Half Year 2016 Ver 11 - Nadeem Group · 2017-02-27 · 2016 2015 2016 2015 CONDENSED INTERIM...

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COMPANY INFORMATION

Board of Directors : Mr. Zahid Mazhar (Chief Executive)Mr. Omer Bin Zahid (Executive Director)

Mr. Hassan Bin Zahid (Executive Director)Mrs. Naila Zahid (Chairperson)Mrs. Anam Omer

Mrs. Shafia Hassan

Mr. Mehmood Siddiqi

Chief Financial Officer : Mr. Omer Bin Zahid

Company Secretary : Mr. Abdul Amin

Audit Committee : Mr. Mehmood Siddique (Chairman)Mrs. Anam Omer (Member)Mrs. Shafia Hassan (Member)

H. R. & RemunerationCommitte : Mrs. Anam Omer (Chairperson)

Mr. Hassan Bin Zahid (Member)

Mr. Mehmood Siddique (Member)

Chartered Accountants

Legal Advisor : Mr. Abdul Ghani Khan (Advocate)

Bankers : Soneri Bank LimitedJ. S. Bank LimitedBank Al-Falah LimitedSamba Bank LimitedAllied Bank LimitedAskari Bank Limited

Head Office /

Registered Office : A 801-804, Lakson Square Building No. 3,Sarwar Shaheed Road,Karachi - Pakistan.Phone : (021) 35220481-8Fax : (92-21) 35220495-6

Share Registrar : M/s Hameed Majeed Associates (Pvt.) Ltd.5th Floor, Karachi Chambers,

Hasrat Mohani Road, Karachi.

Phone : 32424826-32412754 Fax : 32424835

E-mail : [email protected]

Mills : Unit 1: A-265, S.I.T.E., Nooriabad,

District Dadu, Sindh.

Unit 2: E-11, S.I.T.E, Kotri, Sindh.

URL : www.nadeem.com.pk

Auditors : M/s. Rahman Sarfaraz Rahim Iqbal Rafiq

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DIRECTORS' REPORT

February 27, 2017Karachi:

Dear Shareholders,

The Directors of the Company take pleasure in presenting their report together with the reviewed Interim Financial Statements of the Company for the Half Year ended December 31, 2016.

OPERATING RESULTSDuring the Half Year ended December 31, 2016 the company has improved its

profitability as compared to corresponding period of last year despite of persistent

economic and political crisis and higher prices of raw cotton.

Following is the financial highlights for the period under review:

Dec. 31, 2016 Dec. 31, 2015Rs. In Million Rs. In Million

Net Sales 2,821.21 2,339.35Gross Profit 170.07 99.29Gross profit % 6.03% 4.24%Profit / (Loss) before Tax 10.41 (43.32)Profit / (Loss) after tax 5.73 (52.22)Earning per share 0.37 (4.35)

OVERVIEWDuring the period under review, the prices of yarn in local and international market have

shown some improvement but higher prices of raw cotton shrunk the profit margins.

The company managed to achieve sales turnover of Rs. 2,821 million during the Half

Year ended December 31, 2016 as compared to Rs. 2,339 million of the comparative

period showing an increase of 20.60%. The gross profit margin of the period also

increased to Rs. 170.07 million as compared to 99.28 million of the corresponding period

of last year showing an increase of 71.92%.

FUTURE OUTLOOKThe government has recently announced a textile package to boost the exports of textiles. The abolition of customs duty and sales tax on import of cotton, abolition of sales tax on import of textile machinery and duty draw back on export of textile products are some of the key factors that would help good off-take of Pakistani textile products in the international markets in near future.

The directors of the Company are committed to continue its BMR policy to improve results.

ACKNOWLEDGEMENTThe management of the Company appreciates the efforts of its employees, and continuous support of customers, suppliers and bankers.

for and on behalf of the Board of Directors

Zahid MazharChief Executive

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Introduction We have reviewed the accompanying condensed interim balance sheet of Nadeem Textile Mills Limited (“the Company”) as at 31 December 2016 and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim cash flow statement, condensed interim statement of changes in equity and notes to the condensed interim financial information for the six months period then ended (here-in-after referred to as the “condensed interim financial information”). Management is responsible for the preparation and presentation of this condensed interim 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 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 interim 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 financial information as at December 31, 2016 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 quarters ended December 31, 2016 and December 31, 2015 in the condensed interim financial information have not been reviewed by us and we do not express a conclusion on them.

AUDITOR’S REPORT TO THE MEMBERSOn Review of Condensed Interim Financial Information

Karachi:February 27, 2017

RAHMAN SARFARAZ RAHIM IQBAL RAFIQ

Engagement Partner: Muhammad WaseemChartered Accountants

Omer Bin Zahid Director

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NADEEM TEXTILE MILLS LIMITEDCONDENSED INTERIM BALANCE SHEET

AS AT DECEMBER 31, 2016

ASSETS NoteNON-CURRENT ASSETSProperty, plant and equipment 6 1,658,802,663 1,575,466,348Long term deposits 13,174,429 12,679,429

1,671,977,092 1,588,145,777CURRENT ASSETSStores, spares and loose tools 71,784,677 71,325,048Stock in trade 973,506,779 682,154,873Trade debtors - unsecured - considered good 7 442,470,054 525,539,426Short term investments - 675,167Loan and advances 15,515,130 17,835,152Deposits, prepayments and other receivable 66,392,317 62,743,228Tax refund due from government 93,034,612 42,896,163Cash and bank balances 8,566,045 16,247,564

1,671,269,614 1,419,416,621

TOTAL ASSETS 3,343,246,706 3,007,562,398

EQUITY AND LIABILITIESAuthorized capital25,000,000 (June 2016: 25,000,000) 250,000,000 250,000,000Ordinary shares of Rs. 10/- eachIssued, subscribed and paid-up capital15,619,500 (June 30, 2016: 15,619,500) ordinary shares of Rs. 10/- each 156,195,000 156,195,000Share premium 123,710,000 123,710,000Un-appropriated profits 195,575,068 182,831,184

475,480,068 462,736,184Surplus on revaluation of property, plant & equipment 8 344,170,011 351,182,709NON CURRENT LIABILITIESLong term finances - secured 141,044,465 127,729,583Deferred liabilities 9 77,384,693 86,065,171Loan from associate 281,831,284 293,056,284

500,260,442 506,851,038CURRENT LIABILITIESLoan from directors 4,800,000 4,800,000Trade and other payables 442,559,609 368,589,438Accrued mark up 24,830,358 21,627,692Short term borrowings - secured 10 1,376,809,921 1,098,964,697Current portion of long term finance 110,786,297 115,360,640Loan from associate 63,550,000 77,450,000

2,023,336,185 1,686,792,467Contingencies and commitments 11TOTAL EQUITY AND LIABILITIES 3,343,246,706 3,007,562,398

The annexed notes from 1 to 14 form an integral part of this condensed interim financial

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AuditedJun. 30, 2016

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Un-AuditedDec. 31, 2016

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Zahid MazharChief ExecutiveKarachi: February 27, 2017

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NADEEM TEXTILE MILLS LIMITEDCONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)

DECEMBER 31, 2016 FOR THE HALF YEAR AND QUARTER ENDED

Sales (net) 2,821,213,639 2,339,347,388 1,452,610,955 1,064,410,899Cost of Sales (2,651,146,236) (2,240,060,857) (1,044,933,919)

Gross Profit 99,286,531 19,476,980

Operating Expenses

Distribution costs (52,735,640) (44,933,859) (39,962,500) (30,269,655)

Current (19,905,332) (22,283,546) (8,931,284) (9,918,577)

3,863,150 3,863,150

11,365,040 11,365,040

The annexed notes from 1 to 14 form an integral part of this condensed interim financial information.

(1,367,956,835)

170,067,403 84,654,120

Administrative expenses (44,318,770) (42,095,960) (21,240,436) (19,428,761)

(97,054,410) (87,029,819) (61,202,936) (49,698,416)

Operating profit/(loss) 73,012,993 12,256,712 23,451,184 (30,221,436)

Finance costs (63,050,469) (46,908,694) (37,267,293) (29,510,128)

Other operating

(expenses)/income 445,804 (8,671,330) 1,402,251 1,017,484

(62,604,665) (55,580,024) (35,865,042) (28,492,644)

Profit / (loss) before

taxation 10,408,328 (43,323,312) (12,413,858) (58,714,080)

Taxation

Prior (26,433) (26,433)

Deferred 13,415,193 13,415,193

(4,677,142) (8,894,786) 6,296,906 3,470,183

Profit / (loss) after

taxation 5,731,186 (52,218,098) (6,116,952) (55,243,897)

Earning per share -

basic and diluted 0.37 (4.35) (0.39) (4.60)

HALF YEAR ENDED QUARTER ENDED

31-Dec-16 RUPEES

31-Dec-15RUPEES

31-Dec-16 RUPEES

31-Dec-15 RUPEES



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Profit / (loss) for the period 5,731,186 (52,218,098) (6,116,952) (55,243,897)

Other comprehensive income - - - -

Total comprehensive income

/ (loss) for the period 5,731,186 (52,218,098) (6,116,952) (55,243,897)


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For the half year endedDecember 31,

For the quarter endedDecember 31

2016 2015 2016 2015

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) DECEMBER 31, 2016FOR THE HALF YEAR AND QUARTER ENDED

NADEEM TEXTILE MILLS LIMITED

Rupees Rupees



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NADEEM TEXTILE MILLS LIMITEDCONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)

FOR THE HALF YEAR ENDED DECEMBER 31, 2016

Half ended

Dec. 31, 2016RUPEES

year Half yearended

Dec. 31, 2015RUPEES

CASH FLOW FROM OPERATING ACTIVITIESProfit / (loss) before taxation

Adjustments for non - cash and other itemsDepreciationProvision for gratuity 12,701,100 8,605,137Gain on remeasurement of investment - (6,718)Gain on disposal on property, plant and equipment (451,639) (341,369)Contribution to workers' profits participation fund 547,807 -Contribution to workers' welfare fund - -Finance cost

Operating profit before working capital changes

(Increase) / decrease in current assetsStore, spares and loose tools (459,629) (7,109,087) Stocks in trade (291,351,906) (215,640,945)Trade debts -unsecured- considered good 83,069,372 (59,529,405)Loans and advances 2,320,022 (44,413,761)Deposits, prepayments and other receivables (3,649,089) (6,532,950)

(210,071,230) (333,226,148)

(Decrease)/increase in current liabilities

Net cash generated from / (used) in operations

Taxes paid (34,353,113) (13,745,308)Gratuity paid (10,016,538) (10,684,584)Finance cost paid (59,847,803) (52,320,465)

(104,217,454) (76,750,357)

Net cash used in operating activities (90,836,882) (426,854,978)

c/f ...

10,408,328 (43,323,312)

63,773,373 56,622,797

63,050,469 46,908,694

139,621,110 111,788,541

150,029,438 68,465,229

Trade and other payables 73,422,364 (85,343,702)

13,380,572 (350,104,621)

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CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment (147,637,049) (37,141,926)(6,854,000)

Proceeds from disposal of short term investment 1,342,777Proceeds from disposal of property, plant and equipment 979,000

CASH FLOWS FROM FINANCING ACTIVITIESLong term loan acquired / (repaid) - net (48,208,209)Loan (repaid) / acquired from associate - net 5,250,000

Net decrease in cash and cash equivalents (253,031,615) (513,339,113)

Cash and cash equivalents at beginning of the period (1,115,212,261) (720,294,158)

Cash and cash equivalents at end of the period

(1,368,243,876) (1,233,633,271)

Cash and cash equivalents comprise of :

Cash and bank balances 8,566,045 6,537,040

Short term borrowings - Secured (1,376,809,921) (1,240,170,311)

(1,368,243,876) (1,233,633,271)


b/f (90,836,882) (426,854,978)

Long term deposit paid (495,000)-

470,000

Net cash used in investing activities (145,810,272) (43,525,926)

8,740,539 (25,125,000)

Net cash (used in) generated from financing activities (16,384,461) (42,958,209)

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CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE HALF YEAR ENDED DECEMBER 31, 2016

Half ended

Dec. 31, 2016RUPEES

year Half ended

Dec. 31, 2015RUPEES

year

Omer Bin ZahidDirector


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NADEEM TEXTILE MILLS LIMITEDCONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)

FOR THE HALF YEAR ENDED DECEMBER 31, 2016

Balance as at July 01, 2015 120,150,000 15,575,000 368,970,958 504,695,958

Comprehensive income for the half year ended - - (52,218,098) (52,218,098)

Balance as at December 31, 2015 120,150,000 15,575,000 316,752,860 452,477,860

Issue of shares 36,045,000 108,135,000 - 144,180,000Comprehensive loss for the half year ended - - (133,921,676) (133,921,676)

Balance as at June 30, 2016 156,195,000 123,710,000 182,831,184 462,736,184

Comprehensive loss for thehalf year ended - - 5,731,186 5,731,186

Incremental depreciation transferred from surplus on revaluation of fixed assets - net of deferred tax - - 7,012,698 7,012,698

Balance as at December 31, 2016 156,195,000 123,710,000 195,575,068 475,480,068


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UN-APPRO-PRIATED

PROFIT / (LOSS)CAPITALRESERVE

ISSUEDSUBSCRIBEDAND PAID UP

CAPITAL TOTAL

RUPEES


Omer Bin ZahidDirector


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NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED)FOR THE HALF YEAR ENDED DECEMBER 31, 2016

1 STATUS AND NATURE OF BUSINESNadeem Textile Mills Limited (the "Company") is a public listed company incorporated under the Companies Ordinance, 1984 and is quoted on the Pakistan Stock Exchange (formerly Karachi Stock Exchange). The company is in the business of manufacturing and sale of cotton yarn. The manufacturing facility of the company is located at A-265, S.I.T.E, Nooriabad and E-11,S.I.T.E, Kotri, District Dadu, Sindh. The registered business office of the company is situated at Suite A-801-804 , Lakson Square Building No-3,Sarwar Shaheed Road, Karachi.

2 BASIS OF PREPARATION2.1 Statement of compliance

These condensed interim financial information of the company for the six months period ended 31 December 2016 has been prepared in accordance with the requirements of the International Accounting Standard - 34 “Interim Financial Reporting” and the provisions of and directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions and directives issued under the Companies Ordinance, 1984 have been followed.

This condensed interim financial information is unaudited and is being submitted to the shareholders as required under section 245 of the Companies Ordinance, 1984 and the listing regulation of Pakistan Stock Exchange as required by the Code of Corporate Governance. The figures in the condensed interim financial statements for the quarter ended 31 December 2016 and 31 December 2015 have not been reviewed by the auditors.

This condensed interim financial information does not include all the information required for full annual financial statements and should be read in conjunction with the annual audited financial statements of the company as at and for the year ended June 30, 2016.

The comparative balance sheet presented in this condensed interim financial information as at December 31, 2016 has been extracted from the audited financial statements of the Company for the year ended June 30, 2016, whereas the comparative profit and loss account, statement of comprehensive income, statement of changes in equity and the cash flow statement are extracted from the unaudited condensed interim financial information for the six months period ended 31 December 2015.

2.2 Functional and presentation currencyThis condensed interim financial statements is presented in Pakistani Rupees which is the Company's functional currency.

3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies and methods of computation adopted in the preparation of this condensed interim financial statements are the same as those adopted in preparation of the annual audited financial statements of the Company as at and for the year ended 30 June 2016.

Amendments to certain accounting standards and new interpretations on approved accounting standards effective during the period were not relevent to the Company's operations and do not have any impact on the accounting policies of the Company.

4 ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of condensed interim financial statements requires management to make

judgements, estimates and assumptions that affect the accounting policies and the reported amounts of assets and liabilities, income and expenses. However, actual results may differ from these estimates.

The significant judgements made by the management in applying the accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as at and for the year ended 30 June 2016 except for change in usefull life of factory buildings and office premises resulting in downward revision of depreciation rate from 10% p.a to 5% p.a with effect from 01 July 2016 applied prospectively.The increase in profits as a result of change in estimate amounted to Rs. 13.2 million.

5 FINANCIAL RISK MANAGEMENTThe Company's financial risk management objectives and policies are consistent with

S


6 PROPERTY, PLANT & EQUIPMENT

Operating fixed assets 6.1 1,645,573,191 1,573,239,023Capital work in process 13,229,472 2,227,325

1,658,802,663 1,575,466,348

6.1 During the six months period ended 31 December 2016, the Company acquired property,

plant and equipment aggregating Rs. 136.63 million (31 December 2015: Rs.33.72 million) while property, plant and equipment with the carrying value of Rs. 0.52 million (31

December 2015: Rs. 1.55 million) were disposed off during the same period. Depreciation

charge for the period amounts to Rs. 63.77 million (31 December 2015:Rs. 56.62 million ).

7 STOCK IN TRADERaw material 691,475,358 399,860,421Work in process 40,175,286 31,753,397Finished goods 227,171,430 237,405,673Waste 14,684,705 13,135,382

973,506,779 682,154,873

8 SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENTGross surplusBalance as at 01 July 386,949,308 -Revaluation increase recognized during the period - 386,949,308Incremental depreciation transferred to retained earnings (8,033,334) -

378,915,974 386,949,308Related deferred tax charge (34,745,963) (35,766,599)

344,170,011 351,182,709

9 DEFFERED LIABILITIES

Gratuity 53,974,672 51,290,110 Deferred taxation 23,410,021 34,775,061

77,384,693 86,065,171

10 SHORT TERM BORROWINGS-SECUREDDuring the period company had obtained local financing to meet it's working capital requirements from different financial institutions. The rate of markup ranges from 8.0% to 8.5% per annum. Further the company has also obtained foreign currency loan having a rate of LIBOR plus 2.0% to 2.9% per annum. All the loans are obtained to meet the working capital requirements of the company.

11 CONTINGENCIES AND COMMITMENTS

Contingencies

Contingencies are same as disclosed in note 24 to the annual financial statements for the

year ended June 30, 2016.

11.2 CommitmentsAgainst letters of credit 437,561,277 39,500,000

Bank guarantee to Excise and Taxation department 16,025,753 14,775,753Bank guarantee to HESCO 10,290,000 10,290,000

Revolving letter of credit to Sui Southern Gas Company Limited 33,822,953 33,822,953

FBP outstanding 431,844,683 267,907,662Civil contractor 5,095,925 395,578

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12 TRANSACTIONS WITH RELATED PARTIESRelated parties comprise of associated companies, other associated undertakings, directors and key management personnel. Transactions between the Company and the

related parties are:

Transactions during the period: Electricity purchased 105,990,996 108,626,437

Rental income 10,000 -Purchase of equipment - 2,632,500Loan received 25,110,000 72,900,000

Loan repaid 50,225,000 67,650,000

Balance outstanding

Nadeem International (Private) Limited 313,550,000 327,450,000Nadeem Power Generation (Private) Limited 49,939,089 43,056,284

Loan from director 4,800,000 4,800,000

13 DATE OF AUTHORIZATION FOR ISSUE

This condensed interim financial information has been authorized by the Board of Directors for issue in their meeting held on 27-02-2017.

14 GENERALFigures have been rounded off to the nearest rupee.

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Half Year 2016 Ver 11 - Nadeem Group · 2017-02-27 · 2016 2015 2016 2015 CONDENSED INTERIM...

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