CONTENTS Corporate Information 2 Directors Review 3 Condensed Interim Balance Sheet 4 Condensed Interim Profit and Loss Account 5 Condensed Interim Cash Flow Statement 6 Condensed Interim Statement of Changes in Equity 7 Notes to the Condensed Interim Financial Information 8 1
CORPORATE INFORMATION Board of Directors Mr. Naveed M. Sheikh - Chairman Mr. Waqar Ibn Zahoor Bandey - Director/CEO Mian Muhammad Ali - Director Mr. Muhammad Asghar - Director Mr. Ahmed Haji Mussa - Director Mr. Asad Ali - Director Ms. Samina Gul - Director Chief Financial Officer Company Secretary Mr. Saifullah Sheikh Mr. Abdul Mansoor Khan Audit Committee Mr. Muhammad Asghar - Chairman Mian Muhammad Ali - Member Ms. Samina Gul - Member Executive Committee Mr. Naveed M. Sheikh - Chairman Mr. Waqar Ibn Zahoor Bandey - Member Ms. Samina Gul - Member Financial Institutions Auditors Legal Advisors Registered Office Shares Registrar National Bank of Pakistan MCB Bank Limited Faysal Bank Limited KASB Bank Limited The Bank of Punjab Al-Baraka Bank (Pakistan) Limited Pak Oman Investment Company Limited Naveed Zafar Husain Jaffery & Co. Chartered Accountants Imtiaz Siddiqui & Associates Advocates & Solicitors Ismail Aiwan-e-Science Building, 205-Ferozepur Road Lahore - 54600 UAN # (042) 111-COLONY 265669 Fax # (042) 3576-3247 Drummonds (Pvt) Limited Suit # 204-206, 2nd Floor, Al-Qadir Heights 1-Babar Block, New Garden Town Lahore Ph # 042-35846644-5 Production Facilities Phalia Project Mian Chanu Project Karmanwala, Tehsil Phalia Chak # 84/15L, 15 KM Distt. Mandi Bahauddin. Vehari Road, Kacha Khoo Ph # (0546) 541-151/54 Tehsil Mian Chanu Fax # (0546) 541-162 Distt. Khanewal. Ph # (0652) 553-182 Fax # (0652) 660-452 2
DIRECTORS' REVIEW Dear Members Your directors are pleased to present the condensed un-audited interim financial information of the company for the first quarter ended on December 31,. Turnover for the quarter under review is Rupees 976 Million (2010: Rupees 914 Million) whilst the cost of sales stood at Rupees 780 Million (2010: Rupees 721 Million) bringing gross profit to Rupees 196 Million (2010: Rupees 193 Million). After making provision for tax, profit for the quarter is Rupees 7 Million (2010: Rupees 10 Million) and earnings per share is Rupees 0.07 as compared with Rupees 0.10 for the last quarter. Despite several challenges like financial cost, inflationary pressure of inputs and depressed selling price of sugar, company managed to be in profit. Sugarcane cultivation was enhanced for the current crushing season mainly on account of healthy returns to growers in prior years and high support price of sugarcane fixed by the Government for the current season (Punjab Government increased sugarcane support price from Rupees 125 to Rupees 150 per 40 Kg). In view of better availability of sugarcane coupled with increased recovery, we expect higher production for the current year. Board is thankful to the valuable Members, Growers, Banks and Government departments for their trust, contribution, persistent support and patronage and would like to place on record its gratitude to all the Employees of the company for their dedication and hard work. For and on behalf of the Board Lahore January 30, 2012 Naveed M. Sheikh Chairman 3
CONDENSED INTERIM BALANCE SHEET AS AT DECEMBER 31, EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Note Un-Audited December 31, Audited September 30, Authorised capital 100,000,000 (: 100,000,000) ordinary shares of Rupees 10/- each. 1,000,000 1,000,000 Issued, subscribed and paid up capital 8 990,200 990,200 Unappropriated profit 541,610 534,743 1,531,810 1,524,943 NON-CURRENT LIABILITIES Long term finances 9 961,834 1,097,528 Staff retirement benefits 12,642 12,943 Deferred taxation 5,000 5,000 979,476 1,115,471 CURRENT LIABILITIES Trade and other payables 1,698,906 527,388 Accrued finance cost 95,811 121,221 Short term borrowings-secured 10 1,253,242 1,625,102 Current portion of long term finances 232,430 137,500 Provision for taxation 37,576 35,269 3,317,965 2,446,480 Contingencies and commitments 11 -)))) -)))) PROPERTY AND ASSETS 5,829,251 5,086,894 NON-CURRENT ASSETS Property, plant and equipment 7 3,476,875 3,515,925 CURRENT ASSETS Stores, spares and loose tools 157,331 135,899 Stocks in trade 1,737,156 896,981 Trade debts -)))) 324,547 Advances, deposits, prepayments and other receivables 220,872 196,583 Cash and bank balances 237,017 16,959 2,352,376 1,570,969 5,829,251 5,086,894 The annexed notes form an integral part of these condensed interim financial information. Chief Executive Officer Director 4
CONDENSED INTERIM PROFIT AND LOSS ACCOUNT FOR THE FIRST QUARTER ENDED DECEMBER 31, (Un-Audited) Note December 31, December 31, 2010 Sales - net 13 976,121 914,334 Cost of sales 13 780,215 721,194 Gross profit 195,906 193,140 Administrative expenses 13 28,380 25,643 Distribution and marketing expenses 13 45,766 44,614 74,146 70,257 Operating profit 121,760 122,883 Other operating income 118 65 121,878 122,948 Finance cost 104,375 102,941 Other operating expenses 875 1,000 105,250 103,941 Profit before taxation 16,628 19,007 Provision for taxation 9,761 9,196 Profit for the period 6,867 9,811 Earnings per share - basic & diluted 0.07 0.10 The annexed notes form an integral part of these condensed interim financial information. Chief Executive Officer Director 5
CONDENSED INTERIM CASH FLOW STATEMENT FOR THE FIRST QUARTER ENDED DECEMBER 31, (Un-Audited) CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 16,628 19,007 Adjustments for non-cash and other items: Finance cost 104,375 102,941 Depreciation of property, plant and equipment 41,204 35,082 Employees' retirement benefits - gratuity 226 200 Workers' profit participation fund 875 1,000 146,680 139,223 Cash generated from operating activities before working capital changes 163,308 158,230 Adjustments for Working Capital Changes (Increase)/Decrease in current assets: Stores, spares and loose tools (21,432) 8,861 Stocks-in-trade (840,175) (440,429) Trade debts 324,547 89,106 Advances, deposits, prepayments and other receivables (16,488) 17,266 Increase in current liabilities: Trade and other payables 1,170,643 329,520 Net working capital changes 617,095 4,324 Finance cost paid (129,784) (144,763) Employees' retirement benefits - gratuity paid (527) (1) Income tax paid (15,256) 519 (145,567) (144,245) Net cash generated from operating activities 634,836 18,309 CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities - fixed capital expenditure (2,154) (71) CASH FLOWS FROM FINANCING ACTIVITIES December 31, December 31, 2010 Short term borrowings (371,860) 161,807 Long term finances-repaid (net) (40,764) (23,612) Net cash (used)/generated in financing activities (412,624) 138,195 Net increase in cash and cash equivalents 220,058 156,433 Cash and cash equivalents at the beginning of the period 16,959 37,576 Cash and cash equivalents at the end of the period 237,017 194,009 The annexed notes form an integral part of these condensed interim financial information. Chief Executive Officer Director 6
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE FIRST QUARTER ENDED DECEMBER 31, (Un-Audited) Particulars Share capital Unappropriated profit Total equity Balance as on September 30, 2010 990,200 469,032 1,459,232 Profit for the quarter -)))) 9,811 9,811 Balance as on December 31, 2010 990,200 478,843 1,469,043 Balance as on September 30, 990,200 534,743 1,524,943 Profit for the quarter -)))) 6,867 6,867 Balance as on December 31, 990,200 541,610 1,531,810 The annexed notes form an integral part of these condensed interim financial information. Chief Executive Officer Director 7
SELECTED EXPLANATORY NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION FOR THE FIRST QUARTER ENDED DECEMBER 31, (Un-Audited) 1. THE COMPANY AND ITS OPERATION 8 Colony Sugar Mills Limited ("the Company") was incorporated in Pakistan on May 09, 2007 under the Companies Ordinance, 1984. The shares of the company are quoted on Karachi Stock Exchange (Guarantee) Limited. The Company's registered office is situated in Lahore and its manufacturing facilities are located at Tehsil Phalia, District Mandi Bahauddin and Tehsil Mian Channu, District Khanewal. The company is engaged in manufacturing and sale of white refined sugar and ethanol. 2. STATEMENT OF COMPLIANCE This condensed interim financial information has been prepared, in all material respects, in accordance with the requirements of International Accounting Standard (IAS) 34, "Interim Financial Reporting", as applicable in Pakistan. This condensed interim financial information is un-audited and is being submitted to the members as required by section 245 of the Companies Ordinance, 1984 and listing regulation of Karachi Stock Exchange. 3. BASIS OF PRESENTATION, MEASUREMENT AND ESTIMATIOIN Estimates used in the preparation of these condensed interim financial information are reasonable under the circumstances, continually evaluated and are based on historical experience. The basis of presentation and measurement adopted for the preparation of these condensed interim financial information are the same as those adopted in the preparation of the preceding annual published audited financial statements for the year ended September 30,. 4. SIGNIFICANT ACCOUNTIING POLICIES The accounting policies adopted and applied for the preparation of this condensed interim financial information are the same as those applied in the preparation of preceding annual published audited financial statements of the Company for the year ended September 30,. 5. SEASONALITY OF OPERATION The Company is inter-alia, engaged in manufacturing of sugar for which the season begins in November and ends in April. Therefore, majority of expenses are incurred and production activities are undertaken in first half of the Company's financial year. 6. PROVISIONS The provision in respect of staff retirement benefits, workers' profit participation fund and taxation are estimated and these are subject to final adjustments in the annual audited financial statements. 7. PROPERTY, PLANT AND EQUIPMENT Un-Audited December 31, Audited September 30, Opening book value 3,515,925 3,022,160 Add: Additions during the period 7.1 2,154 655,593 3,518,079 3,677,753 Less:Depreciation charged during the period (41,204) (161,828) 3,476,875 3,515,925
7.1 Addition during the period Un-Audited December 31, Audited September 30, Company owned assets Building on freehold land -)))) 6,340 Plant and machinery 11 645,215 Furniture, fixture and equipments 3 3,908 Vehicles 2,140 130 8. ISSUED, SUBSCRIBED AND PAID UP CAPITAL 2,154 655,593 64,020,000 ( September 30, : 64,020,000 ) Ordinary shares of Rupees 10 each fully paid in cash 640,200 640,200 35,000,000 ( September 30, : 35,000,000 ) Ordinary shares of Rupees 10 each issued as fully paid for consideration other than cash 350,000 350,000 990,200 990,200 8.1 26,506,961 (: 26,506,961) ordinary shares of the Company are held by Colony Mills Limited. 9. LONG TERM FINANCES-Secured Outstanding balance 1,194,264 1,235,028 Current portion shown under current liabilities (232,430) (137,500) 10. SHORT TERM BORROWINGS-Secured 961,834 1,097,528 The aggregate facility of short term borrowings available from commercial banks is Rupees 1,650 million (September 30, : Rupees 2,000 million). These facilities are secured against pledge over stocks, current assets and personal guarantee of a director. The rates of mark up range from 11.00% to 16.73% (September 30, : 9.00% to 17.30%) per annum. 11. CONTINGENCIES AND COMMITMENTS Contingencies There are no significant changes in contingencies since the last published annual audited financial statements. Commitments Nil - ( December 31, : Nil) 9
12. TRANSACTIONS WITH RELATED PARTIES DURING THE QUARTER UNDER REFERENCE December 31, December 31, 2010 Colony Mills Limited Long term musharika finance - outstanding -)))) 87,626 Profit on long term musharika finance charged 3,494 3,549 Colony Industries (Private) Limited Long term musharika finance - outstanding 246,696 309,070 Profit on long term musharika finance charged 12,542 12,519 13. BUSINESS SEGMENTS INFORMATION For the first quarter ended December 31, Sugar Ethanol Total For the first quarter ended December 31, 2010 Sugar Ethanol Total Revenue Local 694,300 9,031 703,331 584,801 5,614 590,415 Export -)))) 325,524 325,524 -)))) 335,339 335,339 inter-segment 123,477 -)))) -)))) -)))) -)))) -)))) 817,777 334,555 1,028,855 584,801 340,953 925,754 Less: Sales tax, excise duty and commission 51,488 1,246 52,734 2,383 9,036 11,420 Segment expenses 766,289 333,309 976,121 582,418 331,916 914,334 Cost of sales External 617,475 162,740 780,215 387,458 333,736 721,194 Inter-segment -)))) 123,477 -)))) -)))) -)))) -)))) 617,475 286,217 780,215 387,458 333,736 721,194 Gross profit 148,814 47,092 195,906 194,960 (1,820) 193,140 Administrative and general expenses 25,703 2,677 28,380 23,129 2,514 25,643 Distribution and marketing expenses 3,434 42,332 45,766 2,548 42,066 44,614 29,137 45,009 74,146 25,677 44,580 70,257 Operating profit 119,677 2,083 121,760 169,283 (46,400) 122,883 10
13.1 Inter-segment sales and purchases Inter-segment sales and purchases have been eliminated from total figures. 13.2 Basis of inter-segment pricing All inter -segment transfers are made at cost. As at December 31, Sugar Ethanol Total As at September 30, Sugar Ethanol Total 13.3 Segment assets 4,768,902 1,060,349 5,829,251 3,871,050 1,215,843 5,086,893 13.4 Segment liabilities 3,451,439 841,003 4,292,442 2,606,989 949,962 3,556,951 13.5 Depreciation on property, plant and equipment 28,772 12,432 41,204 113,972 47,856 161,828 14. DATE OF AUTHORIZATION FOR ISSUE This condensed interim financial information was authorized for issue on January 30, 2012 by the Board of Directors of the Company. 15. GENERAL 15.1 Corresponding figures in the balance sheet comprise of balances as per the annual audited financial statements for the year ended September 30,, whereas corresponding figures in the profit and loss account, cash flow statement and statement of changes in equity comprise balances of the comparable period of immediatly preceding financial year. 15.2 Corresponding figures have been rearranged wherever necessary to facilitate comparison. However, no material re-arrangement has been made in these condensed interim financial statements. 15.3 Figures in this condensed interim financial information have been rounded off to the nearest thousand rupees. Chief Executive Officer Director 11