C O N T E N T S · 2016. 11. 4. · E mail: [email protected] Plant Address 52 Km Lahore Multan...

C O N T E N T S

COMPANY INFORMATION

DIRECTORS’ REVIEW

REVIEW REPORT TO MEMBERS

FINANCIAL STATEMENTS OF DOST STEELS LIMITED

BALANCE SHEET

PROFIT AND LOSS ACCOUNT

STATEMENT OF COMPREHENSIVE INCOME

CASH FLOW STATEMENT

STATEMENT OF CHANGES IN EQUITY

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

COMPANY INFORMATION

Board of Directors Mr. Jamal Iftakhar Chief Executive Officer Mr. Zahid Iftakhar Director / Company Secretary Mr. Faisal Zahid Director Mr. Bilal Jamal Director Mr. Saad Zahid Director Mr. Mustafa Jamal Director Mr. Afzal Shahzad Director

Audit Committee Mr. Faisal Zahid Chairman of Committee Mr. Bilal Jamal Member Mr. Saad Zahid Member Mr. Zahid Iftakhar Company Secretary

Chief Financial Officer Mr. Sajid Ahmed Ashrafi

Company Secretary Mr. Zahid Iftakhar

Bankers Faysal Bank Limited National Bank of Pakistan Askari Commercial Bank Limited NIB Bank Limited Bank of Khyber Pak Kuwait Investment Co. (Pvt) Ltd Faysal Bank Limited (RBS) Saudi Pak Industrial & Agricultural Investment Co. Ltd. United Bank Limited

Auditors

Rahman Sarfaraz Rahim Iqbal Rafiq

Chartered Accountants

Legal Advisor Mr. Ahmed Bilal Suite No. 3, Musa Mansion, 5 Fane Road, Behind Punjab Bar Council Building, Lahore. Ph No. +92 (0)42 37363718

Shares Registrar M/s. Your Secretary (Pvt.) Ltd., Suit no. 1020, 10th Floor, Uni Plaza, I. I. Chundrigar Road, Karachi-74200. Ph: 92 021-32428842, 32416957 / Fax: 92 021-32427790 E mail: [email protected] Registered/Head Office 101, Chapal Plaza, Hasrat Mohani Road, Karachi – 74000 Ph # 021-32412200, 32419820 Fax# 021-32412211 E mail: [email protected]

Plant Address 52 Km Lahore Multan Road Phool Nagar, Distt Kasur, Punjab

Web Presence www.doststeels.com

http://www.doststeels.com/

(Un-Audited) (Audited)

December 31, June 30,

2015 2015

Note Rupees Rupees

ASSETS

Non-Current Assets

Property, plant and equipment 7 2,195,668,999 2,028,556,530

Long term deposits 16,416,345 16,416,345

Deferred Tax Asset - -

Total Non-Current Assets 2,212,085,344 2,044,972,875

Current Assets

Advances 2,329,500 3,755,250

Tax refund due from government 845,005 736,175

Other receivable 70,200 774,882

Cash and bank balances 91,244,414 66,999

Total Current Assets 94,489,119 5,333,306

TOTAL ASSETS 2,306,574,463 2,050,306,181

EQUITY AND LIABILITIES

Share Capital and Reserves

Authorized Share Capital

320,000,000 (June 30, 2015: 70,000,000) 3,200,000,000 700,000,000

Ordinary shares of Rs. 10 each

Issued, subscribed and paid up capital 674,645,000 674,645,000

Reserves (486,767,576) (467,040,311)

Total Equity 187,877,424 207,604,689

LIABILITIES

Non-Current Liabilities

Provision for gratuity 152,309 631,559

Advance for issuance of shares-unsecured 8 241,529,066 -

Long term loans-secured 9 838,389,628 838,188,237

Markup accrued on secured loans 583,802,242 546,235,608

Total Non-Current Liabilities 1,663,873,245 1,385,055,404

Current Liabilities

Current and overdue portion of long term loans 93,120,000 93,120,000

Short term borrowings-unsecured interest free 301,886,294 337,190,367

Short term borrowings-unsecured interest bearing 39,349,127 -

Trade and other payables 20,468,373 27,335,721

Total Current Liabilities 454,823,794 457,646,088

Total Liabilities 2,118,697,039 1,842,701,492

Contingencies and Commitments 10

Total Equity and Liabilities 2,306,574,463 2,050,306,181

The annexed notes form an integral part of these financial statements

___________________ ___________________

Chief Executive Director

DOST STEELS LIMITED

CONDENSED INTERIM BALANCE SHEET

AS AT DECEMBER 31, 2015

December 31,

2015

December 31,

2014

December 31,

2015

December 31,

2014

Administrative expenses (19,726,055) (4,340,405) (16,921,636) (2,263,686)

Finance cost (58,216) - (58,216) -

Other income 57,006 48,663 39,079 21,840

Loss before taxation (19,727,265) (4,291,742) (16,940,773) (2,241,846)

Taxation - - - -

Loss after taxation (19,727,265) (4,291,742) (16,940,773) (2,241,846)

Loss per share - basic and diluted (0.292) (0.064) (0.251) (0.033)


_______________ _______________


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

DOST STEELS LIMITED

CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UNAUDITED)

FOR THE HALF YEAR ENDED DECEMBER 31, 2015

Half year ended Quarter ended

Half year ended Quarter ended

December 31, December 31, December 31, December 31,

2015 2014 2015 2014

Loss after taxation for the period (19,727,265) (4,291,742) (16,940,773) (2,241,846)

Other comprehensive income for the period - - - -

Total comprehensive loss for the period (19,727,265) (4,291,742) (16,940,773) (2,241,846)

The annexed notes form an integral part of these financial statements.

__________________ __________________


DOST STEELS LIMITED

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)


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

December 31, December 31,

2015 2014

Rupees Rupees

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before taxation (19,727,265) (4,291,742)

Adjustments for non cash items

Gain on disposal - (3,741)

Depreciation 773,641 -

(18,953,624) (4,295,483)

Working capital changes

Decrease/ (Increase) in current assets:

Advances 1,425,750 -

Other receivable 704,682 (44,236)

Decrease in current liabilities:

Trade and other payables (6,867,348) (1,303,368)

Cash outflow from working capital (4,736,916) (1,347,604)

(23,690,540) (5,643,087)

Taxes paid (108,830) (23,463)

Gratuity paid (479,250) 3,939,956

Net cash used in operating activities (24,278,620) (1,726,594)

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditure (167,886,110) -

Sale proceeds from disposal of property,plant and equipment - 130,000

Net cash (used in)/generated from investing activities (167,886,110) 130,000

CASH FLOWS FROM FINANCING ACTIVITIES

Advance against shares 241,529,066 -

Long term loans-secured 201,391

Accrued markup 37,566,634 -

Short term borrowings-interest bearing 39,349,127 -

Short term borrowings-interest free (35,304,073) 1,814,000

Net cash generated from financial activities 283,342,145 1,814,000

Net increase in cash and cash equivalents 91,177,415 217,406

Cash and cash equivalents at beginning of the period 66,999 373,956

Cash and cash equivalents at end of the period 91,244,414 591,362



DOST STEELS LIMITED

CONDENSED INTERIM CASH FLOW STATEMENT (UNAUDITED)


674,645,000 (368,955,773) 305,689,227

Loss for half year ended December 31, 2014 - (4,291,742) (4,291,742)

Balance as at December 31, 2014-restated 674,645,000 (373,247,515) 301,397,485

Loss for half year ended June 30, 2015 - (93,792,796) (93,792,796)

674,645,000 (467,040,311) 207,604,689

Loss for half year ended December 31, 2015 - (19,727,265) (19,727,265)

674,645,000 (486,767,576) 187,877,424


__________________ _______________


Balance as at July 01, 2014-restated

Balance as at June 30, 2015

Balance as at December 31, 2015

DOST STEELS LIMITED

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)


Issued,

subscribed and

paid up capital

Accumulated

loss Total

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

DOST STEELS LIMITED

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

1. THE COMPANY AND ITS OPERATIONS

2. GOING CONCERN ASSUMPTION

3. BASIS OF PREPARATION

The comparative balance sheet presented in these condensed interim financial statements as at June 30,

2015 has been extracted from the audited financial statements of the company for the year ended June 30,

2015, whereas the comparative profit and loss account, statement of comprehensive income, statement of

changes in equity and the cash flow statement for the half year ended December 31, 2014 have been

subjected to review but not audit.


These condensed interim financial statements of the Company for the half year ended December 31, 2015

have been prepared in accordance with the requirements of the International Accounting Standard 34 “

Interim Financial Reporting" and provisions of and directives issued under the Companies Ordinance, 1984

have been followed.

These condensed interim financial statements are being submitted to the shareholders as required under

section 245 of the companies Ordinance, 1984 and the listing regulations of the Stock Exchanges of

Pakistan where the company is listed.

These Condensed interim financial statements comprise of the balance sheet as at December 31, 2015 and

profit and loss account, statement of comprehensive income, statement of changes in equity and the cash

flow statement for the half year ended December 31, 2015 which have been subjected to review but not

audit.

Dost Steels Limited (the Company) was incorporated in Pakistan on March 19, 2004 as a private limited

company under the Companies Ordinance, 1984 (The Ordinance). The Company was converted into public

limited company with effect from May 20, 2006 and then listed on the Karachi Stock Exchange Limited

with effect from November 26, 2007. The registered office of the Company is situated at 101, Chapal Plaza,

Hasrat Mohani Road, Karachi 74000. The principal business of the Company includes manufacturing of

steel, direct reduced iron, sponge iron, hot briquetted iron, carbon steel, pig iron and special alloy steel in

different forms.

The Company has incurred a net loss of Rs.19.727 (2014 : Rs. 4.291) million and its accumulated losses are

Rs.486.767 (2015: Rs.467.040) million. Its current liabilities exceed its current assets by Rs.360.334

(2015:Rs.452.312) million. Further, the Company has rescheduled Rs 838 million of overdue liabilities out

of Rs.931 millions with Rs 93.120 million still outstanding. The documentation of rescheduling in the

process of being finalised.

Further, the Company is still maintaining a positive relationship with the lead agent of syndicated loan and

has also given a mandate to Invest Capital Markets Limited to make adequate plans and take necessary

actions that are required for commencement of Company's commercial operations. Therefore, the company

expects that adequate inflows will be generated in the future years which will wipe out these losses. Due to

strong chances of success of these plans, the financial statements are prepared on the basis of going concern

assumption.

4. SIGNIFICANT ACCOUNTING POLICIES

5. ESTIMATES

6. RISK MANAGEMENT

The Company's risk management objectives and policies are consistent with those disclosed in the financial

statements as at and for the year ended 30 June 2015.

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

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

the year ended 30 June 2015.

There are certain new international financial reporting standards, amendments to published standards and

interpretations that are mandatory for the accounting periods beginning on or after 01 January 2015. These

are considered not to be relevant or to have any significant effect on the company's reporting and operations

and are therefore not disclosed in these condensed interim financial statements except for IFRS 13 “Fair

Value Measurement, which the company has adopted during the period which became effective for

financial periods beginning on or after 1 January 2015. The effect of IFRS 13 ‘Fair Value Measurement’ is

disclosed in note 12 to these condensed interim financial statements. The company has applied the new fair

value measurement guidance prospectively and has not provided any comparative information for new

disclosures. Notwithstanding the above, the change had no significant impacts on the measurements of the

company's financial assets and liabilities.

Previous period's figures are re-arranged/ re-classified where necessary to facilitate comparison and are

rounded off to the nearest of rupee; appropriate disclosure is given in relevant note in case of material

rearrangement.

The preparation of condensed interim financial statements requires management to make judgments,

estimates and assumptions that effect the application of accounting policies and the reported amounts of

assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant

judgments made by management in applying the accounting policies and the key sources of estimation

uncertainty were the same as those that applied to financial statements as at the year ended 30 June 2015.

(Unaudited) (Audited)


2015 2015

7. PROPERTY, PLANT AND EQUIPMENT Note Rupees Rupees

Operating assets 7.1. 165,570,920 164,682,561

Capital work-in-progress 7.2. 2,030,098,079 1,863,873,969

2,195,668,999 2,028,556,530

7.1. Operating Assets

* Due to typographical errors land was disclosed as leasehold property in last audited financial statements.



2015 2015

7.2. CAPITAL WORK IN PROGRESS Note Rupees Rupees

Land development 13,713,987 13,212,712

Civil works 208,817,121 207,083,362

Plant and Machinery 1,342,638,103 1,219,142,419

Unallocated borrowing cost 464,928,868 424,435,476

2,030,098,079 1,863,873,969

Year ended December 31, 2015

Opening net book value 157,876,220 1,848,943 2,636,490 807,448 57,191 1,456,269 164,682,561

Additions - - - - - 1,662,000 1,662,000

Disposal - - - - - - -

Depreciation charge 138,671 197,737 121,117 4,289 311,827 773,641

Net book value as at Dec 31, 2015 157,876,220 1,710,272 2,438,753 686,331 52,902 2,806,442 165,570,920

As at Dec 31, 2015

Cost 157,876,220 2,855,829 4,057,310 2,341,448 117,252 5,601,035 172,849,094

Accumulated depreciation - 1,145,557 1,618,557 1,655,117 64,350 2,794,593 7,278,174

157,876,220 1,710,272 2,438,753 686,331 52,902 2,806,442 165,570,920

Year ended June 30, 2015

Opening net book value 157,876,220 1,848,943 2,636,490 807,448 57,191 1,582,528 164,808,820

Additions - - - - - - -

Disposal - - - - - (126,259) (126,259)

Net book value as at June 30, 2015 157,876,220 1,848,943 2,636,490 807,448 57,191 1,456,269 164,682,561

As at June 30, 2015

Cost 157,876,220 2,855,829 4,057,310 2,341,448 117,252 3,939,035 171,187,094

Accumulated depreciation - 1,006,886 1,420,820 1,534,000 60,061 2,482,766 6,504,533

157,876,220 1,848,943 2,636,490 807,448 57,191 1,456,269 164,682,561

Rate of Depreciation - 15% 15% 30% 15% 20%

ParticularsElectric

Equipments

Computers

equipmentsVehicles

OWNED

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

- - - - - - - - - - -

Office

equipments

Freehold land

*

Furniture

& fittings Total



2015 2015

Note Rupees Rupees

8. ADVANCE FOR ISSUANCE OF SHARES - Unsecured 241,529,066 -

9. LONG TERM LOANS - Secured

Secured - from banking companies

Faysal Bank Limited 9.1 143,948,806 143,948,806

Syndicate loan 9.2 737,560,822 737,359,431

Saudi Pak Industrial and Agricultural

Investment Company Limited 9.3 50,000,000 50,000,000

931,509,628 931,308,237

Current portion 93,120,000 93,120,000

Overdue portion -

93,120,000 93,120,000

838,389,628 838,188,237

9.1

a)

Percentage of TFC converted

Option 1:

Year 9th 2025 Year 10th 2026

25.00%25.00%

The Company has arranged a Murabaha Finance facility aggregating to Rs. 150 million from Faysal

Bank Limited for setting up the project and repayment of letter of credit facility. The facility is

secured against first pari passu charge by way of mortgage of movable and immovable properties of

the Company, personal guarantees of sponsors and demand promissory note in favor of the Faysal

Bank Limited. The facility was originally repayable in 8 semi annual instalments of Rs.18.75 million

commencing from 2006 but owing to operational and liquidity issues, no installment was paid.

Currently facility is renegotiated and draft agreement is made whose terms are as follows:

The two options to the syndicated members for the repayment of the unpaid markup are

following:

The Company has obtained underwriting advance against issuance of shares from the Crescent Star

Insurance Ltd (CSIL).The advance is un-secured and interest free.

Mark up will be calculated on the total outstanding amount from the date of last payment till 30th

June 2016- the assumed date of Commissioning- at the rate of 8% per annum. The total Mark up

calculated will be converted into a "Zero Coupon TFC convertible into Ordinary shares". All the

TFCs issued will be completely converted into equity/ordinary shares by 2028 as per the

following schedule:

The Conversion shall be held on the 20th Day of December each year at a discount of 5% to the

last six months weighted average price of the company shares at Karachi Stock Exchange Limited

(Now Pakistan Stock Exchange).

Option 2:

Waiver of 85% Mark up to the date of Commissioning.

b)

c) The principal repayment is made as per the repayment schedules.

9.2

9.3

The Mark-up rate effective from the date of Commissioning is 3 Month KIBOR payable in

quarterly Arrears.

The Company has arranged an aggregate finance facility of Rs. 775 million from National Bank of

Pakistan, Askari Bank Limited, NIB Bank Limited, Bank of Khyber, Pak Kuwait Investment

Company (Private) Limited and Faysal Bank Limited (former name The Royal Bank of Scotland

Limited) as syndicate loan, whereby Faysal Bank Limited is acting as agent of the syndicate. The loan

is secured against first pari passu charge by way of mortgage over the mortgaged property of the

Company, first pari passu charge over the hypothecated assets of the Company, personal guarantees

of sponsors and demand promissory note in favor of the syndicate. The facility was originally

repayable in 9 semi-annual installments of Rs.86.111 million commencing from 2006 but owing to

operational and liquidity issues, no installment was paid. Currently facility is renegotiated and draft

agreement is made whose terms are discussed above in note 9.1.

The 15% remaining mark-up would be payable within 2 years after complete payment of

restructured loan.

The Company has arranged finance facility of Rs.50 million from Saudi Pak Industrial and

Agricultural Investment Company Limited. The loan is secured against First Equitable Mortgage on

all immovable assets of the Company plus 25% margin. The loan was originally repayable in 9 semi

annual installments of Rs. 5.56 million commencing from December 2008 but owing to operational

and liquidity issues, no installment was paid. Currently facility is renegotiated and draft agreement is

made whose terms are discussed above in note 9.1.

10. CONTINGENCIES AND COMMITMENTS

10.1 Contingencies

10.1.1


2015 2015

10.2 Commitment Rupees Rupees

For capital expenditure 50,252,363 50,015,000

11.



2015 2015

Rupees Rupees

Receipt of short term loan from directors 15,663,302 6,829,621

Repayment of short term loan to directors 37,000,000 -

TRANSACTIONS WITH RELATED PARTIES

Transactions with related parties and associated undertakings, other than those disclosed elsewhere in these

financial statements, are follows: -

Two suits are pending against company in the High Court for the recovery of Rs.1,299,588,534 and

Rs.122,197,136 respectively filed by Faysal bank and others and Pakistan Kuwait Investment

Company Limited. Currently outcome could not be determined with certainty.

Related parties include associated companies, directors of the company, companies where directors also

hold directorship, related group companies, key management personnel, staff retirement funds and entities

over which directors are able to exercise influence. All transactions involving related parties arising in the

normal course of business are conducted at commercial terms and conditions, and at prices agreed based on

inter company prices using admissible valuation modes, i.e. comparable uncontrolled price method. There

are no transactions with the key management personnel other than under their terms of employment /

entitlements.

12 Financial instruments-fair values

The additional disclosures due to the adoption of IFRS 13 Fair value measurement are as follows :

Loans and

receivables

Other financial

liabilities Total Level 1 Level 2 Level 3

On-balance sheet financial instruments Note

31 December 2015- ( Un-audited)

Financial assets measured at fair value - - - - - -

- - - - - -

Financial assets not measured at fair value 12.1

Long term deposits 16,416,345 - 16,416,345 - - -

129,500 - 129,500 - - -

Other receivable 70,200 - 70,200 - - -

91,244,414 - 91,244,414 - - -

107,860,459 - 107,860,459 - - -

Financial liabilities measured at fair value - - - - - -

- - - - - -

Financial liabilities not measured at fair value 12.1

Advance for issuance of shares-unsecured - 241,529,066 241,529,066

Long term loans-secured - 931,308,237 931,308,237

Markup accrued on secured loans - 583,802,242 583,802,242

Short term borrowings-unsecured - 341,235,421 341,235,421 - - -

Trade and other payables - 20,305,532 20,305,532

- 2,118,180,498 2,118,180,498 - - -

12.1

13 SUBSEQUENT MATERIAL EVENTS

14 DATE OF AUTHORISATION FOR ISSUE

These condensed interim financial information has been authorized for issue on February 26, 2016 by the Board of Directors.


Advances

The management considers the carrying amount of all financial assets and liabilities not measured at fair value at the end of the reporting period to approximate their fair value as

at the reporting date.

There are no significant activities since 31 December 2015 affecting the condensed interim financial information apart from those disclosed in the condensed interim financial

information.

Cash and bank

Carrying Amount Fair Value

- - - - - - - - -- - - - - - - - - - - - - - - - -- - - Rupees 000 - - - - - - - - - - - - - - - - - - - - - - - - -

C O N T E N T S · 2016. 11. 4. · E mail: [email protected] Plant Address 52 Km Lahore Multan...

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