ITTEHAD CHEMICALS LIMITED

Transcription

1 1 ST ST Q UART UART E RLY RLY R EPO EPO R T SE PT PTE M BE BE R 3 0, ITTEHAD CHEMICALS LIMITED

2 ITTEHAD CHEMICALS LIMITED CONDENSED INTERIM FINANCIAL STATEMENTS ST FOR THE 1 QUARTER ENDED SEPTEMBER 30, 2016 (UNAUDITED) Corporate Information 2 Directors Report 34 Condensed Interim Balance Sheet 5 Condensed Interim Profit and Loss Account 6 Condensed Interim Statement of Comprehensive Income 7 Condensed Interim Cash Flow Statement 8 Condensed Interim Statement of Changes in Equity 9 Notes to the Condensed Interim Financial Information 10

3 Corporate Information BOARD OF DIRECTORS Mr. Muhammad Siddique Khatri Chairman NonExecutive Director Mr. Abdul Sattar Khatri Director/CEO Executive Director Mr. Abdul Ghafoor Khatri Director NonExecutive Director Ms. Farhana Abdul Sattar khatri Director NonExecutive Director Mr. Waqas Siddiq Khatri Director Executive Director Mr. Abdullah Mustafa Director NonExecutive Director Mr. Pervaiz Ahmad Khan Director Independent Director AUDIT COMMITTEE Mr. Abdullah Mustafa Chairman Mr. Abdul Ghafoor Khatri Member Mr. Pervaiz Ahmad Khan Member HR & REMUNERATION Mr. Abdul Ghafoor Khatri Chairman COMMITEE Mr. Abdullah Mustafa Member Mr. Waqas Siddiq Khatri Member CHIEF FINANCIAL OFFICER COMPANY SECRETARY Mr. Javed Iqbal Mr. Abdul Mansoor Khan REGISTERED OFFICE/HEAD 39Empress Road, P.O. Box 1414, Lahore OFFICE Tel: , Fax: Website: PLANT SHARES REGISTRAR G.T. Road, Kala Shah Kaku, District Sheikhupura. Ph: , Fax: M/s. Corplink (Pvt.) Limited Corporate and Financial Consultants Wings Arcade, 1K Commercial, Model Town, Lahore. Ph : , Fax : BANKERS Banks Conventional Side Banks Islamic Window Operations Askari Bank Limited AlBaraka Bank (Pakistan) Limited Allied Bank Limited Burj Bank Limited Faysal Bank Limited Dubai Islamic Bank (Pak) Limited Habib Metro Bank Limited Bank Alfalah LimitedIslamic Banking MCB Bank Limited National Bank of Pakistan NIB Bank Limited Pak Libya Holding Co. (Pvt.) Ltd. Pakistan Kuwait Inv. Co. (Pvt.) Ltd. Pak Brunei Inv. Company Ltd The Bank of Punjab United Bank Limited AUDITORS LEGAL ADVISOR M/s. BDO Ebrahim & Co., Chartered Accountants, nd 2 Floor, Block C, Lakson Square Building No.1, Sarwar Shaheed Road, Karachi. Ph: , Fax : Cornelius, Lane & Mufti Advocates & Solicitors NawaeWaqt House 4 ShahraheFatima Jinnah Lahore54000

4 DIRECTORS' REPORT The Directors of your Company take pleasure in presenting the unaudited condensed interim financial statements of the Company for the first quarter ended September 30, During the quarter under review, the Company posted net sales revenue of Rupees 1,031 Million (2015: Rupees 1,122 Million). The cost of sales stood at Rupees 853 Million (2015: Rupees 894 Million) bringing gross profit to Rupees 178 Million (2015: Rupees 228 Million). The bottom line showed a net profit of Rupees 62 million (2015: profit Rupees 65 Million) which yielded earnings per share of Rupees 0.95 (2015: Rupees 1.19 per share). By the grace of Almighty Allah, the Company has successfully transformed its entire (100%) Production Technology on state of the art power efficient environmental friendly Ion Exchange Membrane Plants, thanks to IEM Plant 2 Phase II which commenced its operations in September The Company has now shut down its high power consuming Mercury based DSA (Caustic Soda) Plant. Although the operational indicators for the future appear to be positive however financial performance will depend upon a number of external factors like consistent availability of Gas during winter season, products stable prices, incremental levies and political stability in the country. The Board is thankful to the valuable Members, Customers, Banks and Government departments for their trust, confidence, persistent support and patronage and would like to place on record its gratitude to all the Employees of the company for their contribution, dedication and hard work. On behalf of the Board 03 October 25, 2016 Muhammad Siddique Khatri Lahore Chairman

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6 Condensed Interim Balance Sheet as at September 30, 2016 (Unaudited) September 30, 2016 ASSETS Note (Rupees in thousand) NON CURRENT ASSETS Property, plant and equipment Operating fixed assets 6 3,918,228 3,637,902 Capital work in progress 7 343, ,966 4,261,504 4,063,868 Intangible assets 6,445 6,445 Investment properties 104, ,400 Long term deposits 34,197 34,182 4,406,546 4,208,895 CURRENT ASSETS Stores, spares and loose tools 507, ,748 Stock in trade 488, ,639 Trade debts 516, ,801 Loans and advances 139, ,759 Trade deposits and short term prepayments 8,760 12,142 Tax refunds due from Government 94,061 80,438 Taxation net 206, ,109 Cash and bank balances 111, ,405 2,073,320 2,040,041 TOTAL ASSETS 6,479,866 6,248,936 EQUITY & LIABILITIES SHARE CAPITAL AND RESERVES Authorized share capital 8.1 1,000,000 1,000,000 Issued, subscribed and paid up capital , ,000 Share premium 150, ,000 Unappropriated profit 1,246,633 1,184,570 2,046,633 1,984,570 SURPLUS ON REVALUATION OF FIXED ASSETS 794, ,848 NON CURRENT LIABILITIES Long term financing 9 748, ,791 Long term diminishing musharaka , ,233 Deferred liabilities 238, ,755 1,307,534 1,343,779 CURRENT LIABILITIES Trade and other payables 863, ,005 Markup accrued 33,855 27,667 Short term borrowings 1,048, ,986 Current portion of long term liabilities 385, ,081 2,330,851 2,125,739 CONTINGENCIES AND COMMITMENTS 11 TOTAL EQUITY AND LIABILITIES 6,479,866 6,248,936 The annexed notes from 1 to 16 form an integral part of these financial statements. (Audited) June 30, CHIEF EXECUTIVE DIRECTOR

7 Condensed Interim Profit And Loss Account (Unaudited) for the quarter ended September 30, 2016 Note Quarter ended September 30, (Rupees in thousand) Sales net 1,031,162 1,122,246 Cost of sales 12 (853,066) (894,410) Gross profit 178, ,836 Selling and distribution expenses (60,166) (55,181) General and administrative expenses (40,931) (40,915) Other operating expenses (2,343) (4,660) Other operating income 2,948 2,859 (100,492) (97,897) Operating profit 77, ,939 Financial charges (40,971) (46,412) Profit before taxation 36,633 83,527 Taxation 25,430 (18,325) Profit after taxation 62,063 65,202 Earnings per share basic and diluted (Rupee) The annexed notes from 1 to 16 form an integral part of these financial statements. 06 CHIEF EXECUTIVE DIRECTOR

8 Condensed Interim Statement of Comprehensive Income (Unaudited) for the quarter ended September 30, 2016 Quarter ended September 30, (Rupees in thousand) Profit for the period 62,063 65,202 Other comprehensive income Total comprehensive income for the period 62,063 65,202 The annexed notes from 1 to 16 form an integral part of these financial statements. 07 CHIEF EXECUTIVE DIRECTOR

9 Condensed Interim Cash Flow Statement (Unaudited) for the quarter ended September 30, 2016 Quarter ended September 30, (Rupees in thousand) CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation 36,633 83,527 Adjustments for items not involving movement of funds: Depreciation 74,202 74,490 Amortization of intangible assets 1,586 Provision for gratuity 4,695 3,451 Gain on sale of fixed assets (1,288) Gain on foreign exchange (29) (916) Provision for bad debts 2,500 Bad debts written off 11 Financial charges 40,971 46,412 Net cash flow before working capital changes 157, ,561 Decrease / (increase) in current assets Stores, spares and loose tools 12,416 (33,797) Stock in trade (12,351) (176,071) Trade debts (18,379) (34,512) Loans and advances 29,913 (7,705) Trade deposits and short term prepayments 3,382 (1,223) Tax refunds due from the Government (13,623) 1,358 27,533 (225,775) Increase / (decrease) in current liabilities Trade and other payables 42, ,327 Cash generated from operations 201, ,113 Income taxes paid (52,330) (32,563) Gratuity paid (3,585) (2,315) Financial charges paid (42,488) (54,019) Net cash inflow from operating activities 103,007 17, CASH FLOW FROM INVESTING ACTIVITIES Additions to operating fixed assetsnet (4,795) (2,230) Additions to capital work in progress (259,605) (37,594) Proceeds from sale of operating fixed assets 1,555 Long term deposits (15) Net cash (outflow) from investing activities (262,860) (39,824) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from long term financing 96,788 (18,305) Repayment of long term financing (68,582) Proceeds from long term diminishing musharaka 17,370 1,561 Repayment of finance lease liabilities (339) Short term borrowings 99,055 79,162 Net cash inflow / (outflow) from financing activities 144,631 62,079 Net (decrease) / increase in cash and cash equivalents (15,222) 39,471 Cash and cash equivalents at the beginning of the period 126, ,390 Cash and cash equivalents at the end of the period 111, ,861 The annexed notes from 1 to 16 form an integral part of these financial statements. CHIEF EXECUTIVE DIRECTOR

10 Condensed Interim Statement of Changes in Equity (Unaudited) for the quarter ended September 30, 2016 Share Share Unappropriated Total capital premium profit (Rupees in thousand) Balance as at July 01, ,000 1,078,189 1,578,189 Total Comprehensive income for the period 65,202 65,202 Balance as at September 30, ,000 1,143,391 1,643,391 Transaction with owners: Final cash dividend 2015: Re. 1 per share (50,000) (50,000) Right shares issued during the period 150, , , , ,000 (50,000) 250,000 Total Comprehensive income for the period Profit for the period 102, ,171 Remeasurement of defined benefit liability net (10,992) (10,992) 91,179 91,179 Balance as at June 30, , ,000 1,184,570 1,984,570 Total Comprehensive income for the period 62,063 62,063 Balance as at September 30, ,000 1,246,633 2,046,633 The annexed notes from 1 to 16 form an integral part of these financial statements. 09 CHIEF EXECUTIVE DIRECTOR

11 Notes to the Condensed Interim Financial Information (Unaudited) for the quarter ended September 30, LEGAL STATUS AND OPERATIONS (the Company) was incorporated on September 28, 1991 to takeover the assets of Ittehad Chemicals and Ittehad Pesticides under a Scheme of Arrangement dated June 18, 1992 as a result of which the Company became a wholly owned subsidiary of Federal Chemical and Ceramics Corporation (Private) Limited. The Company was privatized on July 03, 1995 when 90% of the shares were transferred to the buyer. The Company was listed on Karachi Stock Exchange on April 14, 2003 when sponsors of the Company offered 25% of the issued, subscribed and paid up shares of the Company to the general public. The registered office of the Company is situated at 39, Empress Road, Lahore. The Company is engaged in business of manufacturing and selling caustic soda and other allied chemicals. 2 BASIS OF PREPARATION 2.1 Statement of compliance These condensed interim financial statements are unaudited and are being submitted to the members as required under Section 245 of the Companies Ordinance, These condensed interim 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 Standard Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail. The disclosures made in these condensed interim financial statements have, however, been limited in accordance with the requirements of the International Financial Reporting Standards (IFRS) IAS 34, Interim Financial Reporting. They do not include all the information and disclosures made in the annual published financial statements and should be read in conjunction with the financial statements of the Company for the year ended June 30, Basis of measurement These condensed interim financial statements have been prepared under the historical cost convention, except for the recognition of certain staff retirement benefits at present value. These condensed interim financial statements have been prepared following accrual basis of accounting except for cash flow information.

12 2.3 Functional and presentation currency These condensed interim financial statements have been presented in Pak Rupees, which is the functional and presentation currency of the Company. 3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted and methods of computation followed in the preparation of these condensed interim financial statements are the same as those of the preceding published annual financial statements for the year ended June 30, TAXATION Income tax expense is recognized based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. 5 ESTIMATES The preparation of condensed interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgments made by management in applying the Company's accounting policies and key sources of estimation of uncertainty are the same as those that were applied to the financial statements for the year ended June 30, OPERATING FIXED ASSETS Note (Unaudited) September 30, 2016 (Audited) June 30, 2016 (Rupees in thousand) Opening book value (NBV) 3,637,902 3,756,179 Additions (at cost) during the period / year ,795 3,992, ,278 3,946,457 Disposals (at NBV) during the period / year 6.2 (267) (1,716) Depreciation charged during the period / year (74,202) (74,469) (306,839) (308,555) Closing net book value (NBV) 3,918,228 3,637, Details of additions (at cost) during the period / year are as follows: Land Building 21 Plant and machinery 350, ,847 Other equipment 1,767 11,316 Furniture and fixtures Office and other equipment 1,194 2,688 Vehicles 1, ,795 4, ,278 11

13 (Unaudited) September 30, 2016 (Audited) June 30, 2016 (Rupees in thousand) 6.2 Details of disposals (at NBV) during the period / year are as follows: Plant and machinery (102) Vehicles (267) (1,614) (267) (1,716) 7 CAPITAL WORK IN PROGRESS Plant and machinery 343, , , , An amount of Rs million (June 30, 2016: Rs million) has been transferred to operating fixed assets during the period. 8 SHARE CAPITAL 8.1 Authorized share capital 75,000,000 (June 30, 2016: 75,000,000) ordinary shares of Rs. 10/ each 750, ,000 25,000,000 (June 30, 2016: 25,000,000) preference shares of Rs. 10/ each 250, ,000 1,000,000 1,000, Issued, subscribed and paid up share capital 15,100,000 (June 30, 2016: 15,100,000) ordinary shares fully paid in cash 151, ,000 24,900,000 (June 30, 2016: 24,900,000) issued for consideration other than cash 249, ,000 25,000,000 (June 30, 2016: 25,000,000) fully paid bonus shares 250, , , ,000

14 (Unaudited) September 30, 2016 (Audited) June 30, 2016 (Rupees in thousand) 9 LONG TERM FINANCING From banking companies and financial institutions secured Balance as at July , ,353 Obtained during the period / year 96, ,220 Repayments made during the period / year (68,582) 972,711 (117,068) 944,505 From directors and others unsecured Balance as at July 01 4,810 Repayments made during the period / year 972,711 (4,810) 944,505 Current portion shown under current liabilities (224,214) 748,497 (186,714) 757, LONG TERM DIMINISHING MUSHARAKA From banking companies and financial institutions secured Balance as at July , ,572 Obtained during the period / year 17, ,561 Repayments made during the period / year 481,970 (121,533) 464,600 Current portion shown under current liabilities (161,367) 320,603 (141,367) 323, CONTINGENCIES AND COMMITMENTS 11.1 Contingent liabilities a) The Company has received an order under section 161/205 of the Income Tax Ordinance, 2001 for tax year 2004 creating demand of Rs million (June 30, 2015: Rs million). The Company challenged it before Commissioner of Inland Revenue (Appeals) Zone1 who decided the case in favour of the Company. The department had filed an appeal before Appellate Tribunal Inland Revenue. The Honourable ATIR (Appellate Tribunal Inland Revenue) remanded the case back to the Commissioner (Appeals) Zone1 to pass a speaking order. The Company expects a favorable outcome of the proceedings. However, if the case is decided against the Company, it may result in tax payable of Rs million. b) The taxation authorities have amended the deemed assessment for the Tax Year 2010 by passing an order u/s 122(5A) of the Income Tax Ordinance, 2001 creating, thereby, income tax demand of Rs million. The Company has filed an appeal before Commissioner Inland Revenue (Appeals) who partially set aside and remanded back and also partially decided in favour of the Company. The Company as well as tax department filed an appeal against the said order before Appellate Tribunal Inland 13

15 Revenue which is still pending adjudication. The Company expects a favorable outcome of the proceedings. However, if the case is decided against the Company, it may result in maximum tax payable of Rs million. c) The taxation authorities have amended the deemed assessment for Tax Year 2006 by passing an order u/s 122(5A) of the Income Tax Ordinance, The Company challenged the same before Commissioner Inland Revenue (Appeals) who partially set aside and partially decided against the Company. The Company has filed an appeal before Appellate Tribunal Inland Revenue against the said order. The Company expects a favorable outcome of the proceedings. However, if the case is decided against the Company, it may result in tax payable of Rs million. d) Additional Commissioner has passed an order u/s 122(5A) of the Income Tax Ordinance, 2001 adding back tax credit u/s 65B of the Income Tax Ordinance, 2001 on Balancing, Modernization, and Replacement and tax credit on donations for Tax Year Tax amounting to Rs million has been assessed. The Company has challenged the case before Commissioner Inland Revenue (Appeals) who has decided it against the Company. The Company has filed appeal before Appellate Tribunal Inland Revenue. The Company expects a favorable outcome of the proceedings. However, if the case is decided against the Company, it may result in tax payable of Rs million. e) The Company is facing claims, launched in the labour courts, pertaining to staff retirement benefits. In the event of an adverse decision, the Company would be required to pay an amount of Rs million (June 30, 2016: Rs million) against these claims. f) Letters of guarantee outstanding as at September 30, 2016 were Rs million (June 30, 2016: Rs million) Commitments Commitments as on September 30, 2016 were as follows: a) Against letters of credit amounting to Rs million (June 30, 2016: Rs million). b) Against purchase of land amounting to Rs million (June 30, 2016: Rs million). 14

16 (Unaudited) Quarter ended September 30, (Rupees in thousand) 12 COST OF SALES Raw materials consumed 139, ,764 Other overheads Stores, spares and consumables 78,801 58,746 Packing materials consumed 7,939 11,702 Salaries, wages and other benefits 99,230 94,116 Fuel and power 497, ,238 Repair and maintenance 6,909 8,152 Rent, rates and taxes 200 5,029 Insurance 4,303 3,646 Depreciation 72,781 72,923 Vehicle running expenses 4,046 4,750 Telephone, telex and postage Printing and stationery Other expenses , ,380 Opening work in process 21,107 25,666 Closing work in process (26,491) (5,384) (28,208) (2,542) Cost of goods manufactured 907,556 1,038,602 Cost of stores traded 30 2,044 Opening stock of finished goods 323,412 71,417 Closing stock of finished goods (377,932) (54,520) 853,066 (217,653) (146,236) 894, EARNINGS PER SHARE BASIC AND DILUTED Profit after taxation (Rupees in thousand) 62,063 65,202 Weighted average number of ordinary shares (In thousand) 65,000 54,793 Earnings per share basic and diluted (Rupees) There is no dilutive effect on the basic earnings per share of the Company. (Unaudited) Quarter ended September 30, Prior period earnings per share have been adjusted to give effect of bonus element included in the right issue made during the period 15

17 14 TRANSACTIONS WITH RELATED PARTIES The related parties comprise group companies, other associated companies, staff retirement funds, directors and key management personnel. Transactions with related parties and associated undertakings are given as under: (Unaudited) Quarter ended September 30, (Rupees in thousand) Relationship with the Company Nature of transaction Associated company Sale of goods 478 Other related party Marketing services charges 4,924 5,334 Other related party Loan received 1,500 Retirement benefit plans Contribution to staff retirement benefit plans Key management personnel Remuneration and other benefits 22,239 24, DATE OF AUTHORIZATION These financial statements were authorized for issue on October 25, 2016 by the Board of Directors of the Company. 16 GENERAL 16 i ii Figures have been rounded off to the nearest rupees in thousand unless stated otherwise. Corresponding figures have been rearranged and reclassified, wherever necessary, for the purpose of comparison, the effect of which is not material. CHIEF EXECUTIVE DIRECTOR

18 AUSTRIA H E L L A S AUSTRIA H E L L A S EN ISO 9001/2008 EN ISO 14001/2004 ITTEHAD G R O U P A C IN C Registered/Head Office: 39Empress Road, LahorePakistan. Tel: , Fax: Factory: G.T. Road, Kala Shah Kaku, District SheikhupuraPakistan. Tel: , Fax: T E R N A T I O N IAF R E D IT A TIO N F O L U R M Ms Certification No of Certificate 236 TRADE JUNCTION