Contentsfazalcloth.com/FinancialReports/H-YAccounts31-12-2017PDF.pdfThis coupled with a long overdue...

Contents

Corporate

03 Company Information

04 Directors' Review

Condensed Interim Unconsolidated Financial Information

08 Condensed Interim Unconsolidated Balance Sheet10 Condensed Interim Unconsolidated Profit and Loss Account11 Condensed Interim Unconsolidated Statement of Comprehensive Income12 Condensed Interim Unconsolidated Cash Flow Statement13 Condensed Interim Unconsolidated Statement of Changes in Equity14 Notes to the Interim Condensed Unconsolidated Financial Information

Condensed Interim C onsolidated Financial Information

30 Condensed Interim C onsolidated Balance Sheet32 Condensed Interim C onsolidated Profit and Loss Account33 Condensed Interim C onsolidated Statement of Comprehensive Income34 Condensed Interim C onsolidated Cash Flow Statement35 Condensed Interim C onsolidated Statement of Changes in Equity36 Notes to the Condensed Interim C onsolidated Financial Information

05

06 Auditor’s Report to the Member

1st Quarter Ended Sep 30, 2017

1


2

Company Information

Board of Directors Sh. Naseem Ahmad Chief Executive OfficerMr. Rehman Naseem ChairmanMr.Mr. Fazal Ahmed SheikhMr. Faisal AhmedMr. Fahd Mukhtar

Mr. Babar Ali

Independent Director

Audit Committee

Mr. Babar Ali

Aamir Naseem Sheikh

Chairman

Mr. Rehman Naseem

Member

Mr. Fahd Mukhtar

Member

Human Resource and

Remuneration Committee

Mr. Rehman Naseem

Chairman

Mrs. Aamir

Naseem

Sheikh

Member

Mr. Faisal Ahmad

Member

Company Secretary

Mr. Asad Mustafa

Chief Financial Officer

Mr. Muhammad Azam

Auditors

KPMG Taseer Hadi & Co., Chartered Accountants

Bankers

Allied Bank Limited

National Bank of Pakistan

MCB Bank Limited Meezan Bank Limited United Bank Limited Standard Chartered Bank Pakistan Limited

Habib Bank Limited

Soneri Bank Limited

NIB Bank Limited

Bank Al-Falah Limited

Faysal Bank Limited

Askari Bank Limited

The Bank of Punjab The Bank of Khyber Pak Kuwait Investment Company (Pvt.) Limited

Pak Brunei Investment Company LimitedPak Oman Investment Company LimitedSummit Bank Limited

Samba Bank Limited

Dubai Islamic Bank (Pakistan) Limited

Bank Al-Habib Limited

JS Bank Limited

Head Office &Shares Department:

59/3, Abdali

Road, Multan.

Phone: (92) 61-4579001-7, 4781637 Fax: (92) 61-4541832

E-mail: [email protected]; [email protected]: www.fazalcloth.com

Shares Registrar:

Vision Consulting Ltd.

3-C, LDA Flats, Lawrence Road, [email protected]

Phone: (92) 42-36283096, 36283097 Fax: (92) 42-36312550

Registered Office:

69/7, Abid Majeed Road, Survey No. 248/7, Lahore Cantt, Lahore.Phone: (92) 42-36684909

Mills: i) Fazal Nagar, Jhang Road, Muzaffargarh – PakistanPh. (92) 66-2422216,18 Fax: (92) 66-2422217

ii) Qadirpur Rawan Bypass, Khanewal Road, Multan – PakistanPh. (92) 61-6740041-43, Fax : (92) 61-6740052


3

Sd/-(Rehman Naseem)Chairman/Director

Place: MultanDated: February 23, 2018

For & on behalf of the Board

DIRECTORS' REVIEW

Dear Shareholders!Assalam-o-Alaikum

Your Directors are pleased to present before you un-audited financial information of Fazal Cloth Mills Limited for the six months ended December 31, 2017.

Your Company earned after tax profit of Rs. 250.10 million as compared to Rs. 408.02 million for the corresponding period last year after charging depreciation of Rs. 399.58 million (December 31, 2016: Rs. 371.81 million). EBITDA of Rs. 1,330.40 million (December 31, 2016: Rs. 1,206.65 million) was generated.

Sales were recorded at Rs. 15,099.69 million during the half year of the current financial year compared to Rs. 12,914.04 million during the corresponding half year, registering an increase of 16.92%.

Earnings per share of the Company for the half year ended December 31, 2017 is Rs. 8.34 as compared to Rs. 13.60 for corresponding period in previous year.

Subsidiary Companies and Consolidated Financial StatementsThe consolidated condensed interim un-audited financial information comprising Fazal Cloth Mills Limited and Fazal Weaving Mills Limited is annexed with separate interim condensed un-audited financial information of your Company in accordance with the requirements of International Accounting Standard 27 (Consolidated and Separate Financial Statements), 34 (Interim Financial Reporting) and applicable provisions of repealed Companies Ordinance, 1984.

During the half year the Group earned after tax profit of Rs. 307.21 million as compared to Rs. 488.84 million earned in the same period of last year after charging depreciation of Rs. 474.82 million as compare to Rs. 449.25 million in the same period last year. EBITDA of Rs. 1,622.03 million (December 31, 2016: Rs. 1,491.19 million) was generated.

Earnings per share of the Group for the half year ended December 31, 2017 is Rs. 10.24 as compared to Rs. 16.29 for corresponding period in previous year.

.Financial Highlights

Six Month Ended 31 December

2017 2016

Increase/

(Decrease) %

Net Sales (Rs. '000')

7.48

Gross Profit (Rs. '000') 20.89

Profit before tax (Rs. '000') (9.84)

Profit after tax (Rs. '000') (37.15)

Gross Profit (%)

Profit after tax (%)

Earning per share Rs.

16,199,801

1,610,399

502,259

307,210

9.94

1.90

10.24

15,072,513

1,332,081

557,088

488,837

8.83

3.24

16.29

Future OutlookRaw Cotton prices in Pakistan as well as the international market have increased. Alhamdulillah, your company was able to cover its cotton requirements for the season at lower prices. This coupled with a long overdue devaluation of the Pakistani Rupee by 5% has resulted in an increase in Cotton Yarn prices which shall have a positive impact on margins and profitability of the Company over the remaining half year. However, they synthetic yarn segment of the Company is suffering from increased cost of fibers. Energy, especially RLNG, prices have also increased sharply. Although Fabric prices have also increased, net margins of the weaving segment of the Company remain stagnant. Overall, your management expects improved profitability during the remaining half year of the current financial year.

Management and Labor RelationsThe relations between the workers and management remained cordial throughout the period. Your Directors wish to thank all workers and staff members for their hard work.


4

Dated: February 23, 2018

20172016

(37.15)

7.48

20.89

(9.84)

16,199,801

1,610,399

502,259

307,210

9.94

1.90

10.24

15,072,513

1,332,081

557,088

488,837

8.83

3.24

16.29


5

Auditor’s Report to the Members on Review of Condensed Interim Unconsolidated Financial Information

Introduction

We have reviewed the accompanying condensed interim unconsolidated balance sheet of Fazal Cloth Mills Limited (“the Company”)

as at 31 December 2017 and the related condensed interim unconsolidated profit and loss account, condensed interim unconsolidated statement of comprehensive income, condensed interim unconsolidated cash flow statement, condensed interim unconsolidated statement of changes in equity and notes to the condensed interim unconsolidated financial information for the six months period then ended ( here-in-after referred to as “condensed interim unconsolidated financial information”).

Management is responsible for the preparation and presentation of this condensed interim unconsolidated financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this condensed interim unconsolidated financial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of condensed interim unconsolidated financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less

in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim unconsolidated financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting.

Other Matter

The figures for the three months period ended 31 December 2017, in the condensed interim unconsolidated profit and loss account and condensed interim unconsolidated statement of comprehensive income have not been reviewed and we do not express a conclusion on them.

Lahore

Date: February 21, 2018

KPMG Taseer Hadi & Co.Chartered Accountants

( Bilal Ali)

sd/-


6

Fazal Cloth Mills Limited

Condensed Interim Un-Consolidated Financial Information (Un-Audited)For the six months ended 31 December 2017


7

Condensed Interim Un-Consolidated Balance Sheet

(Un-audited) (Audited)

31 December 30 June

2017 2017

Note Rupees Rupees

ASSETS

Non-current assets

Property, plant and equipment 5 18,610,670,222

17,964,030,369

Long term advance and investments 6 4,338,877,565

4,165,944,439

Loan to Subsidiary company 7 530,000,000

530,000,000

Long term deposits 24,071,493

24,446,493

23,503,619,280

22,684,421,301

Current assets

Stores, spares and loose tools 546,968,065

585,091,281

Stock-in-trade 9,355,941,680

6,420,465,744

Trade debts 8 2,735,882,708

4,243,040,569

Loans and advances 151,037,493

750,169,337

Trade deposits and short term

prepayments 45,242,182

6,682,417

Mark-up accrued 84,212,120

46,240,903

Other receivables 331,220,345

250,066,647

Short term investments 9 201,337,600

219,658,800

Tax refunds due from the Government 943,030,849

878,370,161

Cash and bank balances 10 139,711,583 116,327,278

14,534,584,625 13,516,113,137

38,038,203,905 36,200,534,438

The annexed notes from 1 to 22 form an integral part of these financial statements.

Sd/-(SHEIKH NASEEM AHMAD)

CHIEF EXECUTIVE OFFICER

Sd/-(REHMAN NASEEM)

DIRECTOR


8

As at 31 December 2017


31 December 30 June

2017 2017

Note Rupees Rupees

EQUITY AND LIABILITIES

Share capital and reserves

Authorized share capital 700,000,000

700,000,000

Issued, subscribed and paid-up capital 300,000,000

300,000,000

Capital reserves 1,429,690,020

1,606,703,247

Unappropriated profits 7,529,417,838

7,296,152,237

9,259,107,858

9,202,855,484

Surplus on revaluation of fixed assets - net of tax 6,165,704,831

6,306,367,002

Non-current liabilities

Long term financing - secured 11 6,688,677,252

6,068,698,886

Long term musharika - secured 12 1,220,000,000

878,750,000

Deferred liabilities:

- Staff gratuity 213,985,157

204,404,551

- Deferred taxation 2,238,089,419

2,175,617,785

10,360,751,828

9,327,471,222

Current liabilities

Trade and other payables 13 2,380,416,886 1,848,977,304

Accrued mark-up 263,348,281 249,256,533

Short term borrowings - secured 7,789,718,793 7,516,146,659

Current portion of non - current liabilities 1,819,155,428 1,749,460,234

12,252,639,388 11,363,840,730

Contingencies and commitments 14

38,038,203,905 36,200,534,438

Sd/-(MUHAMMAD AZAM)

CHIEF FINANCIAL OFFICER


9

Condensed Interim Un-Consolidated Profit and Loss Account (Un-Audited)For the half year and quarter ended 31 December 2017

31 December 31 December 31 December 31 December

2017 2016 2017 2016

Note Rupees Rupees Rupees Rupees

Sales - net 15 15,099,688,741

12,914,043,534

7,525,909,286

6,215,380,844

Cost of sales 16 (13,757,534,160)

(11,858,691,866)

(6,844,786,356)

(5,628,065,379)

Gross profit 1,342,154,581

1,055,351,668

681,122,930

587,315,465

Selling and distribution expenses (250,525,759)

(195,118,236)

(140,382,658)

(133,114,208)

Administrative expenses (154,647,401) (128,368,902) (83,037,417) (66,238,232)

Other expenses (49,947,641)

(27,576,051)

(35,444,196)

(12,637,908)

(455,120,801)

(351,063,189)

(258,864,271)

(211,990,348)

Other income 43,788,028

130,547,452

21,005,755

113,703,759

Profit from operations 930,821,808

834,835,931

443,264,414

489,028,876

Finance cost (533,228,593)

(405,147,938)

(280,592,801)

(225,088,960)

Profit before taxation 397,593,215

429,687,993

162,671,613

263,939,916

Taxation (147,489,788)

(21,667,803)

(62,379,247)

35,114,804

Profit after taxation 250,103,427 408,020,190 100,292,366 299,054,720

Earnings per share 8.34 13.60 3.34 9.97


Half year ended Quarter ended



Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



10

Condensed Interim Un-Consolidated Statement of Comprehensive Income (Un-Audited)For the half year and quarter ended 31 December 2017


2017 2016 2017 2016

Rupees Rupees Rupees Rupees

Profit after taxation 250,103,427

408,020,190

100,292,366

299,054,720

Other comprehensive income - net of tax

(177,013,227)

185,832,392

(199,691,079)

140,476,690

Total comprehensive income for the year 73,090,200 593,852,582 (99,398,713) 439,531,410



Items that are or may be reclassified

subsequently to profit and loss:

Net change in fair value of available for

sale financial assets



Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



11

Condensed Interim Un-Consolidated Cash Flow Statement (Un-Audited)For the half year ended 31 December 2017

31 December 31 December

2017 2016

Note Rupees Rupees

Cash flows from operating activities

Profit before taxation 397,593,215 429,687,992

Adjustments for:

Depreciation of property, plant and equipment 5.1 399,582,719 371,811,472

Unrealized loss / (gain) on re-measurement of investments 9 18,321,200 (19,234,000)

Provision for gratuity 47,784,599 43,579,386

Provision for infrastructure cess 20,173,514 17,763,188

Loss / (gain) on disposal of property, plant and equipment 6,448,622 (130,517)

Dividend income - (86,892,539)

Finance cost 533,228,593

405,147,938

Cash generated from operations before working capital changes 1,423,132,462

1,161,732,920

Effect on cash flows due to working capital changes

(Increase) / decrease in current assets:


(94,152,267)

Stock in trade (2,925,472,822) (1,650,483,587)

Trade debts 1,507,157,861

(968,618,001)


273,195,301

Trade deposits and short term prepayments (38,559,765)

(29,831,917)

Other receivables (81,153,698)

1,096,577

(900,773,364)

(2,468,793,894)

Increase in current liabilities

Trade and other payables 498,832,743

351,096,208

Cash generated from / (used in) operations 1,021,191,841

(955,964,766)

Gratuity paid to employees (38,203,993)

(51,334,739)

Long term deposits 375,000

-

Taxes paid (149,678,839)

(191,476,751)

Finance cost paid - net (557,108,062)

(381,613,542)

(744,615,894)

(624,425,032)

Net cash generated from / (used in) operating activities 276,575,947

(1,580,389,798)

Cash flows from investing activities

Capital expenditure incurred (1,062,164,323)

(858,025,557)

Proceeds from sale of property, plant and equipment 9,493,128

772,025

Investment in associates - net (349,946,352)

10,627,090

Dividend received -

86,892,539

Net cash used in investing activities (1,402,617,547) (759,733,903)

Cash flows from financing activities

Long term financing obtained 11 1,427,845,929 1,809,668,078

Long term financing repaid 11 (713,172,369) (817,850,181)

Long term musharika obtained 500,000,000 -

Long term musharika repaid 12 (183,750,000) (40,000,000)

Short term borrowings - net 273,572,134 1,506,059,688

Cash dividend paid (155,069,789) (74,691,065)

Net cash generated from financing activities 1,149,425,905 2,383,186,520

Net increase in cash and cash equivalents 23,384,305 43,062,819

Cash and cash equivalents at the beginning of the period 116,327,278 85,453,947

Cash and cash equivalents at the end of the period 10 139,711,583 128,516,766


Half year ended



Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



12

Condensed Interim Un-Consolidated Statement of Changes in Equity (Un-Audited)For the half year ended 31 December 2017

Share capital Revenue reserve

Balance as at 01 July 2016 300,000,000 77,616,000 175,000,000 1,369,835,755 6,782,748,947 8,705,200,702

Total comprehensive income

Profit for six months - - - - 408,020,190 408,020,190Other comprehensive income - - - 185,832,392 - 185,832,392

- - - 185,832,392 408,020,190 593,852,582

- -

-

-

101,242,601 101,242,601

Transactions with the owners of the Company

- -

-

-

(75,000,000) (75,000,000)

Balance as at 31 December 2016 300,000,000 77,616,000

175,000,000

1,555,668,147

7,217,011,738 9,325,295,885


Profit for six months - - - - (19,733,674) (19,733,674)Other comprehensive loss - -

-

(201,580,900)

(4,983,281) (206,564,181)

- -

-

(201,580,900)

(24,716,955) (226,297,855)

- -

-

-

103,246,946 103,246,946

- -

-

-

610,508 610,508

Balance as at 30 June, 2017 300,000,000 77,616,000 175,000,000 1,354,087,247 7,296,152,237 9,202,855,484


Profit for six months - - - - 250,103,427 250,103,427Other comprehensive loss - - - (177,013,227) - (177,013,227)

- - - (177,013,227) 250,103,427 73,090,200

- - - - 137,660,004 137,660,004

Surplus transferred on disposal of a revalued asset - - - - 3,002,170 3,002,170

Transactions with the owners of the Company

- - - - (157,500,000) (157,500,000)

Balance as at 31 December 2017 300,000,000 77,616,000 175,000,000 1,177,074,020 7,529,417,838 9,259,107,858


Ordinary shares Share premiumCapital

redemption

reserve

Fair value reserve-

available for sale

financial assets

Un-appropriated

profits

Final cash dividend @ Rs. 2.5 per share for year

ended 30 June 2016

Final cash dividend @ Rs. 5.25 per share for year

ended 30 June 2017

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Capital reserves

Total

Surplus transferred to un-appropriated profit on

account of incremental depreciation charged during

the period - net of tax



the period - net of taxTransfer from surplus on revaluation of fixed

assets on disposal - net of tax



the period - net of tax



Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



13

Notes to the Condensed Interim Un-consolidated Financial Information (Un-audited)For the period ended 31 December 2017

1 Reporting entity

2 Basis of preparation

2.1 Basis of Accounting

2.1.1

2.1.2

2.1.3

2.1.4

2.1.5

2.1.6 These condensed interim financial information are the separate financial statements of the Company

in which investments in subsidiaries are accounted for on the basis of direct equity interest rather

than on the basis of reported results and net assets of the investee. Condensed interim consolidated

financial information of the Group is prepared and presented separately.

Fazal Cloth Mills Limited ("the Company") was incorporated in Pakistan in 1966 as a Public Limited

Company under the Companies Act, 1913 (now the Companies Act, 2017). The Company is listed on Pakistan

Stock Exchange. The registered office of the Company is situated at 69/7, Abid Majeed Road, Survey No.

248/7, Lahore Cantt, Lahore. The Company is principally engaged in manufacture and sale of yarn and fabric.

The manufacturing facilities are located at Fazal Nagar, Jhang Road, Muzaffargarh and Qadirpur Rawan

Bypass, Khanewal Road, Multan in the province of Punjab.

This condensed interim financial information comprises the condensed interim unconsolidated

balance sheet of the Company as at 31 December 2017 and the related condensed interim

unconsolidated profit and loss account, condensed interim unconsolidated statement of

comprehensive income, condensed interim unconsolidated cash flow statement and condensed

interim unconsolidated statement of changes in equity together with the notes forming part thereof.

This condensed interim financial information of the Company for the six months period ended 31

December 2017 has been prepared in accordance with the requirements of the International

Accounting Standard (IAS) 34 - Interim Financial Reporting, Islamic Financial Reporting Standards

(IFASs) and provisions of and directives issued under the Repealed Companies Ordinance, 1984. In

case where requirements differ, the provisions of or directives issued under the Repealed Companies

Ordinance, 1984 have been followed.

This condensed interim financial information does not include all of the information required for full

annual financial statements and should be read in conjunction with the annual financial statements for

the year ended 30 June 2017.

During the year, the Companies Act 2017 ("the Act") was enacted on 30 May 2017 and replaced and

repealed the Companies Ordinance, 1984 ("the repealed Ordinance"). However, the Securities and

Exchange Commission of Pakistan vide its Circular No. 17 and Circular No. 23 dated 20 July 2017

and 04 October 2017 respectively and Institute of Chartered Accountants of Pakistan vide its

Circular No. 17 dated 06 October 2017, have advised and clarified that the Annual Financial

Statements of the Companies whose financial year closes on or before 31 December 2017 and interim

financial statements of the Companies for the period ended on or before 31 December 2017, shall be

prepared in accordance with the repealed Ordinance.

Corresponding balance sheet numbers are extracted from the annual audited financial statements of

the Company for the year ended 30 June 2017, whereas corresponding profit and loss account,

statement of comprehensive income, cash flow statement and statement of changes in equity are

stated from unaudited condensed interim financial information of the Company for the six months

period ended 31 December 2016.

This condensed interim financial information is unaudited and being submitted to the shareholders as

required under Section 237 of the Company Act, 2017 and Code of Corporate Governance.


14

The Company has following major investment:

Name of the company Shareholding Nature

Subsidiary

- Fazal Weaving Mills Limited ("the Subsidiary") 100% Spinning

Name of the company Shareholding Nature

Associates

- Fatima Energy Limited (''FEL'') 24.24% Power Generation

- Fatima Transmission Company Limited (''FTCL'') 24.00% Transmission of Energy

- Fatima Electric Company Limited 20.00% Power Generation

3

3.1

3.2

4 Statement of consistency in accounting policies

4.1

4.2

4.3

IFRS 2 - Share-based Payment 01 January 2018

IAS 40 - Investment Property 01 January 2018

IFRIC 22 - Foreign Currency Transactions

and Advance Consideration 01 January 2018

Annual Improvements to IFRS Standards 2014–2016 Cycle 01 January 2018

IFRS 15 - Revenue from contracts with customers 01 July 2018

IFRS 9 - Financial Instrument 01 July 2018

IFRIC 23 - Uncertainty over Income Tax Treatments 01 January 2019

Amendment to IFRS 9 - Financial Instrument 01 January 2019


4.4

Estimates and judgments

The preparation of condensed interim unconsolidated financial information requires management to

make judgments, estimates and assumptions that affect the application of accounting policies and the

reported amounts of assets and liabilities, income and expense. Actual results may differ from these

estimates.

Estimates and judgments made by the management in the preparation of this condensed interim

unconsolidated financial information are the same as those that were applied to the unconsolidated

annual financial statements of the Company as at and for the year ended 30 June 2017.

The following amendments and interpretations of approved accounting standards will be effective for

accounting periods as detailed below:

In addition, the Companies Act, 2017 applicable from 01 January 2018 requires certain additional

disclosures and Section 235 of the repealed Companies Ordinance, 1984 relating to treatment of

surplus arising out of revaluation of assets has not been carried forward in the Companies Act, 2017.

This would require change in accounting policy relating to surplus on revaluation of fixed assets to

bring it in line with the requirements of IAS 16 – Property, plant and equipment. This amendment

will result in reclassification of surplus on revaluation of fixed assets as part of shareholders' equity.

The accounting policies and the methods of computation adopted in the preparation of this condensed

interim unconsolidated financial information are same as those applied in the preparation of the

unconsolidated annual financial statements for the year ended 30 June 2017.

There were certain new standards and amendments to the approved accounting standards which

became effective during the period but are considered not to be relevant or have any significant effect

on the Company's operations and are, therefore, not disclosed.


15

(Un-audited)

31 December (Audited)

30 June

2017 2017

5 Property, plant and equipment Note Rupees Rupees

Operating assets 5.1 17,922,871,604 17,553,135,722

Capital work in progress 5.2 687,798,618 410,894,647

18,610,670,222 17,964,030,369

5.1 Operating assets

Net book value at beginning of the period / year 17,553,135,722 16,563,486,879

Additions during the period / year:

Freehold land - 353,212

Factory building 69,138,605 734,330

Non-factory building 20,518,892

14,679,680

Plant and machinery 685,022,445

1,708,601,975

Electric fittings and installations 446,615

11,884,818

Tools, laboratory equipment and arms 5,641,489

2,600

Fire extinguishing equipment and scales -

36,000

Office equipment 1,905,238

2,835,748

Furniture and fixtures 482,352

3,162,920

Vehicles 2,104,715

12,391,695

785,260,351

1,754,682,978

Net book value of assets disposed of during

the period / year (15,941,750)

(7,941,528)

Depreciation charge for the period / year (399,582,719)

(757,092,607)

Net book value at end of the period / year 17,922,871,604

17,553,135,722

5.2 Capital work in progress

Break-up of capital work in progress is as follows:

Factory building

Material and expenses 144,034,274

153,371,459

Advance payments 104,089,158

105,967,251

248,123,432

259,338,710

Non-factory building


114,675,777


-

128,255,908

114,675,777

Plant and machinery

Cost and expenses 22,708,493

614,294


5,052,138

Letters of credit 248,702,004

27,279,148

299,142,290

32,945,580

Electrical fittings and installation


-

Advance payments 288,455 -

4,402,367 -

Office equipment

Advance payments 78,026 8,000

Furniture and fixtures

Material and expenses ‐ 1,752,419


564,183 2,549,580

Vehicles

Advance payments 7,112,412 1,377,000

Freehold land -


687,798,618 410,894,647


16

(Un

-au

dit

ed)

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ber

(A

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2017

2017

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6


17

7 Loan to Subsidiary Company

(Audited)

30 June

2017 2017

8 Trade debts Note Rupees Rupees

Considered good:

Export - secured 1,106,066,689

2,023,682,671

Local - unsecured, considered good 8.1 1,629,816,019

2,219,357,898

2,735,882,708

4,243,040,569

8.1 This represents amounts due from

following related parties

Fazal Rehman Fabrics Limited -

118,695,560

Ahmad Fine Textile Mills Limited -

4,036,691

Reliance Weaving Mills Limited 3,267,224

3,406,079

3,267,224

126,138,330

(Audited)

30 June

2017 2017

9 Short term investments Note Rupees Rupees

At fair value through profit and loss account

Investment in related party:

Fatima Fertilizer Company Limited - quoted

9.1 201,337,600

219,658,800

9.1 Movement of carrying value:

Unrealized loss on re-measurement of

investment during the period / year (18,321,200)

(1,630,000)

201,337,600 219,658,800

10 Cash and bank balances

Cash in hand 16,051,543 10,372,138

Cash at banks

- Current accounts 123,204,150 105,935,431

- Saving accounts 455,890 19,709

123,660,040 105,955,140

139,711,583 116,327,278

(Un-audited)

31 December

It represents loan disbursed to FWML to finance its capital expenditure as well as the working capital needs

thereof. It carries mark-up at weighted average borrowing cost of the Company. During the period mark up

was charged at the rates ranging from 6.26% to 6.28% per annum (30 June 2017: 7.72% to 7.79% per annum).

(Un-audited)

31 December

6,520,000 (30 June 2016 : 6,520,000) fully paid

ordinary shares of Rs. 10 each having market value of

Rs. 30.88 per share (30 June 2017 : Rs. 33.69 per

share)

Carrying value at the opening of the period /

year219,658,800

221,288,800


18

(Audited)

30 June

2017 2017

11 Long term financing - secured Note Rupees Rupees

Balance at the beginning of the period / year 7,475,659,120 6,004,221,550

Loan obtained during the period / year 11.1 1,427,845,929 3,429,363,417

Repayments made during the period / year (713,172,369) (1,957,925,847)

Balance at the end of the period / year 8,190,332,680 7,475,659,120

Less: current portion grouped under current liabilities (1,501,655,428) (1,406,960,234)

6,688,677,252 6,068,698,886

11.1 Markup bearing finances from

conventional banks:

The Bank of Punjab - Term finance ("TF") 11.1.1 600,000,000

494,995,866

11.1.2 335,327,747

442,627,983

11.1.3 224,569,573

203,857,410

11.1.4 136,368,475

-

The Bank of Punjab - Term finance VI 5,004,134

-

141,372,609

United Bank Limited - Demand Finance II -

796,927,367

11.1.5

United Bank Limited - Demand Finance III -

300,000,000

126,576,000

1,096,927,367

National Bank of Pakistan- Demand Finance - VII - 140,954,791

Pak Brunei Investment Company Limited - Term finance ("TF") -

250,000,000

Pak Oman Investment Company Limited - Term finance ("TF") -

350,000,000

Standard Chartered Bank (Pakistan) Limited -

Term finance ("TF")-

450,000,000

1,427,845,929

3,429,363,417

11.1.1 The Bank of Punjab – Term Finance

11.1.2

United Bank Limited - Demand Finance I1 under

LTFF Scheme126,576,000

-

During the period, a term finance of Rs. 600.00 million has been obtained to refinance / finance local

capital expenditure ("Capex") on Balancing Modernization and Replacement ("BMR") already incurred

and to be incurred by the Company. The principal amount of loan is repayable within period of eight

years including grace period of two years, in twelve equal half yearly installments. It carries mark up at

the rate of six months KIBOR + 0.75% per annum in arrears and payable in arrears on quarterly basis.

This loan is secured against joint pari passu ("JPP") charge / mortgage of Rs. 1,718.00 million on all

present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

During the period, a term loan of Rs. 335.33 million has been obtained to finance the retirement of

letters of credit opened for import of textile machinery for expansion / BMR purpose. Out of total term

loan, Rs. 243.97 million has been refinanced from SBP under its LTFF Scheme. The principal loan

amount is repayable within a period of ten years, including a grace period of two years, in sixteen equal

half yearly installments. It carries mark up at the rate of six months KIBOR + 0.50% per annum on its

Allied Bank Limited - Term Loan - VII under State Bank of Pakistan ("SBP") Long term

financing facility ("LTFF") Scheme

Allied Bank Limited - Term loan ("TL") under

LTFF Scheme

Habib Bank Limited - Demand finance under

LTFF Scheme

The Bank of Punjab -Term finance III under LTFF Scheme

(Un-audited)

31 December


19

own source loan and SBP's applicable rate for loan under LTFF scheme + 0.50% per annum on loan

under SBP's LTFF scheme. This loan is secured against JPP charge / mortgage of Rs. 2,267.00 million

on all present and future fixed assets of the Company and personal guarantees of the sponsoring

directors.

11.1.3 Habib Bank Limited – Demand Finance under SBP’s LTFF Scheme

11.1.4 The Bank of Punjab –Term Finance under SBP’s LTFF Scheme

11.1.5 United Bank Limited – Demand Finance-II under SBP’s LTFF Scheme

(Audited)

30 June

2017 2017

12 Long term musharika - secured Note Rupees Rupees

Balance at the beginning of the period / year 1,221,250,000

1,445,000,000

Loan obtained during the period / year 12.1 500,000,000

-

Repayments made during the period / year (183,750,000)

(223,750,000)

Balance at the end of the period / year 1,537,500,000

1,221,250,000

Less: current portion grouped under current liabilities (317,500,000)

(342,500,000)

1,220,000,000 878,750,000

12.1 Faysal Bank Limited – Diminishing Musharaka

During the period, demand finance of Rs. 224.57 million has been obtained to finance the retirement of

letters of credits for import of textile machinery for BMR purpose. Total limit of demand finance is Rs.

430.00 million which is partially disbursed during last year. Aggregate amount of demand finance has

been refinanced from SBP under LTFF Scheme and it is repayable within the period of ten years

including two years grace period, in sixteen half yearly equal installments of principal amount. It carries

mark up at the rate of SBP rate +0.50% per annum. This finance is secured against JPP charge /

mortgage of Rs. 639.00 million on all present and future fixed assets of the Company and personal

guarantees of the sponsoring directors.

During the period, a Diminishing Musharaka facility of Rs.500.00 million has been obtained for

adjustment, swap or repayment of existing term finances with financial objective of balance sheet re-

profiling. It is repayable within the period of five years including grace period of two years in six equal

half yearly installments of principal amount. It carries mark up at the rate of three months KIBOR +

0.75% per annum. This finance is secured against JPP charge/mortgage of Rs.1,054.00 million on all

present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

(Un-audited)

31 December

During the period, an amount of Rs.126.58 million has been obtained for retirement of letters of credit for

imported machinery under CAPEX / BMR in existing units. This finance is repayable within the period

of ten years including grace period of two years in sixteen equal half yearly installments of principal

amount. It carries mark up at the rate of SBP rate + 0.50% per annum on SBP's LTFF and six months

KIBOR + 1.00% per annum on own source demand finance, payable in arrears on quarterly basis. This

finance is secured against JPP / mortgage of Rs. 1,975.00 million on all present and future fixed assets of

the Company and personal guarantees of the sponsoring directors.

During the period an amount of Rs. 136.37 million has been obtained for retirement of letters of credits

for import of textile machinery / generators / components for BMR / expansion and for import & local

purchase of machinery / components / equipment for renewable Energy Captive Combined Cycle Power

Plant of 1.6MW. Total limit of this finance is for Rs. 500 million. This finance is repayable within the

period of ten years including grace period of two years in sixteen equal half yearly installments of

principal amount. It carries mark up at the rate of SBP rate + 0.75% per annum on SBP's LTFF and six

months KIBOR + 0.75% per annum on own source term finance.


20

13 Trade and other payables

(Un-audited)

31 December

(Audited)

30 June

2017 2017

Rupees Rupees

3,162,671 11,350,171

50,308,872 -

4,835 4,835

92,952,931 -

40,501 40,501

1,564,290

3,504,702 1,090,066

151,538,802 12,485,573

14 Contingencies and commitments

Contingencies

14.1

14.2

(Un-audited)

31 December

(Audited)

30 June

2017 2017

Note Rupees Rupees

14.3

586,413,715 581,413,715

14.4 Commitments for irrevocable letters

of credit:

- capital expenditure 203,050,368 686,911,980

- raw material, stores and spares 2,659,415,108 1,336,804,565

- others 14.5 787,500,000 987,500,000

3,649,965,476 3,011,216,545

14.5

There has been no change in the status of contingencies since the annual audited financial statements

as at 30 June 2017.

Export documents negotiated with banks under Foreign bill purchase ("FBP") facility aggregating to

USD 11.42 million (30 June 2017: Nil). Subsequent to balance sheet date, upon receipt of acceptance

by the concerned bank, , this exposure has been shifted to bank risk and accordingly not recourseable

to the Company.

Commitments

As at balance sheet date, Stand by Letters of Credit (SBLCs) amounting to Rs. 787.5 million (30 June

2017: 987.5 million) are outstanding which were issued by the Dubai Islamic Bank Limited and

Summit Bank Limited on behalf of the Company favoring the lenders of Fatima Energy Limited

(FEL), an associated company, confirming that in case of failure of the Company to make payment of

the committed amount of equity during the period of two years, the lenders of FEL can draw on the

SBLCs to cover the amount not paid by the Company. An amount of Rs. 2,017 million (30 June 2017:

1,679 million) has been paid by the Company to FEL till 31 December 2017.

Guarantees issued by various commercial banks, in

respect of financial and operational obligations of

the Company, to various institutions and corporate

bodies.

Pak Arab Fertilizer Limited

Fatima Fertilizer Company Limited

These include due to following associated undertakings on account of trading activities:

Hussain Ginneries Limited

Fazal Rehman Fabrics Limited

Fatima Sugar Mills Limited

Ahmed Fine Textile Mills Limited

Fatima Energy Limited -


21

(Un-audited) (Un-audited) (Un-audited) (Un-audited)


2017 2016 2017 2016


15

Export 5,721,425,442 3,901,747,855 2,565,076,280 1,798,311,441

Local 8,789,196,504 8,720,024,022 4,570,706,610 4,263,502,442

Waste 378,849,407 292,271,657 179,909,009 153,566,961

14,889,471,353 12,914,043,534 7,315,691,899 6,215,380,844

Duty drawback on exports 15.1 210,217,388 - 210,217,388 -

15,099,688,741 12,914,043,534 7,525,909,286 6,215,380,844

15.1



2017 2016 2017 2016


16 Cost of sales

Raw and packing materials

consumed 8,551,491,991

7,557,951,781

4,387,672,854

3,765,100,518

Manufacturing costs 3,157,379,347 2,822,393,803 1,697,615,668 1,429,709,344

11,708,871,338 10,380,345,584 6,085,288,522 5,194,809,862

Opening stock of work-

in-process 276,835,823

247,793,019

281,941,506

270,346,222

Closing stock of work-

in-process (289,536,457)

(277,982,206)

(289,536,457)

(277,982,206)

Cost of goods manufactured 11,696,170,704

10,350,156,397

6,077,693,571

5,187,173,878

Opening stock of finished

goods 1,809,881,306

2,270,180,548

1,687,498,965

1,608,030,133

Finished goods purchased 2,162,338,458

922,206,772

1,004,999,234

523,300,563

15,668,390,468

13,542,543,717

8,770,191,770

7,318,504,574

Closing stock of finished

goods (1,926,834,207) (1,712,918,454) (1,926,834,207) (1,712,918,454)

Cost of raw material sold 15,977,899 29,066,603 1,428,793 22,479,259

13,757,534,160 11,858,691,866 6,844,786,356 5,628,065,379

17

The Board of Directors of the Company intends to distribute sufficient cash dividend for the year ended 30 June 2018 (refer to

note 24) to comply with the above stated requirements. Accordingly, no provision for tax on undistributed reserves has been

recognized in this condensed interim unconsolidated financial information for the period ended 31 December 2017.

Half Year ended Quarter ended

Sales - net

This represents duty drawback on exports under Duty Drawback of Taxes Order 2017-2018 allowed by the Ministry of

Textile under the Prime Minister's package of incentives for exporters.

The Finance Act, 2015 introduced a new tax under Section 5A of the Income Tax Ordinance, 2001 on every public Company

other than a scheduled bank or modaraba, that derives profits for the tax year and does not distribute cash dividend within six

months of the end of said tax year or distribute dividends to such extent that its reserves, after such distribution, are in excess of

100% of its paid up capital. However, with effect from tax year 2017 this tax on undistributed reserves is not applicable to a

public Company which distributes at least 40% of its after tax profits within six months of the end of the tax year through cash

dividend or bonus shares.

Half Year ended Quarter ended


22

18F

air

valu

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easu

rem

ent

of fi

nan

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in

stru

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the

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e if

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- -

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pee

s -

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23

Hel

d-fo

r

tradi

ngLo

ans

and

rece

ivab

les

Ava

ilabl

e

for-

sale

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er fi

nanc

ial

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at 3

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ne 2

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at fa

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Long

term

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stm

ents

-

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--

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t ter

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ts21

9,65

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0

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219,

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219,

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--

219,

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anci

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-

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term

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2,04

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term

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term

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--

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--

--

Car

ryin

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ount

Fair

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e

- - -

- - -

- - -

- - -

- - -

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- - -

- - -

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- - -

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- - -

- - -

- - -

- - -

- - -

- - -

- - -

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- Rup

ees -

- - -

- - -

- - -

- - -

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- - -

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24

19R

econ

cilia

tion

of m

ovem

ent o

f lia

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ies t

o ca

sh fl

ows a

risin

g fr

om fi

nanc

ing

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ities

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ed, s

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and

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-up

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tal

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e pre

miu

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ivid

end

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ble

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term

finan

cing

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term

mus

hari

ka

Sho

rt te

rm

borr

owin

g

Acc

rued

mar

kup

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net

Tota

l

As a

t 30

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201

7

300

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77,

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7,97

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(147

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(354

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)17

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nt p

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long

term

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7

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16

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,550

,679

2017

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- (R

upee

s) -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -


25

20

20.1

(Un-audited) (Un-audited)

31 December 31-December

2017 2016

Rupees Rupees

Subsidiary Company

Sale of goods and services 104,583,281

342,898,781

Purchase of goods and services 1,895,308,372

594,204,967

Payments against purchase of goods and services-net 1,259,824,125

-

Mark-up on loan 19,410,489

19,343,694

Associated undertakings

Sale of goods 885,998,862

686,086,714

Purchase of goods 511,430,608

283,683,241

Receipts from Associated undertakings 991,181,585

639,229,929

Payments made to Associated undertakings 238,313,569

190,240,317

Mark-up accrued on advance against issue of shares 18,560,729

2,333,129

Dividend Income - 86,892,539

Advance under equity investment made 349,946,352 4,304,160

Purchase of shares -

55,068,750

Post retirement benefits

Provision for staff retirement benefits 47,784,599 43,579,386

20.2

20.3

Transactions with related parties

The related parties comprise subsidiary company (Fazal Weaving Mills Limited), associated companies,

related group companies, directors of the Company, companies where directors also hold directorship, key

employees and staff retirement funds. Details of transactions with related parties, other than those which have

been specifically disclosed elsewhere in this condensed interim financial information is as follows:

Aggregate transactions made with the associated undertakings were as follows:

Half year ended

Sales, purchases and other transactions with related parties are carried out at fair market price in

accordance with policy of related party transactions as approved by the board of directors.

Salaries and benefits to key management personnel for the six months period ended 31 December

2017 amounted to Rs.37.8 million (31 December 2016: Rs. 35.03 million) out of which Rs. 6.26

million (31 December 2016: Rs. 5.02 million) relates to post employment benefits.


26

21

22 General

Figures in the condensed interim unconsolidated financial information have been rounded-off to the nearest

rupees except stated otherwise.

Date of authorization for issue

This condensed interim unconsolidated financial information was authorized for issue by the Board of

Directors on 23 February, 2018.



Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



27


28

Fazal Cloth Mills Limited (The Group)Condensed Interim Consolidated Financial Information (Un-Audited)

For the six months ended 31 December 2017


29


31 December 30 June

2017 2017

Note

ASSETS

Non-current assets

Property, plant and equipment 5 21,587,441,142

20,982,732,578

Intangible assets 551,250

642,225

Long term advances and investments 6 4,028,653,461

3,872,437,148

Long term deposits 24,071,493

24,446,493

25,640,717,346

24,880,258,444

Current assets


626,485,047

Stock-in-trade 11,161,517,043

7,579,999,590

Trade debts 7 2,932,891,097

4,619,059,328


197,595,026

Trade deposits and short term

prepayments 49,959,254

6,682,417

Mark-up accrued 45,698,544

27,137,816

Other receivables and deposits 378,689,355

309,284,068

Short term investments 8 201,337,600

219,658,800

Tax refundable from Government 1,128,988,735

1,062,978,019

Cash and bank balances 9 204,265,649

143,354,044

16,805,685,052 14,792,234,155

42,446,402,398 39,672,492,599


- - - - - - - - - - - Rupees - - - - - - - - - - - -

Condensed Interim Consolidated Balance Sheet



Sd/-(REHMAN NASEEM)

DIRECTOR


30

As at 31 December 2017


31 December 30 June

2017 2017

Note

700,000,000

700,000,000

300,000,000

300,000,000

1,429,690,020

1,606,703,247

7,716,757,328

7,420,558,491

9,446,447,348

9,327,261,738

6,360,983,560 6,507,472,663

10 7,917,766,492

7,439,660,754

11 1,229,367,944

889,679,269

222,169,302

214,614,337

2,129,093,828

2,056,716,653

11,498,397,566

10,600,671,013

12 2,738,043,692

2,022,377,306

296,109,892

280,002,402

10,001,078,936

8,940,727,933

2,105,341,403

1,993,979,544

15,140,573,923 13,237,087,184

EQUITY AND LIABILITIES

Share capital and reserves

Authorized share capital

Issued, subscribed and paid-up capital

Capital reserves

Unappropriated profits

Surplus on revaluation of fixed assets - net of tax

Non-current liabilities

Long term financing - secured

Long term musharika - secured

Deferred liabilities:

- Staff gratuity

- Deferred taxation

Current liabilities

Trade and other payables

Accrued profit / interest / mark-up

Short term borrowings - secured

Current portion of non-current liabilities

Contingencies and commitments 13

42,446,402,398 39,672,492,599

- - - - - - - - - - Rupees - - - - - - - - - - - -

Sd/-(MUHAMMAD AZAM)



31

Condensed Interim Consolidated Profit and Loss Account (Un-Audited)

For the half year and quarter ended 31 December 2017

Half Year Half Year Quarter Quarter

Ended Ended Ended Ended


2017 2016 2017 2016


Sales - net 14 16,199,800,838 15,072,513,411 8,016,298,648 7,250,694,372

Cost of sales 15 (14,589,402,147)

(13,740,432,697)

(7,219,625,443)

(6,513,588,021)

Gross profit 1,610,398,691

1,332,080,714

796,673,205

737,106,351

Selling and distribution expenses (271,451,252)

(229,804,304)

(147,600,742)

(158,844,836)-

Administrative expenses (159,972,441)

(133,610,330)

(85,787,161)

(69,210,559)-

Other expenses (56,385,458)

(34,480,950)

(37,632,194)

(14,461,894)

(487,809,151)

(397,895,584)

(271,020,097)

(242,517,289)

Other income 24,627,259

111,541,814

11,475,959

104,360,965

Profit from operations 1,147,216,799

1,045,726,944

537,129,067

598,950,027

Share of loss of associate (16,716,812)

(3,793,123)

(10,686,560) (328,547)

Finance cost (628,240,823)

(484,845,868)

(333,821,261)

(272,372,527)

Profit before taxation 502,259,164

557,087,953

192,621,246

326,248,953

Taxation (195,049,431)

(68,250,782)

(84,846,907)

10,744,708

Profit after taxation 307,209,733 488,837,171 107,774,339 336,993,661

Attributable to:

Equity holders of the Holding Company 307,209,733 488,837,171 107,774,339 336,993,661

Earnings per share - basic and diluted 10.24 16.29 3.59 11.23


16



Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



32

Condensed Interim Consolidated Statement of Comprehensive Income (Un-Audited)For the half year and quarter ended 31 December 2017

Half year

ended Half year

ended Quarterended

Quarter

ended


2017 2016 2017 2016


Profit after taxation 307,209,733

488,837,171

107,774,339

336,993,661

Other comprehensive income - net of tax

Items that will never be reclassified to profit and loss:

Net change in fair value of available for

sale financial assets (177,013,227) 185,832,392 (199,691,079) 140,476,690

Total comprehensive (loss) / income for the year 130,196,506 674,669,563 (91,916,740) 477,470,351

Attributable to:

Equity holders of the Holding Company 130,196,506 674,669,563 (91,916,740) 477,470,351

130,196,506 674,669,563 (91,916,740) 477,470,351




Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



33

Note

Cash flows from operating activities

Profit before taxation 502,259,164 557,087,953

Adjustments for:

Depreciation of property, plant and equipment 474,815,050 449,254,451

Amortization of intangible assets 90,975 90,975

Unrealized loss / (gain) on re-measurement of investments 18,321,200 (19,234,000)

Provision for gratuity 51,484,512 46,815,582

Provision for infrastructure cess 22,323,391 17,763,188

Loss / (gain) on disposal of property, plant and equipment 6,448,622 (130,517)

Share of loss of associate 16,716,812 3,793,123

Dividend income - (86,892,539)

Finance cost 628,240,823 484,845,868

Cash generated from operations before working capital changes 1,720,700,549

Half year ended

31 December

2017

Rupees

Half year ended

31 December

2016

Rupees

1,453,394,084

Effect on cash flows due to working capital changes

(Increase) / decrease in current assets:


(114,998,402)

Stock-in-trade (3,581,517,453)

(2,597,651,523)

Trade debts 1,686,168,231

(1,011,642,750)


(90,117,829)

Trade deposits and short term prepayments (43,276,837)

(36,318,151)

Other receivables (69,405,287)

29,623,766

(1,886,288,940)

(3,821,104,889)

Increase in current liabilities

Trade and other payables 690,912,784

488,185,868

Cash generated from / (used in) operations 525,324,393

(1,879,524,937)

Gratuity paid to employees (43,929,547) (56,079,591)

Long term deposits 375,000

-

Taxes paid (188,682,972)

(234,528,473)

Finance cost paid - net (630,694,061)

(438,158,277)

(862,931,580)

(728,766,341)

Net cash used in operating activities (337,607,187)

(2,608,291,278)

Cash flows from investing activities

Capital expenditure incurred (1,095,465,367)

(877,792,110)

Proceeds from sale of property, plant and equipment 9,493,128

772,025

Investment in associates (349,946,359)

10,627,090

Dividend received -

86,892,539

Net cash used in investing activities (1,435,918,598)

(779,500,457)

Cash flows from financing activities

Long term financing obtained 10 1,447,744,049 1,809,668,078

Long term financing repaid 10 (833,276,548) (876,637,814)

Long term musharika obtained 11 500,000,000 -

Long term musharika repaid 11 (185,311,325) (41,561,325)

Short term borrowings - net 1,060,351,003 2,557,272,092

Cash dividend paid (155,069,789) (74,691,065)

Net cash generated from financing activities 1,834,437,390 3,374,049,965

Net (decrease) / increase in cash and cash equivalents 60,911,605 (13,741,769)

Cash and cash equivalents at the beginning of the period 143,354,044 209,689,213

Cash and cash equivalents at the end of the period 204,265,649 195,947,444


Condensed Interim Consolidated Cash Flow Statement (Un-Audited)For the half year ended 31 December 2017

4.1

8



Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



34

Condensed Interim Consolidated Statement of Changes in Equity (Un-Audited)For the half year ended 31 December 2017

Share capital Revenue reserve

Balance as at 30 June 2016 300,000,000 77,616,000 175,000,000 1,369,835,755 6,833,013,573 8,755,465,328


Profit for six months - - - - 488,837,171 488,837,171Other comprehensive income / (loss) - - - 185,832,392 - 185,832,392

- - - 185,832,392 488,837,171 674,669,563Surplus transferred to un-appropriated profit on

account of incremental depreciation charged during the period - net of tax -

-

-

-

106,510,505 106,510,505

Transactions with the owners of the Company:

Cash dividend @ Rs. 2.5 per share -

-

-

-

(75,000,000) (75,000,000)

Balance as at 31 December 2016 300,000,000

77,616,000

175,000,000

1,555,668,147

7,353,361,249 9,461,645,396


Profit for six months -

-

-

-

(33,868,085) (33,868,085)Other comprehensive income / (loss) -

-

-

(201,580,900)

(6,144,162) (207,725,062)-

-

-

(201,580,900)

(40,012,247) (241,593,147)Surplus transferred to un-appropriated profit on

account of incremental depreciation charged during the period - net of tax -

-

-

-

106,598,980 106,598,980

Transfer from surplus on revaluation of fixed assets on disposal - net of tax 610,507 610,507

Balance as at 30 June 2017 300,000,000 77,616,000 175,000,000 1,354,087,247 7,420,558,489 9,327,261,736


Profit for six months - - - - 307,209,733 307,209,733Other comprehensive income / (loss) - - - (177,013,227) - (177,013,227)

- - - (177,013,227) 307,209,733 130,196,506Surplus transferred to un-appropriated profit on

account of incremental depreciation charged during the period - net of tax - - - - 143,486,936 143,486,936

Surplus transferred on disposal of a revalued asset 3,002,170 3,002,170

Transactions with the owners of the Company:Cash dividend @ Rs. 5.25 per share (157,500,000) (157,500,000)

Balance as at 31 December 2017 300,000,000 77,616,000 175,000,000 1,177,074,020 7,716,757,328 9,446,447,348

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Capital reserves

TotalOrdinary shares Share premium

Capital

redemption

reserve

Fair value reserve-

available for sale

financial assets

Un-appropriated

profits

- - - -

-

-

-

-

-

-

-

-




Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



35

Notes to the Condensed Interim Consolidated Financial Information (Un-audited)For the period ended 31 December 2017

1 Reporting entity

The Group comprises of

- Fazal Cloth Mills Limited ("the Holding Company"); and

- Fazal Weaving Mills Limited ("the Subsidiary Company").

Associates

- Fatima Energy Limited

- Fatima Transmission Company Limited

- Fatima Electric Company Limited

1.1

1.2

2 Basis of preparation

2.1 Basis of Accounting

2.1.1

2.1.2

2.1.3 During the year, the Companies Act 2017 ("the Act") was enacted on 30 May 2017 and replaced and

repealed the Companies Ordinance, 1984 ("the repealed Ordinance"). However, the Securities and Exchange

Commission of Pakistan vide its Circular No. 17 and Circular No. 23 dated 20 July 2017 and 04 October

2017 respectively and Institute of Chartered Accountants of Pakistan vide its Circular No. 17 dated 06

October 2017, have advised and clarified that the Annual Financial Statements of the Companies whose

financial year closes on or before 31 December 2017 and interim financial statements of the Companies for

the period ended on or before 31 December 2017, shall be prepared in accordance with the repealed

Ordinance.

Fazal Cloth Mills Limited ("the Company") was incorporated in Pakistan in 1966 as a Public Limited

Company under the Companies Act, 1913 (now the Repealed Companies Ordinance, 1984). Previously, the

shares of the Holding Company were quoted on Karachi and Lahore Stock Exchanges of Pakistan. However,

due to integration of Karachi, Lahore and Islamabad Stock Exchanges into Pakistan Stock Exchange

("PSX") with effect from 11 January 2016 the shares of the Company are now quoted on PSX. The

registered office of the Holding Company is situated at 69/7, Abid Majeed Road, Survey No. 248/7, Lahore

Cantt, Lahore. The Company is principally engaged in manufacture and sale of yarn and fabric. The

manufacturing facilities are located at Fazal Nagar, Jhang Road, Muzaffargarh and Qadirpur Rawan Bypass,

Khanewal Road, Multan in the province of Punjab.

The Subsidiary Company was incorporated in Pakistan in 1989 as a public limited company under the

Repealed Companies Ordinance, 1984. The registered office of the Subsidiary Company is situated at 69/7,

Abid Majeed Road, Survey No. 248/7, Lahore Cantt, Lahore. The Subsidiary Company is engaged in the

manufacture and sale of yarn. The manufacturing facility of the Subsidiary Company is located at Mauza

Khairabad Qadir Pur Rawan By Pass, Khanewal Road, Multan in the province of Punjab. The Subsidiary

Company commenced its commercial production on April 01, 2014.

This condensed interim financial information comprises the condensed interim consolidated balance sheet

of the Group as at 31 December 2017 and the related condensed interim consolidated profit and loss

account, condensed interim consolidated statement of comprehensive income, condensed interim

consolidated cash flow statement and condensed interim consolidated statement of changes in equity

together with the notes forming part thereof.

This condensed interim financial information of the Group for the six months period ended 31 December

2017 has been prepared in accordance with the requirements of the International Accounting Standard (IAS)

34 - Interim Financial Reporting, Islamic Financial Reporting Standards (IFASs) and provisions of and

directives issued under the Repealed Companies Ordinance, 1984. In case where requirements differ, the

provisions of or directives issued under the Repealed Companies Ordinance, 1984 have been followed.


36

2.1.4 This condensed interim financial information does not include all of the information required for full annual

financial statements and should be read in conjunction with the annual financial statements for the year

ended 30 June 2017.

2.1.5

2.1.6

2.1.7

3

3.1

3.2

4 Statement of consistency in accounting policies

4.1

4.2

4.3

IFRS 2 - Share-based Payment 01 January 2018

IAS 40 - Investment Property 01 January 2018

IFRIC 22 - Foreign Currency Transactions

and Advance Consideration 01 January 2018Annual Improvements to IFRS Standards 2014–2016 Cycle 01 January 2018

IFRS 15 - Revenue from contracts with customers 01 July 2018IFRS 9 - Financial Instrument 01 July 2018

IFRIC 23 - Uncertainty over Income Tax Treatments 01 January 2019Amendment to IFRS 9 - Financial Instrument 01 January 2019


4.4

The following amendments and interpretations of approved accounting standards will be effective for

accounting periods as detailed below:

In addition, the Companies Act, 2017 applicable from 01 January 2018 requires certain additional

disclosures and Section 235 of the repealed Companies Ordinance, 1984 relating to treatment of surplus

arising out of revaluation of assets has not been carried forward in the Companies Act, 2017. This would

require change in accounting policy relating to surplus on revaluation of fixed assets to bring it in line with

the requirements of IAS 16 – Property, plant and equipment. This amendment will result in reclassification

of surplus on revaluation of fixed assets as part of shareholders' equity.

Estimates and judgments made by the management in the preparation of this condensed interim

consolidated financial information are the same as those that were applied to the consolidated annual

financial statements of the Group as at and for the year ended 30 June 2017.

The accounting policies and the methods of computation adopted in the preparation of this condensed

interim consolidated financial information are same as those applied in the preparation of the

consolidated annual financial statements for the year ended 30 June 2017.

There were certain new standards and amendments to the approved accounting standards which became

effective during the period but are considered not to be relevant or have any significant effect on the

Group's operations and are, therefore, not disclosed.

The preparation of condensed interim consolidated financial information requires management to make

judgments, estimates and assumptions that affect the application of accounting policies and the reported

amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

This condensed interim financial information is unaudited and being submitted to the shareholders as

required under Section 237 of the Company Act, 2017 and Code of Corporate Governance.

These condensed interim financial information are the consolidated financial statements of the Group in

which investments in subsidiaries are accounted for on the basis of direct equity interest rather than on the

basis of reported results and net assets of the investee.

Estimates and judgments

Corresponding consolidated balance sheet numbers are extracted from the annual audited consolidated

financial statements of the Group for the year ended 30 June 2017, whereas corresponding consolidated

profit and loss account, consolidated statement of comprehensive income, consolidated cash flow statement

and consolidated statement of changes in equity are stated from unaudited condensed interim financial

information of the Group for the six months period ended 31 December 2016.


37

(Audited)

30 June

2017 2017

5 Property, plant and equipment Note Rupees Rupees

Operating property, plant and equipment 5.1 20,862,206,058 20,567,185,770

Capital work-in-progress - at cost 5.2 725,235,084 415,546,806

21,587,441,142 20,982,732,576

5.1 Opening net book value 20,567,185,770 19,666,758,299

Additions during the period / year:

Freehold land - 353,212

Factory building 69,138,605 5,440,156

Non-factory building 20,518,892

24,507,978

Plant and machinery 685,129,333

1,720,170,820

Furniture and fixtures 482,352

3,162,920

Office equipment 2,004,238

4,993,101

Vehicles 2,104,715

12,391,695

Electric fittings and installations 737,315

30,702,429

Tools, laboratory equipment and arms 5,661,639

18,997,333

Fire extinguishing equipments and scales -

36,000

785,777,087

1,820,755,642

Net Book Value of assets disposed off during

the period / year (15,941,750)

(7,941,528)

Depreciation charge for the period / year (474,815,050)

(912,386,643)

Closing net book value 20,862,206,058

20,567,185,770

5.2 Breakup of closing balance of capital work-in-progress - at cost :

Factory building


154,455,632


109,535,237

260,426,344 263,990,869

Non-factory building


114,675,777


-

130,867,993

114,675,777

Plant and machinery

Cost and expenses 24,686,798

614,295


9,172,340

Letters of credit 269,245,169

23,158,945

321,663,760

32,945,580

Electrical fittings and installation

Material and expenses 4,113,912 -

Advance payments 288,455 1,377,000

4,402,367 1,377,000

Office equipment


(Un-audited)

31 December


38

Furniture and fixtures

Material and expenses ‐ 1,752,419


564,183 2,549,580

Vehicles

Advance payments 7,112,412 -

Freehold land -


725,235,084 415,546,806

5.3 Capital work-in-progress mainly represents capital expenditure incurred by the Group for Balancing,

Modernisation and Replacement (''BMR'').

(Un-audited)


30 June

2017 2017

Rupees Rupees

(Un-audited)


30 June

2017 2017

6 Long term advances and investments Note Rupees Rupees

Long term advances to associate

Pakarab Energy Limited 25,904,160

25,904,160

Fatima Transmission Company Limited 23,320,790

11,761,200

Fatima Energy Limited 643,269,447

304,882,685

6.1 692,494,397

342,548,045

Investment

Investment in related parties:

Available for sale - at fair value 6.2 1,945,255,677 2,122,268,904

Associated companies - at equity method 6.3 1,369,259,387 1,385,976,199

3,314,515,064 3,508,245,103

Others

Others - at cost 6.4 21,644,000 21,644,000

4,028,653,461 3,872,437,148


39


40

(Audited)30 June

2017RupeesNote

7

Considered good:

secured (against letters of credit) 1,134,549,660 2,241,365,975

Unsecured:

- Related Parties 3,267,224 178,469,148

- Others 7.1 1,795,074,213 2,199,224,205

2,932,891,097 4,619,059,328

7.1

- 170,961,236

- 4,036,691

3,267,224 3,471,221

3,267,224 178,469,148

8 Short term investments

Held for trading

Associated Company (others)

Fatima Fertilizer Company Limited - quoted 201,337,600

219,658,800

201,337,600

219,658,800

These investments are at fair value

through profit & loss

Carrying value at balance sheet date

Related party 219,658,800 218,028,800

Others - -

219,658,800

218,028,800

Unrealized gain on re-measurement of

investment - during the period (18,321,200) 1,630,000

201,337,600 219,658,800

9 Cash and Bank balances

Cash in hand 20,672,370 15,463,035

Cash at banks

- Current accounts 183,137,388 127,871,300

- Saving accounts 455,890 19,709

183,593,278 127,891,009

204,265,649 143,354,044

Rs. 10.00 each. Equity held 0.31% (2017: 0.31%)

(Un-audited)31 December

2017Rupees

Trade debts

This represents amount due from following related parties:



Reliance Weaving Mills Limited

(Audited)30 June

2017Rupees


2017Rupees


41

10 Long term financing - secured Note

The Holding Company

Opening balance 9,088,017,648 7,841,305,151

Loan obtained during the period / year 1,447,744,049 3,429,363,418

Repayments made during the period / year (833,276,548) (2,182,650,920)

Closing balance 9,702,485,149 9,088,017,648

Less: current portion grouped under current liabilities (1,784,718,657) (1,648,356,894)

7,917,766,492 7,439,660,754

The Holding Company

10.1 Markup bearing finances from conventional banks:

The Bank of Punjab - Term finance ("TF") 10.1.1 600,000,000 494,995,866

10.1.2 335,327,747 442,627,983

10.1.3 224,569,573 203,857,410

10.1.4 136,368,475 -

The Bank of Punjab - Term finance VI 5,004,134 -

141,372,609

United Bank Limited- Demand Finance II -

796,927,367

Demand Finance I1 under LTFF Scheme 10.1.5 126,576,000 -

Demand Finance III - 300,000,000

126,576,000 1,096,927,367

National Bank of Pakistan- Demand Finance - VII -

140,954,791

Pak Brunei Investment Company Limited -

Term finance ("TF") -

250,000,000

Pak Oman Investment Company Limited -


350,000,000

Standard Chartered Bank (Pakistan) Limited -


450,000,000

1,427,845,929

3,429,363,417

The Subsidiary Company

10.1.6 19,898,120

-

1,447,744,049

3,429,363,417

Allied Bank Limited - Term loan ("TL") under LTFF

Scheme

Habib Bank Limited - Demand finance under LTFF

Scheme

The Bank of Punjab -Term finance III under LTFF Scheme

Allied Bank Limited - Term loan ("TL") under LTFF

Scheme

10.1

(Audited)30 June

2017Rupees


2017Rupees


42

10.1.1 The Bank of Punjab – Term Finance

10.1.2 Allied Bank Limited –Term Loan-VII under SBP’s LTFF Scheme

10.1.3

10.1.4 The Bank of Punjab –Term Finance under SBP’s LTFF Scheme

10.1.5 United Bank Limited – Demand Finance-II under SBP’s LTFF Scheme

The Subsidiary Company

10.1.6

Habib Bank Limited – Demand Finance under SBP’s LTFF Scheme

During the period demand finance of Rs.224.57 million has been obtained to finance the retirement of letters of credits for

import of textile machinery for BMR purpose. Total limit of demand finance was Rs.430.00 million and partially was

disbursed during last year 2017. Entire finance has been refinanced from State Bank of Pakistan under LTFF Scheme. It

is repayable within the period of ten years inclusive of two years grace period in sixteen half yearly equal installments of

principal amount. It carries mark up at the rate of SBP rate +0.50% per annum. This finance is secured against joint pari

passu charge/mortgage of Rs.639.00 million on all present and future fixed assets of the Holding Company and personal

guarantees of the sponsoring directors.

During the period an amount of Rs.136.37 million has been obtained for retirement of letters of credits for import of

textile machinery/generators/components for BMR/ expansion and for import & local purchase of machinery /

components / equipment for renewable Energy Captive Combined Cycle Power Plant of 1.6MW. Total limit of this

finance is for Rs.500 million. This finance is repayable within the period of ten years inclusive of grace period of two

years in sixteen equal half yearly installments of principal amount. It carries mark up at the rate of SBP rate +0.75% per

annum on SBP’s LTFF and six months KIBOR + 0.75% per annum on own source term finance. This finance is secured

against the security as stated in note 10.1.1.

During the period an amount of Rs.126.58 million has been obtained for retirement of letters of credit for imported

machinery under CAPEX / BMR in existing units. This finance is repayable within the period of ten years inclusive of

grace period of two years in sixteen equal half yearly installments of principal amount. It carries mark at the rate of SBP

rate + 0.50% per annum on SBP’s LTFF and six months KIBOR + 1.00% per annum on own source demand finance.

This finance is secured against joint pari passu charge / mortgage of Rs.1,975.00 million on all present and future fixed

assets of the Holding Company and personal guarantees of the sponsoring directors.

Allied Bank Limited –Term Loan-III under SBP’s LTFF Scheme

During the period a term loan of Rs.19.898 million has been obtained to finance the retirement of letters of credit

opened for import of textile machinery for capex / BMR purpose. It is repayable within the period of ten years inclusive

of grace period of two years in sixteen equal half yearly installments of principal amount. It carries mark up at the rate of

SBP rate +1.00% per annum on SBP’s LTFF and six months KIBOR +1.00% per annum on own source term loan. This

loan is secured against joint pari passu charge/mortgage of Rs.1,333.334 million on all present and future fixed assets

of the Holding Company, personal guarantees of the sponsoring directors and corporate guarantee of the Holding

Company.

During the period a term finance of Rs.335.33 million has been obtained to finance the retirement of letters of credit

opened for import of textile machinery for expansion/BMR purpose. Out of above term finance Rs.243.97 million has

been refinanced from State Bank of Pakistan under its LTFF Scheme. It is repayable within the period of ten years

inclusive of grace period of two years in sixteen equal half yearly installments of principal amount. It carries mark up at

the rate of SBP rate +0.50% per annum on SBP’s LTFF and six months KIBOR +0.50% per annum on own source term

loan. This finance is secured against joint pari passu charge/mortgage of Rs.2,267.00 million on all present and future

fixed assets of the Holding Company and personal guarantees of the sponsoring directors.

During the period a term finance of Rs.600.00 million has been obtained to refinance / finance local capex on BMR

already incurred and to be incurred by the Company. It is repayable within the period of eight years inclusive of grace

period of two years in twelve equal half yearly installments of principal amount. It carries mark up at the rate of six

months KIBOR + 0.75% per annum. This finance is secured against joint pari passu charge/mortgage of Rs.1,718.00

million on all present and future fixed assets of the Holding Company and personal guarantees of the sponsoring

directors.


43

11 Long term musharika - secured

Opening balance 1,235,301,919 1,462,174,569

Loan obtained during the period / year 500,000,000 -

Repayments made during the period / year (185,311,325) (226,872,650)

Closing balance 1,549,990,594 1,235,301,919

Less: current portion grouped under current liabilities (320,622,650) (345,622,650)

1,229,367,944 889,679,269

11.1 Faysal Bank Limited – Diminishing Musharaka

During the period a Diminishing Musharaka facility of Rs.500.00 million has been obtained for adjustment, swap or

repayment of existing term finances with financial objective of balance sheet re-profiling. It is repayable within the

period of five years inclusive of grace period of two years in six equal half yearly installments of principal amount. It

carries profit at the rate of three months KIBOR + 0.75% per annum. This finance is secured against joint pari passu

charge/mortgage of Rs.1,054.00 million on all present and future fixed assets of the Company and personal guarantees of

the sponsoring directors.

12 Trade and other payables

3,162,671 11,350,171

50,308,872 -

4,835 4,835

92,952,931 -

40,501 40,501

3,504,702 -

1,564,290 1,090,066

151,538,802 12,485,573

13 Contingencies and commitments

Contingencies

13.1

13.2

Fatima Energy Limited

Fatima Fertilizer Company Limited

There has been no change in the status of contingencies since the annual audited financial

statements as at June 30, 2017.

Export documents negotiated with banks under Foreign bill purchase ("FBP") facility aggregating to

$ 12.35 million (June 30, 2017: Nil). Upon receipt of acceptance by the concerned bank subsequent

to balance sheet date, this exposure has been shifted to bank risk and accordingly not recourseable

to the Group.

Pak Arab Fertilizer Limited

These include due to following associated undertakings on account of trading activities:

Hussain Ginneries Limited


Fatima Sugar Mills Limited


(Audited)30 June

2017Rupees


2017Rupees

(Audited)30 June

2017Rupees


2017Rupees

Note

11.1


44

Note

13.3

- the Holding Company 586,413,715 581,413,715

- the Subsidiary Company 82,853,000 77,853,000

13.4 Commitments for irrevocable letters

of credit:

- the Holding Company

- capital expenditure 203,050,368 686,911,980

- raw material, stores and spares 2,659,415,108 1,336,804,565

- others

14.1

787,500,000 987,500,000

3,649,965,476 3,011,216,545

- the Subsidiary Company

- capital expenditure 29,755,000 -

- raw material, stores and spares 515,102,658 3,651,055

544,857,658 3,651,055

13.5 As at balance sheet date, Stand by Letters of Credit (SBLCs) amounting to Rs. 787.5 million (30

June 2017: 987.5 million) are outstanding which were issued by the Dubai Islamic Bank Ltd and

Summit Bank Ltd on behalf of the Holding Company favoring the lenders of Fatima Energy Limited

(FEL), an associated company, confirming that in case of failure of the Holding Company to make

payment of the committed amount of equity during the period of nine months, the lenders of FEL

can draw on the SBLCs to cover the amount not paid by the Holding Company. An amount of Rs.

2,017 million (30 June 2017: 1,679 million) has been paid by the Holding Company to FEL till 31

December 2017.

Commitments

Guarantees issued by various commercial banks, in

respect of financial and operational obligations of the

Group, to various institutions and corporate bodies.

(Un-audited)

31 December

2017

Rupees

(Un-audited)

31 December

2016

Rupees

14

Export 6,099,779,851 5,685,234,376 2,602,840,908 2,781,580,771

Local 9,422,513,066 9,033,356,261 4,981,614,739 4,276,801,562

Waste 462,845,566 353,922,774 217,180,646 188,036,698

15,985,138,483 15,072,513,411 7,801,636,293 7,246,419,031

Duty drawback on exports 214,662,355 - 214,662,355

16,199,800,838 15,072,513,411 8,016,298,648 7,246,419,031


Sales - net

(Audited)30 June

2017Rupees


2017Rupees

(Un-audited)

31 December

2016

Rupees

(Un-audited)

31 December

2017

Rupees


45

14.1



2017 2016 2017 2016


15

Raw and packing materials

consumed 10,206,516,143

8,420,941,425

5,250,924,481

4,274,941,749

Manufacturing costs 3,644,014,410

3,264,806,278

1,946,170,417

1,661,155,146

13,850,530,553

11,685,747,703

7,197,094,898

5,936,096,895

Opening stock of work-

in-process 310,982,823

278,621,424

313,894,506

302,080,222

Closing stock of work-

in-process (332,959,457)

(313,286,206)

(332,959,457)

(313,286,206)

Cost of goods manufactured 13,828,553,918

11,651,082,921

7,178,029,947

5,924,890,911

Opening stock of finished

goods 2,105,211,306

2,614,346,122

1,800,833,965

1,704,678,133

Finished goods purchased 670,111,174

1,346,231,502

269,784,889

761,834,169

16,603,876,399

15,611,660,545

9,248,648,801

8,391,403,213

Closing stock of finished

goods (2,030,452,207) (1,900,294,454) (2,030,452,207) (1,900,294,454)

Cost of raw material sold 15,977,955 29,066,603 1,428,849 22,479,259

14,589,402,147 13,740,432,694 7,219,625,444 6,513,588,018

16

Cost of sales

Through Finance Act, 2017 provisions of section 5A of the Income Tax Ordinance, 2001 have been substituted to

the effect that for tax year 2017 and onwards a tax at the rate of 7.5% of accounting profit before tax is leviable to

a public limited company other than schedule bank or a modarba that derives profit for a tax year but does not

distribute (by way of cash or bonus shares) at least 40% of after tax profits within six months of end of tax year.

The Board of Directors of the Group intends to distribute sufficient cash dividend for the year ended 30 June, 2018

to comply with the above stated requirements. Accordingly, no provision for tax on undistributed reserves has been

recognized in this condensed interim financial information for the period ended 31 December 2017.

This represents an amount of Duty Drawback on exports under Duty Drawback of Taxes Order 2016-2017

allowed by the Ministry of Textile under the Prime Minister's package of incentives for exporters.



46

17Se

gmen

t inf

orm

atio

n

17.1

Segm

ent r

even

ue a

nd re

sults

Follo

win

g is

an an

alys

is of

the G

roup

's re

venu

e and

resu

lts b

y re

porta

ble s

egm

ents:

(Un-

audi

ted)

(Un-

audi

ted)

(Un-

audi

ted)

(Un-

audi

ted)

(Un-

audi

ted)

(Un-

audi

ted)

31 D

ecem

ber 2

017

31 D

ecem

ber

2016

31 D

ecem

ber 2

017

31 D

ecem

ber

2016

31 D

ecem

ber 2

017

31 D

ecem

ber 2

016

Exte

rnal

reve

nues

13,4

13,8

56,6

34

12,2

40,0

22,7

83

2,

785,

944,

204

2,

832,

490,

627

17,4

13,3

60,7

5617

,040

,942

,167

Inte

rseg

men

t rev

enue

s1,

194,

182,

543

1,

968,

428,

757

19,3

77,3

75

-

(1,2

13,5

59,9

18)

(1,9

68,4

28,7

57)

Cost

of sa

les

(13,

124,

489,

813)

(13,

075,

874,

895)

(1

,464

,912

,333

)

(6

64,5

57,8

04)

(15,

802,

962,

065)

(15,

708,

861,

456)

Inte

rseg

men

t cos

t of s

ales

(19,

377,

375)

-

(1

,194

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,543

)

(1

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,428

,757

) 1,

213,

559,

918

1,96

8,42

8,75

7

Dist

ribut

ion

and

mar

ketin

g ex

pens

e(2

27,5

60,7

43)

(188

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)

(4

3,89

0,50

8)

(41,

082,

898)

(2

71,4

51,2

52)

(229

,804

,304

)

Adm

inist

rativ

e exp

ense

s(1

44,1

62,0

96)

(123

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)

(15,

810,

345)

(10,

378,

356)

(159

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,441

)(1

33,6

10,3

29)

Oth

er o

pera

ting

expe

nse

(54,

821,

055)

(31,

000,

700)

(1,5

64,4

03)

(3,4

80,2

50)

(56,

385,

458)

(34,

480,

950)

Fina

nce c

ost

(571

,483

,913

)

(405

,303

,654

)

(56,

756,

910)

(79,

542,

214)

(628

,240

,823

)(4

84,8

45,8

68)

Oth

er o

pera

ting

inco

me

23,1

95,2

6711

0,43

7,41

61,

431,

992

1,10

4,39

824

,627

,259

111,

541,

814

Shar

e of l

oss o

f ass

ocia

te-

--

-(1

6,71

6,81

2)(3

,793

,123

)

Profi

t bef

ore t

ax

489,

339,

448

494,

756,

327

29,6

36,5

2966

,124

,746

502,

259,

164

557,

087,

953

17.1

.1

Spin

ning

Wea

ving

Tota

l

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - R

upee

s - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

The a

ccou

ntin

g po

licie

s of t

he re

porta

ble s

egm

ents

are t

he sa

me a

s tho

se d

escr

ibed

in th

e ann

ual C

onso

lidat

ed fi

nanc

ial s

tate

men

ts fo

r the

pre

cedi

ng y

ear e

nded

30

June

201

7.


47

Segm

ent a

sset

s and

liab

ilitie

s

Repo

rting

segm

ents'

asse

ts an

d lia

bilit

ies ar

e rec

oncil

ed to

total

asse

ts an

d to

tal li

abili

ties a

s fol

lows

:

(Un-

audi

ted)

(Aud

ited)

(Un-

audi

ted)

(Aud

ited)

(Un-

audi

ted)

31 D

ecem

ber

2017

30 Ju

ne

2017

31 D

ecem

ber

2017

31 D

ecem

ber

2017

Segm

ent a

ssets

for r

epor

table

segm

ents

34,5

86,9

85,3

72

30,1

80,6

05,8

75

2,

701,

774,

830

4,55

6,47

1,55

7

37

,288

,760

,202

Un-a

lloca

ted co

rpor

ate as

sets

-

-

-

-

5,

157,

642,

196

Total

asse

ts as

per

bala

nce s

heet

34,5

86,9

85,3

72

30,1

80,6

05,8

75

2,

701,

774,

830

4,55

6,47

1,55

7

42

,446

,402

,398

Segm

ent l

iabili

ties f

or re

porta

ble s

egm

ents

22,4

35,9

34,7

6419

,498

,184

,582

1,85

1,77

3,59

32,

068,

242,

627

24,2

87,7

08,3

57

Un-a

lloca

ted co

rpor

ate li

abili

ties

--

--

2,35

1,26

3,13

0

Total

liab

ilitie

s as p

er b

alanc

e she

et22

,435

,934

,764

19,4

98,1

84,5

821,

851,

773,

593

2,06

8,24

2,62

726

,638

,971

,487

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

Rup

ees - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- -

Spin

ning

Wea

ving

30 Ju

ne

2017

17.2

(Aud

ited)

Segm

ent a

ssets

34,7

37,0

77,4

32

4,93

5,41

5,16

7

39,6

72,4

92,5

99

Segm

ent l

iabi

lities

21,5

66,4

27,2

09

2,27

1,33

0,98

9

23,8

37,7

58,1

98

Tota

l

30 Ju

ne

2017


48

18Fi

nanc

ial i

nstr

umen

ts -

Fair

val

ues a

nd r

isk m

anag

emen

t

18.1

Fair

val

ue m

easu

rem

ent o

f fina

ncia

l ins

trum

ents

Hel

d-fo

r tr

adin

g

Loan

s and

rece

ivab

les

Avai

labl

e fo

r-sa

le

Oth

er fi

nanc

ial

liabi

litie

sTo

tal

Leve

l 1Le

vel 2

Leve

l 3To

tal

31 D

ecem

ber

2017

Fina

ncia

l ass

ets -

mea

sure

d at

fair

val

ue

Long

term

adv

ance

and

inve

stmen

ts

-

-

1,

945,

255,

677

-

1

,945

,255

,677

1,9

45,2

55,6

77

-

-

1

,945

,255

,677

Shor

t ter

m in

vestm

ents

20

1,33

7,60

0

-

-

-

2

01,3

37,6

00

201

,337

,600

-

-

2

01,3

37,6

00

20

1,33

7,60

0

-

1,

945,

255,

677

-

2

,146

,593

,277

2,1

46,5

93,2

77

-

-

2

,146

,593

,277

Fina

ncia

l ass

ets -

not

mea

sure

d at

fair

val

ue

Long

term

adv

ance

and

inve

stmen

ts

-

-

2,

083,

397,

784

-

2

,083

,397

,784

-

-

-

-

Long

term

dep

osits

-

24,

071,

493

-

-

24,

071,

493

-

-

-

-

Trad

e de

bts

-

2,

932,

891,

097

-

-

2,9

32,8

91,0

97

-

-

-

-

Loan

s and

adv

ance

s

-

12

2,71

5,20

2

-

-

122

,715

,202

-

-

-

-

Mar

k-up

acc

rued

-

45,

698,

544

-

-

45,

698,

544

-

-

-

-

Oth

er re

ceiv

able

s and

dep

osits

-

378,

689,

355

-

-

3

78,6

89,3

55

-

-

-

-

Bank

bal

ance

s

-

18

3,59

3,27

8

-

-

183

,593

,278

-

-

-

-

-

3,

687,

658,

969

2,

083,

397,

784

-

5

,771

,056

,753

-

-

-

-

Fina

ncia

l lia

bilit

ies -

not

mea

sure

d at

fair

val

ue

Long

term

fina

ncin

g - s

ecur

ed-

-

-

7,9

17,7

66,4

92

7,9

17,7

66,4

92

-

-

-

-

Long

term

mus

harik

a - s

ecur

ed-

-

-

1,2

29,3

67,9

44

1,2

29,3

67,9

44

-

-

-

-

Trad

e an

d ot

her p

ayab

les

-

-

-

2,7

38,0

43,6

92

2,7

38,0

43,6

92

-

-

-

-

Acc

rued

pro

fit /

inte

rest

/ mar

k-up

-

-

-

2

96,1

09,8

92

2

96,1

09,8

92

-

-

-

-

Shor

t ter

m b

orro

win

gs -

secu

red

-

-

-

10,0

01,0

78,9

36

10,0

01,0

78,9

36

-

-

-

-

Curre

nt p

ortio

n of

non

-cur

rent

liab

ilitie

s-

-

-

2,1

05,3

41,4

03

2,1

05,3

41,4

03

-

-

-

-

-

-

-

24,2

87,7

08,3

59

24,2

87,7

08,3

59

-

-

-

-

The

addi

tiona

l disc

losu

res d

ue to

the

adop

tion

of IF

RS 1

3 Fa

ir va

lue

mea

sure

men

t are

as f

ollo

ws : C

arry

ing

amou

ntFa

ir v

alue

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

Rup

ees -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- -


49

Hel

d-fo

r tr

adin

g

Loa

ns a

nd

rece

ivab

les

Avai

labl

e fo

r-sa

le

Oth

er fi

nanc

ial

liabi

litie

sTo

tal

Lev

el 1

Lev

el 2

Lev

el 3

Tota

l

June

30,

201

7

Fina

ncia

l ass

ets -

mea

sure

d at

fair

val

ue

Long

term

adv

ance

and

inve

stm

ents

-

-

2,12

2,26

8,90

4

-

2,1

22,2

68,9

04

2

,122

,268

,904

-

-

2,1

22,2

68,9

04

Shor

t ter

m in

vest

men

ts

219,

658,

800

-

-

-

219

,658

,800

2

19,6

58,8

00

-

-

219

,658

,800

21

9,65

8,80

0

-

2,

122,

268,

904

-

2

,341

,927

,704

2,3

41,9

27,7

04

-

-

2

,341

,927

,704

Fina

ncia

l ass

ets -

not

mea

sure

d at

fair

val

ue

Long

term

adv

ance

and

inve

stm

ents

-

-

1,75

0,16

8,24

4

-

1,7

50,1

68,2

44

-

-

-

-

Long

term

dep

osits

-

24,

446,

493

-

-

24,

446,

493

-

-

-

-

Trad

e de

bts

-

4,

619,

059,

328

-

-

4,6

19,0

59,3

28

-

-

-

-

Loan

s and

adv

ance

s

-

19

7,59

5,02

6

-

-

197

,595

,026

-

-

-

-

Mar

k-up

acc

rued

-

27,

137,

816

-

-

27,

137,

816

-

-

-

-

Oth

er re

ceiv

able

s and

dep

osits

-

309,

284,

068

-

-

3

09,2

84,0

68

-

-

-

-

Ban

k ba

lanc

es

-

12

7,89

1,00

9

-

-

127

,891

,009

-

-

-

-

-

5,

305,

413,

740

1,

750,

168,

244

-

7

,055

,581

,984

-

-

-

-

Fina

ncia

l lia

bilit

ies -

not

mea

sure

d at

fair

val

ue

Long

term

fina

ncin

g - s

ecur

ed‐

‐‐

7,4

39,6

60,7

54

7,4

39,6

60,7

54

-

-

-

-

Long

term

mus

harik

a - s

ecur

ed‐

‐‐

8

89,6

79,2

69

8

89,6

79,2

69

-

-

-

-

Trad

e an

d ot

her p

ayab

les

‐‐

‐

1

,700

,169

,306

1

,700

,169

,306

-

-

-

-

Acc

rued

pro

fit /

inte

rest

/ m

ark-

up‐

‐‐

2

80,0

02,4

02

2

80,0

02,4

02

-

-

-

-

Shor

t ter

m b

orro

win

gs -

secu

red

‐‐

‐

8

,940

,727

,933

8

,940

,727

,933

-

-

-

-

Cur

rent

por

tion

of n

on-c

urre

nt li

abili

ties

‐‐

‐

1

,993

,979

,544

1

,993

,979

,544

-

-

-

-

-

-

-

21,2

44,2

19,2

08

21,2

44,2

19,2

08

-

-

-

-

18.2

Fina

ncia

l ris

k m

anag

emen

t

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

Rup

ees -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- -

The

Gro

up's

finan

cial

risk

man

agem

ent o

bjec

tive

and

polic

ies a

re c

onsi

sten

t with

that

dis

clos

ed in

the

annu

al c

onso

lidat

ed fi

nanc

ial s

tate

men

ts o

f the

Gro

up fo

r the

yea

r end

ed Ju

ne 3

0, 2

017.

Car

ryin

g am

ount

Fair

val

ue


50

19R

econ

cilia

tion

of m

ovem

ent o

f lia

bilit

ies t

o ca

sh fl

ows a

risin

g fr

om fi

nanc

ing

activ

ities

Issu

ed, s

ubsc

ribe

d

and

paid

-up

capi

tal

Shar

e pr

emiu

mD

ivid

end

paya

ble

Long

term

finan

cing

Long

term

mus

hari

ka

Sho

rt te

rm

borr

owin

g

Acc

rued

mar

kup-

Net

Tota

l

As a

t 30

June

201

7

300

,000

,000

77,

616,

000

7,97

2,26

2

9

,088

,017

,648

1

,235

,301

,919

8

,940

,727

,933

252

,864

,586

19

,902

,500

,348

Chan

ges f

rom

fina

ncin

g ca

sh fl

ows

Div

iden

d pa

id-

‐

(155

,069

,789

)

-

‐

-

-

(155

,069

,789

)

Shor

t ter

m fi

nanc

es o

btai

ned-

net

-

-

-

-

1,

060,

351,

003

-1,

060,

351,

003

Fina

ncia

l cha

rges

pai

d-

-

-

-

-

-

(612

,133

,333

)(6

12,1

33,3

33)

Long

term

fina

nces

pai

d-

-

(8

33,2

76,5

48)

(1

85,3

11,3

25)

-

-(1

,018

,587

,873

)

Proc

eeds

from

long

term

fina

ncin

g-

-

-

1,44

7,74

4,04

9

500,

000,

000

-

-1,

947,

744,

049

Tota

l cha

nges

from

fina

ncin

g ca

sh fl

ows

300,

000,

000

77,6

16,0

00

(147

,097

,527

)

9,70

2,48

5,14

9

1,54

9,99

0,59

4

10,0

01,0

78,9

36

(359

,268

,747

)21

,124

,804

,405

Oth

er c

hang

es

Fina

l cas

h di

vide

nd

-

‐

1

57,5

00,0

00

-

‐

-

-

1

57,5

00,0

00

Curre

nt p

ortio

n of

long

term

fina

ncin

g/ M

usha

rka

-

‐

-

(1,7

84,7

18,6

57)

(3

20,6

22,6

50)

-

-

(2,1

05,3

41,3

07)

Inte

rest

expe

nse-

net

-

-

-

-

-

-

6

09,6

80,0

95

6

09,6

80,0

95

Tota

l lia

bilit

y re

late

d ot

her c

hang

es

-

-

1

57,5

00,0

00

(1,7

84,7

18,6

57)

(3

20,6

22,6

50)

-

609

,680

,095

(1

,338

,161

,212

)

As a

t 31

Dec

embe

r 201

7

300

,000

,000

77,

616,

000

1

0,40

2,47

3

7

,917

,766

,492

1

,229

,367

,944

10

,001

,078

,936

250

,411

,348

19

,786

,643

,193

2017

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- (R

upee

s) -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -


51

20

20.1

(Un-audited) (Un-audited)

31 December 31 December

2017 2016

Rupees Rupees

Associated undertakings

Sale of goods 1,027,936,599

798,049,614

Purchase of goods 511,430,608

283,683,241

Receipts from Associated undertakings 1,100,350,323

767,721,266

Payments made to Associated undertakings 238,313,569

190,240,317

Mark-up accrued on Issue of shares 18,560,728

2,333,129

Dividend Income - 86,892,539

Advance under equity investment made 349,946,352

4,304,160

Purchase of shares -

55,068,750

Post retirement benefits

Provision for staff retirement benefits 51,484,512

46,815,582

20.2

20.3

21

22

Date of authorization for issue

This condensed interim consolidated financial information was authorized for issue by the Board of Directors on

23 February, 2018.

General

Figures in the financial statements have been rounded-off to the nearest rupee.

Transactions with related parties

The related parties comprise associated companies, related group companies, directors of the Group, companies

where directors also hold directorship, key employees and staff retirement funds. Details of transactions with

related parties, other than those which have been specifically disclosed elsewhere in this condensed interim

financial information is as follows:

Aggregate transactions made with the associated undertakings were as follows:

Half year ended

Sales, purchases and other transactions with related parties are carried out at fair market price in

accordance with policy of related party transactions as approved by the board of directors.

Salaries and benefits of key management personnel for the six months period ended 31 December 2017

amounted to Rs. 39.10 million (31 December 2016: Rs. 37.28 million) out of which Rs. 6.39 million

(31 December 2016: Rs. 5.11 million) relates to post employment benefits.



Sd/-(REHMAN NASEEM)

DIRECTOR

Sd/-(MUHAMMAD AZAM)



52

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