Shaukat Khanum Memorial Cancer Hospital and Research Centre Endowment Fund

Asian Journalhttp://ajc.sagepub.
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of Management Cases
Shaukat Khanum Memorial Cancer Hospital and Research Centre Endowment Fund
Ayesha Bhatti, Junaid Ashraf and M. Farhan Akhtar
Asian Journal of Management Cases 2014 11: 71
DOI: 10.1177/0972820114538343
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Editors Introduction 71
Case
Shaukat Khanum Memorial

Cancer Hospital and Research
Centre Endowment Fund
Ayesha Bhatti
Junaid Ashraf
M. Farhan Akhtar
Asian Journal of Management Cases

11(2) 7187
2014 Lahore University of
Management Sciences
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/0972820114538343
http://ajc.sagepub.com
Abstract
The case looks at issues pertaining to the financial management of the Endowment Fund of Shaukat
Khanum Memorial Cancer Hospital and Research Centre (SKMCH&RC). The Chairman of SKMCH&
RC, Mr Imran Khan, is also the head of the political party Pakistan Tehreek-e-Insaaf (PTI), the key
contender in the general elections of May 2013. One of the key figures of a rival political party PML-N,
Mr Khawaja Asif has accused Mr Imran Khan of gambling with donated funds leading to significant
financial losses of money which should have been used for the treatment and care of the poor cancer
patients of the hospital.
The case is intended to be used for Executive Teaching and should be assigned and read together with
the Technical Note Understanding Endowment Funds. Together the technical note and the case aim to
offer a number of learning objectives for managers of nonprofit organizations. The technical note lists
the main types of endowment funds and, by considering the endowment funds of Harvard University
and Yale University (considered to be two well managed funds), discusses matters related to their financial management and accounting and reporting requirements. After reading this note, students will have
acquired some technical understanding of how to address the key questions in the case.
Keywords
Nonprofits, endowment fund, financial management
Introduction
On 1 August 2013, Khawaja Asif, a prominent member of the Pakistani political party, PML-N, called a
press conference together with two other party members, in which he accused Imran Khan, the founder
This case was written by Research Associate M. Farhan Akhtar under the supervision of Assistant Professor
Ayesha Bhatti (ayesha.bhatti@lums.edu.pk) and Associate Professor Junaid Ashraf (jashraf@lums.edu.pk) at Lahore
University of Management Sciences to serve as basis for class discussion rather than to illustrate either effective
or ineffective handling of an administrative situation. This material may not be quoted, photocopied or reproduced
in any form without the prior written consent of the Lahore University of Management Sciences. This research
was made possible through support provided by the United States Agency for International Development. The
opinions expressed herein are those of the author(s) and do not necessarily reflect the views of the US Agency for
International Development or the US Government.
72
and central leader of the main rival political party, Pakistan Tehreek-e-Insaaf (PTI), of financial mismanagement of sadqaat, fitrana and zakat 1 resulting in serious losses. These allegations were related to
Shaukat Khanum Memorial Cancer Hospital and Research Centre (SKMCH&RC), the biggest cancer
hospital in Pakistan. The cancer treatment centre was also one of the largest nonprofit organizations of
the country. Imran Khan served as the Chairman of the Board of Directors of SKMCH&RC and was also
the Chairman of PTI. Khawaja Asif accused Imran Khan of financial mismanagement of the hospital
endowment fund.
The money which should have been used for the treatment and care of the poor cancer patients of
Pakistan had instead been used in a gambling investment stated Asif. This was the money of the
Pakistani nation which had been sent abroad. (Express Tribune, 1 August 2013). Citing examples of
large international endowment funds like Harvard and Yale, Asif said, Yes they make investments in real
estate but these investments are made in downtown New York or Boston, not in some newly developed
real estate project in a country outside the US. (Television Report, 1 August 2013).
The seriousness and severity of the accusations resulted in an immediate backlash from Imran Khan
and his supporters, who denied the allegations as completely baseless and stated that not a single rupee
of the donations had ever been used for personal purposes. He went on to say that the hospitals financial
reports had transparently disclosed all of the financial information relating to the matter and were publically available on the official website (2 August 2013).
These two political parties were arch rivals and contenders for the new government to be formed after
the forthcoming elections of May 2013. SKMCH&RC was also often regarded as a model of good governance by Imran Khan and his political party. Imran Khan claimed that if his party came to power, the
whole country would be run on similar high standards of governance. Keeping this context in mind, two
matters warranted investigation. First, a factual understanding of the charges made by Khawaja Asif was
required in terms of whether endowment funds could invest money in overseas real estate projects in the
manner done by SKMCH&RC. Secondly, how transparent was SKMCH&RC in providing details of its
endowment fund activities to its stakeholders. This transparency had to be judged in the light of the legal
requirements and best practices on the financial management and accounting disclosures of nonprofit
endowment funds.
Background
SKMCH&RC was founded by Imran Khan with its formal inauguration on 29 December 1994. Since
1994 Imran Khan was serving as the Chairman Board of Governors. SKMCH&RC was registered
in Pakistan with the Registrar of Trusts, and was awarded the prestigious Corporate Excellence Award
by the Management Association of Pakistan in November 20102. The hospital had a total capacity of
176 beds and a staff of 1,524, which included 59 consultants, physicians and surgeons. It was spread
over an area of 20 acres. According to the official website of SKMCH&RC, 75 per cent of the total
patients received financial support. Operational statistics for 2011 included: 9,480 new registrations,
141,806 outdoor patient visits, 75,907 chemotherapy and radiation treatments, 6,560 surgical procedures, 3,251,680 pathology tests, 144,216 imaging studies and 931,848 pharmacy dispensations3.
After the success of the cancer hospital and his interest in social welfare, Imran Khan wanted to bring
about a larger-scale change in the country. Therefore, on 25 April 1996, PTI was founded in Lahore.
PTI started with slow electoral success in the past, but then became one of the countrys mainstream
Asian Journal of Management Cases, 11, 2 (2014): 7187
Shaukat Khanum Memorial Cancer Hospital and Research Centre Endowment Fund 73
national political parties especially after 30 October 2011 when thousands of people gathered in Lahore
to support it. According to a survey by International Republican Institute (IRI), as of May 2012, PTI
topped the list of popular political parties in the country4.
Financial Mismanagement of the Endowment FundThe Allegation

On 1 August 2012, Khawaja Asif claimed that Imran Khan lost a huge amount of money donated to his
social welfare hospital in a real estate gamble5. Khawaja Asif questioned as to why an investment was
made in real estate and that too, in another country. He also pointed out that unlike SKMCH&RC; NGOs
prefer to invest in prime locations like London and Manhattan, etc. Table 1 categorizes the investment
pattern of SKMCH&RC according to their asset class for the last four years (20072010).
According to Facts sheet on the business and realities behind Shaukat Khanum Memorial Hospital6
issued by the official website of PML-N, one of the major claims made was that a fictitious company
with the name of HBG was first formed in Dubai, and then US$ 4.5 million were invested through it
in real estate7. It would be important to note the structure of investment on which PML-N imposed
the allegations. SKMCH&RCs endowment fund management committee entrusted HBG Holdings
Company, based in Dubai, to manage its fund. HBG in turn invested SKMCH&RCs funds in 3,000,000
shares of one of its subsidiaries, Cinnabar International Services Limited (CISL). These shares had a par
value of US$ 1 each, and they did not have voting powers, and hence it could be considered as a passive
investment. Furthermore, CISL owned 3,000 shares in Sugarland Real Estate Limited (SREL), another
subsidiary of HBG. The loss of investment stated by PML-N was actually related to a price of land
owned by SREL. This land had an impairment loss as of 30 December 2010 and, according to Khawaja
Asif, the value of the investment was reduced by 64 per cent8.
Transparency and Reporting of Endowment FundThe Response

In response to the allegations put forward by Khawaja Asif, the two key points put forward by Imran
Khan were that first, no funds had been taken out of Pakistan for investment purposes and secondly
SKMCH&RC had transparently disclosed all financial information related to their endowment fund.
The following extract from the Express Tribune, 1 August 2012 clarifies the first part of Khans
response in relation to the investment of the funds:
Calling the accusation that Zakat money was invested abroad a lie; Khan said that the hospital receives money
from donors within the country and from those outside of it. He said that the amount of money the hospital gets
in zakat is never enough to provide free health service and so fund raising events are organized to bridge the
shortfall.
He further explained that the foreign donations are collected in a dollar account which is managed by the
hospitals endowment fund. The endowment fund uses this money for investment and earns profit on it, he
declared.
The endowment fund has its own board which decides how to use the money, a board of which Im not
a member, Khan said, adding that the board decided to invest money in Dubai as property prices were rising
back then.

74
Answering the accusations point by point, Khan said that the money never went abroad from Pakistan as it
was a part of the endowment fund and the company, where the hospitals endowment fund invested, was owned
by Imtiaz Haideri, who is also the chief executive.
The investment crashed all of a sudden, Khan admitted, but, said, the owner had promised them that they will
earn profit on the investment and will not incur losses9.
The second key line of defence taken by Khan was that all of the information quoted by Asif was publically available and that the PML-N leader had in fact relied on their public balance sheet to pick out all
the numbers for his accusation. In the earlier mentioned article, he also stated:
[T]he $3 million amount mentioned by Khawaja is already stated in hospitals balance sheet. If we had misused
the money, we would have not mentioned it in our accounts.
It is worth mentioning that according to the Trust Act 1882, under which SKMCH&RC was registered,
there were no prescribed accounting and reporting requirements. In the absence of any mandatory disclosure requirements, its disclosures with regard to the endowment fund included the following:
1. Main Body of Financial Statements: The financial statements of SKMCH&RC were audited
by one of the top four accountancy firms of the country. Figures 15 present the financial statements of SKMCH&RC for the year 2010. The total value of the endowment fund was PKR 991.5
million (Figure 1: Balance Sheet). This included PKR 631 million of investment in non-current
and PKR 360 million of investment in current assets. These financial statements reveal an
increase of PKR 53.3 million in the endowment fund from 2009 to 2010. This increase included
a surplus of PKR 30.8 million over expenditures (Figure 2: Income and Expenditure Account)
and other comprehensive income of PKR 22.5 million (Figure 3: Statement of Comprehensive
Income). There was also a transfer of PKR 1.7 million from general fund to endowment fund
(Figure 4: Statement of Changes in Funds). Figure 6 gives the details of non-current investments
whereas the details of current investment can be found in Figure 7.
Table 2 illustrates movements in revenues and expenses over the last ten years. It can be
observed that almost 50 per cent or more of the revenues came from donations. This table also
shows financial stability of SKMCH&RC as surplus on income can be observed over these ten
years, except for year 2002 where there was a deficit of PKR 31 million. The hospital had a budget of PKR 3.6 billion for 201010. Table 3 illustrates movements in its endowment fund11 and
general fund for the last ten years. A continuous growth can be observed for endowment and
general fund from 2001 to 2010. The value of endowment fund at the end of the year 2010 stood
at PKR 991 million while general fund stood at PKR 2.5 billion.
2. Accounting Policy Note: The objective of SKMCH&RCs endowment fund as stated in note
4.22, Notes to and forming part of the financial statements for the year ended 31 December 2010
was, Endowment fund is a restricted fund. The main objective of the fund is to generate income
for the operating expenses of SKMCH&RC12.
3. Note 11.4: In Note 11.4 to the financial statements, SKMCH&RC explained the reason for not
realizing this impairment loss. According to this note, the net realizable value upon completion
of the project was expected to be higher than its carrying value as at 31 December 2010.
It should be noted that the chairman and the CEO message was given in the Sections Message
from the Chairman and Message from the CEOs Desk, respectively.
21.4%
211,800,000
991,490,674
21.4%
40.6%
26.3%
1.6%
10.1%
15,996,000
100,063,672
211,800,000
402,852,587
260,778,415
779,690,674
2010
1,148,289,111
211,800,000
13,364,400
21,546,032
211,800,000
854,476,435
47,102,244
936,489,111
18.4%
18.4%
74.4%
4.1%
1.2%
1.9%
2009
1,001,004,671
211,800,000
6,058,700
124,222,309
211,800,000
627,277,293
31,646,369
789,204,671
21.2%
21.2%
62.7%
3.2%
0.6%
12.4%
2008
693,189,547
7,015,000
90,203,166
571,962,280
24,009,101
693,189,547
0.0%
0.0%
82.5%
3.5%
1.0%
13.0%
2007
Source: Case Writers Analysis.

Notes: Domestic Equities includes shares in Hub Power Company Limited for Year 2010, 2009, 2008 and 2007.

Fixed Income includes AKD Opportunity Fund Units and Pakistan Income Fund Units for 2010; Term Finance Certificates of Jahangir Siddiqui &
Company Limited, AKD Income Fund Units, AKD Opportunity Funds Units and Pakistan Income Fund Units, less Current Maturity TFCs for 2009;
Term Finance Certificates of Jahangir Siddiqui & Company Limited, AKD Income Fund Units, AKD Opportunity Fund Units and Pakistan Income Fund
Units, less Current Maturity TFCs for 2008; and Term Finance Certificates of Jahangir Siddiqui & Company Limited, AKD Income Fund Units, AKD
Opportunity Funds Units, less Current Maturity TFCs for 2007.

Private Equity (Real Estate) includes shares in CISL for Year 2010, 2009 and 2008.

Short-term securities/cash/other includes ABN Amro Bank notes and current assets for year 2010, 2009, 2008 and 2007.
Private Equity
Marketable Alternative
Strategies
Venture Capital
Private Equity (Real Estate)
Energy and Natural
Resources
Distressed Debt
Total
*Alternative Assets
Domestic Equities
Fixed Income
International Equities
Alternative Strategies*
Short-term Securities
Cash
Asset Class
SKCMH&RC Investment Pattern
Table 1. SKCMH&RC Investment Pattern
76
Figure 1. Balance Sheet

Financial Information
SHAUKAT KHANUM MEMORIAL TRUST
BALANCE SHEET AS AT DECEMBER 31, 2010
General
fund Rupees
Endowment
fund Rupees
2010
Rupees
2009
Rupees
2,536,652,309
991,490,674
3,528,142,983
3,365,733,921
6
7
8
9
10
2,264,045,521
228,030,267
9,306,677
139,853,459
5,613,301
2,264,045,521
228,030,267
9,306,677
139,853,459
5,613,301
1,998,405,326
122,409,281
196,002,080
4,634,552
11
33,215,424
2,680,064,649
630,984,857
630,984,857
664,200,281
3,311,049,506
617,219,464
2,938,670,703
21,627,316
213,496,078
62,229,000
94,996,507
21,627,316
213,496,078
62,229,000
94,996,507
21,752,387
263,437,991
58,022,000
61,206,961
62,249,696
1,808,967
305,067,167
761,474,731
2,927,402
96,800,000
260,778,415
360,505,817
65,177,098
98,608,967
565,845,582
1,121,980,548
48,077,033
577,370,518
185,272,789
1,215,139,679
20
50,782,570
50,782,570
51,136,281
21
18
19
73,002,190
80,780,847
269,121,227
473,686,834
73,002,190
80,780,847
269,121,227
473,686,834
46,937,038
218,316,527
197,862,538
514,252,384
149,063,605
149,063,605
205,859,254
84,015,753
43,323,600
125,000,000
29,797,279
431,200,237
84,015,753
43,323,600
125,000,000
29,797,279
431,200,237
42,436,794
25,528,029
273,824,077
2,536,652,309
991,490,674
3,528,142,983
3,365,733,921
Note
FUND BALANCE
REPRESENTED BY
NON-CURRENT ASSETS
Property, plant and equipment
Assets subject to finance lease
Intangible assets
Capital work-in-progress
Long term advances, receivables
and security deposits
Investments
CURRENT ASSETS
Stores and spares
Stocks
Donations in kind
Trade receivables
Advances, deposits, prepayments
and other receivables
Investments
Cash and bank balances
LESS: CURRENT LIABILITIES
Current maturity of long term
loans-secured
Current maturity of lease liabilities
Short term borrowings-secured
Trade and other payables
12
13
14
15
16
17
LESS: NON-CURRENT LIABILITIES

Long term loans-secured
20
Liabilities against assets subject to
finance lease
21
Long term advances
22
Deferred government grant
23
Deferred liabilities
24
Contingencies and
commitments
25
Source: https://www.shaukatkhanum.org.pk/images/skm_img/downloads/Audits/financial10.pdf
The annexed notes 1 to 37 form an integral part of these financial statements.

Figure 2. Income and Expenditure Account
INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2010
General
Note fund Rupees
Endowment
fund Rupees
2010
Rupees
2009
Rupees
CLINICAL INCOME
26
1,553,844,162
1,553,844,162
1,280,870,988
OTHER INCOME
27
1,459,145,471
33,783,967
1,492,929,438
1,573,012,374
3,012,989,633
33,783,967
3,046,773,600
2,853,883,362
28
29
2,202,776,678
554,052,427
2,202,776,678
554,052,427
1,841,772,644
431,916,893
30
31
106,354,159
40,706,793
2,975,192
106,354,159
43,681,985
79,830,569
68,717,897
2,903,890,057
109,099,576
109,099,576
2,975,192
30,808,775
30,808,775
2,906,865,249
139,908,351
139,908,351
2,422,238,003
431,645,359
431,645,359
TOTAL INCOME
EXPENSES
Clinical expenses
General and administrative
expenses
Marketing expenses
Finance cost
Surplus before taxation
Provision for taxation
Surplus of income over
expenditure
Figure 3. Statement of Comprehensive Income

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2010
Surplus of income over expenditure

Other comprehensive income:
Revaluation surplus or land
Unrealized (loss)/gain on investments
Gain transferred to comprehensive
income on disposal
Other comprehensive income for the year
Total comprehensive income for the year
General
fund Rupees
Endowment
fund Rupees
2010
Rupees
2009
Rupees
109,099,576
30,808,775
139,908,351
431,645,359
(1,730)
31,798,146
(9,295,705)
31,796,416
(9,295,705)
402,741,250
57,025,215
(1,730)
109,097,846
22,502,441
53,311,216
22,500,711
162,409,062
459,766,465
891,411,824

2,536,652,309
(1,700,000)
109,097,846
2,429,254,463
(43,069,416)
801,551,057
1,670,772,822
Endowment Fund
20,853,263
22,502,441
(1,649,178)
57,060,824
(58,710,002)
970,637,411
1,700,000
30,808,775
938,128,636
43,069,416
32,799,943
862,259,277
991,490,674
1,700,000
53,311,216
936,479,458
43,069,416
89,860,767
803,549,275
Unrealized Accumulated
surplus of
Total
(loss/gain)
income over Endowment
on
Fund
investments expenditure
Rupees
Total
General
Fund
The annexed notes 1 to 37 form an integral part of these financial statement.
1,444,920,291
(94,232)
109,099,576
1,337,520,715
(43,069,416)
398,845,416
981,744,715
Balance as on December
31, 2010
(1,730)
(92,502)
(35,609)
(56,893)
(1,700,000)
1,091,826,250
General Fund
Unrealized Accumulated
surplus of
(loss/gain)
income over
on
investments expenditure
Transfer from general

fund to endowment fund
1,091,826,250
Balance as on December
31, 2009
Total comprehensive
income for the year
402,741,250
Total comprehensive
income for the year
Transfer from general

fund to endowment fund
689,085,000
Balance as on
January 01, 2009
Revaluation
Surplus on
land
(Note 5)

STATEMENT OF CHANGES IN FUNDS FOR THE YEAR ENDED DECEMBER 31, 2010
Figure 4. Statement of Changes in Funds
3,528,142,983
162,409,062
3,365,733,921
891,411,824
2,474,322,097
Total
Figure 5. Cash Flow Statement
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2010
2010
Notes
Cash flows from operating activities
Operating surplus
Adjustments for:
Depreciation on property, plant and equipment
Depreciation on assets subject to finance lease
Amortisation on intangible assets
(Gain)/loss on disposal of property, plant and equipment
Finance cost
Exchange gain
Interest income
Amortisation of gain on investment
Provision for deferred liabilities
Provision against investment unrealisable
Provision for donation unrealisable
Provisions and unclaimed balances written back
Revaluation loss on property, plant and equipment
Provision against doubtful receivables
Receivables written off
Advances written off
Revaluation (gain)/loss on donations in kind
Surplus before working capital changes
2009
Rupees
139,908,351
431,645,359
187,104,347
28,862,697
2,605,967
(1,337,360)
43,681,985
(10,624,885)
(26,870,640)
(218,440)
46,394,873
1,440,000
(104,550)
2,877,416
(2,790,000)
410,929,761
163,279,728
18,652,258
(82,622)
68,717,897
(42,783,138)
(20,364,463)
38,449,565
10,500,000
125,071
49,941,913
(2,857,000)
(33,789,546)
(16,271,940)
3,681,354
(83,240,618)
(9,033,150)
(29,833,175)
31,060,226
Cash generated from operations
74,727,963
71,876,461
482,806,222
(123,017,940)
(210,383,303)
463,160,467
Finance cost paid

Taxes paid
Payments for retirement benefits
(47,151,259)
(829,502)
(42,021,073)
(75,157,571)
(581,821)
(34,438,844)
Net cash inflow from operating activities
392,804,388
352,982,231
Effect on cash flow due to working capital changes

(Increase)/decrease in current assets:
Stores and spares
Stocks
Donations in kind
Trade receivables
Advances, deposits, prepayments and other receivables
Increase/(decrease) in current liabilities:
Trade and other payables
1,428,000
2,471,508
377,528
1,252,150
673,543,770
(Figure 5 continued)

80
(Figure 5 continued)
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2010
2010
Notes
Cash flows from investing activities
Fixed capital expenditure
Sale proceeds of property, plant and equipment disposed off
Long term advances and security deposits
Proceeds from the disposal of investment
Investments purchased
Interest received
Net cash inflow/(outflow) from investing activities
Cash flows from financial activities
Repayment of long term loans
Repayments of finance lease liabilities
Proceeds from long term advances
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of
the year
Cash and cash equivalents at the end of the year
32
2009
Rupees
(238,508,649)
2,109,091
(5,633,382)
590,964,770
(125,840,000)
28,649,234
(168,632,500)
473,094
1,821,240
(94,432,399)
20,262,677
251,741,064
(240,507,888)
(57,149,360)
(112,611,219)
43,323,600
(64,793,926)
(79,186,837)
(126,436,979)
518,108,473
(33,043,738)
(143,980,763)
(31,506,420)
(1,537,318)
485,064,735
(33,043,738)
Figure 6. Details of Non-Current Investments

11. Investments
Note
Held to maturity
Term Finance Certificates:
Jahangir Siddiqui & Company Limited
Pakistan Mobile Communications
Limited
Musharika Certificates
Available for sale
Shares in Hub Power Company Limited
National Investment Trust units
AKD Income Fund units
AKD Opportunity Fund units
11.3
General
fund Rupees
Endowment
fund Rupees
2010
Rupees
2009
Rupees
33,418,440
33,418,440
38,149,336
4,993,000
33,418,440
1,100,000
33,418,440
1,100,000
43,142,336
1,100,000
34,518,440
34,518,440
44,242,336
360,984
15,996,000
34,898,073
15,996,000
360,984
34,898,073
13,364,400
347,542
18,609,062
30,012,861

11. Investments
Note
Pakistan Income Fund units

ABN AMRO Bank Notes:
CROCI Alpha Pairs Note
(US$ 1,000,000)
Global Healthcare Sector Note
(US$ 1,000,000)
Asian Index Note (US$ 1,000,000)
Climate Change Note (US$ 1,500,000)
Shares in Cinnaber International Services
11.4
Limited
Less: Current maturity

Held to maturity
Limited
Available for sale
General
fund Rupees
Endowment
fund Rupees
2010
Rupees
2009
Rupees
65,165,599
65,165,599
57,907,159
84,208,820
84,208,820
81,021,940
95,572,640
95,572,640
82,687,120
123,343,725
211,800,000
84,983,050
123,343,725 116,209,380
211,800,000 211,800,000
360,984
360,984,857
631,345,841 696,942,514
34,879,424
630,984,857
665,864,281 741,184,850
1,664,000
1,664,000
38,149,336
833,000
1,664,000
1,664,000
38,982,336
1,664,000
33,215,424
630,984,857
84,983,050
1,664,000 123,965,386
664,200,281 617,219,464
11.1 These have been specifically invested for Physicians endowment fund and Clinical research fund as disclosed in note 19.
11.2 Return on investments held to maturity ranges from 14.86% to 16.44% per annum.
11.3 Included in these are 5,100 units held by the Trust that are in the name of the donor of this investment.
11.4 This represents investment in 3,000,000 class B ordinary shares of USD 1 each of Cinnabar International Services Limited
(CISL), a company incorporated in British Virgin Islands (BVI). The Trust owns the entire class B ordinary share capital
of the company, which do not carry any voting rights in the company. Consequently, the Trust does not have significant
influence over the company due to which the company is not considered an associate of the Trust.This investment has been
made through an investment company, HBG Management Partners Limited, based in Dubai, United Arab Emirates. Further,
CISL is a subsidiary of HBG Investment Holdings Limited (HBG).
CISL owns 3,000 shares as at December 31, 2010 in Sugarland Real Estate (BVI) Limited, a special purpose entity
incorporated by HBG to undertake the development of a real estate project in Oman. Sugarland Real Estate (BVI) Limited is
also a subsidiary of HBG. The land purchased and development costs for the project are currently appearing in the financial
statements of Sugarland Real Estate (BVI) Limited at an aggregate cost of USD 28.323 million reduced by an impairment
loss of USD 18.256 million, thereby resulting in a carrying amount of USD 10.067 million as at December 31, 2010.

82
The land represents capital contribution in kind by one of HBG Groups shareholders, Sheikh Salim Al Mashani (the
shareholder). HBGs management have assessed the realizable value of the plot of land at December 31, 2010 by obtaining
market valuation from an independent valuer and noted a decline in the value of the plot of land by USD 18.256 million,
which is to be adjusted through reduction of capital contributed by the shareholder by virtue of an agreement with him. In
accordance with the agreement with the shareholder dated December 15, 2010, the shareholder agreed for a reduction in
his capital contribution commensurate with the reduction in the value of land which shall mutually be agreed between HBG
and the shareholder. HBGs management is currently into advanced stages of negotiations with the shareholder to agree a
final revised value of the plot of land, after which a resolution shall be passed at an extra-ordinary general meeting of the
shareholders to effect the capital reduction. Based on the above, the carrying value of the plot of land has been adjusted
based on the independent valuation obtained as of December 31, 2010 against proposed land has been adjusted based on
the independent valuation obtained as of December 31, 2010 against proposed reduction in the capital by an equivalent
amount in the financial statements of Sugarland Real Estate (BVI) Limited for the year ended December 31, 2010.
In line with the requirements of IAS 39 Financial Instruments: Recognition and Measurement, the Trusts management has
assessed whether there is an indication that the Trusts investment is impaired as at December 31, 2010. Under the above
circumstances, the Trusts management feels that there is no indication that the investment is impaired since the impairment
loss on the above mentioned land would be borne by the shareholder. However, based on the decline in the project lands
value, the Trusts management performed a further evaluation by reviewing the recoverable amount of the asset (the project)
by reference to the present value of expected future cash flows. The estimation of revenues on unsold properties depends
on demand and market conditions. Based on these, the Trusts management is of the opinion that the net realizable value of
the project upon completion of development will be higher than its carrying amount as at December 31, 2010. Consequently,
no provision for impairment has been recognized in these financial statements as at December 31, 2010.
Figure 7. Details of Current Investments

General
Note fund Rupees
16. Investments
Endowment
fund Rupees
2010
Rupees
2009
Rupees
96,800,000
96,800,000
37,050,000
61,780,000
18,015,000
10,500,000
96,800,000
96,800,000
10,500,000
116,845,000
10,500,000
10,500,000
96,800,000
107,300,000
127,345,000
336,400,000
144,967
144,967
160,132
144,967
144,967
336,560,132
Held to maturity
Term Deposit Receipts with:
The Bank of Punjab (six months)
The Bank of Punjab (one year)
NIB Bank Limited (one year)
Trust Investment Bank (one year)
Defence Savings Certificates
Available for sale
Caylon Financial Products (Guernsey)
Limited
Momentum Invest Note
(US$ 4,000,000)
Shares in Abbott Laboratories Limited

General
Note fund Rupees
16. Investments
Current maturity of long term investments

Held to maturity
Limited
Available for sale
Less: Provision for investment
unrealisable
Defence Savings Certificates
16.1
29
2009
Rupees
1,664,000
38,149,336
833,000
1,664,000
1,664,000
38,982,336
12,308,967
96,800,000
109,108,967
84,983,050
587,870,518
10,500,000
10,500,000
10,500,000
96,800,000
98,608,967
577,370,518
Endowment
fund Rupees
2010
Rupees
2009
Rupees
10,500,000
10,500,000
10,500,000
10,500,000
General
Note fund Rupees
Opening balance
Provision for the year
Closing balance
2010
Rupees
1,664,000
1,808,967
16.1 Provisions for investment
unrealisable
Endowment
fund Rupees
10,500,000
10,500,000
Message from the Chairman

Over the years, my faith in the goodness of mankind has increased greatly. Shaukat Khanum Memorial Cancer
Hospital and Research Centre is indeed a living tribute to your kindness and generosity. I am personally grateful
to all those individuals who made a contribution to launch the Hospital and to those of you who have continued
to support us in helping patients fight against cancer. While nearly 50 per cent of our revenue is generated by
our Hospital services, the rest comes from your zakat and generous donations. We need your support now more
than ever. The Hospital has a budget of ` 3.6 billion for 2010. Because of your support, I was able to carry out
my dream of building a world-class hospital for cancer and I sincerely hope that I can look forward for your
continued support to help the Hospital provide services to those victims of cancer with nowhere else to turn.
Imran Khan
Source: SKMCH&RC General Report (2010), p.6.
https://www.shaukatkhanum.org.pk/images/skm_img/downloads/Audits/general10.pdf

84
Message from the CEOs Desk

Shaukat Khanum Memorial Cancer Hospital and Research Centre (SKMCH&RC) has continued to provide
quality care to all segments of society.
The year 2010 proved to be quite difficult for Pakistan. The devastation caused by the monsoon floods and
its aftermath was immeasurable and impacted every individual and institution in the country. SKMCH&RC was
also affected. Our focus in these difficult times was to prudently manage our resources and keep hope alive for
the thousands of poor cancer patients being treated at the Hospital.
I am pleased to share with you that because of your faith and enduring support for our institution and what it
stands for, there was no impact to the number of patients accepted for treatment nor the standards of cancer care
practiced at the Hospital. The construction of the new inpatient unit, which will increase the number of inpatients
at the Hospital by two-fold, continued throughout the year. Our Karachi Diagnostic Centre and Clinic started to
provide chemotherapy facilities. In Peshawar, the Government of Pakistan recognised the Hospitals credibility
and awarded the institution land for another cancer hospital. The Peshawar facility is expected to be up and running within the next three years.
The Hospital was also awarded the prestigious Corporate Excellence Award by the Management Association
of Pakistan in November 2010. The award affirms the Hospitals adherence to the best management practices and
endorses its image as the best, quality-driven healthcare institution in the country.
The cost of providing cancer care in line with international recommendations is continuously on the rise and
the annual budget for 2011 is approximately PKR 3.6 billion, or US$ 40 million. A number of new equipment
and resources are required to manage the increasing workload at the Hospital, which will need to be purchased
on priority in 2011.
I invite you to join us in contributing to build and support this national institution, which has the potential to
change not only the medical but also the social fabric of Pakistan.
SKMCH&RC is a success story that showcases the collective will of our people and the affirmation of some
of the greatest positives of our society.
Dr. Faisal Sultan
Source: SKMCH&RC General Report (2010), p.7.

2009
2008
2007
2006
2005
2004*
40,417,746
73,028,835
25,141,510
57,653,768
86,932,002
33,861,617
662,024,568
57,985,980
52,228,336
79,447,745
460,812,242
129,523,434
2,906,865,249 2,422,238,003 2,053,456,995 1,855,553,468 1,427,158,820 1,123,273,428 1,335,600,921
(1,021,424)
(190,106)
139,908,351 431,645,359 345,642,878 204,306,039 161,376,654
86,495,343 364,610,852
73,833,841
71,552,287
974,275,086
230,896,323
37,827,275
68,717,897
43,681,985
861,648,695
178,829,455
261,334,652
458,675,896
720,010,548
2003
43,497,510
79,830,569
106,354,159
2,202,776,678 1,841,772,644 1,578,170,397 1,426,845,670 1,069,027,710

554,052,427 431,916,893 329,900,470 297,031,717 244,684,529
1,553,844,162 1,280,870,988 1,124,979,154 953,736,900 749,662,086 572,536,041 595,424,397

1,492,929,438 1,573,012,374 1,274,120,719 1,106,122,607 838,873,388 636,211,306 1,104,977,482
3,046,773,600 2,853,883,362 2,399,099,873 2,059,859,507 1,588,535,474 1,208,747,347 1,700,401,879
2010
28,451,024
622,019,839
(132,187)
(31,556,779)
14,222,967
30,547,096
425,265,186
123,533,566
234,202,692
356,392,555
590,595,247
2002
498,343,343
(30,009)
91,157,416
21,140,264
28,827,427
448,375,652
211,463,812
378,066,956
589,530,768
2001
Source: https://www.shaukatkhanum.org.pk/about-us/annual-report.html
Note: * Year 2004 contains income and expenditures for one and a half year (from July 2003 to December 2004), because of the change in financial year from JulyJune to
JanuaryDecember.
Provision for Taxation

Surplus after Taxation
for the year
Finance Cost
Exchange Loss
Marketing Expenses
General and
Administrative Expenses
Clinical Expenses
Expenses
Clinical Income
Other Income
Income
Table 2. Movement of Revenue and Expenses of SKMCH&RC over the Years (in PKR)
611,611,922
536,677,189
(170,217,036)
(41,592,617)
936,479,458
630,984,857
360,505,817
991,490,674
2009
803,549,275
662,071,274
338,933,397
(197,455,396)
2008
693,189,547
380,247,189
312,942,358
2007
652,349,492
42,181,200
610,168,292
2006
555,579,108
41,514,800
514,064,308
2005
290,860,490
152,519,549
2003
2001
296,380,543
2,955,500
160,294,112 280,262,718
2002
Source: https://www.shaukatkhanum.org.pk/about-us/annual-report.html
Note: * Year 2004 presents figures as of December 2004, after a change in financial year from JulyJune to JanuaryDecember.
450,853,420 389,331,306 464,300,381

(599,911,342) (445,220,986) (351,833,628)
668,609,727 574,998,674 435,978,840
225,229,688 118,324,019 152,760,622

817,667,649 630,888,354 323,512,087
526,807,159 334,507,811 320,556,587

298,333,871 229,037,194 184,037,663
(599,911,342) (445,220,986) (351,833,628)
453,691,008 443,380,039 456,674,655 283,218,218
7,383,000
446,308,008
2004*
Non-Current
2,680,064,649 2,327,058,781 1,869,704,606 1,612,753,028 1,524,160,256 1,314,265,143 1,307,423,547
Current
761,474,731
678,462,490
730,780,955
533921320
468,251,184
510,262,920
387,917,711
Less: Liabilities
(904,887,071) (617,859,425) (929,712,739) (656,030,602) (655,223,937) (569,764,257) (423,426,257)
Due from/(to)
41,592,617
funds
Net Balance 2,536,652,309 2,429,254,463 1,670,772,822 1,490,643,746 1,337,187,503 1,254,763,806 1,271,915,001
Non-Current
3,311,049,506 2,938,670,703 2,531,775,880 1,993,000,217 1,566,341,456 1,355,779,943 1,314,806,547
Assets
Current Assets 1,121,980,548 1,215,139,679 1,069,714,352
846,863,678 1,078,419,476 1,024,327,228
834,225,719
Less: Liabilities
(904,887,071) (788,076,461) (1,127,168,135) (656,030,602) (655,223,937) (569,764,257) (423,426,257)
Net Assets
3,528,142,983 3,365,733,921 2,474,322,097 2,183,833,293 1,989,536,995 1,810,342,914 1,725,606,009
General Fund
Non-Current
Current
Less: Liabilities
Due from/(to)
funds
Total
Endowment
Fund
2010
Table 3. Movement of Endowment Fund and General Fund over the Years (in PKR)
Notes
1. Modes of charity within Islam, which according to religious injunctions have to be spent on specified charitable
objectives.
2. Although it is a corporate award, This award affirms the SKMCH&RCs adherence to best management practices and endorses its image as one of the best quality driven healthcare entity. (Source: http://www.shaukakha
num.org.pk/component/content/article/7-news/229-printmedia.html)
3. http://www.shaukatkhanum.org.pk/about-us/fast-facts.html
4. http://www.thenews.com.pk/Todays-News-13-14418-IRI-survey-shows-PTI-on-top-of-popularity-list.
5. http://tribune.com.pk/story/415920/imran-khan-lost-donation-money-in-real-estate-gambling-khwaja-asif/.
6. http://pmln.org/facts-sheet-on-the-business-and-realities-behind-shaukat-khanum-memorial-hospital-english/.
7. http://tribune.com.pk/story/415920/imran-khan-lost-donation-money-in-real-estate-gambling-khwaja-asif/.
8. Ibid.
9. http://tribune.com.pk/story/415983/pml-n-can-even-harm-pakistan-for-power-imran-khan/.
10. SKMCH&RC General report (2010), Message from the chairman, p. 6.
11. Which was formally inaugurated by former President General Pervez Musharraf.
12. Financial Report 2010, SKMCH&RC, 2010, p. 40.


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