COMPANY INFORMATION DIRECTORS Lt Gen Syed Tariq Nadeem Gilani, HI(M), (Retd) Chairman Lt Gen Javed Iqbal, HI(M), (Retd) Chief Executive & Managing Director Lt Gen Tariq Khan, HI(M), (Retd) Mr Qaiser Javed Dr. Nadeem Inayat Maj Gen Kaleem Saber Taseer, HI(M), (Retd) Maj Gen Tahir Ashraf Khan, HI(M), (Retd) Maj Gen Wasim Sadiq, HI(M), (Retd) Brig Raja Jahanzeb, SI (M), (Retd) Mr Naved A. Khan Mr Nasier A. Sheikh Dr. Rashid Bajwa COMPANY SECRETARY Brig Abdul Rehman, (Retd) CHIEF FINANCIAL OFFICER Syed Aamir Ahsan REGISTERED OFFICE FFBL Tower, C1 / C2, Sector B, Jinnah Boulevard, Phase II, DHA Islamabad. Tel: +92 51 8763325, Fax: +92 51 8763304-05 E-mail: secretary@ffbl.com PLANTSITE Plot No. EZ/I/P-1 Eastern Zone, Port Qasim, Karachi 75020. Tel: +92 21 34724500-29 Fax : +92 21 34750704 Email: information@ffbl.com WEB PRESENCE www.ffbl.com 1
BANKERS Habib Bank Limited MCB Bank Limited United Bank Limited National Bank of Pakistan Allied Bank Limited Askari Bank Limited Faysal Bank Limited Standard Chartered Bank (Pakistan) Limited Habib Metropolitan Bank Limited Bank Al-Falah Limited Bank Al-Habib Limited Silk Bank Limited The Bank of Punjab The First Micro Finance Bank Limited Soneri Bank Limited Summit Bank Limited JS Bank Limited Samba Bank Limited Zarai Taraqiati Bank Limited Industrial Bank of China The Bank of Khyber Al-Baraka Bank (Pakistan) Limited Dubai Islamic Bank Pakistan Limited Bank Islami Pakistan Limited Meezan Bank Limited MCB Islamic Bank Limited LEGAL ADVISORS Orr Dignam & Co, Advocates Marina Heights, 2nd floor, 109 East, Jinnah Avenue, Blue Area, Islamabad, Pakistan Tel:051-2348645-9 AUDITORS EY Ford Rhodes Eagle Plaza, 75 West Fazal-e-Haq Road Blue Area, Islamabad. SHARES REGISTRAR M/s Corplink (Pvt) Limited Wings Arcade, 1-K, Commercial, Model Town, Lahore. Tel: (042) 35839182, 35887262 Fax: (042) 35869037 2
Directors Review For the Quarter Ended March 31, 2018 The Board of Directors is pleased to present a brief overview of the operational and financial performance of the Company for the first quarter ended March 31, 2018. Overall performance of the plants remained satisfactory during the period. Improved gas supply from SSGCL has resulted in overall better production numbers, though margins remained under pressure that continue to affect Company`s profitability. Provision of power and steam by FFBL Power Company Ltd to FFBL during the quarter also enabled the Company to utilise the gas as raw material, instead of fuel and enhanced its production. Production of Ammonia at 92 Kt, Urea at 98 Kt and DAP at 167 Kt is higher by 28%, 60% and 2% respectively compared with the corresponding period. Urea sales during Jan-Mar 2018 were 88 Kt as compared to 38 Kt sales of corresponding period of 2017, showing a healthy increase of 132%. DAP sales during the period remained at 142 Kt, 18% lower than 173 Kt sales of Jan-Mar 2017. Year 2018 started on a positive note with balanced supply situation and increase in prices. The low inventory levels and increasing trend in price triggered advanced buying by the dealers. The momentum built during first two months started to taper off at the close of first quarter 2018. Urea market generally remained steady during the first quarter of the year. Estimated production of 1,300 Kt during Jan-Mar 2018 is 4% less than 1,353 Kt during same period last year. Domestic sales are estimated at 1,255 Kt, 44% more than the same period of last year. Industry also exported 76 Kt Urea during the period under review. Estimated inventory at end Mar 2018 is 258 Kt. Upward trend in domestic market encouraged dealers investment in phosphate products. Year started with an inventory of 255 Kt, which was 144% more than the inventory at the start of 2017. Domestic sales of DAP during Jan-Mar 2018 are estimated at 380 Kt, 21% higher as compared to 313 Kt during the same period of last year. Industry is estimated to carry an inventory of 230 Kt into the second quarter of 2018. During Jan-Mar 2018, FFBL share in Urea and DAP market is estimated to be 7% and 37% respectively. FFBL s operational results for the first quarter 2018 show improvement as compared to the corresponding period due to improved sales number. The Company posted gross profit of Rs. 746 million as compared to gross loss of Rs. 254 million in the corresponding period. The main reasons include increase in DAP selling price, higher sales volume of Urea during the quarter and classification of subsidy on DAP as other income in corresponding period. Increase 3
in Phos Acid price and better production numbers have mainly contributed towards higher cost of production. Feed and fuel gas prices remained high which could not be passed on to the customers. The Company suffered exchange loss of Rs. 145 million during the quarter due to devaluation of Pak Rupee. Other income mainly includes GoP subsidy of Rs. 173 million on Urea sales and Rs. 159 million income from investment with financial institutions. Net loss after tax, as a result of above factors stood at Rs 449 million against loss of Rs. 135 million in the corresponding period. Company s loss per share at March 31, 2018 stood at Re. 0.48 against Re. 0.14 loss in the corresponding period. Due to Rotor damage of Sulphuric Acid Plant, PMP production numbers remained low during the first quarter ended March 2018. PMP produced 35 Kt of P 2 O 5 during the period and sold 23 Kt as against production of 90 Kt and sale of 109 Kt respectively in the corresponding period. PMP earned a net profit of Moroccan Dirhams (MAD) 122 million for the year ended December 31, 2017 as against MAD 123 million for the year ended December 31, 2016 as per Moroccan reporting standards. FFBL remains in close coordination with Ministry of Petroleum and SSGCL for continuous and improved supply of gas. The Company remains committed to provide quality products to its customers and get better results for its stakeholders through improved operational efficiency at all levels. For and on behalf of the Board Lt Gen Syed Tariq Nadeem Gilani HI(M), (Retd) Chairman Lt Gen Javed Iqbal, HI(M), (Retd) Chief Executive & Managing Director Islamabad April 24, 2018 4
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Interim Condensed Financial Information
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION AS AT MARCH 31, 2018 March 31, 2018 (Un - audited) Note (Rupees 000) December 31, 2017 (Audited) EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital 9,341,100 9,341,100 Capital reserve 228,350 228,350 Accumulated profit 2,431,216 3,581,188 12,000,666 13,150,638 NON-CURRENT LIABILITIES Long-term loans 5 14,083,333 15,333,333 Deferred liabilities 529,035 524,302 14,612,368 15,857,635 CURRENT LIABILITIES Trade and other payables 20,802,676 23,328,113 Accrued interest 169,504 172,805 Short-term borrowings 8,348,426 9,934,276 Current portion of long-term loans 5 4,166,667 3,208,333 33,487,273 36,643,527 60,100,307 65,651,800 CONTINGENCIES AND COMMITMENTS 6 The annexed notes, from 1 to 19, form an integral part of this interim condensed financial information. 8
March 31, 2018 (Un - audited) Note (Rupees 000) December 31, 2017 (Audited) ASSETS NON-CURRENT ASSETS Property, plant and equipment 7 10,222,521 10,426,780 Long-term investments 8 23,064,751 23,064,751 Long-term deposits 78,643 78,643 Deferred tax asset - net 9 1,795,383 1,322,118 35,161,298 34,892,292 CURRENT ASSETS Stores and spares 2,636,768 2,745,198 Stock-in-trade 1,875,313 1,854,349 Trade debts 993,953 1,004,582 Advances 1,289,883 1,142,822 Current portion of long-term loans 10 11,288 33,863 Trade deposits and short-term prepayments 97,278 62,006 Interest accrued 57,574 51,118 Other receivables 11 6,064,265 4,030,390 Income tax refundable - net 1,028,641 615,257 Sales tax refundable 2,113,430 1,478,447 Short-term investments 12 4,992,033 14,194,289 Cash and bank balances 3,778,583 3,547,187 24,939,009 30,759,508 60,100,307 65,651,800 CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 9
INTERIM CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMREHENSIVE INCOME (UN-AUDITED) 2018 2017 Note (Rupees 000) Sales - net 10,282,860 7,998,759 Cost of sales 13 (9,537,339) (8,252,630) Gross profit / (loss) 745,521 (253,871) Selling and distribution expenses (935,513) (917,158) Administrative expenses (238,828) (384,464) (428,820) (1,555,493) Finance costs (419,272) (477,375) Other operating expenses (162,780) (10,184) (1,010,872) (2,043,052) Other income 14 360,482 1,745,412 Loss before taxation (650,390) (297,640) Taxation 15 201,011 162,842 Loss after taxation (449,379) (134,798) Other comprehensive income - - Total comprehensive loss (449,379) (134,798) Loss per share - basic and diluted (Rupees) (0.48) (0.14) The annexed notes, from 1 to 19, form an integral part of this interim condensed financial information. 10 CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER
INTERIM CONDENSED STATEMENT OF CASH FLOWS (UN-AUDITED) 2018 2017 Note (Rupees 000) CASH FLOWS FROM OPERATING ACTIVITIES Cash (used in) / generated from operating activities 16 (5,346,697) 4,010,541 Income tax paid (685,407) (202,409) Receipt from gratuity fund - 1,812 Finance costs paid (422,573) (722,388) Compensated absences paid (13,409) (13,895) (Payment to) / Receipt from Workers (Profit) Participation Fund (43,328) 11,296 Net cash (used in) / generated from operating activities (6,511,414) 3,084,957 CASH FLOWS FROM INVESTING ACTIVITIES Fixed capital expenditures (210,061) (303,635) Long-term investments - (427) Sale proceeds from disposal of property, plant and equipment 11,784 1,900 Dividend received - 121,395 Investment at fair value through profit or loss account (199,387) (250,000) Long-term loans recovered / (disbursed) 22,575 - Profit received on bank balances, term deposits and sub-ordinated loans 112,880 127,105 Net cash used in investing activities (262,209) (303,662) CASH FLOWS FROM FINANCING ACTIVITIES Long-term financing payment (791,666) (791,667) Long-term financing receipt 500,000 - Short-term borrowings - net (245,000) (3,485,549) Dividend paid (564,544) (334,183) Net cash used in financing activities (1,101,210) (4,611,399) NET DECREASE IN CASH AND CASH EQUIVALENTS (7,874,833) (1,830,104) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE QUARTER 10,347,911 9,930,399 CASH AND CASH EQUIVALENTS AT THE END OF THE QUARTER 2,473,078 8,100,295 CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statement of cash flows comprise the following statement of financial position amounts: - Cash and bank balances 3,776,504 5,364,223 - Short-term highly liquid investments 1,725,000 3,710,281 - Short-term running finance (3,028,426) (974,209) 2,473,078 8,100,295 The annexed notes, from 1 to 19, form an integral part of this interim condensed financial information. CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 11
INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) Share capital Capital reserve Accumulated profit ( R u p e e s 0 0 0 ) Balance as at January 01, 2017 - audited 9,341,100 228,350 3,187,608 12,757,058 Total comprehensive income Loss after taxation for the period - - (134,798) (134,798) Other comprehensive income for the period - - - - Total comprehensive loss for the period - - (134,798) (134,798) Total Transactions with owners, recorded directly in equity Distributions to owners Final dividend 2016 (Re. 0.5 per ordinary share) - - (467,056) (467,056) Total transactions with owners - - (467,056) (467,056) Balance as at March 31, 2017 9,341,100 228,350 2,585,754 12,155,204 Balance as at January 01, 2018 - audited 9,341,100 228,350 3,581,188 13,150,638 Total comprehensive income Loss after taxation for the period - - (449,379) (449,379) Other comprehensive income for the period - - - - Total comprehensive loss for the period - - (449,379) (449,379) Transactions with owners, recorded directly in equity Distributions to owners Final dividend 2017 (Re. 0.75 per ordinary share) - - (700,593) (700,593) Total transactions with owners - - (700,593) (700,593) Balance as at March 31, 2018 9,341,100 228,350 2,431,216 12,000,666 The annexed notes, from 1 to 19, form an integral part of this interim condensed financial information. CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 12
NOTES TO THE INTERIM CONDENSED FINANCIAL INFORMATION (UN-AUDITED) 1. THE COMPANY AND ITS OPERATIONS Fauji Fertilizer Bin Qasim Limited ( the Company ) is a public limited company incorporated in Pakistan under the Companies Ordinance,1984 (now replaced by the Companies Act, 2017 with effect from May 31, 2017). The shares of the Company are quoted on the Pakistan Stock Exchange. The registered office of the Company is situated at FFBL Tower, C1/C2, Sector B, Jinnah Boulevard, DHA II, Islamabad. The principal objective of the Company is manufacturing, purchasing and marketing of fertilizers. The Company commenced its commercial production on January 1, 2000. 2. BASIS OF PREPARATION This interim condensed financial information of the Company, for the quarter ended March 31, 2018, has been prepared in accordance with the requirements of International Accounting Standard 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Act, 2017. In case where requirements differ, the provisions of or directives issued under the Companies Act, 2017 have been followed. As a result of the promulgation of the Companies Act, 2017, the nomenclature for the statement presenting the financial position of the Company has been changed, from Balance Sheet to Statement of Financial Position. Further, all items of income and expense recognized in a period are now presented in a single Statement of Profit or Loss and Other Comprehensive Income, whereas previously these were presented in two separate statements: a statement displaying components of profit or loss (the Profit and Loss Account) and a second statement beginning with profit or loss for the year and displaying components of other comprehensive income (the Statement of Comprehensive Income). The disclosures in this interim condensed financial information do not include the information reported for full annual financial statements and should therefore be read in conjunction with the financial statements for the year ended December 31, 2017. The comparative Statement of Financial Position is extracted from the annual financial statements, as of December 31, 2017, whereas the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Cash Flows and Statement of Changes in Equity are extracted from the unaudited interim condensed financial information, for the quarter ended March 31, 2017. This interim condensed financial information is unaudited and is being submitted to the members, as required under Section 237 of the Companies Act, 2017, and the listing regulations of the Pakistan Stock Exchange (PSX). The interim condensed consolidated financial information of the Company is prepared separately. In this interim condensed financial information, the investments in subsidiaries and associates are accounted for on the basis of direct equity interest at cost, rather than on the basis of reported results. 3. ACCOUNTING POLICIES The accounting policies and methods of computation adopted for the preparation of this interim condensed financial information are similar to those applied in the preparation of the financial statements for the preceding year, ended December 31, 2017. 4. The status of significant shareholdings, as at March 31, 2018, is given below: Shares Percentage Fauji Fertilizer Company Limited 465,891,896 49.88 Fauji Foundation 170,842,386 18.29 13
NOTES TO THE INTERIM CONDENSED FINANCIAL INFORMATION (UN-AUDITED) 5. LONG-TERM LOANS March 31, 2018 (Un - audited) (Rupees 000) December 31, 2017 (Audited) Loans from banking companies-secured 18,250,000 18,541,666 Less: Current portion shown under current liabilities 4,166,667 3,208,333 14,083,333 15,333,333 6. CONTINGENCIES AND COMMITMENTS Contingencies i) Guarantees issued by banks on behalf of the Company 54,986 37,021 Commitments i) Capital expenditure - contracted 1,847,019 1,526,145 ii) Letters of credit for purchase of stores, spares and raw materials 823,798 895,587 7. PROPERTY, PLANT AND EQUIPMENT Opening written down value 10,426,780 11,298,191 Additions during the period / year 210,061 760,076 Cost of disposals during the period / year (24,705) (160,559) Depreciation charged during the period / year (402,924) (1,600,412) Depreciation charged on disposals during the period / year 13,309 129,484 10,222,521 10,426,780 14
NOTES TO THE INTERIM CONDENSED FINANCIAL INFORMATION (UN-AUDITED) 8. LONG-TERM INVESTMENTS March 31, 2018 (Un - audited) Note (Rupees 000) December 31, 2017 (Audited) Joint venture 8.1 1,411,150 1,411,150 Associated companies 8.2 7,991,556 7,991,556 Subsidiary companies 8.3 13,662,045 13,662,045 Other long-term investments 8.4 - - 23,064,751 23,064,751 8.1 Investment in joint venture - at cost Pakistan Maroc Phosphore S.A, Morocco (PMP) 1,411,150 1,411,150 8.2 Investments in associates - at cost Quoted Fauji Cement Company Limited (FCCL) 300,000 300,000 Askari Bank Limited (AKBL) 5,230,991 5,230,991 Un-quoted Foundation Wind Energy - I Limited (FWE-I) 1,225,873 1,225,873 Foundation Wind Energy - II (Private) Limited (FWE-II) 1,234,692 1,234,692 7,991,556 7,991,556 8.3 Investments in subsidiaries - at cost Quoted Fauji Foods Limited (FFL) Voting Shares 8.3.1 4,672,902 3,920,805 Non-voting Shares - 752,097 4,672,902 4,672,902 Un-quoted Fauji Meat Limited (FML) 2,250,000 2,250,000 FFBL Foods Limited 298,518 298,518 FFBL Power Company Limited (FPCL) 6,440,625 6,440,625 13,662,045 13,662,045 8.3.1 Persuant to approval in Annual General Meeting of the Fauji Foods Limited (FFL) held on March 26, 2018, voting and non-voting share classes of FFL have been consolidated. There has been no change in the Company s effective holding after the consolidation of share classes. 8.4 Investment - available for sale - unquoted Arabian Sea Country Club Limited (ASCCL) 300,000 ordinary shares of Rs. 10 each 3,000 3,000 Less: Impairment in value of investment 3,000 3,000 - - - - 15
NOTES TO THE INTERIM CONDENSED FINANCIAL INFORMATION (UN-AUDITED) 9. DEFERRED TAXATION - NET March 31, December 31, 2018 2017 (Un - audited) (Audited) (Rupees 000) The balance of deferred tax is in respect of the following major (taxable) / deductible temporary differences: Accelerated tax depreciation (1,813,010) (1,898,337) Provision for inventory obsolescence 37,888 37,917 Provision against doubtful other receivables 59,086 59,086 Accrued liabilities and payables 3,511,419 3,123,452 1,795,383 1,322,118 10. LONG-TERM LOANS Long-term loans 11,288 33,863 Less: Current portion shown under current liabilities 11,288 33,863 - - 10.1 During the year 2016, the Company provided Rs. 45.15 million as Subordinated Loans and Guarantee Facilities to Foundation Wind Energy-I Limited and Foundation Wind Energy-II (Pvt) Limited, at three months KIBOR + 2% per annum, on the terms set out in the respective agreements. During the period payments of Rs. 17,850 thousand and Rs. 4,725 thousand have been received by the Company from Foundation Wind Energy-I Limited and Foundation Wind Energy-II (Pvt) Limited, respectively. 11. OTHER RECEIVABLES This includes an amount of Rs. 2,789 million (December 31, 2017: Rs. 910 million) receivable from Fauji Fertilizer Company Limited, an associated company, on account of amounts received from customers against sales of the Company s products by FFCL under an inter-company services agreement. March 31, 2018 (Un - audited) December 31, 2017 (Audited) (Rupees 000) 12. SHORT-TERM INVESTMENTS Loans and receivables Term deposits with banks and financial institutions 1,725,000 11,170,000 Investments at fair value through profit or loss Mutual funds 3,267,033 3,024,289 4,992,033 14,194,289 12.1 The balance at the period end includes investments in term deposit receipts, having maturity periods upto 3 months and carrying mark-up between 5.00% to 9.25% per annum (December 31, 2017: 5.00% to 9.15% per annum). 16
NOTES TO THE INTERIM CONDENSED FINANCIAL INFORMATION (UN-AUDITED) 2018 2017 (Un-audited) (Rupees 000) 13. COST OF SALES Raw materials consumed 7,160,684 5,901,910 Packing materials consumed 139,607 96,765 Fuel and power 2,116,924 796,520 Chemicals and supplies consumed 49,940 40,028 Salaries, wages and benefits 146,955 392,315 Rent, rates and taxes 14,390 6,195 Insurance 17,466 15,552 Travel and conveyance 29,318 26,176 Repairs and maintenance 728,566 597,391 Communication, establishment and other expenses 25,904 37,716 Depreciation 351,880 342,821 Opening stock - work in process 103,813 80,055 Closing stock - work in process (23,069) (41,689) Cost of goods manufactured 10,862,378 8,291,755 Opening stock - finished goods 183,002 1,137,927 Closing stock - finished goods (1,508,041) (1,177,052) Cost of sales 9,537,339 8,252,630 14. OTHER INCOME Profit on bank balances & term deposits 115,889 105,430 Gain / Dividend from mutual funds and other investments 43,357 55,913 Dividend received - AKBL - 407,826 Subsidy income on DAP - 1,039,617 Subsidy income on Urea 173,291 116,344 Interest on sub-ordinated loans 414 748 Scrap sale and other receipts 15,068 14,236 Gain on sale of property, plant & equipment 388 1,900 Guarantee Fee - FWE I & FWE II 2,039 3,398 Guarantee Fee - FML 3,304 - Other s 6,732-360,482 1,745,412 17
NOTES TO THE INTERIM CONDENSED FINANCIAL INFORMATION (UN-AUDITED) 2018 2017 (Un-audited) (Rupees 000) 15. TAXATION Current tax 272,254 202,170 Deferred tax (473,265) (365,012) (201,011) (162,842) 16. CASH (USED IN) / GENERATED FROM OPERATIONS Loss before taxation (650,390) (297,640) Adjustment for non-cash charges and other items: Provision for gratuity 18,105 21,783 Exchange losses 144,886 1,541 Provision for compensated absences 18,141 27,912 Provision for Workers Welfare Fund 17,369 9,520 Depreciation 402,924 396,096 Finance costs 419,272 477,375 Profit on bank balances and term deposits (159,246) (161,343) Dividend from associates - (407,826) Gain on sale of property, plant and equipment (388) (1,900) Mark-up on sub-ordinated loans (414) (748) Guarantee Fee (5,343) (3,398) Operating profit before working capital changes 204,916 61,372 Changes in working capital Stores and spares 108,430 79,655 Stock-in-trade (20,964) (12,670) Trade debts 10,629 2,475,888 Advances (147,061) 460,810 Trade deposits and short-term prepayments (35,272) (26,923) Other receivables (2,033,324) 398,865 Sales tax refundable (635,534) 125,402 Trade and other payables (2,798,517) 448,142 (5,551,613) 3,949,169 Cash (used in) / generated from operations (5,346,697) 4,010,541 18
NOTES TO THE INTERIM CONDENSED FINANCIAL INFORMATION (UN-AUDITED) 17. RELATED PARTY TRANSACTIONS Fauji Fertilizer Company Limited (FFCL) has a 49.88% share holding in FFBL (2017: 49.88%). while Fauji Foundation (FF) holds 18.29% shares (2017: 18.29%) in the Company. The Company has related parties, which comprise of a joint venture, the Fauji group entities, directors, key management personnel and employees funds. Transactions with related parties and the balances outstanding at the period end are given below. The carrying values of investments in subsidiaries, associates and the joint venture are disclosed in note 8 to the interim condensed financial information. 2018 2017 (Rupees 000) Transactions with Fauji Foundation: Dividend paid 128,132 85,421 Services provided 154 - Transactions with subsidiary companies: Investments in FFBL Foods Limited - 428 Balance payable to FFBL Power Company Limited (FPCL) 653,125 555,991* Balance receivable from Fauji Meat Limited (FML) 1,785 2,310* Balance receivable from FFBL Power Company Limited (FPCL) 142,429 160,166* Balance receivable from FFBL Foods Limited 426 283* Material / services provided to FFBL Power Company Limited (FPCL) 114,572 - Material / services provided to Fauji Foods Limited (FFL) 13,560 22,811 Services provided to Fauji Meat Limited (FML) 1,785 22,638 Material received from FFBL Power Company Limited (FPCL) 1,907,148 196,921 Expenses incurred on behalf of FFBL Foods Limited 426 - Gurantee Fee from Fauji Meat Limited (FML) 3,304 - Transactions with associates Services and material acquired 246,919 340,933 Receipts under consignment account (FFCL) 6,212,283 12,098,656 Commision charged to the Company 4,586 4,217 Balance receivable at the period end - unsecured (FFCL) 2,788,298 910,300* Dividend paid 349,419 232,946 Profit on bank balances (AKBL) 17,248 16,684 Long-term loans (AKBL) 500,000 - Mark-up on long-term loans (AKBL) 387 - Investments in mutual funds & TDR s with AKBL - 590,451 Income from TDR s with AKBL - 14,321 Balances at bank (AKBL) 229,488 958,310* Interest and Guarantee Fee from FWE-I and FWE-II 2,453 4,146 Transaction with Fauji Foundation Hospital 2 55 Tansactions with Foundation Gas 171 567 Loans to associates - FWE-I and FWE-II 11,288 - Transactions with joint venture: Purchase of raw materials 4,097,195 4,392,535 Expenses incurred on behalf of joint venture 4,378 4,721 Balance payable at the period end - secured 3,128,587 4,105,955* Balance receivable at the period end - unsecured 7,921 6,854* Other related parties: Contribution to Provident Fund 17,286 17,713 Contribution to Gratuity Fund 18,105 21,783 Receipt from Gratuity Fund (174) (1,812) Payment to / (Receipt from) Workers (Profit) Participation Fund & WWF 43,328 (11,296) Balance payable at the period end - unsecured (WWF and WPPF) 1,316,060 1,342,019* Payable to Gratuity Fund 95,768 77,489* Remuneration of key management personnel 129,399 163,622 * These balance of accounts, appearing as comparatives, are as at December 31, 2017 (audited). 19
NOTES TO THE INTERIM CONDENSED FINANCIAL INFORMATION (UN-AUDITED) 18. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS 18.1 Financial risk factors The Company s activities expose it to a variety of financial risks including market risk (currency risk, interest rate risk and other price risk), credit risk and liquidity risk. There have been no changes in the risk management policies during the period; consequently this interim condensed financial information does not include all the financial risk management information and disclosures required in the annual financial statements. 18.2 Fair value estimation The table below analyzes financial instruments carried at fair value by the valuation method. The different levels have been defined as follows: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices level 2) - Inputs for the asset or liability that are not based on observable market data (level 3) Level 1 Level 2 Level 3 (Rupees 000) March 2018 - un-audited ASSETS Financial assets at fair value through profit or loss - Short-term investments 3,267,033 - - December 2017 - audited ASSETS Financial assets at fair value through profit or loss - Short-term investments 3,024,289 - - 19. GENERAL 19.1 Figures have been rounded off to the nearest thousand rupees. 19.2 Corresponding figures have been reclassified / re-arranged, wherever necessary, for the purpose of comparison. 19.3 This interim condensed financial information was authorized for issue on April 24, 2018 by the Board of Directors of the Company. CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 20
Interim Condensed Consolidated Financial Information
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT MARCH 31, 2018 March 31, 2018 (Un - audited) Note (Rupees 000) December 31, 2017 (Audited) EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital 9,341,100 9,341,100 Capital reserve 228,350 228,350 Revaluation reserve on available for sale investments, net of tax (110,454) 33,856 Statutory reserve 866,477 821,150 Translation reserve 1,118,667 824,699 Accumulated profit 2,972,098 3,959,623 14,416,238 15,208,778 NON-CONTROLLING INTEREST 4,593,621 4,765,782 19,009,859 19,974,560 NON-CURRENT LIABILITIES Long-term loans 5 39,295,422 41,052,214 Finance lease liability 91,081 103,054 Deferred liabilities 556,503 549,047 39,943,006 41,704,315 CURRENT LIABILITIES AND PROVISIONS Trade and other payables 22,776,020 26,314,126 Accrued interest 428,130 335,601 Short-term borrowings 14,276,954 15,674,197 Current portion of long-term loans 5 7,386,576 6,298,979 Current portion of finance lease liability 40,549 38,583 44,908,229 48,661,486 103,861,094 110,340,361 CONTINGENCIES AND COMMITMENTS 6 The annexed notes, from 1 to 20, form an integral part of this interim condensed consolidated financial information. 22
March 31, 2018 (Un - audited) Note (Rupees 000) December 31, 2017 (Audited) ASSETS NON-CURRENT ASSETS Property, plant and equipment 7 50,298,267 50,289,228 Intangible assets 385,129 383,689 Long-term investments 8 16,026,720 15,699,061 Long-term deposits 79,066 79,587 Deferred tax asset - net 9 2,158,028 1,749,630 68,947,210 68,201,195 CURRENT ASSETS Stores and spares 2,894,249 2,924,557 Stock-in-trade 4,180,452 3,834,867 Trade debts 2,320,912 2,254,962 Advances 1,704,270 1,476,932 Current portion of long-term loans 10 11,288 33,863 Trade deposits and short-term prepayments 239,222 217,041 Interest accrued 55,853 55,465 Other receivables 11 6,352,574 4,550,546 Income tax refundable - net 2,250,088 1,703,255 Sales tax refundable 3,075,344 2,531,576 Short-term investments 12 5,942,033 17,094,289 Cash and bank balances 5,887,599 5,461,813 34,913,884 42,139,166 103,861,094 110,340,361 CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 23
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (UN-AUDITED) 2018 2017 Note (Rupees 000) Sales - net 14,024,295 9,655,329 Cost of sales 13 (11,974,200) (9,874,204) Gross profit / (loss) 2,050,095 (218,875) Selling and distribution expenses (1,484,590) (1,340,735) Administrative expenses (406,090) (532,558) 159,415 (2,092,168) Finance costs (1,074,408) (661,333) Other operating expenses (202,811) (17,342) (1,117,804) (2,770,843) Other income 14 Share of profit of associates and joint venture - net 203,468 448,662 Others 423,890 1,347,432 627,358 1,796,094 Loss before taxation (490,446) (974,749) Taxation - net 15 76,680 242,509 Loss after taxation (413,766) (732,240) Attributable to: - Owners of the holding Company (241,605) (404,839) - Non controlling interest (172,161) (327,401) (413,766) (732,240) Other comprehensive income Exchange difference on translating a joint venture 288,698 (162,933) Effect of translation - share of Askari Bank Limited under equity method 5,270 (55) Revaluation reserve on available for sale investments (169,777) (533,584) Related deferred tax 25,467 66,698 (144,310) (466,886) Total comprehensive loss (264,108) (1,362,114) Attributable to: - Owners of the holding Company (91,947) (1,034,713) - Non controlling interest (172,161) (327,401) (264,108) (1,362,114) Loss per share - basic and diluted (Rupees) (0.26) (0.43) The annexed notes, from 1 to 20, form an integral part of this interim condensed consolidated financial information. CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 24
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UN-AUDITED) 2018 2017 Note (Rupees 000) CASH FLOWS FROM OPERATING ACTIVITIES Cash (used in) / generated from operating activities 16 (5,614,601) 3,380,773 Income tax paid (853,085) (269,950) Payment to gratuity fund - (830) Finance cost paid (981,879) (726,552) Compensated absences paid (4,935) (15,241) (Payment to) / Receipt from Workers (Profit) Participation Fund (43,377) 11,247 Net cash (used in) / generated from operating activities (7,497,877) 2,379,447 CASH FLOWS FROM INVESTING ACTIVITIES Fixed capital expenditures (813,968) (2,848,728) Dividend received - 121,395 Sale proceeds of property, plant and equipment 12,315 3,462 Increase in long-term deposits 521 - Receipt from long-term loans 22,575 - Investment at fair value through profit & loss account (299,387) (250,000) Profit received on bank balances, term deposits and sub-ordinated loans 155,858 124,184 Net cash used in investing activities (922,086) (2,849,687) CASH FLOWS FROM FINANCING ACTIVITIES Short-term borrowings - net (245,000) (3,120,989) Long-term loans (677,455) (498,507) Finance lease liability - net (10,008) (1,275) Dividend paid (564,545) (334,183) Net cash used in financing activities (1,497,008) (3,954,954) NET DECREASE IN CASH AND CASH EQUIVALENTS (9,916,971) (4,425,194) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE QUARTER 9,422,616 10,474,842 CASH AND CASH EQUIVALENTS AT THE END OF THE QUARTER 494,355 6,049,648 CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statement of cash flows comprises the following statement of financial position amounts: - Cash and bank balances 5,887,599 6,043,909 - Short-term highly liquid investments 2,575,000 5,410,281 - Short-term running finance (8,956,954) (5,404,542) (494,355) 6,049,648 The annexed notes, from 1 to 20, form an integral part of this interim condensed consolidated financial information. CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 25
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) Share capital Capital reserve Reserves Revaluation reserve on Statutory Translation Accumulated available reserve reserve profit / (loss) for sale investments Noncontrolling Interest ( R u p e e s 0 0 0 ) Balance as at January 01, 2017 - audited 9,341,100 228,350 705,043 577,799 683,133 2,934,171 3,454,533 17,924,129 Total comprehensive income Loss for the period after taxation - - - - - (404,839) (327,401) (732,240) Other comprehensive loss for the period - - (466,886) - (162,988) - - (629,874) Total comprehensive loss for the period - - (466,886) - (162,988) (404,839) (327,401) (1,362,114) Transfer to statutory reserve - - - 57,528 - (57,528) - - Transactions with owners, recorded directly in equity Distributions to owners Final dividend 2016 (Re. 0.5 per ordinary share) - - - - - (467,055) - (467,055) Total transactions with owners - - - - - (467,055) - (467,055) Balance as at March 31, 2017 9,341,100 228,350 238,157 635,327 520,145 2,004,749 3,127,132 16,094,960 Total Balance as at January 01, 2018 - audited 9,341,100 228,350 33,856 821,150 824,699 3,959,623 4,765,782 19,974,560 Total comprehensive income Loss for the period after taxation - - - - - (241,605) (172,161) (413,766) Other comprehensive income for the period - - (144,310) - 293,968 - - 149,658 Total comprehensive income / (loss) for the period - - (144,310) - 293,968 (241,605) (172,161) (264,108) Transfer to statutory reserve - - - 45,327 - (45,327) - - Transactions with owners, recorded directly in equity Distributions to owners Final dividend 2017 (Re. 0.75 per ordinary share) - - - - - (700,593) - (700,593) Total transactions with owners - - - - - (700,593) - (700,593) Balance as at March 31, 2018 9,341,100 228,350 (110,454) 866,477 1,118,667 2,972,098 4,593,621 19,009,859 The annexed notes, from 1 to 20, form an integral part of this interim condensed consolidated financial information. CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 26
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) 1. THE GROUP AND ITS OPERATIONS Fauji Fertilizer Bin Qasim Limited is a public limited company incorporated in Pakistan under the Companies Ordinance,1984, and its shares are quoted on Pakistan Stock Exchange (PSX). The registered office of FFBL is situated at FFBL Tower, C1/C2, Sector B, Jinnah Boulevard, DHA Phase II, Islamabad, Pakistan. The principal objective of FFBL is manufacturing, purchasing and marketing of fertilizers. FFBL commenced its commercial production effective January 01, 2000. Fauji Fertilizer Bin Qasim Limited group comprises of Fauji Fertilizer Bin Qasim Limited (FFBL / parent company) and its subsidiaries, Fauji Meat Limited (FML), FFBL Foods Limited and FFBL Power Company Limited (FPCL), Fauji Foods Limited collectively referred as ( Group ). FML is a public limited company incorporated on September 05, 2013 in Pakistan under the Companies Ordinance, 1984. The principal objectives of FML are to establish a meat abattoir unit for halal slaughtering of animals to obtain meat for local and export sale purposes. FFBL Foods Limited is a public limited company incorporated on July 04, 2013 in Pakistan under the Companies Ordinance, 1984. The principal objectives are to produce multi brand dairy products. FFBL Power Company Limited is a public limited company incorporated on June 27, 2014 in Pakistan under the Companies Ordinance, 1984. The principal activity is generation and supply of electricity and all other forms of energy. Fauji Foods Limited (FFL) was incorporated in Pakistan on September 26, 1966 as a public company and its shares are quoted on Pakistan Stock Exchange. It is principally engaged in processing and sale of toned milk, milk powder, fruit juices, allied dairy and food products. 2. BASIS OF PREPARATION This interim condensed consolidated financial information of the Company, for the quarter ended March 31, 2018, has been prepared in accordance with the requirements of International Accounting Standard 34 - Interim Financial Reporting and provisions of and directives issued under the Companies Act, 2017. In case where requirements differ, the provisions of or directives issued under the Companies Act, 2017 have been followed. As a result of the promulgation of the Companies Act, 2017, the nomenclature for the statement presenting the financial position of the Company has been changed, from Balance Sheet to Statement of Financial Position. Further, all items of income and expense recognized in a period are now presented in a single Statement of Profit or Loss and Other Comprehensive Income, whereas previously these were presented in two separate statements: a statement displaying components of profit or loss (the Profit and Loss Account) and a second statement beginning with profit or loss for the year and displaying components of other comprehensive income (the Statement of Comprehensive Income). The disclosures in this interim condensed consolidated financial information do not include the information reported for full annual financial statements and should therefore be read in conjunction with the financial statements for the year ended December 31, 2017. The comparative Consolidated Statement of Financial Position is extracted from the annual financial statements, as of December 31, 2017, whereas the Statement of Profit or Loss and Other Comprehensive Income, the Statement of cash flows and Statement of Changes in Equity are extracted from the unaudited interim condensed consolidated financial information, for the quarter ended March 31, 2017. This interim condensed consolidated financial information is unaudited and is being submitted to the members, as required under Section 237 of the Companies Act, 2017, and the listing regulations of the Pakistan Stock Exchange (PSX). 27
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) 3. ACCOUNTING POLICIES The accounting policies and method of computation adopted for the preparation of this interim condensed consolidated financial information is same as those applied in preparation of financial statements for the preceding year ended December 31, 2017. 4. GROUP CONSISTS OF FOLLOWING SUBSIDIARY COMPANIES: Ownership in 2018 Ownership in 2017 Fauji Meat Limited 75% 75% FFBL Power Company Limited 75% 75% FFBL Foods Limited 100% 100% Fauji Foods Limited 50.59% 49.40% The interim condensed financial information of subsidiary companies has been consolidated on line by line basis. The carrying value of investments held by the Holding Company is eliminated against the subsidiaries share capital and pre-acquisition reserves. All material intercompany balances have been eliminated. March 31, 2018 (Un-audited) (Rupees 000) December 31, 2017 (Audited) 5. LONG-TERM LOANS Loans from banking companies-secured 46,681,998 47,351,193 Less: Current portion shown under current liabilities 7,386,576 6,298,979 39,295,422 41,052,214 28
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) March 31, 2018 (Un - audited) December 31, 2017 (Audited) (Rupees 000) 6. CONTINGENCIES AND COMMITMENTS Contingencies i) Guarantees issued by banks on behalf of the Group. 54,986 37,021 ii) Group s share of contingent liabilities of Fauji Cement Company Limited as at December 31, 2017 49,830 49,830 iii) Group s share of contingent liabilities of Foundation Wind Energy - I Limited as at December 31, 2017 77,756 77,756 iv) Group s share of contingent liabilities of Foundation Wind Energy - II (Pvt) Limited as at December 31, 2017 269,388 269,388 v) Group s share of contingent liabilities of Askari Bank Limited as at December 31, 2017 70,588,655 68,368,802 vi) Contingent liabilities of Fauji Foods Limited 1,335,880 1,335,880 vii) Contingent liabilities of Fauji Meat Limited 308,074 58,113 Commitments i) Capital expenditures - contracted. 1,847,019 1,526,145 ii) Letters of credit for purchase of stores, spares and raw materials 823,798 895,587 iii) Commitments with Fauji Foundation for investment in FWE- I & FWE- II 232,840 226,984 iv) Company s share of commitments of PMP as at December 31, 2017 30,616 34,266 v) Commitments of Fauji Meat Limited 25,506 24,021 vi) Commitments of FFBL Power Company Limited 815,513 503,980 vii) Group s share of commitments of Fauji Cement Company Limited as at December 31, 2017. 11,601 9,262 viii) Commitments of Fauji Foods Limited 1,370,760 1,084,560 7. PROPERTY, PLANT AND EQUIPMENT Opening written down value 50,289,228 46,535,066 Additions during the period / year 811,297 6,539,219 Disposals during the period / year (26,180) (124,466) Depreciation during the period / year (789,412) (2,756,309) Depreciation charged on disposals during the period / year 13,334 95,718 Closing written down value 50,298,267 50,289,228 29
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) March 31, 2018 (Un-audited) December 31, 2017 (Audited) (Rupees 000) 8. LONG-TERM INVESTMENTS Investment in joint venture - equity method Pakistan Maroc Phosphore S.A, Morocco (PMP) Balance brought forward 4,105,395 3,630,614 Share of profit 96,628 441,456 Dividend - (107,023) Loss during the year on translation of net assets 288,698 140,348 Closing balance 4,490,721 4,105,395 Investment in associates - equity method Fauji Cement Company Limited (FCCL) Balance brought forward 407,743 392,688 Share of profit 10,857 31,930 Dividend - (16,875) Closing balance 418,600 407,743 Foundation Wind Energy - I Limited (FWE-I) Opening balance 2,038,217 1,574,361 Share of (loss) / profit (67,549) 463,856 Closing balance 1,970,668 2,038,217 Foundation Wind Energy - II (Pvt) Limited (FWE-II) Opening balance 2,075,568 1,770,038 Share of (loss) / profit (62,003) 305,530 Closing balance 2,013,565 2,075,568 Askari Bank Limited (AKBL) Opening balance 7,072,138 7,438,522 Share of profit 225,535 1,101,103 Dividend - (679,710) Defined benefit obligation - (12,116) Revenue reserve on revaluation of available for sale investment (169,777) (776,879) Effect of translation 5,270 1,218 Closing balance 7,133,166 7,072,138 Investment - available for sale - unquoted Arabian Sea Country Club Limited (ASCCL) 300,000 ordinary shares of Rs. 10 each 3,000 3,000 Less: Impairment in value of investment 3,000 3,000 - - 16,026,720 15,699,061 30
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) 9. DEFERRED TAXATION - NET The balance of deferred tax is in respect of the following major (taxable) / deductible temporary differences: March 31, 2018 (Un - audited) December 31, 2017 (Audited) (Rupees 000) Accelerated depreciation (2,204,233) (2,518,921) Share of profit of associates and joint venture - net (795,698) (755,461) Share of profit of subsidiary (91,444) (91,444) Provision for inventory obsolescence 37,888 37,917 Provision for doubtful other receivables 59,086 59,086 Deferred tax on revaluation of available for sale investments 30,474 5,007 Accrued liabilities and payables 3,511,419 3,123,451 Unabsorbed losses 1,610,536 1,889,995 2,158,028 1,749,630 Deferred tax asset on unused tax losses, tax credits and other deductible temporary differences, are recognized on the basis that sufficient future taxable profits will be available against which they can be utilized. 10. LONG-TERM LOANS Long-term loans 11,288 33,863 Less: Current portion shown under current liabilities 11,288 33,863 - - During year 2016, the Company has provided Rs. 45.15 million as sub-ordinated loans to Foundation Wind Energy-I Limited and Foundation Wind Energy-II (Pvt) Limited, at KIBOR + 2 % per annum, on the terms set out in the respective agreements. 11. OTHER RECEIVABLES This includes an amount of Rs. 2,789 million (December 31, 2017: Rs. 910 million) receivable from Fauji Fertilizer Company Limited, an associated company on account of amount recovered from customers, against sales of the Company s products under an inter-company services agreement. 31
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) 12. SHORT-TERM INVESTMENTS The balance at the period end includes investments in term deposit receipts of various banks, having maturity periods up to 3 months, and carrying mark-up between 5.00% to 9.25% per annum (December 31, 2017: 5.00% to 9.15% per annum). 2018 2017 (Rupees 000) 13. COST OF SALES 32 Raw materials consumed 9,971,913 6,876,080 Packing materials consumed 895,435 522,571 Fuel and power 296,116 678,844 Ash Dumping 8,912 - Utilities 45,166 - Milk Collection Charges 65,298 26,388 Chemicals and supplies consumed 150,739 66,863 Salaries, wages and benefits 458,023 540,724 Rent, rates and taxes 14,630 12,641 Insurance 39,727 21,105 Travel and conveyance 40,735 41,471 Repairs and maintenance 787,326 615,687 Communication, establishment and other expenses 48,002 61,500 Depreciation 724,596 498,438 Opening stock - work in process 129,948 152,818 Closing stock - work in process (93,937) (136,960) Cost of goods manufactured 13,582,629 9,978,170 Opening stock - finished goods 467,002 1,432,743 Closing stock - finished goods (2,075,431) (1,536,709) Cost of sales 11,974,200 9,874,204 14. OTHER INCOME Share of profit / (loss) from associates and joint ventrue Pakistan Maroc Phosphore S.A, Morocco 96,628 141,312 Foundation Wind Energy - I Ltd. (67,549) 107,095 Foundation Wind Energy - II (Pvt) Ltd. (62,003) (29,303) Fauji Cement Company Limited 10,857 9,094 Askari Bank Limited 225,535 220,464 203,468 448,662 Profit on bank balances & term deposits 153,793 107,737 Gain / Dividend from mutual funds and other investments 43,357 55,913 Subsidy income on DAP - 1,039,617 Subsidy income on Urea 173,291 116,344 Interest and guarantee fee 2,453 4,146 Scrap sale and other receipts 46,050 18,085 (Loss) / gain on sale of property, plant and equipment (531) 2,917 Miscellaneous income 5,477 2,673 423,890 1,347,432 627,358 1,796,094
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) 15. TAXATION - NET 2018 2017 (Rupees 000) Current tax 306,252 212,921 Deferred tax (382,932) (455,430) (76,680) (242,509) 16. CASH (USED IN) / GENERATED FROM OPERATIONS Loss before taxation (490,446) (974,749) Adjustment for non-cash charges and other items: Provision for gratuity 27,415 29,961 Exchange losses 137,436 2,800 Provision for compensated absences 20,983 28,912 Provision for Workers Welfare Fund 40,998 9,520 Provision for Workers Profit Participation Fund 17,369 - Amortization of transaction cost of long-term finance 8,260 - Depreciation 790,643 565,932 Finance cost 1,066,148 661,333 Profit on bank balances and term deposits (153,793) (107,737) Income on mutual funds (43,357) (55,913) Guarantee fee (414) (3,398) Profit from associates and joint venture - net (203,468) (448,662) Mark-up on sub-ordinated loans (2,039) (748) Loss / (gain) on sale of property, plant and equipment 531 (2,917) Operating profit before working capital changes 1,216,266 (295,666) Changes in working capital Stores and spares 30,308 106,670 Stock-in-trade (345,585) (758,169) Trade debts (65,950) 2,542,718 Advances (227,338) 625,686 Trade deposits and short-term prepayments (22,181) (114,947) Other receivables (1,802,028) 491,878 Sales tax receivable (543,768) 85,090 Trade and other payables (3,854,325) 697,513 (6,830,867) 3,676,439 Cash used in operations (5,614,601) 3,380,773 33
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) 17. RELATED PARTY TRANSACTIONS The Group has related parties which comprise of a joint venture, entities under common directorship, directors, key management personnel and employees funds. Transactions with related parties and the balances outstanding at the quarter end are given below. The carrying value of investment in associates and joint venture are disclosed in note 8 to the interim condensed consolidated financial information. 2018 2017 (Rupees 000) Transactions with Fauji Foundation (FF) Dividend paid 128,132 85,421 Services provided 154 - Transactions with associated undertakings due to common directorship Services and material acquired 246,919 340,933 Receipts under Consignment Account (FFCL) 6,212,283 12,098,656 Commission charged to the company 4,586 4,217 Balance receivable at the period end - unsecured (FFCL) 2,788,298 910,300* Dividend paid 349,419 232,946 Profit on Bank Balances with AKBL 21,078 18,190 Long-term loans (AKBL) 500,000 - Mark-up on long-term loans (AKBL) 387 - Running finance with AKBL - 995,008 Mark-up on running finance with AKBL - 12,981 Investments in Mutual Funds & TDR s with AKBL - 590,451 Income from Mutual Funds & TDR s with AKBL - 14,321 Expenses paid on behalf of AKBL 3,541 - Balances at Bank (AKBL) 229,488 958,310* Transaction with Fauji Foundation Hospital 2 55 Interest and Guarantee Fee from FWE - I & FWE - II 2,453 4,146 Transactions with Foundation Gas 171 567 Balance payable at the period end - Foundation Gas - 129* Balance of loans to associates - FWE-I & FWE-II 11,288 33,863* Transactions with joint venture Purchase of raw materials 4,097,195 4,392,535 Expenses incurred on behalf of joint venture 4,378 4,721 Balance payable at the period end - secured 3,128,587 4,105,955* Balance receivable at the period end - unsecured 7,921 6,854* Dividend received during the period - 209,668 Other related parties Contribution to Provident Fund 25,054 17,713 Receipt from Gratuity Fund - (1,365) Payment to / (Receipt from) Workers (Profit) Participation Fund & WWF 43,328 (11,247) Balance payable at the period end - (WWF+WPPF) unsecured 1,451,728 1,436,739* Payable to Gratuity Fund 95,768 132,604* Remuneration of key management personnel 158,773 197,489 * Balance of accounts appearing as comparatives are as at December 31, 2017 34
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) 18. SEGMENT REPORTING A business segment is a group of assets and operations engaged in providing products that are subject to risk and returns that are different from those of other business segments. March 31, 2018 Fertilizer Food Meat Power Elimination-net Consolidated (Rupees 000) Revenue 10,282,860 1,949,730 179,751 3,456,812 (1,844,858) 14,024,295 (Loss) / Profit after tax (449,379) (564,151) (289,206) 703,144 171,864 (427,728) March 31, 2017 Revenue 7,998,759 1,269,081 387,489 - - 9,655,329 Loss after tax (134,798) (447,086) (343,807) (21,020) 214,471 (732,240) March 31, 2018 Assets 60,100,307 12,038,561 7,922,723 32,830,826 (9,031,323) 103,861,094 Liabilities 48,099,641 8,250,545 7,363,685 21,914,510 (777,155) 84,851,226 December 31, 2017 Assets 65,651,800 11,314,325 8,049,903 34,608,826 (9,284,493) 110,340,361 Liabilities 52,501,162 6,962,158 7,201,660 24,395,654 (694,833) 90,365,801 19. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS 19.1 Financial risk factors The group s activities expose it to a variety of financial risk including market risk (currency risk, interest rate risk and other price risk), credit risk and liquidity risk. There have been no changes in the risk management policies during the period, consequently this interim condensed consolidated financial information does not include all the financial risk management information and disclosures required in the annual financial statements. 19.2 Fair Value estimation The table below analyzes financial instruments carried at fair value by valuation method. The different levels have been defined as follows: -Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) -Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices level 2) - Inputs for the asset or liability that are not based on observable market data (level 3) Level 1 Level 2 Level 3 (Rupees 000) March 31, 2018 - unaudited ASSETS Financial assets at fair value through profit and loss - Short-term investments 3,367,033 - - December 31, 2017 - audited ASSETS Financial assets at fair value through profit and loss - Short-term investments 3,024,289 - - 35
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UN-AUDITED) 20. GENERAL 20.1 Figures have been rounded off to the nearest thousand rupees. 20.2 Corresponding figures have been re-arranged / restated, wherever necessary, for the purpose of comparison. 20.3 This interim condensed consolidated financial information was authorized for issue on April 24, 2018 by the Board of Directors of the Company. CHAIRMAN CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER 36