Samin Textiles Limited

Transcription

1 Interim Financial Report for the half year ended December 31, 2017

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3 Contents Company Information Directors Review Auditors Report Condensed Interim Balance Sheet Condensed Interim Profit and Loss Account Condensed Interim Statement of Comprehensive Income Condensed Interim Statement of Cash Flows Condensed Interim Statement of Changes in Equity Notes to the Condensed Interim Financial Information

4 Company Information Board of Directors NonExecutive Directors Mrs. Mehvash Amin Mr. Shehryar Amin Mr. Tariq Jilani Mr. Jamil Masud Executive Directors Mr. Jehanzeb Amin Mr. Safder Hussain Tariq Independent Director Mr. Qamber Hamid Audit Committee Mr. Qamber Hamid Mr. Jamil Masud Mr. Tariq Jilani Human Resource & Remuneration Committee Mr. Jamil Masud Mr. Tariq Jilani Mr. Shehryar Amin Chief Financial Officer Mr. Safder Hussain Tariq Company Secretary Mr. Muhammad Tayyab Chief Internal Auditor Ms. Nayab Ayaz Auditors Chairman Cheif Executive Chairman Member Member Chairman Member Member Legal Advisor Imtiaz Saddiqui & Associates Leading Banks National Bank of Pakistan Askari Bank Limited Bank Alfalah Limited Summit bank Limited NIB Bank Limited Allied Bank Limited Pak Libya Holding Company (Private) Limited Pak Oman Investment Company Limited Soneri Bank Limited Shares Registrar Corplink (Pvt) Limited Wings Arcade, 1K, Commercial Model Town, Lahore, Pakistan. Tel: Fax: Registered/Head Office 50C, Main Gulberg, Lahore, Pakistan. Tel: Fax: Mills th 8 Kilometer, Manga Raiwaind Road, District Kasur, Pakistan. Grant Thornton Anjum Rahman Chartered Accountants 02

5 Interim Financial Report Directors Review The board of directors of your company is pleased to present before you the unaudited financial statements duly reviewed by the auditors. These financial statements have been prepared in compliance with IAS 34 Interim Financial Reporting and are submitted under section 245 of the companies ordinance Financial Highlights Sales Net Gross (Loss) / Profit Other Operating Income (Loss)/Profit After Tax Depreciation Cash Loss / Profit Half Year ended December 31, (94.381) ( ) ( ) in million Half Year ended December 31, (79.120) (64.895) The figures tabulated above reveal that during the period under review the company posted net sales amounting to Rs million and a net loss of Rs million as compared to net sales of Rs million and net loss of Rs million for the corresponding period of last financial year. Due to paucity of working capital, the Company has changed its business model i.e. from Own raw material purchase to Conversion / Order weaving. Due to this business model the sales values went down by 60% to 70% during the period under review. Due to lack of orders, the plant is running on idle capacity i.e. less than 60% capacity utilization, as such the fixed cost is heavy and not being absorbed in the cost of goods sold and couldn't generate gross margins. Future Outlook / Strategy The sponsors and the management have faith and belief in the textile business. The present lean period on textile industry hasn't shaken their determination to stay in the business. As the entire textile sector especially the weaving is facing the depressed market condition, the management is quite optimistic that it will bounce back and those who can sustain the current pressure and cross through this rough patch will be able to get benefits of the upcoming opportunities. They are committed to cater for the financial needs of the company for its survival and revival. The management is of the opinion that this is the time when government should come forward to support the industry in terms of export rebate schemes and release of sales tax refunds. Such measures will put the industry back to its own feet. However, the management is cognizant of these facts and strives to take all necessary measures to turnaround the company in a profitable unit. Cost cutting measures under all heads of account and financial support from the sponsors is helping the company to survive till crossing the rough patch. Acknowledgement: We are grateful to all our stakeholders exclusively the bankers for their ongoing support and the employees of the company for their commitment and hard work. For and on behalf of the Board Lahore : rd Dated : 23 February, 2018 Jehanzeb Amin Chief Executive 03

6 (79.120) (64.895) (94.381) ( ) ( ) 04

7 Interim Financial Report Introduction We have reviewed the accompanying condensed interim balance sheet of Samin Textiles Limited as at December 31, 2017 and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim statement of cash flows, condensed interim statement of changes in equity together with the notes forming part thereof for the half year then ended (hereinafter referred to as the condensed interim financial information ). Management is responsible for the preparation and presentation of this condensed 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 condensed interim financial information based on our review. The figures of condensed interim profit and loss account and condensed interim statement of comprehensive income for the quarters ended December 31, 2017 and 2016 have not been reviewed as we are required to review only the cumulative figures. Scope of Review We conducted our review in accordance with International Standard on Review Engagement 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 of and is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Emphasis of Matter TM An instinct for growth Grant Thornton Anjum Rahman 1Inter Floor, Eden Centre, 43Jail Road, Lahore 54000, Pakistan. T , F Auditor's Report to the Members on Review of Condensed Interim Financial Information Without qualifying our conclusion, we draw attention to note 1.2 to the accompanying condensed interim financial information which describes that during the period ended December 31, 2017, the Company has incurred loss amounting to Rs million mainly due to nonimplementation of full BMR & E plans, sluggish market conditions for greige fabric in the international market and shortage of working capital. These conditions indicate existence of uncertainties relating to going concern status of the Company in foreseeable future. This financial information has, however, been prepared on a going concern basis for the reasons, as more fully explained in note 1.2 to the financial information. Our conclusion is not qualified in respect of this matter. CHARTERED ACCOUNTANTS Engagement Partner: Muhammad Shaukat Naseeb Lahore Dated: February 23, 2018 Chartered Accountants Member of Grant Thornton International Ltd Offices in Karachi and Islamabad 05

8 Condensed Interim Balance Sheet (Unaudited) as at December 31, 2017 Equity and liabilities Share capital and reserves Authorized capital Note Unaudited Audited Dec 31, 2017 Jun 30, ,000,000 (June 2017: 30,000,000) ordinary shares of Rs. 10 each Share capital Loan from sponsor 6 Reserves Total share capital and reserves Surplus on revaluation of property, plant and equipment 300,000, ,280,000 49,288,373 (375,799,140) (59,230,767) 332,544, ,000, ,280,000 41,000,000 (215,745,357) 92,534, ,791,266 Liabilities Noncurrent Subordinated loanrelated party Long term financing 7 Deferred liabilities Total noncurrent liabilities 10,411,566 53,668,313 1,287,100 65,366,979 10,411, ,579,602 1,287, ,278,268 Current Trade and other payables 8 Interest /markup accrued Short term borrowings 9 Current portion of long term financing Total current liabilities Total liabilities Total equity and liabilities 227,681,564 25,708, ,834,481 44,529, ,754,434 1,046,121,413 1,319,435, ,071,698 36,436, ,607,481 51,362, ,478, ,757,076 1,386,082,985 Contingencies and Commitments 10 Assets Noncurrent Property, plant and equipment 11 Intangible assets 12 Long term investments 13 Long term deposits Total Noncurrent assets 854,024,829 14,420, ,445, ,072,369 14,420, ,493,159 Current Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Trade deposits and prepayments Tax refunds due from governmentnet Cash and bank balances 14 Current assets 48,088, ,679,552 19,761,301 13,122,784 2,793, ,730,515 7,813, ,989,583 52,077, ,970,158 19,414,419 7,370,758 2,859, ,840,173 5,058, ,589,826 Total assets 1,319,435,202 1,386,082,985 The annexed notes from 1 to 23 form an integral part of this condensed interim financial information. JEHANZEB AMIN Chief Executive SAFDAR HUSSAIN TARIQ Director/CFO 06

9 Interim Financial Report Condensed Interim Profit and Loss Account (Unaudited) Notes For the half year ended Dec 31, 2017 For the half year ended Dec 31, 2016 () For the quarter ended Dec 31, 2017 () For the quarter ended Dec 31, 2016 Sales net 200,823, ,730,332 83,348, ,205,796 Cost of sales 15 (295,205,035) (581,588,148) (130,051,160) (254,271,840) Gross (loss)/profit (94,381,366) 3,142,184 (46,702,927) 10,933,956 Other income 2,359, ,888 2,346,793 (554) Distribution cost (6,633,245) (9,242,351) (3,411,241) (4,844,546) Administrative expenses (26,672,636) (30,519,322) (13,065,754) (14,851,098) Other expenses 16 (2,106,253) (15,500) (2,106,253) 55,976 Operating loss (127,433,738) (36,467,100) (62,939,382) (8,706,265) Finance cost (35,384,627) (39,264,791) (17,865,697) (18,598,673) Loss before taxation (162,818,365) (75,731,891) (80,805,079) (27,304,938) Taxation 17 (4,482,128) (3,388,580) (3,304,839) (1,419,280) Net loss for the period (167,300,493) (79,120,472) (84,109,918) (28,724,219) Loss per share basic & diluted 21 (6.26) (2.96) (3.15) (1.07) The annexed notes from 1 to 23 form an integral part of this condensed interim financial information. JEHANZEB AMIN Chief Executive SAFDAR HUSSAIN TARIQ Director/CFO 07

10 Condensed Interim Statement of Comprehensive Income (Unaudited) For the half year ended Dec 31, 2017 For the half year ended Dec 31, 2016 For the quarter ended Dec 31, 2017 For the quarter ended Dec 31, 2016 Loss after taxation (167,300,493) (79,120,472) (84,109,918) (28,724,219) Other comprehensive income for the period Total comprehensive loss for the period (167,300,493) (79,120,472) (84,109,918) (28,724,219) The annexed notes from 1 to 23 form an integral part of this condensed interim financial information. JEHANZEB AMIN Chief Executive SAFDAR HUSSAIN TARIQ Director/CFO 08

11 Interim Financial Report Condensed Interim Statement of Cash Flows (Unaudited) For the half year ended Dec 31, 2017 For the half year ended Dec 31, 2016 Notes Cash generated from operations Cash (used in) / generated from operations Taxes paid Net cash (used in) / from operating activities 19 (45,006,680) (1,537,792) (46,544,472) 60,944,163 (13,178,441) 47,765,722 Cash flows from investing activities (Increase) / Decrease in long term deposits Proceeds from disposal of property, plant and equipment Additions in property, plant and equipment Net cash used in investing activities 2,800, (9,158,680) (6,358,680) (209,040) (3,573,463) (3,782,503) Cash flows from financing activities (Decrease) / increase in short term borrowings (Decrease) in long term financing net Increase in interest free loan from sponsor Finance cost paid Net cash (used in) / from financing activities 157,227,000 (63,744,289) 8,288,373 (46,112,867) 55,658,217 (11,684,623) (17,618,168) (34,846,226) (64,149,017) Net change in cash and cash equivalents 2,755,065 Cash and cash equivalents at the beginning of the period 5,058,157 Cash and cash equivalents at the end of the period 7,813,222 (20,165,798) 26,116,244 5,950,446 The annexed notes from 1 to 23 form an integral part of this condensed interim financial information. JEHANZEB AMIN Chief Executive SAFDAR HUSSAIN TARIQ Director/CFO 09

12 Condensed Interim Statement of Changes in Equity (Unaudited) Particulars Issued, subscribed and paid up share capital Revenue reserve Accumulated Profits/(Loss) Reserves Loan from sponsor Subtotal Total Equity Balance as at July 01, ,280,000 51,256,016 51,256, ,536,016 Loss for the period (79,120,472) (79,120,472) (79,120,472) Other comprehensive income for the period Total comprehensive loss for the period (79,120,472) (79,120,472) (79,120,472) Transfer from surplus on revaluation of property, plant and equipmentnet of tax 5,555,811 5,555,811 5,555,811 Balance as at December 31, 2016 (unaudited) 267,280,000 (22,308,644) (22,308,644) 244,971,356 Balance as at July 01, ,280,000 (215,745,357) 41,000,000 (174,745,357) 92,534,643 Loss for the period (167,300,493) (167,300,493) (167,300,493) Other comprehensive income for the period Total comprehensive loss for the period (167,300,493) (167,300,493) (167,300,493) Loan obtained during the period 8,288,373 8,288,373 8,288,373 Transfer from surplus on revaluation of property, plant and equipment net of tax 7,246,710 7,246,710 7,246,710 Balance as at December 31, 2017 (audited) 267,280,000 (375,799,140) 49,288,373 (326,510,767) (59,230,767) The annexed notes from 1 to 23 form an integral part of this condensed interim financial information. JEHANZEB AMIN Chief Executive SAFDAR HUSSAIN TARIQ Director/CFO 10

13 Interim Financial Report Notes to the Condensed Interim Financial Information (Unaudited) 1 General information and nature of operations 1.1 Samin Textiles Limited (the "Company") is a public limited company incorporated in Pakistan on November 27, 1989 under the Companies Ordinance, The shares of the Company are listed on Pakistan Stock Exchange. The principal business of the Company is manufacturing and sale of cloth. The address of its registered/head office is 50C, Main Gulberg, Lahore. The mill is situated at Manga Raiwind Road, District Kasur in the Province of Punjab. 1.2 During the period ended December 31, 2017 the company has incurred net loss amounting to Rs million mainly due to nonimplementation of BMR & E plans, sluggish market conditions for greige fabric in the international market, shortage of working capital and idle capacity utilization of plant. Due to shortage of working capital, the Company have to change its business model i.e. own raw material purchase to conversion. The plant is running on idle capacity i.e. less than 60% and accordingly, the fixed cost is heavy and not being absorbed in the cost of goods sold. Continuation of the Company as going concern is dependent on its ability to attain satisfactory levels of profitability in the future and implementation of following plans drawn by the management: Financial Projections The management of the Company has prepared a set of financial projections for a period of three years to analyze the Company s sustainability in the future periods with a particular focus on the 12 months period ending December 31, The financial projections are based on various assumptions such as production levels, interest rates, interest repayments, availability of fuel and power and other market forces. These financial projections have been approved by the Board of Directors (the Board) of the Company and have been subjected to the stressed scenarios which the Board considered to be reasonable and appropriate. Financial commitment from sponsors The sponsors of the Company have explicitly provided a commitment to provide necessary financial support to the Company, if the need arises, to address any liquidity and solvency issues to enable the Company to continue its business. Cost Cutting/Staff Retrenchment The Company has taken proactive measures to further reduce the existing cost i.e. released redundant work force, curtailed wastages, and other important steps to improve the Company's financial health and makes the project efficient/profitable. Keeping in view aforementioned achievements/plans, the management is of the view that the Company will have requisite resources and continue to work as a going concern in the foreseeable future. 2 Statement of Compliance This condensed interim financial information is unaudited and is being submitted to shareholders, as required by the Companies Act, Effective 30 May 2017, the Companies Act, 2017 (the Act) has been promulgated, however, the Securities and Exchange Commision of Pakistan (SECP) vide its circularno. 23 of 2017 dated October 04, 2017decided that the Companies whose financila year closes on or before December 31, 2017 shall prepare their financial statements in accordancewith the provisions of the repealed Companies ordinance, Furthermore Institue of Chartered Accountants of Pakistan also issued clarification vide its circular dated 06 October 2017 which states that the interim financial information of the Companies for period ending or before December 31, 2017 shall also be prepared in accordance of with the provision of repealed Companies Ordinance, 1984.Accordingly, these condensed interim financial information of the Company for the six month ended 31 December 2017 has been prepared in accordance with the requirements of the International Accounting Standard (IAS) 34, "Interim Financial Reporting" and provisions of and directives issued under the Companies Ordinance, In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed. This condensed interim financial report does not include all the information required for full annual financial statements and should be read in conjunction with the annual financial statements of the Company for the year ended June 30, Currently, the Company is assessing the impact of these requirements on the financial 11

14 Notes to the Condensed Interim Financial Information (Unaudited) statements. It is expected that it will result in change in accounting treatments and enhanced disclosures in the financial statements which will be incorporated in subsequent financial statements of the Company. 3 Significant Accounting policies The accounting policies and methods of computation adopted for the preparation of this condensed interim financial information are consistent with those applied in the preparation of the annual published financial statements of the Company for the year ended June 30, The new standards, amendments to the approved accounting standards and interpretations that are mandatory for accounting periods beginning on or after July 1, 2017, were either considered not to be relevant to the Company's operations or did not have significant effect on the accounting policies of the Company. 4 Critical accounting estimates and judgments Judgments and estimates made by the management in the preparation of this condensed interim financial report are the same as those applied to the preceding annual published financial statements of the Company for the year ended June 30, Financial risk management The financial risk management objectives and policies adopted by the Company are consistent with those disclosed in the financial statements of the Company for the year ended June 30, Unaudited Audited Dec 31, 2017 Jun 30, 2017 Note 6 LOAN FROM SPONSOR RELATED PARTY Loan from sponsor unsecured 49,288,373 41,000,000 Total ,288,373 41,000, Opening balance 41,000,000 Received during the period/year 8,288,373 41,000,000 Closing balance ,288,373 41,000, This represents interest free loan from a member of the Company. This loan is designated interest free and is repayable at the discretion of the Company. 'Further, in accordance with Technical Release 32 Accounting Directors Loan issued by the Institute of Chartered Accountants of Pakistan effective for the financial statements for the period beginning on or after January 01, 2016 with earlier application permitted, such loan has been classified as part of equity instead of long term borrowing. 7 Long term financingsecured Unaudited Audited Dec 31, 2017 Jun 30, 2017 From financial institutions 96,816, ,561,169 Less: Payable within in next twelve months (43,148,567) (49,981,567) Total 53,668, ,579,602 12

15 Interim Financial Report Notes to the Condensed Interim Financial Information (Unaudited) Unaudited Audited Dec 31, 2017 Jun 30, 2017 Note 7.1 Opening balance Movement during the period: Increase during the period Repaid during the period Closing balance 160,561,169 (63,744,289) 96,816, ,832,177 (91,271,008) 160,561,169 8 TRADE AND OTHER PAYABLES Creditors for goods for supplies for services 31,272,677 43,284,602 47,613, ,170,319 46,322,077 37,000,822 48,033, ,356,211 Accrued liabilities Advances from customers Security deposits Payable to Workers' Profit Participation Fund Provident fund payable Unclaimed dividend Total 41,316,222 28,315, ,630 8,211,557 23,688,531 3,466, ,681,564 33,039,183 27,119, ,630 6,443,376 15,733,793 3,466, ,071,698 Unaudited Audited Sanctioned Limit Dec 31, 2017 Jun 30, 2017 Note 9 SHORT TERM BORROWINGS From banking companiessecured: Pre & Postshipment own sources 300,000, ,835, ,835,000 Cash finance 335,000, ,999, ,772,481 From related partiesunsecured ,000, ,000,000 Total 682,834, ,607, The securities registered with SECP against short term borrowing from one financial institution is utilized for various facilities sanctioned by the said financial institution. 9.2 These facilities are secured against first joint pari passu charge on current assets ranging from Rs. 120 million to Rs. 176 million, first pari passu charge on fixed assets ranging from Rs. 60 million to Rs. 160 million, second joint pari 13

16 Notes to the Condensed Interim Financial Information (Unaudited) passu charge on fixed assets of the Company ranging from Rs. 40 million to Rs. 114 million, 4th ranking charge over Machinery, first joint pari passu charge on present and future fixed assets of the Company amounting to Rs. 115 million, joint pari passu charge amounting Rs.65 million on current and fixed assets of the Company duly registered SECP with creditors(nbp,askari bank, Bank Alfalah), Ranking Mortgage charge for Rs.13 million over additional land measuring 11 kanals & 19 Marlas, Joint Pari passu charge of Rs. 80 Million on the current assets of the company, indemnity bond to cover exchange risk, lien on export LC/contract for Rs. 85 million, export bills under lien and personal guarantee of the sponsoring director of the Company and carry markup at rates ranging from three to six months KIBOR plus 2.5% to 4% per annum (June 2017: one to six months KIBOR plus 2.5% to 4% per annum). 9.3 These facilities are secured against first joint pari passu charge over the current assets of the Company amounting to Rs. 295 million, first pari passu charge over the fixed assets of the company valuing 340 million, 1% registered and 100% equitable mortgage of residential property in the name of Mrs. Mehvish Amin, pledge of stocks (i.e. yarn and grey cloth) and personal guarantee of the sponsoring director. Ranking charge over the current assets of the company in the amount of Rs. 176 million.these facilities carry markup at rate six month KIBOR plus 3% per annum (June 2017: three to six month KIBOR average ask rate plus 3% per annum). 9.4 This loan has obtained from sponsor and is unsecured carries 3 months kibor plus 0.5% (June 2017: Nil). This loan is repayable on the demand of sponsor. 10 Contingencies and commitments Contingencies 10.1 There is no material change in contingencies as disclosed in the notes to the financial statements for the year ended June 30, 2017 except as follow: Proceedings under section 214C read with section 177 ot the Ordinance for the Tax year 2015 were initiated in August The ACIR passed an order on u/s 122(1) of the Ordinance whereby additions of Rs. 18,856,268 were made and refund claimed by the Company was reduced from Rs 17,462,076 to 17,099,006. Being aggrieved from aforesaid Order, the Company has filed Appeal before Commissioner AppealsII, Lahore. This appeal is pending for adjudication. The management of the Company expects favourable outcome of the appeal and accordingly no provisions in this regard has been made in these condensed interim financial information In respect of Audit proceedings for the Tax Year 2014, the Assistant/Deputy CIR passed an Order u/s 122(1)(5) whereby additions of Rs 23,525,775 were made and the tax demand of Rs 1,293,704 was raised. Being aggrieved from the aforesaid Order, the Company has filed the Appeal before the Commissioner AppealII, Lahore. on This appeal is pending for adjudication. The management of the Company expects favourable outcome of the appeal and accordingly no provision in this regard has been made in these condensed interim financial information The Addl. CIR, Audit Range, Lahore initiated proceedings u/s 122(9)(5A) of the Ordinance for Tax Year The Addl. CIR passed an Order u/s 122(5A) of the Ordinance whereby the tax demand of Rs. 61,365,329 was raised and made impugned attrition/disallowance of Rs 255,774,631. Being aggrieved from the aforesaid Order the Company has filed Appeal before the Commissioner AppealsII, Lahore which is pending for adjudication. Further the Company has also got stay against recovery proceedings uptill The management of the Company expects favourable outcome of the appeal and accordingly no provision in this regard has been made in these condensed interim financial information Commitments as at balance sheet date amounting to Rs. Nil (June 30, 2017: Nil). 14

17 11 Property, plant and equipment Interim Financial Report Notes to the Condensed Interim Financial Information (Unaudited) Unaudited Audited Dec 31, 2017 Jun 30, 2017 Note Operating fixed assets ,024, ,072, Operating fixed assets Written down value opening 882,072,369 Add: Cost of additions during the period / year ,158, ,231,049 Disposals during the period / year (W.D.V) (533,194) Less: Depreciation (36,673,027) Written down value closing 854,024, ,921,557 5,519, ,441,075 (9,890) (72,358,816) 882,072, Cost of additions during the period/year Plant and machinery 9,158,680 Office equipment 9,158,680 4,430,516 1,089,002 5,519, Intangible assets Intangible assets 12.1 Total 12.1 Written down value opening Less: Amortization during the period Written down value closing 469,280 (469,280) 13 LONG TERM INVESTMENT Investments in related parties Associate Onetel Pakistan (Private) Limited 13.1 & 13.2 & 13.3 Total 13.1 This represents Company's investment in an associate, Onetel Pakistan (Private) Limited. The Company held common directorship with the associate and hold 24% (2016: 24%) equity in the associate. The breakup value per share based on audited accounts amounts to Rs. 10 per share at 30 June 2017 (2016: Rs. 10 per share) During the last year, the investment in associate company has been impaired due to change in plans and therefore investment in equity is written off. 15

18 Notes to the Condensed Interim Financial Information (Unaudited) Unaudited Audited Dec 31, 2017 Jun 30, 2017 Note 13.3 This is madeup as under: Opening Investment Less: Impaired during the year Total 1,000,000 (1,000,000) 14 CASH AND BANK BALANCES Cash at bank: current accounts deposit accounts foreign currency accounts Cash in hand 2,981,392 1,795,845 5,060 4,782,297 3,030,925 7,813,222 4,378, ,829 5,060 4,555, ,337 5,058, Cost of Sales For the Half Year Ended For the Half Year Ended For the Quarter Ended For the Quarter Ended December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016 Raw material consumed 53,189, ,112,464 3,641, ,946,833 Salaries, wages and other benefits 64,135,931 78,455,794 33,173,862 39,758,778 Other factory Overheads 148,189, ,246,223 78,371,834 89,864, ,514, ,814, ,187, ,570,061 (Increase)/decrease in work in process Opening work in process 1,329,570 2,850,745 1,143,169 3,417,538 Closing work in process (961,252) (291,054) (961,252) (291,054) Adjustment of work in process 368,318 2,559, ,917 3,126,484 Cost of goods manufactured 265,882, ,374, ,368, ,696,545 (Increase)/decrease in finished goods Opening stock 249,908, ,733, ,268, ,062,146 Closing stock (220,511,430) (339,453,922) (220,511,430) (339,453,922) Adjustment of finished goods 29,397,034 25,279,833 14,756,755 (4,391,776) Less: Export rebate (65,857) (32,929) Total 295,279, ,588, ,125, ,271,840 16

19 Interim Financial Report Notes to the Condensed Interim Financial Information (Unaudited) Unaudited Dec 31, 2017 Unaudited Dec 31, OTHER EXPENSES Donations Impairment on investment in associate Debtors written off Total 73,025 2,033,228 2,106,253 15,500 15, PROVISION FOR TAXATION Current 2,514,800 5,884,669 Prior period 1,967,328 (2,496,089) Total 4,482,128 3,388, Fair values of financial assets and liabilities Fair value is the amount that would be received on sale of an asset or paid on transfer of a liability in an orderly transaction between market participants at the measurement date. Consequently, differences can arise between carrying values and fair value estimates. Underlying the definition of fair value is the presumption that the Company is a going concern without any intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. IFRS 13, 'Fair Value Measurements' requires the Company to classify fair value measurements using fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level I: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e as prices) or indirectly (i.e derived from prices). Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs). Financial instruments by category The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. 17

20 Notes to the Condensed Interim Financial Information (Unaudited) Carrying Amount Fair Value Fair value Loans and receivables Available for sale instruments through income statement Other financial instruments Total Level 1 Level 2 Level 3 Total December 31, 2017 (Unaudited) Financial assets not measured at fair value Current Trade debts Loans and advances Trade deposits Cash and bank balances 19,761,301 19,761,301 13,122,784 13,122,784 2,793,663 2,793,663 7,813,222 7,813,222 43,490,970 43,490,970 Financial liabilities not measured at fair value Noncurrent Subordinated loanrelated party Long term financing 10,411,566 10,411,566 96,816,880 96,816,880 Current Trade and other payables Interest accrued Short term borrowings 178,153, ,153,785 25,708,457 25,708, ,834, ,834, ,925, ,925,169 June 30, 2017 (Audited) Financial assets not measured at fair value Current Trade debts Loans and advances Trade deposits Cash and bank balances 19,414,419 19,414,419 7,370,758 7,370,758 2,793,663 2,793,663 5,058,157 5,058,157 34,636,997 34,636,997 Financial liabilities not measured at fair value Noncurrent Subordinated loanrelated party Long term financing Current Trade and other payables Interest accrued Short term borrowings 10,411,566 10,411, ,561, ,561, ,589, ,589,139 36,436,697 36,436, ,607, ,607, ,606, ,606,052 18

21 Interim Financial Report Notes to the Condensed Interim Financial Information (Unaudited) Unaudited Unaudited Dec 31, 2017 Dec 31, Cash (used in)/generated from operations Loss before taxation Adjustments for: Depreciation on property, plant and equipment Gain on disposal of property, plant and equipment Interest Income (162,818,365) 36,673,026 (2,266,806) (73,025) (75,731,891) 36,121,984 (73,025) Operating profit before changes in working capital (93,100,543) Impairment loss on investment in associate 73,025 (183,501) Changes in working capital (Increase) /decrease in current assets Stores, spare parts and loose tools 3,988,565 (3,134,948) Stock in trade 32,290,606 49,294,846 Trade debts (346,882) 21,525,539 Loans and advances (5,752,026) 2,674,514 Trade deposits, prepayments and balances with statutory authorities 8,230,709 (10,483,068) Increase in current liabilities Trade and other payables 9,609,866 1,250,781 Total (45,006,680) 60,944, Transactions with related parties Significant transactions with related parties during six months are as follows: Unaudited Unaudited Dec 31, 2017 Dec 31, 2016 Relationship Mrs. Mehvish Amin Sponsor Office rent 600, ,000 Mrs. Shehla Segal Sponsor Markup on subordinated loan 454, ,496 Mr. Sarmid Amin Sponsor Markup on loan 2,385,264 Directors and other key management personnel Directors and executives Remuneration and benefits 16,393,230 15,627,090 Provident Fund expense including interest Provident fund 10,223,733 10,936,622 19

22 Notes to the Condensed Interim Financial Information (Unaudited) Significant balances with related parties as on balance sheet date are as follows: Unaudited Dec 31, 2017 Audited Jun 30, 2017 Payable to Sponsors Sponsors 230,722,113 63,594,476 Payable to Provident Fund Provident fund 23,688,531 15,733,793 Unaudited Unaudited Dec 31, 2017 Dec 31, Loss per share basic and diluted Loss for the period (167,300,493) (79,120,472) Weighted average number of ordinary shares 26,728,000 26,728,000 Loss per share () (6.26) (2.96) 22 General 22.1 Corresponding figures have been rearranged wherever necessary, for the purpose of comparison. However, there were no material reclassification or rearrangement to report Figures have been rounded off to the nearest rupees unless otherwise stated. 23 Date of authorization for issue This condensed interim financial information was authorized for issue on February 23, 2018 by the Board of Directors of the Company. JEHANZEB AMIN Chief Executive SAFDAR HUSSAIN TARIQ Director/CFO 20

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