CONTENTS Company Information Directors Review Condensed Interim Balance Sheet Condensed Interim Profit & Loss Account Condensed Interim Cash Flow Statement Condensed Interim Statement of Changes in Equity Notes to and forming part of the Condensed Interim Financial Information
COMPANY INFORMATION Board of Directors Kunwar Idris Chairman Hideya Iijima Managing Director & Chief Executive Officer Tsutomu Mori Deputy Managing Director Hiroshi Kokaji Hirofumi Wachi Haruo Komatsu Koji Tsubouchi Company Secretary Fahim Aijaz Sabzwari Bankers Allied Bank Limited Bank Alfalah Limited Citibank, N.A. Habib Metropolitan Bank Limited. Habib Bank Limited. National Bank of Pakistan Standard Chartered Bank (Pakistan) Limited The Bank of Tokyo-Mitsubishi UFJ, Limited. United Bank Limited. Bank Al-Habib Limited Auditors A.F. Ferguson & Co. Chartered Accountants Legal Advisor Sayeed & Sayeed Registered Office D-2, S.I.T.E., Manghopir Road P.O. Box No. 10714, Karachi - 75700, Pakistan Tel: 021-32563510-9, Website: www.hinopak.com Email: info@hinopak.com Share Registrar Technology Trade (Pvt.) Limited Dagia House 241-C, Block-2 P.E.C.H.S., Off Shahrah-e-Quaideen, Karachi Tel: 021-34391316-7 & 9, 021-34387960-1 Fax: 021-34391318
HINOPAK MOTORS LIMITED DIRECTORS REVIEW FOR THE NINE MONTHS ENDED DECEMBER 31, Greetings to the Shareholders! The total sale of commercial vehicles of all makes in the country in the Oct-Dec quarter of was 597 units 22% less than in the corresponding quarter of last year but 117 units more than the previous quarter. SALES The sale of Hinopak s trucks and buses decreased, in line with the market size, to 394 units from 489 units in the corresponding quarter of last year. However, it was 107 units more than the sales in the preceding quarter. SALES REVENUE The sales revenue for the quarter is Rs. 2.69 billion and for the nine months of Hinopak s financial year stands at Rs. 5.28 billion - 30% less than Rs. 7.59 billion of the corresponding period of last year. The gross profit in this quarter is Rs. 350 million. FINANCE The finance cost stands at Rs. 98 million (Rs. 286 million for nine months). Liquidity deteriorated increasing the bank borrowing to Rs. 2.6 billion from Rs. 1.39 billion in the corresponding quarter. PROFIT & LOSS The profit after tax in the quarter rose to Rs. 120 million from Rs. 60 million of last year s third quarter and the profit per share increased to Rs. 9.68 from Rs.4.81. OUTLOOK FOR THE FOURTH QUARTER The sales graph in the first quarter of the calendar year shows an upward trend but the future remains uncertain. The management is making every possible effort to cut costs and increase sales to make up for the loss suffered in the first half of the Company s financial year. Managing Director & CEO Dated: January 25, 2012 Chairman
CONDENSED INTERIM BALANCE SHEET AS AT DECEMBER 31, (Unaudited) (Audited) March 31, Note ASSETS Non-Current Assets Property, plant and equipment 5 1,800,041 1,788,255 Intangible assets 1,282 2,038 Investments - Long-term loans and advances 11,421 3,908 Long-term deposits 6,209 5,881 Current Assets 1,818,953 1,800,082 Stores, spares and loose tools 28,127 19,794 Stock-in-trade 3,345,265 1,677,525 Trade debts 1,187,081 482,570 Loans and advances 39,155 83,382 Trade deposits and prepayments 31,054 27,253 Refunds due from the government 427,810 225,479 Other receivables 44,004 28,876 Taxation - payments less provisions 275,001 144,567 Cash and bank balances 97,877 63,416 5,475,374 2,752,862 Total Assets 7,294,327 4,552,944 EQUITY AND LIABILITIES Share Capital and Reserves Share capital 124,006 124,006 Reserves 1,236,560 1,355,480 1,360,566 1,479,486 SURPLUS ON REVALUATION OF FIXED ASSETS 1,034,521 1,049,014 LIABILITIES Non-Current Liabilities Deferred taxation 35 47,372 Retirement benefits obligations 70,455 73,105 70,490 120,477 Current Liabilities Trade and other payables 6 2,063,383 1,597,894 Short-term borrowings 2,703,162 296,310 Accrued mark-up 62,205 9,763 4,828,750 1,903,967 Total Liabilities 4,899,240 2,024,444 CONTINGENCY AND COMMITMENTS Total Equity and Liabilities 7,294,327 4,552,944 7 The annexed notes 1 to 12 form an integral part of this condensed interim financial information. Managing Director & CEO Chairman
CONDENSED INTERIM PROFIT AND LOSS ACCOUNT FOR THE NINE MONTHS ENDED DECEMBER 31, - (UNAUDITED) Quarter ended Nine months ended Note 2010 2010 Revenue 2,687,448 2,504,960 5,279,009 7,589,579 Cost of sales (2,337,749) (2,235,443) (4,792,080) (6,954,728) Gross profit 349,699 269,517 486,929 634,851 Distribution expenses (76,128) (90,335) (180,019) (240,629) Administration expenses (46,931) (42,928) (139,784) (127,793) Other operating income 25,253 10,072 45,246 48,735 Other operating expenses - - (1,023) - Profit from operations 251,893 146,326 211,349 315,164 Finance cost 8 (97,651) (61,639) (285,621) (307,588) Profit / (loss) before taxation 154,242 84,687 (74,272) 7,576 Taxation (34,218) (25,092) (63,263) (71,645) Profit / (loss) after taxation 120,024 59,595 (137,535) (64,069) Other comprehensive income / (loss) - - - - Total comprehensive profit / (loss) 120,024 59,595 (137,535) (64,069) Profit / (loss) per share - Rs. 9.68 Rs. 4.81 Rs. (11.09) Rs. (5.17) basic and diluted The annexed notes 1 to 12 form an integral part of this condensed interim financial information. Managing Director & CEO Chairman
CONDENSED INTERIM CASH FLOW STATEMENT FOR THE NINE MONTHS ENDED DECEMBER 31, - (UNAUDITED) Note 2010 CASH FLOWS FROM OPERATING ACTIVITIES Cash used in operations 9 (1,983,031) (690,763) (Increase) / Decrease in long-term loans and advances (7,513) 3,533 (Increase) / Decrease in long-term deposits (328) 131 Retirement benefits obligations paid (27,306) (27,509) Mark-up paid on short-term borrowings (56,167) (80,420) Return on saving accounts 1,094 1,315 Taxes paid (203,343) (78,213) Net cash used in operating activities (2,276,594) (871,926) CASH FLOWS FROM INVESTING ACTIVITIES Fixed capital expenditure incurred (104,903) (119,828) Proceeds from sale of property, plant and equipment 9,106 34,393 Net cash used in investing activities (95,797) (85,435) CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid - (6) Net decrease in cash and cash equivalents (2,372,391) (957,367) Cash and cash equivalents at the beginning of the period (232,894) (430,941) Cash and cash equivalents at the end of the period 10 (2,605,285) (1,388,308) The annexed notes 1 to 12 form an integral part of this condensed interim financial information. Managing Director & CEO Chairman
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE NINE MONTHS ENDED DECEMBER 31, - (UNAUDITED) Share Capital General Reserves - Revenue Unappropriated Profit Total Balance at April 1, 2010 124,006 291,000 1,088,973 1,503,979 Transferred from surplus on revaluation of fixed assets on account of incremental depreciation - - 4,242 4,242 Total comprehensive loss for the nine months ended 2010 - - (64,069) (64,069) Balance at 2010 124,006 291,000 1,029,146 1,444,152 Balance at April 1, 124,006 291,000 1,064,480 1,479,486 Transferred from surplus on disposal of fixed assets - - 2,255 2,255 Transferred from surplus on revaluation of fixed assets on account of incremental depreciation - - 16,360 16,360 Total comprehensive loss for the nine months ended - - (137,535) (137,535) Balance at 124,006 291,000 945,560 1,360,566 The annexed notes 1 to 12 form an integral part of this condensed interim financial information. Managing Director & CEO Chairman
NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL INFORMATION FOR THE NINE MONTHS ENDED DECEMBER 31, - (UNAUDITED) 1. GENERAL INFORMATION Hinopak Motors Limited is incorporated in Pakistan as a public limited company and quoted on Karachi and Lahore stock exchanges. The Company s principal activity is the assembly and progressive manufacture and sale of Hino buses and trucks. The Company also sells buses and trucks in international market. The registered office of the Company is at D-2, S.I.T.E., Manghopir Road, Karachi. The Company is a subsidiary of Hino Motors Limited Japan and the ultimate parent of the Company is Toyota Motors Corporation Japan. This condensed interim financial information does not include all the information required for full financial statements and should be read in conjunction with the annual financial statements as at and for the year ended March 31,. 2. BASIS OF PREPARATION This condensed interim financial information of the Company for the nine months ended 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, 1984. In case where requirements differ, the provisions of or directives issued under the Companies Ordinance, 1984 have been followed. 3. ACCOUNTING POLICIES The accounting policies are consistent with those of the annual financial statements for the year ended March 31,. Standards, interpretations and amendments to published approved accounting standards which have been effective in IAS 24 (revised), Related party disclosures, the standard is mandatory for periods beginning on or after January 1,. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. The standard, however has no effect on this condensed interim financial information of the Company. Prepayments of a minimum funding requirement (amendments to IFRIC 14). The amendments correct an unintended consequence of IFRIC 14, IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction. Without the amendments, entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. The amendments are effective for annual periods beginning January 1,. The amendments should be applied retrospectively to the earliest comparative period presented. The amendment is expected to have no effect on this condensed interim financial information of the Company. Standards, interpretations and amendments to published approved accounting standards that are not yet effective but relevant to the Company IAS 19 - Employee Benefits was amended in June which eliminated the corridor approach so as to recognise all actuarial gains and losses in other comprehensive income as they occur, to immediately recognise all past service costs and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the defined benefit liability/(asset). The amendment is expected to affect the measurement criteria and certain disclosure requirements in the annual financial statements of the Company.The amendment is effective for annual periods beginning January 1, 2013.
4. 4.1 ACCOUNTING ESTIMATES AND FINANCIAL RISK MANAGEMENT The preparation of this condensed interim financial information 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 expense. Actual results may differ from these estimates. In preparing this condensed interim financial information, the significant judgements made by management in applying the Company's accounting policies and areas where assumptions and estimates are significant are the same as those applied to the financial statements as at and for the year ended March 31,. 4.2 The Company's financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended March 31,. (Unaudited) (Audited) March 31, 5. PROPERTY, PLANT AND EQUIPMENT Operating assets - note 5.1 Capital work-in-progress 1,777,213 1,692,262 22,828 95,993 1,800,041 1,788,255 5.1 Additions / disposals Additions (at cost) Nine Months ended 2010 Building on leasehold land 99,712 2,416 4,243-7,577 Plant and machinery 28,764 12,021 129 25 Furniture and fittings 81 62 - - Vehicles 28,928 49,273 5,708 19,859 Electrical installations 10,749 1,157-28 Office and other equipments 9,644 4,543-11 177,878 69,472 10,080 27,500 Disposals (at net book value) 2010 6. TRADE AND OTHER PAYABLES These include bills payable to Toyota Tsusho Corporation, Japan - associated company amounting to Rs 690.62 million (March 31, : Rs 532.28 million) and advances from customers amounting to Rs 673.94 million (March 31, : Rs 357.38 million). 7. 7.1 7.2 CONTINGENCY AND COMMITMENTS Contingency As at the Company has received provisional refunds of Rs. 519.05 million (March 31, : Rs. 519.05 million) from the sales tax authorities against bank guarantees and other undertakings by the Company. Commitments Commitments for capital expenditures as at amounted to Rs. 12.45 million (March 31, : Rs. 71.50 million).
8. FINANCE COST (Unaudited) (Unaudited) 2010 Mark-up on short-term borrowings Exchange loss - net 108,609 168,030 112,084 189,660 Bank charges 8,922 5,844 Interest on Workers Profits Participation Fund 60-285,621 307,588 9. CASH USED IN OPERATIONS (Loss) / profit before taxation (74,272) 7,576 Add / (less): Adjustments for non cash charges and other items Depreciation and amortisation 83,793 75,659 Mark-up on short-term borrowings 108,609 112,084 Retirement benefits charge 24,656 20,092 Loss / (Gain) on sale of property, plant and equipment 974 (10,603) Return on saving accounts (1,094) (1,315) 216,938 195,917 Profit before working capital changes 142,666 203,493 EFFECT ON CASH FLOW DUE TO WORKING CAPITAL CHANGES (Increase) / Decrease in current assets Stores, spares and loose tools (8,333) 5,849 Stock-in-trade (1,667,740) 879,383 Trade debts (704,511) 218,410 Loans and advances 44,227 11,873 Trade deposits and prepayments (3,801) 7,855 Refunds due from the government (235,900) 142,846 Other receivables (15,128) (5,436) (2,591,186) 1,260,780 Increase / (Decrease) in trade and other payables 465,489 (2,155,036) (2,125,697) (894,256) (1,983,031) (690,763) 10. CASH AND CASH EQUIVALENTS (Unaudited) (Audited) March 31, Cash and bank balances 97,877 63,416 Short-term borrowings - Running finance under mark-up arrangements (2,703,162) (296,310) (2,605,285) (232,894)
11. TRANSACTIONS WITH RELATED PARTIES Disclosure of transactions with the related parties during the period are as follows: Relationship Nature of transactions Deceber 31, 2010 i. Holding Company - Purchase of goods 95,897 103,349 - Sale of goods 62,885 194,412 - Royalty charge 29,373 42,900 - Technical services fee ii. Associated Companies - Purchase of goods and services - Sale of goods - Purchase of property, plant and equipment 4,140,646 379,986 18,550-19,628 iii. Employees' Provident Fund - Contribution paid 12,138 13,677 iv. Employees' Gratuity Fund - Contribution paid 5,435 11,792 v. Employees' Pension Fund - Contribution paid 18,893 14,019 vi. Key Management Personnel - Salaries and other employee benefits 18,876 34,654 4,632 - Commission earned 21,292 3,734,075 473,674 13,918 - Post employment benefits - 351 12. DATE OF AUTHORISATION FOR ISSUE This condensed interim financial information was approved and authorised for issue by the Board of Directors of the Company on January 25, 2012. Managing Director & CEO Chairman