Growth through. Diversification

Transcription

1 Growth through Diversification 2nd Quarterly Report For the Quarter & Half-Year ended December 31,

2 Growth Through Diversification 1 CORPORATE INFORMATION BOARD OF DIRECTORS CHAIRMAN Mr. Sikandar Mustafa Khan CHIEF EXECUTIVE S M Irfan Aqueel DIRECTORS Mr. Latif Khalid Hashmi Mr. Sohail Bashir Rana Mr. Laeeq Uddin Ansari Mian Muhammad Saleem Mr. Ahmad Aqeel Mr. Saad Iqbal COMPANY SECRETARY Muhammad Faisal Azeem CHIEF FINANCIAL OFFICER Mr. Sohail A Nisar - FCA AUDITORS M/S A. F. Ferguson & Co. Chartered Accountants LEGAL ADVISORS Asjad Saeed and Associates Akhtar Ali & Associates Ch. Law Associates Inn COMPANY SHARE REGISTRARS M/s. Hameed Majeed Associates (Pvt.) Ltd., 1st Floor, H.M. House, 7-Bank Square, Lahore. Tel: Fax: shares@hmaconsultants.com BANKERS Bank Alfalah Ltd. Habib Bank Ltd. MCB Bank Ltd. Standard Chartered Bank. United Bank Ltd. Allied Bank Ltd. Meezan Bank Ltd. REGISTERED OFFICE AND PLANT Sheikhupura Road, Distt. Sheikhupura. Tel: , UAN: Fax: , Website: info@millat.com.pk REGIONAL OFFICES KARACHI 3-A, Faiyaz Centre, Sindhi Muslim Co-operative Housing Society, Tel: , UAN: Fax: MULTAN CANTT. Garden Town, (Daulatabad), Shershah Road, Tel: Fax: ISLAMABAD H. No. 22, St. No. 41, Sector F-6/1, Tel: , UAN: Fax: SUKKUR A-3, Professor Housing Society, Shikarpur Road, Tel: , Fax:

3 2 Half year ended December 31, DIRECTORS REVIEW I am pleased to present the interim financial information of the Company for the six months ended 31 December along with consolidated interim financial information of the Millat Group of Companies. Despite many challenges, your company managed to achieve another milestone of 20,000 units sold during the first half of fiscal year -18. Resultantly, sales volume increased by 54% as compared to previous period. Sales increased from Rs billion to Rs billion, representing an increase of 58%. Profit after tax for the six months period stands at Rs. 2.7 billion as compared to Rs. 1.6 billion for the same period last year. This represents an increase of 69% which translates into EPS of Rs per share in contrast to Rs for the corresponding period last year. We were able to achieve this despite numerous uncertainties being faced by Pakistan economy during first half of fiscal year 2018.Four key factors of Pakistan s economy have witnessed significant changes since November. Pak rupee devalued by approximately five percent against US dollar straining supply chain. Oil prices in global market have touched the USD 70 mark. MTL is contributing significantly towards saving foreign exchange because of the high level of localization. This has also made your company highly competitive not just in the local market but also for export. However, the outlook remains positive as agricultural sector has shown increase in output for the second year in succession. Production of almost all major Kharif crops has surpassed the level for fiscal year. The World Bank predicts GDP growth rate of 5.5% for Pakistan in this fiscal year which would be highest in this decade. Core inflation was also slightly higher than expected but well contained. Keeping these factors in view, future outlook remains positive for your company and Pakistan economy as a whole. Demand for agricultural tractors and related products is expected to grow for the remaining fiscal year. All in all, this period has been prosperous for the company due to which, on behalf of the Board, I would like to thank and acknowledge untiring efforts made by our employees, vendors and all other stakeholders in sustaining growth and helping us realize our vision. For and on behalf of the Board Lahore: February 22, 2018 Sikandar Mustafa Khan Chairman

4 Growth Through Diversification 3 AUDITORS REPORT to the members on review of unconsolidated condensed interim financial information Introduction We have reviewed the accompanying unconsolidated condensed interim balance sheet of Millat Tractors Limited the Company as at December 31, and the related unconsolidated condensed interim profit and loss account, unconsolidated condensed interim statement of comprehensive income, unconsolidated condensed interim cash flow statement, unconsolidated condensed interim statement of changes in equity and notes to the accounts for the half year then ended (here-in-after referred to as the unconsolidated condensed interim financial information ). Management is responsible for the preparation and presentation of this unconsolidated 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 unconsolidated condensed interim financial information based on our review. The figures of the unconsolidated condensed interim profit and loss account and unconsolidated condensed interim statement of comprehensive income for the quarters ended December 31, and 2016 have not been reviewed, as we are required to review only the cumulative figures for the half year ended December 31,. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying unconsolidated condensed interim financial information as of and for the half year ended December 31, is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim reporting. Other matter The financial statements of the Company for the year ended June 30, were audited by another firm of Chartered Accountants who expressed an unqualified opinion thereon vide their report dated September 14,. A. F. Ferguson & Co. Chartered Accountants Engagement Partner: Hammad Ali Ahmad Lahore: February 22, 2018

5 4 Half year ended December 31, Unconsolidated Condensed Interim Balance Sheet as at December 31, (Unaudited) Note (Un-audited) December 31, (Audited) June 30, (Rupees in thousand) EQUITY AND LIABILITIES Share capital and reserves Authorized share capital 50,000,000 (June 30, : 50,000,000) ordinary shares of Rs. 10 each 500, ,000 Issued, subscribed and paid up capital 442, ,926 General reserves 2,278,935 2,278,935 Unappropriated profit 2,970,424 2,849,637 Fair value reserve 129, ,355 5,821,572 5,749,853 Non-current liabilities Long term deposits 11,515 11,515 Deferred tax liabilities - net 65,990 19,120 77,545 30,635 Current liabilities Accumulating compensated absences 102,011 94,952 Trade and other payables 5 13,441,466 11,255,169 13,543,477 11,350,121 CONTINGENCIES AND COMMITMENTS 6 19,442,594 17,130,609 The annexed notes 1 to 20 form an integral part of the unconsolidated condensed interim financial information. Chief Financial Officer Chief Executive Officer

6 Growth Through Diversification 5 Note (Un-audited) December 31, (Audited) June 30, (Rupees in thousand) ASSETS Non-current assets Property, plant and equipment Operating fixed assets 7 696, ,873 Capital work in progress 11,983 6,974 Intangible assets Investment property 255, ,708 Long term investments 8 435, ,279 Long term loans 4,057 2,575 Employee s defined benefit plan 29,667 39,962 1,433,963 1,508,268 Current assets Stores, spare parts and loose tools 121, ,431 Stock-in-trade 4,055,568 3,646,581 Trade debts 144, ,827 Loans and advances 9 46,758 54,488 Trade deposits and short term prepayments 32,241 19,611 Other receivables 156, ,730 Short term investments 10 9,057,109 6,718,196 Balances with statutory authorities 2,514,058 2,526,588 Tax refunds due from the Government 803, ,886 Cash and bank balances 11 1,077,246 2,061,003 18,008,631 15,622,341 19,442,594 17,130,609 Chairman

7 6 Half year ended December 31, Unconsolidated Condensed Interim Profit and Loss Account for the half year ended December 31, (Unaudited) Note Half year ended Quarter ended December 31, December 31, Rupees in thousand Sales - net 18,222,938 11,543,319 9,253,874 6,882,912 Cost of sales 14,007,252 8,922,554 6,986,994 5,261,920 Gross profit 4,215,686 2,620,765 2,266,880 1,620,992 Distribution and marketing expenses 301, , , ,874 Administrative expenses 231, ,372 92,488 94,664 Other operating expenses 300, , , , , , , ,222 Other income , , , ,733 Operating profit 3,937,557 2,226,970 2,297,262 1,495,503 Finance costs Profit before taxation 3,936,747 2,226,692 2,296,759 1,495,425 Taxation 1,158, , , ,749 Profit after taxation for the period 2,778,340 1,579,698 1,611,729 1,066,676 Earnings per share - basic and diluted (Rupees) The annexed notes from 1 to 20 form an integral part of this unconsolidated condensed interim financial information. Chief Financial Officer Chief Executive Officer Chairman

8 Growth Through Diversification 7 Unconsolidated Condensed Interim Statement of Comprehensive Income for the half year ended December 31, (Unaudited) Half year ended Quarter ended December 31, December 31, Rupees in thousand Profit after taxation for the period 2,778,340 1,579,698 1,611,729 1,066,676 Other comprehensive income: Items to be reclassified to profit or loss in subsequent periods: Unrealized (loss)/ gain on revaluation of investments (49,068) 63,718 (15,073) (15,483) Total other comprehensive (loss)/ income - net of taxation (49,068) 63,718 (15,073) (15,483) Total comprehensive income for the period 2,729,272 1,643,416 1,596,656 1,051,193 The annexed notes from 1 to 20 form an integral part of this unconsolidated condensed interim financial information. Chief Financial Officer Chief Executive Officer Chairman

9 8 Half year ended December 31, Unconsolidated Condensed Interim Cash Flow Statement for the half year December 31, (Unaudited) Half year ended December (Rupees in thousand) Cash flows from operating activities Profit before taxation 3,936,747 2,226,692 Adjustment for: Depreciation on property, plant and equipment 39,721 33,476 Amortization of intangible assets 450 1,448 Provision for accumulating compensated absences 7,059 3,000 Property, plant and equipment written off Profit on bank deposits (87,783) (7,383) Dividend income (264,541) (174,621) Provision for pension obligaiton 10,295 19,895 Bad debts written off 8,772 - Gain on disposal of property, plant and equipment - (1,027) Fair value gain on short term investments (173,958) (62,386) Finance costs Workers Profit Participation Fund 211, ,286 Workers Welfare Fund 84,661 39,732 (162,337) (28,302) Cash flows from operating activities before working capital changes 3,774,410 2,198,390 Effect on cash flow due to working capital changes (Increase) / decrease in current assets: Stores, spare parts and loose tools (3,177) (5,761) Stock in trade (408,987) (773,268) Trade debts 29,992 82,351 Loans and advances 7,730 6,028 Trade deposits and short term prepayments (12,630) (9,207) Other receivables (47,553) (4,988) Increase in current liabilities: Trade and other payables 1,800,142 1,246,291 Cash generated from operations 1,365, ,446

10 Growth Through Diversification 9 Half year ended December (Rupees in thousand) Taxes paid (1,717,420) (700,390) Net increase in long term loans to employees (1,482) (91) Workers Profit Participation Fund paid (19,536) (5,507) Employee benefits paid - (5,960) Long term security deposits received Interest and mark-up paid (810) (512) (1,739,208) (712,060) Net cash generated from operating activities 3,400,719 2,027,776 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred (37,361) (88,012) Proceeds from disposal of property, plant and equipment 13,090 8,409 Short term investments made (2,900,000) (4,309,674) Proceeds from sale of short term investments 735,647 2,051,512 Profit on bank deposits received 87,783 6,445 Dividend received 264, ,621 Net cash used in investing activities (1,836,300) (2,156,699) CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid (2,548,176) (1,328,776) Net cash used in financing activities (2,548,176) (1,328,776) Net decrease in cash and cash equivalents (983,757) (1,457,699) Cash and cash equivalents at the beginning of the period 2,061,003 2,562,252 Cash and cash equivalents at the end of the period 1,077,246 1,104,553 The annexed notes from 1 to 20 form an integral part of this unconsolidated condensed interim financial information. Chief Financial Officer Chief Executive Officer Chairman

11 10 Half year ended December 31, Unconsolidated Condensed Interim Statement of Changes In Equity for the half year December 31, (Unaudited) Revenue Reserves Share capital General reserves Unappropriated profit Fair value reserves Total Rupees in thousand Balance as on June 30, 2016 (audited) 442,926 2,985, ,192 91,123 4,141,760 Final dividend for the year ended June 30, Rs. 30 per share - (706,584) (622,192) - (1,328,776) Profit after taxation for the period - - 1,579,698-1,579,698 Other comprehensive income ,718 63,718 Total comprehensive income for the period - - 1,579,698 63,718 1,643,416 Balance as on December 31, 2016 (un-audited) 442,926 2,278,935 1,579, ,841 4,456,400 Interim dividend for the period ended December 31, Rs. 35 per share - - (1,550,239) - (1,550,239) Profit after taxation for the period - - 2,820,178-2,820,178 Other comprehensive income ,514 23,514 Total comprehensive income for the period - - 2,820,178 23,514 2,843,692 Balance as on June 30, (audited) 442,926 2,278,935 2,849, ,355 5,749,853 Final dividend for the year ended June Rs. 60 per share - - (2,657,553) - (2,657,553) Profit after taxation for the period - - 2,778,340-2,778,340 Other comprehensive income (49,068) (49,068) Total comprehensive income for the period - - 2,778,340 (49,068) 2,729,272 Balance as on December 31, (un-audited) 442,926 2,278,935 2,970, ,287 5,821,572 The annexed notes from 1 to 20 form an integral part of this unconsolidated condensed interim financial information. Chief Financial Officer Chief Executive Officer Chairman

12 Growth Through Diversification 11 Selected Notes to the Unconsolidated Condensed Interim Financial Information for the half year December 31, (Unaudited) 1. THE COMPANY AND ITS ACTIVITIES The Company is a public limited Company incorporated in Pakistan in 1964 under the Companies Act (repealed Companies Ordinance, 1984), and is listed on Pakistan Stock Exchange Limited. The registered office of the Company is situated at Sheikhupura Road, District Sheikhupura. The Company is principally engaged in assembling and manufacturing of agricultural tractors, implements and multi-application products. 2. STATEMENT OF COMPLIANCE 2.1 These unconsolidated condensed interim financial information has been prepared in accordance with the approved accounting standards as applicable in Pakistan for interim financial reporting. The Companies Ordinance, 1984 has been repealed after the enactment of the Companies Act,. However, as allowed by the Securities and Exchange Commission of Pakistan (SECP) vide circular No. CLD/CCD/PR(11)/ dated July 20, and circular No. 23/ dated October 4,, the Company has prepared these unconsolidated condensed interim financial information in accordance with the provisions of the repealed Companies Ordinance, 1984 (the Ordinance). Accordingly, this unconsolidated condensed interim financial information is unaudited and has been prepared in accordance with the requirements of the International Accounting Standard 34, Interim Financial Reporting and provisions of and directives issued under the Ordinance, and is being submitted to the shareholders in accordance with Section 245 of the Ordinance. In case, where the requirements differ, the provisions of or directives issued under the Ordinance have been followed. The figures of the half year ended December 31, have been subjected to limited scope review as required by above-mentioned section of the Ordinance. 2.2 The comparative unconsolidated condensed interim balance sheet presented in these unconsolidated condensed interim financial information has been extracted from the unconsolidated annual audited financial statements of the Company for the year ended June 30,, whereas comparative unconsolidated condensed interim profit and loss account, unconsolidated condensed interim statement of comprehensive income, unconsolidated condensed interim cash flow statement and unconsolidated condensed interim statement of changes in equity have been extracted from the unconsolidated condensed interim financial information for the half year ended December 31, BASIS OF PREPARATION 3.1 These unconsolidated condensed interim financial information do not include all information and disclosures required in the unconsolidated annual audited financial statements and therefore should be read in conjunction with the unconsolidated annual audited financial statements for the year ended June 30,.

13 12 Half year ended December 31, 3.2 The accounting policies and methods of computation adopted for the preparation of this unconsolidated condensed interim financial information are same as those applied in the preparation of the preceding unconsolidated annual audited financial statements of the Company for the year ended June 30,, except for as disclosed in note 3.3 below. 3.3 The Company has adopted the following amendments and interpretation of IFRSs which became effective during the current period: - IAS 12 - Recognition of Deferred tax assets for Unrealized Losses - IFRS 7 Disclosure initiative Improvements to Accounting Standards Issued by the IASB - IFRS 1 Exemption clarification - IFRS 12 Clarification of disclosure requirements - IAS 28 Clarification of recognition criteria The adoption of the above amendments, interpretation and improvements are not expected to have any significant impact on this unconsolidated condensed interim financial information. Standards, interpretations and amendments to published approved accounting standards that are not yet effective but relevant The following are the new standards, amendments to existing approved accounting standards and new interpretations that will be effective for the periods beginning on or after July 1, 2018 that may have an impact on the financial statements of the Company. IFRS 9 Financial instruments - This standard replaces the guidance in IAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit loss model that replaces the current incurred loss impairment model. IFRS 15 Revenue from contracts with customers - IFRS 15 replaces the previous revenue standards: las 18 Revenue, las 11 Construction Contracts, and the related interpretations on revenue recognition. IFRS 15 introduces a single five-step model for revenue recognition and establishes a comprehensive framework for recognition of revenue from contracts with customers based on a core principle that an entity should recognise revenue representing the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

14 Growth Through Diversification 13 The management is in the process of assessing the impact of changes laid down by these standards on its financial statements. 4. ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of this unconsolidated 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 June 30,. (Un-audited) December 31, (Audited) June 30, (Rupees in thousand) 5. TRADE AND OTHER PAYABLES Trade creditors 1,397,101 1,023,184 Bills payable 181, ,559 Accrued liabilities 158, ,484 Advances from customers 10,840,789 9,386,045 Trademark fee payable 65,062 64,738 Workers Profit Participation Fund 211,773 19,656 Workers Welfare Fund 157,188 72,527 Security deposits 4,915 4,765 Unclaimed dividends 352, ,693 Others 73,395 99,518 13,441,466 11,255, CONTINGENCIES AND COMMITMENTS 6.1 Contingencies There has been no significant change in the contingencies since the date of preceding published unconsolidated annual audited financial statements for the year ended June 30,. 6.2 Commitments Commitments in respect of outstanding letters of credit are Rs. 1,106,190 thousand as at December 31, (June 30, : Rs. 1,375,790 thousand).

15 14 Half year ended December 31, Note (Un-audited) December 31, (Audited) June 30, (Rupees in thousand) 7. OPERATING FIXED ASSETS Book value at the start of the period/ year 717, ,130 Add: Additions during the period/ year , , , ,500 Less: Deletions during the period/ year (13,614) (16,589) Depreciation charge for the period/ year (39,721) (71,038) (53,335) (87,627) Book value at the end of the period/ year 696, , Additions during the period/ year Buildings - 211,456 Plant and machinery 1,759 8,579 Tools and equipments 1,342 3,679 Furniture, fixture and office equipment 2,593 54,276 Vehicles 25,235 74,685 Computers 1,423 4,695 32, ,370 8 LONG TERM INVESTMENTS Related parties: Investment at cost Subsidiaries - unquoted 217, ,170 Subsidiary - quoted 76,610 76, , ,780 Others: Available for sale - quoted Cost 12,145 12,145 Surplus on revaluation of investment 129, , , , , ,279

16 Growth Through Diversification LOANS AND ADVANCES Current portion of long term loans to employees 3,500 3,224 Advances to employees - considered good 1,211 1,479 Advances to suppliers - considered good 37,768 45,515 42,479 50,218 Advances to suppliers - considered doubtful 2,485 2,485 Less: Provision for doubtful advances (2,485) (2,485) - - Letter of credit opening charges 4,279 4, SHORT TERM INVESTMENTS Investment in conventional mutual funds designated at 46,758 54,488 fair value through profit and loss 7,057,109 5,718,196 Investment in Term Deposit Receipt (TDR) 2,000,000 1,000, CASH AND BANK BALANCES 9,057,109 6,718,196 In hand - Cash 3, In hand - Cheques 137,019 22,991 Cash at bank - current accounts 539, ,699 Cash at bank - deposits accounts 397,238 1,341, OTHER INCOME Income from financial assets (Un-audited) December 31, (Audited) June 30, (Rupees in thousand) 1,077,246 2,061,003 Half year ended December 31 (Un-audited) (Un-audited) 2016 (Rupees in thousand) Dividend Income 264, ,621 Gain on short term investments 173,958 62,386 Mark-up on bank deposits 87,783 7,383 Mark-up on early payments 16,244 13,571 Gain on exchange rate and price difference , ,968 Income from assets other than financial assets 13,140 7, , ,587

17 16 Half year ended December 31, 13. TRANSACTIONS WITH RELATED PARTIES The related parties comprise subsidiary companies, companies in which directors are interested, major shareholders, staff retirement funds and key management personnel, inclusive of directors, and their close family members. The Company in the normal course of business carries out transactions with various related parties. The period end balances and transactions with related parties are as follows: Relationship Nature of transaction (Un-audited) December 31, (Un-audited) December 31, 2016 Rupees in thousand Subsidiaries Purchase of components 3,399,020 2,232,817 Dividend income 264, ,621 Sale 242, ,643 Retirement benefit plans Contribution to staff retirement benefit plans 18,510 8,403 Key management personnel Remuneration 15,046 48,843 Disposal of fixed assets 6,586 3,965 The outstanding balances of such parties are as under: (Un-audited) (Audited) December 31, June 30, Rupees in thousand Subsidiaries Payables 169, ,923 Receivables 3,760 22,746

18 Growth Through Diversification OPERATING SEGMENTS 14.1 These financial statements have been prepared on the basis of a single reportable segment 14.2 Revenue from sale of tractors represents 97% (December 31, 2016: 96%) of the total revenue of the Company % (December 31, 2016: 98%) sales of the Company relate to customers in Pakistan All non-current assets of the Company as at December 31, are located in Pakistan. 15. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES 15.1 Fair value of available-for-sale financial assets is derived from quoted market prices in active markets, if available The carrying values of other financial assets and financial liabilities reflected in financial statements approximate to their fair values. Fair value is determined on the basis of objective evidence at end of each financial year. 16. FINANCIAL RISK MANAGEMENT 16.1 The Company s financial risk management objective and policies are consistent with that disclosed in the unconsolidated annual audited financial statements for the year ended June 30,. 17. EVENTS AFTER BALANCE SHEET DATE The Board of Directors has declared Rs cash dividend (June 30, : Rs. 60 per share) and Nil bonus shares (June 30, : Nil) in their meeting held on February 22, CORRESPONDING FIGURES There has been no significant re-classifications/restatements in this unconsolidated condensed interim financial information.

19 18 Half year ended December 31, 19. DATE OF AUTHORIZATION FOR ISSUE This unconsolidated condensed interim financial information was authorized for issue by the Board of Directors of the Company on February 22, GENERAL 20.1 Provisions in respect of Worker s Welfare Fund, Worker s Profit Participation Fund, Employees defined benefit plan, Accumulating compensated absences and taxation are estimated and these are subject to final adjustment in the annual financial statements The figures of the unconsolidated condensed interim profit and loss account and unconsolidated condensed interim statement of comprehensive income for the quarters ended December 31, and 2016 were not subject to limited scope review by the auditors as scope of review covered only cumulative figures Figures have been rounded off to the nearest thousand rupees, unless otherwise stated. Chief Financial Officer Chief Executive Officer Chairman

20 Growth Through Diversification 19 Consolidated Condensed Interim Financial Statements MILLAT TRACTORS LIMITED For the Half Year ended December 31,

21 20 Half year ended December 31, Consolidated Condensed Interim Balance Sheet as at December 31, (Unaudited) Note December 31, June 30, (Rupees in thousand) EQUITY AND LIABILITIES Share capital and reserves Authorized share capital 50,000,000 (: 50,000,000) ordinary shares of Rs. 10/- each 500, ,000 Issued, subscribed and paid up capital 442, ,926 General reserves 2,475,309 2,475,309 Unappropriated profit 3,750,772 3,635,597 Exchange translation reserve 7,408 1,223 Fair value reserve 179, ,682 6,855,942 6,788,737 Non-controlling interests 1,229,841 1,222,266 Non-current liabilities Long term deposits 26,289 23,530 Deferred tax liabilities - net 142,463 92,247 Employee s defined benefit plan obligation 35,069 23, , ,756 Current liabilities Accumulating compensated absences 129, ,386 Trade and other payables 5 13,753,246 11,571,982 Current portion of long term deposits 1,221 1,013 Short term borrowings 246, ,501 Accrued mark-up on short term borrowings 3,042 1,126 14,133,000 11,812,008 CONTINGENCIES AND COMMITMENTS 6 22,422,604 19,962,767 The annexed notes 1 to 21 form an integral part of the condensed interim financial information. Chief Financial Officer Chief Executive Officer

22 Growth Through Diversification 21 Note December 31, June 30, (Rupees in thousand) ASSETS Non-current assets Property, plant and equipment Operating fixed assets 7 1,567,151 1,581,995 Capital work in progress 8 128, ,508 1,695,653 1,727,503 Intangible asset 615 1,099 Goodwill 18,572 18,572 Investment property 255, ,708 Long term investments 9 173, ,193 Long term loans 5,276 3,429 Long term deposits 7,411 7,412 2,156,364 2,246,916 Current assets Stores and spares 402, ,937 Stock in trade 5,052,350 4,438,217 Trade debts 431, ,300 Loans and advances , ,376 Trade deposits and short term prepayments 51,491 29,457 Other receivables 156,437 97,434 Balances with statutory authorities 2,516,344 2,550,041 Tax refunds due from the Government 917, ,766 Short term investments 11 9,355,180 7,281,640 Cash and bank balances 12 1,260,770 2,213,683 20,266,240 17,715,851 22,422,604 19,962,767 Chairman

23 22 Half year ended December 31, Consolidated Condensed Interim Profit and Loss Account for the half year ended December 31, (Unaudited) Half Year ended Quarter ended December 31 December 31 Note (Rupees in thousand) Sales - net 18,666,490 12,211,498 9,316,368 7,311,480 Cost of sales 13,473,401 8,946,785 6,478,051 5,258,485 Gross profit 5,193,089 3,264,713 2,838,317 2,052,995 Distribution and marketing expenses 348, , , ,359 Administrative expenses 364, , , , , , , ,046 Operating profit 4,480,348 2,639,741 2,525,137 1,726,949 Other income , , ,178 78,713 4,800,558 2,756,603 2,707,315 1,805,662 Other operating expenses 355, , , ,673 Finance cost 8,600 10,437 4,273 5, , , , ,727 Profit before taxation 4,436,791 2,550,114 2,495,508 1,670,935 Taxation 1,376, , , ,524 Profit for the period 3,060,618 1,762,484 1,676,511 1,147,411 Attributable to: - Equity holders of the holding Company 2,772,728 1,588,827 1,501,887 1,024,854 - Non-controlling interests 287, , , ,557 3,060,618 1,762,484 1,676,511 1,147,411 Earnings per share - basic and diluted (Rupees) Appropriations have been reflected in the statement of changes in equity. The annexed notes 1 to 21 form an integral part of the condensed interim financial information. Chief Financial Officer Chief Executive Officer Chairman

24 Growth Through Diversification 23 Consolidated Condensed Interim Statement of Comprehensive Income for the half year ended December 31, (Unaudited) Half year ended Quarter ended Decenber 31 December (Rupees in thousand) Profit for the year 3,060,618 1,762,484 1,676,511 1,147,411 Other comprehensive income: Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations 6,185 (1,533) 6,185 - Unrealized (loss) / gain on revaluation of available for sale investments (60,065) 77,854 (18,451) (18,954) Total other comprehensive (loss) / gain, net of tax (53,880) 76,321 (12,266) (18,954) Total comprehensive income for the year 3,006,738 1,838,805 1,664,245 1,128,457 Attributable to: - Equity holders of the holding Company 2,724,758 1,665,148 1,489,621 1,005,900 - Non-controlling interest 281, , , ,557 3,006,738 1,838,805 1,664,245 1,128,457 The annexed notes 1 to 21 form an integral part of the condensed interim financial information. Chief Financial Officer Chief Executive Officer Chairman

25 24 Half year ended December 31, Consolidated Condensed Interim Cash Flow Statement for the half year ended December 31, (Unaudited) Cash flows from operating activities Half year ended December (Rupees in thousand) Profit before taxation 4,436,791 2,550,114 Adjustment for: Depreciation on property, plant & equipment 85,764 72,175 Amortization of intangible assets 484 1,498 Provision for accumulated compensated absences 16,811 4,000 Profit on bank deposits (93,135) (12,181) Dividend income (6,281) (7,851) Provision for pension obligaiton 11,090 28,772 Gain on disposal of property, plant and equipment - (1,027) Gain on sale of short term investments (183,039) (76,659) Finance cost 8,600 10,437 Workers Profit Participation Fund 245, ,938 Workers Welfare Fund 97,591 49, , ,337 Cash flow from operating activities before working capital changes 4,620,318 2,762,451 Effect on cash flow due to working capital changes Decrease/(Increase) in current assets: Stores, spare parts and loose tools (21,140) 1,285 Stock in trade (614,133) (998,613) Trade debts (146,254) 57,023 Loans and advances 13,697 (33,918) Trade deposits and prepayments (22,034) (5,712) Other receivables (25,306) (131,772) (815,170) (1,111,707) Increase / (Decrease) in current liabilities: Trade and other payables 1,941,931 1,564,453 1,126, ,746

26 Growth Through Diversification 25 Note Half year ended December (Rupees in thousand) Cash used in operations Income tax paid (1,940,549) (684,680) Net decrease in long term loans to employees (1,847) (512) Workers Profit Participation Fund paid (82,122) (143,938) Workers Welfare Fund paid (21,778) (49,234) Employee benefits paid - (8,931) Increase / (Decrease) in long term security deposits 2,967 (253) Mark-up paid (6,684) (12,463) (2,050,013) (900,011) Net cash generated from operating activities 3,697,066 2,315,186 Cash flows from investing activities Purchase of property, plant and equipment- net (70,179) (162,403) Short term investments made- net (1,890,501) (2,064,538) Proceeds from sale of property, plant and equipment 16,265 13,874 Dividend received 6,281 7,851 Profit on bank deposits received 93,135 12,181 Net cash used in investing activities (1,844,999) (2,193,035) Cash flows from financing activities Dividend paid to controlling interests (2,657,553) (1,328,776) Dividend paid to non-controlling interests (274,405) (165,241) Net cash used in financing activities (2,931,958) (1,494,017) Net decrease in cash and cash equivalents (1,079,891) (1,371,867) Cash and cash equivalents at the beginning of the period 2,213,683 2,734,452 Short term borrowings at the beginning of the period (125,501) (274,159) Foreign exchange difference 6,185 (1,533) Cash and cash equivalents at the end of the period 15 1,014,476 1,086,893 The annexed notes 1 to 21 form an integral part of the condensed interim financial information. Chief Financial Officer Chief Executive Officer Chairman

27 26 Half year ended December 31, Consolidated Condensed Interim Statement of Changes in Equity for the half year ended December 31, (Unaudited) Revenue reserves Share Exchange Noncapital General Unappropriated profit reserve interest translation Fair value Controlling reserve Total reserves...(rupees in thousand)... Balance as on 01 July ,926 3,181,893 1,105,960 1, ,450 1,118,359 5,996,617 Net profit for the period - - 1,588, ,657 1,762,484 Final dividend for the year ended June Rs. 30 per share - (706,584) (622,192) (1,328,776) Dividend payment to NCI (165,241) (165,241) Other comprehensive income for the period (1,533) 77,854-76,321 - (706,584) 966,635 (1,533) 77,854 8, ,788 Balance as on 31 December ,926 2,475,309 2,072,595 (504) 224,304 1,126,775 6,341,405 Interim dividend for the year ended - - (1,550,239) (1,550,239) 30 Rs. 35/- per share Dividend payment to NCI (216,370) (216,370) Exchange difference on translation of foreign operations , ,727 Total comprehensive income for the period - - 3,113,241-9, ,861 3,434, ,563,002 1,727 9,378 95,491 1,669,598 Balance as on 30 June 442,926 2,475,309 3,635,597 1, ,682 1,222,266 8,011,003 Balance as on 01 July 442,926 2,475,309 3,635,597 1, ,682 1,222,266 8,011,003 Net profit for the period - - 2,772, ,890 3,060,618 Final dividend for the year ended 30 Rs. 60 per share - - (2,657,553) (2,657,553) Dividend payment to NCI (274,405) (274,405) Other comprehensive income for the period ,185 (54,155) (5,910) (53,880) ,175 6,185 (54,155) 7,575 74,780 Balance as on 31 December 442,926 2,475,309 3,750,772 7, ,527 1,229,841 8,085,783 The annexed notes 1 to 21 form an integral part of the condensed interim financial information. Chief Financial Officer Chief Executive Officer Chairman

28 Growth Through Diversification 27 Selected Notes to the Consolidated Condensed Interim Financial Information for the half year ended December 31, (Unaudited) 1. THE GROUP AND ITS ACTIVITIES Millat Tractors Limited - the Holding Company is a public limited Company incorporated in Pakistan in 1964 under the Companies Act (repealed Companies Ordinance, 1984), and is listed on Pakistan Stock Exchange Limited. The registered office of the Company is situated at Sheikhupura Road, District Sheikhupura. The Company is principally engaged in assembling and manufacturing of agricultural tractors, implements and multi-application products. Millat Industrial Products Limited (MIPL), an unlisted public company registered under the Companies Act (repealed Companies Ordinance, 1984), is a subsidiary of Millat Tractors Limited which holds 64.09% equity. MIPL is engaged in the business of manufacturing of industrial, domestical and vehicular batteries, cells and components. Tipeg Intertrade DMCC, Dubai, a limited liability company registered with Dubai Multi Commodities Centre Authority, is a subsidiary of Millat Tractors Limited which holds 75% equity. The principal place of business of the company is located at Jumeirah Lake Towers, Dubai-UAE. The company is formed for trading of machinery and heavy equipment. Millat Equipment Limited (MEL), an unlisted public company registered under the Companies Act (repealed Companies Ordinance, 1984), is a subsidiary of Millat Tractors Limited which holds 45% equity. MEL is engaged in the business of manufacturing of automotive, agricultural and industrial vehicles parts and components thereof. Bolan Castings Limited (BCL), a public limited company incorporated in Pakistan under the Companies Act (repealed Companies Ordinance, 1984), and is listed on Pakistan Stock Exchange, is a subsidiary of Millat Tractors Limited which holds 46.26% equity. BCL is engaged in the business of manufacturing of castings for tractors and automotive parts thereof. 2. STATEMENT OF COMPLIANCE These consolidated condensed interim financial information has been prepared in accordance with the approved accounting standards as applicable in Pakistan for interim financial reporting. The Companies Ordinance, 1984 has been repealed after the enactment of the Companies Act,. However, as allowed by the Securities and Exchange Commission of Pakistan (SECP) vide circular No. CLD/CCD/PR(11)/ dated July 20, and circular No. 23/ dated October 4,, the Group has prepared these consolidated condensed interim financial information in accordance with the provisions of the repealed Companies Ordinance, 1984 (the Ordinance). Accordingly, this consolidated condensed interim financial information is unaudited and has been prepared in accordance with the requirements of the International Accounting Standard 34, Interim Financial Reporting and provisions of and directives issued under the Ordinance, and is being submitted to the shareholders in accordance with Section 245 of the Ordinance. In case, where the requirements differ, the provisions of or directives issued under the Ordinance have been followed. 3. BASIS OF PREPARATION 3.1 This interim financial information does not include all the information and disclosures required in annual financial statements, and should be read in conjunction with the Group s annual financial statements as at June 30,.

29 28 Half year ended December 31, 3.2 The accounting policies and methods of computation adopted for the preparation of this condensed interim financial information are same as those applied in the preparation of the preceding annual published financial statements of the Company for the year ended 30 June except for as disclosed in note 3.3 below. 3.3 The Group has adopted the following amendments and interpretation of IFRSs which became effective during the current period: - IAS 12 - Recognition of Deferred Tax Assets for Unrealized Losses - IFRS 7 Disclosure initiative Improvements to Accounting Standards Issued by the IASB - IFRS 1 Exemption clarification - IFRS 12 Clarification of disclosure requirements - IAS 28 Clarification of recognition criteria The adoption of the above amendments, interpretation and improvements did not have any significant impact on this condensed interim financial information except as below: Standards, interpretations and amendments to published approved accounting standards that are not yet effective but relevant The following are the new standards, amendments to existing approved accounting standards and new interpretations that will be effective for the periods beginning on or after July 1, 2018 that may have an impact on the financial statements of the Group. IFRS 15 Revenue from contracts with customers - IFRS 15 replaces the previous revenue standards: las 18 Revenue, las 11 Construction Contracts, and the related interpretations on revenue recognition. IFRS 15 introduces a single five-step model for revenue recognition and establishes a comprehensive framework for recognition of revenue from contracts with customers based on a core principle that an entity should recognize revenue representing the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The management of the Group is in the process of assessing the impact of changes laid down by these standards on its financial statements. 4. ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of 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 Group s accounting policies and the key sources of estimation are the same as those that applied to the financial statements for the year ended June 30,.

30 Growth Through Diversification TRADE AND OTHER PAYABLES (Un-audited) December 31, (Audited) June 30, (Rupees in thousand) Trade creditors 1,565,382 1,177,147 Bills payable 181, ,559 Accrued liabilities 194, ,763 Advances from customers 10,857,463 9,409,029 Trademark fee payable 65,062 64,738 Workers Profit Participation Fund 252,378 88,858 Workers Welfare Fund 175,513 99,700 Security deposits 8,057 8,901 Unclaimed dividends 358, ,650 Others 95, ,637 13,753,246 11,571, CONTINGENCIES AND COMMITMENTS There has been no significant change in the contingencies since the date of preceding published annual financial statements. Commitments in respect of outstanding letters of credit are Rs.1,141,150 thousand (June 30, : Rs 1,434,718 thousand). 7. OPERATING FIXED ASSETS Opening book value 1,582,362 1,237,431 Stores, spares & loose tools Add: Additions during the period 85, ,084 1,669,180 1,760,493 Less: Disposals / write offs during the period (at book value) (16,265) (20,546) Depreciation charged during the period (85,764) (157,952) (102,029) (178,498) Closing book value 1,567,151 1,581, Additions during the period - Buildings on freehold land 2, ,656 - Plant and machinery 27,773 66,910 - Tools and equipment 8,730 15,431 - Furniture, fixture and office equipment 2,711 59,495 - Vehicles 41, ,961 - Computers 3,276 5,631 85, ,084

31 30 Half year ended December 31, 8. CAPITAL WORK IN PROGRESS (Un-audited) December 31, (Audited) June 30, (Rupees in thousand) Advance for purchase of office space 26 1,166 Plant and machinery 108, ,549 Vehicles 12,972 11,793 Furniture, fixture and office equipment 6, , , CONTINGENCIES AND COMMITMENTS Available for sale - quoted Cost 24,364 24,364 Surplus on revaluation of investment 148, , , , , , LOANS AND ADVANCES Current portion of long term loans to employees 4,307 3,872 Advances to employees - considered good 5,283 4,213 Advances to suppliers - considered good 108, , , ,042 Advances to suppliers - considered doubtful 2,485 2,485 Less: Provision for doubtful advances (2,485) (2,485) - - Letter of credit opening charges 4,493 19, , , SHORT TERM INVESTMENTS Financial assets at fair value through profit and loss - Mutual fund units 7,352,263 5,718,196 Held for trading investments - 400,527 Investment in Term Deposit Receipt (TDR) 2,002,917 1,162,917 9,355,180 7,281, CASH AND BANK BALANCES In hand - Cash 4,411 1,139 In hand - Cheques 137,019 22,991 Cash at bank - current accounts 589, ,294 Cash at bank - deposits accounts 530,149 1,475,259 1,260,770 2,213,683

32 Growth Through Diversification TRANSACTIONS WITH RELATED PARTIES The related parties comprise subsidiary companies, companies in which directors are interested, staff retirement funds, directors and key management personnel. Significant transactions with related parties and associated undertakings are as under: Half year ended December 31 (Un-audited) (Un-audited) 2016 (Rupees in thousand) Retirement benefit plans Contribution to staff retirement benefit plans 25,541 12,225 Key management personnel Remuneration 75,178 64,118 Disposal of vehicles 6,586 3, OTHER INCOME Income from financial assets: Dividend Income 6,281 7,851 Return on commercial bank deposits 93,135 12,185 Gain on revaluation investment 183,039 68, ,455 88,360 Income from assets other than financial assets 37,755 28, , , CASH AND CASH EQUIVALENTS Cash and bank balances 1,260,770 1,212,232 Short term borrowings (246,294) (125,339) 1,014,476 1,086,893

33 32 Half year ended December 31, 16 OPERATING SEGMENT INFORMATION Business segments For management purposes, the Group is organized into business units based on their nature of business and has three reportable operating segments as follows: Tractors Tractor components Castings No other operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its operating segments separately for the purpose of performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. Tractors Tractor components Castings Other segments Inter segment eliminations Total December December 2016 December December 2016 December December 2016 Sales 18,222,938 11,543,319 2,050,544 1,248,471 1,123, , , ,375 (3,653,831) (2,232,815) 18,666,490 12,211,498 Cost of sales 14,007,252 8,922,554 1,357, , , , , ,247 (3,653,831) (2,232,815) 13,473,401 8,946,785 Gross profit 4,215,686 2,620, , , , , , , ,193,089 3,264,713 December December 2016 December December 2016 December Rupees in thousands December 2016 Distribution cost 301, ,684 1,478 1,140 29,663 20,287 15,554 21, , ,717 Administrative expenses 231, ,372 50,820 30,365 34,955 22,824 47,042 29, , , , ,056 52,298 31,505 64,618 43,111 62,596 51, , ,972 Operating profit 3,682,457 2,121, , , ,331 79,332 41,990 97, ,480,348 2,639,741 Finance costs ,725 8,663 1,600 1, ,600 10,437 Other operating expenses 300, ,326 45,426 24,445 7,632 5,623 1,543 5, , , , ,604 45,891 24,751 13,357 14,286 3,143 6, , ,489 Other income 555, ,587 17,474 12,937 4,494 3,274 1,986 3,271 (259,410) (168,207) 320, ,862 Profit before taxation 3,936,747 2,226, , , ,468 68,320 40,833 94,251 (259,410) (168,207) 4,436,791 2,550,114 Taxation 1,158, , , ,956 30,928 20,489 4,771 18, ,376, ,630 Profit for the year 2,778,340 1,579, , ,102 75,540 47,831 36,062 76,060 (259,410) (168,207) 3,060,618 1,762, Inter segment sales and purchases have been eliminated.

34 Growth Through Diversification Allocation of assets and liabilities Tractors Tractor components Castings Others December June December June December June December June Elimination of Inter-segment transactions December June December June (Rupees in thousands) Total Segment operating assets Non- Current assets 1,433,963 1,508, , , , , , ,351 (293,780) (293,780) 2,167,459 2,263,122 Goodwill ,572 18,572 18,572 18,572 Current Assets 18,008,631 15,622,341 1,118, , , , , ,641 (173,747) (187,117) 20,316,531 17,540,628 Total Assets 19,442,594 17,130,609 1,721,995 1,590, , , , ,992 (448,955) (462,325) 22,502,562 19,822,322 Segment operating liabilities Non-current liabilities 77,545 30,635 69,368 68,474 73,259 86,855 13,316 15, , ,988 Current liabilities 13,543,477 11,350, , , , , ,371 80,306 (173,747) (187,117) 14,183,291 11,762,189 Total operating assets 13,621,022 11,380, , , , , ,687 95,330 (173,747) (187,117) 14,416,779 11,963,177