HIGHNOON LABORATORIES LIMITED. Q2 Report HIGHNOON FOR A HEALTHIER NATION

Transcription

1 HIGHNOON LABORATORIES LIMITED Q2 Report HIGHNOON FOR A HEALTHIER NATION

2 Contents Vision, Mission & Corporate Objectives Company Information Directors Report Condensed Interim Unconsolidated Financial Information Independent Auditor s Review Report to the Members 6 Balance Sheet 7 Profit & Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity 13 Selected s to the Financial Information 14 Directors Report Condensed Interim Consolidated Financial Information Balance Sheet Profit & Loss Account Statement of Comprehensive Income Cash Flow Statement 33 Statement of Changes in Equity 35 Selected s to the Financial Information 36

3 Vision Company Information We at Highnoon Laboratories Limited understand the duties of being responsible corporate citizen and stand true to our conviction and promise to work for the betterment and prosperity of our people. Board of Directors Dr. Adeel Abbas Highnoon for a Healthier Nation Chief Financial Officer Mission Company Secretary We strive to maintain excellence in our business practices with the objective to benefit the medical community, consumers, stakeholders and employees; and to improve quality of life by providing quality products. Bankers Registered, Head Office & Plant Corporate Objectives Excel in meeting customer needs. Maintain leadership in national pharmaceutical industry. Gain confidence of Doctors, Pharmacists and Consumers who use our products. Seek employee involvement, continuous improvement and enhanced performance goals. Enhance export business. Legal Advisors Tax Advisors Auditors Shares Registrar EY Ford Rhodes 1 Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 2

4 S REPORT I feel pleasure to present the financial statements of the Company for the half year ended 30th June on behalf of the Board of Directors. The Company generated net sales revenue of Rs billion during the period under review compared to Rs billion in the same period last year registering a growth of 13 percent. On quarterly basis, the net sales revenue increased by Rs. 122 million showing an increase of 9 percent over last quarter. Gross profit and gross profit as a percentage of sales for the period amounted to Rs billion and 49% as compared to Rs billion and 48% respectively. Distribution selling & promotional expenses and administrative expenses increased by 13% and 15% respectively over same period last year. The increase is largely on account of increase in the size of sales team to improve market penetration and improving customer focus. The net profit after tax and earnings per share increased to Rs. 317 million and Rs per share which translated in an increase of 18 percent over the same period last year. Against the backdrop of mixed macroeconomic and political conditions, the outlook of the Company remains positive. The combination of our diversified product portfolio, new products pipeline and increased focus on export market gives us additional confidence that the Company is marching forward in right direction. On behalf of the Board, I would like to express my sincere gratitude to the Shareholders, Doctors, Pharmacist, Consumers, Business partners and the Bankers for the continued patronage and business and to the employees and management for their continued, dedicated, untiring efforts and hard work. For & On behalf of the Board Lahore: 25 August Dr. Adeel Abbas Chief Executive Officer 3 Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 4

5 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS ON REVIEW OF INTERIM FINANCIAL INFORMATION Introduction We have reviewed the accompanying condensed interim balance sheet of Highnoon Laboratories Limited as at and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim cash flow statement, condensed interim statement of changes in equity and notes to the accounts, for the sixmonth period then ended (hereinafter referred to as the interim financial information ). Management is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information as at and for the sixmonth period ended is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. CONDENSED INTERIM FINANCIAL INFORMATION HIGHNOON LABORATORIES LTD. For the Half Year Ended Chartered Accountants Engagement Partner: Naseem Akbar Lahore: 25th August 5 Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 6

6 BALANCE SHEET AS AT 30 JUNE (Rupees) (Rupees) EQUITY AND LIABILITIES ASSETS Share capital and reserves Authorized share capital 50,000,000 ( : 25,000,000) Ordinary shares of Rs. 10 each Share capital Revenue reserves Available for sale reserve Total equity 6 500,000, ,423,170 1,475,415, ,555 1,730,984, ,000, ,056,400 1,376,455,659 1,604,512,059 Non current assets Property, plant and equipment Intangible assets Long term investment Long term deposits ,144,096 13,419, ,000,000 12,111, ,675, ,163,879 21,765, ,000,000 12,111, ,041,360 Surplus on revaluation of fixed assets 206,903, ,883,736 Noncurrent liabilities Liabilities against assets subject to finance lease Long term advances Deferred liabilities Current liabilities Trade and other payables Mark up payable Short term borrowing Current portion of long term liabilities Income taxnet TOTAL EQUITY AND LIABILITIES CONTINGENCIES AND COMMITMENTS ,297,128 37,617, ,215, ,129, ,390,778 20,797 22,552, ,103, ,067,733 2,895,085,266 16,843,781 27,248, ,920, ,012, ,811,842 18,622 27,104, ,275, ,210,812 2,833,619,523 Current assets Stock in trade Trade debts Advances Trade deposits and short term prepayments Profit accrued Other receivables Tax refund due from government Short term investment Cash and bank balances TOTAL ASSETS ,948, ,462, ,787,009 27,349, ,342 3,815,170 5,919, ,167,242 1,917,410,114 2,895,085, ,637,743 75,154,453 74,672,999 17,423,457 1,235,074 3,341,447 10,413, ,699,860 1,855,578,163 2,833,619,523 The annexed notes from 1 to 24 form an integral part of this condensed interim financial information. 7 Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 8

7 PROFIT AND LOSS ACCOUNT (UN AUDITED) For the six months ended STATEMENT OF COMPREHENSIVE INCOME (UN AUDITED) For the six months ended Six Months Ended (Rupees) Three Months Ended (Rupees) (Rupees) Sales net Cost of sales ,857,837,915 (1,460,114,048) 2,534,727,427 (1,316,732,326) 1,490,021,938 (742,472,360) 1,304,763,636 (677,035,563) Profit for the period 317,194, ,906,061 Gross profit 1,397,723,867 1,217,995, ,549, ,728,073 Other comprehensive (loss) / income: Items to be reclassified to profit and loss in subsequent periods: Net unrealized gain on available for sale investments 145, ,290 Distribution, selling and promotional expenses (752,833,011) (663,745,988) (404,902,938) (360,852,381) Administrative and general expenses Research and development expenses (131,283,442) (1,816,843) (114,538,893) (1,626,054) (67,503,796) (1,048,999) (50,063,011) (824,564) Total comprehensive income for the period 317,340, ,543,351 Other operating expenses (44,945,909) (38,338,786) (23,919,513) (19,695,543) Operating Profit Other income 19 (930,879,205) 466,844,662 13,730, ,575,644 (818,249,721) 399,745,380 8,406, ,152,062 (497,375,246) 250,174,332 6,394, ,568,422 (431,435,499) 196,292,574 5,574, ,867,444 Surplus arising on 'revaluation of fixed assets' is presented under a separate head below equity as 'surplus on revaluation of assets' in accordance with the requirements specified by the Securities and Exchange Commission of Pakistan (SECP) vide its S.R.O.45(I)/2003 dated 13 January 2003 and section 235 of Companies Ordinance, 1984 respectively. Finance costs Profit before taxation 20 (2,353,126) 478,222,518 (3,271,006) 404,881,056 (1,195,620) 255,372,802 (1,781,837) 200,085,607 The annexed notes from 1 to 24 form an integral part of this condensed interim financial information. Taxation (161,028,030) (133,974,995) (98,443,321) (74,419,379) Profit for the period 317,194, ,906, ,929, ,666,228 Restated Restated Earnings per share basic and diluted The annexed notes from 1 to 24 form an integral part of this condensed interim financial information. 9 Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 10

8 CASH FLOW STATEMENT (UN AUDITED) For the six months ended CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustments to reconcile profit before tax to net cash flows: Depreciation Amortization of intangible assets Gain on disposal of property, plant and equipment Exchange loss Provision for slow moving and obsolete items Provision for defined benefit obligation Finance costs Profit before working capital changes Effect on cash flow due to working capital changes : (Increase)/decrease in current assets: Stock in trade Trade debts Advances Trade deposits and short term prepayments Profit accrued Other receivables Tax refund due from government Increase/(decrease) in current liabilities: Trade and other payables Cash flows generated from operations Taxes paid Gratuity paid Finance costs paid Long term advances received net Net cash flow generated from operating activities Six Months Ended (Rupees) 478,222, ,881,056 38,073,717 39,500,673 8,346,425 8,337,101 (3,211,778) (3,254,468) 5,699,512 4,185,357 4,529,998 9,752,122 22,184,868 21,584,814 2,353,126 3,271,006 77,975,868 83,376, ,198, ,257,661 26,158,968 (52,895,281) (157,308,220) 20,397,207 (59,114,010) 21,411,893 (9,925,805) (5,599,572) 419, ,610 (473,723) 975,438 4,494,046 2,158,196 (99,746,369) (69,933,365) (295,495,381) (82,899,874) 260,703, ,357,787 (162,195,482) (100,610,820) (9,891,989) (7,116,190) (1,069,973) (1,200,213) 8,622,417 5,723,204 96,167, ,153,768 Six Months Ended (Rupees) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred Long term Investment made net Long term deposits net Short term investment made net Proceeds from disposal of property, plant and equipment Net cash flow used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of finance lease liabilities net Dividend paid Net cash flow used in financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period (41,628,722) (100,000,000) 9,290,066 (132,338,656) (16,139,793) (177,222,147) (193,361,940) (229,532,618) 680,699, ,167,242 (15,746,060) (41,077,000) (1,622,700) (50,000,000) 8,419,204 (100,026,556) (16,892,737) (138,300,466) (155,193,203) 46,934, ,794, ,728,982 The annexed notes from 1 to 24 form an integral part of this condensed interim financial information. 11 Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 12

9 STATEMENT OF CHANGES IN EQUITY (UN AUDITED) For the six months ended Balance as at 01 January Profit for the period ended Other comprehensive income Total comprehensive income for the period ended June Incremental depreciation relating to surplus on revaluation of fixed assets net of tax Issuance of bonus 12% for the year ended 2015 Share Capital 203,621,790 24,434,610 General reserve 114,000,000 Unappropriated profit 907,980, ,906, ,906,061 Revenue reserves 3,390,320 (24,434,610) Sub total 1,021,980, ,906, ,906,061 3,390,320 (24,434,610) Available for sale reserve 637, ,290 Total 1,225,602, ,906, , ,543,351 3,390,320 SELECTED NOTES TO THE FINANCIAL INFORMATION (UN AUDITED) For the six months ended 1 THE COMPANY AND ITS OPERATIONS Highnoon Laboratories Limited ('the Company') was incorporated as a private limited company in Pakistan in 1984 and converted into an unquoted public limited company in Its shares are quoted on Pakistan Stock Exchange Limited (formerly Karachi Stock Exchange in which Lahore and Islamabad stock exchanges have merged) since November The Company is principally engaged in the manufacture, import, sale and marketing of pharmaceutical and allied consumer products. The registered office of the Company is situated at 17.5 Km, Multan Road, Lahore. This financial information is the separate financial information of the company in which investment in subsidiary is stated at cost less impairment losses, if any. The condensed interim consolidated financial statements are prepared separately. 2 STATEMENT OF COMPLIANCE 2.1 During the year, the Companies Act (the Act) has been effective from 30 May. However, Securities and Exchange Commission of Pakistan vide its circular no.17 of dated July 20, communicated that the companies whose financial year closes on or before June 30, shall prepare their financial statements in accordance with the provisions of the repealed Companies Ordinance, Final Rs per share for the year ended 2015 Balance as at Balance as at 01 January 228,056, ,056, ,000, ,000,000 (152,716,343) 1,005,126,160 1,262,455,659 (152,716,343) 1,119,126,160 1,376,455, ,290 (152,716,343) 1,347,819,850 1,604,512,059 Accordingly, these unconsolidated condensed interim financial information of the Company for the six months period ended has been prepared in accordance with the requirements of the International Accounting Standard 34 Interim Financial Reporting as are notified under the repealed Companies Ordinance, 1984, provisions of and directives issued under the repealed Companies Ordinance,1984. In case requirements differ, the provisions or directives of the repealed Companies Ordinance, 1984 shall prevail. Profit for the period ended Other comprehensive income 317,194, ,194, , ,194, , This condensed interim financial information is unaudited and is being submitted to shareholders, as required by section 245 of the Companies ordinance, Total comprehensive income for the period ended June Incremental depreciation relating to surplus on revaluation of fixed assets net of tax Issuance of bonus 12% for the year ended 27,366,770 Final Rs per share for the year ended 317,194,488 2,979,913 (27,366,770) (193,847,940) 317,194,488 2,979,913 (27,366,770) (193,847,940) 145, ,340,043 2,979,913 (193,847,940) 3 BASIS OF PREPARATION 3.1 These unconsolidated condensed interim financial information of the Company for the six months period ended has been prepared in accordance with the requirements of the International Accounting Standard 34 Interim Financial Reporting as are notified under the repealed Companies Ordinance, 1984, provisions of and directives issued under the repealed Companies Ordinance, This condensed interim financial information does not include all the information and disclosures required in annual financial statements, and should be read in conjunction with the Company's annual financial statements as at. Balance as at 255,423, ,000,000 1,361,415,350 1,475,415,350 The annexed notes from 1 to 24 form an integral part of this condensed interim financial information. 145,555 1,730,984,075 4 ACCOUNTING POLICIES The accounting policies adopted for the preparation of this condensed interim financial information are the same as those applied in the preparation of the preceding annual published financial statements of the Company for the year ended except as follows: The Company has adopted the following standards and amendment to IFRSs which became effective for the current period: IFRS 7 Financial Instruments: Disclosures Disclosure Initiative (Amendment) IAS 12 Income Taxes Recognition of Deferred Tax Assets for Unrealized losses (Amendments) The adoption of the above amendment to accounting standards did not have any material effect on the condensed interim financial information. 13 Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 14

10 5 ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of condensed interim financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amount of assets and liabilities, incomes and expenses. Actual results may differ from these estimates. The significant judgments made by management in applying the Company's accounting policies and the key sources of estimation are the same as those that applied to the financial statements for the year ended. Minimum lease payments Finance cost for future periods Principal outstanding Rupees (Rupees) Not later than one year Later than one year but not later than five years 22,721,704 17,762,470 40,484,174 2,093, ,689 3,012,306 20,628,087 16,843,781 37,471,868 6 SHARE CAPITAL Issued, subscribed and paidup 5,905,000 ( : 5,905,000) ordinary shares of Rs. 10 each fully paid in cash 59,050,000 59,050,000 Salient features of the leases are as follows: Discounting factor Period of lease Security deposits 30Jun %8.50% 36 months 5%10% 31Dec %8.50% 36 months 5%10% 95,000 ( : 95,000) ordinary shares of Rs.10 each issued for consideration other than cash , ,000 The Company has entered into finance lease arrangements with various conventional financial institutions for lease vehicles as shown in note The liabilities under these arrangements are payable in monthly installments and above mentioned markup rates are used as discounting factor to determine the present value of minimum lease payments. 16,805,640 ( : 14,362,179) ordinary shares of Rs. 10 each issued as fully paid bonus shares Issuance of 2,736,677 ( : 2,443,461) ordinary shares of Rs. 10 each issued as fully paid 168,056, ,621,790 All lease agreements carry renewal option at the end of lease period and the Company intends to exercise its option to purchase the leased assets upon completion of the respective lease terms. Residual value of the leased assets has already been paid at the inception of the lease in the form of security deposit. There are no financial restrictions imposed by lessor. Taxes, repairs, replacements and insurance costs are borne by the lessee. bonus shares 27,366, ,423, ,423,170 24,434, ,056, ,056, SHORT TERM BORROWINGS (Rupees) 6.1 This represents the issuance of shares against the purchase of plant and machinery and other assets. Short term borrowings 7. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Present value of minimum lease payments Less: current portion shown under current liabilities Minimum lease payments 33,118,746 17,821,618 15,297,128 Finance cost for future periods 37,471,868 20,628,087 16,843,781 Principal outstanding Unaudited Rupees 8.1 Short term running finances have been availed from various commercial banks against aggregate sanctioned limit of Rs. 605 million ( : Rs. 660 million).these facilities carry markup at rates ranging from one month KIBOR to six months KIBOR plus 100 to 150 basis points ( : one month KIBOR to six months KIBOR plus 100 to 150 basis points) per annum. These facilities along with import credit facility are secured by way of first pari passu charge for Rs. 782 million ( : Rs. 782 million) on fixed assets and first joint pari passu hypothecation charge of Rs. 657 million ( : Rs. 693 million) on stocks including but not limited to raw materials, goods in process and finished goods of the Company. 8.2 Out of total borrowing facility, an amount of Rs. 50 million ( : Rs. 50 million) represents Export Refinance Facility obtained from a commercial bank under SBP regulations at a subsidized mark up rate of 5.75% ( : 5.75%) per annum. Not later than one year Later than one year but not later than five years 19,608,608 16,063,384 35,671,992 1,786, ,382 2,553,372 17,821,618 15,297,002 33,118, The Company has also negotiated aggregate sanctioned import credit facilities with various commercial banks amounting to Rs. 900 million ( : Rs. 950 million). These facilities carry markup at rates ranging from one month KIBOR to six months KIBOR plus 125 to 150 basis points ( : one month KIBOR to six months KIBOR plus 125 to 150 basis points) per annum. These available facilities are secured by way of joint pari passu, ranking hypothecation charge over present and future current assets of the Company and lien on its export documents. 15 Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 16

11 (Rupees) (Rupees) 9. CURRENT PORTION OF LONG TERM LIABILITIES 11.1 Operating fixed assets (owned) Liabilities against assets subject to finance lease 7 17,821,618 20,628,087 Opening book value 677,233, ,136,848 Long term advances 4,730,797 6,476,840 Add: Additions during the period / year cost (11.1.1) 42,433,449 34,400,206 22,552,415 27,104,927 Transferred from leased assets during the period / year vehicles 2,932,898 20,085, CONTINGENCIES AND COMMITMENTS 45,366,347 54,485,784 Contingencies: Less: Deletions during the period / year (11.1.2) 6,078,288 15,880,157 There is no significant change in the contingencies since the date of preceding published annual financial statements. Depreciation during the period / year Adjustment during the period / year 32,408,433 68,032,327 1,476,716 Commitments: Commitments against irrevocable letters of credit include: Book value at the end of the period / year 38,486, ,113,058 85,389, ,233,432 (Rupees) Additions during the period / year cost Plant and machinery Laboratory equipment Furniture and fixtures 3,986, ,430 5,318,083 7,706, ,881 Raw materials Packing materials Finished goods Plant and machinery 201,985,958 7,172,215 32,127,375 1,432, ,935,968 14,018,692 13,075, ,781 Electric and gas appliances Office equipment Vehicle 832, ,724 36,594,499 42,433,449 2,288,999 2,000,973 16,723,489 34,400, ,718, ,932, Deletions during the period / year Rentals under ijara agreements: Not later than one year Later than one year but not later than five years 28,617,382 8,855,635 37,473,017 30,755,447 22,086,957 52,842,404 Plant and machinery Office equipment Vehicles 46,025 6,032,263 6,078, , ,712 15,089,233 15,880, Operating fixed assets (leased vehicles) 11. PROPERTY, PLANT AND EQUIPMENT Operating fixed assets: owned assets leased assets Capital work in progress (11.1) (11.2) (11.3) 684,113,058 53,306, ,419,467 14,724, ,144, ,233,432 51,401, ,634,523 15,529, ,163,879 Opening book value Add: Additions during the period / year cost Adjustment during the period / year Less: Transfers to owned assets during the period / year Depreciation during the period / year 51,401,091 10,503,500 61,904,591 2,932,898 5,665,284 8,598,182 55,747,159 26,884,500 1,476,716 84,108,375 20,085,578 12,621,706 32,707,284 Book value at the end of the period / year 53,306,409 51,401, Capital work in progress Plant and machinery owned 2,163, ,357 Advances to suppliers vehicles 12,561,225 15,384,999 14,724,629 15,529, Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 18

12 12. STOCK IN TRADE Raw materials In hand In transit With third party Packing material In hand In transit With third party Work in process Finished goods In hand In transit Less: provision for slow moving and obsolete items (12.1) 12.1 Provision for slow moving and obsolete items Opening provision Charge for the year Written off during the year Closing provision 13. TRADE DEBTS Secured considered good Unsecured: Considered good Considered doubtful Less: Provision against doubtful debts 14. ADVANCES Advances considered good: To staff against: Expenses Salary To suppliers 458,322,417 75,223,317 6,808, ,354, ,090,519 7,886,128 4,626, ,602,766 56,893, ,767, ,767,321 (7,669,026) 961,948,777 15,683,130 4,529,998 (12,544,102) 7,669,026 87,346, ,116,537 1,039,897 1,039, ,462,673 28,766,276 9,432,218 95,588, ,787,009 (Rupees) 445,923,691 66,638,762 9,631, ,193, ,436,820 18,285,690 3,774, ,497,267 51,610, ,732,321 14,286, ,019,174 (15,683,130) 992,637,743 11,083,975 12,168,711 (7,569,556) 15,683,130 9,696,988 65,457,465 1,039,897 1,039,897 75,154,453 15,994,237 8,489,793 50,188,969 74,672, SHORT TERM INVESTMENT Available for sale 15.1 This represent investment in (948,933 units) of money market fund managed by UBL Asset Management Limited. 16. CASH AND BANK BALANCES Cash and Imprest Balance with banks: current accounts: local currency foreign currency deposit accounts (15.1) (16.1) 2,045, ,666, , ,000, ,121, ,167, This carries profit at the rate of 6.50% ( : 3.75% to 6.50%). 17. SALES net Manufactured products Local Export Purchased products local Third party Less: Discount Sales tax 18. COST OF SALES Manufactured pharmaceutical products: Opening stock of finished goods (excluding purchased products) Cost of goods manufactured Closing stock of finished goods (excluding purchased products) Cost of sales manufactured Cost of sales purchased products Cost of goods sold 2,697,790, ,468,789 2,894,259, ,036, ,686,144 3,130,982, ,252,499 7,891, ,144,162 2,857,837,915 2,381,885, ,925,660 2,507,811,496 52,976, ,201,581 2,783,989, ,504,133 8,758, ,262,525 2,534,727,427 (Rupees) 1,417,661, ,393,748 1,524,055,476 45,571,716 64,988,208 1,634,615, ,967,336 3,626, ,593,462 1,490,021,938 2,029, ,182,345 7,487, ,000, ,670, ,699,860 Six Month Period Ended Three Month Period Ended (Rupees) 225,020,552 1,390,210,118 1,615,230,670 (198,783,666) 1,416,447,004 43,667,044 1,460,114, ,760,824 1,265,200,219 1,455,961,043 (173,950,196) 1,282,010,847 34,721,479 1,316,732, ,859, ,178, ,037,940 (198,783,666) 725,254,274 17,218, ,472,360 1,232,559,469 62,012,865 1,294,572,334 24,343, ,977,001 1,433,893, ,787,449 3,341, ,129,368 1,304,763, ,466, ,459, ,925,590 (173,950,196) 659,975,394 17,060, ,035, Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 20

13 19. OTHER INCOME Income from financial assets: Return on deposit Income from nonfinancial assets: Gain on disposal of property, plant and equipment Scrap sales Others 20. FINANCE COST Markup on short term borrowings Finance cost on liability against assets subject to finance lease Interest on Workers' Profit Participation Fund Bank charges 7,506,948 3,211,778 3,009,256 3,000 13,730,982 26,101 1,283, , ,716 2,353,126 (Rupees) 2,596,582 3,254,468 2,480,632 75,000 8,406, ,787 2,039,949 8,010 1,118,260 3,271, FINANCIAL RISK MANAGEMENT 22.1 Financial risk factors There is no change in the company's objectives, policies, procedures for measuring and managing the financial risks including capital management risk, since the preceding annual financial year ended Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in financial statements approximate to their fair values. Fair value is determined on the basis of objective evidence at each reporting date. Accordingly, detailed disclosure with reference to fair value has not been given in the condensed interim financial information. Fair value hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable either, directly or indirectly 21. RELATED PARTY TRANSACTIONS The related parties comprises associated companies, staff retirement funds, directors and key management personnel. Transactions with related parties are as stated below: 21.1 Sales of goods Associated company 21.2 Purchase of goods Associated company 21.3 Contribution towards employees' benefits fund: Staff provident fund Employees' welfare trust 21.4 Remuneration Chief Executive Officer Directors Executives 113,576,488 85,504,044 12,579,573 1,226,497 6,900,980 8,304, ,847, ,850,676 60,942,269 10,187, ,500 5,135,482 12,481, ,824,275 Six Month Period Ended Three Month Period Ended (Rupees) 54,224,182 46,680,232 6,319, ,047 3,049,315 3,780,723 68,712,441 69,792,693 27,543,470 5,133, ,450 1,901,723 5,970,104 57,988,809 Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data As at, the Company held the following financial instruments carried at fair value on the statement of financial position: Financial assets measured at fair value Available for sale financial assets Investment in UBL mutual fund Level 1 Level 2 Level 3 (Rupees) There were no financial liabilities measured at fair value as at. During the six month period ended, there were no transfers between Level 1 and Level 2 fair value measurements. There were no financial assets and liabilities measured at fair value as at The outstanding balances of such parties are as under: Relationship with the Company Associated company Staff provident fund Employees' welfare trust Associated company Nature of balance Creditors Contribution payable Contribution payable Advances 4,239, , ,811 (Rupees) 2,083,998 4,130, , Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 22

14 Cash and cash equivalents 22.3 Financial instruments by categories Financial assets as per balance sheet Long term Investment Long term deposits Loans to employees Trade debts Trade deposits Profit accrued Other receivables Short term investments Cash and bank balances Loans and advances Available for sale Total (Rupees) 451,167, ,167, ,000,000 12,111,613 9,432, ,462,673 12,347, ,342 3,815, ,984, ,000,000 12,111,613 9,432, ,462,673 12,347, ,342 3,815, ,167,242 1,022,297, DATE OF AUTHORIZATION OF ISSUE The Board of Directors of the Company authorized this condensed interim financial information for issuance on 25th August. 24. GENERAL 24.1 The figures of condensed interim profit and loss account for the three month period ended 30 June and were not subject to limited scope review by the auditors as scope of review covered only the cumulative figures Provisions in respect of Worker's Welfare Fund, Worker's Profit Participation Fund, Defined Benefit Plan and Taxation are estimated and these are subject to final adjustment in the annual audited financial statements Figures have been rounded off to the nearest rupee unless otherwise specified. Financial liabilities as per balance sheet Liabilities against assets subject to finance lease Markup accrued on secured loans Trade and other payables Financial Liabilities at amortized cost Rupees 33,118,746 20, ,942, ,081,642 Cash and cash equivalents Financial assets as per balance sheet Long term Investment Long term deposits Loans to employees Trade debts Trade deposits Profit accrued Other receivables Short term investments Cash and bank balances Loans and advances Available for sale Total (Rupees) 680,699, ,699, ,000,000 12,111,613 8,489,793 75,154,453 11,580,227 1,235,074 3,341, ,912, ,000,000 12,111,613 8,489,793 75,154,453 11,580,227 1,235,074 3,341, ,699, ,612,467 Financial liabilities as per balance sheet Liabilities against assets subject to finance lease Markup accrued on secured loans Trade and other payables Financial Liabilities at amortized cost Rupees 37,471,868 18, ,253, ,743, Half Yearly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Half Yearly Report 24

15 S REPORT I feel pleasure to present the consolidated financial statements of the Company and its subsidiary ( the Group ), for the half year ended 30th June on behalf of the Board of Directors. The Group generated net sales revenue of Rs billion during the period under review compared to Rs billion in the same period last year registering a growth of 13 percent. On quarterly basis, the net sales revenue increased by Rs. 122 million showing an increase of 9 percent over last quarter. Gross profit and gross profit as a percentage of sales for the period amounted to Rs billion and 49 as compared to Rs billion and 48% respectively. Distribution selling & promotional expenses and administrative expenses increased by 13% and 18% respectively over same period last year. The increase is largely on account of increase in the size of sales team to improve market penetration and improving customer focus. The net profit after tax and earnings per shares increased to Rs. 308 million and Rs per shares which translates in an increase of 16 percent same period last year. The subsidiary company, Curexa Health (Pvt.) Limited (formerly Procef (Pvt.) Limited) has been granted Drug Manufacturing License in June. Following grant of Drug Manufacturing License, the company has applied for product registration and is now awaiting registration of the products by DRAP after which the production and marketing of the products would commence. Against the backdrop of mixed macroeconomic and political conditions, the outlook of the Group remains positive. The combination of our diversified product portfolio, new products pipeline and increased focus on export market gives us additional confidence that the group is marching forward in the right direction. On behalf of the Board, I would like to express my sincere gratitude to the Shareholders, Doctors, Pharmacist, Consumers, Business partners and the Bankers for the continued patronage and business and to the employees and management for their continued, dedicated, untiring efforts and hard work. For & On behalf of the Board Lahore: 25 August Dr. Adeel Abbas Chief Executive Officer 25 Half Yearly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Half Yearly Report 26

16 Left intentionally blank CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION HIGHNOON LABORATORIES LTD. AND ITS SUBSIDIARY For the Half Year Ended 27 Half Yearly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Half Yearly Report 28

17 CONSOLIDATED BALANCE SHEET AS AT 30 JUNE (Rupees) (Rupees) EQUITY AND LIABILITIES ASSETS Share capital and reserves Authorized share capital 50,000,000 ( : 25,000,000) Ordinary shares of Rs. 10 each Share capital Revenue reserves Available for sale reserve Total equity 6 500,000, ,423,170 1,453,247, ,555 1,708,816, ,000, ,056,400 1,363,429,484 1,591,485,884 Non current assets Property, plant and equipment Intangible assets Goodwill Long term deposits 11 1,034,282,958 14,359, ,230 12,649,713 1,062,126, ,602,093 21,765, ,230 12,111, ,313,804 Surplus on revaluation of fixed assets 206,903, ,883,736 Noncurrent liabilities Long term loan Liabilities against assets subject to finance lease Long term advances Deferred liabilities Current liabilities Trade and other payables Mark up payable Short term borrowing Current portion of long term liabilities Income taxnet TOTAL EQUITY AND LIABILITIES CONTINGENCIES AND COMMITMENTS ,062,500 15,297,128 37,665, ,215, ,240, ,891,929 3,046,274 28,489, ,103, ,531,861 2,983,492,211 95,000,000 16,843,781 27,248, ,920, ,012, ,131, ,684 27,104, ,275, ,660,877 2,918,043,413 Current assets Stock in trade Trade debts Advances Trade deposits and short term prepayments Profit accrued Other receivables Tax refund due from government Short term investment Cash and bank balances TOTAL ASSETS ,948, ,462, ,787,009 27,417, ,342 3,815,170 9,360, ,613,438 1,921,365,867 2,983,492, ,637,743 75,154,453 74,772,999 17,548,529 1,235,074 3,341,447 13,746, ,292,799 1,928,729,609 2,918,043,413 The annexed notes from 1 to 24 form an integral part of this condensed interim consolidated financial information. 29 Half Yearly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Half Yearly Report 30

18 CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED) For the six months ended CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) For the six months ended Six Months Ended (Rupees) Three Months Ended (Rupees) (Rupees) Sales net Cost of sales ,857,837,915 (1,460,114,048) 2,534,727,427 (1,316,732,326) 1,490,021,938 (742,472,360) 1,304,763,636 (677,035,563) Profit for the period 308,052, ,164,060 Gross profit Distribution, selling and promotional expenses 1,397,723,867 (752,833,011) 1,217,995,101 (663,745,988) 747,549,578 (404,902,938) 627,728,073 (360,852,381) Other comprehensive (loss) / income: Items to be reclassified to profit and loss in subsequent periods: Net unrealized gain on available for sale investments 145, ,290 Administrative and general expenses (140,405,303) (119,274,911) (72,854,507) (52,527,450) Research and development expenses Other operating expenses (1,816,843) (44,945,909) (1,626,054) (38,338,786) (1,048,999) (23,919,513) (824,564) (19,695,543) Total comprehensive income for the period 308,198, ,801,350 Operating Profit Other income Finance costs (940,001,066) 457,722,801 13,730, ,453,783 (2,372,869) (822,985,739) 395,009,362 8,406, ,416,044 (3,276,989) (502,725,957) 244,823,621 6,394, ,217,711 (1,214,203) (433,899,938) 193,828,135 5,574, ,403,005 (1,783,436) Total comprehensive income attributable to: Shareholders of the Parent Non Controlling Interest 308,198, ,198, ,168,381 (367,031) 266,801,350 Profit before taxation Taxation Profit for the period 469,080,914 (161,028,030) 308,052, ,139,055 (133,974,995) 266,164, ,003,508 (98,443,321) 151,560, ,619,569 (74,419,379) 123,200,190 Surplus arising on 'revaluation of fixed assets' is presented under a separate head below equity as 'surplus on revaluation of assets' in accordance with the requirements specified by the Securities and Exchange Commission of Pakistan (SECP) vide its S.R.O.45(I)/2003 dated 13 January 2003 and section 235 of Companies Ordinance, 1984 respectively. Profit/(Loss) after tax attributable to: Shareholders of the Parent 308,052, ,531, ,560, ,302,982 The annexed notes from 1 to 24 form an integral part of this condensed interim consolidated financial information. Non Controlling Interest (367,031) (102,792) 308,052, ,164, ,560, ,200,190 Restated Restated Earnings per share basic and diluted The annexed notes from 1 to 24 form an integral part of this condensed interim financial information. 31 Half Yearly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Half Yearly Report 32

19 CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) For the six months ended CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustments to reconcile profit before tax to net cash flows: Depreciation Amortization of intangible assets Gain on disposal of property, plant and equipment Exchange loss Provision for slow moving and obsolete items Provision for defined benefit obligation Finance costs Profit before working capital changes Effect on cash flow due to working capital changes : (Increase)/decrease in current assets: Stock in trade Trade debts Advances Trade deposits and short term prepayments Profit accrued Other receivables Tax refund due from government Increase/(decrease) in current liabilities: Trade and other payables Cash flows generated from operations Taxes paid Gratuity paid Finance costs paid Long term advances received net Net cash flow generated from operating activities Six Months Ended (Rupees) 469,080, ,139,055 39,360,008 40,867,413 8,346,425 8,337,101 (3,211,778) (3,254,468) 5,699,512 4,185,357 4,529,998 9,752,122 22,184,868 21,584,814 2,372,869 3,271,006 79,281,902 84,743, ,362, ,882,400 26,158,968 (52,895,281) (157,308,220) 20,397,207 (59,014,010) 21,411,893 (9,868,955) (5,599,572) 419, ,610 (473,723) 975,438 4,386,146 2,158,196 (100,430,277) (70,220,771) (296,130,339) (83,187,280) 252,232, ,695,120 (162,195,482) (100,622,945) (9,891,989) (7,116,190) (1,089,716) (1,200,213) 8,670,513 5,723,204 87,725, ,478,976 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred Long term Investment made net Long term deposits net Short term investment made net Proceeds from disposal of property, plant and equipment Net cash flow used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of finance lease liabilities net Acquisition of noncontroling interest Dividend paid Net cash flow used in financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period Six Months Ended (Rupees) (101,795,191) The annexed notes from 1 to 24 form an integral part of this condensed interim consolidated financial information. (538,100) (100,000,000) 9,290,066 (193,043,225) (16,139,793) (177,222,147) (193,361,940) (298,679,362) 750,292, ,613,438 (36,910,569) (1,622,700) (50,000,000) 8,419,204 (80,114,065) (16,892,737) (11,077,000) (138,300,466) (166,270,203) 52,094, ,568, ,663, Half Yearly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Half Yearly Report 34

20 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) For the six months ended Balance as at 01 January Profit for the period ended Other comprehensive income Total comprehensive income for the period ended June Acquisition of Noncontroling interest Incremental depreciation relating to surplus on revaluation of fixed assets net of tax Issuance of bonus 12% for the year ended 2015 Share Capital 203,621,790 24,434,610 General reserve 114,000,000 Unappropriated profit 905,311, ,531, ,531,091 Revenue reserves (1,004,409) 3,390,320 (24,434,610) Sub total 1,019,311, ,531, ,531,091 (1,004,409) 3,390,320 (24,434,610) Non Controling Interest 10,439,622 (367,031) (367,031) (10,072,591) Available for sale reserve 637, ,290 Total 1,233,372, ,164, , ,801,350 (11,077,000) 3,390,320 SELECTED NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION For the six months ended 1 THE GROUP AND ITS OPERATIONS The Highnoon Group ("the Group") comprises of Highnoon Laboratories Limited ("HNL") ("the Holding Company") and Curexa Health (Private) Ltd (formaly Procef Laboratories (Private) Limited) (formerly Biocef (Private) Limited) ("CXH")("the Subsidiary Company"). The Holding Company was incorporated as a private limited company in Pakistan in year 1984 and converted into an unquoted public limited company in Its shares are quoted on Pakistan Stock Exchange since November Holding company is principally engaged in the manufacture, import, sale and marketing of pharmaceutical and allied consumer products. The registered office of HNL is situated at 17.5 Km, Multan Road, Lahore. The subsidiary company was incorporated on 10 June 2015 as a private limited company. The registered office of CXH is situated at 17.5 KM Multan Road, Lahore. It is set up with principle object to carry on business as manufacturers, importers, exporters, producers, preparers, refiners, buyers, seller and dealers of all kinds of pharmaceutical, drugs, medicines medicaments, basic raw material, herb salts, acids, alkalis, chemical and surgical material, instruments and appliances patent and proprietary articles. It owns Greenfield pharmaceuticals project that envisages production of cephalosporin drugs. CXH is in construction phase and hence has not yet started commercial operations. HNL acquired 80% shares of CXH in September 2015 and it became subsidiary company of HNL. Subsequently HNL also acquired right shares of CXH and it shareholding increased to 88%. In May The Holding Company has further acquired 1,107,700 shares at par value of Rs.10 per share as a result of which CXH became wholly owned subsidiary of HNL. Final Rs per share for the year ended 2015 Balance as at Balance as at 01 January Profit for the period ended Other comprehensive income 228,056, ,056, ,000, ,000,000 (152,716,343) 997,077,630 1,249,429, ,052,884 (152,716,343) 1,111,077,630 1,363,429, ,052, , ,555 (152,716,343) 1,339,771,320 1,591,485, ,052, ,555 2 STATEMENT OF COMPLIANCE 2.1 These condensed interim consolidated financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by Institute of Chartered Accountants of Pakistan as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, Wherever the requirements or directives issued by Securities and Exchange Commission of Pakistan differ with the requirements of IFRS or IFAS, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives prevail. Total comprehensive income for the period ended June 308,052, ,052, , ,198, This condensed interim consolidated financial information is unaudited and is being submitted to shareholders, as required by section 245 of the Companies ordinance, Incremental depreciation relating to surplus on revaluation of fixed assets net of tax 2,979,913 2,979,913 Issuance of bonus 12% for the year ended Final Rs per share for the year ended Balance as at 27,366, ,423, ,000,000 (27,366,770) (193,847,940) 1,339,247,571 The annexed notes from 1 to 24 form an integral part of this condensed interim financial information. (27,366,770) (193,847,940) 1,453,247, ,555 2,979,913 (193,847,940) 1,708,816,296 3 BASIS OF PREPARATION 3.1 These condensed consolidated interim financial information of the Group for the six months period ended has been prepared in accordance with the requirements of the International Accounting Standard 34 Interim Financial Reporting as are notified under the repealed Companies Ordinance, 1984, provisions of and directives issued under the repealed Companies Ordinance, This condensed consolidated interim financial information does not include all the information and disclosures required in annual financial statements, and should be read in conjunction with the Group's annual financial statements as at. 4 ACCOUNTING POLICIES The accounting policies adopted for the preparation of this condensed consolidated interim financial information are the same as those applied in the preparation of the preceding annual published financial statements of the Group for the year ended except as follows: The Group has adopted the following standards and amendment to IFRSs which became effective for the current period: IFRS 7 Financial Instruments: Disclosures Disclosure Initiative (Amendment) IAS 12 Income Taxes Recognition of Deferred Tax Assets for Unrealized losses (Amendments) 35 Half Yearly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Half Yearly Report 36

21 The adoption of the above amendment to accounting standards did not have any material effect on the condensed consolidated interim financial information. 5 ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of condensed interim consolidated financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amount of assets and liabilities, incomes and expenses. Actual results may differ from these estimates. The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation are the same as those that applied to the financial statements for the year ended. Not later than one year Later than one year but not later than five years Minimum lease payments Finance cost for future periods Principal outstanding Rupees 22,721,704 17,762,470 40,484,174 2,093, ,689 3,012,306 20,628,087 16,843,781 37,471,868 6 SHARE CAPITAL Issued, subscribed and paidup 5,905,000 ( : 5,905,000) ordinary shares of Rs. 10 each fully paid in cash 95,000 ( : 95,000) ordinary shares of Rs.10 each issued for consideration other than cash ,805,640 ( : 14,362,179) ordinary shares of Rs. 10 each issued as fully paid bonus shares Issuance of 2,736,677 ( : 2,443,461) ordinary shares of Rs. 10 each issued as fully paid bonus shares 59,050, , ,056,400 27,366, ,423, ,423,170 (Rupees) 59,050, , ,621,790 24,434, ,056, ,056,400 Salient features of the leases are as follows: Discounting factor Period of lease Security deposits The holding Company has entered into finance lease arrangements with various conventional financial institutions for lease vehicles as shown in note The liabilities under these arrangements are payable in monthly installments and above mentioned markup rates are used as discounting factor to determine the present value of minimum lease payments. All lease agreements carry renewal option at the end of lease period and the holding Company intends to exercise its option to purchase the leased assets upon completion of the respective lease terms. Residual value of the leased assets has already been paid at the inception of the lease in the form of security deposit. There are no financial restrictions imposed by lessor. Taxes, repairs, replacements and insurance costs are borne by the lessee. 8. SHORT TERM BORROWINGS 7.00%8.50% 36 months 5%10% (Rupees) 7.00%8.50% 36 months (Rupees) 5%10% 6.1 This represents the issuance of shares against the purchase of plant and machinery and other assets. 7. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Present value of minimum lease payments Less: current portion shown under current liabilities Not later than one year Later than one year but not later than five years Minimum lease payments 9 33,118,746 17,821,618 15,297,128 Finance cost for future periods 37,471,868 20,628,087 16,843,781 Principal outstanding Unaudited Rupees 19,608,608 16,063,384 35,671,992 1,786, ,382 2,553,372 17,821,618 15,297,002 33,118,620 Short term borrowings 8.1 Short term running finances have been availed from various commercial banks against aggregate sanctioned limit of Rs. 605 million ( : Rs. 660 million).these facilities carry markup at rates ranging from one month KIBOR to six months KIBOR plus 100 to 150 basis points ( : one month KIBOR to six months KIBOR plus 100 to 150 basis points) per annum. These facilities along with import credit facility are secured by way of first pari passu charge for Rs. 782 million ( : Rs. 782 million) on fixed assets and first joint pari passu hypothecation charge of Rs. 657 million ( : Rs. 693 million) on stocks including but not limited to raw materials, goods in process and finished goods of the holding Company. 8.2 Out of total borrowing facility, an amount of Rs. 50 million ( : Rs. 50 million) represents Export Refinance Facility obtained from a commercial bank under SBP regulations at a subsidized mark up rate of 5.75% ( : 5.75%) per annum. 8.3 The holding Company has also negotiated aggregate sanctioned import credit facilities with various commercial banks amounting to Rs. 900 million ( : Rs. 950 million). These facilities carry markup at rates ranging from one month KIBOR to six months KIBOR plus 125 to 150 basis points ( : one month KIBOR to six months KIBOR plus 125 to 150 basis points) per annum. These available facilities are secured by way of joint pari passu, ranking hypothecation charge over present and future current assets of the holding Company and lien on its export documents. 37 Half Yearly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Half Yearly Report 38