HALF YEARLY REPORT C O N T E N T S Vision / Mission and Corporate Strategies 02 Company Information 03 Directors Report 04 Balance Sheet 08 Profit and Loss Account 09 Statement of Comprehensive Income 10 Statement of Changes in Equity Cash Flow Statement 11 12 Notes to the Accounts 13 01
HALF YEARLY REPORT Our Vision To recognize globally as a leading supplier of steel large bar of the highest quality standards, with market leading standards of customer service. Business development by adoption of emerging technologies, growth in professional competence, support to innovation. Enrichment of human resources and performance recognition. Our Mission To manufacture and supply high quality steel large bar to the construction sector whilst adopting safe and environmentally friendly practices. To remain the preferred and consistent supply source for various steel products in the country. Offer products that are not only viable in terms of desirability and price but most importantly give true and lasting value to our customers. To fulfill social obligation and compliance of good governance. Ensure that the business policies and targets are in conformity with national goals. Deliver strong returns on investments of our stakeholders by use of specialized and high quality corporate capabilities with the combined use of modern bar mill practices, enterprise class software on a web based solution and targeted human resource support. Corporate Strategies Ensure that the business policies and targets are in conformity with national goals. Establish a better and safer work environment for all employees Contribute in National efforts towards attaining sustainable self-efficiency in steel products, Customer's satisfaction by providing best value and quality products. Maintain modern management system conforming to international standards needed for an efficient organization. Ensure to foster open communications, listen, and understand other perspectives. Acquire newer generation technologies for effective and efficient operations. 02
HALF YEARLY REPORT COMPANYS INFORMATION Registered Office Associated Company The Crescent Star Insurance Co. Ltd. Nagar, Soneri Bank Limited Summit Bank Limited Habib Bank Limited MCB Bank Limited NIB Bank Limited e mail: info@doststeels.com 03
HALF YEARLY REPORT DIRECTORS' REPORT Dear Members Assalam-o-Alaikum The Directors of Dost Steels Limited are pleased to present their review on the financial performance of the Company for the half year and period ended 31 December. General Review We are please to inform the shareholders of the current status of the re-bar plant. During the preceding two quarter of the current financial year, the plant has under gone extensive preparations and efforts to raise it to a functioning level. All outstanding installations have been completed and existing facilities restored. The plant automation software has been uploaded and tested thoroughly. Raw materials, spare parts and other consumables have been purchased and production teams are in place in anticipation of plant operations. In light of the aforementioned progress and as intimated to the public through a material st information notice, trial production commenced on the 1 of February 2018. Limited hot testing of individual sections of the plant have progressed to full end-to-end testing of the entire rolling line. Following the success of the trail production and upon achieving spectacular results, the Board of Directors of the company has unanimously approved the date of the start of commercial th operations of 28 February 2018. We are grateful to the shareholders for the patience exercised and the support extended towards your company during this crucial time, enabling it to reach this pivotal point. Performance Highlights December December 2016 Loss before Tax (PKR) (35,729,435) (54,189,812) Loss after Tax (PKR) (35,729,435) (54,189,812) LPS (0.11) (0.38) Future outlook Keeping in view the country's expanding annual steel demand and the government's commitments toward upcoming infrastructure projects including but not limited to highways, dams and industrial undertakings in relation to China Pakistan Economic Corridor. The DSL is in takeoff position to capture a fair portion of steel sector's canvas soon after its commencement of commercial operations. Acknowledgement The Board of Directors would like to express their appreciation for the assistance and co-operation received from the banks, Government authorities, vendors and above all, the shareholders of the Company for placing trust on their Company and also wish to place on record their deep sense of appreciation for the committed services by the executives and staff of the company. For and on behalf of the Board of Directors Jamal Iftakhar Chief Executive Officer Karachi: February 24, 2018 04
05 HALF YEARLY REPORT
06 HALF YEARLY REPORT
AUDITORS' REPORT TO MEMBERS ON REVIEW OF CONDENSED INTERIM FINANCIAL INFORMATION Introduction We have reviewed the accompanying condensed interim balance sheet of Dost Steels Limited ( the Company ) as at and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim statement of changes in equity and condensed interim cash flow statement together with the notes forming part thereof for the half year then ended (here-in-after referred to as the interim financial information ). Management is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on the interim financial information based on our review. Scope of review We conducted our review in accordance with International Standards 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. Basis for qualified conclusion The Company has incurred a net loss of Rs. 35.729 million, its accumulated losses are Rs. 617.741 million and it has not been able to commence its commercial production as disclosed in note 2 to the interim financial statements. Further, syndicated loan agreement remains to be signed by one of the syndicate members. These conditions indicate the existence of material uncertainties which may cast significant doubt on ability of the company to continue as going concern, to realize its assets and to discharge its liabilities in normal course of business. The financial statements do not fully disclose this fact. Qualified conclusion Based on our review, with the exception of the matter described in the preceding paragraph, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Matter of emphasis Without qualifying our opinion on these points, we draw attention to: a) Note 12 to the interim financial statements which describes the Company's arrangement of Restructured Term Finance Facilities as Syndicated Loan. All the syndicate banks except Pak Kuwait Investment Company (Private) Limited have signed the rescheduling and restructuring agreement. b) Note 7 and 14 to the financial statements regarding unrecovered advances of Rs. 17.9 million as reported in audit report of. Management have provided for these advances which have remained unrecovered/unadjusted, however directors have compensated for the loss by making one time special grant of the amount. Other matter The figures of the condensed interim profit and loss account and condensed interim statement of comprehensive income for the quarters ended 31 December and 2016 have not been reviewed, as we are required to review only the cumulative figures for the half year ended 31 December. Rahman Sarfaraz Rahim Iqbal Rafiq CHARTERED ACCOUNTANTS Engagement Partner: Rashid Rahman Mir Lahore: 07
HALF YEARLY REPORT ASSETS CONDENSED INTERIM BALANCE SHEET AS AT 31 DECEMBER (Un-Audited) (Audited) June 30, Note Rupees Rupees Non-Current Assets Property, plant and equipment 7 2,466,374,800 2,363,043,780 Long term security deposits 43,051,345 13,910,345 Deferred tax assets - - 2,509,426,145 2,376,954,125 Current Assets Stock in trade 135,023,099 - Current portion of Long term security deposits 1,170,000 1,170,000 Advances 6,674,399 3,386,543 Short term prepayments 473,800 - Interest accrued 34,331 17,406 Taxes refundable/adjustable 2,099,437 1,595,033 Cash and bank balances 8 461,636,216 781,199,806 607,111,282 787,368,788 TOTAL ASSETS 3,116,537,427 3,164,322,913 EQUITY Share Capital and Reserves Authorized Share Capital 320,000,000 (June 30, : 320,000,000) 3,200,000,000 3,200,000,000 Issued, subscribed and paid up capital 9 3,157,338,600 3,157,338,600 Discount on issue of right shares 10 (1,365,481,480) (1,365,481,480) Accumulated losses (617,741,102) (582,011,667) Total Equity 1,174,116,018 1,209,845,453 LIABILITIES Non-Current Liabilities Advance for issuance of shares-unsecured 11 358,100,019 358,100,019 Long term financing - secured 12 806,413,487 815,728,583 Markup accrued on secured loans 614,940,264 614,940,264 Deferred Liabilities 5,428,135 4,243,275 Current Liabilities 1,784,881,905 1,793,012,141 Trade & other payables 30,201,208 23,233,120 Accrued Markup 6,214,069 4,215,915 Short term borrowings - unsecured 94,481,181 112,395,016 Current and overdue portion of long term borrowings 26,643,046 21,621,268 157,539,504 161,465,319 Contingencies and Commitments 13 Total Liabilities 1,942,421,409 1,954,477,460 TOTAL EQUITY AND LIABILITIES 3,116,537,427 3,164,322,913 The annexed notes 01 to 17 form an integral part of these financial statements. Chief Executive Officer Chief Financial Officer Director 08
HALF YEARLY REPORT CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER 31, Half year Ended December 31, December 31, 2016 Quarter Ended 2016 ----------------------------------Rupees----------------------------- Administrative expenses (54,818,501) (59,742,294) (35,970,952) (50,798,381) Finance cost (155,734) (67,482) (55,449) (50,586) Other operating income 14 19,244,800 5,619,964 19,244,800 2,295,166 Loss before taxation (35,729,435) (54,189,812) (16,781,601) (48,553,801) Taxation - - - - Loss after taxation (35,729,435) (54,189,812) (16,781,601) (48,553,801) Loss per share - basic & diluted (0.11) (0.38) (0.05) (0.31) The annexed notes 01 to 17 form an integral part of these financial statements. Chief Executive Officer Chief Financial Officer Director 09
HALF YEARLY REPORT CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER 31, Half year Ended Quarter Ended 2016 2016 ----------------------------------Rupees----------------------------- Loss after tax for the period (35,729,435) (54,189,812) (16,781,601) (48,553,801) Other comprehensive income for the period Items that will not be reclassified to profit or loss - - - - Items that may be reclassified to profit or loss - - - - Total comprehensive loss for the period (35,729,435) (54,189,812) (16,781,601) (48,553,801) The annexed notes 01 to 17 form an integral part of these financial statements. Chief Executive Officer Chief Financial Officer Director 10
HALF YEARLY REPORT CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER 31, Issued, subscribed and paid up capital Discount on issue of right shares Accumulated losses Total - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - Balance as at June 30, 2016 674,645,000 - (500,993,968) 173,651,032 Loss for the half year ended 2016 - - (54,189,812) (54,189,812) Right shares issued during the period 2,482,693,600 - - 2,482,693,600 Discount on right shares issued - (1,365,481,480) - (1,365,481,480) Balance as at 2016 3,157,338,600 (1,365,481,480) (555,183,780) 1,236,673,340 Loss for the half year ended June 30, - - (26,827,887) (26,827,887) Balance as at June 30, 3,157,338,600 (1,365,481,480) (582,011,667) 1,209,845,453 Loss for the half year ended - - (35,729,435) (35,729,435) Balance as at 3,157,338,600 (1,365,481,480) (617,741,102) 1,174,116,018 The annexed notes 01 to 17 form an integral part of these financial statements. Chief Executive Officer Chief Financial Officer Director 11
HALF YEARLY REPORT CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER 31, CASH FLOWS FROM OPERATING ACTIVITIES 2016 Note Rupees Rupees Loss before taxation (35,729,435) (54,189,812) Adjustments for non cash items: Depreciation 588,535 611,083 Finance cost 155,734 67,482 Provision for gratuity 1,184,860 584,000 Bad debts provision 17,913,835 1,000,000 Creditors written back - (5,543,350) One time special grant from Directors (17,913,835) - Interest income (1,330,965) (76,614) 598,164 (3,357,399) Operating cash flow before working capital changes (35,131,271) (57,547,211) Working capital changes: (Increase) / Decrease in current assets: Stock in trade (135,023,099) - Advances (3,287,856) 56,862 Short term prepayments (473,800) 3,446,500 Tax refund due from government (504,404) (113,397) Increase / (Decrease) in current liabilities: Trade and other payables 6,968,088 (2,500,234) Cash inflow/(outflow) from working capital (132,321,071) 889,731 Cash generated from/(used in) operations (167,452,342) (56,657,480) Finance cost paid (24,267,266) (31,944,172) Net cash generated from/(used in) operating activities (191,719,608) (88,601,652) CASH FLOW FROM INVESTING ACTIVITIES Fixed capital expenditure (77,809,869) 188,501,372 Long term security deposits (29,141,000) - Interest received 1,314,040 545,584 Net cash (used in) / generated from investing activities (105,636,829) 189,046,956 CASH FLOW FROM FINANCING ACTIVITIES Advance received against issuance of shares - (328,503,167) Receipts against Issuance of Right Shares - 1,117,212,120 Repayment of long term financing - secured (4,293,318) (44,933,280) (Repayment) / Receipt of short term borrowings- unsecured (17,913,835) 66,702,782 Net cash (used in) / generated from financing activities (22,207,153) 810,478,455 Net (decrease)/increase in cash and cash equivalents during the period (319,563,590) 910,923,759 Cash and cash equivalents at beginning of the period 781,199,806 6,505,449 Cash and cash equivalents at the end of the period 8 461,636,216 917,429,208 The annexed notes 01 to 17 form an integral part of these financial statements. Chief Executive Officer Chief Financial Officer Director 12
1 THE COMPANY AND ITS OPERATION Dost Steels Limited (the Company) was incorporated in Pakistan on March 19, 2004 as a private limited company under the Companies Ordinance, 1984 (now the Companies Act, ). The Company was converted into public limited company with effect from May 20, 2006 and then listed on the Pakistan Stock Exchange Limited (formerly Karachi Stock Exchange Limited) with effect from November 26, 2007. The registered office of the Company is situated at 101, Chapel Plaza, Hasrat Mohani Road, Karachi 74000. The principal business of the Company include manufacturing of steel, direct reduced iron, sponge iron, hot briquetted iron, carbon steel, pig iron and special alloy steel in different forms. 2 GOING CONCERN ASSUMPTION The Company has incurred a net loss of Rs. 35.729 million (2016: Rs. 54.19 million) and its accumulated losses are Rs. 617.741 million (2016: Rs. 555.184 million). Further, the Company is still maintaining a positive relationship with the lead agent of syndicated loan and has also given a mandate to consultants to make adequate plans and take necessary actions that are required for commencement of Company's commercial operations. Therefore the company expects that adequate inflows will be generated in the future years which will wipe out these losses. Due to strong chances of success of these plans, the financial statements are prepared on the basis of going concern assumption. 3 BASIS OF PREPARATION NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF YEAR ENDED DECEMBER 31, This condensed interim financial information is unaudited and being submitted to the shareholders as required under Section 237 of the Companies Act, ("the Act") and is unaudited but subject to limited scope review by external auditors as required by the Act and Code of Corporate Governance. During the previous year, the Companies Act ("the Act") was enacted on 30 May and replaced and repealed the Companies Ordinance, 1984 ("the repealed Ordinance"). However, the Securities and Exchange Commission of Pakistan vide its Circular No. 17 and Circular No. 23 dated 20 July and 04 October respectively and Institute of Chartered Accountants of Pakistan vide its Circular No. 17 dated 06 October, have advised and clarified that the Annual Financial Statements of the Companies whose financial year closes on or before 31 December and interim financial statements of the Companies for the period ended on or before 31 December, shall be prepared in accordance with the repealed Ordinance. These condensed interim financial statements comprise of the Balance Sheet as at, Profit and Loss Account, Statement of Comprehensive Income, Statement of Changes in Equity and the Cash Flow Statement together with the selected notes for the half year ended which have been subjected to review but not audit. The comparative balance sheet presented in these condensed interim financial statements as at June 30, has been extracted from the audited Financial Statements of the Company for the year ended June 30,, whereas the comparative Profit and Loss Account, Statement of Comprehensive Income, Statement of Changes in Equity and the 13 HALF YEARLY REPORT
HALF YEARLY REPORT Cash Flow Statement for the half year ended 2016 have been subjected to review but not audit. These interim financial statements do 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 for the year ended 30 June. 4 SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of the financial statements for the year ended June 30,. Previous periods' figures are re-arranged / re-classified where necessary to facilitate comparison and are rounded off to the nearest rupee; appropriate disclosure is given in relevant note in case of material rearrangement. 5 ESTIMATES The preparation of condensed interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements made by the management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended June 30,. 6 RISK MANAGEMENT The Company's risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended June 30,. 14
HALF YEARLY REPORT (Un-Audited) (Audited) June 30, Note Rupees Rupees 7 PROPERTY, PLANT AND EQUIPMENT Operating assets 7.1 163,931,750 164,217,785 Capital work-in-progress 7.2 2,302,443,050 2,198,825,995 2,466,374,800 2,363,043,780 7.1 Operating Assets OWNED Total Computers Equipments Electric Equipments Office Equipment Vehicles Furniture & fittings Free hold land Particulars - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - - - - - - - - - Period ended Opening net book value 157,876,220 1,282,015 1,329,656 446,339 2,369,584 913,971 164,217,785 Additions - - - - 205,500 97,000 302,500 Depreciation charged - (96,150) (132,968) (33,476) (181,790) (144,151) (588,535) Net book value as at 157,876,220 1,185,865 1,196,688 412,863 2,393,294 866,820 163,931,750 15 Period ended Cost 157,876,220 3,689,799 5,601,035 596,602 5,890,799 3,632,048 177,286,503 Accumulated depreciation - (2,503,934) (4,404,347) (183,739) (3,497,505) (2,765,228) (13,354,753) 157,876,220 1,185,865 1,196,688 412,863 2,393,294 866,820 163,931,750 Year ended June 30, Opening net book value 157,876,220 1,471,530 1,662,070 213,444 1,740,614 714,932 163,678,810 Additions - 35,700-280,000 984,097 517,790 1,817,587 Depreciation charged - (225,215) (332,414) (47,105) (355,127) (318,751) (1,278,612) Net book value as at June 30, 157,876,220 1,282,015 1,329,656 446,339 2,369,584 913,971 164,217,785 As at June 30, Cost 157,876,220 3,689,799 5,601,035 596,602 5,685,299 3,535,048 176,984,003 Accumulated depreciation - (2,407,784) (4,271,379) (150,263) (3,315,715) (2,621,077) (12,766,218) 157,876,220 1,282,015 1,329,656 446,339 2,369,584 913,971 164,217,785 Rate of Depreciation - 15% 20% 15% 15% 30%
HALF YEARLY REPORT (Un-Audited) (Audited) June 30, Note Rupees Rupees 7.2 Capital work in progress Land Development 14,685,412 14,314,430 Civil Works 215,017,718 212,049,809 Plant and machinery 1,489,840,563 1,397,758,250 Advances for plant and machinery 7.2.1-17,913,835 Unallocated borrowing costs 582,899,357 556,789,671 2,302,443,050 2,198,825,995 7.2.1 Advances for plant and machinery Advances for plant and machinery 17,913,835 17,913,835 Provision against doubtful advances 7.2.1 (a) 17,913,835-35,827,670 17,913,835 7.2.1 (a) Provision of Rs. 17,913,835/- has been made against unrecoverable advances paid for purchase of plant & machinery. The company has recovered and adjusted advances of Rs. 213,184,150/- from suppliers against advances paid for purchase of plant and machinery due to quality issues. The management has decided to create provision for doubtful debts in respect of the remaining amount of Rs.17,913,835/- refer note 14. 8 CASH AND BANK BALANCES Cash in hand 58,506 161,815 Cash at banks: - current accounts 375,223,573 707,720,609 - deposit accounts 86,354,137 73,317,382 8.1 461,577,710 781,037,991 461,636,216 781,199,806 8.1 It includes balances pertaining to proceeds from the right issue amounting to Rs. 373,119,161/- (June : Rs. 668,708,971/-) kept in an escrow account at the directions of SECP and Rs. 14,226,923/- (June : Rs. 12,684,520/-) in a repayment account for long term loans. 9 ISSUED, SUBSCRIBED AND PAIDUP CAPITAL June 30, June 30, Number of shares Ordinary share of Rs.10 each Rupees 315,733,860 315,733,860 fully paid in cash 9.1 3,157,338,600 3,157,338,600 9.1 It includes 75,694,000 ordinary shares of Rs.10 each amounting to Rs.756,940,000/- held by related parties. 9.2 The company has only one class of ordinary shares. The holder of ordinary shares are entitled to receive dividend, bonus and right issue as declared and entitled to vote at meetings of the Company. 9.3 The company has not reserved shares for issue under options or sale contracts. 16
17 HALF YEARLY REPORT 10 DISCOUNT ON ISSUE OF RIGHT SHARES 1,365,481,480 1,365,481,480 The Company has issued right shares with the approval of board of directors, SECP and PSX with face value of Rs.2,482,693,600/- comprising of 248,269,360/- ordinary shares of Rs. 10/- each at a discount of Rs. 5.5/- per share. 11 ADVANCE FOR ISSUANCE OF SHARES-UNSECURED From Crescent Star Insurance Limited 354,279,066 354,279,066 From directors 3,820,953 3,820,953 358,100,019 358,100,019 The Company has received advance against issuance of shares from the Crescent Star Insurance Limited (CSIL) and advance from directors of the company which will be adjusted against shares in capital of the company whenever there is next issue. The advances are unsecured and interest free. CSIL has unilaterally after the right issue started claiming mark up @ 1 year KIBOR + 3% which directors of the company don't accept being against the agreed terms. 12 LONG TERM FINANCING - SECURED Term Finance - Restructured Facilities 12.1 From banking companies and financial institutions Opening balance 837,349,851 886,576,455 Paid during the year (4,293,318) (49,226,604) 833,056,533 837,349,851 Less: Current portion (18,630,192) (13,972,644) Less: Overdue portion 12.1.1 (8,012,854) (7,648,624) (26,643,046) (21,621,268) 806,413,487 815,728,583 12.1 The Company has arranged Restructured Term Finance facilities of Rs. 931,509,627/- from National Bank of Pakistan, Askari Bank Limited, NIB Bank Limited, Bank of Khyber, Pak Kuwait Investment Company (Private) Limited, Saudi Pak Industrial and Agricultural Investment Company Limited and Faysal Bank Limited (former Royal Bank of Scotland Limited) as Syndicated loan, whereby Faysal Bank Limited is acting as agent of the syndicate. Due to absence of cash flow and non-commissioning of the project, DSL was and is unable to meet its repayment obligations towards the Financiers. All the syndicate banks have given their in-principle approval to the rescheduling and restructuring of the debts and obligations. All the syndicate banks except Pak Kuwait Investment Company (Private) Limited have signed the rescheduling and restructuring agreement. Pak Kuwait is expected to sign this agreements in due course. Terms of rescheduled and restructured agreement are as follows: (Un-Audited) (Audited) June 30, Note Rupees Rupees a) For the repayment of the unpaid markup, mark up has been calculated on the total outstanding amount from the date of last payment till 30 June - the assumed date of commissioning @ 8% per annum. The total Mark up calculated will be converted into a "Zero Coupon TFC convertible into ordinary shares". All the TFCs issued will be completely converted into equity/ordinary shares by 2027 as per the following schedule:
HALF YEARLY REPORT Year 9th Year 10th Year 11th Year 12th Percentage of TFC converted 2024 2025 2026 2027 25% 25% 25% 25% The Conversion shall be held on the 20th Day of December each year at a discount of 5% to the last six months weighted average price of the company shares at Karachi Stock Exchange Limited (Now Pakistan Stock Exchange Limited). b) The Mark-up rate effective from the date of Commissioning is 3 Month KIBOR payable in quarterly arrears. c) The principal repayment is made in 41 quarterly installments commencing from 31 March 2016 and ending on 31 December 2025 as per repayment schedule. d) The loan is secured by a mortgage by deposit of title deeds of the Mortgaged Properties, a charge by way of hypothecation over Hypothecated Assets, pledge of the pledged shares, and personal guarantees of the sponsors. 12.1.1 Overdue portion of liability represents the instalments duly deposited by company as per arrangement in a designated bank accounts maintained with Faysal Bank Limited for the purpose but Pak Kuwait Investment Company (Private) Limited has not accepted the payment. Management of the company as per arrangement can't withdraw amounts once deposited in the designated bank account. 13 CONTINGENCIES AND COMMITMENTS 13.1 Contingencies 13.1.1The company is not exposed to any contingent liability in respect of syndicated loan at the balance sheet date, in view of restructuring agreement - Note 12. In the year ended June 30, 2015, two suits were pending against company in the High Court for the recovery of Rs.1,299,588,534 and Rs.122,197,136 respectively filed by Faysal bank and others and Pak Kuwait Investment Company (Private) Limited. 13.1.2The company has received advance against issuance of shares from the Crescent Star Insurance Limited (CSIL) as described in note 11. The advance was interest free and the fact was confirmed in the year 2016 confirmation. The CSIL after the right issue unilaterally started claiming mark up @ 1 year KIBOR + 3% which directors of the company don't accept being against the agreed terms and is apparently illegal demand. The amount of disputed mark up calculates to Rs. 66,027,918/-. 13.2 Commitments (Un-Audited) Rupees (Audited) June 30, Rupees Capital commitments 52,647,840 52,647,840 Non-capital commitments 6,120,312 6,678,906 18
HALF YEARLY REPORT 14 OTHER OPERATING INCOME 19,244,800 5,619,964 Other operating income includes Rs. 17,913,835/- (2016 : Nil ) as one time special grant from directors to compensate for the unrecoverable advances as mentioned in note 7.2.1. 15 TRANSACTIONS WITH RELATED AND ASSOCIATED PARTIES (Un-Audited) (Un-Audited) 2016 Rupees Rupees Related parties include associated companies, directors of the company, companies where directors also hold directorship, related group companies, key management personnel, staff retirement funds and entities over which directors are able to exercise influence. All transactions involving related parties arising in the normal course of business are conducted at commercial terms and conditions, and at prices agreed based on inter company prices using admissible valuation modes, i.e. comparable uncontrolled price method except short term loan which are unsecured and interest free. There are no transactions with the key management personnel other than under their terms of employment / entitlements. Transactions with related parties and associated undertakings, other than those disclosed elsewhere in these financial statements, are follows: - Associated undertakings: (Un-Audited) Rupees (Audited) June 30, Rupees Issuance of shares - 67,500,000 Advance received for / (adjusted against) issuance of shares - (67,500,000) Key management personnel: Issuance of shares - 261,003,168 (Adjusted against) / Received from Directors/sponsors (17,913,835) 66,702,782 Advance received for/(adjusted against) issuance of shares - (261,003,168) Special grant received from directors 17,913,835 - Advance for issuance of shares - unsecured of Rs. 358,100,019/- and Short term borrowings - unsecured of Rs. 94,481,181/- is due to associated undertakings and related parties. 16 SUBSEQUENT MATERIAL EVENTS There are no significant activities since affecting the condensed interim financial information apart from those disclosed in the condensed interim information. 17 DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on 24 February 2018 by the board of directors of the company. Chief Executive Officer Chief Financial Officer Director 19
20 HALF YEARLY REPORT