Contents - Crescent Textile Mills Limitedcrescenttextile.com/wp-content/uploads/FN/3rd Qtr Report...

Contents

Company Information

Directors’ Report to the Shareholders

Balance Sheet

Profit & Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements

4

5

6

7

8

9

10

3

Company information

Al Baraka Islamic Bank B.S.C (E.C)

Allied Bank Limited

Faysal Bank Limited

Habib Bank Limited

Meezan Bank Limited

MCB Bank Limited

National Bank of Pakistan

NIB Bank Limited

Standard Chartered Bank (Pakistan) Limited

United Bank Limited

Mr. Muhammad Anwar

Mr. Abdul Majeed M. Siddique

Mr. Ahmad Shafi

Mr. Khalid Bashir

Mr. Manohar Lal Dawani

Mr. Maqbool H.H.

Rahimtoola (Nominee NIT)

Mr. Muhammad Arshad

Mr. Nasir Shafi

Chairman &

Chief Executive

Director

Director

Director

Director

Director

Director

Director

Audit Committee

Mr. Khalid Bashir

Mr. Nasir Shafi

Mr. Ahmad Shafi

Chairman

Member

Member

Chief Financial Officer

Mr. Sadiq Saleem

Registered Office & Share Department

40-A, Off: Zafar Ali Road, Gulberg-V,

Lahore. Pakistan

T + 92-42-111-245-245

F + 92-42-111-222-245

E-mail: [email protected]. Naseer Ahmad Chaudhary

Corporate Secretary

Mr. Muhammad Attiq ur Rehman

Head of Internal Audit

Ford Rhodes Sidat Hyder & Company

Chartered Accountants

Auditors Sargodha Road,

Faisalabad. Pakistan

T + 92-41-111-105-105

F + 92-41-111-103-104

E-mail: [email protected]

Web Site: www.crescenttextile.com

Mills

Mr. Fazal Din Faiz

Hassan & Hassan

Advocate

Advocates

Legal Advisor

The Crescent Textile Mills Limited is a listed Company

and its shares are traded on all three stock Exchanges

in Pakistan.

8th Floor, Sidco Avenue Centre,

Stratchen Road,

Karachi. Pakistan

T + 92-21-111-105-105

F + 92-21-111-103-104

E-mail: [email protected]

Stock Exchange Listing Liaison Office

The Company's shares are quoted in leading dailies

under textile composite sector.

4

Directors' Report to the Shareholders

for the Nine Months Ended March 31, 2008

We are pleased to present the un-audited financial statements of the company for the nine months period ended on

March 31, 2008.

During the period sales (Rs.6,206 millions) of the company saw a substantial increase of 50% compared to the same period

last year (Rs.4,138 millions). However, the company was unable to take advantage of this sales growth as gross profit declined

by 29% on the back of weak margins. Factors that led to an adverse effect on the margins include record high cotton prices

(Rs.3,600 per maund) as against Rs.2,700 per maund during last year, minimum wage increase of 15% (from Rs.4,000 to

Rs.4,600 effective July, 2 007) a nd a 5.5 2% incr ease in ga s p rices effectiv e January , 2008. .

Future Outlook:

for and on behalf of the Board.

5(Muhammad Anwar)

Chairman & Chief Executive

Net sales

Gross profit

Loss after tax

Million Rs.

6,206.186

511.826

83.820

4,138.212

396.433

57.910

Jul-Mar, 2008

Jul-Mar, 2007

Period under review also saw a weak law and order situation, frequent power and gas shut downs and rising fuel prices adding

to an adverse affect on LSM growth, mainly affecting the operational efficiency of the textile industry. On the other hand subdued

selling margins of key categories (fabric and bed wear) in US market and duty measures adopted by EU for Pakistan have consistently

been deteriorating financial health of the industry. In order to counter these effects the industry and the Government have to look into

some radical measures to boost exports, protect employment and improve law and order besides steps already taken in the past like

LTF facility for E OP's at sub sidized mar k up r ates and R &D f acility. .

The company's 09 months financial results are summarized as below:

Included in the after tax loss are Rs.25.338 millions on account of negative fair value impact as on December 31, 2007

on derivative financial instrument used by the company for swapping of its long term debt in US Dollar on August 24,20 07.

For improving performance of the company the focus is towards better product mix to improve selling margins, better capacity

utilization, controlling wastages and other cost cutting efforts. We hope these steps will help in lowering conversion costs and

with improved marketing efforts the margins will increase and lead to better financial results of the company.

Board is also pleased to acknowledge the efforts of all its team members (staff and workers) in addition to financial

institutions in achieving higher sales during this period.

Interim Condensed Balance Sheetas at March 31, 2008

Equity and liabilities

Authorized share capital100,000,000 (June 30, 2007: 100,000,000) ordinary shares of Rupees 10 each

Share capital and reserves

Issued, subscribed and paid up share capitalRevenue reservesUnrealized gain on revaluation of investments

Surplus on revaluation of operating fixed assets

Total Equity

Un-Audited

March 31,2008

( Rupees in thousand )

1,000,000 1,000,000

492,098

1,547,455

796,331

Note Audited

June 30,2007

4

5

447,362

1,676,007

865,863

2,835,884 2,989,232

1,640,405 1,640,409

Deferred income on sale and lease back of

operating fixed assets

Long term financing - secured

Term finance certificates

Bills payable

Deferred tax

Non-current liabilities

-

1,110,722

249,962

-

33,115

137

953,333

299,955

420,419

70,854

1,393,799 1,744,698

Trade and other payables

Accrued interest on loans and other payables

Short term finances

Current portion of long term borrowings

Current liabilities 440,573

144,292

4,343,395

387,125

321,688

114,319

3,070,846

369,867

Contingencies and commitments

Total Liabilities

5,315,385 3,876,720

6,709,184

-

5,621,418

-

11,185,473 10,251,059

The annexed notes from 1 to 18 form an integral part of these financial information.

Total Equity and Liabilities

8

Property, plant and equipment:

Operating fixed assets - tangible

Assets subject to finance lease

Capital work-in-progress

Assets

Non-current assets

9

10

11

4,267,782

-

3,134

4,404,416

36,414

6,589

4,270,916 4,447,419 Long term investments

Long term loans and advances

Long term deposits and prepayments

1,164,976

1,594,433

3,128

1,120,161

1,491,611

3,235

7,033,453 7,062,426

12

Stores, spares and loose tools

Stock in trade

Trade debts

Loans and advances

Trade deposits and prepayments

Balances with statutory authorities

Interest accrued

Other receivables

Short term investments

Sales tax recoverable

Cash and bank balances

Current assets

216,729

1,356,365

1,881,502

81,589

11,033

66,326

5,603

89,155

385,387

47,647

10,684

203,450

978,266

1,258,121

76,950

5,346

54,186

7,605

71,564

498,644

27,136

7,365

4,152,020 3,188,633

Total assets 11,185,473 10,251,059

6 (Muhammad Anwar)


(Khalid Bashir)

Director

6

7

13

Interim Condensed Profit and Loss Account (Un-Audited)


Sales - net

Cost of sales

Nine months ended

March 31, 2008

March 31, 2008

( R u p e e s i n t h o u s a n d )

70,908

29,283

29,039

2,456,975

2,217,954

Note Quarter ended

14

51,298

30,029

1,614

1,423,816

1,275,383

129,230 82,941

Gross profit

Distribution cost

Administrative expenses

Other operating expenses

Other operating income

Finance cost

(Loss)/Profit before taxation

Taxation

(Loss)/Profit after taxation

(Loss)/Profit per share

- Basic and diluted (Rupees)


150,703

90,533

4,241

4,138,212

3,741,779

180,397

89,900

77,427

6,206,186

5,694,360

245,477 347,724

239,021

148,433

396,433

511,826

109,791 65,492 150,956 164,102

61,145 44,782 141,829 150,120

170,936 110,274 292,785 314,222

128,320 119,507 325,695 402,281

42,616 (9,233) (32,910) (88,059)

10,500 9,000 25,000 (4,239)

32,116 (18,233) (57,910) (83,820)

0.65 (0.37) (1.18) (1.70)

7(Muhammad Anwar)


(Khalid Bashir)

Director

March 31, 2007

March 31, 2007

Interim Condensed Cash Flow Statement (Un-Audited)


Cash flows from operating activities

Loss before taxation

DepreciationGain on disposal of operating fixed assets Amortization of deferred income on sale and lease back of operating fixed assetsGain on sale of investmentsDebit balances write offCredit balances added backIncome from investment in loans and advancesFinance cost Cash flows from operating activities before working capital changes

Nine monthsended

March 31,2008

(Rupees in thousand)

Nine monthsended

March 31,2007

425,218 373,767

(88,059) (32,910)


Stock in trade

Trade debts

Loans and advances

Trade deposits, prepayments

Interest accrued

Other receivables

Sales tax recoverable

Effect on cash flows due to working capital changes

Short term finances

Trade and other payables

(13,279)

(378,099)

(623,385)

(4,639)

(5,687)

2,002

(17,591)

(20,511)

(15,976)

(161,518)

(325,530)

39,196

10,484

(4,584)

(63,181)

37,853

1,272,549

123,934

1,095,218

70,111

Net cash generated from working capital changes 335,294 682,073

Cash generated from operations 760,512 1,055,840

Finance cost paid

Income tax paid

Dividend paid

(372,308)

(45,640)

(12)

(258,949)

(35,872)

(184)

(417,960)

342,552

Net cash flows from operating activities

Cash flows from investing activities

Capital expenditure incurred on property, plant and equipment

Proceeds from sale of property, plant and equipment

Proceeds from sale of investments

Long term loans and advances made

Long term investments made

Long term deposits and prepayment received

(61,622)

16,963

5,221

(1,640)

(2,496)

107

(923,286)

23,010

-

(2,071)

(53,888)

2,316

(43,467) (953,919)Net cash used in investing activities

Cash flows from financing activitiesLong term finances acquired

Repayment of bills payable

Repayment of long term finances

Repayment of finance lease liabilities

432,945

(420,419)

(294,910)

(13,382)

429,592

-

(233,325)

(32,275)

(295,766) 163,992 Net cash (used in) / generated from financing activities

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

3,319

7,365

10,684

(29,092)

40,570

11,478

(Increase) / decrease in current assets:

Increase in current liabilities:

Adjustment for non-cash and other items:


8 (Muhammad Anwar)


(Khalid Bashir)

Director

223,728

(2,566)

(137)

(3,814)

4

(5,037)

(101,182)

402,281

191,657

(6,436)

(273)

-

590

(3)

(104,553)

325,695

(295,005)

760,835

Interim Condensed Statement of Changes in Equity (Un-Audited)


10% bonus shares issued

Net loss for the period from July 01, 2006

to March 31, 2007

Unrealized gain on revaluation of investments

Balance as on July 01, 2006

Sharecapital Sub total

Total

447,362 1,818,380 30,000 (318,099) 1,530,281 768,185 2,745,828

Revenue Reserves

Dividend equalization

Unappropriated Profit/

(AccumulatedLoss)

Unrealized gainon revaluationof investments

General


406,693

40,669

-

-

1,859,049

(40,669)

-

-

30,000

-

-

-

(260,189)

-

(57,910)

-

1,628,860

(40,669)

(57,910)

-

426,266

-

-

341,919

2,461,819

-

(57,910)

341,919

Balance as on March 31, 2007

10% bonus shares issued

Net loss for the period from July 01, 2007

to March 31, 2008

Transfer from surplus on revaluation of operating

fixed assets on account of incremental depreciation

Unrealized gain on revaluation of investments

Balance as on July 01, 2007

492,098 1,773,644 30,000 (256,189) 1,547,455 796,331 2,835,884

447,362

44,736

-

-

-

1,818,380

(44,736)

-

-

-

30,000

-

-

-

-

(172,373)

-

(83,820)

4

-

1,676,007

(44,736)

(83,820)

4

-

865,863

-

-

-

(69,532)

2,989,232

-

(83,820)

4

(69,532)

Balance as on March 31, 2008


9(Muhammad Anwar)


(Khalid Bashir)

Director

The Crescent Textile Mills Limited (the Company) is a public limited company incorporated in Pakistan under the

Companies Act, 1913 (Now Companies Ordinance, 1984). The registered office of the Company is located at 40-A,

Zafar Ali Road, Gulberg-V, Lahore. Its shares are quoted on all the Stock Exchanges in Pakistan. The Company is

engaged in business of textile manufacturing comprising of spinning, combing, weaving, dyeing, bleaching, printing,

stitching, buying, selling and otherwise dealing in yarn, cloth and other goods and fabrics made from raw cotton

and synthetic fiber(s). The Company also operates a cold storage .

.

Selected Notes to the Interim Condensed Financial Information (Un-Audited)


The company and its activities1.

Basis of preparation

These financial information are un-audited and are being submitted to shareholders, as required by section 245

of the Companies Ordinance, 1984.

2.

2.1

The accounting policies adopted for the preparation of these condensed nine monthly financial information are the same

as those applied in the preparation of the preceding annual published financial statements of the Company for the year

ended June 30, 2007 except for the following;

2.2

These financial information have been prepared in accordance with the requirements of the International

Accounting Standard (IAS) 34, "Interim Financial Reporting" .

2.3

Un-Audited

March 31, 2008

March 31, 2008

(No of Shares)

Audited

June 30, 2007

June 30, 2007

Critical accounting estimates and judgments

3

Judgments and estimates made by the management in the preparation of the condensed nine monthly financial information

are the same as those applied in the preparation of the preceding annual published financial statements of the Company for

the year ended June 30, 2007 except for interest rates and cross currency swap which involves use of estimates with regard

to interest and foreign currency rates which fluctuate with the market forces.

Issued, subscribed and paid-up share capital4

19,781,136

19,781,136

Un-Audited


Audited

Ordinary shares of Rupees 10

each fully paid in cash

Ordinary shares of Rupees 10

each issued as fully paid bonus shares

-Opening balance

-Issued during the period / year

197,811 197,811

24,955,158

4,473,629

20,888,222

4,066,936

29,428,787 24,955,158

49,209,923 44,736,294

249,551

44,736

208,882

40,669

294,287 249,551

492,098 447,362 10

The Company uses derivative financial instruments such as interest rate swaps and cross currency swaps to hedge its risk

associated with interest and exchange rate fluctuations. Such derivative financial instruments are initially recognized at fair

value on the date on which a derivative contract is entered into and are subsequently measured at fair value. The derivatives

which do not qualify for hedge accounting are accounted for at fair value. Derivatives are carried as assets when the fair value

is positive and as liabilities when the fair value is negative. Any gains or losses arising from subsequent change in fair value of

derivatives that do not qualify for hedge accounting are taken to profit and loss account. These swap arrangements have

exposed the Company with foreign currency risks on the US Dollar value converted at arrangement date of the principal amount

of the loans.

Revenue reserves

5.

Dividend equalization

General

Accumulated losses

Long term financing

6.

Opening balance

Add: Additions during the period / year

Less: Payments during the period / year

Less: Current portion

Un-Audited

March 31, 2008 ( Rupees in thousand )

Audited

June 30, 2007

30,000

1,773,644

(256,189)

30,000

1,818,380

(172,373)

1,547,455 1,676,007

Note

1,209,833

432,945

(244,916)

1,393,167

-

(183,334)

1,397,862 1,209,833

(287,140)

(256,500)

1,110,722 953,333

6.1

Term finance certificates

7.

Opening balance

Less: Payments during the period / year

Less: Current portion

399,940

(49,993)

4 99 ,925

(99,985)

349,947 399,940

(99,985)

(99,985)

249,962 299,955

(6.1)

(7.1)

7.1

The company has entered into an interest rate swap as referred to in Note 6.1 above.

Contingencies and commitments

8.

Contingencies

There has been no significant change in contingencies since the date of preceding annual published financial

statements.

-

Commitments

Commitments in respect of capital expenditures are Rupees 11.973 million (June 30, 2007: Rupees 25.731 million).

Commitments in respect of outstanding letters of credit other than for capital expenditures are Rupees 182.818

million (June 30, 2007: Rupees 46.174 million).

Letter of guarantees outstanding as on March 31, 2008 amount to Rupees 124.048 million (June 30, 2007:

Rupees 126.316 m illion)

-

-

-

11

The company has entered into an interest rate swap for its long term finances and Term Finance Certificates

having aggregate nominal value of Rupees 1,116.485 million (US Dollar 18.516 million) to hedge the possible

adverse movements in interest rates. Under the terms of the interest rate swap arrangement, the company

pays Libor plus 1.4% on the nominal amount denominated in US Dollar for the purposes of the interest rate

swap, and receives 6 month Kibor from the arranging bank on six months basis. There has been no transfer

of liability under this arrangement, only the nature of the interest payments has changed. As the Company

has not designated this derivative as a hedging instrument and nature of the item being hedged so that this

arrangement does not qualify for hedge accounting specified in IAS 39 ‘Financial instruments: Recognition

and Measurement’. The derivative interest rate swap outstanding as at March 31, 2008 has been marked to

the market and the resulting loss of 25.338 million has been recognized in profit and loss account .

Operating fixed assets - tangible9.

Opening book value

Add: Additions during the period / year -cost

Less: Deletions during the period / year

Less: Depreciation during the period / year

Book value at the end of the period / year

Un-Audited

March 31, 2008


Audited

4,404,416

99,367

1,820,119

2,870,436

4,267,782 4,404,416

(9.1)

4,503,783

14,397

4,690,555

24,575

4,489,386

221,604

4,665,980

261,564

(9.2)

-

-

8,008

73,021

2,702

435

11,409

696

3,096

1,639,297

1,281

70,455

1,137,128

335

1,362

19,788

223

567

99,367 2,870,436

Additions during the period / year

9.1

Land - freehold - revaluation

Land - leasehold - revaluation

Building on freehold land

Plant and machinery

Factory tools and equipments

Gas and electric installations

Vehicles

Furniture and fixtures

Office equipments

Deletions during the period / year

9.2

Plant and machinery

Factory tools and equipments

Vehicles

11,428

4

2,965

21,709

-

2,866

14,397 24,575

Assets subject to finance lease

10.

Opening book value

Less:

Transferred to freehold assets during the period / year

Depreciation for the period / year

36,414

105,869

- 36,414 Book value at the end of the period / year

34,290

2,124

59,880

9,575

36,414

69,455

Capital work in progress

11.

Building

Plant and machinery

Advances to suppliers -considered good

-

3,134

-

5,064

1,275

250

3,134 6,589

Long term investments - available for sale

12.

Related parties:

Quoted

Unquoted

Others:

Quoted

Unquoted

207,377

312,423

207,377

311,423

519,800

518,800

1,164,976 1,120,161

19,798

500

19,798

500

20,298

20,298

540,098

624,878

539,098

581,063

Add: Unrealized gain on revaluation of investments

12

Short term investments - available for sale

13.

Quoted

Add: Unrealized gain on revaluation of investments

181,244

204,143

181,154

317,490

385,387 498,644

Note June 30,

2007


Raw material consumed

Cloth and yarn purchased


Packing materials

Processing and weaving charges

Salaries, wages and other benefits

Fuel and power

Repairs and maintenance

Insurance

Depreciation

Other factory overheads

Nine months ended

March 31, 2008

March 31, 2008

March 31, 2007

March 31, 2007

Quarter ended

1,596,508

790,152

333,854

171,464

208,058

339,777

524,537

28,863

10,706

214,534

7,476

1,363,315

729,395

334,619

110,113

186,783

291,768

383,212

27,313

9,379

183,991

5,494

590,878

227,220

123,581

65,588

65,944

117,819

187,371

9,438

4,195

71,935

1,777

442,727

248,142

108,348

38,293

54,650

94,334

138,438

10,642

3,139

73,133

1,756

1,465,746 1,213,602 3,625,382 4,225,929

Un-Audited

Cost of sales

14.

Work-in-process:

Opening stock

Closing stock

73,119

(92,614)

765,623

(818,530)

50,015

(70,709)

626,172

(655,849)

88,521

(92,614)

981,746

(818,530)

70,854

(70,709)

584,003

(655,849)

(19,495)

4,206,434

(20,694)

3,604,688

(4,093)

1,461,653

145

1,213,747

Cost of goods manufactured

Finished goods:

Opening stock

Closing stock

2,217,954 1,275,383 3,741,779 5,694,360

(52,907)

1,540,833

(29,677)

166,768

163,216

593,085

(71,846)

133,482

Cost of goods sold -purchased products

Associated Companies

272,778

81,604

8,382

19,665

-

16,931

107,998

9,549

-

370,646

235,586

3,106

1,421

276

16,998

112,466

8,494

483

Nine monthsended

Nine monthsended

March 31,2008

March 31,2007


The related parties and associated undertakings comprise associated companies, associates, companies in which

directors are interested, staff retirement funds, directors and key management personnel. Significant transactions

with related parties and associated undertakings are as under:

Transactions with related parties

15.

Company Type

Nature of Transaction

Employees Provident Fund Trust

Purchases

Sales

Processing income

Dividend income

Rental income

Insurance charges

Interest income

Amount contributed

Interest accrued

Investment in shares


(Number)

100,000 1,400,451

13

These financial information were authorized for issue by the Board of Directors of the Company on April 28, 2008.

Date of authorization

16.

Corresponding figures have been rearranged and / or restated, wherever necessary, for the purpose of comparison.

However, no major significant rearrangements / restatements have been made.

Corresponding figures

17.

General

18.

Figures have been rounded off to the nearest thousand rupees.

14 (Muhammad Anwar)


(Khalid Bashir)

Director

The outstanding balances of such parties are as under:

(8,813)

1,590,138

98,547

7,603

16,787

(9,392)

1,488,956

78,288

7,605

15,568


Insurance payable

Long term loans and advances

Trade receivable

Interest accrued

Other receivables

Transactions entered into with the key management personnel as per their terms of employment are excluded

from related party transactions.

Nine monthsended Year ended

March 31,2008

June 30,2007


Company Type

Nature of Transaction

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