HIGHNOON LABORATORIES LIMITED. Q3 Report HIGHNOON FOR A HEALTHIER NATION

Transcription

1 HIGHNOON LABORATORIES LIMITED Q3 Report HIGHNOON FOR A HEALTHIER NATION

2 Contents Vision, Mission & Corporate Objectives Company Information Chairman's Review Condensed Interim Unconsolidated Financial Information Balance Sheet Profit & Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Selected Notes to the Financial Information Chairman's Review Condensed Interim Consolidated Financial Information Balance Sheet Profit & Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Selected Notes to the Financial Information

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 Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 2

4 CHAIRMAN'S REVIEW I feel pleasure to present the financial statements of the Company for the nine months ended 30th September on behalf of the Board of Directors. The Company generated net sales revenue of Rs.4.31 billion during the period under review compared to Rs.3.74 billion in the same period last year registering a growth of 15 percent. On quarterly basis, the net sales revenue increased by 249 million showing an increase of 21 percent over same period last year. Gross profit and gross profit as a percentage of sales for the period amounted to Rs.2.10 billion and 49% as compared to Rs.1.78 billion and 48% respectively. Distribution selling & promotional expenses and administrative expenses increased by 20% and 10% respectively over same period last year. The increase is largely because 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.469 million and Rs per shares which translates in an increase of 17 percent same period last year. While we will continue to work through our portfolio of established products that has demonstrated a strong position in the market and strong demand, we are excited with our new products that are lined up for launch in the last quarter of this year as well as in first quarter of next year. 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: 21 October Tausif Ahmad Khan Chairman 3 Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 4

5 Left intentionally blank CONDENSED INTERIM FINANCIAL INFORMATION HIGHNOON LABORATORIES LTD. For the Quarter Ended 5 Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 6

6 BALANCE SHEET AS AT 30 SEPTEMBER Note (Rupees) Note (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 Total equity 500,000, ,423,160 1,628,460,151 1,883,883, ,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 7 745,693,282 9,146, ,000,000 12,111, ,951, ,163,879 21,765, ,000,000 12,111, ,041,360 Surplus on revaluation of fixed assets 205,427, ,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 Current portion of long term liabilities Income taxnet TOTAL EQUITY AND LIABILITIES CONTINGENCIES AND COMMITMENTS 6 12,213,769 42,925, ,498, ,637, ,523,476 23,053 22,212, ,787, ,547,464 3,086,495,483 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 Loan to subsidiary Cash and bank balances TOTAL ASSETS 8 1,076,661, ,236, ,786,227 26,641,340 2,867,773 4,284,439 9,361,522 20,000, ,704,503 2,119,543,862 3,086,495, ,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 13 form an integral part of this condensed interim financial information. 7 Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 8

7 PROFIT AND LOSS ACCOUNT (UN AUDITED) For the nine months ended STATEMENT OF COMPREHENSIVE INCOME (UN AUDITED) For the nine months ended Note Nine Months Ended (Rupees) Three Months Ended (Rupees) (Rupees) Sales net Cost of sales ,311,501,128 (2,215,127,514) 3,739,305,548 (1,960,197,683) 1,453,663,213 (755,013,466) 1,204,578,121 (643,465,357) Profit for the period 468,762, ,624,656 Gross profit 2,096,373,614 1,779,107, ,649, ,112,764 Other comprehensive (loss) / income: Items to be reclassified to profit and loss in subsequent periods: Net unrealized gain on available for sale investments Distribution, selling and promotional expenses (1,163,197,416) (965,547,411) (410,364,405) (301,801,423) Administrative and general expenses Research and development expenses (193,087,698) (2,592,605) (175,719,249) (2,715,041) (61,804,256) (775,762) (61,180,356) (1,088,987) Total comprehensive income for the period 468,762, ,624,656 Other operating expenses (66,408,646) (54,544,225) (21,462,737) (16,205,439) Operating Profit Other income (1,425,286,365) 671,087,249 24,295, ,382,956 (1,198,525,926) 580,581,939 10,305, ,887,518 (494,407,160) 204,242,587 10,564, ,807,312 (380,276,205) 180,836,559 1,898, ,735,456 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 (3,620,666) (4,160,600) (1,267,540) (889,594) Profit before taxation Taxation 691,762,290 (222,999,301) 586,726,918 (187,102,262) 213,539,772 (61,971,271) 181,845,862 (53,127,267) The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. Profit for the period 468,762, ,624, ,568, ,718,595 Restated Restated Earnings per share basic and diluted The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. 9 Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 10

8 CASH FLOW STATEMENT (UN AUDITED) For the nine 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 Nine Months Ended (Rupees) 691,762, ,726,918 58,591,490 60,349,647 12,619,142 12,505,651 (7,950,837) (3,254,468) 7,422,993 5,052,305 4,529,998 9,752,122 33,277,302 32,377,221 3,620,666 4,160, ,110, ,943, ,873, ,669,996 (88,554,109) (65,286,559) (170,081,751) 12,303,556 (33,113,228) 24,132,396 (9,217,883) (544,276) (1,632,699) 82,871 (942,992) 661,808 1,051,608 (24,202) (86,245,079) (4,309,321) (388,736,133) (32,983,727) 415,136, ,686,269 (210,482,530) (124,148,576) (11,701,223) (7,446,190) (1,715,035) (1,746,699) 13,590,679 15,914, ,828, ,259,725 Nine Months Ended (Rupees) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred Long term Investment made net Long term deposits net Loan to subsidiary 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 (58,308,202) (20,000,000) 19,612,846 (58,695,356) (22,814,583) (177,314,220) (200,128,803) (53,995,357) 680,699, ,704,503 (26,661,451) (100,700,000) (1,622,700) 8,419,206 (120,564,945) (20,168,152) (145,366,780) (165,534,932) 271,159, ,794, ,954,821 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. 11 Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 12

9 STATEMENT OF CHANGES IN EQUITY (UN AUDITED) For the nine months ended Balance as at 01 January Profit for the period ended Other comprehensive income Total comprehensive income for the period ended September 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, ,624, ,624,656 Revenue reserves 5,085,479 (24,434,610) Sub total 1,021,980, ,624, ,624,656 5,085,479 (24,434,610) Total 1,225,602, ,624, ,624,656 5,085,479 SELECTED NOTES TO THE FINANCIAL INFORMATION (UN AUDITED) For the nine 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 information 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) 1,135,539,914 1,262,455,659 (152,716,343) 1,249,539,914 1,376,455,659 (152,716,343) 1,477,596,314 1,604,512,059 Accordingly, these unconsolidated condensed interim financial information of the Company for the nine 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 468,762, ,762, ,762, 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 September Incremental depreciation relating to surplus on revaluation of fixed assets net of tax Issuance of bonus 12% for the year ended Final Rs per share for the year ended 27,366, ,762,989 4,456,203 (27,366,760) (193,847,940) 468,762,989 4,456,203 (27,366,760) (193,847,940) 468,762,989 4,456,203 (193,847,940) 3 BASIS OF PREPARATION 3.1 These unconsolidated condensed interim financial information of the Company for the nine 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 1,514,460,151 1,628,460,151 1,883,883,311 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. 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 Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly 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. 6 CONTINGENCIES AND COMMITMENTS Contingencies: There is no significant change in the contingencies since the date of preceding published annual financial statements. Commitments: Commitments against irrevocable letters of credit include: Note 7.1 Operating fixed assets (owned) Opening book value Add: Additions during the period / year cost Transferred from leased assets during the period / year vehicles Less: Deletions during the period / year Depreciation during the period / year Adjustment during the period / year Book value at the end of the period / year Additions during the period / year cost (Rupees) 677,233,432 55,731,750 3,564,338 59,296,088 11,662,009 49,603,681 61,265, ,263, ,136,848 34,400,206 20,085,578 54,485,784 15,880,157 68,032,327 1,476,716 85,389, ,233,432 Plant and machinery 11,102,301 5,318,083 Note (Rupees) Laboratory equipment Furniture and fixtures Electric and gas appliances Office equipment 585, , ,500 1,068,689 7,706, ,881 2,288,999 2,000,973 Raw materials Packing materials 218,143,832 12,639, ,935,968 14,018,692 Vehicle 41,951,330 55,731,750 16,723,489 34,400,206 Finished goods 36,496,751 13,075, Deletions during the period / year Plant and machinery Rentals under ijara agreements: Not later than one year Later than one year but not later than five years 267,280,086 25,283,827 8,255, , ,932,497 30,755,447 22,086,957 Plant and machinery Office equipment Vehicles 185,348 67,345 11,409,316 11,662, , ,712 15,089,233 15,880,157 33,539,725 52,842, Operating fixed assets (leased vehicles) 7 PROPERTY, PLANT AND EQUIPMENT Operating fixed assets: owned assets leased assets ,263,830 52,323, ,233,432 51,401,091 Opening book value Add: Additions during the period / year cost Adjustment during the period / year Less: Transfers to owned assets during the 51,401,091 13,474,709 13,474,709 55,747,159 26,884,500 1,476,716 28,361,216 Capital work in progress ,587,483 18,105, ,693, ,634,523 15,529, ,163,879 period / year Depreciation during the period / year 3,564,338 8,987,809 12,552,147 20,085,578 12,621,706 32,707,284 Book value at the end of the period / year 52,323,653 51,401, Capital work in progress Plant and machinery owned 1,564, ,357 Advances to suppliers vehicles 16,541,500 15,384,999 18,105,799 15,529, Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 16

11 Note (Rupees) Nine Month Period Ended Three Month Period Ended (Rupees) (Rupees) 8. 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 (8.1) 516,157,014 77,108,320 6,808, ,073, ,912,399 4,591,688 5,124, ,628,293 69,899, ,728, ,728,770 (1,669,026) 1,076,661, ,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, SALES net Manufactured products Local Export Purchased products local Third party Less: Discount Sales tax 10. COST OF SALES Opening stock of finished goods (excluding purchased products) Cost of goods manufactured 4,122,525, ,602,407 4,428,128,285 80,609, ,025,754 4,718,763, ,751,536 9,510, ,262,111 4,311,501, ,020,552 2,138,705,833 3,544,171, ,453,620 3,745,625,077 76,158, ,590,262 4,107,373, ,596,378 11,471, ,068,230 3,739,305, ,760,824 1,876,816,692 1,381,565, ,133,618 1,490,699,433 15,742,119 81,339,610 1,587,781, ,499,037 1,618, ,117,949 1,453,663, ,783, ,382,737 1,162,285,621 75,527,960 1,237,813,581 23,181,564 62,388,681 1,323,383, ,092,245 2,713, ,805,705 1,204,578, ,950, ,616, Provision for slow moving and obsolete items 2,363,726,385 2,067,577, ,166, ,566,669 Opening provision Charge for the year Written off during the year 15,683,130 4,529,998 (18,544,102) 11,083,975 12,168,711 (7,569,556) Closing stock of finished goods (excluding purchased products) Cost of sales manufactured (198,786,143) 2,164,940,242 (158,135,399) 1,909,442,117 (198,786,143) 746,380,260 (158,135,399) 627,431,270 Closing provision 1,669,026 15,683,130 Cost of sales purchased products 50,187,272 50,755,566 8,633,206 16,034,087 2,215,127,514 1,960,197, ,013, ,465, 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: 11.1 Sales of goods Associated company 166,444, ,662,253 52,867,674 63,811, Purchase of goods Associated company 178,672, ,560,666 93,168,105 38,955, Contribution towards employees' benefits fund: Staff provident fund 19,090,104 15,547,640 6,510,531 5,359,970 Employees' welfare trust 1,844,561 1,323, , , Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 18

12 11.4 Remuneration Nine Month Period Ended Three Month Period Ended (Rupees) (Rupees) Left intentionally blank Chief Executive Officer 11,442,708 8,315,277 4,541,728 3,179,795 Directors 13,115,241 18,271,983 4,810,837 5,970,104 Executives 224,707, ,009,605 84,860,398 65,185,330 (Rupees) 11.5 The outstanding balances of such parties are as under: Relationship with the Company Associated company Staff provident fund Employees' welfare trust Associated company Subsidiary company Nature of balance Creditors Contribution payable Contribution payable Advances Accrued profit 970,970 4,473, ,876 1,259,088 93,896 2,083,998 4,130, , DATE OF AUTHORIZATION OF ISSUE The Board of Directors of the Company authorized this condensed interim financial information for issuance on 21 October. 13 GENERAL 13.1 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. 19 Quarterly Report Highnoon Laboratories Limited Highnoon Laboratories Limited Quarterly Report 20

13 CHAIRMAN'S REVIEW I feel pleasure to present the consolidated financial statements of the Company and its subsidiary for the nine months ended 30th September on behalf of the Board of Directors. The Group generated net sales revenue of Rs.4.31 billion during the period under review compared to Rs.3.74 billion in the same period last year registering a growth of 15 percent. On quarterly basis, the net sales revenue increased by 249 million showing an increase of 21 percent over same period last year. Gross profit and gross profit as a percentage of sales for the period amounted to Rs.2.10 billion and 49% as compared to Rs.1.78 billion and 48% respectively. Distribution selling & promotional expenses and administrative expenses increased by 20% and 13% respectively over same period last year. The increase is largely because 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.454 million and Rs per shares which translates in an increase of 16 percent same period last year. While we will continue to work through our portfolio of established products that has demonstrated a strong position in the market and strong demand, we are excited with our new products that are lined up for launch in the last quarter of this year as well as in first quarter of next year. Curexa Health Private Limited, a wholly owned subsidiary of the company has received all regulatory approvals including product registration letter permitting to manufacture 27 pharmaceutical products and has now commenced commercial operations. Curexa Health Private Limited has a state of the art production plant which will manufacture Cephalosporin products including sterile powder for injections, powder for oral suspensions and capsules for the local and export markets. 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: 21 October 21 Quarterly Report Tausif Ahmad Khan Chairman Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 22

14 Left intentionally blank CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION HIGHNOON LABORATORIES LTD. AND ITS SUBSIDIARY For the Quarter Ended 23 Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 24

15 CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER Note (Rupees) Note (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 Total equity 500,000, ,423,160 1,600,389,018 1,855,812, ,000, ,056,400 1,363,429,484 1,591,485,884 Non current assets Property, plant and equipment Intangible assets Goodwill Long term deposits 7 1,021,151,079 10,086, ,230 12,852,913 1,044,924, ,602,093 21,765, ,230 12,111, ,313,804 Surplus on revaluation of fixed assets 205,427, ,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 6 89,062,500 12,213,769 43,084, ,498, ,858, ,832,575 2,113,134 18,497,721 28,150, ,073, ,667,500 3,176,766,164 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 Cash and bank balances TOTAL ASSETS 8 1,090,637, ,236, ,200,616 27,188,121 2,867,773 4,284,439 9,361, ,065,321 2,131,841,216 3,176,766, ,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 13 form an integral part of this condensed interim financial information. 25 Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 26

16 CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED) For the nine months ended CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) For the nine months ended Note Nine Months Ended (Rupees) Three Months Ended (Rupees) (Rupees) Sales net Cost of sales ,311,501,128 (2,215,127,514) 3,739,305,548 (1,960,197,683) 1,453,663,213 (755,013,466) 1,204,578,121 (643,465,357) Profit for the period 453,718, ,998,123 Gross profit Distribution, selling and promotional expenses 2,096,373,614 (1,163,197,416) 1,779,107,865 (965,547,411) 698,649,747 (410,364,405) 561,112,764 (301,801,423) Other comprehensive (loss) / income: Items to be reclassified to profit and loss in subsequent periods: Net unrealized gain on available for sale investments Administrative and general expenses (207,817,655) (183,338,749) (67,412,352) (68,799,856) Research and development expenses Other operating expenses (2,592,605) (66,408,646) (2,715,041) (54,544,225) (775,762) (21,462,737) (1,088,987) (16,205,439) Total comprehensive income for the period 453,718, ,998,123 (1,440,016,322) (1,206,145,426) (500,015,256) (387,895,705) Operating Profit Other income Finance costs 656,357,292 24,295, ,652,999 (3,935,667) 572,962,439 10,305, ,268,018 (4,167,633) 198,634,491 10,564, ,199,216 (1,562,798) 173,217,059 1,898, ,115,956 (896,627) 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 before taxation Taxation 676,717,332 (222,999,301) 579,100,385 (187,102,262) 207,636,418 (61,971,271) 174,219,329 (53,127,267) The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. Profit for the period 453,718, ,998, ,665, ,092,062 Profit/(Loss after tax attributable to: Shareholders of the Parent 453,718, ,365, ,665, ,092,062 Non Controlling Interest (367,031) 453,718, ,998, ,665, ,092,062 Restated Restated Earnings per share basic and diluted The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. 27 Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 28

17 CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) For the nine 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 Nine Months Ended (Rupees) 676,717, ,100,385 60,583,075 62,339,562 12,619,142 12,505,651 (7,950,837) (3,254,468) 7,422,993 5,052,305 4,529,998 9,752,122 33,277,302 32,377,221 3,935,667 4,160, ,417, ,932, ,134, ,033,378 (102,529,475) (65,286,559) (170,081,751) 12,303,556 (50,427,617) 24,132,396 (9,639,592) (544,276) (1,632,699) 82,871 (942,992) 661,808 4,385,043 (24,202) (82,255,983) (3,766,087) (413,125,066) (32,440,493) 378,009, ,592,885 (214,196,895) (124,172,680) (11,701,223) (7,446,190) (1,747,507) (1,746,699) 13,749,957 15,914, ,113, ,142,237 Nine Months Ended (Rupees) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred Long term deposits 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 shares of Noncontroling interest Increase in short term borrowings 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 (124,581,880) (741,300) 19,612,846 (105,710,334) (22,814,583) 18,497,721 (177,314,220) (181,631,082) (123,227,478) 750,292, ,065,321 (118,427,789) (1,622,700) 8,419,206 (111,631,283) (20,168,152) (11,077,000) (145,366,780) (176,611,932) 263,899, ,568, ,467,948 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. 29 Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 30

18 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) For the nine months ended Balance as at 01 January Profit for the period ended Other comprehensive income Total comprehensive income for the period ended September 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 Final Rs per share for the year ended 2015 Share Capital 203,621,790 24,434,610 General reserve 114,000,000 Unappropriated profit 905,311, ,365, ,365,154 Revenue reserves (1,004,409) 5,085,479 (24,434,610) (152,716,343) Sub total 1,019,311, ,365, ,365,154 (1,004,409) 5,085,479 (24,434,610) (152,716,343) Non Controling Interest 10,439,622 (367,031) (367,031) (10,072,591) Total 1,233,372, ,998, ,998,123 (11,077,000) 5,085,479 (152,716,343) SELECTED NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION For the nine 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. 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. Balance as at Balance as at 01 January Profit for the period ended Other comprehensive income 228,056, ,056, ,000, ,000,000 1,124,606,852 1,249,429, ,718,031 1,238,606,852 1,363,429, ,718,031 1,466,663,252 1,591,485, ,718,031 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, Total comprehensive income for the period ended September Incremental depreciation relating to surplus on revaluation of fixed assets net of tax Issuance of bonus 12% for the year ended Final Rs per share for the year ended Balance as at 27,366, ,423, ,000, ,718,031 4,456,203 (27,366,760) (193,847,940) 1,486,389, ,718,031 4,456,203 (27,366,760) (193,847,940) 1,600,389,018 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. 453,718,031 4,456,203 (193,847,940) 1,855,812,178 Accordingly, these condensed interim consolidated financial information of the Group for the nine 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. 2.2 This condensed interim consolidated financial information is unaudited and is being submitted to shareholders, as required by section 245 of the Companies ordinance, BASIS OF PREPARATION 3.1 These condensed interim consolidated financial information of the Group for the nine 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 consolidated 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 interim consolidated financial information are the same as those applied in the preparation of the preceding annual published consolidated financial statements of the Group for the year ended except as follows: 31 Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 32

19 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) The adoption of the above amendment to accounting standards did not have any material effect on the condensed 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 consolidated financial statements for the year ended. 6 CONTINGENCIES AND COMMITMENTS 7.1 Operating fixed assets (owned) Opening book value Add: Additions during the period / year cost Transferred from leased assets during the period / year vehicles Less: Deletions during the period / year Depreciation during the period / year Adjustment during the period / year Book value at the end of the period / year Note (Rupees) 725,649,060 56,748,100 3,564,338 60,312,438 11,662,009 51,595,265 63,257, ,704, ,136,848 34,484,586 20,085,578 54,570,164 15,880,157 69,275,168 1,476,716 86,632, ,649,060 Contingencies: There is no significant change in the contingencies since the date of preceding published annual financial statements. Commitments: Commitments against irrevocable letters of credit include: Raw materials Packing materials Finished goods Plant and machinery Rentals under ijara agreements: Not later than one year Later than one year but not later than five years 7 PROPERTY, PLANT AND EQUIPMENT Operating fixed assets: owned assets leased assets Capital work in progress Note (Rupees) 218,143,832 16,984,613 36,496,751 1,896, ,521,621 27,230,923 13,622,850 40,853, ,704,225 52,323, ,027, ,123,201 1,021,151, ,935,968 14,018,692 13,075, , ,932,497 30,755,447 22,086,957 52,842, ,649,060 51,401, ,050, ,551, ,602, Additions during the period / year cost Plant and machinery Laboratory equipment Furniture and fixtures Electric and gas appliances Office equipment Vehicle Deletions during the period / year Plant and machinery Office equipment Vehicles 7.2 Operating fixed assets (leased vehicles) 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 Book value at the end of the period / year 11,102, , , ,590 1,523,889 41,951,040 56,748, ,348 67,345 11,409,316 11,662,009 51,401,091 13,474,709 13,474,709 3,564,338 8,987,809 12,552,147 52,323,653 5,318,083 7,706, ,831 2,337,199 2,023,203 16,723,489 34,484, , ,712 15,089,233 15,880,157 55,747,159 26,884,500 1,476,716 28,361,216 20,085,578 12,621,706 32,707,284 51,401, Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 34

20 8. 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 8.1 Provision for slow moving and obsolete items Note (8.1) 530,132,380 77,108,320 6,808, ,049, ,912,399 4,591,688 5,124, ,628,293 69,899, ,728, ,728,770 (1,669,026) 1,090,637,220 (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, COST OF SALES 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 11. RELATED PARTY TRANSACTIONS Nine Month Period Ended 225,020,552 2,138,705,833 2,363,726,385 (198,786,143) 2,164,940,242 50,187,272 2,215,127, ,760,824 1,876,816,692 2,067,577,516 (158,135,399) 1,909,442,117 50,755,566 1,960,197,683 Three Month Period Ended 198,783, ,382, ,166,403 (198,786,143) 746,380,260 8,633, ,013, ,950, ,616, ,566,669 (158,135,399) 627,431,270 16,034, ,465,357 The related parties comprises associated companies, staff retirement funds, directors and key management personnel. Transactions with related parties are as stated below: Opening provision Charge for the year Written off during the year Closing provision 15,683,130 4,529,998 (18,544,102) 1,669,026 11,083,975 12,168,711 (7,569,556) 15,683, Sales of goods Associated company Nine Month Period Ended Three Month Period Ended 166,444, ,662,253 52,867,674 63,811, SALES net Manufactured products Local Export Purchased products local Third party Less: Discount Sales tax Nine Month Period Ended Three Month Period Ended (Rupees) 4,122,525, ,602,407 4,428,128,285 80,609, ,025,754 4,718,763, ,751,536 9,510, ,262,111 4,311,501,128 3,544,171, ,453,620 3,745,625,077 76,158, ,590,262 4,107,373, ,596,378 11,471, ,068,230 3,739,305,548 1,381,565, ,133,618 1,490,699,433 15,742,119 81,339,610 1,587,781, ,499,037 1,618, ,117,949 1,453,663,213 1,162,285,621 75,527,960 1,237,813,581 23,181,564 62,388,681 1,323,383, ,092,245 2,713, ,805,705 1,204,578, Purchase of goods Associated company 178,672, ,560, Contribution towards employees' benefits fund: Staff provident fund Employees' welfare trust 11.4 Remuneration Chief Executive Officer Directors Executives 19,090,104 1,844,561 11,442,708 16,265, ,292,667 15,547,640 1,323,450 8,315,277 21,421, ,504,605 93,168,105 6,510, ,064 4,541,728 5,860,837 85,055,398 38,955,408 5,359, ,950 3,179,795 8,940,567 65,680, Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 36

21 11.5 The outstanding balances of such parties are as under: (Rupees) Left intentionally blank Relationship with the Company Nature of balance Associated company Creditors 970,970 2,083,998 Staff provident fund Contribution payable 4,473,681 4,130,226 Employees' welfare trust Contribution payable 415, ,509 Associated company Advances 1,259, DATE OF AUTHORIZATION OF ISSUE The Board of Directors of the Holding Company authorized this condensed interim consolidated financial information for issuance on 21 October. 13. GENERAL 13.1 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. 37 Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company Highnoon Laboratories Limited and its Subsidiary Company Quarterly Report 38

22 Left intentionally blank 39 Quarterly Report Highnoon Laboratories Limited and its Subsidiary Company

23 BOOK POST 17.5 Kilometer Multan Road, Lahore 53700, Pakistan Tel: Fax: info@highnoon.com.pk Web: