QUARTERLY 15 16 MARCH 31,
MARCH 31, ARTISTIC DENIM MILLS LIMITED CONTENTS COMPANY INFORMATION... 2 DIRECTORS' REVIEW... 3 CONDENSED INTERIM BALANCE SHEET... 4 CONDENSED INTERIM PROFIT AND LOSS ACCOUNT... 5 CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME... 6 CONDENSED INTERIM CASH FLOW STATEMENT... 7 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY... 8 NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS... 9
ARTISTIC DENIM MILLS LIMITED MARCH 31, COMPANY INFORMATION Board of Directors Chief Executive Chairperson Directors Audit Committee Chairman Members Human Resource and Remuneration Committee Chairman Members Chief Financial Officer Company Secretary Chief Internal Auditor Auditors Mr. Faisal Ahmed Mrs. Maliha Faisal Mr. Muhammad Yousuf Ahmed Mr. Muhammad Ali Ahmed Ms. Sarah Faisal Ahmed Mr. Muhammad Iqbal-ur-Rahim Mr. Zafar-ul-Mukhtar Ahmed Khan Mr. Muhammad Iqbal-ur-Rahim Mrs. Maliha Faisal Mr. Zafar-ul-Mukhtar Ahmed Khan Mr. Muhammad Iqbal-ur-Rahim Mr. Muhammad Ali Ahmed Ms. Sarah Faisal Ahmed Mr. Sagheer Ahmed Mr. Muhammad Ozair Qureshi Mr. Salman Arif M/s Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Legal Advisor Monawwer Ghani Advocate Share Registrar M/s Technology Trade (Pvt.) Ltd. Dagia House, 241-C, Block-2, PECHS, Karachi. Phone No. 3439 1316-7 Bankers Allied Bank Limited Bank Al Habib Limited Faysal Bank Limited Habib Metropolitan Bank Limited National Bank of Pakistan Standard Chartered Bank (Pakistan) Limited United Bank Limited Registered Office Plot No. 5-9, 23-26, Sector 16, and Factory Korangi Industrial Area, Karachi. UAN: 111 236 236, Fax No. 3505 4652 www.admdenim.com 02
MARCH 31, ARTISTIC DENIM MILLS LIMITED DIRECTORS' REVIEW The Directors of your company have pleasure in presenting their Review with the un-audited condensed interim financial statements for the nine months period ended March 31,. PERIOD UNDER REVIEW Following is the gist of the Company's performance for the period under review as compared with the corresponding period last year: March 31, Rs. in million March 31, Rs. in million Net Sales 4,458 5,668 Gross profit 506 964 Finance costs 62 102 Net Profit 292 625 EPS (Rs. per share) 3.48 7.44 During the period under review, your Company's net sales were recorded at Rs. 4,458 million, reflecting a decrease of 21.35% over the corresponding period last year. The decrease in sales was due to decrease in selling prices, recession in advance economies especially European market, subdued global demand, high cost of doing business and stiff competition from Turkey and regional competitors. Turkey sells products to European markets due to its close proximity and close relationships with Europe and its currency has also depreciated sharply against the Euro since the start of. Gross profit for the nine months period ended is Rs. 506 million as compared to Rs. 964 million in corresponding period of last year. The decrease in gross profit was due to increase in gas tariff, recording of provision of GID Cess, escalating labor costs and increase in prices of other inputs costs. Finance costs reduced by 38.65% over similar period last year, primarily on account of lower interest rates. Due to the reasons explained above, net profit recorded at Rs. 292 million decreasing by 53.27% as compared to the same period previous year. FUTURE OUTLOOK The future outlook for textile sector is expected to remain challenging as there has been a constant dismal trend in textile exports over the past one year. The concern of the industry about the pending sales tax / income tax refunds, gas and power availability at competitive prices with other regional countries, withdrawal of Gas Infrastructure Development Cess (GIDC) and restoring zero rate facility are still pending. While competing regional countries including China, Bangladesh and India have strengthened their industries by all ways and means to maintain their leading position in the region and have filling up their coffers with foreign exchange earned out of exports and not the International Monetary Fund. The government should understand that a downward trend would be irreversible if continued unabated as the buyers would not return to us and to revive the ailing textile industry, the Government should announce the Strategic Trade Policy Framework immediately. To meet challenges mentioned above, the Company has been doing capital expenditure in building and machinery to convert fabric into value added garments as most of its major fabric customers in Pakistan and in Bangladesh have started to produce their own fabric. Despite the challenges being faced, the Management is focused on improving its operational efficiencies, maintaining the high standards of quality, effectively minimizing the production costs and exploring new international markets. ACKNOWLEDGEMENTS We thank our customers for their trust in our products and shareholders, bankers and suppliers for their continued support. We would also like to thank our employees for their commitment, professionalism and dedicated efforts at all levels. ON BEHALF OF THE BOARD FAISAL AHMED Karachi: April 27, Chief Executive 03
ARTISTIC DENIM MILLS LIMITED MARCH 31, CONDENSED INTERIM BALANCE SHEET AS AT MARCH 31, (UN-AUDITED) March 31, June 30, ----------(Rupees in 000)---------- ASSETS NON-CURRENT ASSETS Property, plant and equipment Note 4 (Un-audited) 5,154,660 (Audited) 4,694,984 Long-term loans 7,010 7,266 Long-term deposits 1,658 956 CURRENT ASSETS Stores and spares 201,816 185,303 Stock-in-trade 1,639,159 1,032,582 Trade debts 1,397,064 1,115,975 Loans and advances 106,037 60,783 Trade deposits and prepayments 2,770 2,295 Other receivables 101,667 101,681 Sales tax refundable 152,750 102,400 Taxation - net 305,821 255,377 Cash and bank balances 67,829 27,385 3,974,913 2,883,781 TOTAL ASSETS 9,138,241 7,586,987 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital 5 840,000 840,000 Reserves 4,572,673 4,616,653 5,412,673 5,456,653 NON-CURRENT LIABILITIES Long-term financing 448,420 130,452 Deferred liability 129,865 112,164 CURRENT LIABILITIES Trade and other payables 951,333 631,575 Accrued mark-up 13,738 15,968 Short term borrowings 2,182,212 1,188,530 Current maturity of long-term financing - 51,645 3,147,283 1,887,718 CONTINGENCIES AND COMMITMENTS 6 TOTAL EQUITY AND LIABILITIES 9,138,241 7,586,987 The annexed notes 1 to 9 form an integral part of these condensed interim financial statements. Faisal Ahmed Chief Executive Muhammad Iqbal-ur-Rahim Director 04
MARCH 31, ARTISTIC DENIM MILLS LIMITED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT FOR THE NINE MONTHS PERIOD ENDED MARCH 31, (UN-AUDITED) Nine-months ended Quarter ended March 31, March 31, March 31, March 31, -----------------------------(Rupees in 000)--------------------------- NET SALES 4,458,035 5,668,349 1,703,305 1,644,522 Cost of sales (3,952,073) (4,704,215) (1,548,271) (1,424,655) GROSS PROFIT 505,962 964,134 155,034 219,867 Distribution costs (104,933) (164,618) (34,391) (37,511) Administrative expenses (68,917) (65,154) (22,766) (21,757) Other operating expenses (24,580) (50,272) (5,558) (12,209) Other operating income 49,659 51,156 11,833 23,259 (148,771) (228,888) (50,882) (48,218) OPERATING PROFIT 357,191 735,246 104,152 171,649 Finance costs (62,483) (101,855) (26,578) (9,458) PROFIT BEFORE TAXATION 294,708 633,391 77,574 162,191 Taxation (2,688) (8,419) 15,794 (597) NET PROFIT FOR THE PERIOD 292,020 624,972 93,368 161,594 EARNINGS PER SHARE - Basic and diluted (Rs. per share) 3.48 7.44 1.11 1.92 The annexed notes 1 to 9 form an integral part of these condensed interim financial statements. Faisal Ahmed Chief Executive Muhammad Iqbal-ur-Rahim Director 05
ARTISTIC DENIM MILLS LIMITED MARCH 31, CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS PERIOD ENDED MARCH 31, (UN-AUDITED) Nine-months ended Quarter ended March 31, March 31, March 31, March 31, -----------------------------(Rupees in 000)--------------------------- Net profit for the period 292,020 624,972 93,368 161,594 Other comprehensive income - - - - Total comprehensive income for the period 292,020 624,972 93,368 161,594 The annexed notes 1 to 9 form an integral part of these condensed interim financial statements. Faisal Ahmed Chief Executive Muhammad Iqbal-ur-Rahim Director 06
MARCH 31, ARTISTIC DENIM MILLS LIMITED CONDENSED INTERIM CASH FLOW STATEMENT FOR THE NINE MONTHS PERIOD ENDED MARCH 31, (UN-AUDITED) CASH FLOWS FROM OPERATING ACTIVITIES March 31, March 31, ----------(Rupees in 000)---------- Profit before taxation 294,708 633,391 Adjustments for non cash charges and other items: Depreciation 257,732 236,412 Provision for gratuity 20,498 14,506 Finance costs 62,483 101,854 Gain on disposal of operating fixed assets (165) (741) 340,548 352,031 Profit before working capital changes 635,256 985,422 Increase in current assets Stores and spares (16,513) (40,181) Stock-in-trade (606,577) (78,541) Trade debts (281,089) (250,124) Loans and advances (45,254) (9,837) Trade deposits and prepayments (475) 2,072 Other receivables and sales tax refundable (50,336) 20,295 (1,000,244) (356,316) Increase / (Decrease) in current liabilities 319,402 (119,162) Cash (used in) / generated from operations (45,586) 509,944 Income taxe paid (53,132) (84,026) Gratuity paid (2,797) (6,379) Finance costs paid (64,713) (113,708) Long-term deposits - net (702) 1 (121,344) (204,112) Net cash (used in) / generated from operating activities (166,930) 305,832 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure (717,592) (544,302) Long-term loans 256 393 Proceeds from disposal of operating fixed assets 349 1,692 Net cash used in investing activities (716,987) (542,217) CASH FLOWS FROM FINANCING ACTIVITIES Long-term financing repaid (161,296) (120,247) Long-term financing acquired 427,619 125,317 Dividends paid (335,644) (83,866) Short-term borrowings acquired 993,682 342,857 Net cash generated from financing activities 924,361 264,061 NET INCREASE IN CASH AND CASH EQUIVALENTS 40,444 27,676 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 27,385 7,739 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 67,829 35,415 The annexed notes 1 to 9 form an integral part of these condensed interim financial statements. Faisal Ahmed Chief Executive Muhammad Iqbal-ur-Rahim Director 07
ARTISTIC DENIM MILLS LIMITED MARCH 31, CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE NINE MONTHS PERIOD ENDED MARCH 31, (UN-AUDITED) Issued, subscribed and paid-up Capital Unappropriated profit Total --------------(Rupees in 000)-------------- Balance as at July 01, 2014 840,000 3,962,782 4,802,782 Cash dividend paid @ Rs. 1 per Ordinary share of Rs. 10 each for the year ended June 30, 2014 - (84,000) (84,000) Net profit for the period ended March 31, - 624,972 624,972 Other comprehensive income - - - Total comprehensive income - 624,972 624,972 Balance as at March 31, 840,000 4,503,754 5,343,754 Balance as at July 01, 840,000 4,616,653 5,456,653 Cash dividend paid @ Rs. 4 per Ordinary share of Rs. 10 each for the year ended June 30, - (336,000) (336,000) Net profit for the period ended March 31, - 292,020 292,020 Other comprehensive income - - - Total comprehensive income - 292,020 292,020 Balance as at March 31, 840,000 4,572,673 5,412,673 The annexed notes 1 to 9 form an integral part of these condensed interim financial statements. Faisal Ahmed Chief Executive Muhammad Iqbal-ur-Rahim Director 08
MARCH 31, ARTISTIC DENIM MILLS LIMITED NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS PERIOD ENDED MARCH 31, (UN-AUDITED) 1 THE COMPANY AND ITS OPERATIONS Artistic Denim Mills Limited (the Company) was incorporated in Pakistan on May 18, 1992 under the Companies Ordinance, 1984 and is currently listed on the Pakistan Stock Exchange. The principal activity of the Company is to manufacture and sell rope dyed denim fabric, yarn and value added textile products. The registered office of the Company is situated at Plot No. 5-9, 23-26, Sector 16, Korangi Industrial Area, Karachi. 2 BASIS OF PREPARATION These condensed interim financial statements are un-audited and are being submitted to the shareholders as required by Section 245 of the Companies Ordinance, 1984 (the Ordinance) and the listing regulations of the Pakistan Stock Exchange. These condensed interim financial statements have been prepared in accordance with the requirements of the International Accounting Standards (IAS) - 34 "Interim Financial Reporting" and provisions of and directives issued under the Ordinance. In case where requirements differ, the provisions of or directives issued under the Ordinance have been followed. These condensed interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company's annual financial statements for the year ended June 30,. 3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of these condensed interim financial statements are consistent with those followed in the preparation of the Company's annual financial statements for the year ended June 30, except as follows: New, Amended and Revised Standards and Interpretations of IFRSs The Company has adopted the following revised standards, amendments and interpretation of IFRSs which became effective during the period: IFRS-10 - Consolidated Financial Statements IFRS-11 - Joint Arrangements IFRS-12 - Disclosure on Interests in Other Entities IFRS-13 - Fair Value Measurement The adoption of the above revision, amendments and interpretation of the standards did not have any effect on these condensed interim financial statements. 09
ARTISTIC DENIM MILLS LIMITED MARCH 31, 4 PROPERTY, PLANT AND EQUIPMENT Operating Fixed assets 4.1 4,374,529 4,170,718 Capital work-in-progress 780,131 524,266 5,154,660 4,694,984 4.1 The additions and disposals in property, plant and equipment are as follows: March 31, June 30, ----------(Rupees in 000)---------- Note (Un-audited) (Audited) Opening net written down value 4,170,718 3,655,456 Additions during the period / year 4.1.1 461,727 842,540 Disposals, at their written down values, during the period / year (184) (1,069) Depreciation charge during the period / year (257,732) (326,209) (257,916) (327,278) 4,374,529 4,170,718 4.1.1 Following additions were made during the period / year Building on leasehold land 22,928 224,886 Plant and machinery 421,510 551,088 Factory equipment 9,051 40,048 Furniture & fixtures 457 16,134 Office equipment, including computers 2,703 2,186 Vehicles 5,078 8,198 461,727 842,540 5 SHARE CAPITAL March 31, No. of shares June 30, March 31, June 30, -------(Rupees in 000)------- (Un-audited) (Audited) Authorised share capital 100,000,000 100,000,000 Ordinary shares of Rs.10 each 1,000,000 1,000,000 Issued, subscribed and paid-up capital Ordinary shares of Rs.10 each 14,000,000 14,000,000 fully paid in cash 140,000 140,000 70,000,000 70,000,000 fully paid bonus shares 700,000 700,000 84,000,000 84,000,000 840,000 840,000 10
MARCH 31, ARTISTIC DENIM MILLS LIMITED 6 CONTINGENCIES AND COMMITMENTS Contingencies March 31, June 30, -----(Rupees in 000)----- (Un-audited) (Audited) 6.1 Outstanding counter guarantees 149,354 141,354 6.2 The Company imported Natural Gas Generator in November 2014. The Company availed the benefit of concessional rates of custom duty and sales tax under the Fifth Schedule of the Custom Act, 1969 and the Sixth Schedule of the Sales Tax Act, 1990 respectively and after allowing such benefit at the time of import, the Model Customs Collectorate (MCC) attempted to withdraw the same by imposing an additional condition which is not contemplated by the relevant concessional entries of the Schedule. On December 27, 2014 MCC reassessed the import duty and raised a demand of differential amount of duty amounting Rs. 29.763 million. The Company challenged the reassessment of import duty in the Honorable High Court of Sindh (HCS). On January 13,, the Company has obtained stay order against same from HCS. The stay order has restrained the MCC from charging / recovering the duty till the final decision on this matter. The Company based on the advice of its legal counsel is confident that the case will be decided in favor of the Company hence no provision in this respect is made in these condensed interim financial statements which amounts to Rs. 29.763 (June 30, : 29.763) million. Commitments 6.3 Commitments in respect of civil works on building on leasehold land at the end of the current period amounted to Rs. 223.666 (June 30, : Rs. 223.365) million. 6.4 Outstanding letters of credit at the end of the current period amounted to Rs. 500.769 (June 30, : Rs. 535.497) million. 6.5 Post dated cheques issued in favour of Custom Authorities aggregated to Rs.154.161 (June 30, : Rs. 111.179) million, against various statutory notifications. 7 TRANSACTIONS WITH RELATED PARTIES Related parties of the Company comprise associated undertakings, directors and key management personnel. The Company in the normal course of business carries out transactions with various related parties. Details of transactions with related parties, other than remuneration and benefits to the directors and key management personnel under the terms of their employments, are given below: 11
ARTISTIC DENIM MILLS LIMITED MARCH 31, March 31, March 31, ----------(Rupees in 000)---------- Aggregate amount in respect of: Sales of goods 42,176 139,701 The above transactions are at arm's length using admissible valuation methods. 8 DATE OF AUTHORISATION FOR ISSUE These condensed interim financial statements were authorised for issue on April 27, by the Board of Directors of the Company. 9 GENERAL Figures have been rounded-off to the nearest thousand rupees. Faisal Ahmed Chief Executive Muhammad Iqbal-ur-Rahim Director 12