3rd quarterly report march 31, 2017 - shahzad...

3rd Quarterly Report March 31, 2017

SHAHZAD TEXTILE MILLS LIMITED


Contents

Company’s Information

Directors’ Report - English

Directors’ Report - Urdu

Balance Sheet

Profit and Loss Account

Statement of Comprehensive Income

Cash Flow Statement

Statement of Changes in Equity

Notes to the Account

1

2

3

4

5

6

7

8

9-12



Company’s Information

SHAHZAD TEXTILE MILLS LIMITED1

Board of DirectorsMian Parvez Aslam

Mr. Imran Aslam

Mr. Irfan Aslam

Syed Raza Ali Bokhari

Mr. Humayun Bakht

Mr. Ahsan Ahmad Khan

Mr. Maqsood Shahid Najmi

Chief Financial OfficerMr. Humayun Bakht

Company SecretaryMr. Hassan-ud-Din Ansari

AuditorsHorwath Hussain Chaudhry & Co.

Chartered Accountants

Audit CommitteeSyed Raza Ali Bokhari

Mr. Irfan Aslam

Mr. Maqsood Shahid Najmi

Human Resources &

Remuneration CommitteeSyed Raza Ali Bokhari

Mr. Imran Aslam

Mr. Ahsan Ahmad Khan

Chairman

Chief Executive

Chairman

Member

Member

Chairman

Member

Member

BankersHabib Metropolitan Bank Ltd.

J S Bank Ltd.

National Bank of Pakistan.

Meezan Bank Limited.

United Bank Limited.

Bank Al-Falah (Islamic Banking)

Share RegistrarHameed Majeed Associates (Pvt) Ltd.

H.M House, 7-Bank Square Lahore

Registered Office19-A Off. Zafar Ali Road,

Gulberg-V, Lahore.

Ph: +92 (42) 35754024-27

Fax:+92 (42) 35712313

E-mail:[email protected]

Web:www.shahzadtex.com

Mills

Unit # 1, 3 & 434th KM Lahore Sheikhupura

Road, Sheikhupura.

Unit # 27th KM Sheikhupura Faisalabad

Road, Sheikhupura.

CONDENSED INTERIM FINANCIAL INFORMATION

OF


FOR THE 3RD QUARTER ENDED

MARCH 31, 2017


Directors’ Report


The directors of the company are pleased to present un-audited accounts for third quarterand Nine months Ended March 31, 2017.

The company has earned pretax profit Rs.55,916 million as compared to loss of Rs.(3,549)million in corresponding period of last year. In the current quarter profit is increased to19,962/-million from 14,171 million profit of correspondence period of last year. The Salesof yarn is also increased to Rs.3,360,331 million in nine monthly period from Rs. 2,685,098million sales in the corresponding period of previous year.

The affirmative changes in turnover of textile yarn can be fairly associated with demandof yarn in local market but with mild profit margin. International market did not show anyhot demand for our yarn due to damaged and low quality of cotton crop.

Raw material prices i.e. Cotton Rs.6500 per maund, Polyester Rs. 128 per kg and ViscoseRs.231 per kg exhibited upward trend during the period under review. As there was lowand damaged production of cotton in the period under discussion, therefore, managementhas to import quality cotton from India to maintain its established standard of yarn in themarket.

EXPANSION PLAN

Regarding replacement of existing Jenbachar Generators which we discussed in our halfyearly directors report five Generators have been reached in our mills and are underinstallation process which hopefully shall be completed and start functioning in the monthof May 2017. Other Generators are also under general over hauling which shall enhancetheir efficiency in producing the electricity.

Earning per share in nine monthly accounts is Rs.1.16 as compared loss Rs.1.70 pershare in previous corresponding period. In current quarter earning per share is Rs.0.59as compared to Rs.0.37 earning per share in corresponding period.

The directors openly acknowledge and cordially appreciate the confidence manifestedby the valued customers and excellent cooperation extended by the financial institutionand banks. The directors would not miss the opportunity to put on record the dedicatedperformance depicted by the officials and employees of the company.

for and on behalf of the Board

LahoreDate: April 24, 2017 Mian Parvez Aslam

Chairman


SHAHZAD TEXTILE MILLS LIMITED 3


Condensed Interim Balance Sheet


As At March 31, 2017

CAPITAL AND LIABILITIES

Share Capital and Reserves

Authorized capital:40,000,000 (June 2016: 40,000,000) ordinary shares of Rs. 10 each

Issued, subscribed and paid up capital17,971,372 (June 2016: 17,971,372) ordinary shares of Rs. 10 each

Reserves

Surplus on Revaluation of Property,Plant and Equipment

Non Current LiabilitiesLong term financingStaff retirement benefitsDeferred tax liability

Current LiabilitiesTrade and other payablesAccrued mark upShort term borrowingsCurrent portion of long term financingProvision for taxation

Contingencies and Commitments

ASSETSNon Current AssetsProperty, plant and equipmentLong term investment in associateLong term deposits

Current AssetsStores and sparesStock in tradeTrade debtsAdvances, trade deposits, prepayments

and other receivablesShort term investmentsTax refunds due from the GovernmentCash and bank balances

400,000

179,7141,064,3871,244,101

488,477

109,16298,592

236,840444,594

332,5198,687

426,81240,74033,674

842,432-

3,019,604

1,696,686363,131

13,9702,073,787

53,967640,154

72,159

58,5921,436

90,80428,705

945,8173,019,604

400,000

179,7141,029,3251,209,039

505,320

-93,332

230,791324,123

229,1384,807

320,591-

37,341591,877

-2,630,359

1,576,075344,015

13,9701,934,060

49,408363,391

45,988

77,3811,184

70,79688,151

696,2992,630,359

The annexed notes form an integral part of this condensed interim financial information (un-audited).Statement under section 241 (2) of the Companies Ordinance , 1984:The Chief Executive officer of the company is presently out of the Country. Therefore these financial statements have been signed bytwo Directors as required under section 241 (2) of the Companies Ordinance , 1984.

Note

March 31,2017

June 30,2016

(Un-Audited) (Audited)(Rupees 000) (Rupees 000)

DIRECTOR DIRECTOR

4

5

6



Condensed Interim Profit and Loss Account (Un-Audited)For The Nine Months Period And Quarter Ended March 31, 2017

Note

Nine Months Ended Quarter EndedMarch 31,

2017March 31,

2016March 31,

2017March 31,

2016

SalesCost of sales

Gross Profit

Operating expenses:- Selling and distribution- Administrative expenses

Operating Profit

Finance costOther operating expensesOther incomeShare of net profit of associate

Profit / (Loss) before Taxation

Taxation

Net Profit / (Loss) for the Period

Earnings per Share - Basic

3,360,331(3,172,985)

187,346

(33,474)(85,358)

(118,832)

68,514

(24,092)(18,048)

2,30227,240

(12,598)

55,916

(35,033)

20,883

1.16

2,685,098(2,560,282)

124,816

(27,279)(86,109)

(113,388)

11,428

(23,722)(790)2,7406,795

(14,977)

(3,549)

(27,018)

(30,567)

(1.70)

1,148,997(1,080,992)

68,005

(2,201)(28,385)

(30,586)

37,419

(8,093)(15,003)

(151)5,790

(17,457)

19,962

(9,352)

10,610

0.59

853,028(798,391)

54,637

(7,577)(26,952)

(34,529)

20,108

(9,846)-

6623,247

(5,937)

14,171

(7,581)

6,590

0.37

DIRECTOR

7

The annexed notes form an integral part of this condensed interim financial information (un-audited).

Statement under section 241 (2) of the Companies Ordinance , 1984:The Chief Executive officer of the company is presently out of the Country. Therefore these financial statements have been signed bytwo Directors as required under section 241 (2) of the Companies Ordinance , 1984.

(Rupees 000) (Rupees 000) (Rupees 000) (Rupees 000)

DIRECTOR



Condensed Interim Statement Comprehensive Income (Un-Audited)

For The Nine Months Period And Quarter Ended March 31, 2017Nine Months Ended Quarter Ended

March 31,2017

March 31,2016

March 31,2017

March 31,2016

DIRECTOR

Net Profit / (Loss) for the Period

Other Comprehensive Incomefor the Period

Items that may be reclassifiedsubsequently to profit and loss

Share of associate's othercomprehensive income - net ofdeferred tax

Total Comprehensive Income /(Loss) for the Period

20,883

143

21,026

(30,567)

25

(30,542)

10,610

(496)

10,114

6,590

34

6,624




DIRECTOR



Condensed Interim Cash Flow Statement (Un-Audited)For Nine Months Period Ended March 31, 2017

March 31,2017

(Rupees 000) (Rupees 000)

DIRECTOR

CASH FLOW FROM OPERATING ACTIVITIES

Profit / (Loss) before taxation

Adjustments for:- Depreciation- Share of net profit of associate- Gain on disposal of property, plant and equipment - Net- Surplus on revaluation of short term investments at fair

value through profit or loss- Provision for gratuity- Exchange gain- Provision for workers' (profit) participation fund- Provision for workers' welfare fund- Finance cost

Operating Profit before Working Capital Changes

(Increase) / Decrease in current assets- Stores and spares- Stock in trade- Trade debts- Advances, trade deposits, prepayments, and other

receivables- Tax refunds due from the Government

Increase / (Decrease) in current liabilities- Trade and other payables

Net Cash used in Operations

Income tax paidGratuity paidFinance cost paidWorkers' (profit) participation fund paidWorkers' welfare fund paidNet Cash used in Operating Activities

CASH FLOW FROM INVESTING ACTIVITIES

Property, plant and equipment purchasedProceeds from disposal of property, plant and equipmentCapital work in progressNet Cash used in Investing Activities

CASH FLOW FROM FINANCING ACTIVITIES

LTF - LoanLiabilities against assets subject to finance leaseDividend paidDividend received from associated undertakingShort term borrowingsNet Cash generated from Financing Activities

Net Decrease in Cash and Cash Equivalents

Cash and cash equivalents at the beginning of the period

Cash and Cash Equivalents at the End of the Nine Months Ended

55,916

64,494(27,240)

(1,353)

(252)26,550

(2)2,879

82018,98984,885

140,801

(4,559)(276,764)

(26,169)

5,116(24,650)

100,872(226,154)

(85,353)

(19,026)(21,290)(15,109)

(1,189)-

(141,967)

(21,138)13,951

(176,565)(183,752)

149,902--

10,150106,221266,273

(59,446)

88,151

28,705

(3,549)

68,025(6,795)

-

69018,300

(116)--

18,94699,05095,501

2,262(105,119)

24,839

(30,641)6,319

(30,737)(133,077)

(37,576)

(25,901)(22,350)(19,208)

(3,073)(1,006)

(109,114)

(1,238)--

(1,238)

-(27,922)(17,972)

16,240109,627

79,973

(30,379)

82,556

52,177

March 31,2016

The annexed notes form an integral part of this condensed interim financial information (un-audited).Statement under section 241 (2) of the Companies Ordinance , 1984:The Chief Executive officer of the company is presently out of the Country. Therefore these financial statements have been signed bytwo Directors as required under section 241 (2) of the Companies Ordinance , 1984.

DIRECTOR



Condensed Interim Statement of Changes in Equity (Un-Audited)For Nine Months Period Ended March 31, 2017

ShareCapidal

Rupees in thousands

Particulars

SharePremiumReserve

UnapropriatedProfit

TotalEquity

Balance as at June 30, 2015

Net loss for the period endedMarch 31, 2016

Other comprehensive profit forthe period ended March 31, 2016

Transferred from surplus on revaluationof property, plant and equipment onincremental depreciation charged incurrent period (net of deferred tax)

Transaction with owners

Dividend paid during the period

Balance as at March 31, 2016

Balance as at June 30, 2016

Net profit for the period endedMarch 31, 2017

Other comprehensive profit for the periodended March 31, 2017

Transferred from surplus on revaluationof property, plant and equipment onincremental depreciation charged incurrent period (net of deferred tax)

Surplus realized on disposal ofrevalued property, plant andequipment (net of deferred tax)transferred to retained earnings

Share in realized surplus on revaluationof property, plant and equipment ofassociate (net of deferred tax)

Transaction with owners

Dividend paid during the period

Balance as at March 31, 2017

179,714

-

-

-

-

179,714

179,714

-

-

-

-

-

-

179,714

5,796

-

-

-

-

5,796

5,796

-

-

-

-

-

-

5,796

1,033,080

(30,567)

25

10,961

(17,971)

995,528

1,023,529

20,883

143

11,580

827

1,629

-

1,058,591

1,218,590

(30,567)

25

10,961

(17,971)

1,181,038

1,209,039

20,883

143

11,580

827

1,629

-

1,244,101

DIRECTOR



DIRECTOR


March 31,2017


June 30,2016


Notes To and Forming Part of Condensed Interim FinancialInformation (Un-Audited)For The Nine Months Period Ended March 31, 2017

Note 1General Information

Shahzad Textile Mills Limited is a Public Limited Company incorporated in Pakistan under theCompanies Act, 1913 (now the Companies Ordinance, 1984). Its shares are quoted on PakistanStock Exchange (PSX). The Company manufactures and deals in all types of yarn. Theregistered office of the Company is situated at 19-A, Off. Zafar Ali Road, Gulberg - V , Lahore.

Note 2Basis of Preparation

2.1 This condensed interim financial statements have been prepared in accordance withthe directives issued by the Securities & Exchange Commission of Pakistan (SECP)and is in compliance with the International Accounting Standard - 34 (Interim FinancialReporting).

2.2 This condensed interim financial information is presented in Pak rupees, which is theCompany's functional and presentational currency. Figures have been rounded off tonearest thousand rupees, unless stated otherwise. This condensed financial informationdoes not include all the information required for annual financial statements and therefore,should be read in conjunction with the annual financial statements for the year endedJune 30, 2016.

Note 3Accounting Policies

The accounting policies and methods of computation of this condensed interim financialinformation is the same as those followed in the preparation of annual financial statements forthe preceding financial year ended on June 30, 2016.

Note 4Long Term Financing

LTF loan - SecuredCurrent portion of LTF loan

149,902(40,740)109,162

---

4.1 These represent LTF loans obtained from banking companies during the period againstspecific and exclusive charge on relevant fixed assets of the Company. The tenure offacility is from 3 to 5 years starting from February 2017 and ends in February 2022.Mark up on these facilities is charged at SBP rate payable quarterly along with paymentof principal amount.

(Un-audited) (Audited)


March 31,2017

Rupees in million

June 30,2016


Note 5Contingencies and Commitments

Contingencies

- The Company has provided bank guarantees in favour of following parties:

- Sui Northern Gas Pipeline Limited- Custom Authorities

47.84-

47.84

47.847.10

54.94

- The Company is contingently liable for Rs. 15.372 million (June 2016: Rs. 11.886million) on account of electricity duty on self generation of energy. However, thecompany has not admitted the said duty and case is pending before the SupremeCourt of Pakistan.

Commitments

- The Company's outstanding commitments / contracts as at the balance sheet dateare as under:

Foreign bills of exchange purchasedLetters of credit

-156.86156.86

85.4833.89

119.37

Note 6Property, Plant and Equipment

Operating fixed assetsCapital work in progress

6.1 Operating fixed assets

Opening written down valueAdditions during the period / year (at cost)Revaluation adjustment

Disposals during the period / year (at written down value)

Depreciation charged for the period / yearRevaluation adjustment

1,520,121176,565

1,696,686

1,576,07521,138

-1,597,213

(12,598)1,584,615

(64,494)-

1,520,121

1,576,075-

1,576,075

1,630,097-

(201,203)1,428,894

-1,428,894

(90,644)237,825

1,576,075


March 31,2017

June 30,2016

(Un-audited) (Audited)Note

6.1


March 31,2017

Rupees in million

June 30,2016




Nine Months Ended Quarter EndedMarch 31,

2017March 31,

2016March 31,

2017March 31,

2016

Note 7Cost of Sales

Raw materials consumedStores and spares consumedPacking materials consumedSalaries, wages and other benefitsFuel and powerInsuranceRepairs and maintenanceOther manufacturing expensesDepreciation

Opening work in processClosing work in process

Cost of goods manufactured

Opening finished goodsClosing finished goods

2,177,32564,30069,424

346,410433,591

5,4759,6858,034

56,8963,171,140

29,336(34,231)

(4,895)3,166,245

52,961(46,221)

6,7403,172,985

1,683,75056,67462,747

285,122368,430

7,0955,0756,165

58,9692,534,027

32,367(27,435)

4,9322,538,959

45,278(23,955)

21,3222,560,282

751,77824,92122,580

114,823151,482

2,041206

2,47019,268

1,089,56931,700

(34,231)(2,531)

1,087,038

40,175(46,221)

(6,046)1,080,992

512,43021,50018,78195,476

110,6713,5451,1152,055

19,632785,205

28,730(27,435)

1,295786,500

35,846(23,955)

11,891798,391

Note 8Transactions with Related Parties

The related parties comprise associated companies, staff retirement funds, directors and keymanagement personnel. The Company in the normal course of business carries out transactionswith various related parties. The Company enters into transactions with related parties on thebasis of mutually agreed terms. Significant transactions with related parties are as follows:

Transaction during the period

Related party Relationship

Sargodha Jute AssociateMills Limited

Directors

Nature of Transaction

Purchase of materials,goods and services

Sale of materials, goodsand services

Rent received / receivable

Dividend income received

Dividend paid

Mark up on loanfrom directors

216

2,251

324

16,240

15

2,008

March 31,2017

(Un-audited)

March 31,2016

275

755

324

10,150

-

1,823


(Un-audited)(Rupees 000) (Rupees 000)



Note 9Segment Information

For management purposes, the activities of the Company are recognized into one operatingsegment, i.e. manufacturing and sales of yarn. The Company operates in the said reportableoperating segment based on the nature of the product, risk and return, organizational andmanagement structure and internal financial reporting systems. Accordingly, the figures reportedin these financial statements related to the Company's only reportable segment. Entity-widedisclosures regarding reportable segment are as follows:

9.1 Information about products:Yarn

9.2 Major customers:3 customers (2016: 3 customers)

9.3 Geographical Information:Company's revenue from external customers and geographical location is given as under:

PakistanAsiaEurope

2,717,977529,282120,181

3,367,440

2,870,169619,098359,136

3,848,403

9.4 All non-current assets of the Company are located and operated in Pakistan as at thereporting date.

Note 10Authorization of Interim Financial Information

This condensed interim financial information (un-audited) is authorized for issue on April 24,2017 by the Board of Directors of the Company.

Note 11General

Corresponding figures have been re-arranged / reclassified, wherever necessary, to facilitatecomparison. No significant re-arrangements have been made in this condensed interim financialinformation (un-audited).

March 31,2017

Percentage

June 30,2016


99.37%

67.85%

March 31,2017

June 30,2016


Percentage

99.27%

47.78%

DIRECTOR




DIRECTOR

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