FAUJI CEMENT COMPANY LIMITED · 2017-03-02 · FAUJI CEMENT COMPANY LIMITED 2 COMPANY INFORMATION...

FAUJI CEMENT COMPANY LIMITED

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CONTENTS

Company Information 1

Directors' Review 2

Condensed Interim Balance Sheet 3

Condensed Interim Profit & Loss Account 5

Condensed Interim Cash Flow Statement 6

Condensed Interim Statement of Changes in Equity 7

Condensed Interim Notes to the Financial Statements 8


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COMPANY INFORMATIONat a glance

► Board of Directors

Lt Gen Hamid Rab Nawaz, HI (M) (Retired) ChairmanLt Gen Javed Alam Khan, HI (M) (Retired) Chief Executive / MDMr. Qaiser Javed DirectorMr. Riyaz H. Bokhari, IFU DirectorBrig Arif Rasul Qureshi, SI (M) (Retired) DirectorBrig Rahat Khan, SI (M) (Retired) DirectorDr. Nadeem Inayat DirectorBrig Liaqat Ali, (Retd) DirectorBrig Munawar Ahmed Rana, SI(M) (Retd) Director

► Company Secretary: Brig Shabbir Ahmed (Retired)House No. 62, Khayaban-e-Iqbal(Margalla Road), F-7/2,Islamabad - PakistanTel: (051) 9221690Fax: (051) 9221693E-mail: [email protected]

► Chief Financial Officer Mr. Omer AshrafTel (051) 2651762

► Registered Office andMarketing and Sales Department:

Ist Floor, Aslam Plaza,60 Adam Jee Road, Sadar, Rawalpindi – PakistanTel: (051) 5523836, 5528042, 5528960, 5528963-64Fax: (051) 5528965-66

► Factory: Near Village Jhang, Tehsil Fateh JangDistrict: AttockTel: 057-2538047-48, 2538138, 2538148 – 49Fax: 057-2538025

► Auditors: M/s KPMG Taseer Hadi & Co,Chartered AccountantsFax No: (051) 2822671

► Legal Advisors: M/s Orr Dignam & Co, AdvocatesTel: (051) 2260517Fax No: (051) 2260653

► Company Website http: //www.fccl.com.pk

► Share Registrar M/s CORPLINK (PVT) LIMITEDWings Arcade, 1-K, Commercial, Model Town,LahorePh No: 042-5839182, 5887262Fax No: 042-5869037

mailto:[email protected]

www.fccl.com.pk


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DIRECTORS’ REVIEW1. The Board of Directors is pleased to present their review report along with the un-audited accounts of the Company for the quarter ended 31 March 2009.

2. Overall demand for cement reduced during the third quarter of current fiscal year 2008-09. Total cement despatches during this quarter stood at 7.478 Million tons as compared to 7.951Million tons over the corresponding quarter of the last year. Cement exports registered a growth of28.41% and domestic demand depicted a decrease of 18.76%. Capacity utilization of the cementindustry stood at 72.16% of total installed capacity.

3. As in the past, the Company performed better than the industry average and achievedcapacity utilization of 106.65% as compared to 101.56% in the corresponding period of the lastyear. Local despatches stood at 241,745 tons as compared to 215,119 tons during thecorresponding period of the last year depicting an increase of 12.38%. On the other hand, FCCLexported 69,077 tons as compared to 80,789 tons in the same period of the last year depicting adecrease of 14.50%.

4. Fauji Cement continued to command premium brand. As a result, the net profit of theCompany for the quarter witnessed an increase from 41 Million to 187 Million.

5. In anticipation of increase in demand for the domestic as well as the internationalmarket due to onset of summer season and continued efforts by the Company for economizingoperation, the Company will Inshallah be in a position to further improve its profitability.

Rawalpindi Lt Gen Hamid Rab Nawaz, HI (M) (Retd)21 April 2009 Chairman


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CONDENSED INTERIM BALANCE SHEETAS AT 31 March 2009

31 March 2009 30 June 2008Un-Audited Audited

Note Rupees ('000) Rupees ('000)

SHARE CAPITAL AND RESERVES

Share capital 4 7,419,887 7,419,887Reserves 2,481,015 1,864,094

9,900,902 9,283,981

NON - CURRENT LIABILITIES

Long term financing - secured 5 1,830,120 325,000Deferred liability - compensated absences 10,922 9,468Deferred tax liability - net 628,954 363,154Retention money payable 108,083 18,129

CURRENT LIABILITIES

Trade and other payables 599,237 493,210Markup accrued 65,302 33,186Short term borrowings - secured 6 707,001 1,378,365Current portion of long term financing 325,000 550,000

1,696,540 2,454,761

14,175,521 12,454,493

CONTINGENCIES AND COMMITMENTS 7

The annexed notes 1 to 14 form an integral part of these condensed interim financial statements

Chief Executive


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31 March 2009 30 June 2008Un-Audited Audited

Note Rupees ('000) Rupees ('000)

NON-CURRENT ASSETS

FIXED ASSETS - Tangible

Property, plant and equipment 8 11,611,506 7,106,599

LONG TERM ADVANCE 7,200 7,200

LONG TERM DEPOSITS & PREPAYMENTS 9 1,015,137 46,611

CURRENT ASSETS

Stores, spares and loose tools 660,637 907,591

Stock in trade 197,635 230,089

Trade debts 23,388 26,927

Advances, deposits, prepayments and other receivables 245,940 345,567

Cash and bank balances 414,078 3,783,909

1,541,678 5,294,083

14,175,521 12,454,493

Director


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CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN - AUDITED)FOR THE THIRD QUARTER ENDED 31 MARCH 2009

Quarter Ended Year to Date

Note 31 March 2009 31 March 2008 31 March 2009 31 March 2008

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

SALES 10 1,823,147 1,195,895 5,068,606 3,396,136

Less: Government levies 10 (445,557) (292,353) (1,171,289) (882,168)

NET SALES 1,377,590 903,542 3,897,317 2,513,968

Less: Cost of sales 11 (1,045,906) (777,964) (2,720,486) (2,076,392)

GROSS PROFIT 331,684 125,578 1,176,831 437,576

Other income 20,915 2,319 179,409 14,718

352,599 127,897 1,356,240 452,294

Distribution cost (7,333) (15,245) (34,427) (27,354)

Administrative expenses (21,501) (17,033) (69,255) (55,038)

Other expenses (19,639) (4,465) (73,486) (18,195)

PROFIT FROM OPERATIONS 304,126 91,154 1,179,072 351,707

Finance cost (37,798) (31,331) (202,515) (108,627)

NET PROFIT BEFORE TAXATION 266,328 59,823 976,557 243,080

Taxation

- Current (2,752) (4,518) (9,471) (12,570)

- Deferred (76,668) (14,140) (265,801) (74,050)

(79,420) (18,658) (275,272) (86,620)

NET PROFIT AFTER TAXATION 186,908 41,165 701,285 156,460

Restated Restated

Earnings per share - Basic (Rupees) 0.270 0.100 1.012 0.381

Earnings per share - Diluted (Rupees) 0.252 0.089 0.945 0.340


Chief Executive Director


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CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE PERIOD ENDED 31 MARCH 2009

31 March 2009 31 March 2008Rupees ('000) Rupees ('000)

Cash flows from operating activitiesNet Profit before taxation 976,557 243,080

Adjustment for:Depreciation 230,645 226,496Provision for staff retirement benefit 13,013 7,484Workers' (Profit) Participation Fund and Workers' Welfare Fund 72,376 18,015Finance cost 202,515 108,627Loss/ (gain) on disposal of property, plant and equipment 960 (2,544)Interest income (177,739) (6,997)

341,770 351,081Operating cash flows before working capital changes 1,318,327 594,161Decrease in stores, spares, loose tools and stocks 279,408 25,977Increase in long-term deposits (39,992) -Increase in retention money 89,954 -Decrease/(increase) in trade debts 3,539 (6,186)Decrease in advances, deposits, prepayments and other receivables 44,270 3,772Increase/(decrease) in trade and other payables 66,376 (40,118)

443,555 (16,555)Cash generated from operations 1,761,882 577,606Compensated absences paid (11,457) (7,810)Payment to Workers' (Profit) Participation Fund (24,413) (41,483)Income tax paid (52,339) (12,732)

Net cash from operating activities 1,673,673 515,581Cash flows from investing activities

Additions in property, plant and equipment excluding borrowing cost capitalized (4,618,121) (1,592,503)Proceeds from disposal of property, plant and equipment 473 2,544Short term investments - (400,000)Interest received on bank deposits 191,602 8,538

Net cash used in investing activities (4,426,046) (1,981,421)Cash flows from financing activities

Repayment of long term financing (550,000) (550,000)Proceeds from issue of right shares-net of issue cost - 5,059,352Proceeds from long-term financing 1,830,120 -Long term prepayment (994,761) -Dividend paid on ordinary shares (53) (3,762)Dividend paid on preference shares (8,361) (8,361)Import finances paid (754,988) -Finance costs paid (223,039) (199,114)

Net cash used in financing activities (701,082) 4,298,115(Decrease)/ increase in cash and cash equivalents (3,453,455) 2,832,275Cash and cash equivalents at beginning of the period 3,160,532 47,623Cash and cash equivalents at end of the period (292,923) 2,879,898Cash and cash equivalents comprise of the following:

Cash and bank balances 414,078 2,879,898Short term running finances (707,001) -

(292,923) 2,879,898The annexed notes 1 to 14 form an integral part of these condensed interim financial statements



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CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE PERIOD ENDED 31 MARCH 2009

Share capital Capital reserve Revenue reserve

Hedging Accumulated Total

Ordinary Preference Share premium reserve (loss)/profit

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

Balance as at 30 June 2007 3,707,430 486,992 - - (459,216) 3,735,206

Profit for the period - - - - 156,460 156,460

Total recognized income andexpense for the period - - - - 156,460 156,460

Right shares issued 3,225,464 - - - - 3,225,464

Share premium on right shares(net of issue cost) - - 1,833,888 - - 1,833,888

Balance as at 31 March 2008 6,932,894 486,992 1,833,888 - (302,756) 8,951,018

Balance as at 30 June 2008 6,932,895 486,992 1,833,709 84,364 (53,979) 9,283,981

Changes in cash flow hedge - - - (84,364) - (84,364)

Profit for the period - - - - 701,285 701,285

Total recognized income andexpense for the period - - - (84,364) 701,285 616,921

Balance as at 31 March 2009 6,932,895 486,992 1,833,709 - 647,306 9,900,902




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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)FOR THE PERIOD ENDED 31 MARCH 2009

1. Fauji Cement Company Limited ("the Company") is a public limited company incorporated in Pakistan on 23 November1992 under the Companies Ordinance, 1984 and commenced its business with effect from 22 May 1993. The sharesof the Company are quoted on Karachi, Islamabad and Lahore stock exchanges in Pakistan. The principal activity ofthe Company is manufacturing and sale of ordinary portland cement. The Company's registered office is situated atAslam Plaza, Adamjee Road, Rawalpindi. Fauji Foundation holds 26.86% ordinary and 100% preference shares in theCompany.

The Company is in the process of setting up a new cement manufacturing line. For this purpose, the Company hasentered into agreements with M/s Polysius AG, M/s Loesche Gmb H, M/s ABB Schweiz AG and M/s Haver andBoecker OHG for supply of machinery and related services and M/s Descon Engineering Limited for EPC related work.Refer note 7.2 (b) for commitment in this regard.

2. These interim financial statements are unaudited and are being submitted to the shareholders' in accordance with therequirements of Section 245 of the Companies Ordinance, 1984. These financial statements are presented incondensed form in accordance with the requirements of International Accounting Standard 34: "Interim FinancialReporting". These condensed interim financial statements do not include all of the information required for annualfinancial statements and should be read in conjunction with the annual financial statements of the Company for the yearended 30 June 2008. Comparative balance sheet is extracted from annual audited financial statements for the yearended 30 June 2008 whereas comparative profit and loss account, statement of changes in equity and cash flowstatement are stated from un-audited condensed interim financial statements for the nine months period ended 31March 2008.

3. Accounting policies, related judgments, estimates and assumptions adopted for the preparation of these condensedinterim financial statements are the same as those applied in preparation of the annual financial statements of theCompany for the year ended 30 June 2008.

4. SHARE CAPITALThere is no change in composition of issued, subscribed, and paid up share capital of the Company from 30 June 2008.

Note 31 Marh 2009 30 June 20085. LONG TERM FINANCING - secured Un-Audited Audited

Rupees (`000) Rupees (`000)- From banking companies and financial institutionsSyndicated term finance facility - secured 5.1 325,000 875,000Add: Long-term finance obtained during the period/year 1,830,120 -

2,155,120 875,000Less: Amount payable within 12 months shown as current portion (325,000) (550,000)

1,830,120 325,000

5.1Movement in this account during the period/year is as follows:Opening balance 875,000 1,425,000Long-term finance obtained during the period/year 1,830,120 -Repayments during the period/year (550,000) (550,000)

2,155,120 875,000

6. SHORT TERM BORROWINGS- securedThe Company has running finance and export refinance limits to the tune of Rs. 1,620 million (June 2008: Rs. 1,500million) from banking companies. These facilities are secured against first pari passu/ranking charge by way ofhypothecation over the present and future assets of the Company (excluding land and building) retaining 25% marginand carry markup ranging from 1 month's KIBOR plus 1.5% - 2% for running finance and 7.5% for export refinance perannum of the utilized amount and payable on quarterly basis.


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7. CONTINGENCIES AND COMMITMENTS7.1 Contingencies

There is no change in contingent liabilities as reported in the annual financial statements for the year ended 30June 2008 except following:a) Competition Commission of Pakistan (CCP) has issued a show cause notice dated 28 October 2008 to 21

cement manufacturers (including the Company) under section 30 of the Competition Ordinance, 2007. Themanagement is of the opinion that the Company has not violated any requirement of the Ordinance,accordingly no penalty is expected to be imposed on the Company.

b) The Company is contingently liable in respect of guarantees amounting to Rs. 289 million (30 June 2008:Rs.270 million) issued by banks on behalf of the Company in the normal course of business.

7.2 Commitments

There is no change in commitments as reported in the annual financial statements for the year ended 30 June2008, except for the following:

a) The Company has opened letters of credit for import of machinery, spares and coal valuing Rs. 6,373 million(30 June 2008: Rs. 7,541 million).

b) Capital commitments of Rs. 6,964 million (30 June 2008: Rs. 9,269 million) in respect of new cementmanufacturing line.

31 Marh 2009 30 June 2008Note Un-Audited Audited

8. PROPERTY, PLANT AND EQUIPMENT Rupees (`000) Rupees (`000)Opening carrying amount 7,106,599 4,392,450Additions during the period / year 8.1 4,736,985 3,016,849Written down value of disposals 8.2 (1,433) (44)Depreciation for the period/ year (230,645) (302,656)Closing carrying amount 11,611,506 7,106,599

Closing carrying amount includes capital work in progress amounting to Rs. 7,628 million (30 June 2008: Rs. 2,950million).

31 Marh 2009 30 June 2008Note Un-Audited Audited

Rupees (`000) Rupees (`000)8.1 Additions

Plant, machinery and equipment 22,220 142,619Building 6,364 17,316Office equipment 153 1,780Computers 2,183 3,109Electrical equipment 1,534 1,412Furniture and fixtures 1,931 186Motor vehicles 24,316 33,330Capital work in progress 4,678,284 2,817,097

4,736,985 3,016,8498.2 Disposals

Cost 2,810 3,045Accumulated depreciation (1,377) (3,001)

1,433 449. LONG TERM DEPOSITS & PREPAYMENTS

Islamabad Electric Supply Company Limited 61,592 21,600Sui Northern Gas Pipelines Limited 25,011 25,011Prepaid guarantee and commitment fee for loans 9.1 928,534 -

1,015,137 46,611

9.1This mainly includes premium paid to Euler Hermes kreditversicherungs-AG (Hermes) for guarantee issued to lenders assecurity against loan arrangement dated 7 November 2007 for construction of new cement manufacturing line.


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Quarter Ended Year to date31 March 2009 31 March 2008 31 March 2009 31 March 2008Rupees (`000) Rupees (`000) Rupees (`000) Rupees (`000)

10. SALES-NetSales - Local 1,547,962 945,814 4,121,491 2,794,497

- Export 275,185 250,081 947,115 601,639 1,823,147 1,195,895 5,068,606 3,396,136

Less: - Sales tax (215,930) (123,658) (572,724) (358,616)- Excise duties (228,900) (168,260) (596,010) (522,223)- Export development surcharge (727) (435) (2,555) (1,329)

(445,557) (292,353) (1,171,289) (882,168) 1,377,590 903,542 3,897,317 2,513,968

11. COST OF SALESRaw material consumed:

Opening stock 13,853 9,094 10,696 4,579Purchases 61,246 55,233 193,831 165,051

Closing stock (11,324) (7,561) (11,324) (7,561) 63,775 56,766 193,203 162,069

Packing material consumed 91,236 74,801 252,772 206,817Stores and spares consumed 4,776 1,988 13,217 8,076Salaries, wages and benefits 35,210 30,633 128,239 90,018Rent, rates and taxes 1,545 737 5,028 2,268Insurance 3,505 3,052 9,920 9,151Fuel consumed 463,117 378,071 1,379,679 941,893Power consumed 161,522 125,880 449,203 320,888Depreciation 72,780 71,397 220,056 217,016Repairs and maintenance 29,877 21,149 76,956 66,306Technical assistance - 38 6,746 1,170Printing and stationery 328 169 758 595Traveling and conveyance 682 712 1,911 1,812Vehicle running and maintenance expenses 1,919 1,677 6,578 5,170Communication, establishment and other expenses 1,266 685 3,139 2,167

931,538 767,755 2,747,405 2,035,416Add: Opening work-in-process 236,066 90,860 152,529 115,221Less: Closing work-in-process (138,466) (71,097) (138,466) (71,097)Cost of goods manufactured 1,029,138 787,518 2,761,468 2,079,540Add: Opening finished goods 63,732 37,726 46,289 44,157Less: Closing finished goods (15,800) (40,742) (15,800) (40,742)

1,077,070 784,502 2,791,957 2,082,955Less: Own consumption capitalized (31,164) (6,538) (71,471) (6,563)

1,045,906 777,964 2,720,486 2,076,392


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12. RELATED PARTY TRANSACTIONS AND BALANCES

Fauji Foundation holds 26.86% ordinary shares and 100% preference shares of the Company, therefore all subsidiaries and associatedundertakings of Fauji Foundation are related parties of the Company. Other related parties comprise directors, key management personnel,entities over which the directors are able to exercise influence and employees' fund. Transaction and balances with related parties are asfollows:

Year to Date

31 March 2009 31 March 2008Rupees (`000) Rupees (`000)

Fauji Foundation

- Sale of cement 10,595 7,830- Preference dividend paid 8,361 8,361- Payment for use of medical facilities 79 2- Payment for expenses - 2,228- Advance paid on account of clearance of shipments 6,200 17,700- Balance receivable on account of clearance of shipments 160 539 *- Balance payable 50,000 - *- Balance of advance against sale of cement 94 162 *- Preference dividend payable - 8,361 *

Payments made into Employees' Provident Fund 6,149 4,599Payments made to Workers' (Profit) Participation Fund 24,413 41,483Remuneration including benefits and perquisites to Chief Executive 5,132 3,490Remuneration including benefits and perquisites to Executives 37,874 26,497Fee paid to directors for meetings 300 23

* Comparative figures of receivable/ payable balances are as of 30 June 2008

13. DATE OF AUTHORIZATION FOR ISSUE

These condensed interim financial statements were authorized for issue by the Board of Directors of the Company in their meeting held on21April 2009.

14. GENERAL

Figures have been rounded off to the nearest thousand of rupees unless otherwise stated.


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