| Samin Textile Mills Ltd - 2006 |
======================================================================================== BALANCE SHEET AS AT JUNE 30, 2006 ======================================================================================== 2006 2005 Rupees Rupees Notes Restated ======================================================================================== EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES AUTHORISED SHARE CAPITAL: 20,000,000 (2005: 20,000,000) ordinary shares of Rs 10 each 200,000,000 200,000,000 Issued, subscribed and paid-up capital 3 133,640,000 133,640,000 Accumulated unappropriated profits 63,483,003 28,381,768 197,123,003 162,021,768 Surplus on revaluation of 4 66,649,737 - property plant and equipment Subordinated loan 5 133,072,075 133,072,075 NON CURRENT LIABILITIES: Long-term financing - secured 6 65,360,632 130,908,446 Liabilities against assets subject to finance lease 7 118,718,614 105,278,704 Deferred liabilities 8 2,336,000 3,046,750 186,415,246 239,233,900 CURRENT LIABILITIES: Trade and other payables 9 131,737,447 183,667,282 Mark-up accrued on finances and other payable 10 20,753,237 24,939,572 Short term finances - secured 11 612,993,254 635,135,313 Current portion of long term finances 12 91,520,425 79,215,198 857,004,363 922,957,365 Contingencies and commitments 13 1,440,264,424 1,457,285,108 ASSETS FIXED ASSETS: Property, plant and equipment 14 745,533,190 642,962,102 Investment in associate 16 - 50,170,183 Long term deposits 17 6,254,259 2,254,259 CURRENT ASSETS: Stores, spares and loose tools 18 38,102,050 32,162,711 Stock in trade 19 351,909,914 370,649,333 Trade debts 20 147,898,196 207,417,811 Loans and advances 21 31,160,157 34,141,065 Trade deposits 22 2,904,063 2,767,463 Other receivables 23 7,033,348 15,875,757 Other financial asset 24 73,968,831 21,560,000 Taxation 25 21,189,030 39,318,245 Cash and bank balances 26 14,311,386 38,006,179 688,476,975 761,898,564 1,440,264,424 1,457,285,108 ======================================================================================== ======================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2006 ======================================================================================== Nine months Year ended ended June 30, 2006 June 30, 2005 Rupees Rupees Notes Restated ======================================================================================== Sales - net 27 1,613,886,482 1,281,567,879 Cost of goods sold 28 1,423,069,715 1,147,420,329 Gross profit 190,816,767 134,147,550 Other operating income 29 9,924,910 1,367,415 Distribution cost 30 58,369,678 78,105,310 Administrative expenses 31 21,180,257 12,713,106 Other operating expenses 32 3,671,538 9,993,099 83,221,473 100,811,515 Finance cost 33 104,015,782 54,117,318 Share of income from associate 16 28,673,730 13,300,647 Profit /(loss) before tax 42,178,152 (6,113,221) Provision for taxation 34 7,076,916 12,750,110 Profit/(loss) after tax 35,101,236 (18,863,331) Earnings per share basic and diluted 36 2.63 (1.41) ======================================================================================== ======================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2006 ======================================================================================== Year ended Nine months ended June 30, 2006 June 30, 2005 Rupees Rupees Note Restated ======================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 38 234,018,819 82,804,192 Finance cost paid (108,202,117) (44,770,057) Employee benefits paid (710,750) (242,250) Income taxes paid (17,116,347 (13,770,178) (126,029,214) (58,782,485) Net cash flow from operating activities 107,989,605 24,021,707 CASH FLOWS FROM INVESTING ACTIVITIES: Intangible assets - (14,377,321) Long term deposits (4,000,000) (535,714) Long term Investment 22,958,475 - Proceeds from disposal of 21,423,142 2,210,000 property, plant and equipment Purchase of property, plant and equipment (116,002,918) (39,465,808) Dividend received 4,875,082 2,820,038 Net cash used in investing activities (70,746,219) (49,348,805) CASH FLOWS FROM FINANCING ACTIVITIES: Short term finances (22,142,059) 66,559,263 Proceeds from subordinated loan - 27,800,000 Payment of long term finances (39,802,677) (48,815,750) Dividend paid - (2,802) Net cash inflow / (outflow) from financing activities (61,944,736) 45,540,711 Effects of exchange rate changes on 1,006,558 8,162,017 cash and cash equivalents Net increase / (decrease) in cash and cash equivalents (23,694,793) 20,213,612 Cash and cash equivalents at the beginning of the period 38,006,179 9,630,550 Cash and cash equivalents at the end of the period 14,311,386 38,006,179 ======================================================================================== ========================================================================================================== STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2006 ========================================================================================================== Unappropriated profits/ (accumulated Share capital losses) Total Note Rupees ========================================================================================================== Balance as at September 30, 2004- reported earlier 133,640,000 23,159,617 156,799,617 Effect of change in accounting policy 2.10 - 24,085,482 24,085,482 Balance as at September 30, 2004 133,640,000 47,245,099 180,885,099 Loss for the period - restated - (18,863,331) (18,863,331) Balance as at June 30, 2005 - restated 133,640,000 28,381,768 162,021,768 Balance as at July 1, 2005 - reported earlier 133,640,000 (6,788,415) 126,851,585 Balance as at July 1, 2005 - restated 133,640,000 28,381,768 162,021,768 Profit for the year - 35,101,236 35,101,236 Balance as at June 30, 2006 133,640,000 63,483,003 197,123,003 ==========================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2006 1. STATUS AND ACTIVITIES The Company was incorporated in Pakistan on November 27, 1989 as a public limited company under the Companies Ordinance, 1984. The registered office of the Company is situated at 50-C, Main Gulberg, Lahore. The Company is currently listed on Karachi and Lahore stock exchanges in Pakistan. The principal business of the Company is manufacturing and sale of cloth. 2. SIGNIFICANT ACCOUNTING POLICIES 2.1. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of Companies Ordinance, 1984 or the requirements of the said directives take precedence. 2.2. ACCOUNTING CONVENTION These accounts have been prepared under the historical cost convention modified by revaluation of free hold land referred in policy note 2.5 and other modifications as required by International Accounting Standards referred to in the accounting policies given below. 2.3. EMPLOYEE BENEFITS Defined contribution plan The company operates unapproved funded contributory provident fund for all its employees who have completed minimum qualifying period of service as defined under the respective scheme. Equal monthly contributions are made both by the Company and the employees at the rate of 8.33% of basic salary. 2.4. TAXATION Current The charge for current taxation is based on taxable income at the current rate of taxation after taking into account applicable tax credit, rebates and exemption available, if any or minimum taxation at the rate of 0.5 percent of the turnover whichever is higher. However, for income covered under final tax regime, taxation is based on applicable tax rates under such regime. Deferred Deferred tax is provided using the liability method for all temporary differences at the balance sheet date between tax bases of assets and liabilities and their carrying amount for financial reporting purposes. In this regard the effects on deferred taxation of the portion of income subject to final tax regime is also considered in accordance with the requirement of 'Technical Release -27 issued by the Institute of Chartered Accountants of Pakistan. Deferred income tax assets is recognised for all deductible temporary differences and carry forward of unused tax losses, if any, to the extent that it is probable that taxable profit will be available against which such temporary differences and tax losses can be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statements, except in the case of items credited or charged to equity in which case it is included in equity. 2.5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment except freehold land and capital work in progress are stated at cost less accumulated depreciation and impairment in value, if any. Freehold land is stated at revalued amount. Capital work in progress and stores held for capital expenditure are stated at cost less impairment loss, if any. Cost also includes borrowing cost as referred in relevant accounting policy. Depreciation is charged to income applying the reducing balance method over the estimated useful life at the rates specified in property, plant and equipment note. International Accounting Standard (IAS) 16, "Property, plant and equipment (revised 2003)" is applicable to financial statements covering annual periods beginning on or after January 1, 2005 and requires a review of residual value of assets, useful lives and depreciation method at each financial year end. Accordingly, based on a review of the above, the management has revised the following: Depreciation on additions is now charged from the month the asset is available for use while no depreciation is charged in the month in which the asset is disposed off. Previously, full years depreciation was charged in the year of acquisition while no depreciation was charged in the year of disposal. The above revisions have been accounted for as changes in accounting estimates in accordance with the requirements of International Accounting Standard (IAS) 8, "Accounting Policies, Changes in Accounting Estimates and Errors". Accordingly, the effect of these changes in accounting estimates has been recognised prospectively in the profit and loss account of the current year. Had there been no change in these estimates, the profit before taxation would have been lower by Rs 6.5 million. The company during the current year has revalued its land from Rs 15 million to Rs 81.7 million as mentioned in note 4. This change in accounting has been applied prospectively as per provisions of IAS 8 and IAS 16. The assets' residual values and useful lives are reviewed at each financial year end, and adjusted if impact on depreciation is significant. Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements are capitalised and the assets so replaced, if any, are retired. Gain or loss on disposal of property, plant and equipment are taken to profit and loss account. All expenditure connected with specific asset incurred during installation and construction period are carried under capital work in progress. These are transferred to specific asset as and when these assets are available for use. 2.6. INTANGIBLE ASSETS Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is recorded when these assets are available for use using straight line method whereby the cost of an intangible asset is written off over its estimated useful life. 2.7. ACCOUNTING FOR FINANCE LEASE Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Assets held under finance leases are recognised as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lesser is included in the balance sheet as liabilities against assets subject to finance lease. Lease payments are appropriated between finance charges and reduction of the liabilities against assets subject to finance lease so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company's general policy on borrowing costs. Assets so acquired are amortised over their expected useful life at the rates specified in property, plant and equipment note. 2.8. FOREIGN CURRENCIES Transactions in currencies other than Pakistani rupees are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date except where forward exchange contracts have been entered into wherein the rates contracted for are used. Gains and losses arising on retranslation are included in net profit or loss for the period. 2.9. BORROWING COSTS Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying asset is deducted from the borrowing costs eligible for capitalisation. All other borrowing cost are recognised in profit or loss in the period in which they are incurred. 2.10. INVESTMENTS Investment in equity instruments of associated companies. These investments are initially valued at cost. At subsequent reporting dates, the Company reviews the carrying amount of the investment to assess whether there is any indication that such investments have suffered an impairment loss. If such indication exists, the recoverable amount is estimated in order to determine the impairment loss, if any. The company during the current year, in pursuance of change in International Accounting Standard 28 Investment in Associates" has changed its accounting policy for investment in associates from cost method to equity method. The equity method is a method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee. The profit or loss of the investor includes the investor's share of the profit or loss of the investee. Such a change in accounting policy has been accounted for retropectively and comparative statements restated in accordance with International Accounting Standard 8: "Accounting Policies, Changes in Accounting Estimates and Errors". Had there been no change the investment in associates would have been lower by Rs 58.90 million, opening retained earnings lower by Rs 35.20 million and current year profit lower by Rs 23.70 million. For investment in listed securities, closing quotations of stock exchange on last working day of the accounting year is used for determining fair value. All investments are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the company has transferred substantially all risks and rewards of ownership. 2.11. TRADE DEBTS AND OTHER RECEIVABLES Trade debts and other receivables are carried at original invoice amount less an estimate made for doubtful receivables based on review of outstanding amounts at period end. Balance considered bad and irrecoverable are written off when identified. 2.12. CASH AND CASH EQUIVALENTS Cash and cash equivalents are carried at cost in the balance sheet. For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand, demand deposits, other short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value and short term running finances under mark up arrangements. In the balance sheet, finances under mark up arrangements are included in current liabilities. 2.13. LOANS AND BORROWINGS Loans and borrowings are recorded at the proceeds received. Financial charges are accounted for on an accrual basis and are included in markup accrued on loans and other payables to the extent of amount remaining unpaid, if any. 2.14. TRADE AND OTHER PAYABLES Liabilities for trade and other payables are carried at their cost which is the fair value of the consideration to be paid in the future for goods and services received whether billed to the Company or not. 2.15. FINANCIAL INSTRUMENTS Financial assets and liabilities are recognised at the fair value of the consideration given or received at the time when the Company becomes a party to the contractual provisions of the instrument by following the trade dated accounting. A financial asset or part thereof is de-recognised when the Company loses control of the contractual rights that comprises the financial asset or part thereof. Such control is deemed to be lost if the Company realises the rights to the benefits specified in the contracts, the right expire or the Company surrenders those rights. A financial liability or part thereof is removed from the balance sheet when it is extinguished i.e. when the obligation specified in the contract is discharged, cancelled or expired. A financial asset and financial liability is offset and the net amount reported in the balance sheet, if the company has a legal enforceable right to set off the transaction and also intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Any gain or loss on subsequent measurement and de-recognition is accounted for in profit and loss account. The particular recognition methods adopted by the Company are disclosed in the individual policy statements associated with each item of financial instruments. 2.16. STORES AND SPARES These are valued at moving average cost except goods in transit, which are valued at cost comprising invoice value plus other charges incurred thereon. 2.17. STOCK IN TRADEf These are valued at the lower of cost and net realisable value applying the following basis: Raw material Weighted average Work in process Average manufacturing cost Finished goods Average manufacturing cost Packing material Weighted average Waste Net realisable valueRaw material in transit are stated at invoice price plus other charges paid thereon up to the balance sheet date. Average manufacturing cost in relation to work in process and finished goods, consists of direct material and labor and a proportion of manufacturing overheads based on normal capacity. Net realisable value signifies the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. 2.18. REVENUE RECOGNITION Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivables for goods and services provided in the normal course of business. -- Export sales are accounted for on shipment basis and exchange difference if any on account of export proceeds are adjusted in the period of realisation. -- Local sales are recorded on dispatch of goods to customers. -- Rebate income is recognised on accrual basis. -- Dividend income is recognised when the Company's right to receive payment is established. -- Interest income is recognised on time proportion basis. 2.19. PROVISIONS Provisions are recognised when the Company has a present, legal or constructive obligation as a result of past events, it is probable that an out flow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 2.20. RELATED PARTY TRANSACTIONS Transactions with related parties are priced on arm's length basis. Prices for these transactions on the basis of comparable uncontrolled price method, which sets the price by reference to comparable goods and services sold in an economically comparable market to a buyer unrelated to the seller. 2.21. IMPAIRMENT The carrying amounts of the assets are reviewed at each balance sheet date to determine whether there is any indication of impairment of any asset or group of assets. If any such indication exits, the recoverable amount of that asset or group of assets is estimated and impairment losses are recognised in the profit and loss account. 3. ISSUED SUBSCRIBED AND PAID-UP CAPITAL Issued, subscribed and paid-up: ==============================================================================================
2006 2005 2006 2005
Number of shares Rupees Rupees
==============================================================================================
13,364,000 13,364,000 Ordinary shares of Rs 10/-
each fully paid in cash 133,640,000 133,640,000
13,364,000 13,364,000 133,640,000 133,640,000
==============================================================================================4. SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENTThis represents surplus over book value resulting from revaluation of freehold land as referred in note 14.1. It can only be utilised in the manner specified in section 235 of the Companies Ordinance, 1984. 5. SUBORDINATED LOAN - UNSECURED ========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Opening balance 133,072,075 105,272,075
Add: obtained during the period - 27,800,000
133,072,075 133,072,075
========================================================================================These are interest free loans from directors of the Company and are subordinated.6. LONG TERM FINANCES - SECURED ========================================================================================
2006 2005
Notes Rupees Rupees
========================================================================================
From banking companies 6.2 130,318,090 204,688,091
LESS: CURRENT PORTION:
Overdue for the period - 8,821,187
Payable within next twelve months 12 64,957,458 64,958,458
65,360,632 130,908,446
========================================================================================6.1. The aggregate unavailed long term financing facilities available amounted to Rs Nil (2005: Rs Nil).6.2. DESCRIPTION ===============================================================================================================================================================
Amount Interest Security Payment Terms
(Rupees)
===============================================================================================================================================================
National Bank of Pakistan 76,463,293 Six month average First charge over fixed assets of the Ten half yearly instalments,
Demand finance -1 KIBOR ask rate plus Company for Rs 340 million and commencing from April 30, 2004
2.2% per annum. personal guarantee of Mr Sarmad Amin
Askari Commercial Bank Ltd 14,000,000 6 month KIBOR + 1.8% First parri passu charge over fixed assets Six half yearly instalments,
Term finance with floor of 9% per annum of the Company for Rs 60 million and commencing from July 22, 2004.
Habib Bank Limited 15,206,040 6 month 1- Bill + 300bp First pari passu charge over fixed asset The loan is repayable in sixteen
Demand finance - 2 Floor 4.0 % p.a of the Company for Rs 60 million and quarterly instalments,
Allied Bank Limited 24,648,757 Three month average First pari passu charge to the extent of Eight half yearly instalments,
Demand finance -3 KIBOR pIus 2% per annum. Rs 60 million with 33% margin on commencing from March 17, 2005.
present and future fixed assets by way of
Total 130,318,090
===============================================================================================================================================================7. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASEThis represents plant and machinery obtained under finance lease from various leasing companies. The financing rate used as discounting factor ranges from 10 % to 12.29% (2005: 10% to 10.805%) per annum. Taxes, repairs, replacements and insurance costs are born by the company. The company intends to exercise its option to purchase the above assets upon completion of lease period. ========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Present value of minimum lease payments 145,281,581 110,714,257
Less: current portion 12 (26,562,967) (5,435,553)
118,718,614 105,278,704
========================================================================================7.1. The reconciliation between gross minimum lease payments, future financial charges and present value of minimum lease payments is as under:========================================================================================
2006 2005
Rupees Rupees
========================================================================================
GROSS MINIMUM LEASE PAYMENTS:
Not later than one year 40,473,536 16,258,292
Later than one year but not later than five years 140,415,423 127,599,119
180,888,959 143,857,411
LESS: FINANCE CHARGES ALLOCATED TO FUTURE PERIOD:
Not later than one year 13,920,165 9,191,460
Later than one year but not later than five years 21,687,213 23,951,694
35,607,378 33,143,154
Present value of minimum lease payments
Not later than one year 26,562,967 5,435,553
Later than one year but not later than five years 118,718,614 105,278,704
145,281,581 110,714,257
Less: current portion (26,562,967) (5,435,553)
118,718,614 105,278,704
========================================================================================8. DEFERRED LIABILITIES========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Staff gratuity 8.1 2,336,000 3,046,750
2,336,000 3,046,750
========================================================================================8.1. The company had operated an unfunded gratuity scheme up to the year ended September 30, 1999 covering all its employees who had completed prescribed qualifying period of service.The unfunded gratuity scheme has been substituted by Provident Fund scheme operated by the company for all employees as defined in note 2.3. This balance of gratuity payable represents the entitlement of current employees as at September 30, 1999, as reduced by the payments made to employees who have left the Company. 9. TRADE AND OTHER PAYABLES ========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
CREDITORS:
- for goods 46,362,717 83,914,827
- for supplies 8,365,710 8,997,129
- for services 10,010,792 6,403,897
64,739,219 99,315,853
Accrued expenses 38,565,729 32,639,238
Advances from customers 348,589 2,122,912
Security deposits 1,063,630 1,063,630
Withholding tax payable 1,451,093 1,483,748
Workers' profit participation fund 9.1 23,303,616 20,161,158
Provident fund payable 105,038 245,190
Due to associated undertakings 24,475,020 -
Unclaimed dividend 2,160,533 2,160,533
131,737,447 183,667,282
========================================================================================9.1. WORKERS' PROFIT PARTICIPATION FUND========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Opening balance 20,161,158 18,370,076
Interest on funds utilised in 9.2 2,620,951 1,791,082
the company's business
Amount allocated during the year - 521,507
23,303,616 20,161,158
========================================================================================9.2. Interest on workers' profit participation fund has been provided @ 13% per annum (2005: 13% per annum).9.3. The company retains workers' participation funds for its business operations and pays interest at prescribed rate under the companies profit (Workers' Participation Act, 1968). 9.4. Company disposed off shares of Kohinoor Weaving Mills Ltd during the year. Now it is not an associated company as at June 30, 2006. The maximum aggregate balance as at the end of any month during the year was Rs 39.4 million (2005: 39.63 million). 10. MARK-UP ACCRUED ON LOANS AND OTHER PAYABLES ========================================================================================
2006 2005
Rupees Rupees
========================================================================================
MARK-UP ACCRUED ON SECURED:
Long term financing 3,103,283 5,332,056
Liabilities against assets subject to finance lease 1,106,392 1,185,240
Short term borrowings 16,543,562 18,422,276
20,753,237 24,939,572
========================================================================================11. SHORT TERM BORROWINGS - SECURED========================================================================================
2006 2005
Notes Rupees Rupees
========================================================================================
FROM BANKING COMPANIES:
Pre-shipment - own sources 11.2 309,344,000 321,887,520
Pre-shipment - dollar financing 11.3 47,070,541 85,380,268
Cash finance 11.4 256,578,713 227,867,525
612,993,254 635,135,313
========================================================================================11.1. The aggregate unavailed short term borrowing facilities available amounted to Rs 58 million (2005: Rs 34) million.11.2. These are secured against first joint pari passu charge on current assets, second joint pari passu charge on fixed assets of the Company, lien on confirmed export orders and personal guarantee of the sponsoring director of the Company and carry markup at the rate, ranging from one to six months KIBOR plus 1.5% to 4% per annum (2005: KIBOR plus 1.5% to 2% per annum). The facilities expire on various dates on or after September 30, 2006. 11.3. These are secured against first joint pari passu charge on current assets for Rs 120 million and personal guarantee of sponsoring director of the Company and carries markup at the rate of six month LIBOR plus 1.5% to 3% per annum (2005: LIBOR plus 2% to 3% per annum) These facilities expire on and after September 30, 2006. 11.4. The facility is secured against first joint pari passu charge over present and future assets of the Company for Rs 295 million and personal guarantee of sponsoring directors of the Company and carry markup at the rate of six month KIBOR average ask rate plus 2.2% per annum (2005: six month KIBOR average ask rate plus 2.2% per annum). The facility expires on September 30, 2006. 12. CURRENT PORTION OF LONG-TERM FINANCES ========================================================================================
2006 2005
Notes Rupees Rupees
========================================================================================
Long term finances 6 64,957,458 73,779,645
Liabilities against assets
subject to finance lease 7 26,562,967 5,435,553
91,520,425 79,215,198
========================================================================================13. CONTINGENCIES AND COMMITMENTS13.1. CONTINGENCIES (i) The Company through APTMA has obtained a stay order against levy of central excise duty on advances by financial institutions. The case was decided in high court in favour of the Company. Since the case is pending for decision in Honourable Supreme Court of Pakistan. Therefore the amount deducted in this respect amounting to Rs 4,367,366 (2005: Rs 4,367,366) has been treated as excise duty receivable. (ii) A suit for declaration with consequential relief and damages has been filed against Samin Textiles Ltd to challenge the purchase of land at Rousa Kasur. The same is pending adjudication before civil judge. (iii) Guarantees of Rupees 25 million (2005: 25 million ) have been given by the banks of the company to Sui Northern Gas Pipelines Company Limited against gas connection and collector of customs. 13.2. COMMITMENTS (i) Commitments against foreign bills purchased by bank is Rs 91 million (2005: Rs 28.805 million). (ii) Commitment against irrevocable letters of credit for import of stores and spares is Rs 2.46 million (2005: Rs 8.457 million)and against plant & machinery is 25.76 million (2005: Nil). 14. PROPERTY, PLANT AND EQUIPMENT ================================================================================================================================================================
COST DEPRECIATION Written down
As at Additions/ Revaluation As at As at As at value as on
July (Deletions)/ Surplus/ June Rate July 01, For the year/ June June
Description 01, 2005 Transfer in (Transfer from) 30, 2006 % 2005 Adjustment 30, 2006 30, 2006
Rupees
================================================================================================================================================================
COMPANY OWNED:
Freehold land 15,100,263 - 66,649,737 81,750,000 - - - 81,750,000
Building on freehold land 116,460,612 3,268,229 - 119,728,841 10 47,295,201 7,141,741 54,436,942 65,291,899
Plant and machinery 705,788,404 70,780,518 - 739,788,959 10 296,076,880 41,423,330 320,529,684 419,259,275
(36,779,963) - (16,970,526)
Furniture and fixtures 4,267,518 779,855 - 5,047,373 10 2,023,976 256,408 2,280,384 2,766,989
Office equipment 13,703,907 1,643,711 - 15,347,618 10 5,542,495 884,254 6,426,749 8,920,869
Vehicles 15,285,660 9,944,882 - 22,663,790 20 5,371,637 2,030,212 5,881,362 16,782,428
(2,566,752) - (1,520,487)
Electric installation 9,888,703 1,337,945 - 11,226,648 10 6,624,744 347,749 6,972,493 4,254,155
Tube well 786,423 - - 786,423 10 445,488 34,094 479,582 306,841
Arms and ammunition 5,500 - - 5,500 10 3,859 164 4,023 1,477
881,286,990 87,755,140 66,649,737 996,345,152 363,384,280 52,117,952 397,011,219 599,333,933
(39,346,715) (18,491,013)
ASSETS HELD UNDER FINANCE LEASE:
Plant and machinery 44,996,269 65,629,091 - 110,625,360 10 4,006,659 7,107,913 11,114,572 99,510,788
44,996,269 65,629,091 - 110,625,360 - 4,006,659 7,107,913 11,114,572 99,510,788
Capital work in progress -
Plant and machinery - 46,688,469 - 46,688,469 - - - - 46,688,469
Powerhouse 81,481,035 37,606,545 (119,087,580) - - - - - -
Building and civil work 2,588,748 - (2,588,748) - - - - - -
84,069,783 84,295,014 (121,676,328) 46,688,469 - - - - 46,688,469
June 30, 2006 1,010,353,042 237,679,245 66,649,737 1,153,658,981 - 367,390,939 59,225,865 408,125,791 745,533,190
(39,346,715) (121,676,328) - (18,491,013)
June 30, 2005 899,034,776 115,809,156 27,361,017 1,010,353,042 - 322,353,999 45,036,941 367,390,940 642,962,102
(4,490,890) (27,361,017)
================================================================================================================================================================14.1. SURPLUS ON REVALUATION OF FIXED ASSETS========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
LAND:
Opening balance without revaluation 15,100,263 15,100,263
Add: Surplus on revaluation of land 4 66,649,737 --
Closing revalued balance 81,750,000 15,100,263
========================================================================================14.1.1. Revaluation of land was carried out by an independent valuer M/s UNIT - 3 consultants as on March 15, 2006 on the basis of market value, especially in forced sale situation.Had there been no revaluation the carrying amount of the land would have been lower by Rs 66.6 million. 14.2. DEPRECATION FOR THE PERIOD HAS BEEN ALLOCATED AS UNDER ========================================================================================
2006 2005
Notes Rupees Rupees
========================================================================================
Cost of goods sold 28 56,054,991 42,443,631
Administrative expenses 31 3,170,874 2,593,311
59,225,865 45,036,942
========================================================================================14.3. DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT===========================================================================================================================================================
Proceeds Gain on
from disposal disposal of
of property, property,
Accumulated Written down plant and plant and Mode of
Description Cost depreciation value equipment equipment disposal Particulars of buyer
===========================================================================================================================================================
PLANT AND MACHINERY:
Transformer (1500KVA) 1,410,000 315,488 1,094,512 1,050,000 (44,513) Negotiation Shafi Spinning Mills Ltd
Feroz Watwan, Faisalabad.
Transformer (1500KVA) 1,725,000 519,872 1,205,128 1,150,000 (55,128) Negotiation Habib Haseeb Spinning Mills Ltd
1st Floor, Sehgal Plaza, St No 1,
Montgomery Bazar, Faisalabad.
Transformer (1500KVA) 1,350,000 302,063 1,047,937 1,000,000 (47,938) Negotiation Chiragh Textiles Ltd
Flat No 10, 2nd Floor, Shan Arcade,
Barkat Market,
New Garden Town, Lahore.
H.T. PANNELS 375,000 83,906 291,094 300,000 8,906 Negotiation Zypher Textiles Limited
IEP Building Liberty, Market, Lahore.
Compressor 2,300,000 853,846 1,446,154 1,423,375 (22,779) Negotiation Faisal Fabrics Ltd
1-KM Khurianwala Jaranwala
Road, Lahore.
Looms 26,573,748 13,152,459 13,421,289 12,756,267 (665,022) Negotiation ACS Textiles Ltd
Plot # 1-D, Road No 10, Block K,
Baridhara Dhaka, Bangladesh.
Electric Pannels 1050,000 736,745 313,255 855,000 541,745 Negotiation Highnoon Laboratones Ltd
175 Km, Multan Road, Lahore.
Boiler 1,407,715 1,006,147 401,568 850,000 448,432 Negotiation Aims Boiler House.
Street #5, Brandreth Road, Lahore.
Generator 588,501 - 588,501 588,501 - Replacement Pak Electron Limited
14-KM, Ferozepur Road, Lahore.
VEHICLES:
LRD-2999 1,010,310 617,178 393,132 450,000 56,868 Negotiation Mr Farrukh Saleem
House #50/4 Habibullah Raod,
Garhi Shahu, Lahore.
LRC-3000 I 1,213,000 674,751 538,249 750,000 211,751 Negotiation Mr Waseem Ahmed
76-B/3, Gulberg Ill, Lahore.
LRE-3511 343,442 228,558 114,884 250,000 135,116 Negotiation Mr M. Jamil Qadri
House #3 Rawan Street,
Rehmanpure lchra, Lahore.
June 30, 2006 39,346,715 18,491,013 20,855,703 21,423,142 567,439
June 30, 2005 4,490,890 2,856,027 1,634,863 2,210,000 575,137
===========================================================================================================================================================15. INTANGIBLE ASSETS-EXPORT QUOTA========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Opening balance - 7,881,715
Add: Purchased during the period - 14,377,321
- 22,259,036
Less: Amortisation for the period 30 - (22,259,036)
========================================================================================16. INVESTMENT IN ASSOCIATE========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
UNQUOTED:
Security General Insurance Company Limited
2,437,541 (2005: 2,437,541) shares of Rs 10 each 73,968,831 50,170,183
Less: Transferred to current assets 24 (73,968,831) -
- 50,170,183
========================================================================================16.1. The company holds 20.14% (2005: 20.14%) of the investee's total equity.========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Opening balance 50,170,183 39,085,482
Share of income from associate 28,673,730 13,300,647
Dividend received (4,875,082) (2,215,946)
73,968,831 50,170,183
========================================================================================16.2. The summarised unaudited results of the company's associate for the year ended June 30, 2006 and its assets and liabilities as at that date are as follows.========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Total assets 1,014,367,168 691,620,813
Total liabilities 647,184,482 442,575,069
Revenue 97,755,911 131,418,978
Profit after tax 142,372,046 66,040,948
========================================================================================17. LONG TERM DEPOSITS========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Long term deposits 17.1 6,254,259 2,254,259
========================================================================================17.1. Long term deposits represent security deposits against the finance leases.18. STORES, SPARES AND LOOSE TOOLS ========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Stores and spares 18.1 38,102,050 32,162,711
38,102,050 32,162,711
========================================================================================18.1. Stores and spares include items which may result in fixed capital expenditures but are not distinguishable.19. STOCK IN TRADE ========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Raw materials 67,133,890 88,556,404
Work in process 9,176,019 8,841,759
Finished goods 19.1 275,600,005 273,251,170
351,909,914 370,649,333
========================================================================================19.1. This includes goods in transit amounting to Rs 58,518,517 (2005: Rs 40,928,584)19.2. No stock was pledged as on June 30, 2006. 19.3. No stock is carried at net realised value. 20. TRADE DEBTS ========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Export - secured against export 76,856,552 127,301,891
documents and considered good
- Local- unsecured but considered good 71,041,644 80,115,920
147,898,196 207,417,811
========================================================================================21. LOANS AND ADVANCES========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
ADVANCES TO:
Staff - secured 1,251,306 570,058
Suppliers - unsecured but considered good 11,981,662 25,690,661
Letters of credit 177,852 170,440
Advance income tax 34 17,749,337 7,709,906
31,160,157 34,141,065
========================================================================================22. TRADE DEPOSITS========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Security deposits 2,904,063 2,767,463
========================================================================================23. OTHER RECEIVABLES - UNSECURED BUT CONSIDERED========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Export rebate receivable 2,030,602 10,322,666
Excise duty receivable 4,367,366 4,367,366
Other receivables 635,380 1,185,725
7,033,348 15,875,757
========================================================================================24. OTHER FINANCIAL ASSETS========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Kohinoor Weaving Mills Limited
(Associated company by 24.1 - 21,560,000
virtue of common directorship)
INVESTMENT IN ASSOCIATE:
- Security General insurance Limited 16, 24.2 73,968,831
73,968,831 21,560,000
========================================================================================24.1. During the year Kohinoor Weaving Mills Limited ceased to associated undertaking as the company disposed off its share holding in Kohinoor Weaving Mills Limited.24.2. The company intends to dispose off its share holding in Security General Insurance Limited within the next financial year. 25. TAXATION ========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Sales tax refundable 21,189,030 39,318,245
========================================================================================26. CASH AND BANK BALANCES========================================================================================
2006 2005
Rupees Rupees
========================================================================================
CASH WITH BANKS ON:
- current accounts 7,894,783 32,432,699
- PLS accounts 3,909,860 2,861,492
- escrow account 187,117 187,117
- foreign currency accounts(US$: 18,132.79) 1,076,906 1,081,841
13,068,666 36,563,149
Cash in hand 1,242,720 1,443,030
14,311,386 38,006,179
========================================================================================26.1. The effective markup rate in respect of PLS and foreign currency account ranging from 0.5% to 3%. (2005: 0.5% to 2%).27. SALES - NET ========================================================================================
Nine months
Year ended ended
June 30, 2006 June 30, 2005
Rupees Rupees
========================================================================================
EXPORT:
Cloth 946,748,826 738,192,627
Rebate 830,973 11,210,627
947,579,799 749,403,254
LOCAL - GROSS:
Cloth 673,612,260 612,884,568
Waste/commercial sizing 13,092,137 10,516,100
686,704,397 623,400,668
1,634,284,196 1,372,803,922
Sales tax - (73,011,515)
Commission (20,397,714) (18,224,528)
(20,397,714) (91,236,043)
1,613,886,482 1,281,567,879
========================================================================================28. COST OF GOODS SOLD========================================================================================
2006 2005
Notes Rupees Rupees
========================================================================================
Raw materials consumed 28.1 1,125,551,276 885,933,556
Power and fuel 70,629,246 86,290,081
Stores, spares and loose tools consumed 102,353,721 76,146,733
Salaries, wages and other benefits 28.2 50,285,103 32,382,440
Processing charges 7,810,351 5,515,511
Repair and maintenance 4,024,957 2,807,085
Communication 279,095 363,779
Insurance 2,977,963 2,126,710
Depreciation 56,054,991 42,443,630
Traveling and conveyance 684,845 288,455
Other expenses 5,101,263 4,311,948
1,425,752,810 1,138,609,928
ADJUSTMENT OF WORK IN PROCESS:
Opening work in process 8,841,759 4,892,181
Closing work in process (9,176,019) (8,841,759)
(334,260) (3,949,578)
1,425,418,550 1,134,660,350
ADJUSTMENT OF FINISHED GOOD:
Opening stock 273,251,170 284,065,853
Fabric purchases - 1,945,296
Closing stock (275,600,005) (273,251,170)
(2,348,835) 12,759,979
1,423,069,715 1,147,420,329
========================================================================================28.1. RAW MATERIALS CONSUMED========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Opening stock 88,556,404 70,024,061
Purchases 1,104,128,762 904,465,899
1,192,685,166 974,489,960
Closing stock (67,133,890) (88,556,404)
1,125,551,276 885,933,556
========================================================================================28.2. This includes employees' benefits amounting to Rs 1,104,526 (2005: Rs 875,740).29. OTHER OPERATING INCOME ========================================================================================
2006 2005
Rupees Rupees
========================================================================================
INCOME FROM FINANCIAL ASSETS:
Profit on PLS and foreign currency accounts 359,544 188,187
Foreign currency translation differences 1,006,558 -
INCOME FROM INVESTMENTS IN RELATED PARTIES:
Kohinoor Genertek Limited - 604,091
Profit on realisation of investment 1,398,475 --
INCOME FROM ASSETS OTHER THAN FINANCIAL ASSETS:
Reversal of provision 6,592,893 -
Gain on disposal of property, plant and equipment 567,440 575,137
9,924,910 1,367,415
========================================================================================30. DISTRIBUTION COST========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Salaries and other benefits 6,512,967 4,348,171
Outward freight 41,178,407 44,427,052
Cloth export expenses 752,959 914,483
Travelling and conveyance 4,973,186 3,257,495
Communication 1,213,259 1,026,897
Vehicle running and maintenance 282,574 193,154
Amortisation of intangible assets 15 - 22,259,036
Other selling expenses 3,456,326 1,679,022
58,369,678 78,105,310
========================================================================================30.1. This includes employees' benefits amounting to Rs 206,409 (2005: Rs 172,537).31. ADMINISTRATIVE EXPENSES ========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Salaries, wages and other benefits 31.1 10,063,713 5,896,852
Office rent 465,000 315,000
Repair and maintenance 291,863 123,108
Insurance 713,236 429,575
Printing and stationery 60,975 37,010
Communication 179,298 174,989
Electricity, gas and water 920,714 409,304
Traveling and conveyance 1,293,736 594,462
Entertainment 122,050 72,905
Fee and subscription 1,007,153 271,110
Legal and professional 1,111,215 529,000
Vehicle running and maintenance 425,552 313,515
Auditors' remuneration 31.2 200,000 175,000
Depreciation 14.2 3,170,874 2,593,311
Miscellaneous 1,154,878 777,965
21,180,257 12,713,106
========================================================================================31.1. This includes employees' benefits amounting to Rs 252,479 (2005: Rs 193,923).31.2. AUDITORS' REMUNERATION ========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Audit fee 125,000 125,000
Half yearly review 50,000 25,000
Certificate on code of corporate governance 25,000 25,000
200,000 175,000
========================================================================================32. OTHER OPERATING EXPENSES========================================================================================
2006 2005
Notes Rupees Rupees
========================================================================================
Workers' profit participation fund 9.1 521,507 --
Interest on workers' profit participation fund 9.1 2,620,951 1,791,082
Foreign currency translation differences - 8,162,017
Donations 32.1 529,080 40,000
3,671,538 9,993,099
========================================================================================32.1. No director or his spouse had any interest in the donee.33. FINANCE COST ========================================================================================
2006 2005
Rupees Rupees
========================================================================================
MARK UP ON SECURED:
Long term finances 19,168,935 14,063,456
Liabilities against assets subject to finance lease 8,483,437 2,496,411
Short term finances 68,537,695 30,440,646
Bank charges and others 7,825,715 7,116,805
104,015,782 54,117,318
========================================================================================34. TAXATION========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
TAX DEDUCTED AT SOURCE:
Opening balance 7,709,906 6,689,838
During the period 17,116,347 13,770,178
24,826,253 20,460,016
PROVISION FOR TAXATION:
Charge for the period (12,526,720) (12,750,110)
Prior year 5,449,804 -
(7,076,916) (12,750,110)
Tax adjustable against future liabilities 21 17,749,337 7,709,906
========================================================================================34.1. The company has not accounted for any deferred taxation as it falls under the ambit of final tax regime u/s 154 and minimum tax payment on turnover of the company u/s 113 of the income tax ordinance 2001.Provision for income tax is made accordingly. 35. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES =================================================================================================
CHIEF EXECUTIVE DIRECTORS EXECUTIVES
June 30, June 30, June 30, June 30, June 30, June 30,
2006 2005 2006 2005 2006 2005
Rupees
=================================================================================================
Remuneration 1,400,000 818,550 2,163,472 1,646,507 2,739,092 630,000
Utilities 140,000 163,350 230,747 164,651 273,909 63,000
House rent 560,000 368,100 850,989 658,603 1,095,637 252,000
Other allowances - - - 303,000 - 90,000
2,100,000 1,350,000 3,245,208 2,772,761 4,108,638 1,035,000
Number of person (s) 1 1 4 5 1 1
=================================================================================================35.1. In addition, Chief Executive, Directors and Executive are provided with free use of Company owned and maintained cars.35.2 Provident fund contribution are made by the Company @ 8.33% (2005: 8.33%) on the basic salary of Directors and Executive. 35.3. Chief Executive is provided with mobile phone, private security guard at resident and medical facilities. 36. EARNING PER SHARE - BASIC AND DILUTED Earning per share are calculated by dividing Profit / (Losses) after tax for the period by weighted average number of shares outstanding during the period as follows: ========================================================================================
Nine months
Year ended ended
June 30, 2006 June 30, 2005
========================================================================================
Profit/(Loss) after tax (rupees) 35,101,236 (18,863,331)
Weighted average number of ordinary shares 13,364,000 13,364,000
Earning per share-Basic and diluted 2.63 (1.41)
========================================================================================No figure for diluted earnings per share has been presented as the Company has not issued any instruments carrying options, which would have an impact on earnings per share when exercised.37. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable willing parties in an arm's length transaction. As at June 30, 2006 the net fair value of all financial instruments has been based on the valuation methodology outlined below: Non-current liabilities For all non-current liabilities, the fair values have been taken at book values as these are not considered materially different based on the current market rates of return and reprising profiles of similar non-current liabilities. Other financial instruments The fair values of all other financial instruments are considered to approximate their book values as they are short term in nature. The analysis of yield / mark-up rate risk is as under: ======================================================================================================================================================
Interest / mark-up bearing Non interest / mark-up bearing
Maturity Maturity Maturity Maturity
upto one after one up to one after one
year year Sub-total year year Sub-total Grand total 2005
Rupees
======================================================================================================================================================
FINANCIAL ASSETS:
Trade debts - - - 147,898,196 - 147,898,196 147,898,196 207,417,811
Trade deposits - - - - 2,904,063 2,904,063 2,904,063 2,767,463
Other receivables - - - 635,380 - 635,380 635,380 1,185,725
Cash and bank balances 4,986,766 - 4,986,766 9324,620 . 9,324,620 14,311,386 38,006,179
4,986,766 - 4,986,766 157,858,196 2,904,063 160,762,259 165,749,025 249,377,178
FINANCIAL LIABILITIES:
Subordinated loan - - - - 133,072,075 133,072,075 133,072,075 133,072,075
Long term financing 64,957,458 65,360,632 130,318,090 - - - 130,318,090 204,688,091
Liabilities against assets
subject to finance lease 26,562,967 118,718,614 145,281,581 - - 145,281,581 110,714,257
Trade and other payable - - - 41,789,892 - 41,789,892 41,789,892 60,338,421
Mark-up accrued on loans
and other payables 20,753,237 - 20,753,237 - - 20,753,237 24,939,572
Short term borrowings 612,993,254 - 612,993,254 - - - 612,993,254 635,135,313
725,266,916 184,079,246 909,346,162 41,789,892 133,072,075 174,861,967 1,084,208,129 1,168,887,729
On balance sheet gap 2006 (720,280,150) (184,079,246) (904,359,396) 116,068,304 (130,168,012) (14,099,708) (918,459,104) (919,510,551)
On balance sheet gap 2005 (735,346,750) (236,187,150) (971,533,900) 182,327,961 (130,304,612) 52,023,349 (919,510,551) -
Off balance sheet items
Commitment against foreign
bill purchased - - -91,000,000 - - 91,000,000 91,000,000 87,997,000
Letters of credit for import of
stores and spares
and plant and machinery - - -28,226,097 - - 28,226,097 28,226,097 17,259,000
- - 119,226,097 - - 119,226,097 119,226,097 105,256,000
====================================================================================================================================================== EFFECTIVE INTEREST RATESFinancial liabilities Long term finances 10.58 to 12.11 percent per annum Liabilities against leased assets Short term running finances 6.60 to 13.43 percent per annum Financial assets Cash with banks on saving accounts 0.5 to 3 percent per annumInterest rate risk Interest rate risk arise from the possibility that changes in interest rates will affect the value of financial instruments. Changes in interest rates can adversely affect the rates charged on interest bearing liabilities. This can result in an increase in interest expense relative to financial borrowings or vice versa. The company manages its risk by maintaining a fair balance between interest rates, financial assets and financial liabilities. The effective interest rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements. Credit risk and concentration of credit risk Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties tail to perform as contracted. Out of the total financial assets of Rs 166 (2005: 249.377) million, the financial assets which are subject to credit risk amounted to Rs 71 (2005: 81.30) million. The company manages credit risk in trade receivables by limiting significant exposure to any individual customers by obtaining advance against sales. The company is exposed to credit risk on loans, advances, deposits, trade debts, and other receivables. The company seeks to minimise the credit risk exposure through dealing with customers considered credit worthy and obtaining securities where applicable. Foreign exchange risk management Foreign currency risk arises mainly where receivables and payables exist due to transactions with Foreign undertakings. However, the company is not exposed to any significant foreign currency risk. As at June 30, 2006, the total foreign currency risk exposure was Rs 77(2005: Rs 127.30) million in respect of trade debts. The Company incurs foreign currency risk on sales and purchases that are entered in a currency other than Pak Rupees. Liquidity risk Liquidity risk reflects the Company's inability in raising funds to meet commitments. The management closely monitors the Company's liquidity and cash flow position. This includes maintenance of balance sheet liquidity ratios, debtors and creditors concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual customer. 38. CASH FLOWS FROM OPERATING ACTIVITIES ========================================================================================
Nine months
Year ended ended
June 30, 2006 June 30, 2005
Rupees Rupees
========================================================================================
Profit before tax 42,178,152 (6,113,221)
ADJUSTMENTS FOR NON-CASH CHARGES
AND ITEMS PERTAINING OTHER ACTIVITIES:
Depreciation on property, plant and equipment 59,225,865 45,036,942
Gain on disposal of property, (567,440) (575,137)
plant and equipment
Gain on disposal of Investment (1,398,475) -
Share of income from associate (28,673,730) (13,300,647)
Amortisation of intangible assets - 22,259,036
Workers' profit participation fund 521,507 -
Mark-up on workers' profit participation fund 2,620,951 1,791,082
Dividend income - (604,091)
Foreign exchange differences (1,006,558) (8,162,017)
Finance cost 104,015,782 54,117,318
Operating profit before 176,916,053 94,449,265
changes in working capital
CHANGES IN WORKING CAPITAL
(INCREASE) / DECREASE IN CURRENT ASSETS:
Stores, spares and loose tools (5,939,339) (3,092,688)
Stock in trade 18,739,419 (11,667,238)
Trade debts 59,519,615 (19,114,606)
Loans and advances 13,020,339 (15,641,271)
Trade deposits (136,600) (2,024,774)
Other receivables 8,842,409 (1,615,161)
Sales tax refunded 18,129,215 33,295,145
112,175,058 (19,860,593)
INCREASE IN CURRENT LIABILITIES:
Trade and other payables (55,072,293) 8,215,521
Cash generated from operations 234,018,819 82,804,192
========================================================================================39. TRANSACTIONS WITH RELATED PARTIES========================================================================================
2006 2005
Rupees Rupees
========================================================================================
SECURITY GENERAL INSURANCE COMPANY LIMITED:
Dividend received 4,875,082 2,215,946
Nil (2005: 221,595) Bonus shares received
MUSLIM COMMERCIAL BANK LIMITED:
Interest income 19,837 9,659
PAK KUWAIT INVESTMENT COMPANY (PVT) LTD:
Rentals Paid during the year 13,528,368 -
Leased facility availed during the period. - 65,629,091
========================================================================================39.1. Transactions with related parties are carried out at arm's length price determined in accordance with comparable uncontrolled price method.39.2. ========================================================================================== Related parties Nature of relationships ========================================================================================== Areva Pakistan (Pvt) Limited Common directorship Muslim Commercial Bank Limited Common directorship Security General Insurance Company Limited Common directorship Pak Kuwait Investment Company (Pvt) Ltd 4.91% share holding in Samin Textiles Limited ==========================================================================================40. CAPACITY INSTALLED AND ACTUAL PRODUCTION ========================================================================================
2006 2005
========================================================================================
Number of looms installed 177 186
Number of looms worked 177 186
Shift per day 3 3
No of days actually worked 360 268
Rated capacity (running meters) per annum 21,443,722 17,438,181
Actual commercial production (running meters) 19,728,224 16,217,508
========================================================================================It is difficult to determine precisely the production/rated capacity in the textile industry since it fluctuates widely depending on various factors such as speed, width and construction of the cloth etc., the reasons for shortfall in production include factors like manufacturing different qualities and maintenance of equipments etc.During the year 20 old looms were sold & 11 new looms were purchased. 41. NUMBER OF EMPLOYEES ========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Number of employees at period end 592 586
========================================================================================42. DATE OF AUTHORISATION FOR ISSUEThese financial statements have been approved by the Board of Directors of the Company and authorised for issue on October 3, 2006. 43. RECLASSIFICATION Corresponding figures have been rearranged and reclassified wherever necessary to reflect more appropriate presentation of events and transactions for the purpose of comparison. Significant reclassifications made are as follows: -- Foreign currency translation differences amounting to Rs 1 million gain (2005: 8 million loss) have been included in other operating income or other operating expenses previously included in sales-net. -- Dividend income amounting to Rs 4.8 million (2005: Rs 2.2 million) have been included in the share of income from associates previously included in other operating income. 44. GENERAL Figures have been rounded off to the nearest rupee. Previous year figures of Profit and Loss account, Cash Flow Statement and Statement of Changes in Equity have been shown for nine months, therefore these are not comparable with the current year. It was due to change in the accounting year in the last year of "Cotton Textiles" from September to June vide its SRO No 684 (1) / 2004 dated August 10, 2004. |