Contents

1 ContentsCompany InformationOur ProductsVision / Mission Statement and Corporate StrategyOur ValuesFinancial Highlights of Six YearsNotice of Annual General MeetingDirectors ReportStatement of Compliance with the Code of Corporate GovernanceAuditors Review Report on Statement of ComplianceAuditors Report to the MembersBalance SheetProfit & Loss AccountStatement of Comprehensive IncomeCash Flow StatementStatement of Changes in EquityNotes to the Financial StatementsPattern of ShareholdingForm of Proxy0203040506070815171820222324252653 ANNUAL REPORT 2014 AuditorsM/s. Fazal Mahmood & AccountantsBankersNational Bank of PakistanUnited Bank LimitedSummit BankLegal AdvisorSardar Zulfiqar Umar Khan ThahimRegistered Office6/7-Sir Ganga Ram Trust Building,Shahrah-e-Quaid-e-Azam, : 042 37 32 0225-7 Fax No. : 042 37 32 3108E-Mail : : : Kot Lakhpat Registrar:M/s.

2 Scarlet IT System (Pvt) Road, Near Mozang Chungi, of DirectorsMr. Muhammad Arif Azim (Chairman)Mr. Shafqat-ur-Rehman Ranjha (Chief Executive)Mr. Arif IbrahimMr. Muhammad Arif HabibMr. Rashid Ali KhanMr. Liaqat MohammadMr. Muhammad IqbalMirza Mahmood AhmadMr. Muhammad Iqbal AwanBoard Audit & Risk Management CommitteeMirza Mahmood Ahmad (Chairman)Mr. Liaqat MohammadMr. Muhammad IqbalMr. Muhammad Iqbal AwanBoard Finance CommitteeMr. Rashid Ali Khan (Chairman)Mr. Arif IbrahimMr. Liaqat MohammadBoard HR & Remuneration CommitteeMr. Muhammad Arif Azim (Chairman)Mr. Arif IbrahimMr. Muhammad IqbalMr. Muhammad Iqbal AwanCFO & Company SecretaryMian Anwar AzizCOMPANY INFORMATIONANNUAL REPORT 201402 OUR PRODUCTSPECO is playing a vital role in the manufacturing of qualitative engineering goods of internationalstandard. Its products have earned reputation due to quality and reliability. PECO present productsrange includes the following: Steel Structure -Electricity Transmission & Distribution Line Towers.

3 (11, 132, 220 & 500 Kv) -Telecommunication Towers (Green Field & Roof Top) Pumps & Turbines PECO produces Mono Block & Non Clogging Pumps, Multi Stage Centrifugal Pumps, Deep Well & Agro Turbines of various capacities & heads as per requirements of the customers. PECO pumps range also includes Sludge Pumps and the Pumps utilized in Sugar & Chemical industries. Electric Motors PECO manufactures following range of electric motors: -Horizontal Foot Mounted Motors in Drip Proof & Enclosures. -Flange Mounted Squirrel Cage Induction Motors. -Vertical Hollow Shaft Motors in Drip Proof & Totally Enclosed Fan Cooled Enclosures. Safes, Strong Room Doors & Steel Lockers. -Steel Safes 30 , 60 , 72 -Strong Room Doors & Steel Lockers for Banks Foundry Products. - Grey & Iron Castings. - Bronze Castings. - Aluminum Alloy Castings. Rolled Products - Angles - Plain Bars - Deformed Bars (Grade 60 & 40)03 ANNUAL REPORT 2014 Vision StatementA sustainable growth oriented company andmarket leader in Steel Towers for ElectricityTransmission and Telecommunication,Pumps & Electric MotorsMission StatementTo replace the old machines & equipment with most modern, efficient machines leading towards automation.

4 To producequality products at higher efficiency andconsistent quality with lower StrategyTo accomplish excellent results throughincreased earnings in the best interest of allstake holders. To be a responsible employerto take care of the employees in theircareer planning and reward. Being a good corporate citizen,contributing to the development of societythrough harmony in all PolicyWe are committed to maintain our Customer ssatisfaction by delivering the qualitative products andservices in accordance with their needs and s feed-back is continuously reviewed forquality improvement to have continued customer sconfidence and trust in our products. Quality policy andobjectives are reviewed on yearly REPORT Company s Policy is to conduct business with honesty and integrity and to be Ethical in allits dealings showing respect for the interest of those with whom it has Company complies with all laws and regulations.

5 All employees are expected to familiarizethemselves with laws and regulations governing their individual areas of responsibility, and notto transgress them. In case of any doubt the employees are expected to seek necessary Company believes in fair competition and supports appropriate competition Company does not support any political party nor contribute to the funds of groups whoseactivities promote party Company is committed to provide services, which consistently offer, value in terms of priceand quality and satisfy customer needs and Company is committed to run its business in an environment that is sound and a good corporate entity, the Company recognizes its social responsibilities and will endeavorto contribute to community activities as a Company believes in and fully adheres to the principles of reliability and credibility in itsfinancial reporting and in transparency of business Company is an equal opportunity employer.

6 Its employee recruitment and promotional policiesare free of any gender bias and are merit and excellence oriented. It believes in providing itsemployees safe and healthy working conditions and in maintaining good channels of Company expects its employees to abide by certain personal ethics whereby Company informationand assets are not used for any personal advantage or gain. Any conflict of interest should beavoided, where it exists it should be disclosed and guidance Board of Directors has constituted the Board Audit & Risk Management Committee to ensurecompliance of above Values05 ANNUAL REPORT 2014Rs. in Million201420132012201120102009 Trading Results Sales , , Cost of , , Gross Profit/(Loss)( )( )( ) Admn, Gen. & Selling Other Operating Other Operating Operating Profit/(Loss)( )( )( )( ) Financial Workers Profit Participation Profit/(Loss) before Tax( )( )( )( ) Net Profit/(Loss) after Tax( )( )( )( ) Cash Dividend Per Share (Rs.)

7 Position Property, Plant & Equipment 8, , , , , , Paid up Fixed Capital Expenditure8, , , , , , Indicators Gross Profit Ratio( )( )( ) Operating Profit Ratio( )( )( )( ) Operation Expenses Profit/(Loss) Before Tax Ratio( )( )( )( ) Net Profit Ratio( )( )( )( ) Earning Per Share( )( )( )( ) Working Capital Current Quick HIGHLIGHTSANNUAL REPORT 201406 Notice is hereby given that the 65th Annual General Meeting of pakistan Engineering Company Limitedwill be held at Hotel Ambassador, 7-Davis Road, Lahore, on Friday, 31 October 2014 at totransact the following business: confirm Minutes of 64th Annual General Meeting held on Thursday, 31 receive, consider and adopt the Audited Accounts of the Company for the year ended30 June 2014 together with the Auditors and Directors report appoint auditors and fix their remuneration.

8 M/s. Fazal Mahmood & Company retireand in their place the Company received Notices under Section 253 (2) of the CompaniesOrdinance, 1984 from Shareholders for appointing M/s. Tariq Abdul Ghani Maqbool &Company, Chartered Accountants, as auditor for the year ending on 30 June, 2015. TheAudit Committee and the Board of Directors have also recommended to appoint Abdul Ghani Maqbool & Compnay, Chartered Accountants as the Auditors for theyear transact any other business with the permission of the ORDER OF THE BOARD ( Mian Anwar Aziz ) Company SecretaryLahore: 29 September 2014 Share Transfer Books of the Company shall remain closed from 24 October 2014to 31 October 2014 ( Both days inclusive ) and no transfer will be registered duringthat time. Transfers received in order at the office of the Registrar of the Company M/sScarlet IT System (Pvt.) Limited, 24 Ferozpur Road, Near Mozang Chungi, Lahore atthe close of business on 23 October 2014 will be treated in member entitled to attend and vote at this meeting is entitled to appoint any personas a proxy and vote on his / her behalf.

9 Proxies in order to be effective must be receivedat the Registered Office of the Company not less than 48 hours before the time of individual Beneficial Owner of the Central Depository Company (CDC), entitled tovote at this meeting must bring his/her Computrized National Identity Card (CNIC)or passport (in case of foreigner) alongwith CDC account number to prove his/heridentity and in case of proxy must enclose an attested copy of his/her CNIC or passport. Representatives of corporate members should bring the usual documentsrequired for such are requested to notify us immediately of any change in their Registeredaddress currently available with Registrar of the Company is, M/s SCARLET IT Systems Ltd. 24 Ferozpur Road,Near Mozang Chungi, who have not yet submitted photocopy of their Computerized NationalIdentity Cards(CNIC) to the Company are requested to send the same at the OF ANNUAL GENERAL MEETING07 ANNUAL REPORT 2014 The Directors of pakistan Engineering Company Limited (PECO) are pleased to present the 65th AnnualReport accompanied by the audited accounts for the financial year ended 30 June OUTLOOKA lthough sentiments internationally have broadly improved, developing economies like pakistan arestill facing the challenge of economic recovery and growth.

10 Prices within the global steel industry remainvolatile. Steel prices are, by and large, dictated by iron ore, coking coal and various ferrous metal pricesand subject to seasonality. The economic situation in pakistan that houses PECO manufacturing facilityremains tenuous and unpredictable. Your Company is however geared to meet the challenges in termsof technical capability, manufacturing capacity and market acceptance of its the year 2013-14, we directed all our efforts to improve the financial and operational conditionof the Company to create a fair value for our shareholders. During the year, performance was not upto the mark mainly due to unstable law and order situation, acute energy crises, costly raw materialsand low orders in hand. These factors adversely affected performance of the Company but due to effortsand hard work of management, last quarter of the year 2013-14 shows anticipative the year, the turnover of the Company could not reach the desired level where as last quarterof the year 2013-14 fetched of total turnover of the year.