at the year end was Rs. 6,500 million (2021: Rs. 6,500 million). These
facilities are secured by hypothecation of stock in trade and plant and machinery amounting to Rs. 7,222 million (2021:
Rs. 7,222 million). The mark-up ranges between 10.39% and 16.81% (2021: 7.49% and 9.71%) per annum and is payable
quarterly. The facilities are renewable on annual basis.
Effective September 2022, the Company has rolled over/obtained new loan of Rs. 2,300 million (Dec 31, 2021: Rs. 2,300
million) from different banks under export refinance scheme. The interest rate is 9.20% (Dec 31, 2021: 2.20%).
97
(b) Non-funded finance facilities
The Company also has non-funded financing facilities available with banks, which include facility to avail letter of credit
and letter of guarantee. The aggregate facility of Rs. 2,500 million (2021: Rs. 2,500 million) and Rs. 1,200 million (2021: Rs.
1,200 million) is available for letter of credit and letter of guarantee respectively, out of which the facility availed at the year
end is Rs. 1,512 million (2021: Rs. 295 million) and Rs. 770 million (2021: Rs. 542 million). The letter of credit and guarantee
facility is secured by second ranking hypothecation charge over stock-in-trade amounting to Rs. 1,333 million (2021: Rs.
1,333 million).
30 Lease liability
This represents lease agreements entered into with a leasing company for vehicles and IFRS 16 leases. Total lease rentals due
under various lease agreements aggregate to Rs. 1,737,866 thousand - short term Rs. 802,531 thousand and long term Rs.
935,335 thousand (December 31, 2021: Rs. 1,999,185 thousand - short term Rs. 577,272 thousand and long term Rs. 1,421,913
thousand) and are payable in equal monthly instalments latest by December 2027. Taxes, repairs, replacement and insurance
costs are to be borne by the Company. Financing rates of 9% to 17% (December 31, 2021: 9% to 13%) per annum have been
used as discounting factor.
As per IFRS 16 all rental facilities of the Company with lease terms greater than one year have been capitalised as leased
assets. When measuring the lease liabilities for leases that were capitalised during the year, the Company discounted lease
payments using an estimated incremental borrowing rate and recorded lease obligation of Rs. 322,031 thousand (2021: Rs.
373,573 thousand) during the year.
The amount of future minimum lease payments together with the present value of the minimum lease payments and the periods
during which they fall due are as follows:
2022 2021

Rs. ‘000 Rs. ‘000
Present value of minimum lease payments 1,737,866 1,999,185

Current maturity shown under current liabilities (802,531) (577,272)
935,335 1,421,913
Future minimum lease payments

Not later than one year 961,612 742,882
Later than one year 1,178,197 1,725,627
2,139,809 2,468,509
Interest (401,943) (469,324)
Present value of minimum lease payments

Later than one year 935,335 1,421,913
1,737,866 1,999,185
31 Unpaid dividend
Unpaid dividend includes amount of Rs. 5,286,154 thousand (2021: Rs. 4,507,434 thousand), payable to British American Tobacco
(Investments) Limited, parent company.
98
2022 2021

Rs. ‘000 Rs. ‘000
32 Deferred income tax liability
Deferred tax liability is in respect of:

Accelerated tax depreciation 1,771,478 1,412,009
Leased assets 182,135 142,931
1,953,613 1,554,940
Deferred tax asset is in respect of:

Remeasurement loss arising on employees’
retirement benefit (218,076) (156,231)
Provision for severance benefits (839,251) (346,163)
Provision for stock and stores (26,388) (23,000)
869,898 1,029,546
The gross movement on deferred income tax account is as follows:
At January 1 1,029,546 888,506

(Credit)/charge for the year - statement of profit or loss (97,802) 179,149
(Credit) for the year - statement of comprehensive income (61,846) (38,109)
At December 31 869,898 1,029,546
33 Retirement benefits
Investments in all contributory funds have been made in accordance with the provisions of section 218 of the Companies Act,
2017 and the rules formulated for that purpose.
2022 2021

Rs. ‘000 Rs. ‘000
Staff pension fund - liability / (asset) - note 27 & 24 122,112 (501,307)
Employees’ gratuity fund - liability - note 27 272,269 219,441
The latest actuarial valuation of the defined benefit plans was conducted at December 31, 2022 using the projected unit credit
method. Details of the defined benefit plans are:
Defined Benefit Defined Benefit

Pension Plan Gratuity Plan
2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(a) The amounts recognised in the statement

of financial position:
Present value of defined benefit obligations 6,106,054 5,707,806 1,638,103 1,691,179

Fair value of plan assets (5,983,942) (6,209,113) (1,365,834) (1,471,738)
Net liability / (assets) 122,112 (501,307) 272,269 219,441
99

2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(b) Movement in the liability / (asset) recognized

in the statement of financial position
is as follows:
Balance as at January 1 (501,307) (316,026) 219,441 275,517

Charge for the year - profit or loss (13,677) 26,821 104,562 113,429
Employer’s contribution during the year (24,182) (27,352) (28,909) (300,914)
Benefits paid by the Company – – – –
Remeasurement (gain)/loss recognized in Other
Comprehensive Income (OCI) during the year 661,278 (184,750) (22,825) 131,409
Balance as at December 31 122,112 (501,307) 272,269 219,441
(c) The amounts recognised in the statement

of profit or loss:
Current service cost 85,464 94,898 105,235 102,462
Interest cost 699,448 593,042 208,475 162,596

Expected return on plan assets (768,255) (627,581) (182,613) (134,845)
Net interest (68,807) (34,539) 25,862 27,751

Members’ own contribution (22,146) (23,735) – –
Secondees’ own contribution (4,063) (4,330) – –
Contribution by employer in respect of secondees (4,125) (5,473) (26,535) (16,784)
(13,677) 26,821 104,562 113,429
(d) Re-measurements recognised in Other

Comprehensive Income (OCI) during
the year:
Actuarial loss/ (gain) on obligation 82,121 (598,185) 25,301 9,748

Net return on plan assets over interest income 579,157 413,435 (48,126) 121,661
Total remeasurements loss / (gain) recognised

in OCI 661,278 (184,750) (22,825) 131,409
(e) Movement in the present value of defined

benefit obligation:
Present value of defined benefit obligation at

January 1 5,707,806 5,882,010 1,691,179 1,598,482
Interest cost 699,448 593,042 208,475 162,596
Actual benefits paid during the year (468,785) (263,959) (392,087) (182,109)
Remeasurements: Actuarial loss /(gain)
on obligation 82,121 (598,185) 25,301 9,748
Present value of defined benefit obligation

at December 31 6,106,054 5,707,806 1,638,103 1,691,179
100

2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(f) Movement in the fair value of plan assets:
Fair value of plan assets at January 1 6,209,113 6,198,036 1,471,738 1,322,964

Interest income 768,255 627,581 182,613 134,845
Contribution by employer in respect of members 24,182 27,352 28,909 300,915
Members’ own contribution 22,146 23,735 – –
Secondees’ own contribution 4,063 4,330 – –
Contribution by employer in respect of secondees 4,125 5,473 26,535 16,784
Return on plan assets, excluding amounts included in
interest income (579,157) (413,435) 48,126 (121,661)
Fair value of plan assets at December 31 5,983,942 6,209,113 1,365,834 1,471,738
Actual return on plan assets 170,902 399,897 76,227 13,685
The Company expects to charge Rs 43 million for pension plan and charge Rs 135 million for gratuity plan for the year
ending December 31, 2023.

2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(g) The major categories of plan assets:
Investment in listed equities 1,294,470 1,542,807 373,556 374,414

Investment in bonds 4,683,913 1,493,619 784,643 322,894
Cash and other assets 5,559 3,172,687 207,635 774,430
5,983,942 6,209,113 1,365,834 1,471,738
(h) Significant actuarial assumptions at

the statement of financial position date:
Discount rate 14.25% 12.50% 14.25% 10.25%

Pension increase rate 8.75% 7.00% – –
Expected rate of increase in salary
First year 12.25% 10.50% 12.25% 10.50%
Second year onwards 12.25% 10.50% 12.25% 10.50%
The mortality table used for post retirement mortality is Standard Table Mortality The “80” Series PMA 80 (C=2015) and PFA
80(C=2015) for males and females respectively but rated up 2 years.
The discount rate is determined by considering underlying yield currently available on Pakistan Investment Bonds and high
quality term finance certificates and expected return on plan assets is determined by considering the expected returns
available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based
on gross redemption yields as at the reporting date.
Salary increase assumption is based on the current general practice in the market.
101
(i) Sensitivity Analysis on significant actuarial assumptions
The calculation of the defined benefit obligation is sensitive to assumptions set out above. The following table summarizes
how the impact on the defined benefit obligation at the year end of the reporting period would have increased / (decreased)
as a result of a change in respective assumptions by one percent.

1 percent 1 percent 1 percent 1 percent
increase decrease increase decrease
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Discount rate (647,795) 789,945 (131,467) 150,724

Salary increase 116,730 (106,939) 156,125 (138,134)
Increase in post retirement pension 687,139 (573,746) – –
If life expectancy increases by 1 year, the obligation of the Pension Fund increases by Rs 344,856 thousand
( 2021: 343,537 thousand).
Expected maturity profile
Following are the expected distribution and timing of benefits payments at the year end.

2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Weighted average duration of the PBO (Years) 10.61 10.93 8.03 8.00
Risks associated with defined benefit plan
Longevity risk
The risk arises when the actual lifetime of retiree is longer than the estimate of future employee lifetime expectation. This
risk is measured at the plan level over the entire retiree population.
Salary increase risk
The most common type of retirement benefit is one where the benefit is linked with final salary. The risk arises when the
actual increases are higher than the expectations and impacts the liability accordingly.
Withdrawal risk
The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation. The
movement of the liability can go either way.
Mortality Risk
The risk that the actual mortality experience is different. The effect depends on the beneficiaries’ service/age distribution
and the benefit.
Investment Risk
The risk of the investments underperforming and not being sufficient to meet the liabilities.
102
Historical Information

Present value of Net liability Present value of Net liability at

defined benefit (asset) at the defined benefit the end of
obligation end of the year obligation the year
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

2022 6,106,054 122,112 1,638,103 272,269
2021 5,707,806 (501,307) 1,691,179 219,441

2020 5,882,010 (316,026) 1,598,482 275,517
2019 4,978,396 (881,821) 1,650,938 337,649
2018 4,628,109 (787,677) 1,474,653 210,278
33.1 Salaries, wages and benefits as appearing in note 9, 10 and 11 include amounts in respect of the following:
2022 2021

Rs. ‘000 Rs. ‘000
Defined Contribution Provident Fund 107,379 109,512

Defined Benefit Pension Fund (13,677) 26,821
Defined Contribution Pension Fund 138,839 136,686
Defined Benefit Gratuity Fund 104,562 113,429
337,103 386,448
33.2 Defined Contribution Plan
Details of the management and employees’ provident funds are as follows:

Un-audited Un-audited
(a) Size of the fund - total assets 1,672,531 1,722,422
Cost of investments made 1,569,237 1,615,318
Percentage of investments made 94% 94%
Fair value of investments made 1,465,127 1,615,012
2022 2021
Rs. ‘000 % age Rs. ‘000 % age
(b) Breakup of investments at cost
Treasury bills 20,000 1% – –

Pakistan Investment Bonds 266,471 16% 188,615 11%
Investment plus deposit certificates 579,750 35% 579,750 34%
Investment in savings account with bank 46,170 3% 194,029 11%
Investment in securities 281,809 17% 281,809 16%
Accrued interest 375,037 22% 371,115 22%
1,569,237 94% 1,615,318 94%
103
34 Share capital
34.1 Authorized share capital
2022 2021 2022 2021

Number of shares Rs. ‘000 Rs. ‘000
300,000,000 300,000,000 Ordinary shares of Rs 10 each 3,000,000 3,000,000
34.2 Issued, subscribed and paid-up capital
2022 2021 2022 2021

230,357,068 230,357,068 Issued for cash 2,303,571 2,303,571

25,136,724 25,136,724 Issued as bonus shares 251,367 251,367
255,493,792 255,493,792 2,554,938 2,554,938
British American Tobacco (Investments) Limited held 241,045,141 (2021: 241,045,141) ordinary shares at the year-end
and 10,274 (2021:10,274) and 798,282 (2021:798,282) ordinary shares are held by the directors/other executives and
associated company respectively.
All ordinary shares rank equally with regard to the Company’s residual assets. Holders of these shares are entitled to
dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company.
2022 2021

Rs. ‘000 Rs. ‘000
35 Contingencies and commitments
35.1 Contingencies
Claims and guarantees
(i) Claims against the Company not acknowledged as debt - Note 35.1.1 3,024 75,706
(ii) Guarantees issued by banks on behalf of the Company 769,944 541,991
35.1.1 Litigation
a) Employees’ Old-Age Benefits Institution (EOBI) constituted under the Employees’ Old-Age Benefits Act, 1976 (“the Act”)
requires contributions to be made by industries and establishments against workers employed by it. PTC has been making
prompt contributions under the Act. PTC has contractual arrangements with Logistics Service Providers for the shipment
of its raw material and finished goods. In the year 2015, the EOBI Jhelum issued a show cause notice dated March 4th,
2015, demanding payment of Rs. 3,024,000 against non-payment of contribution of 200 employees. These employees
were in fact employees of five transport concerns with which PTC had contractual arrangements. PTC filed complaint
against the said show cause before Adjudicating Authority – III, EOBI Islamabad and raised the objection that this liability is
of the five transport concerns who are independent entities. The Adjudicating Authority however passed an order against
PTC on February 14th, 2017, upholding the demand earlier raised by the EOBI Jhelum. PTC has filed an appeal in May
2017 against the order before the Board of Trustees EOBI Head Quarter at Karachi which is pending adjudication. Said
appeal was dismissed in January 2022, following which PTC challenged the demand from EOBI before the Islamabad High
Court which issued a stay order in favour of PTC against coercive recovery by EOBI. This stay order is still intact.
The Company expects favorable outcome in this case and accordingly, no provision is recognised in the financial
statements.
35.2 Commitments
(a) Letters of credit outstanding at December 31, 2022 were Rs. 1,511,561 thousand (2021: Rs. 295,277 thousand).
104
36 FINANCIAL INSTRUMENTS - Fair values and risk management

36.1 Accounting classification and fair value
The following tables shows the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable approximation of fair value.
December 31, 2022 Fair value
Fair value Amortised Total Level 1 Level 2 Level 3

through profit cost
or loss
Note Rs. ‘000 Rs. ‘000
Financial assets measured at fair value
Short-term investments 25 21,522,111 – 21,522,111 – 21,522,111 –
Financial assets not measured at fair value
Deposits 19 – 23,604 23,604 – – –
Trade debts 22 – 2,876 2,876 – – –
Other receivables 24 – 3,532,555 3,532,555 – – –
Cash and bank balances 26 – 1,878,796 1,878,796 – – –
21,522,111 5,437,831 26,959,942 – – –
Financial liabilities measured at fair value – – – – – –
Financial liabilities not measured at fair value
Trade and other payables 27 – (18,158,538) (18,158,538) – – –
Other liabilities 28 – (4,092,981) (4,092,981) – – –
Short term running finance/export refinance 29 – (2,354,312) (2,354,312) – – –
Lease liability 30 – (1,737,866) (1,737,866) – – –
Unpaid dividend 31 – (5,391,129) (5,391,129) – – –
Unclaimed dividend – (106,330) (106,330) – – –
– (31,841,156) (31,841,156) – – –

through profit cost
or loss
Note Rs. ‘000 Rs. ‘000
Deposits 19 – 28,661 28,661 – – –
Trade debts 22 – 2,142 2,142 – – –
9,402,598 2,632,461 12,035,059
Lease liability 30 – (1,999,185) (1,999,185) – – –
Unpaid dividend 31 – (4,663,641) (4,663,641) – – –
– (21,039,614) (21,039,614) – – –
105
36.2 Financial risk management
The Company has exposure to the following risks from financial instruments:
- credit risk
- liquidity risk
- market risk
36.2.1 Financial risk management framework
The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the financial performance. Risk management is carried out by the Treasury Committee
(the Committee) under policies approved by the board of directors (the Board). The Board provides written principles for
overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate
risk, credit risk and investment of excess liquidity. All treasury related transactions are carried out within the parameters of
these policies.
36.2.2 Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from trade debts, other receivables, deposits with banks and investment in treasury bills
issued by the Government of Pakistan. The carrying amount of financial assets represents the maximum credit exposure.
Due to the Company’s long standing business relationships with these counterparties and after giving due consideration to
their strong financial standing, management does not expect non-performance by these counter parties on their obligations
to the Company. Accordingly the credit risk is minimal.
Financial assets amounting to Rs 26,960 million (2021: Rs 12,035 million) do not include any amounts which are past due
or impaired. The table below shows bank balances held with counterparties at the reporting date.
Counterparty Rating Rating agency
Short term Long term 2022 2021

Rs. ‘000 Rs. ‘000
Cash at bank:
Standard Chartered Bank A-1+ AAA PACRA 1,240,955 622,267
MCB Bank Ltd A-1+ AAA PACRA 257,353 172,338
Deutsche Bank AG A-2 A- S&P 232,230 175,397
MCB Islamic Bank A-1 A PACRA 78,676 50,252
Habib Bank Ltd A-1+ AAA VIS 66,215 195,329
Citibank N.A. P-1 Aa3 Moody’s 2,894 25,747
National Bank of Pakistan A-1+ AAA PACRA 473 3,738
1,878,796 1,245,068
Short term investments:
Government of Pakistan Caa1- Moody’s 21,522,111 9,402,598
23,400,907 10,647,666
106
As at December 31, 2022, maximum exposure to credit risk for financial assets by geography was as follows:
Carrying amount
2022 2021

Rs. ‘000 Rs. ‘000
Pakistan 26,658,269 11,720,796

United Kingdom 118,420 114,043
Asia & other 183,253 200,220
26,959,942 12,035,059
As at 31 December 2022, the ageing of financial assets was as follows:
Carrying amount
2022 2021

Rs. ‘000 Rs. ‘000
Not due 26,647,901 11,494,387

1-30 days 80,121 234,002
31-90 days 205,323 279,543
90 days 26,597 27,127
26,959,942 12,035,059
36.2.3 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is
to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal
and stressed conditions, without incurring unacceptable losses or risking to the Company’s reputation.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross
and undiscounted, and include contractual interest payments and exclude the impact of the netting arrangements:
Carrying Contractual cash flows

amount Total 12 months 1 to 5
or less years
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
31 December 2022
Trade and other payables 18,158,538 (18,158,538) (18,158,538) –
Other liabilities 4,092,981 (4,092,981) (4,092,981) –
Short term running finance/export refinance 2,354,312 (2,354,312) (2,354,312) –
Lease liability 1,737,866 (1,737,866) (1,737,866) –
Unpaid dividend 5,391,129 (5,391,129) (5,391,129) –
Unclaimed dividend 106,330 (106,330) (106,330) –
31,841,156 (31,841,156) (31,841,156) –
31 December 2021
Lease liability 1,999,185 (1,999,185) (1,999,185) –
Unpaid dividend 4,663,641 (4,663,641) (4,663,641) –
21,039,614 (21,039,614) (21,039,614) –
107
Cash flows included in the maturity analysis are not expected to occur significantly earlier or at significantly different
amounts.
36.2.4 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates will affect the Company’s
income or the value of its holding of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. This exists due to the Company’s exposure resulting from outstanding payments on account of
import of goods and services. The currencies in which these transactions are primarily denominated are euro, sterling and
US dollars.
The summarised quantitative data about the Company’s exposure to currency risk is as follows:
December 31, 2022 December 31, 2021
Euro Sterling US dollars Euro Sterling US dollars
Other receivables – 44,263 521,595 184,087 67,857 313,019

Cash and bank balances – – 6,378,942 – – 4,448,907
Trade and other payables – (4,737,376) (8,250,675) (1,729,952) (325,143) (3,581,725)
Net exposure – (4,693,113) (1,350,138) (1,545,865) (257,286) 1,180,201
The following significant exchange rates have been applied:
Average rate Year-end spot rate

2022 2021 2022 2021
Euro 1 214.59 192.47 241.60 200.72

Sterling 1 251.49 223.97 272.31 239.06
US dollar 1 204.56 162.91 226.38 176.50
A 10 percent strengthening (weakening) of the Rupee against euro, sterling and US dollar at the reporting date would have
affected the measurement of financial instruments denominated in a foreign currency and affected the equity and profit
or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remains
constant and ignores any impact of forecast sales and purchases.
Profit or loss Equity, net of tax

Strengthening Weakening Strengthening Weakening
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
31 December 2022
Euro – – – –
Sterling 127,798 (127,798) 91,976 (91,976)
US dollar 30,564 (30,564) 21,997 (21,997)
108

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
31 December 2021
Euro 31,029 (31,029) 22,331 (22,331)
Sterling 6,151 (6,151) 4,427 (4,427)
US dollar (20,831) 20,831 (14,992) 14,992
Interest rate risk

This represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not exposed to fair value interest rate risk as it does not hold any fixed rate
instruments. The Company does not have any significant long-term interest-bearing financial assets or financial liabilities
whose fair value or future cash flows will fluctuate because of changes in market interest rates.
Financial liabilities include balances of Rs. 1,737,866 thousand (2021: Rs. 1,999,185 thousand) which are subject to
interest rate risk. Applicable interest rates for these financial liabilities have been indicated in respective notes.
At statement of financial position date, if interest rates had been 1% higher/lower, with all other variables remain constant,
profit for the year would have been Rs. 17.379 million (2021: Rs. 19.992 million) lower/higher, mainly as a result of higher/
lower interest expense on floating rate borrowings.
37 Remuneration of Chief Executive, Directors and Executives
The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to Chief Executive,
Executive Directors and executives are as follows:-
Chief Executive Executive Directors Executives Total
Key Management Other

Personnel Executives
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Managerial remuneration 117,576 93,838 136,599 127,572 292,653 162,603 977,624 839,688 1,524,452 1,223,701
Corporate bonus 29,703 34,239 47,950 48,432 130,677 126,463 258,277 261,515 466,607 470,649
Leave fare assistance 1,296 2,590 7,056 7,306 4,655 1,477 - 25 13,007 11,398
Housing and utilities 19,070 14,110 14,430 16,458 55,046 59,212 369,650 343,055 458,196 432,835
Medical expenses 644 136 1,634 1,989 11,255 8,762 83,709 73,064 97,242 83,951
Post employment benefits 1,440 1,202 13,356 12,114 23,964 26,442 205,872 204,284 244,632 244,042
169,729 146,115 221,025 213,871 518,250 384,959 1,895,132 1,721,631 2,804,136 2,466,576
Number of persons 1 1 2 2 13 13 328 311 344 327
37.1 The Company, in certain cases, also provides individuals with the use of company accommodation, cars and household
items, in accordance with their entitlements.
37.2 The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to nine
(2021: nine) non-executive directors of the Company amounted to Rs. 10,352 thousand (2021: Rs. 6,515 thousand).
109
38 Transactions with related parties
British American Tobacco (Investments) Limited (BAT-IL) holds 94.34% (2021: 94.34%) shares of the Company at the year end.
Therefore, all the subsidiaries and associated undertakings of BAT-IL and the ultimate parent company British American Tobacco,
p.l.c (BAT) are related parties of the Company. The related parties also include directors, major shareholders, key management
personnel, employee funds and the entities over which the directors are able to exercise significant influence. The amounts
due from and due to these undertakings are shown under receivables and payables. The remuneration of the chief executive,
directors, key management personnel and executives is given in note 37 to the financial statements. Transactions with employee
funds and associated payable/receivable balances are provided in note 33 to the financial statements.
As National Bank of Pakistan is an associated company under the Companies Act 2017 due to common directorship, yet does
not fall under the definition of related party as interpreted from IAS 24 “Related Party Disclosures”. Accordingly, transactions and
balances with National Bank of Pakistan have not been disclosed in the related party disclosure.
2022 2021

Rs. ‘000 Rs. ‘000
Procurement of goods and services from:

Holding company 2,287,151 2,253,371
Associated companies 5,460,330 5,273,360
Sale of goods and services to:

Holding company – 11,335
Dividend declared
Holding company 11,608,964 19,348,274
Royalty charged by:

Holding /associate company 850,354 598,658
Expenses reimbursed to:

Holding company – 590
Associated companies 14,893 372
Expenses reimbursed by:

Holding company 3,266 53,228
Associated companies 492,215 456,184
Payment under employee incentive schemes:

Key management personnel 90,702 57,709
Other income:
Associated company:
Export of services 551,559 581,565
Recharges written back – 57,146
38.1 Following are the name of associated companies, related parties and associated undertakings with whom the Company
had entered into transactions or had agreements and arrangements in place during the year. Names of associated
companies, related parties and associated undertakings, incorporated outside Pakistan are included in note 38.2.
110
Associated companies / related Aggregate % of

parties and associated undertakings Basis of relationship shareholding
Pheonix (Private) Limited Subsidiary Nil

BAT SAA Services (Private) Limited Common Directorship Nil
National Bank of Pakistan Common Directorship Nil
Retrirment benefit funds:

Pension Funds Post employment benefits Nil
Provident Funds Post employment benefits Nil
Gratuity Fund Post employment benefits Nil
Zafar Mahmood Director 0.000196%

Syed Ali Akbar Director 0.000978%
Kelly Burtenshaw Director 0.000978%
Syed Asad Ali Shah Director 0.000196%
Usman Zahur Director 0.000196%
Wael Sabra Director 0.000196%
Belinda Ross Director 0.000196%
Asif Jooma Director 0.000196%
Mohammad Riaz Director 0.000196%
Lt. Gen (Rtd.) Najib Ullah Khan Director 0.000196%
Gary Tarrant Director 0.000196%
Oliver Engels Director 0.000196%
Sayeed Salam Key management personnel Nil
Faiza Imtiaz Key management personnel Nil
M. Ammar Yasir Key management personnel Nil
Mohammad W.Naser Key management personnel Nil
Patrick Bejjani Key management personnel Nil
Khubaib Akram Key management personnel Nil
Khan Muhammad Mohmand Key management personnel Nil
Muhammad Asim Key management personnel Nil
Hassan Khalid Key management personnel Nil
Haroon Saleem Key management personnel Nil
Junaid Khatana Key management personnel Nil
Bushra Rahman Key management personnel Nil
Mir Faraz Key management personnel Nil
38.2 Following particulars relate to associated companies incorporated outside Pakistan with whom the Company had entered
into transactions during the year or have arrangement / agreement in place.
Basis of Aggregate % Country of

Associated company relationship of Shareholding Incorporation
British American Tobacco p.l.c. Ultiamte Parent Company 0.00% United Kingdom
BAT (Investments) Limited Holding Company 94.34% United Kingdom
BAT Rothmans International Holding Company 0.31% United Kingdom
BAT Exports Limited Fellow Subsidiary 0.00% United Kingdom
Ceylon Tobacco Company PLC Fellow Subsidiary 0.00% Sri Lanka
British American Tobacco Myanmar Limited Fellow Subsidiary 0.00% Myanmar
British American Tobacco Argentina Fellow Subsidiary 0.00% Argentina
British American Tobacco Australia Fellow Subsidiary 0.00% Australia
BAT Bangladesh Company Limited Fellow Subsidiary 0.00% Bangladesh
Souza Cruz Ltd. Fellow Subsidiary 0.00% Brazil
BAT Switzerland SA Fellow Subsidiary 0.00% Swiztzerland
British American Tobacco Chile Operaciones SA Fellow Subsidiary 0.00% Chile
111

BAT Germany GmbH Fellow Subsidiary 0.00% Germany

BAT (Brands) Limited Fellow Subsidiary 0.00% United Kingdom
Benson & Hedges (Overseas) Limited Fellow Subsidiary 0.00% United Kingdom
BAT (Holdings) Limited Fellow Subsidiary 0.00% United Kingdom
BASS (GSD) Limited Fellow Subsidiary 0.00% United Kingdom
British American Tobacco (GLP) Limited Fellow Subsidiary 0.00% United Kingdom
Nicoventures Trading Ltd Fellow Subsidiary 0.00% United Kingdom
British American Tobacco Asia Pacific Region Ltd Fellow Subsidiary 0.00% Hong Kong
British American Tobacco Co. (HK) Ltd Fellow Subsidiary 0.00% Hong Kong
British American Tobacco GTR Ltd Fellow Subsidiary 0.00% Hong Kong
Fielder & Lundgren AB Fellow Subsidiary 0.00% Sweden
BAT Pecsi Dohanygyar KFT Fellow Subsidiary 0.00% Hungary
British American Tobacco Kenya Ltd Fellow Subsidiary 0.00% Kenya
BAT Koea Ltd Fellow Subsidiary 0.00% South Korea
BAT Koea Manufacturing Ltd Fellow Subsidiary 0.00% South Korea
British American Tobacco Mexico SA de CV Fellow Subsidiary 0.00% Mexico
BAT AsPac Service Centre Sdn Bhd Fellow Subsidiary 0.00% Malaysia
BAT GSD (KL) Sdn Bhd. Fellow Subsidiary 0.00% Malaysia
BAT Nigeria Ltd Fellow Subsidiary 0.00% Nigeria
BAT Marketing Nigeria Ltd. Fellow Subsidiary 0.00% Nigeria
British American Tobacco Niemeyer Fellow Subsidiary 0.00% Netherlands
British-American Tobacco Polska S.A Fellow Subsidiary 0.00% Poland
BAT Investment (Romania) SRL Fellow Subsidiary 0.00% Romania
BAT (Romania) Trading SRL. Fellow Subsidiary 0.00% Romania
BASS Europe SRL. Fellow Subsidiary 0.00% Romania
JSC BAT-Spb Fellow Subsidiary 0.00% Russia
British-American Tobacco (Singapore) Pte Ltd Fellow Subsidiary 0.00% Singapore
BAT Marketing (Singapore) Pte Ltd Fellow Subsidiary 0.00% Singapore
British American Tobacco Tutun Mamulleri Fellow Subsidiary 0.00% Turkey
TDR D.O.O Fellow Subsidiary 0.00% Croatia
West Indian Tobacco Co. Ltd Fellow Subsidiary 0.00% Trinidad & Tobago
PJSC A/T B.A.T Prilucky Tobacco Co. Fellow Subsidiary 0.00% Ukraine
R J Reynolds Tobacco Company Fellow Subsidiary 0.00% United States
British American Tobacco South Africa (Pty) Ltd. Fellow Subsidiary 0.00% South Africa
British American Tobacco ME DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Saudia for Trading Fellow Subsidiary 0.00% Saudi Arabia
BAT GCC DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Middle East DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Qatar LLC Fellow Subsidiary 0.00% Qatar
BAT Middle East S.P.C. Fellow Subsidiary 0.00% Bahrain
British American Tobacco Jordan Fellow Subsidiary 0.00% Jordan
BAT Egypt Ltd. Fellow Subsidiary 0.00% Egypt
Central Manufacturing Company Ltd Fellow Subsidiary 0.00% Fiji
PT Bentoel International Investama Fellow Subsidiary 0.00% Indonesia
PT Bentoel International Prima Fellow Subsidiary 0.00% Indonesia
PT Export Leaf Fellow Subsidiary 0.00% Indonesia
British American Tobacco (Malaysia) Fellow Subsidiary 0.00% Malaysia
Tobacco Importers and Manufacturers Fellow Subsidiary 0.00% Malaysia
British American Tobacco Japan Ltd Fellow Subsidiary 0.00% Japan
British American Tobacco (PNG) Ltd Fellow Subsidiary 0.00% Papua New Guinea
BAT SAA Services Pvt Ltd Fellow Subsidiary 0.00% Pakistan
British American Tobacco Vranje AD Fellow Subsidiary 0.00% Serbia
BAT Services Ltd., Taiwan Branch Fellow Subsidiary 0.00% Taiwan
Tabacalera Hondurena S.A. Fellow Subsidiary 0.00% Honduras
RAI Services Company Fellow Subsidiary 0.00% United States
Solomon Islands Tobacco Co. Ltd. Fellow Subsidiary 0.00% Solomon Islands
British American Tobacco (Cambodia) Fellow Subsidiary 0.00% Cambodia
112
2022 2021

Rs. ‘000 Rs. ‘000
39 Cash generated from operations
Profit before taxation 34,733,607 26,207,048

Adjustment for non-cash items:
- Depreciation / impairment 2,148,129 1,706,855
- Gain on disposal of property, plant and equipment (108,401) (81,741)
- Finance cost 327,683 274,282
- Finance income (2,274,037) (981,404)
- Foreign exchange loss 720,142 153,459
- Provision /(Reversal of provision) for slow moving
stores and spares 660 8,896
- Provision / (reversal of provision) for stock-in-trade 221,051 53,114
- Provision for staff retirement benefit plans 337,103 386,448
1,372,330 1,519,909
Changes in working capital:
- Stock-in-trade (3,081,718) (2,615,091)
- Stores and spares 84,524 23,774
- Trade debts (734) (750)
- Loans and advances (743,879) 246,289
- Short term prepayments (106,615) 43,069
- Other receivables (2,419,069) (411,625)
- Trade and other payables 5,772,590 1,286,190
- Other liabilities 1,596,054 423,061
1,101,153 (1,005,083)
Changes in long term deposits and prepayments 5,057 (941)
37,212,147 26,720,933
40 Reconciliation of movement of liabilities to cash flows arising from financing activities
Liabilities Equity Total

Unclaimed / Lease Revenue
Unpaid Dividend liability reserves

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Balance at January 1, 2022 4,740,647 1,999,185 2,300,000 9,039,832
Changes from financing cash flows:
Finance Lease payments – (1,149,784) – (1,149,784)

Additions during the year – – – –
Dividend paid (11,506,890) – – (11,506,890)
Total changes from financing cash flows (11,506,890) (1,149,784) – (12,656,674)
Other changes:
New leases – 913,212 – 913,212

Retirements – (249,177) – (249,177)
Interest charge – 224,430 – 224,430
Dividend declared 12,263,702 – – 12,263,702
Total equity-related other changes – – 20,914,717 20,914,717
Balance at December 31, 2022 5,497,459 1,737,866 23,214,717 30,450,042
113
Liabilities Total
Unclaimed / Lease Short term
Unpaid Dividend liability Running finance /
export refinance

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Balance at January 1, 2021 162,237 2,252,622 – 2,414,859
Finance lease payments – (987,256) – (987,256)

Additions during the year – – 2,300,000 2,300,000
Dividend paid (15,861,094) – – (15,861,094)
Total changes from financing cash flows (15,861,094) (987,256) 2,300,000 (14,548,350)
Other changes:
New leases – 644,636 – 644,636

Retirements – (139,838) – (139,838)
41 Events after the reporting date
In respect of the year ended December 31, 2022 final dividend of Rs Nil (2021: Rs 28.00) per share amounting to a total dividend
of Rs. Nil thousand (2021: Rs. 7,153,826 thousand) has been proposed at the Board of Directors meeting held on February 23,
2023. These financial statements do not reflect this proposed dividend.
42 General
42.1 Date of authorization for issue
These financial statements have been authorized for circulation to the shareholders by the Board of Directors of the
Company on February 23, 2023.

114
PAKISTAN TOBACCO COMPANY LIMITED
CONSOLIDATED
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
CHAIRMAN’S REVIEW
(Consolidated Accounts)
I am pleased to share the Annual Report for the year 2022.

Oxley regulations (SOx), the Company’s control framework
2022 Performance and governance environment has further strengthened. The
Company’s compliance with SOx controls and other policies &
The Company’s performance faced multitude of headwinds
procedures is monitored by the Group’s internal controls team
including high inflation, considerable local currency devaluation,
and also tested by external auditors (KPMG) from time to time.
multiple excise increases and shortage of foreign currency in
the banking system. PTC navigated through these challenges
The Company also mandates its employees to operate and
with a clear aim of continued value delivery to consumers and
deliver with integrity and strongly discourages malpractice. This
of enhanced value generation for shareholders. Implementation
message is reinforced through face-to-face and online trainings
of Track and Trace system and sporadic enforcements by Law
conducted throughout the year as part of Standards of Business
Enforcement Agencies somewhat helped to temporarily reduce
Conduct (SoBC) refreshers. Furthermore, channels have been
price disparity between legitimate industry and duty-not-paid
established and made available for anyone working in or with the
tobacco sector (DNP) resulting in flat year on year volume.
Company to raise their concerns in confidence and without fear
of reprisal.
As a result of the Company’s clear strategy, PTC was able to
deliver EPS growth of 13% for 2022 versus same period last year.
Further, the Company was able to deliver a 122% volume growth
for its non-tobacco nicotine product (VELO) versus same period
Business Sustainability
last year. Furthermore, the Company’s contribution to National In line with BAT Group’s harm reduction agenda under vision
Exchequer increased by 14.2% to Rs. 154.0 billion during 2022 of A Better Tomorrow™, PTC continues to invest behind its
versus same period last year. tobacco-free nicotine products. As a result, Pakistan has become
3rd largest VELO market across BAT Group within 3 years of the
product’s launch. Amidst severe foreign currency shortage, the
Environment, Social and Company continued to pursue its ambition to enhance exports
Governance (ESG) Agenda

with 2022 turnover of $27.6 million. PTC made considerable
investment in Track and Trace System which is expected to
As a responsible corporate citizen, PTC believes in giving back to protect the interests of legitimate tobacco sector and ensure
the society and the very environment it operates in. During 2022, rightful tax contribution to National Exchequer by tobacco
the Company undertook various initiatives towards sustainability Industry. The Company also continued investing in operations
and to combat climate crisis. including Integrated Work System and ESG initiatives to enhance
productivity and achieve operational efficiencies.
The Company invested heavily in energy conservation in Jhelum
Factory and Akora Khattak Factory making them the highest and In the absence of full-scale implementation of Track and Trace
third-highest on-site power generation sites across BAT Group system and sporadic enforcements by Law Enforcement
respectively. The CO2 emissions reduction of 5000 tons over Agencies, multiple excise-increases during 2022 have created
two years is a testament to the Company’s commitment towards a considerable price disparity between legitimate industry
environmentally sustainable operations. The Company also and local DNP sector. This is an area of grave concern since it
continued to focus on water recycling initiatives while being the continues to put pressure on legitimate industry’s sustainability
second largest water-recycling operation across BAT Group. and has caused leakage of estimated Rs. 87 billion of
Government tax revenue. Thus, it is imperative that stringent
Among other initiatives, PTC continued to provide free medical action is taken by the relevant law enforcing authorities to curb
advice and medicines under its Mobile Doctor Unit program. DNP sector in the best interest of all stakeholders. Also, shortage
In 2022, more than 150,000 patients were given free of cost of foreign currency in banking system poses a serious threat
medical consultations and medication under this program. To to business continuity across manufacturing sector. Timely
ensure local community is protected from waterborne diseases, intervention by relevant Government authorities is pertinent
the Company provided clean drinking water to the less privileged for sustainability of manufacturing sector and associated job
segments of the society through 27 water filtration plants, each creation that ensues.
providing up to 20,000 liters of clean drinking water per day.
PTC has a strong belief in its people and their capabilities. The
PTC runs one of the largest private sector afforestation programs. senior management and I have full confidence that our people
Under this flagship program running since 1981, the Company possess right capabilities and attitude to navigate the Company
has successfully distributed and planted more than 150 million through these testing times. Looking ahead, we remain focused
saplings free of cost with 2.5 million saplings distributed during on delivering value offers to our consumers and driving long-term
2022. sustainable growth for our shareholders while creating a positive
impact around us.
Corporate Governance
The Company takes pride in its compliance with good corporate
governance practices. A comprehensive system of controls,
governance and risk management is in place to ensure that the
Company’s assets and the interests of the shareholders are
protected. With the acquisition of Reynolds American Inc. by
the BAT Group and subsequent adherence to all the Sarbanes-
Zafar Mahmood Chairman
116
DIRECTORS’ REPORT
(Consolidated Accounts)
The Directors present the Annual Report of Pakistan Tobacco Company Limited
(PTC) along with the audited financial statements of the Company for the year ended
December 31, 2022.
Macroeconomic a cognizable offense with exemplary punishment.

Environment immediate implementation of Track and Trace System
remains a key pillar to protect interests of the legitimate
As global economy continued to slow down during 2022, industry whilst also protecting Government revenues.
Pakistan had its fair share of economic challenges during
the period under review. Locally, political uncertainty and
natural disasters added further pressure on the domestic
Regulatory environment
economy resulting in double digit inflation, currency In 2022, the Government promulgated Track & Trace
devaluation, and dwindling foreign exchange reserves. System across the tobacco industry followed up by
To manage the current account deficit, State Bank of active enforcement. PTC ensured compliance of its
Pakistan increased import restrictions which negatively operations with the Track & Trace System by Q3 2022.
impacted manufacturing activity and led to multiple price The Government is also legislating Track & Trace System
increases during the year, all of which added pressure to for other product categories related to tobacco/nicotine
consumers’ disposable income. and has also issued a Statutory Regulatory Order (SRO)
pertaining to the same.
Industry Overview
Fiscal environment Company Performance
Sales volume declined by 1% during the year versus
During 2022, Government of Pakistan imposed multiple 2021. This is primarily attributable to the multiple price
Federal Excise Duty (excise) increases on factory increases on account of excise increases, inflation and
manufactured cigarettes (cumulative Rs. 26 per pack for rupee devaluation. The Company continued to maintain
tier 1 and Rs. 8 per pack for Tier 2). The excise increases its market share leadership in the legitimate segment
further incentivized Duty-Not-Paid (DNP) segment as the growing market share by 0.4% in 2022 to 78.4%. In
price gap with the legitimate industry widened to an all- 2022, PTC contributed Rs. 154.0 billion to the National
time high. Consequently, prices of DNP brands were not Exchequer in the form of excise and various regulatory
just lower than the Government mandated minimum price duties.
of Rs. 70.13 per pack, but even lower than the minimum
excise and sales tax payable on a pack of 20 cigarettes The Company’s cost base remained under pressure
i.e. Rs. 51.19 per pack. throughout 2022 in the wake of the currency devaluation
and inflation. Despite these challenges, PTC continued
Increase in duties and taxes, and need to focus on effective cost management and delivered
for rigorous enforcement multiple efficiency improvement projects, thereby allowing
it to keep costs in check. The Company continued to
Frequent and high increases in excise and duties by the focus on enhancing productivity across its value chain by
Government carries inherent risk of furthering price gap ensuring effective cost management, lean operations, and
between legitimate industry and DNP sector. This disparity modernization of machinery infrastructure.
further incentivizes DNP sector towards duty-evasion
which not only impacts the sustainability of the tax-paying BAT Group is driving the agenda for A Better TomorrowTM
legitimate industry but also results in loss of Government by reducing health impact of its business. The Group
revenue estimated at Rs. 87 billion per annum. invests over $430 million per year in research and
development of New Category Products. In line with
Consequently, there should be enhanced focus on the Group’s agenda for tobacco harm reduction, PTC
enforcements by Government, which should also amend continued to build its venture into New Categories of
the law to declare selling of duty-evaded cigarettes tobacco-free nicotine products (VELO). During 2022, PTC
117
tripled the net turnover of its New Category business,
lowered the cost base and sold 420 million nicotine Financial Review
pouches within third year of its launch in Pakistan, and
has thus been awarded with “A Better TomorrowTM” award Rs. (million)
by BAT Group for demonstrating excellent business FY 2022 FY 2021
results. The aforementioned business delivery by PTC also
Gross Turnover 232,600 199,469
makes Pakistan the third largest VELO market in terms of
volume across BAT Group. FED & Sales Tax 137,738 124,481
Net Turnover 94,862 74,988
PTC’s export initiative “Made in Pakistan”, in its third
Cost of Sales 49,706 39,092
year of full-scale operation, has resulted in exports of
$27.6 million during the year. PTC’s export initiatives Gross Profit 45,156 35,896
have significant potential to grow in the coming years, Operating Profit 32,787 25,500
generating additional valuable foreign currency inflows for
the country. Profit Before Tax – PBT 34,734 26,207
Profit After Tax – PAT 21,321 18,862
With people at the core of its delivery, PTC has a strong
Earnings Per Share – EPS (Rs) 83.45 73.83
focus on people by attracting and retaining the best
talent in the country. For its drive and consistent focus on
Diversity and Inclusion, the Company was awarded the Profit & loss analysis
“Global Diversity, Equity & Inclusion Benchmarks Award”
by Global Diversity, Equity and Inclusion Benchmarks, The Company contributed 66% of gross turnover
“Top Employer Award” by Top Employers Institute and (Rs. 154.0bn vs Rs. 134.8bn for 2021) as revenue to
“Women Empowerment Award” for Gender Inclusion the Government while retaining 9% of revenues for
Policies by Overseas Investors Chamber of Commerce distribution amongst shareholders and reinvestment in
and Industry. the business. Cost of Sales and Operating Expenses
accounted for 21% and 5% of gross turnover respectively.
PTC runs one of the largest private sector afforestation
programs and a Mobile Doctor Unit (MDU) program. Domestic gross turnover increased by 18% vs SPLY
Under its flagship afforestation program running since despite a 1% volume reduction on account of sustained
1981, the Company has successfully planted and consumer base through multiple price increases. Exports
distributed more than 150 million saplings free of cost Turnover decreased by 18% vs SPLY driven by loss of
(2.5 million saplings distributed during 2022). certain export markets. The Company is taking measures
to ensure healthy exports pipeline going forward and
Under the MDU program, the Company dispensed expects to deliver robust export growth. The Company
medical advice and medicines free of cost to more than exported 1.4 billion cigarette sticks, 2.5 million Kgs of
150,000 patients. To ensure that the local community cut-rag tobacco, and 1.9 million Kgs of unmanufactured
is protected from waterborne diseases, the Company tobacco in 2022 with a turnover amounting to $27.6
is providing clean drinking water to the less privileged million. PTC also exported human resource services
segments of society through 27 water filtration plants, worth $1.5 million during 2022.
providing 20,000 liters of water per plant per day.
Cost of Sales increased primarily due to devaluation
of local currency, global inflation on imported materials
and local inflationary pressure. These headwinds were
mitigated through multiple productivity saving initiatives
and focused cost management to reduce the overall cost
base. Administrative expenses had a 3% increase due
to higher information technology costs, in line with BAT’s
strategy of simplification through automation.
Net Finance Income increased by 175% in 2022,

attributable to surplus funds available for Treasury Bill
investments on account of better cash position and higher
interest rates.
118
Statement of financial position analysis Rs. (million) Rs. Per Share
Opening Reserves 15,418
Property, plant and equipment increase in 2022 was
primarily driven by upgrades to existing manufacturing Final Dividend 2021 (7,154) 28.00
capacities and infrastructure to support better product Net Profit 2022 21,321 83.45
quality, innovation, higher operating efficiencies and
Other Comprehensive
regulatory requirements. (406)
Income
Stock in Trade increase is attributable to impact of Available for appropriation 29,179
currency devaluation and inflation. Interim Dividends 2022 (5,110) 20.00
Closing Reserves 24,069
Other Receivables mainly includes balances related to
cash margins withheld by banks to comply with State
Bank import regulation to deposit 100% cash margin Final dividend
against arrangements/contracts for import of raw
material. Balance under this head increased in 2022 due The Board of Directors of PTC in its meeting being held
to more import orders in Q4 2022. on February 23, 2023 recommended a final cash dividend
of Rs. 0/- per share for the year ended December 31,
Short term investments in Government treasury bills 2022 (2021: 28 per share), for the shareholders’ approval.
recorded an increase vs SPLY due to higher availability of This recommendation is subject to approval of the
surplus funds. shareholders in the Annual General Meeting, scheduled
on May 2, 2023.
Current Liabilities increased due to higher outstanding
payables to internal and external suppliers on account of Consolidated financial statements
lesser access to foreign currency. and segmental review
Consolidated financial statements, combine performance
Liquidity management
of Pakistan Tobacco Company Limited and its wholly
PTC’s Treasury function is responsible for raising owned subsidiary, Phoenix (Private) Limited. The
finances for the Company as required, managing its cash subsidiary company is dormant and has not commenced
resources and mitigating the financial risks that arise commercial operations.
during its business operations. Clear parameters have
been established, including levels of authority as well Subsequent events review
as the type and use of financial instruments. All treasury
related activities are executed as per defined policies, The Management has assessed events arising after the
procedures and limits. These are reviewed and approved end of the financial year of the Company till the date of
by the Board or the delegated authority to the Finance the report and hereby, confirms that no material changes
Director/Treasury Committee. and commitments affecting the financial position of the
Company have occurred during this period.
Profit distribution & reserve analysis
The Company started the year with reserves of Rs
Operations Review
15.4 billion. During the year, final dividend of Rs. 28 PTC has a full seed-to-smoke business encapsulating
per share related to year ended 2021 was approved two factories and one of the largest leaf operations in
by shareholders and was subsequently paid. In 2022, the BAT Group. To enhance productivity throughout the
the Company earned a net profit of Rs 21.3 billion and value chain, the Company has a sharp focus on effective
declared two interim dividends of Rs. 10 per share in Q2 cost management, lean operations, and continuous
2022 and Rs. 10 per share in Q3 2022. The net reserves modernization of the machinery infrastructure. In line
position of the Company at year end stands at Rs 24.1 with this overarching objective, PTC became the first
billion. Details of appropriation are also elaborated in the “Integrated Work System” (IWS) Phase-2 certified multi-
table below: site and multi-category operation in BAT Group.
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As part of the tobacco harm reduction agenda, PTC Capstan by Pall Mall retained its standing as the best
runs an independent factory at Jhelum site to produce performing brand in the value-for-money segment. To
tobacco-free nicotine pouches. This factory is the first reinforce the place of this brand as the flagship value-for-
of its kind in the Asia Pacific and Middle East Region for money product, one of the largest ever limited-edition-
BAT Group. It is producing nicotine pouches for both local pack campaigns was launched in 2022 which culminated
consumption and export, thus enabling PTC to further its in sales of 10 billion+ cigarette sticks.
agenda towards tobacco harm reduction and cement its
position as an export hub for BAT Group. The Company Additionally, value-for-money segment witnessed
aims to invest considerably over the next 5 years in reinforcement campaigns during the year to further
developing PTC’s New Category portfolio. enhance Gold Flake’s equity. This was a strategic
intervention which helped the brand significantly capture
In compliance with local regulations, PTC has invested lost volume and market share to become the fourth
significantly for implementation of Track and Trace System largest brand in the market (by volume).
which enables law enforcement agencies to effectively
separate duty-paid cigarettes from DNP brands and
helps curtail spread of DNP brands while protecting
Risk Management &
Government revenues. Internal Controls
The Board is responsible for managing the risks and
EH&S – Environment, challenges faced by the Company in its course of
Health & Safety operations, while maintaining a strong internal control

environment. The Company’s risk management and
Significant awareness and infrastructural improvements internal controls framework is aimed at safeguarding the
have been made concerning Environment, Health & shareholders’ investment and the Company’s assets,
Safety processes and procedures across the Company. while minimizing impact of the risks that may impede
Keeping in view the energy crisis in Pakistan, multiple delivery of the Company’s objectives.
energy conservation initiatives were undertaken in 2022
which led Jhelum Factory and Akora Khattak Factory to Comprehensive policies and procedures, structured
be the highest and third-highest on-site power generation governance mechanisms and a conducive organizational
sites across BAT Group respectively. culture have facilitated a strong compliance and control
environment across the Company. All heads of functions
Additionally, the Company continues to focus on water are required to carry out a comprehensive assessment of
recycling initiatives while being the second largest water- globally defined key controls that are expected to be in
recycling operation across BAT Group. The CO2 emissions place and operating effectively. Any non-compliances and
reduction of 5000 tons over two years is a testament to material weaknesses are reported along with action plans
our commitment towards environmentally sustainable to address them. Additionally, all employees are required
operations. PTC’s operation has been recognized by to sign off an annual Statement of Compliance to the
BAT Group for its efforts and outstanding delivery on the Company’s Standards of Business Conduct. Further,
subject. the Company is fully compliant to all the requirements of
Sarbanes Oxley Act (SOx) which has further strengthened
Marketing Review the internal controls environment of the Company.
Consumer affordability remained under stress in 2022

due to the ongoing macro-economic challenges. Despite Forward Looking Approach
inflationary headwinds, focused investments were made Looking ahead, 2023 is expected to remain a highly
for a future-fit brands portfolio. challenging year for the Company as it will need to
counter the challenges presented not only by a tough
As part of BAT Group’s harm reduction agenda, PTC laid macro-economic environment but also by the unique
special focus on developing a New Category of tobacco- dynamics of the tobacco industry coupled with highly
free nicotine products in Pakistan under the VELO brand regressive excise environment. In future, the Company
providing consumers with broader spectrum of choices aims to drive business growth by focusing on delivering
for nicotine consumption. The focus on driving VELO the following objectives and by countering the related
market penetration resulted in 122% increase in VELO challenges.
volume vs 2021.
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It is expected that the local currency will remain weak with
Drive growth agenda minimal value appreciation, if any. This will ultimately lead
The Company’s strategic objective is to deliver to an increase in the cost base and cause the operating
sustainable growth for its shareholders. The Company margins to shrink.
will focus on increasing its volume base and market
share enabled by the implementation of the Track and Rapid devaluation also adds to inflationary pressures
Trace System and associated enforcement by the Law and dilutes the purchasing power of consumers, forcing
Enforcement Agencies. Further, marketing investment them to reprioritize their share of wallet, hence impacting
will be aimed at strengthening the brand equity of the overall industry sales.
Company’s portfolio among consumers of all segments.
Therefore, the Company will need to take effective
This will be achieved through product innovations measures to mitigate the impact of currency devaluation
developed to address the evolving consumer preferences in the future.
and creation of maximum brand awareness through
innovative campaigns directed at relevant and effective Drive operating and
consumer touchpoints. This will aid the Company in manufacturing efficiencies
building and maintaining a robust brand portfolio,
enabling it to continuously outperform the competition The Company is geared to continue investing in
and lead in the marketplace. By adhering to this plan, the enhancement of its operating and manufacturing
Company will be well positioned to drive volume growth efficiencies. This will be achieved through investment in
and gain market share. Thus, the Company remains modern and upgraded equipment and machinery that
confident to retain its market share leadership of the not only delivers better efficiencies and quality but is
industry in the future. also capable of supporting future product innovations,
necessary to maintain competitive advantage in the
Maintain adequate access to foreign marketplace.
currency The Company is already geared to cater for any surge

On account of increasing current account deficit in in market demand. At the same time, the Company is
Pakistan, and ensuing scarcity of foreign currency in committed to investing in its machinery footprint to ensure
the banking system, one of the key priorities of the compliance to any future regulatory requirements.
Company is to sustain its operations independently by
timely settlement of its foreign currency obligations and Additionally, the operating infrastructure is continuously
disbursement of dividends to its foreign shareholders. being upgraded with the best EH&S equipment, systems
and processes to ensure a safe working environment for
While the Government is expected to intervene and all employees.
protect interests of manufacturing sector which employs
significant portion of Pakistan’s workforce, the Company Environment, Social & Governance (ESG)
in parallel will be accelerating its export agenda to self-
fund raw material imports as much as possible. The Company will continue to support initiatives aimed
at the betterment and uplifting of communities in which
PTC operates. Additionally, other initiatives will also be
Drive effective resource allocation supported to continue driving the ESG agenda of the
and cost management Company.
Rising inflation continues to put pressure on the
Company’s cost base; the Management intends to take Invest in human capital
effective measures to mitigate its adverse impacts.
To maintain its competitive advantage, the Company will
continue investing in its people to develop a diverse and
highly competitive talent pool, fully capable of managing
the future challenges of the business. Attracting,
developing and retaining the best talent will continue to
be rooted in the organization.
121
Corporate Governance Fund name (Rs. million)
Staff Pension Fund 6,430
Good corporate governance
Employees Gratuity Fund 1,424
The Directors confirm compliance with the Corporate
Management Provident Fund 1,019
and Financial Reporting Framework of the Securities and
Exchange Commission of Pakistan’s Listed Companies Employees Provident Fund 519
(Code of Corporate Governance) Regulations, 2019 (“the Defined Contribution Pension Fund 1,006
Code of Corporate Governance”) for the following:
a) The financial statements, prepared by the Composition of the Board

management of the Company, present fairly its state The Board comprises a total of 12 directors: 4 are
of affairs, the result of its operations, cash flows and independent directors, 5 non-executive directors and 3
changes in equity. executive directors.
b) Proper books of accounts of the Company have
been maintained. The current composition of the Board is as below:
c) Appropriate accounting policies have been
consistently applied in preparation of financial No. of
Name of Director
statements and the accounting estimates are based Directors
on reasonable and prudent judgement. • Male Directors 10
d) International Financial Reporting Standards, as
applicable in Pakistan, have been followed in • Female Director 2
preparation of the financial statements and any
departures therefrom have been adequately a. Independent Directors 4
disclosed and explained. (i) Mr. Zafar Mahmood (Chairman)
e) The system of internal controls is sound in design (ii) Lt. Gen. (R) Najib Ullah Khan
and has been effectively implemented & monitored. (iii) Mr. Mohammad Riaz
f) There are no significant doubts about the Company’s (iv) Mr. Asif Jooma
ability to continue as a going concern.
g) There has been no material departure from the best b. Non- Executive Directors 5
practices of corporate governance, as detailed (i) Mr. Wael Sabra
in the Code of Corporate Governance and listing
(ii) Ms. Belinda Joy Ross
regulations.
(iii) Mr. Usman Zahur
h) All major Government levies in the normal course
of business, payable as at December 31, 2022 (iv) Mr. Gary Tarrant
have been disclosed in the notes to the financial (v) Mr. Oliver Engels
statements.
i) Key operating and financial data for last six years
c. Executive Directors 3
in summarized form is provided separately in the (i) Mr. Syed Ali Akbar
Company’s Annual Report. (ii) Ms. Kelly Burtenshaw
j) Value of investments in employee’s retirement funds (iii) Syed Asad Ali Shah
for the year ended December 31, 2022 are as
follows. Further details are provided in Note 33 to the There is female representation on the Board in
financial statements. compliance with the regulatory requirement.
The overall effectiveness of the Board is enhanced by
the diversity and breadth of perspective of its members.
The members have sufficient financial acumen and
knowledge through combination of their professional and
122
academic skills, and local and international experience.
Members Attendance
PTC conforms to the regulatory requirements on the
composition and qualification of the Board of Directors. Mr. Zafar Mahmood
Chairman 4/4
Directors’ detailed profiles including their names, status Syed Ali Akbar
(independent, executive, non-executive), in addition to Managing Director and CEO 3/4
industry experience and directorship of other companies, William Francis Pegel
have been provided separately in the Annual Report. Director Finance & IT (resigned w.e.f 14-06-2022) 2/4
The status of directorship (independent, executive, non-
Syed Asad Ali Shah
executive) is indicated in the Statement of Compliance
Director Legal and External Affairs 4/4
with the Code of Corporate Governance.
Kelly Burtenshaw
Director Finance (joined w.e.f 15-06-2022) 2/4
Changes in the Board Belinda Joy Ross
The following changes took place in the Board: Non-Executive Director 3/4
Syed Javed Iqbal
i. Mr. William Francis Pegel (resigned w.e.f. 14-06-2022) Non-Executive Director (Retired) 1/4
was replaced by Ms. Kelly Louise Burtenshaw; Lt. Gen.(R) M. Masood Aslam
ii. Mr. Syed Javed Iqbal (retired) was replaced by Mr. Independent Director (Retired) 1/4
Usman Zahur (w.e.f. 21-4-2022); Mohammad Riaz
iii. Lt. Gen. (R) M. Masood Aslam (retired) was replaced Independent Director 4/4
by Lt. Gen. (R) Najib Ullah Khan (w.e.f. 21-4-2022); Asif Jooma
iv. Mr. Shannon McInnes (resigned w.e.f. 04-10-2022)
was replaced by Mr. Gary Tarrant; Wael Sabra
Non-Executive Director 4/4
v. Mr. Ozsan Ozbas (resigned w.e.f. 14-10-2022) was
Shannon McInnes
replaced by Mr. Oliver Engels.
Non-Executive Director (resigned w.e.f. 4-10-2022) 1/4
Ozsan Ozbas
Meetings of the Board Non-Executive Director (resigned w.e.f.14.10-2022) 0/4
Under the applicable regulatory framework, the Board is Usman Zahur
legally required to meet at least once in every quarter to Non-Executive Director (elected w.e.f. 21-04-2022) 3/4
ensure transparency, accountability, and monitoring of Lt. Gen (R) Najib Ullah Khan
the Company’s performance. Special meetings are also Independent Director 3/4
held during the year to discuss important matters, as
Gary Tarrant
and when required. In 2022, four Board meetings were
convened as per applicable regulations, out of which the
1st meeting was held on 24th February 2022. Oliver Engels
The notices/agendas of the meetings were circulated
in advance, in a timely manner and in compliance with
applicable laws. All meetings of the Board held during Meetings Held Outside
the year surpassed the minimum quorum requirements of
attendance, as prescribed by the applicable regulations. Pakistan
The Company Secretary acts as the Secretary to the In 2022, PTC conducted all its Board meetings in
Board. All decisions made by the Board during the Pakistan.
meetings were clearly documented in the minutes of the
meetings maintained by the Company Secretary and were
duly circulated to all the Directors for endorsement and
Committees of the Board
were approved in the subsequent Board meetings. The Board has four committees namely the Executive
Committee, Audit Committee, Human Resources &
Remuneration Committee and Share Transfer Committee,
which assist the Board in the performance of its functions.
Details of all Board Committees, including attendance
123
and their functions, are provided separately in the
Company’s Annual Report. Brief Roles &
Directors’ Remuneration Responsibilities of the
As per the requirements of the Code of Corporate
Chairman & CEO
Governance, there is a formal and transparent procedure Roles and responsibilities of the Chairman and the CEO
in place for fixing the remuneration packages of individual have been clearly and distinctly defined by the Board.
Directors. No Director is involved in deciding his/her own The Chairman is basically a leader and mediator to head
remuneration. the meeting of the Board of Directors effectively and
These remuneration packages are approved as per take decisions after a free and open sharing of views
requirements of the regulatory framework and internal within a limited time quickly and efficiently. The Chairman
procedures, while ensuring that they are not at a level that is responsible for the overall discharge of the Board’s
could be perceived to compromise the independence of duties.
non-executive directors. The CEO is the executive head of the Company, who
The remuneration of executive directors including the heads all facets of the Company through respective
CEO, key management personnel and other executives is heads of functions and manages the day-to-day
given in note 37 to the financial statements. operations of the Company and provides leadership
towards the achievement of the Corporate Plan. The CEO
Evaluation of Board’s is responsible for leading, developing and executing the
Performance Company’s short and long term strategies with a view to

enhance shareholders’ value. The CEO liaises with the
The Company has designed an “Evaluation Tool” to assist Board and communicates on behalf of the Management.
the Board to:
• Understand and recognise what is working well;
CEO’s Performance
• Identify areas for improvement; Evaluation by the Board
• Discuss and agree on priorities for change, which The Board appoints the CEO for a term of 3 years, in
can be addressed in the short and long term; compliance with applicable laws. His performance
is reviewed annually, based on the yearly corporate
• Agree on an action plan. plan, besides his responsibilities under the regulatory
The Evaluation Tool comprises an evaluation framework.
questionnaire, which is circulated to all the Directors in Performance for the year 2022 is demonstrated by
which each Director must evaluate himself/herself as achievement of the corporate plan and compliance with
well as the Board. In order to encourage open and frank the applicable regulatory requirements.
evaluations, as well as to ensure anonymity, the evaluation
process is directed by the Company Secretary, who mails Formal Orientation at
the questionnaire to each Director and then collates the
results into a report including a summary of the results, Induction
and recommendations to the Board. The Report is then Newly inducted Board members are taken through an
discussed in the next Board Meeting to address the areas Induction Plan for their orientation and familiarization
of concern and improve the Board’s performance. towards the Company’s vision, organizational structure,
roles and responsibilities of senior executives, major
Offices of the Chairman & pending or threatened litigation, policies relating to
CEO dividends, whistleblowing, summary of Company’s major
assets, liabilities and noteworthy contracts etc. As part
To promote transparency and good governance, the of the Induction Plan, senior executives of the Company
offices of the Chairman of the Board of Directors and the present the performance of their respective department
Chief Executive Officer are held by separate individuals to the newly inducted Directors.
with clear segregation of roles and responsibilities.
Directors’ Training Program
PTC has ensured compliance with the applicable
regulatory requirements regarding Director’s training.
More than half of the Directors have obtained certification
124
under Directors’ Training Program (DTP) approved by
SECP. Review of BCM
PTC recognizes the importance of Business Continuity
Last AGM Management (BCM) as the means to ensure that the
The Company’s 75th AGM (Annual General Meeting) was business continues to succeed in times of crisis and
held on April 21, 2022. All shareholders, including minority during the recovery process. To this end, the Company
shareholders, were proactively sent out invites informing has established a BCM Manual as per International
them about the time and place of the meeting, well in Standards which enables the Company to:
advance. High quality and comfortable arrangements, • Proactively plan and prepare in the case of an
aimed at facilitating the shareholders of the Company, incident.
were made to conduct the AGM.
• Understand how to respond should an incident occur.
During the meeting, general clarifications on the
• Know how to manage the situation effectively; and
published financial statements and the impact of illicit
trade were sought by the shareholders and investors. No • Return to Business as Usual (BAU) as quickly as
issues were reported in that meeting. possible to minimize the negative impact on the
business.
Auditors The Board reviews compliance with the BCM Manual on an
Statutory Audit for the Company for the financial year annual basis. Responsibility and accountability for ensuring
ended December 31, 2022 has been concluded and the compliance with the Standards and for the implementation
Auditors have issued their Audit Reports on the Company of the BCM process has been delegated to the Managing
Financial Statements, Consolidated Financial Statements Director. Operational management of BCM is delegated
and the Statement of Compliance with the Code of to the Head of Security who is the lead for BCM in the
Corporate Governance. The Auditors, Messers KPMG Company. Heads of Functions are the risk owners and are
Taseer Hadi & Co., shall retire at the conclusion of the responsible for enabling and maintaining an effective BCM
Annual General Meeting, and they have indicated their capability within their respective functions. The Business
willingness to continue as Auditors for PTC. They have Continuity Manager facilitates and coordinates the BCM
confirmed to have achieved satisfactory rating by the process in the Company. By implementing a BCM process,
Institute of Chartered Accountants of Pakistan (ICAP) and the Company ensures that:
compliance with the Guidelines on the Code of Ethics
• Its people, assets and information are protected,
of the International Federation of Accountants (IFAC) as
and employees receive adequate support and
adopted by ICAP. The Board proposes their appointment
communications in the event of a disruption.
as Auditors for the financial year ending December 31,
2023 on the recommendation of the Audit Committee. • The relationships with other organizations, relevant
This shall be subject to the approval of the shareholders regulators or Government departments, local
in their meeting scheduled for May 02, 2023. authorities and the emergency services are properly
developed and documented, and stakeholder
Pattern of Shareholding requirements are understood and can be delivered;
Our holding company, British American Tobacco and
(Investments) Limited (BAT-IL), incorporated in United • The Company has an enhanced capacity to protect
Kingdom holds 94.34% shares of the Company at the its reputation and remains compliant with its legal
year end. The remaining shareholding is spread across and regulatory obligations.
associated company, institutions and general public.
The pattern of shareholding as at December 31, 2022
alongside the disclosure as required under Code of
Corporate Governance is provided separately in this
Annual Report.
Trading in Shares by
Directors and Executives
The Directors, Chief Executive Officer, Chief Financial
Officer, Company Secretary and their spouses and minors
have reportedly not performed any trading in the shares
of the Company. Zafar Mahmood Chairman Ali Akbar MD/CEO
125
INDEPENDENT AUDITORS’ REPORT
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the annexed consolidated financial statements of Pakistan Tobacco Company Limited (PTC) and its subsidiary
(the Group), which comprise the consolidated statement of financial position as at 31 December 2022, and the consolidated
statement of profit or loss, and the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies and other explanatory information.
In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the Group as
at 31 December 2022, and (of) its consolidated financial performance, and its consolidated cash flows for the year then ended in
accordance with the accounting and reporting standards as applicable in Pakistan.
Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of
Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
126
Following are the Key audit matters:
S. No. Key audit matters How the matters were addressed in our audit
1 Revenue recognition Our audit procedures in respect of recognition of revenue,
Refer notes 7.2 and 8 to the consolidated financial statements.
• Obtaining an understanding of the process relating
The Group is engaged in the production and sale of tobacco
to recognition of revenue and testing the design,
products and velo. The Group recognized net revenue from
implementation and operating effectiveness of key
the sales of cigarettes/tobacco/velo of Rs. 94,862 million for
internal controls over recording of revenue;
the year ended December 31, 2022.
• Comparing a sample of revenue transactions recorded
We identified recognition of revenue as a key audit matter
during the year with sales orders, sales invoices, delivery
because revenue is one of the key performance indicators of
documents and other relevant underlying documents;
the Group and gives rise to an inherent risk that revenue could
be subject to misstatement to meet expectations or targets. • Comparing a sample of revenue transactions recorded
around the year end with the sales orders, sales invoices,
delivery documents and other relevant underlying
documentation to assess if the related revenue was
recorded in the appropriate accounting period;
• Assessing whether the accounting policies for revenue

recognition complies with the requirements of IFRS 15
‘Revenue from Contracts with Customers’;
• Comparing the details of a sample of journal entries

posted to revenue accounts during the year, which met
certain specific risk-based criteria, with the relevant
underlying documentation; and
• Assessing the appropriateness of disclosures in the

consolidated financial statements.
2 Valuation of stock-in-trade Our audit procedures in respect of valuation of stock-in-trade,
Refer notes 7.12 and 18 to the consolidated financial
statements. • Assessing the design, implementation and operating
effectiveness of key internal controls over valuation of
As at 31 December 2022, stock-in-trade is stated at Rs. 24,905
stock-in-trade including determination of net realizable
million. Stock-in-trade is measured at the lower of cost and net
values;
realizable value.
• Attending inventory counts and reconciling the count
Management’s judgement is required to assess the appropriate
results to the inventory listings;
level of provisioning required for the stock-in-trade, including
the assessment of available facts and circumstances, it’s • Assessing the accuracy of cost of stock-in-trade in
physical conditions, the market selling prices and estimated accordance with the accounting policy;
selling costs of the stock in trade. Due to the significance of
• Assessing the net realizable value of stock-in-trade by
stock-in-trade balance and related estimations involved, this is
comparing, on a sample basis, management’s estimation
considered as a key audit matter.
of future selling prices for the products and selling prices
achieved subsequent to the end of the reporting period;
and
• Comparing the net realizable value to the cost of a sample

of stock-in-trade and comparison to the associated
provision to assess whether stock-in-trade provisions are
complete.
127
Information Other than the Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. Other information comprises the information included in the annual report for
the year ended 31 December 2022, but does not include the consolidated financial statements and our auditors’ report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Responsibilities of Management and Board of Directors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
the accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017 and for such
internal control as management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in
Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
128
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Muhammad Ubbaid Ullah.

Islamabad Chartered Accountants
Date: 11 April 2023
UDIN: AR202210240S86fnAMKb
129
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS
2022 2021
Note Rs. ‘000 Rs. ‘000
Gross turnover 8 232,600,278 199,469,017

Excise duties (103,232,916) (95,177,089)
Sales tax (34,505,124) (29,304,177)
Net turnover 94,862,238 74,987,751
Cost of sales 9 (49,705,748) (39,091,727)
Gross profit 45,156,490 35,896,024
Selling and distribution costs 10 (5,708,254) (5,002,183)

Administrative expenses 11 (4,026,820) (3,988,963)
Other operating expenses 12 (3,298,042) (2,129,084)
Other income 13 663,879 724,132
(12,369,237) (10,396,098)
Operating profit 32,787,253 25,499,926
Finance income - interest income on T-bills 23 2,274,037 981,404

Finance cost 14 (327,683) (274,282)
Net finance income 1,946,354 707,122
Profit before income tax 34,733,607 26,207,048
Income tax expense 15 (13,412,676) (7,344,961)
Earnings per share (basic and diluted) - (Rupees) 16 83.45 73.83
The annexed notes 1 to 40 form an integral part of these Consolidated financial statements.

130
COMPREHENSIVE INCOME
2022 2021
Note Rs. ‘000 Rs. ‘000
Other comprehensive income:
Items that will not be reclassified to profit or loss
- Remeasurement loss/gain on defined benefit pension

and gratuity plans 31 (638,453) 53,341
- Tax credit/charge related to remeasurement loss on

defined benefit pension and gratuity plans 15.2 232,239 (15,469)
(406,214) 37,872
Total comprehensive income for the year 20,914,717 18,899,959

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FINANCIAL POSITION
2022 2021
Note Rs. ‘000 Rs. ‘000
Non current assets

Property, plant and equipment 16 16,826,988 15,838,588
Advance for capital expenditure 532,106 1,115,233
Long term deposits and prepayments 17 23,604 28,661
17,382,698 16,982,482
Current assets
Stock-in-trade 18 24,905,320 22,044,653
Stores and spares 19 561,046 646,230
Trade debts 20 2,876 2,142
Loans and advances 21 832,795 88,916
Short term prepayments 139,961 33,346
Other receivables 22 3,832,665 1,913,221
53,675,570 35,376,174
Current liabilities
Trade and other payables 25 27,197,588 20,586,467
Other liabilities 26 4,092,981 2,496,927
Short term running finance/export refinance 27 2,354,312 2,313,141
Lease liability 28 802,531 577,272
Unpaid dividend 29 5,391,129 4,663,641
Unclaimed dividend 106,330 77,006
Current income tax liabilities 2,683,837 1,219,431
(42,628,708) (31,933,885)
Net current assets 11,046,862 3,442,289

Non current liabilities
Lease liability 28 (935,335) (1,421,913)
Deferred income tax liabilities 30 (869,898) (1,029,546)
(1,805,233) (2,451,459)
Net assets 26,624,327 17,973,312
Share capital and reserves

Share capital 32 2,554,938 2,554,938
Revenue reserve - Unappropriated profit 24,069,389 15,418,374
26,624,327 17,973,312
Contingencies and commitments 33


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CHANGES IN EQUITY
Share Revenue Reserve - Total
capital unappropriated
profit
Rs. ‘000 Rs. ‘000 Rs. ‘000

Other comprehensive income for the year - income – 37,872 37,872
Total Comprehensive income for the year – 18,899,959 18,899,959


Other comprehensive income for the year - loss – (406,214) (406,214)
Total comprehensive income for the year – 20,914,717 20,914,717


133
CASH FLOWS
2022 2021
Note Rs. ‘000 Rs. ‘000
Cash flows from operating activities
Cash generated from operations 37 37,212,147 26,720,933

Finance cost paid (62,082) (261,724)
Income tax paid (11,875,679) (6,912,195)
Contribution to retirement benefit funds (357,542) (574,464)
Net cash generated from operating activities 24,916,844 18,972,550
Cash flows from investing activities
Purchases of property, plant and equipment (2,521,652) (2,022,139)

Advance for capital expenditure 583,127 (398,369)
Proceeds from sale of property, plant and equipment 406,736 419,059
Interest received 2,274,037 981,404
Net cash generated from / (used) in investing activities 742,248 (1,020,045)
Cash flows from financing activities
Dividends paid (11,506,890) (15,861,094)

Lease payments (1,398,961) (987,256)
Proceeds from export refinance facility – 2,300,000
Net cash used in financing activities (12,905,851) (14,548,350)

Net increase in cash and cash equivalents 12,753,241 3,404,155
Cash and cash equivalents at beginning of year 10,647,666 7,243,511
Cash and cash equivalents at end of year 23,400,907 10,647,666
Cash and cash equivalents comprise:

23,400,907 10,647,666

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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1 Corporate and general Information
The Group and its operations
Pakistan Tobacco Company Limited (the Company) is a public limited company incorporated in Pakistan on November 18, 1947
under the Companies Act, 1913 (now the Companies Act, 2017) and its shares are quoted on the Pakistan Stock Exchange
Limited. The Company is a subsidiary of British American Tobacco (Investments) Limited, United Kingdom, whereas its ultimate
parent company is British American Tobacco p.l.c, United Kingdom. The principal activity of the Company is to manufacture and
sell cigarettes, tobacco and velo.
The registered office of the Company is situated at Serena Business Complex, Khayaban-e-Suharwardy, Islamabad, Pakistan. The
Company has two manufacturing plants located at Akora Khattak and Jhelum.
Phoenix (Private) Limited (PPL) is a private limited company incorporated on March 9, 1992 in Azad Jammu and Kashmir under
the Companies Ordinance, 1984 (now the Companies Act, 2017. The registered office of PPL is situated at Bin Khurma, Chichian
Road, Mirpur, Azad Jammu and Kashmir. The object for which the PPL has been incorporated is to operate and manage an
industrial undertaking in Azad Jammu and Kashmir to deal in tobacco products. PPL is dormant and has not commenced its
commercial operations.
For the purpose of these consolidated financial statements, the Company and its wholly owned subsidiary PPL is referred to as
the Group.
Capacity and production
Against an estimated manufacturing capacity of 51,800 million cigarettes (2021: 47,728 million cigarettes) actual production
was 41,976 million cigarettes (2021: 46,080 million cigarettes). For modern oral manufacturing capacity was 650 million pouches
(2021: 330 million) and actual production was 451 million pouches (2021: 172 million). The split from each industrial unit is given
below.
Manufacturing Capacity
FMC 2022 2021

Total 51,800 47,728
Modern Oral
Site
Actual Production
FMC 2022 2021

Total 41,976 46,080
Modern Oral
Site
Actual production is less than the installed capacity due to market demand. Increase in production capacity is primarily due to
upgrades in technology that allow more production per hour, ceteris paribus.
135
Number of employees
Total number of employees as at December 31, 2022 were 1,050 (2021: 1,066). Out of the total number of employees, the number
of factory employees as at December 31, 2022 were 394 (2021: 390). Average number of employees during the year were 1,051
(2021: 1,043), whereas average factory employees during the year were 391 (2021: 377)
2 Statement of compliance
These consolidated financial statements have been prepared in accordance with the accounting and reporting standards as
applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:
– International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board
(IASB) as notified under the Companies Act, 2017; and
– Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions of and
directives issued under the Companies Act, 2017 have been followed.
3 Basis of measurement
These consolidated financial statements have been prepared under the historical cost convention except as otherwise stated in
the respective accounting policies notes.
4 Functional and presentation currency
Items included in these financial statements are measured using the currency of the primary economic environment in which the
Company operates (the functional currency), which is the Pakistan rupee (Rs.).
5 Use of estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application
of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognized, prospectively.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
Significant estimates
• Note 7.9 & 16 – useful lives, residual values and depreciation method of property, plant and equipment
• Note 31 – Retirement benefits
Other estimates
• Note 18 and 19 – Provision for obsolescence of stock in trade and stores and spares
• Notes 15 and 30 – Provision for income tax and calculation of deferred tax
• Note 34 – Financial instruments – fair values
• Note 33 – Contingencies
• Note 28 - Leases
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and
non-financial assets and liabilities.
Management regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to
measure fair values, then management assesses the evidence obtained from the third parties to support its conclusion that these
136
valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified.
When measuring fair value of an asset or a liability, the Company uses observable and available market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as
follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1, which are observable and available for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable and available market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair
value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level of input that is
significant to the entire measurement. The Company recognises transfers between levels of the fair value hierarchy at the end of
the reporting period during which the change has occurred.
6 New accounting standards, amendments and IFRIC interpretations that are not yet effective
The following International Financial Reporting Standards (IFRS Standards) as notified under the Companies Act, 2017 and the
amendments and interpretations thereto will be effective for accounting periods beginning on or after 1 January 2023:
• Classification of liabilities as current or non-current (Amendments to IAS 1 in January 2020) apply retrospectively for
the annual periods beginning on or after 1 January 2024 (as deferred vide amendments to IAS 1 in October 2022) with
earlier application permitted. These amendments in the standards have been added to further clarify when a liability is
classified as current. Convertible debt may need to be reclassified as ‘current’. The standard also amends the aspect of
classification of liability as non-current by requiring the assessment of the entity’s right at the end of the reporting period to
defer the settlement of liability for at least twelve months after the reporting period. An entity’s expectation and discretion at
the reporting date to refinance or to reschedule payments on a long-term basis are no longer relevant for the classification
of a liability as current or non-current. An entity shall apply those amendments retrospectively in accordance with IAS 8.
• Non-current Liabilities with Covenants (amendment to IAS 1 in October 2022) aims to improve the information an entity
provides when its right to defer settlement of a liability for at least twelve months is subject to compliance with conditions.
The amendment is also intended to address concerns about classifying such a liability as current or non-current. Only
covenants with which a company must comply on or before the reporting date affect the classification of a liability as
current or non-current. Covenants with which the company must comply after the reporting date (i.e. future covenants)
do not affect a liability’s classification at that date. However, when non-current liabilities are subject to future covenants,
companies will now need to disclose information to help users understand the risk that those liabilities could become
repayable within 12 months after the reporting date. The amendments apply retrospectively for annual reporting periods
beginning on or after 1 January 2024, with earlier application permitted. These amendments also specify the transition
requirements for companies that may have early-adopted the previously issued but not yet effective 2020 amendments to
IAS 1 (as referred above).
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) – the Board has issued
amendments on the application of materiality to disclosure of accounting policies and to help companies provide useful
accounting policy disclosures. The key amendments to IAS 1 include:
– requiring companies to disclose their material accounting policies rather than their significant accounting policies.
– clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves
immaterial and as such need not be disclosed; and
– clarifying that not all accounting policies that relate to material transactions, other events or conditions are
themselves material to a company’s financial statements.
137
The Board also amended IFRS Practice Statement 2 to include guidance and two additional examples on the application of
materiality to accounting policy disclosures. The amendments are effective for annual reporting periods beginning on or after 1
January 2023 with earlier application permitted.
• Definition of Accounting Estimates (Amendments to IAS 8) introduce a new definition for accounting estimates clarifying
that they are monetary amounts in the financial statements that are subject to measurement uncertainty. The amendments
also clarify the relationship between accounting policies and accounting estimates by specifying that an entity develops
an accounting estimate to achieve the objective set out by an accounting policy. The amendments are effective for periods
beginning on or after 1 January 2023, with earlier application permitted, and will apply prospectively to changes in
accounting estimates and changes in accounting policies occurring on or after the beginning of the first annual reporting
period in which the company applies the amendments.
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) narrow the scope
of the initial recognition exemption (IRE) so that it does not apply to transactions that give rise to equal and offsetting
temporary differences. As a result, companies will need to recognize a deferred tax asset and a deferred tax liability
for temporary differences arising on initial recognition of a lease and a decommissioning provision. For leases and
decommissioning liabilities, the associated deferred tax asset and liabilities will need to be recognized from the beginning
of the earliest comparative period presented, with any cumulative effect recognized as an adjustment to retained earnings
or other components of equity at that date. The amendments are effective for annual reporting periods beginning on or
after 1 January 2023 with earlier application permitted.
• Lease Liability in a Sale and Leaseback (amendment to IFRS 16 in September 2022) adds subsequent measurement
requirements for sale and leaseback transactions that satisfy the requirements to be accounted for as a sale. The
amendment confirms that on initial recognition, the seller-lessee includes variable lease payments when it measures a
lease liability arising from a sale-and-leaseback transaction. After initial recognition, the seller-lessee applies the general
requirements for subsequent accounting of the lease liability such that it recognizes no gain or loss relating to the
right of use it retains. A seller-lessee may adopt different approaches that satisfy the new requirements on subsequent
measurement. The amendments are effective for annual reporting periods beginning on or after 1 January 2024 with
earlier application permitted. Under IAS 8, a seller-lessee will need to apply the amendments retrospectively to sale-
and-leaseback transactions entered into or after the date of initial application of IFRS 16 and will need to identify and
re-examine sale-and-leaseback transactions entered into since implementation of IFRS 16 in 2019, and potentially restate
those that included variable lease payments. If an entity (a seller-lessee) applies the amendments arising from Lease
Liability in a Sale and Leaseback for an earlier period, the entity shall disclose that fact.
• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
amend accounting treatment on loss of control of business or assets. The amendments also introduce new accounting
for less frequent transaction that involves neither cost nor full step-up of certain retained interests in assets that are not
businesses. The effective date for these changes has been deferred indefinitely until the completion of a broader review.
The above mentioned amendments are not likely to have an impact on the Company’s Financial Statements.
7 Summary of significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements
Significant accounting policies of the Company are as follows:
7.1 Basis of consolidation
These consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary
company i.e. PPL, collectively called “the Group”.
Subsidiaries are all entities over which the Group has the control or a shareholding of more than half of the voting rights.
The Group controls an entity when it is expose to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns
138
through its power over the entity. Subsidiaries are fully consolidated from the date on which the control is transferred to the
Group. They are derecognized from the date the control ceases.
7.2 Revenue recognition
Revenue comprises the invoiced value for the sale of goods net of sales taxes, rebates and discounts. Certain marketing
costs are deducted from the gross amount of sales. Revenue from the sale of goods is recognised when control of the
goods passes to customers and the customers can direct the use of and substantially obtain all the benefits from the
goods. Revenue is recognized when specific criteria have been met for each of the Company’s activities as described
below:
Revenue from contracts with customers
Sale of goods
The Company manufactures and sells cigarettes to its appointed distributors. Sale of goods is recognized when the
Company has transferred control of the products to the distributor and there is no unfulfilled obligation that could affect
the distributor’s acceptance of the products.
Contract assets
Contract assets arise when the Company performs its performance obligations by transferring goods to a customer before
the customer pays its consideration or before payment is due.
Contract liabilities
A contract liability is the obligation of the Company to transfer goods to a customer for which the Company has received
consideration from the customer. If a customer pays consideration before the Company transfers goods, a contract liability
is recognised when the payment is made. Contract liabilities are recognised as revenue when the Company performs its
performance obligations under the contract.
Income on bank deposits
Income on bank deposits is accounted for on the time proportion basis using the applicable rate of return.
Income on short term investments
Short term investments, classified as financial assets at fair value through profit or loss, are re-measured to fair value
at each reporting date until the assets are de-recognised. The gains and losses arising from changes in fair value are
included in the statement of profit or loss in the period in which they occur.
Others
Scrap sales and miscellaneous receipts are recognized on realized amounts. All other income is recognized on accrual
basis.
7.3 Income tax
Income tax expense for the year comprises current and deferred income tax, and is recognized in the statement of profit
or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in the equity. In
this case, income tax is also recognized in other comprehensive income or directly in equity, respectively.
Current
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment
to the tax payable or receivable in respect of previous years. The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
139
Deferred
Deferred income tax is recognized, using the balance sheet method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred income tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized
to the extent that it is probable that taxable profits will be available against which the deductible temporary differences,
unused tax losses and tax credits can be utilized.
Deferred income tax is calculated at the rates that are expected to apply to the period when the differences reverse.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income tax levied by
the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle
the balance on a net basis.
7.4 Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount could be reliably estimated.
Provisions are not recognized for future operating losses. All provisions are reviewed at each statement of financial position
date and adjusted to reflect current best estimate.
7.5 Earnings per share
The Company presents earnings per share (EPS) data for its ordinary shares. EPS is calculated by dividing the profit or
loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding
during the year.
7.6 Contingent assets
Contingent assets are disclosed when the Company has a possible asset that arises from past events and whose existence
control of the Company. Contingent assets are not recognized until their realization becomes certain.
7.7 Contingent liabilities
Contingent liability is disclosed when the Company has a possible obligation as a result of past events whose existence
control of the Company. Contingent liabilities are not recognised, only disclosed, unless the possibility of a future outflow
of resources is considered remote. In the event that the outflow of resources associated with a contingent liability is
assessed as probable, and if the size of the outflow can be reliably estimated, a provision is recognized in the financial
statements.
7.8 Employee benefits
(a) Retirement benefit plans
The Company operates various retirement benefit schemes. The schemes are generally funded through payments to
trustee-administered funds, determined by periodic actuarial calculations or up to the limit allowed as per the Income Tax
Ordinance, 2001. The Company has both defined contribution and defined benefit plans.
A defined contribution plan is a plan under which the Company pays fixed contributions into a separate fund. The Company
has no further legal or constructive obligation to pay contributions if the fund does not hold sufficient assets to pay all
employees, the benefits relating to employees’ service in the current and prior periods.
140
A defined benefit plan is a plan that is not a defined contribution plan. Typically, defined benefit plans define an amount
of benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of
service and compensation.
The Company operates:
(i) Defined benefit, approved funded pension scheme for management and certain grades of business support officers and
approved gratuity scheme for all employees. Employees also contribute to the pension scheme. The liability recognized in
the balance sheet in respect of pension and gratuity schemes is the present value of the defined benefit obligation of the
Company at the balance sheet date less the fair value of plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using
interest rates of government bonds denominated in Pakistan rupee and have terms to maturity approximating to the terms
of the related liability.
The current service cost of the defined benefit plan, recognised in the income statement in employee benefit expense,
except where included in the cost of an asset, reflects the increase in the defined benefit obligation resulting from employee
service in the current year, benefit changes curtailments and settlements. Past-service costs are recognised immediately
in income.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the
fair value of plan assets. This cost is included in employee benefit expense in the income statement.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or
credited to equity in other comprehensive income in the period in which they arise.
(ii) Approved contributory provident fund for all employees is administered by trustees and approved contributory pension
fund for the new joiners. The contributions of the Company are recognized as employee benefit expense when they are
due. Prepaid contributions, if any, are recognized as an asset to the extent that a cash refund or a reduction in the future
payments is available.
(b) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date or
whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination
benefits when it is demonstrably committed to either terminating the employment of current employees according to
a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made
to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the termination
benefits are measured based on the number of employees expected to accept the offer.
(c) Medical benefits
The Company maintains a health insurance policy for its entitled employees and their dependents and pensioners and
their spouses. The Company contributes premium to the policy annually. Such premium is recognised as an expense in the
statement of profit or loss.
(d) Bonus plans
The Company recognizes a liability and an expense for bonuses based on a formula that takes into consideration the profit
attributable to the Company’s shareholders after certain adjustments and performance targets. The Company recognizes
a provision where it is contractually obliged or where there is a past practice that has created a constructive obligation.
141
(e) Share-based payments
The Company has two cash-settled share-based compensation plans. Share options are granted to key management
personnel which vest over a period of three years. A liability equal to the portion of the services received is recognised at
its current fair value determined at each statement of financial position date.
Where applicable, the Company recognises the impact of revisions to original estimates in the statement of profit or loss,
with a corresponding adjustment to current liabilities for cash-settled schemes.
(i) Long Term Incentive Plan (LTIP)
Nil-cost option exercisable after three years from date of grant with a contractual life of ten years. Pay-out is subject to
performance conditions based on earnings per share, operating cash flow, total shareholder return and net turnover of the
British American Tobacco (BAT) group. Total shareholder return combines the share price and dividend performance of
the BAT group by reference to one comparator group.
(ii) Deferred Share Bonus Scheme (DSBS)
Free ordinary shares released three years from date of grant and may be subject to forfeit if a participant leaves employment
before the end of the three years holding period. Participants receive a separate payment equivalent to a proportion of the
dividend payment during the holding period. Share options are granted in March each year.
7.9 Lease liability
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease
term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index
or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment
(i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered
of low value (i.e. below Rs. 100,000). Lease payments on short-term leases and leases of low-value assets are recognized
as expense on a straight-line basis over the lease term.
7.10 Property, plant and equipment
Owned assets
These are stated at cost less accumulated depreciation and any accumulated impairment losses, except freehold land and
capital work in progress which are stated at cost less impairment losses, if any. Cost includes expenditure that is directly
attributable to the acquisition of the asset.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item
can be measured reliably. The carrying amount of the replaced part is derecognized.
All other repairs and maintenance expenses are recognized in the statement of profit or loss during the financial period in
which they are incurred.
Free-hold land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their
cost less residual value over their estimated useful lives at the following annual rates:
142
• Buildings on freehold and leasehold land 3%
• Plant and machinery 5%
• Air conditioners (included in plant and machinery) 20%
• Office and household equipment 20% to 33.3%
• Furniture and fittings 10% to 20%
• Vehicles – owned and leased 16%
Depreciation on additions and deletions during the year is charged on a pro rata basis from the month when the asset is
put into use or up to the month when asset is disposed/written off.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Gains and losses on disposals of operating fixed assets are recognized in the statement of profit or loss.
Right of use assets
Right of use asset is calculated as the initial amount of the lease liability in terms of property rentals and vehicle rentals at
the lease contract commencement date. The right of use asset is subsequently depreciated using the straight-line method
for a period of lesser of useful life or actual lease term.
7.11 Impairment of non-financial asset
Assets that have an indefinite useful life are not subject to depreciation and are tested annually for impairment. Assets that
are subject to depreciation are reviewed for impairment at each statement of financial position date or whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized
for the amount for which assets carrying amount exceeds its recoverable amount. Recoverable amount is the higher of
an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that
suffered an impairment are reviewed for possible reversal of the impairment at each balance sheet date. Reversals of
the impairment losses are restricted to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortization, if impairment losses had not been recognised. An
impairment loss or reversal of impairment loss is recognised in the statement of profit or loss.
.
7.12 Stock in trade
Stock-in-trade is stated at the lower of cost and net realizable value. Cost is determined using the weighted average
method. The cost of finished goods and work in process comprises design costs, raw materials, direct labour, other
direct costs and related production overheads. Net realizable value is the estimated selling price in the ordinary course of
business, less cost of completion and costs necessary to be incurred to make the sale.
7.13 Stores and spares
Stores and spares are stated at cost less allowance for obsolete and slow moving items. Cost is determined using weighted
average method. Items in transit are valued at cost comprising invoice value and other related charges incurred up to the
statement of financial position date.
7.14 Financial Instruments
Financial assets
i. Recognition and de-recognition
The Company initially recognises financial assets on the date when they are originated. Financial liabilities are initially
recognised on the trade date when the entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are offset, and the net amount presented in the statement of financial position
when, and only when, the Company currently has a legally enforceable right to offset the amounts and intends either to
settle them on a net basis or to realise the asset and settle the liability simultaneously.
143
ii. Classification
On initial recognition, a financial asset is classified as measured at:
• amortised cost;
• fair value through other comprehensive income (FVOCI); or
• fair value through profit or loss (FVTPL)
The classification of financial assets is based on the business model in which a financial asset is managed and its
contractual cash flow characteristics.
(a) Amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at
FVTPL: (i) it is held within a business model whose objective is to hold assets to collect contractual cash flows; and (ii)
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Fair value through other comprehensive income (FVOCI)
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: (i) it
is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets; and (ii) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
(b) Fair value through profit or loss (FVTPL)
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL.
iii. Subsequent measurement
Financial assets Measured at fair value. Net gains and losses, including any interest or dividend income, are recognised
at FVTPL in profit or loss.
Financial assets Measured at amortised cost using the effective interest method. The amortised cost is reduced by
at amortised impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised
cost in profit or loss. Any gain or loss on de-recognition is recognised in profit or loss.
Debt These assets are subsequently measured at fair value. Interest income calculated using the effective
investments interest method, foreign exchange gains and losses and impairment are recognised in profit or loss.
at FVOCI Other net gains and losses are recognised in OCI. On de-recognition, gains and losses accumulated
in OCI are reclassified to profit or loss.
Equity These assets are subsequently measured at fair value. Dividends are recognised as income in profit
investments or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other
at FVOCI net gains and losses are recognised in OCI and are never reclassified to profit or loss.
Subsequent to initial recognition, financial liabilities are measured at amortized cost using the effective interest method.
144
iv. De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards
of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and
rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognized financial
assets that is created or retained by the Company is recognised as a separate asset or liability.
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.
Any gain / (loss) on the recognition and de-recognition of the financial assets and liabilities is included in the statement of
profit or loss for the period in which it arises.
v. Impairment of financial assets
The Company recognizes loss allowance for Expected Credit Losses (ECLs) on financial assets measured at amortized
cost and contract assets. The Company measures loss allowance at an amount equal to lifetime ECLs.
Lifetime ECLs are those that result from all possible default events over the expected life of a financial instrument. The
maximum period considered when estimating ECLs is the maximum contractual period over which the Company is
exposed to credit risk.
At each reporting date, the Company assesses whether the financial assets carried at amortized cost are credit-impaired.
A financial asset is ‘credit-impaired when one or more events that have detrimental impact on the estimated future cash
flows of the financial assets have occurred.
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the
assets. The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations
of recovering a financial asset in its entirety or a portion thereof.

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL
are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other
financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognized in statement of profit or loss. Any gain or loss on de-recognition is also
included in statement of profit or loss.
7.15 Borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised
in the statement of profit or loss over the period of the borrowings using the effective interest method.
Borrowing costs which are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalized as part of the cost of that asset. All other borrowing costs are charged to statement of profit or loss.
7.16 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the financial statements in the period
in which the dividend is approved by the Company’s shareholders at the Annual General Meeting, while interim dividend
distributions are recognised in the period in which the dividends are declared by the Board of Directors.
145
7.17 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks and highly liquid investments with
less than three months maturity from the date of acquisition. Short term finance facilities availed by the Company, which
are repayable on demand and form an integral part of the Company’s cash management are included as part of cash and
cash equivalents in the statement of cash flows.
7.18 Foreign currency transactions and translation
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing on the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency
using the exchange rate prevailing at the statement of financial position date. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates are recognized in the
statement of profit of loss.
7.19 Fair value measurement
Fair value’ is the price that would be received by selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the principal or, in its absence, the most advantageous market to
which the Company has access at that date. The fair value of a liability reflects its non-performance risk.
A number of the Company’s accounting policies and disclosures require the measurement of fair values, both for financial
and non-financial assets and liabilities (See Note 5). When one is available, the Company measures the fair value of an
instrument using the quoted price in an active market for that instrument. If there is no quoted price in an active market,
then the Company uses valuation techniques that maximize the use of relevant observable inputs and minimize the use
of unobservable inputs. The best evidence of the fair value of a financial instrument on initial recognition is normally the
transaction price – i.e. the fair value of the consideration given or received.
7.20 Operating segment
The Board of Directors of the Company, which is chief operating decision-maker, is responsible for allocating resources
and assessing Company’s performance and operations has identified one reportable segment. Accordingly, these
financial statements have been prepared on the basis of single reportable segment. Revenue from external customers
along with local and export sales is disclosed in note 8. Revenue from transaction with a single customer did not exceed
10% of Company’s total revenue. All the assets of the Company are based in Pakistan.
2022 2021

Rs. ‘000 Rs. ‘000
8 Gross turnover
- Domestic 227,459,685 193,211,473

- Export 5,140,593 6,257,544
232,600,278 199,469,017
Revenue is measured based on the consideration specified in a contract with a customer. The transaction prices are generally
fixed as per the contract with customers. The payment terms are governed by the contractual rights and obligations as defined in
the contracts with customers and payments are generally received in advance of delivering goods sold.
Revenue recognised during the year that was included in the contract liability balance at the beginning of year is Rs. 246,718
thousand (2021: Rs. 12,034 thousand).
146
2022 2021

Rs. ‘000 Rs. ‘000
9 Cost of sales
Raw material consumed

Opening stock of raw materials and work in process 18,261,871 16,977,657
Raw material purchases and expenses - note 9.2 38,300,912 31,952,909
Closing stock of raw materials and work in process (21,904,030) (18,261,871)
34,658,753 30,668,695
Government taxes and levies
Customs duty and surcharges 2,328,775 2,534,866
Provincial and municipal taxes and other duties 396,399 369,137
Excise duty on royalty 85,035 59,917
2,810,209 2,963,920
37,468,962 33,632,615
Royalty - note 9.3 850,354 598,658
Provision for severance benefits 1,411,660 136,772
Production overheads
Stores, spares and machine repairs 1,876,288 1,024,182
Fuel and power 1,530,364 851,283
Insurance 91,642 43,396
Repairs and maintenance 1,135,903 742,371
Information technology 37,699 32,726
Depreciation / Impairment - note 9.1 & 17.3 1,026,868 873,665
Provision for slow moving items / stores written off 660 8,896
Sundries 62,909 53,705
9,141,616 6,054,559
Cost of goods manufactured 48,872,592 40,422,604

Cost of finished goods
Opening stock 3,963,744 2,632,867
Closing stock (3,130,588) (3,963,744)
833,156 (1,330,877)
Cost of sales 49,705,748 39,091,727
9.1 This includes impairment on property, plant & equipment amounting to Rs. 893 thousand (2021: Rs. 4,237 thousand).
147
2022 2021

Rs. ‘000 Rs. ‘000
9.2 Raw material purchases and expenses:
Materials 35,049,848 28,151,668

Stores, spares and machine repairs 485,303 539,583
Insurance 14,708 29,412
Depreciation / impairment - note 9.2.1 & 17.3 511,337 255,483
Sundries 652,039 589,267
38,300,912 31,952,909
9.2.1 This includes impairment on property, plant & equipment amounting to Rs. 217,069 thousand (2021: nil).
9.3 This represents royalty payable to the associated companies namely BAT (Brands) Limited, Benson & Hedges (Overseas)
Limited, Nicoventures Trading Limited and BAT Exports Limited having registered office at Globe House, 1 Water Street,
London WC2R 3LA, United Kingdom.
2022 2021

Rs. ‘000 Rs. ‘000
10 Selling and distribution costs

Selling expenses 3,721,683 3,066,565
Freight 198,202 157,392
Insurance 31,849 31,634
Finished goods / wrapping material stock written off 10,720 143,587
Depreciation / impairment - note 10.1 & 17.3 225,981 221,745
5,708,254 5,002,183
10.1 This includes impairment on property, plant & equipment amounting to Rs. nil (2021: Rs. 2,160 thousand).
148
2022 2021

Rs. ‘000 Rs. ‘000
11 Administrative expenses
Salaries, wages and benefits 1,093,837 875,897

Insurance 7,831 2,343
Legal and professional charges 97,028 82,927
Donations - note 11.1 12,300 300
Information technology 2,307,046 2,509,088
Depreciation / impairment - note 17.3 383,943 355,962
Auditor’s remuneration and expenses - note 11.2 15,829 13,825
Sundries 7,454 26,452
4,026,820 3,988,963
11.1 Details of donations exceeding Rs 1,000 thousand are as follows:

Name of Donee
Gottfried Thoma Benevolent Trust 12,000 –
12,000 –
There were no donations in which the directors, or their spouses, had any interest.
2022 2021

Rs. ‘000 Rs. ‘000
11.2 Auditor’s remuneration and expenses include:

- Statutory audit fee 2,926 2,675
- Group reporting, review of half yearly accounts, audit of
consolidated accounts, audit of staff retirement
benefit funds and other certifications and review of
Statement of Compliance with Code of Corporate Governance 12,093 10,600
- Out-of-pocket expenses 810 550
15,829 13,825
149
2022 2021

Rs. ‘000 Rs. ‘000
12 Other operating expenses
Workers’ Profit Participation Fund - 25.7 1,865,392 1,407,468

Workers’ Welfare Fund - note 25.6 658,709 485,656
Bank charges and fees 52,717 45,801
Interest to Workers’ Profit Participation Fund 1,082 36,700
Foreign exchange loss 720,142 153,459
3,298,042 2,129,084
13 Other income
Income from services rendered to associated companies:

- BAT Middle East DMCC - UAE 551,559 581,565
Recharges / other payable to associated companies written back:
-BAT ASPAC Service Center Sdn Bhd - Malaysia – 53,048
-BAT (Holdings) Limited - UK – 4,098
Gain on disposal of property, plant and equipment 108,401 81,741
Miscellaneous 3,919 3,680
663,879 724,132
14 Finance cost
Interest expense on:

Bank borrowings 103,253 45,261
Lease liability 224,430 229,021
327,683 274,282
15 Income tax expense
Current:
For the year 11,089,731 6,868,461
For prior years 2,420,747 297,351
13,510,478 7,165,812
Deferred (97,802) 179,149
13,412,676 7,344,961
150
15.1 Effective tax rate reconciliation:
Numerical reconciliation between the average effective income tax rate and applicable income tax rate is as follows:
2022 2021
% %
Applicable tax rate 29.00 29.00

Tax effect of:
Super tax - current year 3.87 –
Prior year charge 7.33 1.14
Income taxed at different rate (1.85) (2.08)
Others 0.27 (0.03)
Average effective tax rate 38.62 28.03
2022 2021

Rs. ‘000 Rs. ‘000
15.2 Tax on items directly credited to statement

of other comprehensive income
Current tax (credit)/charge on defined benefit plans (170,393) 53,578

Deferred tax charge/(credit) on defined benefit plans (61,846) (38,109)
(232,239) 15,469
2022 2021

Rs. ‘000 Rs. ‘000
16 Property, plant and equipment
Operating assets - note 16.1 15,759,587 14,883,004

Capital work in progress - note 16.2 1,067,401 955,584
16,826,988 15,838,588
151
16.1 Operating assets
Right of use assets

Free-hold Buildings on Plant and Office and Furniture and Vehicles Land and Factory Vehicles Sub- Total
land free-hold machinery household fittings building vehicles-fork total
land equipment lifter trucks
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
At January 1, 2021
Cost 33,934 1,039,621 17,698,534 2,242,202 551,113 70,068 1,765,829 367,164 1,510,957 3,643,950 25,279,422
Accumulated Depreciation / impairment – (325,938) (9,073,544) (1,542,913) (341,702) (53,283) (668,865) (87,040) (504,634) (1,260,539) (12,597,919)
Net book amount January 1, 2021 33,934 713,683 8,624,990 699,289 209,411 16,785 1,096,964 280,124 1,006,323 2,383,411 12,681,503

Net book amount at January 1, 2021 33,934 713,683 8,624,990 699,289 209,411 16,785 1,096,964 280,124 1,006,323 2,383,411 12,681,503
Additions – 58,696 622,332 206,321 80,446 – 315,591 – 418,228 733,819 1,701,614
Disposals – (2,652) (193,667) (126) (17) (1,018) (22,182) – (117,656) (139,838) (337,318)

Cost 33,934 1,621,697 20,206,115 2,531,831 697,594 69,050 1,995,764 367,164 1,655,236 4,018,164 29,178,385
At January 1, 2022
Cost 33,934 1,621,697 20,206,115 2,531,831 697,594 69,050 1,995,764 367,164 1,655,236 4,018,164 29,178,385
Accumulated Depreciation / impairment – (356,662) (9,996,659) (1,775,189) (377,733) (56,640) (1,020,378) (147,515) (564,605) (1,732,498) (14,295,381)
Net book amount January 1, 2022 33,934 1,265,035 10,209,456 756,642 319,861 12,410 975,386 219,649 1,090,631 2,285,666 14,883,004

Net book amount at January 1, 2022 33,934 1,265,035 10,209,456 756,642 319,861 12,410 975,386 219,649 1,090,631 2,285,666 14,883,004
Additions – 61,523 932,181 74,241 10,864 313 322,031 24,492 566,689 913,212 1,992,334
Disposals – (365) (13,082) (34,947) (626) (138) (106,207) – (142,970) (249,177) (298,335)

Cost 33,934 1,686,158 22,130,632 2,669,093 841,811 68,177 2,144,667 391,656 1,913,363 4,449,686 31,879,491
152
16.1.1 Particulars of immovable property (land and building) in the name of the Company are as follows:
Location Total Area
Production Plants
Jhelum 58.3 Acres

Akora 61.0 Acres
Warehouses
Faujoon 163,970 Sq ft.

Shergarh 65,227 Sq ft.
Takht Bhai 54,593 Sq ft.
Umerzai 87,464 Sq ft.
Mianwali 878,694 Sq ft.
Okara 71,723 Sq ft.
Mirpur Azad jammu & Kashmir 178,324 Sq ft.
2022 2021

Rs. ‘000 Rs. ‘000
16.2 Capital work in progress
Carrying value at the beginning of the year 955,584 2,445,300

Additions during the year 1,442,530 1,054,344
2,398,114 3,499,644
Transferred to operating fixed assets (1,330,713) (2,544,060)
Carrying value at the end of the year - note 17.2.1 1,067,401 955,584

16.2.1 Capital work in progress includes capital expenditure on projects relating to enhancement of already installed machinery.
2022 2021

Rs. ‘000 Rs. ‘000
16.3 Depreciation / impairment charge has been allocated as follows:
Cost of sales 1,026,868 873,665

Raw material purchases and expenses 511,337 255,483
Selling and distribution expenses 225,981 221,745
Administrative expenses 383,943 355,962
2,148,129 1,706,855
153
16.4 Details of property, plant and equipment disposed off during the year, having book value of Rs. 500,000 or more are as
follows:
Cost Book Sale Gain/ Particulars of buyers Relationship

value proceeds (loss) on
less selling sale
expenses
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Plant & machinery

- by negotiation 9,714 9,552 9,552 – BAT SAA Service.(Pvt) Ltd Associated company
16,884 6,124 6,421 297 Scrap Buyers Contractor

Vehicles
- as per Company’s policy 2,399 642 601 (41) Amna Farouk Executive
2,414 582 480 (102) Noor Aftab Executive
2,514 972 969 (3) Rabia Abro Ex-Executive
2,584 517 515 (2) Waqas Ali khan Executive
2,654 1,132 1,093 (39) Javeria Aftab Executive
2,846 1,328 1,401 73 Sarah Khan Executive
3,483 2,183 2,507 324 Haris Ahmed Executive
3,483 2,136 1,984 (152) Syed Anas Shah EX-Executive
3,483 2,090 2,048 (42) Kamran Qureshi Ex-Executive
3,483 1,950 1,953 3 Marium Waqar Executive
3,547 2,128 1,939 (189) Furqan Anis Ex-Executive
3,547 1,750 1,135 (615) Muhammad Usman Ex-Executive
3,613 3,179 3,068 (111) Ahmer Rais Khan Ex-Executive
3,658 2,829 2,553 (276) Shahroze Wasif Ex-Executive
3,658 2,926 2,553 (373) Shahroze Ali Executive
3,663 2,833 2,814 (19) Madeeha Chaudhry Executive
3,663 2,637 2,306 (331) Ali Zeeshan Mirza Executive
3,733 3,036 3,191 155 Sughra Sadaf Ex-Executive
3,733 2,887 2,642 (245) Aftab Ahmed Khan Executive
3,907 2,448 2,218 (230) Sarmad Abbasi Ex-Executive
3,913 3,704 3,365 (339) Arslan Chawla Ex-Executive
3,913 3,861 3,334 (527) Saad Abid Ex-Executive
3,937 2,310 2,208 (102) M.Ismail Ahmed Executive
4,219 4,163 3,536 (627) Zain Mughal Ex-Executive
5,283 1,057 987 (70) Syed Hammad Ali Naqvi Ex-Executive
5,283 1,057 1,055 (2) M.Idries Ahmed Ex-Executive
6,483 2,766 2,738 (28) Syed Ali Ex-Executive
8,689 4,982 4,869 (113) Khurram Rajput Ex-Executive
8,689 5,213 4,937 (276) Uzair Qazi Ex-Executive
9,189 8,086 8,400 314 Imran Sharif Ex-Executive
10,500 8,120 8,199 79 Sami Zaman Ex-Executive
21,500 12,040 11,284 (756) Waqas Ahmed Khan Ex-Executive

- by auction 3,444 689 4,060 3,371 Through bidding in auction Auction agent
3,663 3,028 3,950 922 Through bidding in auction Auction agent

- by insurance claim 3,668 2,983 3,663 680 EFU General Insurance Ltd. Insurance agent
3,733 2,986 3,613 627 EFU General Insurance Ltd. Insurance agent
13,970 4,843 13,970 9,127 EFU General Insurance Ltd. Insurance agent
154
2022 2021

Rs. ‘000 Rs. ‘000
17 Long term deposits and prepayments
Security deposits 23,604 28,661
23,604 28,661
18 Stock-in-trade
Raw materials 20,758,494 16,762,002

Raw materials in transit 1,044,440 1,411,372
Work in process 101,096 88,497
Finished goods 3,130,588 3,963,744
25,034,618 22,225,615
Provision for damaged / obsolete stocks - note 18.1 (129,298) (180,962)
24,905,320 22,044,653
18.1 Movement in provision for damaged stocks is as follows:

Provision for the year 169,387 243,684
Written off during the year (221,051) (190,570)
19 Stores and spares
Stores and spares 641,009 725,533

Provision for slow moving items - note 19.1 (79,963) (79,303)
561,046 646,230
19.1 Movement in provision for slowing moving items is as follows:

Provision/(Reversal) during the year- note 9 660 8,896
20 Trade debts
These are unsecured, considered good.
155
2022 2021

Rs. ‘000 Rs. ‘000
21 Loans and advances
Related parties:
Advances to key management personnel for
house rent and expenses - note 21.1 1,300 3,774
Others:
Advances to executives for house rent and expenses 32,539 32,383
Advances to other parties 798,956 52,759
832,795 88,916
21.1 The following advances were outstanding as at December 31:
Mir Faraz 900 –

Bushra Rehman 400 –
Haroon Saleem – 3,139
Uzair Qazi – 635
1,300 3,774
The maximum aggregate amount of advances to key management personnel outstanding at the end of any month during
the year was Rs. 2,397 thousand (2021: Rs. 3,902 thousand).
These loans and advances are unsecured and considered good. Advances extended to key management personnel,
executives and other employees are deducted from the individuals’ monthly payroll as per Company’s policy.
2022 2021

Rs. ‘000 Rs. ‘000
22 Other receivables

Due from holding company / associated companies - note 22.1 555,280 514,075
Workers’ profit participation fund - note 25.7 154,608 –
Staff pension fund - note 31 – 501,307
Staff pension fund - defined contribution 1,682 –
Management provident fund 106,373 39,663
Employees’ provident fund 57,468 35,682
Others:
Claims against suppliers 6,576 6,576
Cash margin with banks - imports 2,848,389 771,605
Others 102,289 44,313
3,832,665 1,913,221
156
22.1 Ageing analysis of the amounts due from holding company / associated companies comprises:
Upto 1 1 to 6 More than

month months 6 months 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Holding company:
British American Tobacco p.l.c. - UK – – – – 11,533
BAT SAA Service (Private) Ltd. - Pakistan 113,889 264 139,454 253,607 199,812
BAT (GLP) Limited - UK 75,049 8,682 – 83,731 3,356
BAT Nigeria Ltd-Nigeria – 7,003 65,190 72,193 50,828
BAT M.E DMCC - UAE 24,271 47,087 – 71,358 49,832
BAT (Investments) Ltd-UK 20,108 3,590 – 23,698 35,969
BAT M.E SPC - Bahrain 11,725 – 679 12,404 530
BAT Asia Pacific Ltd, Hongkong 12,254 – – 12,254 –
Nicoventures Trading Limited - UK 10,991 – – 10,991 26,530
RAI Services Company-U.S – 8,204 – 8,204 –
Ceylon Tobacco Co. Ltd - SriLanka – 4,363 – 4,363 2,951
BAT Aspac Service Centre Sdn Bhd-Malaysia 1,549 – – 1,549 5,182
BAT Bangladesh Co. Limited-Bangladesh – 928 – 928 –
BASS Europe SRL - Romania – – – – 53,138
BAT Exports Limited - UK – – – – 36,655
BAT Marketing (S) Pte Ltd - Singapore – – – – 12,222
BAT Korea Limited - Korea – – – – 11,608
BAT (Singapore) Pte Ltd-Singapore – – – – 10,492
BAT PNG Ltd - Papua New Guinea – – – – 2,538
Central Manufacturing Co. Ltd-Fiji Islands – – – – 899
Total 269,836 80,121 205,323 555,280 514,075
22.1.1 The maximum aggregate amount of receivable from related parties at the end of any month during the year was Rs.
555,280 thousand (2021: Rs. 825,967 thousand).
2022 2021

Rs. ‘000 Rs. ‘000
23 Short term investments
At fair value through profit or loss (FVTPL):

- Market treasury bills 21,522,111 9,402,598
This represents short term investment in treasury bills issued by the Government of Pakistan and carries effective interest rate of
15.75% ( 2021 : 10.10%) per annum and are held for trading. These treasury bills have less than three months maturity from the
date of acquisition and have been disposed off subsequent to the year-end.
157
2022 2021

Rs. ‘000 Rs. ‘000
24 Cash and bank balances
Deposit account - note 24.1 7,513 17,687

Current accounts:
Local currency - note 24.2 427,250 442,149
Foreign currency 1,444,033 785,232
Total 1,878,796 1,245,068
24.1 These are security deposits being kept in separate bank account.
24.2 This includes balance amounting to Rs 0.47 million (2021: Rs 3.74 million) held with National Bank of Pakistan
(an associated company).
2022 2021

Rs. ‘000 Rs. ‘000
25 Trade and other payables

Due to holding company / associated companies - note 25.1 4,859,598 816,919
Others:
Creditors 11,886,136 7,914,345
Federal excise duty - note 25.2 6,291,182 8,655,007
Sales tax 1,892,655 1,820,898
Workers’ welfare fund - note 25.6 708,849 534,838
Workers’ profit participation fund - note 25.7 – 10,968
Other accrued liabilities 182,385 97,837
Employee incentive schemes - note 25.4 112,668 124,332
Employees’ gratuity fund - note 31 272,269 219,441
Staff pension fund - note 31 122,112 –
Staff pension fund - defined contribution – 13,395
Tobacco excise duty / Tobacco development cess - note 25.3 146,337 114,834
Security deposits - note 25.5 7,513 16,935
Contract liability 715,884 246,718
27,197,588 20,586,467
158
25.1 The amount due to holding company / associated companies comprises:
2022 2021

Rs. ‘000 Rs. ‘000
Holding company:
British American Tobacco p.l.c. - UK 796,862 180,013
BAT GLP Ltd - UK - note 25.1.1 1,817,169 125,773
BASS GSD Ltd. - UK 1,256,749 11,655
BAT M.E DMCC - UAE - note 25.1.1 368,833 202,881
BAT Saudia for Trading, Saudi Arabia - note 25.1.1 137,862 66,784
BAT Exports Limited - UK 127,529 81,327
BAT Nicoventures Trading Ltd-UK 101,677 3,007
BAT South Africa SA. - South Africa 78,974 –
BAT Asia Pacific Ltd - HongKong 47,715 21,269
BAT M.E SPC - Bahrain - note 25.1.1 37,240 24,915
BAT Souza Cruz Ltd - Brazil 19,964 17,527
BAT Australia Ltd-Australia 19,242 2,023
PT Bentoel Prima - Indonesia 15,175 23,484
BAT Jordan Ltd - Jordan - note 25.1.1 12,745 –
BAT Singapore (Pte) Ltd - Singapore 12,210 9,516
BAT GSD (KL) SDN BHD - Malaysia 3,542 3,066
Fielder & Lundgren AB. - Sweden 3,028 –
BAT Korea Manufacturing - South Korea 2,611 2,408
BAT Romania Investments Ltd - Romania 471 584
BAT Mexico Ltd - Mexico – 31,669
BAT Myanmar Ltd - Myanmar - note 25.1.1 – 4,981
BAT Chile Tobacco - Chile – 2,882
BAT Tutun Mamulleri - Turkey – 435
BAT Vranje - Serbia – 285
BAT Nigeria Ltd - Nigeria – 283
Ceylon Tobacco Company Plc - Sri Lanka – 152
4,859,598 816,919
25.1.1 Rs. 742,497 thousand (2021: Rs. 299,561 thousand) relates to unsecured export advance.
159
2022 2021

Rs. ‘000 Rs. ‘000
25.2 Federal excise duty
Balance as at January 1 8,655,007 7,314,335

Charged during the year 103,232,916 95,177,089
Payment to the Government during the year (105,596,741) (93,836,417)
Balance as at December 31 6,291,182 8,655,007
25.3 Tobacco excise duty / tobacco development cess:

Payment to the Government during the year (221,537) (226,169)
25.4 Employee incentive schemes
These represent liability for unvested portion of cash-settled share-based payment schemes available to certain
employees. Such schemes require the Company to pay the intrinsic value of these share based payments to the employee
at the vesting date.
2022 2021

Rs. ‘000 Rs. ‘000
Long Term Incentive Plan (LTIP) - note 25.4.1

Deferred Share Bonus Scheme (DSBS) - note 25.4.2

112,668 124,332
25.4.1 Long Term Incentive Plan (LTIP)
Details of the options movement for cash-settled LTIP scheme during the year were as follows:
2022 2021
Number of options

Granted during the year 892 1,885
160
25.4.2 Deferred Share Bonus Scheme (DSBS)
Details of the options movement for cash-settled DSBS scheme during the year were as follows:
2022 2021
Number of options

Granted during the year 5,342 7,515
25.5 These represent amounts received as security deposits from dealers and suppliers, which are non-utilisable for the
purpose of the business in accordance with their agreements. These security deposits are being held in a separate bank
account.
2022 2021

Rs. ‘000 Rs. ‘000
25.6 Movement in Workers’ Welfare Fund is as follows:

Charged during the year 658,709 485,656
Payment to government /reversal during the year (484,698) (407,714)
25.7 Movement in Workers’ Profit Participation Fund is as follows:

Allocation for the year 1,865,392 1,407,468
Payments during the year (2,030,968) (2,251,857)
Balance as at December 31 (154,608) 10,968
26 Other liabilities
This relates to provisions for employee benefits, litigation and restructuring consequent to modernization of production processes.
During the year, the Company has utilized amounts aggregating Rs. 728 million (2021: Rs. 502 million) and recorded further
obligations of Rs. 2,324 million (2021: Rs. 925 million).
27 Short term running finance/export refinance - secured
(a) Short term running finance/export refinance
Short term running finance facilities available under mark-up arrangements with banks amount to Rs. 6,500 million (2021:
Rs. 6,500 million), out of which the amount unavailed at the year end was Rs. 6,500 million (2021: Rs. 6,500 million). These
facilities are secured by hypothecation of stock in trade and plant and machinery amounting to Rs. 7,222 million (2021:
Rs. 7,222 million). The mark-up ranges between 10.39% and 16.81% (2021: 7.49% and 9.71%) per annum and is payable
quarterly. The facilities are renewable on annual basis.
Effective September 2022, the Company has rolled over/obtained new loan of Rs. 2,300 million (Dec 31, 2021: Rs. 2,300
million) from different banks under export refinance scheme. The interest rate is 9.20% (Dec 31, 2021: 2.20%).
161
(b) Non-funded finance facilities
The Company also has non-funded financing facilities available with banks, which include facility to avail letter of credit
and letter of guarantee. The aggregate facility of Rs. 2,500 million (2021: Rs. 2,500 million) and Rs. 1,200 million (2021: Rs.
1,200 million) is available for letter of credit and letter of guarantee respectively, out of which the facility availed at the year
end is Rs. 1,512 million (2021: Rs. 295 million) and Rs. 770 million (2021: Rs. 542 million). The letter of credit and guarantee
facility is secured by second ranking hypothecation charge over stock-in-trade amounting to Rs. 1,333 million (2021: Rs.
1,333 million).
28 Lease liability
This represents lease agreements entered into with a leasing company for vehicles and IFRS 16 leases. Total lease rentals due
under various lease agreements aggregate to Rs. 1,737,866 thousand - short term Rs. 802,531 thousand and long term Rs.
935,335 thousand (December 31, 2021: Rs. 1,999,185 thousand - short term Rs. 577,272 thousand and long term Rs. 1,421,913
thousand) and are payable in equal monthly instalments latest by December 2027. Taxes, repairs, replacement and insurance
costs are to be borne by the Company. Financing rates of 9% to 17% (December 31, 2021: 9% to 13%) per annum have been
used as discounting factor.
As per IFRS 16 all rental facilities of the Company with lease terms greater than one year have been capitalised as leased
assets. When measuring the lease liabilities for leases that were capitalised during the year, the Company discounted lease
payments using an estimated incremental borrowing rate and recorded lease obligation of Rs. 322,031 thousand (2021: Rs.
373,573 thousand) during the year.
The amount of future minimum lease payments together with the present value of the minimum lease payments and the periods
during which they fall due are as follows:
2022 2021

Rs. ‘000 Rs. ‘000

Current maturity shown under current liabilities (802,531) (577,272)
935,335 1,421,913
Future minimum lease payments

Later than one year 1,178,197 1,725,627
2,139,809 2,468,509
Interest (401,943) (469,324)
Present value of minimum lease payments

Later than one year 935,335 1,421,913
1,737,866 1,999,185
29 Unpaid dividend
Unpaid dividend includes amount of Rs. 5,286,154 thousand (2021: Rs. 4,507,434 thousand), payable to British American Tobacco
(Investments) Limited, parent company.
162
2022 2021

Rs. ‘000 Rs. ‘000
30 Deferred income tax liability
Deferred tax liability is in respect of:

Accelerated tax depreciation 1,771,478 1,412,009
Leased assets 182,135 142,931
1,953,613 1,554,940
Deferred tax asset is in respect of:

Remeasurement loss arising on employees’
retirement benefit (218,076) (156,231)
Provision for severance benefits (839,251) (346,163)
Provision for stock and stores (26,388) (23,000)
869,898 1,029,546
The gross movement on deferred income tax account is as follows:
At January 1 1,029,546 888,506

(Credit)/charge for the year - statement of profit or loss (97,802) 179,149
(Credit) for the year - statement of comprehensive income (61,846) (38,109)
At December 31 869,898 1,029,546
31 Retirement benefits
Investments in all contributory funds have been made in accordance with the provisions of section 218 of the Companies Act,
2017 and the rules formulated for that purpose.
2022 2021

Rs. ‘000 Rs. ‘000
Staff pension fund - liability / (asset) - note 25 & 22 122,112 (501,307)
Employees’ gratuity fund - liability - note 25 272,269 219,441
The latest actuarial valuation of the defined benefit plans was conducted at December 31, 2022 using the projected unit credit
method. Details of the defined benefit plans are:

2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(a) The amounts recognised in the statement

of financial position:
Present value of defined benefit obligations 6,106,054 5,707,806 1,638,103 1,691,179

Fair value of plan assets (5,983,942) (6,209,113) (1,365,834) (1,471,738)
Net liability / (assets) 122,112 (501,307) 272,269 219,441
163
2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(b) Movement in the liability / (asset) recognized

in the statement of financial position
is as follows:
Balance as at January 1 (501,307) (316,026) 219,441 275,517

Charge for the year - profit or loss (13,677) 26,821 104,562 113,429
Employer’s contribution during the year (24,182) (27,352) (28,909) (300,914)
Benefits paid by the Company – – – –
Remeasurement (gain)/loss recognized in Other
Comprehensive Income (OCI) during the year 661,278 (184,750) (22,825) 131,409
Balance as at December 31 122,112 (501,307) 272,269 219,441
(c) The amounts recognised in the statement

of profit or loss:
Interest cost 699,448 593,042 208,475 162,596

Expected return on plan assets (768,255) (627,581) (182,613) (134,845)
Net interest (68,807) (34,539) 25,862 27,751

Members’ own contribution (22,146) (23,735) – –
Secondees’ own contribution (4,063) (4,330) – –
Contribution by employer in respect of secondees (4,125) (5,473) (26,535) (16,784)
(13,677) 26,821 104,562 113,429
(d) Re-measurements recognised in Other

Comprehensive Income (OCI) during
the year:
Actuarial loss/ (gain) on obligation 82,121 (598,185) 25,301 9,748

Net return on plan assets over interest income 579,157 413,435 (48,126) 121,661
Total remeasurements loss / (gain) recognised

in OCI 661,278 (184,750) (22,825) 131,409
(e) Movement in the present value of defined

benefit obligation:
Present value of defined benefit obligation at

January 1 5,707,806 5,882,010 1,691,179 1,598,482
Interest cost 699,448 593,042 208,475 162,596
Remeasurements: Actuarial loss /(gain)
on obligation 82,121 (598,185) 25,301 9,748
Present value of defined benefit obligation

at December 31 6,106,054 5,707,806 1,638,103 1,691,179
164
2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(f) Movement in the fair value of plan assets:
Fair value of plan assets at January 1 6,209,113 6,198,036 1,471,738 1,322,964

Interest income 768,255 627,581 182,613 134,845
Contribution by employer in respect of members 24,182 27,352 28,909 300,915
Members’ own contribution 22,146 23,735 – –
Secondees’ own contribution 4,063 4,330 – –
Contribution by employer in respect of secondees 4,125 5,473 26,535 16,784
Return on plan assets, excluding amounts included in
interest income (579,157) (413,435) 48,126 (121,661)
Fair value of plan assets at December 31 5,983,942 6,209,113 1,365,834 1,471,738
Actual return on plan assets 170,902 399,897 76,227 13,685
The Company expects to charge Rs 43 million for pension plan and charge Rs 135 million for gratuity plan for the year
ending December 31, 2023.

2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(g) The major categories of plan assets:
Investment in listed equities 1,294,470 1,542,807 373,556 374,414

Investment in bonds 4,683,913 1,493,619 784,643 322,894
Cash and other assets 5,559 3,172,687 207,635 774,430
5,983,942 6,209,113 1,365,834 1,471,738
(h) Significant actuarial assumptions at

the statement of financial position date:
Discount rate 14.25% 12.50% 14.25% 10.25%

Pension increase rate 8.75% 7.00% – –
Expected rate of increase in salary
First year 12.25% 10.50% 12.25% 10.50%
Second year onwards 12.25% 10.50% 12.25% 10.50%
The mortality table used for post retirement mortality is Standard Table Mortality The “80” Series PMA 80 (C=2015) and PFA
80(C=2015) for males and females respectively but rated up 2 years.
The discount rate is determined by considering underlying yield currently available on Pakistan Investment Bonds and high
quality term finance certificates and expected return on plan assets is determined by considering the expected returns
available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based
on gross redemption yields as at the reporting date.
Salary increase assumption is based on the current general practice in the market.
165
(i) Sensitivity Analysis on significant actuarial assumptions
The calculation of the defined benefit obligation is sensitive to assumptions set out above. The following table summarizes
how the impact on the defined benefit obligation at the year end of the reporting period would have increased / (decreased)
as a result of a change in respective assumptions by one percent.

1 percent 1 percent 1 percent 1 percent
increase decrease increase decrease
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Discount rate (647,795) 789,945 (131,467) 150,724

Salary increase 116,730 (106,939) 156,125 (138,134)
Increase in post retirement pension 687,139 (573,746) – –
If life expectancy increases by 1 year, the obligation of the Pension Fund increases by Rs 344,856 thousand
( 2021: 343,537 thousand).
Expected maturity profile
Following are the expected distribution and timing of benefits payments at the year end.

2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Weighted average duration of the PBO (Years) 10.61 10.93 8.03 8.00
Risks associated with defined benefit plan
Longevity risk
The risk arises when the actual lifetime of retiree is longer than the estimate of future employee lifetime expectation. This
risk is measured at the plan level over the entire retiree population.
Salary increase risk
The most common type of retirement benefit is one where the benefit is linked with final salary. The risk arises when the
actual increases are higher than the expectations and impacts the liability accordingly.
Withdrawal risk
The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation. The
movement of the liability can go either way.
Mortality Risk
The risk that the actual mortality experience is different. The effect depends on the beneficiaries’ service/age distribution
and the benefit.
Investment Risk
The risk of the investments underperforming and not being sufficient to meet the liabilities.
166
Historical Information

Present value of Net liability Present value of Net liability at

defined benefit (asset) at the defined benefit the end of
obligation end of the year obligation the year
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

2022 6,106,054 122,112 1,638,103 272,269
2021 5,707,806 (501,307) 1,691,179 219,441

2020 5,882,010 (316,026) 1,598,482 275,517
2019 4,978,396 (881,821) 1,650,938 337,649
2018 4,628,109 (787,677) 1,474,653 210,278
31.1 Salaries, wages and benefits as appearing in note 9, 10 and 11 include amounts in respect of the following:
2022 2021

Rs. ‘000 Rs. ‘000
Defined Contribution Provident Fund 107,379 109,512

Defined Benefit Pension Fund (13,677) 26,821
Defined Contribution Pension Fund 138,839 136,686
Defined Benefit Gratuity Fund 104,562 113,429
337,103 386,448
31.2 Defined Contribution Plan
Details of the management and employees’ provident funds are as follows:

Un-audited Un-audited
(a) Size of the fund - total assets 1,672,531 1,722,422
Cost of investments made 1,569,237 1,615,318
Percentage of investments made 94% 94%
Fair value of investments made 1,465,127 1,615,012
2022 2021
Rs. ‘000 % age Rs. ‘000 % age
(b) Breakup of investments at cost
Treasury bills 20,000 1% – –

Pakistan Investment Bonds 266,471 16% 188,615 11%
Investment plus deposit certificates 579,750 35% 579,750 34%
Investment in savings account with bank 46,170 3% 194,029 11%
Investment in securities 281,809 17% 281,809 16%
Accrued interest 375,037 22% 371,115 22%
1,569,237 94% 1,615,318 94%
167
32 Share capital
32.1 Authorized share capital
2022 2021 2022 2021

300,000,000 300,000,000 Ordinary shares of Rs 10 each 3,000,000 3,000,000
32.2 Issued, subscribed and paid-up capital
2022 2021 2022 2021

230,357,068 230,357,068 Issued for cash 2,303,571 2,303,571

25,136,724 25,136,724 Issued as bonus shares 251,367 251,367
255,493,792 255,493,792 2,554,938 2,554,938
British American Tobacco (Investments) Limited held 241,045,141 (2021: 241,045,141) ordinary shares at the year-end
and 10,274 (2021:10,274) and 798,282 (2021:798,282) ordinary shares are held by the directors/other executives and
associated company respectively.
All ordinary shares rank equally with regard to the Company’s residual assets. Holders of these shares are entitled to
dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company.
2022 2021

Rs. ‘000 Rs. ‘000
33 Contingencies and commitments
33.1 Contingencies
Claims and guarantees
(i) Claims against the Company not acknowledged as debt - Note 33.1.1 3,024 75,706
(ii) Guarantees issued by banks on behalf of the Company 769,944 541,991
33.1.1 Litigation
a) Employees’ Old-Age Benefits Institution (EOBI) constituted under the Employees’ Old-Age Benefits Act, 1976 (“the Act”)
requires contributions to be made by industries and establishments against workers employed by it. PTC has been making
prompt contributions under the Act. PTC has contractual arrangements with Logistics Service Providers for the shipment
of its raw material and finished goods. In the year 2015, the EOBI Jhelum issued a show cause notice dated March 4th,
2015, demanding payment of Rs. 3,024,000 against non-payment of contribution of 200 employees. These employees
were in fact employees of five transport concerns with which PTC had contractual arrangements. PTC filed complaint
against the said show cause before Adjudicating Authority – III, EOBI Islamabad and raised the objection that this liability is
of the five transport concerns who are independent entities. The Adjudicating Authority however passed an order against
PTC on February 14th, 2017, upholding the demand earlier raised by the EOBI Jhelum. PTC has filed an appeal in May
2017 against the order before the Board of Trustees EOBI Head Quarter at Karachi which is pending adjudication. Said
appeal was dismissed in January 2022, following which PTC challenged the demand from EOBI before the Islamabad High
Court which issued a stay order in favour of PTC against coercive recovery by EOBI. This stay order is still intact.
The Company expects favorable outcome in this case and accordingly, no provision is recognised in the financial
statements.
33.2 Commitments
(a) Letters of credit outstanding at December 31, 2022 were Rs. 1,511,561 thousand (2021: Rs. 295,277 thousand).
168
34 FINANCIAL INSTRUMENTS - Fair values and risk management
34.1 Accounting classification and fair value
The following tables shows the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable approximation of fair value.

through profit cost
or loss
Note Rs. ‘000 Rs. ‘000
Deposits 17 – 23,604 23,604 – – –
Trade debts 20 – 2,876 2,876 – – –
21,522,111 5,417,810 26,939,921 – – –
Lease liability 28 – (1,737,866) (1,737,866) – – –
Unpaid dividend 29 – (5,391,129) (5,391,129) – – –
– (31,841,183) (31,841,183) – – –

through profit cost
or loss
Note Rs. ‘000 Rs. ‘000
Deposits 17 – 28,661 28,661 – – –
Trade debts 20 – 2,142 2,142 – – –
9,402,598 2,612,440 12,015,038
Lease liability 28 – (1,999,185) (1,999,185) – – –
Unpaid dividend 29 – (4,663,641) (4,663,641) – – –
– (21,039,641) (21,039,641) – – –
169
34.2 Financial risk management
The Company has exposure to the following risks from financial instruments:
- credit risk
- liquidity risk
- market risk
34.2.1 Financial risk management framework
The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the financial performance. Risk management is carried out by the Treasury Committee
(the Committee) under policies approved by the board of directors (the Board). The Board provides written principles for
overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate
risk, credit risk and investment of excess liquidity. All treasury related transactions are carried out within the parameters of
these policies.
34.2.2 Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from trade debts, other receivables, deposits with banks and investment in treasury bills
issued by the Government of Pakistan. The carrying amount of financial assets represents the maximum credit exposure.
Due to the Company’s long standing business relationships with these counterparties and after giving due consideration to
their strong financial standing, management does not expect non-performance by these counter parties on their obligations
to the Company. Accordingly the credit risk is minimal.
Financial assets amounting to Rs 26,940 million (2021: Rs 12,015 million) do not include any amounts which are past due
or impaired. The table below shows bank balances held with counterparties at the reporting date.
Counterparty Rating Rating agency
Short term Long term 2022 2021

Rs. ‘000 Rs. ‘000
Cash at bank:
Standard Chartered Bank A-1+ AAA PACRA 1,240,955 622,267
MCB Bank Ltd A-1+ AAA PACRA 257,353 172,338
Deutsche Bank AG A-2 A- S&P 232,230 175,397
MCB Islamic Bank A-1 A PACRA 78,676 50,252
Habib Bank Ltd A-1+ AAA VIS 66,215 195,329
Citibank N.A. P-1 Aa3 Moody’s 2,894 25,747
National Bank of Pakistan A-1+ AAA PACRA 473 3,738
1,878,796 1,245,068
Short term investments:
Government of Pakistan Caa1- Moody’s 21,522,111 9,402,598
23,400,907 10,647,666
170
As at December 31, 2022, maximum exposure to credit risk for financial assets by geography was as follows:
Carrying amount
2022 2021

Rs. ‘000 Rs. ‘000
Pakistan 26,638,248 11,700,775

United Kingdom 118,420 114,043
Asia & other 183,253 200,220
26,939,921 12,015,038
As at 31 December 2022, the ageing of financial assets was as follows:
Carrying amount
2022 2021

Rs. ‘000 Rs. ‘000
Not due 26,647,901 11,494,387

1-30 days 80,121 234,002
31-90 days 205,323 279,543
90 days 6,576 7,106
26,939,921 12,015,038
34.2.3 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is
to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal
and stressed conditions, without incurring unacceptable losses or risking to the Company’s reputation.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross
and undiscounted, and include contractual interest payments and exclude the impact of the netting arrangements:
Carrying Contractual cash flows

amount Total 12 months 1 to 5
or less years
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
31 December 2022
Lease liability 1,737,866 (1,737,866) (1,737,866) –
Unpaid dividend 5,391,129 (5,391,129) (5,391,129) –
31,841,183 (31,841,183) (31,841,183) –
31 December 2021
Lease liability 1,999,185 (1,999,185) (1,999,185) –
Unpaid dividend 4,663,641 (4,663,641) (4,663,641) –
21,039,641 (21,039,641) (21,039,641) –
171
Cash flows included in the maturity analysis are not expected to occur significantly earlier or at significantly different
amounts.
34.2.4 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates will affect the Company’s
income or the value of its holding of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. This exists due to the Company’s exposure resulting from outstanding payments on account of
import of goods and services. The currencies in which these transactions are primarily denominated are euro, sterling and
US dollars.
The summarised quantitative data about the Company’s exposure to currency risk is as follows:
December 31, 2022 December 31, 2021
Euro Sterling US dollars Euro Sterling US dollars
Other receivables – 44,263 521,595 184,087 67,857 313,019

Cash and bank balances – – 6,378,942 – – 4,448,907
Trade and other payables – (4,737,376) (8,250,675) (1,729,952) (325,143) (3,581,725)
Net exposure – (4,693,113) (1,350,138) (1,545,865) (257,286) 1,180,201
The following significant exchange rates have been applied:
Average rate Year-end spot rate

2022 2021 2022 2021
Euro 1 214.59 192.47 241.60 200.72

Sterling 1 251.49 223.97 272.31 239.06
US dollar 1 204.56 162.91 226.38 176.50
A 10 percent strengthening (weakening) of the Rupee against euro, sterling and US dollar at the reporting date would have
affected the measurement of financial instruments denominated in a foreign currency and affected the equity and profit
or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remains
constant and ignores any impact of forecast sales and purchases.

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
31 December 2022
Euro – – – –
Sterling 127,798 (127,798) 91,976 (91,976)
US dollar 30,564 (30,564) 21,997 (21,997)
172
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
31 December 2021
Euro 31,029 (31,029) 22,331 (22,331)
Sterling 6,151 (6,151) 4,427 (4,427)
US dollar (20,831) 20,831 (14,992) 14,992
Interest rate risk

This represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not exposed to fair value interest rate risk as it does not hold any fixed rate
instruments. The Company does not have any significant long-term interest-bearing financial assets or financial liabilities
whose fair value or future cash flows will fluctuate because of changes in market interest rates.
Financial liabilities include balances of Rs. 1,737,866 thousand (2021: Rs. 1,999,185 thousand) which are subject to
interest rate risk. Applicable interest rates for these financial liabilities have been indicated in respective notes.
At statement of financial position date, if interest rates had been 1% higher/lower, with all other variables remain constant,
profit for the year would have been Rs. 17.379 million (2021: Rs. 19.992 million) lower/higher, mainly as a result of higher/
lower interest expense on floating rate borrowings.
35 Remuneration of Chief Executive, Directors and Executives
The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to Chief Executive,
Executive Directors and executives are as follows:-
Chief Executive Executive Directors Executives Total
Key Management Other

Personnel Executives
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Managerial remuneration 117,576 93,838 136,599 127,572 292,653 162,603 977,624 839,688 1,524,452 1,223,701
Corporate bonus 29,703 34,239 47,950 48,432 130,677 126,463 258,277 261,515 466,607 470,649
Leave fare assistance 1,296 2,590 7,056 7,306 4,655 1,477 - 25 13,007 11,398
Housing and utilities 19,070 14,110 14,430 16,458 55,046 59,212 369,650 343,055 458,196 432,835
Medical expenses 644 136 1,634 1,989 11,255 8,762 83,709 73,064 97,242 83,951
Post employment benefits 1,440 1,202 13,356 12,114 23,964 26,442 205,872 204,284 244,632 244,042
169,729 146,115 221,025 213,871 518,250 384,959 1,895,132 1,721,631 2,804,136 2,466,576
Number of persons 1 1 2 2 13 13 328 311 344 327
35.1 The Company, in certain cases, also provides individuals with the use of company accommodation, cars and household
items, in accordance with their entitlements.
35.2 The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to nine
(2021: nine) non-executive directors of the Company amounted to Rs. 10,352 thousand (2021: Rs. 6,515 thousand).
173
36 Transactions with related parties
British American Tobacco (Investments) Limited (BAT-IL) holds 94.34% (2021: 94.34%) shares of the Company at the year end.
Therefore, all the subsidiaries and associated undertakings of BAT-IL and the ultimate parent company British American Tobacco,
p.l.c (BAT) are related parties of the Company. The related parties also include directors, major shareholders, key management
personnel, employee funds and the entities over which the directors are able to exercise significant influence. The amounts
due from and due to these undertakings are shown under receivables and payables. The remuneration of the chief executive,
directors, key management personnel and executives is given in note 37 to the financial statements. Transactions with employee
funds and associated payable/receivable balances are provided in note 33 to the financial statements.
As National Bank of Pakistan is an associated company under the Companies Act 2017 due to common directorship, yet does
not fall under the definition of related party as interpreted from IAS 24 “Related Party Disclosures”. Accordingly, transactions and
balances with National Bank of Pakistan have not been disclosed in the related party disclosure.
2022 2021

Rs. ‘000 Rs. ‘000
Procurement of goods and services from:

Holding company 2,287,151 2,253,371
Sale of goods and services to:

Holding company – 11,335
Dividend declared
Holding company 11,608,964 19,348,274
Royalty charged by:

Holding /associate company 850,354 598,658
Expenses reimbursed to:

Holding company – 590
Associated companies 14,893 372
Expenses reimbursed by:

Holding company 3,266 53,228
Associated companies 492,215 456,184
Payment under employee incentive schemes:

Key management personnel 90,702 57,709
Other income:
Associated company:
Export of services 551,559 581,565
Recharges written back – 57,146
36.1 Following are the name of associated companies, related parties and associated undertakings with whom the Company
had entered into transactions or had agreements and arrangements in place during the year. Names of associated
companies, related parties and associated undertakings, incorporated outside Pakistan are included in note 36.2.
174
Associated companies / related Aggregate % of
parties and associated undertakings Basis of relationship shareholding
BAT SAA Services (Private) Limited Common Directorship Nil

National Bank of Pakistan Common Directorship Nil
Retrirment benefit funds:

Pension Funds Post employment benefits Nil
Provident Funds Post employment benefits Nil
Gratuity Fund Post employment benefits Nil
Zafar Mahmood Director 0.000196%

Syed Ali Akbar Director 0.000978%
Kelly Burtenshaw Director 0.000978%
Syed Asad Ali Shah Director 0.000196%
Usman Zahur Director 0.000196%
Wael Sabra Director 0.000196%
Belinda Ross Director 0.000196%
Asif Jooma Director 0.000196%
Mohammad Riaz Director 0.000196%
Lt. Gen (Rtd.) Najib Ullah Khan Director 0.000196%
Gary Tarrant Director 0.000196%
Oliver Engels Director 0.000196%
Sayeed Salam Key management personnel Nil
Faiza Imtiaz Key management personnel Nil
M. Ammar Yasir Key management personnel Nil
Mohammad W.Naser Key management personnel Nil
Patrick Bejjani Key management personnel Nil
Khubaib Akram Key management personnel Nil
Khan Muhammad Mohmand Key management personnel Nil
Muhammad Asim Key management personnel Nil
Hassan Khalid Key management personnel Nil
Haroon Saleem Key management personnel Nil
Junaid Khatana Key management personnel Nil
Bushra Rahman Key management personnel Nil
Mir Faraz Key management personnel Nil
36.2 Following particulars relate to associated companies incorporated outside Pakistan with whom the Company had entered
into transactions during the year or have arrangement / agreement in place.

British American Tobacco p.l.c. Ultiamte Parent Company 0.00% United Kingdom
BAT (Investments) Limited Holding Company 94.34% United Kingdom
BAT Rothmans International Holding Company 0.31% United Kingdom
BAT Exports Limited Fellow Subsidiary 0.00% United Kingdom
Ceylon Tobacco Company PLC Fellow Subsidiary 0.00% Sri Lanka
British American Tobacco Myanmar Limited Fellow Subsidiary 0.00% Myanmar
British American Tobacco Argentina Fellow Subsidiary 0.00% Argentina
British American Tobacco Australia Fellow Subsidiary 0.00% Australia
BAT Bangladesh Company Limited Fellow Subsidiary 0.00% Bangladesh
Souza Cruz Ltd. Fellow Subsidiary 0.00% Brazil
BAT Switzerland SA Fellow Subsidiary 0.00% Swiztzerland
British American Tobacco Chile Operaciones SA Fellow Subsidiary 0.00% Chile
175
BAT Germany GmbH Fellow Subsidiary 0.00% Germany

BAT (Brands) Limited Fellow Subsidiary 0.00% United Kingdom
Benson & Hedges (Overseas) Limited Fellow Subsidiary 0.00% United Kingdom
BAT (Holdings) Limited Fellow Subsidiary 0.00% United Kingdom
BASS (GSD) Limited Fellow Subsidiary 0.00% United Kingdom
British American Tobacco (GLP) Limited Fellow Subsidiary 0.00% United Kingdom
Nicoventures Trading Ltd Fellow Subsidiary 0.00% United Kingdom
British American Tobacco Asia Pacific Region Ltd Fellow Subsidiary 0.00% Hong Kong
British American Tobacco Co. (HK) Ltd Fellow Subsidiary 0.00% Hong Kong
British American Tobacco GTR Ltd Fellow Subsidiary 0.00% Hong Kong
Fielder & Lundgren AB Fellow Subsidiary 0.00% Sweden
BAT Pecsi Dohanygyar KFT Fellow Subsidiary 0.00% Hungary
British American Tobacco Kenya Ltd Fellow Subsidiary 0.00% Kenya
BAT Koea Ltd Fellow Subsidiary 0.00% South Korea
BAT Koea Manufacturing Ltd Fellow Subsidiary 0.00% South Korea
British American Tobacco Mexico SA de CV Fellow Subsidiary 0.00% Mexico
BAT AsPac Service Centre Sdn Bhd Fellow Subsidiary 0.00% Malaysia
BAT GSD (KL) Sdn Bhd. Fellow Subsidiary 0.00% Malaysia
BAT Nigeria Ltd Fellow Subsidiary 0.00% Nigeria
BAT Marketing Nigeria Ltd. Fellow Subsidiary 0.00% Nigeria
British American Tobacco Niemeyer Fellow Subsidiary 0.00% Netherlands
British-American Tobacco Polska S.A Fellow Subsidiary 0.00% Poland
BAT Investment (Romania) SRL Fellow Subsidiary 0.00% Romania
BAT (Romania) Trading SRL. Fellow Subsidiary 0.00% Romania
BASS Europe SRL. Fellow Subsidiary 0.00% Romania
JSC BAT-Spb Fellow Subsidiary 0.00% Russia
British-American Tobacco (Singapore) Pte Ltd Fellow Subsidiary 0.00% Singapore
BAT Marketing (Singapore) Pte Ltd Fellow Subsidiary 0.00% Singapore
British American Tobacco Tutun Mamulleri Fellow Subsidiary 0.00% Turkey
TDR D.O.O Fellow Subsidiary 0.00% Croatia
West Indian Tobacco Co. Ltd Fellow Subsidiary 0.00% Trinidad & Tobago
PJSC A/T B.A.T Prilucky Tobacco Co. Fellow Subsidiary 0.00% Ukraine
R J Reynolds Tobacco Company Fellow Subsidiary 0.00% United States
British American Tobacco South Africa (Pty) Ltd. Fellow Subsidiary 0.00% South Africa
British American Tobacco ME DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Saudia for Trading Fellow Subsidiary 0.00% Saudi Arabia
BAT GCC DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Middle East DMCC Fellow Subsidiary 0.00% United Arab Emirates
BAT Qatar LLC Fellow Subsidiary 0.00% Qatar
BAT Middle East S.P.C. Fellow Subsidiary 0.00% Bahrain
British American Tobacco Jordan Fellow Subsidiary 0.00% Jordan
BAT Egypt Ltd. Fellow Subsidiary 0.00% Egypt
Central Manufacturing Company Ltd Fellow Subsidiary 0.00% Fiji
PT Bentoel International Investama Fellow Subsidiary 0.00% Indonesia
PT Bentoel International Prima Fellow Subsidiary 0.00% Indonesia
PT Export Leaf Fellow Subsidiary 0.00% Indonesia
British American Tobacco (Malaysia) Fellow Subsidiary 0.00% Malaysia
Tobacco Importers and Manufacturers Fellow Subsidiary 0.00% Malaysia
British American Tobacco Japan Ltd Fellow Subsidiary 0.00% Japan
British American Tobacco (PNG) Ltd Fellow Subsidiary 0.00% Papua New Guinea
BAT SAA Services Pvt Ltd Fellow Subsidiary 0.00% Pakistan
British American Tobacco Vranje AD Fellow Subsidiary 0.00% Serbia
BAT Services Ltd., Taiwan Branch Fellow Subsidiary 0.00% Taiwan
Tabacalera Hondurena S.A. Fellow Subsidiary 0.00% Honduras
RAI Services Company Fellow Subsidiary 0.00% United States
Solomon Islands Tobacco Co. Ltd. Fellow Subsidiary 0.00% Solomon Islands
British American Tobacco (Cambodia) Fellow Subsidiary 0.00% Cambodia
176
2022 2021

Rs. ‘000 Rs. ‘000
37 Cash generated from operations
Profit before taxation 34,733,607 26,207,048

Adjustment for non-cash items:
- Depreciation / impairment 2,148,129 1,706,855
- Gain on disposal of property, plant and equipment (108,401) (81,741)
- Finance cost 327,683 274,282
- Finance income (2,274,037) (981,404)
- Foreign exchange loss 720,142 153,459
- Provision /(Reversal of provision) for slow moving
stores and spares 660 8,896
- Provision / (reversal of provision) for stock-in-trade 221,051 53,114
- Provision for staff retirement benefit plans 337,103 386,448
1,372,330 1,519,909
Changes in working capital:
- Stock-in-trade (3,081,718) (2,615,091)
- Stores and spares 84,524 23,774
- Trade debts (734) (750)
- Loans and advances (743,879) 246,289
- Short term prepayments (106,615) 43,069
- Other receivables (2,419,069) (411,625)
- Trade and other payables 5,772,590 1,286,190
- Other liabilities 1,596,054 423,061
1,101,153 (1,005,083)
Changes in long term deposits and prepayments 5,057 (941)
37,212,147 26,720,933
38 Reconciliation of movement of liabilities to cash flows arising from financing activities
Liabilities Equity Total

Unclaimed / Lease Revenue
Unpaid Dividend liability reserves

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Balance at January 1, 2022 4,740,647 1,999,185 2,300,000 9,039,832
Finance Lease payments – (1,149,784) – (1,149,784)

Additions during the year – – – –
Dividend paid (11,506,890) – – (11,506,890)
Total changes from financing cash flows (11,506,890) (1,149,784) – (12,656,674)
Other changes:
New leases – 913,212 – 913,212

Retirements – (249,177) – (249,177)
177
Liabilities Total
Unclaimed / Lease Short term
Unpaid Dividend liability Running finance /
export refinance

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Balance at January 1, 2021 162,237 2,252,622 – 2,414,859
Finance lease payments – (987,256) – (987,256)

Additions during the year – – 2,300,000 2,300,000
Dividend paid (15,861,094) – – (15,861,094)
Total changes from financing cash flows (15,861,094) (987,256) 2,300,000 (14,548,350)
Other changes:
New leases – 644,636 – 644,636

Retirements – (139,838) – (139,838)
39 Events after the reporting date
In respect of the year ended December 31, 2022 final dividend of Rs Nil (2021: Rs 28.00) per share amounting to a total dividend
of Rs. Nil thousand (2021: Rs. 7,153,826 thousand) has been proposed at the Board of Directors meeting held on February 23,
2023. These financial statements do not reflect this proposed dividend.
40 General
40.1 Date of authorization for issue
These consolidated financial statements have been authorized for circulation to the shareholders by the Board of Directors
of the Group on February 23, 2023.

178
PATTERN OF SHAREHOLDING
No. of Shareholders Categories Total Shares
1,539 From 1 To 100 48,841

1,126 From 101 To 500 314,634
344 From 501 To 1,000 240,202
232 From 1,001 To 5,000 486,355
32 From 5,001 To 10,000 226,480
6 From 10,001 To 15,000 75,024
2 From 15,001 To 20,000 34,223
6 From 20,001 To 25,000 138,775
1 From 25,001 To 30,000 27,000
1 From 30,001 To 35,000 31,978
1 From 35,001 To 40,000 37,000
1 From 40,001 To 45,000 44,402
1 From 45,001 To 50,000 48,879
3 From 55,001 To 60,000 171,961
1 From 60,001 To 65,000 60,961
1 From 65,001 To 70,000 66,000
2 From 165,001 To 170,000 335,714
1 From 240,001 To 245,000 240,280
1 From 300,001 To 305,000 300,752
1 From 385,001 To 390,000 389,480
1 From 795,001 To 800,000 798,282
1 From 1,755,001 To 1,760,000 1,755,873
1 From 8,575,001 To 8,580,000 8,575,555
1 From 241,045,001 To 241,050,000 241,045,141
3,306 255,493,792
179
PATTERN OF SHAREHOLDING
No. of Shares
Associated Companies, Undertakings and Related Parties 241,843,423
NIT and ICP 515
Directors, CEO and their spouse and minor children 10,000
Executives 274
Banks, Development Finance Institutions, Non-Banking
Finance Institutions, Insurance companies, Modaraba and Mutual Funds 2,234,878
Individuals 2,361,100
Others 9,043,602
255,493,792
Categories of Shareholders Number Shares Held %
Directors, CEO and their spouse and minor children 12 10,000 0.0
Executives 7 274 0.0
Associated Companies, Undertakings and Related Parties 2 241,843,423 94.7
Investment Companies 1 515 0.0
Modarabas & Mutual Funds 7 1,836,312 0.7
Insurance Companies 5 385,990 0.2
Banks, Development and other Financial Institutions 8 12,576 0.0
Individuals 3,216 2,361,100 0.9
Others 48 9,043,602 3.5
Total 3,306 255,493,792 100.0
No. of Shares
Associated Companies, Undertakings and Related Parties
British American Tobacco (Investments) Limited 241,045,141
Rothmans International 798,282
NIT and ICP (name wise details)
National Bank of Pakistan 515
Directors, CEO and their spouse and minor children (name wise details)
Zafar Mahmood 500
Syed Ali Akbar 2,500
Kelly Burtenshaw 2,500
Syed Asad Ali Shah 500
Usman Zahur 500
Wael Sabra 500
Asif Jooma 500
Mohammad Riaz 500
Najib Ullah Khan 500
Belinda Ross 500
Gary Tarrant 500
Oliver Engels 500
Executives
Waqas Ahmed Khan 150
Nauman Masood Butt 65
Amir Aziz 17
Tariq Aziz 15
Syed Aamir Iqbal 10
Shahid Yamin 9
Hamid Usman Malik 8
Shareholders holding 10% or more voting interest

British American Tobacco (Investments) Limited 241,045,141
180
181
182
183
184
185
186
187
188
189
190
191
GLOSSARY AND DEFINITIONS
AGM CbPMO
Annual General Meeting Capstan by Pall Mall
AJK CDC
Azad Jammu & Kashmir Central Depository Company
AKF CEO
Akora Khattak Factory Chief Executive Officer
ALT CFO
Area Leadership Team Chief Financial Officer
Amortisation CGS
To charge a regular portion of an expenditure over a fixed Chief of General Staff
period of time CMA
AmSSA Certified Management Accountant
Americas and Sub-Saharan Africa CMT
APME Crisis Management Team
Asia-Pacific and Middle East CNIC
APMEA Computerized National Identity Card
Asia-Pacific, Middle East and Africa COGS
ASOP Cost of Goods Sold
Area Sales Operation Planning COO
ATL Chief Operating Officer
Active Tax Payers List CPA
AWS Crop Protection Agents
Alliance for Water Stewardship Current Ratio
B2B The current ratio indicates a company’s ability to meet short-
Business to Business term debt obligation
BA D2C
Bachelors in Art Direct to Consumer
BAT Debt-to-Equity Ratio
British American Tobacco The ratio found by dividing total debt by the equity (all
BAU assets minus debts) held in stock (This is a measure of
financial risk)
Business As Usual
Dividend Payout Ratio
BCM
The ratio found by dividing the annual dividends per share
Business Continuity Management by the annual earnings per share
BIA DNP
Business Impact Analysis Duty-Not-Paid
BOM DTP
Battle of Minds Directors’ Training Program
CASE Earnings Per Share
Centre for Advanced Studies in Energy Earnings found by dividing the net income of the Company
by the number of shares of common outstanding stock
192
EBITDA HR&RC
Earnings before Interest, Taxes, Depreciation and Human Resources and Remuneration Committee
Amortization HRBP
EH&S Human Resource Business Partner
Environment, Health & Safety ICAP
EOs Institute of Chartered Accountants of Pakistan
Equipment Owners ICP
ESG Investment Corporation of Pakistan
Environment, Social and Governance IFAC
ExCo International Federation of Accountants
Executive Committee IHC
FBR Islamabad High Court
Federal Board of Revenue IMP
FED International Marketing Principles
Federal Excise Duty I-RECS
Fiscal Deficit International Renewable Energy Certificates
Fiscal deficit occurs when a government’s total expenditure IREN
exceeds the revenue that it generates, excluding money
from borrowings Inland Revenue Enforcement Network
FMC IT
Factory Manufactured Cigarettes Information Technology
FMCG IWS
Fast-Moving Consumer Goods Integrated Work System
FTSE JF
Financial Times Stock Exchange Jhelum Factory
FX KPIs
Foreign Exchange Key Performance Indicators
GBS LEP
Global Business Services Limited Edition Pack
Gearing Ratio LLB
Compares some form of owner’s equity (or capital) to Bachelor of Laws

borrow funds M.A
GJ Masters in Arts
Gigajoule MBA
GLT Masters in Business Administration
Green Leaf Threshing MCB
GoP Muslim Commercial Bank
Government of Pakistan MD
HR Managing Director
Human Resource MESA
Middle East and South Africa
193
GLOSSARY AND DEFINITIONS
MO R&D
Modern Oral Research and Development
MoU Return on Equity (ROE)
Memorandum of Understanding The value found by dividing the Company’s net income by
MTBF its net assets (ROE measures the amount a company earns
on investments)
Mean Time Between Failure
RMC
MW
Risk Management Committee
Megawatt
SAA
NC
South Asia Area
New Category
SECP
Net Working Capital
Securities Exchange Commission of Pakistan
Current assets minus current liabilities
SoBC
NIT
Standards of Business Conduct
National Investment Trust
Sox
NRSP
Sarbanes-Oxley
National Rural Support Program
SPLY
NTN
Same Period Last Year
National Tax Number
SRO
NTO
Statutory Regulatory Order
Net Turn Over
U.S.
NUST
United States of America
National University of Sciences and Technology
UAT
Operating Cycle
User Acceptance Test
The average time between purchasing or acquiring
inventory and receiving cash proceeds from its sale UK
ORA United Kingdom
Overall Risk Assessment VFM
PPE Value for Money
Personal Protective Equipment Vs.
Price-Earnings Ratio (P/E) Versus
The ratio found by dividing market price per share by w.e.f.

earnings per share (This ratio indicates what investors think with effect from
of the firm’s earnings’ growth and risk prospects) WIN
PTB Women Inclusion Network
Pakistan Tobacco Board
PTC
Pakistan Tobacco Company or “The Company”
194
FORM OF PROXY
Pakistan Tobacco Company Limited
I/We
of
being a member(s) of Pakistan Tobacco Company Limited (“Company”), holding
Ordinary Share(s) as per Register Folio No./CDC account No.
hereby appoint Mr./Ms.
Folio No./CDC Account No. (if member) of
or failing him/her, Mr./Ms.
Folio No./CDC Account No. (if member)

as my/our proxy in my/our absence to attend and vote for me/us, and on my/our behalf at the 76th Annual General Meeting
of the Company to be held on the 2nd day of May 2023 and at any and every adjournment thereof.
Signed by
Signed under my/our hand this the day of 2023.
WITNESS – 1 WITNESS – 2
Name: Name:
CNIC: CNIC:
Address: Address:

NOTE:
a. The signature should match with the specimen signature registered with the Company or with that on CNIC (in case
of a CDC shareholder).
b. A Proxy need not be a member of the Company.
c. Proxy Forms (scanned copies) properly completed along with attested copies of CNIC or the Passport of the Proxy
shall be sent to zeeshan.akhtar @famco.com.pk not less than 48 hours (excluding closed days) before the Meeting.
d. The Proxy Form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned
on the Form.
e. In case of a corporate entity, the Board of Directors’ Resolution / Power of Attorney with specimen signature shall
be sent at zeeshan.akhtar@famco.com.pk along with Proxy Form.
195
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A JOURNEY OF

As we continue our journey of growth and transformation, we remain

Top Employer Award 2023

Consolidated Financial Statements

116 117 126 130 131 132

133 134 135 179 188 191

192 195 196

Americas and Sub-Saharan Africa (AmSSA) Europe

Revenue by Product Category

Revenue by New Categories £2,894Mn 10.4%

Effective from 2023, the Group will revise its regional

By actively designing and implementing cutting-edge agricultural

In 2022, we celebrated our 75th anniversary, characterized by an

Sales Gujranwala, Lahore,

We will create A Better Tomorrow™ for:

Society Shareholders & Investors

The Orion, 2nd Floor, Office # 1,2,3

• Dunhill Lights • Benson & Hedges (Red)

Launched in 2018, John Player is the most contemporary

Championing Tobacco Harm Reduction

Consumer Centric Strategies

VELO Digital Footprint

3.5Bn+ 400K+ 44%

VELO Sound Station

1.5Bn+ 470K+ 459Mn

Our Market Share 2022

The Year of Pall Mall

The campaign was a huge success and

Cementing the Legacy

Additionally, the Government has signed an MoU with

The Inland Revenue Enforcement Network (IREN) was

to lessen the effects of industrial effluents, we are driving Effluent

Integrated Work System (IWS) is a recognized platform that BAT

Localization of the product itself helped us to tap into a

Additionally, Pakistan has a potential for significant increase in the

Waste recycling increased to more than

In 2022, our operations continued their efforts towards sustainable

First Ever I-RECS

Afforestation Drive Farmer Livelihood

To-date we have provided upwards of 150Mn saplings and in 2022

We provided 2500 kitchen gardening packs to families in 2022 and

Affordable Mechanization and

Crop Input Support 1000KVA Genset Support

Mobile Doctor Units

Water Filtration Plants

Benefits of doing this were:

1. Accelerating agriculture sector towards digitization.

Battle of the Minds 2022

Dynamic and interactive social media campaigns were also

To support our ongoing transformation efforts, we encourage

This year, our commitment to fostering our

Overseas Investors Chamber of Global Diversity, Equity &

Audit Human Resource MD/CEO Share Transfer

Head of Corporate Finance Sr. HRBP OPS

Area Commercial Finance Sr. HRBP OPS

Sr. Commercial Finance Sr. HRBP -

Executive Area Director

Legal & External Head of

As at 31st December 2022