D.G. KHAN CEMENT COMPANY LIMITED 1st Quarter Report.pdf · Khofli Sattai, Distt. Dera Ghazi Khan-Pakistan Phone: 92-641-460025-7 Fax: 92-641-462392 Email: [email protected] 2. 12,

D.G. KHAN CEMENT COMPANY LIMITED

1st Quarter Report

September 30, 2011

(Un-audited)

CONTENTS

D.G Khan Cement Company Limited

Corporate profile ......................................................................................................................... 2

Directors’ Report ......................................................................................................................... 3

Condensed Interim Balance Sheet ............................................................................................ 6

Condensed Interim Profit and Loss Account ............................................................................. 7

Condensed Interim Statement of Comprehensive Income ....................................................... 8

Condensed Interim Cash Flow Statement ................................................................................. 9

Condensed Interim Statement of Changes in Equity .............................................................. 10

Selected Notes to the Condensed Interim Financial Information ............................................ 11

D.G Khan Cement Company Limited and its Subsidiary

Directors’ Report ....................................................................................................................... 17

Condensed Interim Consolidated Balance Sheet ................................................................... 18

Condensed Interim Consolidated Profit and Loss Account..................................................... 19

Condensed Interim Consolidated Statement of Comprehensive Income .............................. 20

Condensed Interim Consolidated Cash Flow Statement......................................................... 21

Condensed Interim Consolidated Statement of Changes in Equity ....................................... 22

Selected Notes to the Condensed Interim Consolidated Financial Information ..................... 23

02 20111st QUARTER

CORPORATE PROFILE

Board of Directors Mrs. Naz Mansha Chairperson Mian Raza Mansha Chief Executive Mr. Khalid Qadeer Qureshi Dr. Arif Bashir Mr. Farid Noor Ali Fazal Mr. Inayat Ullah Niazi Chief Financial Officer Ms. Nabiha Shahnawaz Cheema

Audit Committee Mr. Khalid Qadeer Qureshi Member/Chairman Mr. Farid Noor Ali Fazal Member Ms. Nabiha Shahnawaz Cheema Member

Company Secretary Mr. Khalid Mahmood Chohan

Bankers Allied Bank Limited Habib Metropolitan Bank Limited Askari Bank Limited MCB Bank Limited Bank Alfalah Limited NIB Bank Bank Islami Pakistan Limited Meezan Bank Limited Barclays Bank Plc National Bank of Pakistan Citibank N.A. Samba Bank Limited Deutsche Bank AG Standard Chartered Bank (Pakistan) Dubai Islamic Bank Limited Faysal Bank Limited Silk Bank Limited First Women Bank Limited The Bank of Punjab Habib Bank Limited United Bank Limited HSBC

External Auditors KPMG Taseer Hadi & Co, Chartered Accountants

Cost Auditors Avais Hyder Liaquat Nauman, Chartered Accountants

Legal Advisors Mr. Shahid Hamid, Bar-at-Law

Registered Office Nishat House, 53-A, Lawrence Road, Lahore-Pakistan Phone: 92-42-36367812-20 UAN: 111 11 33 33 Fax: 92-42-36367414 Email: [email protected] web site: www.dgcement.com

Factory 1. Khofli Sattai, Distt. Dera Ghazi Khan-Pakistan Phone: 92-641-460025-7 Fax: 92-641-462392 Email: [email protected]

2. 12, K.M. Choa Saidan Shah Road, Khairpur, Tehsil Kallar Kahar, Distt. Chakwal-Pakistan Phone: 92-543-650215-8 Fax: 92-543-650231

032011 1st QUARTER

DIRECTORS’ REPORT

The board of directors is pleased to submit its report along with the interim financial statements for the September quar ter of the financial year 2012.

Economic Outlook

Business outlook

Year 2011 closed with some posit ive signs of economic recovery. With planned GDP of 4.2% and planned Public Sector Development Program at Rs 730 billion, the prospects for 2011 are fairly positioned for the industrial sector to capitalize on its production capabilities. The devastating floods casting heavily on the already stripped economy would certainly challenge the Government to fulfill its commitments towards infrastructural development projects. The position would, however, open up further when we would cross the half year mark.

Industry wide volumes, so far, have presented some what positive picture of the cement industry as a whole where growth has been witnessed across all domestic market segments after the 2011 decline. Cement exports from Pakistan saw mixed trend in the first three months of financial year 2012 while in aggregate, export volumes remained at the level similar to that of the first quarter 2011 (exhibiting a slight volumetric growth). In domestic market, volumetric growth of 12% was witnessed which, as discussed earlier, resulted primarily because of increased cement demand fueled by various rebuilding and infrastructure development projects.

Company performance vis-à-vis industry overview

Our company took advantage of the slight demand adjustment in the domestic cement market by capital izing on its strong consumer base and production capabilities thereby, maintaining its domestic cement market share. Expor ts, on the other hand, witnessed superb volumetric growth compared to first quarter 2011.

Apart from the industry wide growth witnessed during the first quarter, the market generally remained stagnant in the nor th with no major building or development project kicking off. The general stagnation was also reflected in the cement sales of the company, which slid down during the quarter. The factors for decline remained similar with no major change in the underlying circumstances. Lack of demand still prevails in the rural areas particularly those struck with floods. The public development projects in such areas have also not yet generated the anticipated demand of cement. It is, however, anticipated that the position would significantly improve in the second half of the year 2012.

The volumes rose by 134,022 metric tons thereby recording 64% growth over the same period last year. East African and the Southeast Asian region remained major export markets for the company with Djibouti and Afghanistan topping from both the regions respectively.

Production StatisticsPeriod ended September 30

2010MT

Change

%MT

Clinker Production 975,735 963,193 12,542 1 97% 96% Cement Production 954,860 973,077 -18,217 -2Local Sales 625,586 710,168 -84,582 -12Cement Export 344,485 210,463 134,022 64

2011MT

1,200

1,000

800

600

400

200

-

2007 2008 2009 2010 2011Clinker ProducedCement ProducedCement Sold

Better margins in the domestic market make up for falling volumes: Desp i te fa l l i ng vo lumes across a l l domest ic business segments our company earned a gross profit of 30% on the net sales revenues which went up by 44% as compared to last year. Despite higher production costs, the company gained due to better marketing strategies. Higher operating profits of Rs 1.1 billion on net sales of Rs 5.08 billion, registering a growth of 97% compared wi th last quar ter 's figures, demonstrated the company's operational efficiency as well as effective cost management policy.

The selling and distribution expenses were higher in proportion to exports during the current period because of ever increasing transpor tation costs and higher levels of inflation in the economy.

Figures in millions of Rupees

Surge in oil prices in international markets are bound to further aggravate the position and would put pressure on our margins in coming future.

Provision for taxation during the period includes deferred tax provision amounting to Rs 192 million arising primarily due to reduction in available tax losses due to change in the expor t and local sales mix during the period. The charge for deferred tax has been computed in the light of management's judgment based on the conditions and circumstances existing at the balance sheet date.

Financial Performance

Rupees in ‘000’

Net sales 5,088,013 100.00 3,527,923 100.00 1,560,090 44%

Cost of sales -3,556,816 -69.91 -2,849,484 80.77 707,332 25%

Gross profit 1,531,197 30.09 678,439 19.23 852,758 126%

Profit from operations 1,010,144 19.85 513,779 14.56 496,365 97%

Finance cost -448,863 -8.82 -488,232 13.84 39,369 -8%

Profit before tax 561,281 11.03 25,547 0.72 535,734 20 T

Taxation -243,532 -4.79 -3,401 0.10 -240,131

Profit after tax 317,749 6.25 22,146 0.63 295,603 13 T

% to net

sale

Change

Year on Year %

2011

Quarter ended

30 September

% to net

sale

2010

Quarter ended

30 September

6,000

5,000

4,000

3,000

2,000

1,000

-

Cost of Sales

2007 2008 2009 2010 2011

Net Sales

1,860

3,037 3,2752,849

3,5572,233

4,3374,592

3,528

5,088

35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%

-5.00%

Net ProfitSelling Expenses

Finance Cost Gross Profit

2007 2008 2009 2010 2011

13.84%12.49%

8.82%9.26%

6.2.3%

0.62%

8.65%9.87%

0.49%0.12%2.07%

10.20%

30.09%

19.23%

28.068%29.97%

31.67%

16.73%16.72%

12.74%

04 20111st QUARTER

052011 1st QUARTER

Future Outlook

In view of the factors explained in the preceding paragraphs, the management foresees positive growth trends in the year 2012. Demands are rising in African as well as Asian regions and the company is fully poised to capitalize on the rising demands. As observed in the first quar ter of the year 2012, management anticipates that the pattern of growth would continue throughout the year.

Domestic cement demand, though remained subdued in the first quarter, is likely to go up in the coming months due to initiation of various infrastructural development projects that remained in the pre-startup phase during the first quarter of the financial year 2012.

The management envisions that the recent cut in the discount rate, as announced by the State Bank of Pakistan, would have a favourable impact on the businesses all over the country. It would bring down KIBOR and would ultimately reduce the financing costs.

The trend of devaluation of Pakistani Rupee against US Dollar is also posing a threat since the company is exposed to currency risk with liabilities denominated in US Dollars. The overall adverse effect of such devaluation would, however, be offset by favourable outcomes while realizing export proceeds.

Retained inbusiness5.94%

Taxation4.55%

Otheroperatingexpenses

1.78%

AdministrativeCosts0.96%

Cost of Sales66.49%

Finance Cost8.39%

Selling anddistribution

Cost11.88%

All of the ongoing projects are running as planned and hopefully would be completed on schedule.

Condolence

Our company received a great set back and shock on the sad demise of Mr. Zaka ud Din, Director, on 14th October, 2011, after a short illness. The loss is irreparable and grief is boundless but the consolation to remember is that he was so greatly loved and respected by all of us. We sincerely mourn the passing away of Mr. Zaka ud Din who had endeared himself to every one by his nobility, kindness and large-heartedness.

We pary that Allah, in his unbounded mercy, may grant peace to the soul of the deceased in Heaven and give us the strength to bear this great loss. Ameen !

The vacancy caused in the Board of Directors has been filled with appointment of Dr. Arif Bashir.

Company's Staff and Customers

We wish to record our appreciation of continued commitment of our employees and patronage of our customers.

For and on behalf of the Board

Mian Raza ManshaChief Executive Officer

Lahore: 22 October 2011

06 20111st QUARTER

CONDENSED INTERIM UNCONSOLIDATEDBALANCE SHEET

Rupees in thousands Note 30.09.2011 30.06.2011

unaudited audited

Authorised capital

- 950,000,000 (June 30, 2011: 950,000,000) ordinary shares of Rs 10 each 9,500,000 9,500,000

- 50,000,000 (June 30, 2011: 50,000,000) preference shares of Rs 10 each 500,000 500,000

Total authorized capital 10,000,000 10,000,000

Issued, subscribed and paid up capital 4,381,192 4,381,192

Reserves 22,842,392 24,957,382

Accumulated profit 1,196,460 878,711

Total shareholders' equity 28,420,044 30,217,285

Long term finances 5 4,187,766 4,880,579

Long term deposits 69,940 70,893

Retirement and other benefits 136,265 139,213

Deferred taxation 1,900,060 1,707,886

Total non-current liabilities 6,294,031 6,798,571

Trade and other payables 1,559,315 1,644,045

Accrued markup 242,975 284,511

Short term borrowing-secured 10,141,037 8,691,982

Current portion of non-current liabilities 1,944,713 2,001,566

Provision for taxation 35,090 35,090

Total current liabilities 13,923,130 12,657,194

Total liabilities and shareholders' equity 48,637,205 49,673,050

Property, plant and equipment 6 24,266,620 24,611,565

Capital work in progress 1,582,570 1,373,820

Investments 7 4,728,068 5,259,416

Long term loans, advances and deposits 133,746 133,219

Total non-current assets 30,711,004 31,378,020

Stores, spares and loose tools 4,280,535 3,543,034

Stock-in-trade 913,173 862,141

Trade debts 298,915 459,300

Investments 7 10,542,707 12,126,349

Advances, deposits, prepayments and other receivables 1,514,719 1,136,564

Cash and bank balances 376,152 167,642

Total current assets 17,926,201 18,295,030

Total assets 48,637,205 49,673,050

Contingencies and Commitments 8

The annexed notes form an integral part of this condensed interim unconsolidated financial information.

Chief Executive Director

072011 1st QUARTER

CONDENSED INTERIM UNCONSOLIDATEDPROFIT AND LOSS ACCOUNT - UNAUDITED

Rupees in thousands Note 2011 2010

Sales - net 5,088,013 3,527,923

Cost of sales 9 (3,556,816) (2,849,484)

Gross profit 1,531,197 678,439

Administrative expenses (51,370) (41,960)

Selling and distribution expenses (635,688) (326,732)

Other operating expenses (95,425) (29,382)

Other income 261,430 233,414

Profit from operations 1,010,144 513,779

Finance cost (448,863) (488,232)

Profit before taxation 561,281 25,547

Taxation (243,532) (3,401)

Profit after taxation 317,749 22,146

Restated

Earnings per share basic and diluted (Rupees) 0.73 0.05



July 1 to September 30

08 20111st QUARTER

CONDENSED INTERIM UNCONSOLIDATEDSTATEMENT OF COMPREHENSIVE INCOME - UNAUDITED


Rupees in thousands 2011 2010


Available for sale financial assets

- Change in fair value (2,114,990) (374,310)

- Realized gain through profit and loss account - -

- Tax expense - -

Other comprehensive (loss) for the period (2,114,990) (374,310)

Total comprehensive (loss) for the period (1,797,241) (352,164)



092011 1st QUARTER

CONDENSED INTERIM UNCONSOLIDATEDCASH FLOW STATEMENT - UNAUDITED



Cash (used in)/ generated from operations 11 57,344 (944,023)

Financial cost paid (490,399) (454,881)

Retirement and other benefits paid. (11,196) (6,317)

Taxes paid (67,996) (52,401)

Long term deposits - Net (953) (3,136)

Net cash (used in)/ from operating activities [A] (513,200) (1,460,758)

Capital expenditure including purchase of property, plant and equipment (217,525) (65,763)

Proceeds from sale of property, plant and equipment 15,999 28,380

Long term loans and deposits - Net (527) 10,678

Interest received 16,105 15,610

Dividend received 230,535 213,115

Net cash from/ (used in) investing activities [B] 44,587 202,020

Repayment of long term finances (771,932) (456,917)

Net cash from/ (used in) financing activities [C] (771,932) (456,917)

In(De)crease in cash and cash equivalents [A+B+C] (1,240,545) (1,715,655)

Cash and cash equivalents at the beginning of period (8,524,340) (9,354,850)

Cash and cash equivalents at the end of period 12 (9,764,885) (11,070,505)



10 20111st QUARTER

CONDENSED INTERIM UNCONSOLIDATEDSTATEMENT OF CHANGES IN EQUITY - UNAUDITED

Chi

ef E

xecu

tive

Dire

ctor

Bal

ance

as

at 3

0 Ju

ne 2

010

- A

udite

d

3,65

0,99

3 3,

826,

965

12,9

08,1

75

353,

510

5,07

1,82

7 70

7,75

0 26

,519

,220

Tota

l com

preh

ensi

ve in

com

e fo

r th

e pe

riod

- P

rofit

for

the

year

-

- -

- -

22,1

46

22,1

46

- O

ther

com

preh

ensi

ve in

com

e fo

r th

e ye

ar

- -

(374

,310

) -

- -

(374

,310

)

Bal

ance

as

at S

epte

mbe

r 30

, 201

0 - U

naud

ited

3,65

0,99

3 3,

826,

965

12,5

33,8

65

353,

510

5,07

1,82

7 72

9,89

6 26

,167

,056

Cap

aita

l tra

nsac

tions

with

ow

ner

- R

ight

issu

e 73

0,19

9 73

0,19

9 -

- -

- 1,

460,

398

Tota

l com

preh

ensi

ve in

com

e fo

r th

e pe

riod

- P

rofit

for

the

year

-

- -

- -

148,

815

148,

815

- O

ther

com

preh

ensi

ve in

com

e fo

r th

e ye

ar

- -

2,44

1,01

6 -

- -

2,44

1,01

6

Bal

ance

as

at J

une

30, 2

011

- A

udite

d

4,38

1,19

2 4,

557,

164

14,9

74,8

81

353,

510

5,07

1,82

7 87

8,71

1 30

,217

,285

Tota

l com

preh

ensi

ve ic

ome

for

the

perio

d

- P

rofit

for

the

perio

d -

- -

- -

317,

749

317,

749

- O

ther

com

preh

ensi

ve lo

ss fo

r th

e pe

riod

- -

(2,1

14,9

90)

- -

- (2

,114

,990

)

Bal

ance

as

at S

epte

mbe

r 30

, 201

1 - U

naud

ited

4,38

1,19

2 4,

557,

164

12,8

59,8

91

353,

510

5,07

1,82

7 1,

196,

460

28,4

20,0

44

The

anne

xed

note

s fo

rm a

n in

tegr

al p

art o

f thi

s co

nden

sed

inte

rim u

ncon

solid

ated

fina

ncia

l inf

orm

atio

n.

Fair

Valu

eR

eser

ve

Sh

are

Pre

miu

mS

har

eC

apita

l

Cap

ital

Red

empt

ion

Res

erve

Fund

Gen

eral

Res

erve

Acc

umul

ated

Pro

fitTo

tal

Rup

ees

in th

ousa

nds

112011 1st QUARTER

SELECTED NOTES TO AND FORMING PART OF THECONDENSED INTERIM UNCONSOLIDATED

FINANCIAL INFORMATION - UNAUDITED1. Legal status and nature of business

D. G. Khan Cement Company Limited ("the Company") is a public limited company incorporated in

Pakistan and is listed on Karachi, Lahore and Islamabad Stock Exchanges. It is principally engaged in

production and sale of Clinker, Ordinary Portland and Sulphate Resistant Cement. The registered office of

the Company is situated at 53-A Lawrence Road, Lahore.

2. Basis of preparation

The unaudited condensed interim unconsolidated financial information (hereafter "interim financial

information") for the quar ter has been prepared and is being submitted to shareholders in accordance

with the provisions contained in section 245 of the Companies Ordinance, 1984 and the pronouncements

of International Accounting Standard (IAS) 34 - 'Interim Financial Repor ting'. The interim financial

information does not include all of the information required for full annual financial statements and

accordingly, should be read in conjunction with the annual financial statements for the year ended June

30, 2011 as they provide an update of previously reported information.

The preparation of the interim financial information requires management to make judgments, estimates

and assumptions that affect the application of accounting policies, the presentation of assets, liabilities,

incomes and expenses and the amounts repor ted there against as well as disclosure of contingent

liabilities at the date of the interim financial information. If in future such estimates and assumptions,

which are based on management's best judgment at the date of the interim financial information, deviate

from the actual circumstances, the original estimates and assumptions will be modified as appropriate

during the period in which the circumstances change.

In preparing the interim financial information, the significant judgments made by the management in

applying accounting policies, key estimates and uncertainty includes:

- Residual value and useful life estimation of fixed assets

- Taxation

- Retirements and other benefits

- Provisions and Contingencies

- Fair value of derivatives

3. Significant accounting policies

3.1 The accounting policies and methods of computation adopted in the preparation of the interim

financial information are generally based on the same policies and methods as applied in preparation

of the annual financial statements for the year ended June 30, 2011.

3.2 In addition to above, following amendments to the International Financial Repor ting Standards/

International Accounting Standards are mandatory for the first time for the financial year beginning on

or after January 1, 2011, however, the adoption of these amendments is either not yet effective or the

amendments did not have any significant impact on the financial information of the company.

12 20111st QUARTER

- IFRS 7 - Financial instruments : Disclosures (Improvements)

- IAS 1 - Presentation of Financial Statements (Improvements)

- IAS 24 - Related Party disclosuures (amendment)

- IFRIC 13 - Customer Loyalty Programmes (improvements)

- IFRIC 14 - Prepayments of minimum funding requirements (amendment)

4. The provision for taxation for the quarter September 30, 2011 has been made on an estimated basis.


unaudited audited

5. Long term finances

These are composed of:

- Long term loans 5,317,961 6,067,627

- Loan under musharika arrangement 807,500 807,500

5.1 6,125,461 6,875,127

Less: Current portion shown under current liabilities 1,937,695 1,994,548

Total long term finances 4,187,766 4,880,579

5.1 Long term loans

Opening balance 6,875,127 7,222,988

Add: Disbursements during the period - 1,850,000

Exchange loss during the period 22,266 6,182

6,897,393 9,079,170

Less: Repayment during the period 771,932 2,204,043

Closing balance 6,125,461 6,875,127

6. Property, Plant and Equipment

Opening book value 24,611,565 25,307,302

Add: Additions during the period/ year 6.1 8,776 764,442

24,620,341 26,071,744

Less: Disposals during the period/ year - net book value 5,392 29,769

Depreciation charged during the period/ year 348,329 1,430,410

Closing book value 24,266,620 24,611,565

6.1 Major additions during the period

Free hold land - 410

Building on freehold land - 212,315

Roads - 4,089

Plant and machinery 2,782 454,768

Furniture, fixtures and office equipment 5,454 22,132

Motor vehicles 540 66,843

Power and water supply lines - 3,885

8,776 764,442

132011 1st QUARTER

8. Contingencies and commitments

8.1 Contingencies

There is no significant change in contingencies from the annual financial statements of the company for the

year ended June 30, 2011.

8.2 Commitments in respect of

(i) Contracts for capital expenditure Rs 178.318 million (June 30, 2011: Rs 113.639 million).

(ii) Letters of credit for capital expenditure Rs 1,213.102 million (June 30, 2011: Rs 1,364.57 million).

(iii) Letters of credit other than capital expenditure Rs 793.361 million (June 30, 2011: Rs 873.36

million).

Rupees in thousands 30.09.2011 30.06.2011

unaudited audited

7. Investments

Cost of investments 2,410,884 2,410,884

Add: Fair value adjustments 12,859,891 14,974,881

15,270,775 17,385,765

Less: Investments classified in current assets 10,542,707 12,126,349



9. Cost of sales

Raw and packing materials consumed 451,960 402,596

Salaries, wages and other benefits 211,092 177,671

Electricity, gas and water 472,820 457,201

Furnace oil/coal 1,954,193 1,501,202

Stores and spares consumed 242,936 270,269

Repair and maintenance 46,744 64,596

Insurance 13,833 12,011

Depreciation on property, plant and equipment 344,332 349,494

Royalty 37,665 37,728

Excise duty 3,489 3,492

Vehicle running 5,370 5,751

Postage, telephone and telegram 696 1,214

Printing and stationery 859 743

Legal and professional charges 252 763

Travelling and conveyance 3,212 1,413

Estate development 4,266 2,622

Rent, rates and taxes 5,561 4,056

Freight charges 1,350 1,344

Other expenses 5,941 10,197

Total manufacturing cost c/f 3,806,571 3,304,363


14 20111st QUARTER


Total manufacturing cost b/f 3,806,571 3,304,363

Opening work-in-process 169,612 537,539

Cost of goods available for manufacture 3,976,183 3,841,902

Closing work-in-process (443,002) (802,717)

Cost of goods manufactured 3,533,181 3,039,185

Opening stock of finished goods 294,737 219,365

Cost of goods available for sale 3,827,918 3,258,550

Closing stock of finished goods (261,514) (407,066)

Own consumption capitalized (9,588) (2,000)

Cost of goods sold 3,556,816 2,849,484



Relationship with the Nature of transaction

Company

Subsidiary company Purchase of goods and services 177,664 275,236

Rental Income 203 198

Interest Income 13,910 13,839

Other related parties Purchase of goods and services 226,091 209,051

Sale of property plant and equipment - 23,187

Insurance premium 5,614 6,105

Sale of goods 10,230 8,357

Mark-up income 446 571

Insurance claim received 65 758

Dividend income 230,527 213,112 Key Management personnel Salaries and other employment benefits 65,031 23,654 Post employment benefit Expense charged in respect of staff retirement plans benefits plans 37,514 8,248

All transactions with related parties have been carried out on commercial terms and conditions.


10.Transactions with related parties

The related parties comprise subsidiary company, associated companies, other related companies, directors

of the company, key management personnel and post employment benefit plans. Significant transactions with

related parties are as follows:

152011 1st QUARTER


11. Cash flow from operating activities

Profit before tax 561,281 25,547

Adjustment for :

- Depreciation on property, plant and equipment 348,329 352,184

- Profit on disposal of property, plant and equipment (10,608) (5,299)

- Dividend income (230,535) (213,115)

- Retirement and other benefits accrued 8,248 8,248

- Markup income (15,124) (14,629)

- Exchange loss - net 22,266 14,897

- Finance cost 448,863 488,232

Profit before working capital changes 1,132,720 656,065

- Stores, spares and loose tools (737,501) (879,700)

- Stock-in-trade (51,032) (458,072)

- Trade debts 160,385 162,546

- Advances, deposits, prepayments and other receivables (362,498) (120,008)

- Trade and other payables (84,730) (304,854)

Net working capital changes (1,075,376) (1,600,088)

Cash (used in)/ generated from operations 57,344 (944,023)

12. Cash and cash equivalents

Short term borrowings - secured (10,141,037) (11,327,059)


Total cash and cash equivalents (9,764,885) (11,070,505)


13. Date of authorization This interim financial information was authorized for issue by the Board of Directors of the Company on October

22, 2011.14. Corresponding figures In order to comply with the requirements of the International Accounting Standard 34: 'Interim Financial

Reporting', the condensed interim unconsolidated balance sheet and condensed interim unconsolidated statement of changes in equity have been compared with the balances of annual audited financial statements of preceding year, whereas, the condensed interim unconsolidated profit and loss account, condensed interim unconsolidated statement of comprehensive income and condensed interim unconsolidated cash flow statement have been compared with the balances of comparable period of immediately preceding year.

Corresponding figures have been re-arranged wherever necessary for the purposes of comparison, however, no significant re-arrangements have been made.

Figures have been rounded off to the nearest thousand of Rupees.


CONSOLIDATED FINANCIAL STATEMENTS

172011 1st QUARTER

DIRECTORS’ REPORT

The board of directors is pleased to submit their report along with the consolidated financial statements for the period ended 30 September 2011. Our discussion of affairs of the holding company has been separately presented.

The consolidated sales and operating income increased to Rs 5,296.44 million from Rs 3,730.66 million in

the previous period yielding a growth of 42%. The consolidated operating profit for the year increased to

Rs 1,075.9 million as against Rs 578.93 million in the previous period registering a growth of 86%.

The consolidated net profit before tax increased to Rs 601.12 million from Rs 69.02 million in the previous

period registering a growth of 771%.

Staff and Customers

We wish to record our appreciation of continued commitment of our employees and patronage of our customers.

For and on behalf of the Board

Mian Raza Mansha

Chief Executive Officer

Lahore: 22 October 2011

Consolidated Financial PerformanceRupees in ‘000’

Net sales 5,296,449 100.00 3,730,660 100.00 1,565,789 42%

Cost of sales -3,682,226 -69.52 -2,965,382 -79.49 -716,844 24%

Gross profit 1,614,223 30.48 765,278 20.51 848,945 111%

Profit from operations 1,075,939 20.31 578,938 15.52 497,001 86%

Finance cost -474,815 -8.96 -509,911 -13.67 35,096 -7%

Profit before tax 601,124 11.35 69,027 1.85 532,097 771%

Taxation -245,596 -4.64 -22,761 -0.61 -222,835

Profit after tax 355,528 6.71 46,266 1.24 309,262 668%

% to net

sale

Change

Year on Year

2011

Quarter ended

30 September

% to net

sale

2010

Quarter ended

30 September

18 20111st QUARTER

CONDENSED INTERIM CONSOLIDATEDBALANCE SHEET


unaudited audited

Authorised capital

- 950,000,000 (June 30, 2011: 950,000,000) ordinary shares of Rs 10 each 9,500,000 9,500,000

- 50,000,000 (June 30, 2011: 50,000,000) preference shares of Rs 10 each 500,000 500,000

Total authorized capital 10,000,000 10,000,000

Issued, subscribed and paid up capital 4,381,192 4,381,192

Reserves 22,881,416 24,996,406

Accumulated profit 1,276,554 939,916

Total shareholders' equity 28,539,162 30,317,514

Non-controlling intrest 360,299 341,409

28,899,461 30,658,923

Long term finances 6 4,257,766 4,960,579

Long term deposits 69,940 70,893

Retirement and other benefits 136,265 139,213

Deferred taxation 1,921,081 1,730,886

Total non-current liabilities 6,385,052 6,901,571

Trade and other payables 1,758,430 1,847,505

Accrued markup 272,827 304,800

Short term borrowing-secured 11,040,735 9,362,051

Current portion of non-current liabilities 2,004,713 2,131,566

Provision for taxation 35,090 35,090

Total current liabilities 15,111,795 13,681,012

Total liabilities and shareholders' equity 50,396,308 51,241,506

Property, plant and equipment 7 25,362,535 25,707,179

Capital work in progress 1,582,570 1,373,820

Investments 8 4,524,439 5,055,787

Long term loans, advances and deposits 134,652 134,125

Total non-current assets 31,604,196 32,270,911

Stores, spares and loose tools 4,341,124 3,604,954

Stock-in-trade 1,815,572 1,513,014

Trade debts 432,512 650,283

Investments 8 10,542,725 12,126,367

Advances, deposits, prepayments and other receivables 1,235,932 866,678


Total current assets 18,792,112 18,970,595

Total assets 50,396,308 51,241,506

Contingencies and Commitments 9

The annexed notes form an integral part of this condensed interim consolidated financial information.


192011 1st QUARTER

CONDENSED INTERIM CONSOLIDATEDPROFIT AND LOSS ACCOUNT - UNAUDITED



Sales - net 5,296,449 3,730,660

Cost of sales 10 (3,682,226) (2,965,382)

Gross profit 1,614,223 765,278

Administrative expenses (52,483) (42,811)

Selling and distribution expenses (639,379) (329,518)

Other operating expenses (95,425) (33,535)

Other income 249,003 219,524

Profit from operations 1,075,939 578,938

Finance cost (474,815) (509,911)

Profit before taxation 601,124 69,027

Taxation (245,596) (22,761)


Attributable to:

Equity holders of the parent 336,638 34,206

Non-controlling intrest 18,890 12,060

355,528 46,266

Restated

Earnings per share basic and diluted (Rupees) 0.81 0.11



20 20111st QUARTER

CONDENSED INTERIM CONSOLIDATEDSTATEMENT OF COMPREHENSIVE INCOME - UNAUDITED




Available for sale financial assets

- Change in fair value (2,114,990) (374,310)

- Realized gain through profit and loss account - -

- Tax expense - -

Other comprehensive income for the period (2,114,990) (374,310)

Total comprehensive income for the period (1,759,462) (328,044)

Attributable to:

Equity holders of the parent (1,759,462) (328,044)

Non-controlling intrest - -

(1,759,462) (328,044)



212011 1st QUARTER

CONDENSED INTERIM CONSOLIDATEDCASH FLOW STATEMENT - UNAUDITED



Cash (used in)/ generated from operations 12 (58,236) (931,146)

Financial cost paid (506,788) (476,560)

Retirement and other benefits paid (11,196) (6,317)

Taxes paid (72,039) (56,761)

long term deposits - net (953) (3,136)

Net cash (used in)/ from operating activities [A] (649,212) (1,473,920)

Capital expenditure including purchase

of property, plant and equipment (226,141) (66,506)

Proceeds from sale of property, plant and equipment 15,999 28,380

Long term loans and deposits - net (527) 10,565

Interest received 17,542 15,610

Dividend received 230,535 213,115

Net cash from/ (used in) investing activities [B] 37,408 201,164

Repayment of long term finances (851,932) (526,917)

Repayment of liabilities against assets subject to finance lease - (42)

Net cash from/ (used in) financing activities [C] (851,932) (526,959)

In(De)crease in cash and cash equivalents [A+B+C] (1,463,736) (1,799,715)

Cash and cash equivalents at the beginning of period (9,152,752) (9,817,290)

Cash and cash equivalents at the end of period 13 (10,616,488) (11,617,005)



22 20111st QUARTER

CONDENSED INTERIM CONSOLIDATEDSTATEMENT OF CHANGES IN EQUITY - UNAUDITED

Chi

ef E

xecu

tive

Dire

ctor

Rup

ees

in th

ousa

nds

Bal

ance

as

at J

une

30, 2

010

- A

udite

d

3,65

0,99

3 3,

826,

965

12,9

08,1

75

353,

510

5,1

10,8

51

755,

856

26,6

06,3

50

328,

308

26,9

34,6

58

Tota

l com

preh

ensi

ve in

com

e fo

r th

e pe

riod

- P

rofit

for

the

year

-

- -

- -

34,2

06

34,2

06

12,0

60

46,2

66

- O

ther

com

preh

ensi

ve in

com

e fo

r the

yea

r -

- (3

74,3

10)

- -

- (3

74,3

10)

- (3

74,3

10)

Bal

ance

as

at S

epte

mbe

r 30,

201

0 - U

naud

ited

3,65

0,99

3 3,

826,

965

12,5

33,8

65

353,

510

5,11

0,85

1 79

0,06

2 26

,266

,246

34

0,36

8 26

,606

,614

Cap

ital t

rans

actio

ns w

ith o

wne

r

- R

ight

issu

e 73

0,19

9 73

0,19

9 -

-

-

- 1,

460,

398

- 1,

460,

398

Tota

l com

preh

ensi

ve in

com

e fo

r th

e pe

riod

- P

rofit

for

the

year

-

- -

- -

149,

854

149,

854

1,04

1 15

0,89

5

- O

ther

com

preh

ensi

ve in

com

e fo

r the

yea

r -

- 2,

441,

016

- -

- 2,

441,

016

- 2,

441,

016

Bal

ance

as

at J

une

30, 2

011

- A

udite

d

4,38

1,19

2 4,

557,

164

14,9

74,8

81

353,

510

5,11

0,85

1 93

9,91

6 30

,317

,514

34

1,40

9 30

,658

,923

Tota

l com

preh

ensi

ve in

com

e fo

r th

e pe

riod

- P

rofit

for

the

perio

d -

- -

- -

336,

638

336,

638

18,8

90

355,

528

- O

ther

com

preh

ensi

ve lo

ss fo

r the

per

iod

- -

(2,1

14,9

90)

- -

- (2

,114

,990

) -

(2,1

14,9

90)

Bal

ance

as

at S

epte

mbe

r 30,

201

1 - U

naud

ited

4,3

81,1

92

4,55

7,16

4 12

,859

,891

35

3,51

0 5,

110,

851

1,27

6,55

4 28

,539

,162

36

0,29

9 28

,899

,461

The

anne

xed

note

s fo

rm a

n in

tegr

al p

art o

f thi

s co

nden

sed

inte

rim c

onso

lidat

ed fi

nanc

ial i

nfor

mat

ion.

Sh

are

Pre

miu

mFa

irVa

lue

Res

erve

Cap

ital

Red

empt

ion

Res

erve

Fund

Gen

eral

Res

erve

Acc

umul

ated

Pro

fit

Tota

l sh

are

ho

lder

s eq

uity

Sh

are

Cap

ital

Tota

l eq

uity

attr

ibut

able

to

shar

eho

lder

s o

fp

aren

t co

mp

any

No

n-C

ont

rolli

ngin

tres

t

232011 1st QUARTER

SELECTED NOTES TO AND FORMING PART OF THECONDENSED INTERIM CONSOLIDATED

FINANCIAL INFORMATION - UNAUDITED1. Legal status and nature of business

The group comprises of:

- D. G. Khan Cement Company Limited, the parent company; and

- Nishat Paper Products Company Limited, the subsidiary company.

The parent company is a public limited company incorporated in Pakistan and is listed on Karachi,

Lahore and Islamabad Stock Exchanges. It is principally engaged in production and sale of Clinker,

Ordinary Por tland and Sulphate Resistant Cement. The registered office of the Company is situated at

53-A Lawrence Road, Lahore.

The subsidiary company is an unlisted public limited company incorporated in Pakistan under the

Companies Ordinance 1984 on July 23, 2004. It is principally engaged in manufacture and sale of

paper products and packaging material.

2. Basis of preparation

The condensed inter im f inancial statements have been prepared in accordance with approved

accounting standards as applicable in Pakistan for interim financial repor ting. The disclosures in the

condensed interim financial information do not include the information reported for full annual financial

statements and should therefore be read in conjunction with the financial statements for the year ended

30 June 2011.

3. Estimates

The preparat ion of the condensed inter im f inancial information requires management to make

judgments, estimates and assumptions that affect the application of accounting policies and the

repor ted amounts of assets and liabilities, income and expenses. Actual results may differ from these

estimates. In preparing this financial information the significant judgments made by the management in

applying accounting policies, key estimates and uncer tainty includes:

- Residual value and useful life estimation of fixed assets

- Taxation

- Retirements and other benefits

- Provisions and Contingencies

- Fair value of derivatives

4. Significant accounting policies

4.1 The account ing pol ic ies adopted for the preparat ion of th is inter im consol idated f inancia l

information are the same as those applied in the preparation of the preceding annual published

consolidated financial statements of the group for the year ended June 30, 2011.

24 20111st QUARTER

4.2 In addition to above, following amendments to the International Financial Repor ting Standards/

International Accounting Standards are mandatory for the first time for the financial year beginning

on or after January 1, 2011, however, the adoption of these amendments is either not yet effective

of the amendments did not have any significant impact on the financial information of the group.

- IFRS 7 - Financial instruments : Disclosures (Improvements)

- IAS 1 - Presentation of Financial Statements (Improvements)

- IAS 24 - Related Party disclosuures (amendment)

- IFRIC 13 - Customer Loyalty Programmes (improvements)

- IFRIC 14 - Prepayments of minimum funding requirements (amendment)

5. The provision for taxation for the quarter September 30, 2011 has been made on an estimated basis.


unaudited audited

6. Long term finances

These are composed of:

- Long term loans 5,387,961 6,277,627

- Loan under musharika arrangement 807,500 807,500

6.1 6,195,461 7,085,127

Less: Current portion shown under current liabilities 1,937,695 2,124,548

Total long term finances 4,257,766 4,960,579

6.1 Long term loans

Opening balance 7,085,127 7,432,988

Add: Disbursements during the period - 1,850,000

Exchange loss during the period 22,266 6,182

7,107,393 9,289,170

Less: Repayment during the period 911,932 2,204,043


7. Property, Plant and Equipment

Opening book value 25,707,179 26,446,199

Add: Additions during the period/ year 7.1 12,354 765,909

Transfer in during the period/ year - 673

25,719,533 27,212,781

Less: Disposals during the period/ year - net book value 5,392 31,063

Depreciation charged during the period/ year 351,606 1,474,539


252011 1st QUARTER

9. Contingencies and commitments

9.1 Contingencies

There is no significant change in contingencies from the annual financial statements of the company

for the year ended June 30, 2011.

9.2 Commitments in respect of

(i) Contracts for capital expenditure Rs 178.318 million (June 30, 2011: Rs 113.639 million).

(ii) Letters of credit for capital expenditure Rs 1,213.102 million (June 30, 2011: Rs 1,364.57 million).

(iii) Letters of credit other than capital expenditure Rs 1,101.981 million (June 30, 2011: Rs 1,233.42

million).

Rupees in thousands 30.09.2011 30.06.2011

unaudited audited

7.1 Major additions during the period

Free hold land - 410

Building on freehold land - 212,919

Roads - 4,089

Plant and machinery 6,360 455,263

Furniture, fixtures and office equipment 5,454 22,500

Motor vehicles 540 66,843

Power and water supply lines - 3,885

12,354 765,909

8. Investments

Cost of investments 2,207,273 2,207,273

Add: Fair value adjustments 12,859,891 14,974,881

15,067,164 17,182,154

Less: Investments classified in current assets 10,542,725 12,126,367


26 20111st QUARTER


10 Cost of sales

Raw and packing materials consumed 558,938 525,866

Salaries, wages and other benefits 215,791 182,678

Electricity, gas and water 477,409 458,764

Furnace oil/coal 1,954,193 1,501,202

Stores and spares consumed 244,510 272,643

Repair and maintenance 46,874 66,158

Insurance 15,134 13,310

Depreciation on property, plant and equipment 352,588 360,432

Royalty 37,665 37,728

Excise duty 3,489 3,492

Vehicle running 5,657 6,555

Postage, telephone and telegram 705 1,216

Printing and stationery 865 760

Legal and professional charges 252 788

Travelling and conveyance 3,212 1,423

Estate development 4,266 2,622

Rent, rates and taxes 5,907 4,397

Freight charges 1,396 1,344

Other expenses 6,034 10,215

Total manufacturing cost 3,934,885 3,451,593

Opening work-in-process 169,612 537,539

Cost of goods available for manufacture 4,104,497 3,989,132

Closing work-in-process (443,002) (802,717)

Cost of goods manufactured 3,661,495 3,186,415

Opening stock of finished goods 330,242 249,740

Cost of goods available for sale 3,991,737 3,436,155

Closing stock of finished goods (299,923) (468,773)

Own consumption capitalized (9,588) (2,000)

Cost of goods sold 3,682,226 2,965,382


11. Transactions with related parties

The related parties comprise subsidiary company, associated companies, other related companies, directors

of the company, key management personnel and post employment benefit plans. Significant transactions with

related parties are as follows:

272011 1st QUARTER


12. Cash flow from operating activities

Profit before tax 601,124 69,027

Adjustment for :

- Depreciation on property, plant and equipment 356,644 363,206

- Profit on disposal of property, plant and equipment (10,608) (5,299)

- Dividend income (230,535) (213,115)

- Retirement and other benefits accrued 8,248 8,248

- Markup income (16,561) (14,629)

- Exchange loss - net 22,266 14,897

- Finance cost 474,815 509,911

Profit before working capital changes 1,205,393 732,246

- Stores, spares and loose tools (736,170) (885,262)

- Stock-in-trade (302,558) (514,198)

- Trade debts 217,771 148,159

- Advances, deposits, prepayments and other receivables (353,597) (109,610)

- Trade and other payables (89,075) (302,481)

Net working capital changes (1,263,629) (1,663,392)

Cash (used in)/ generated from operations (58,236) (931,146)



Relationship with the Nature of transaction

Group

Other related parties Purchase of goods and services 226,091 209,051

Sale of property plant and equipment - 23,187

Insurance premium 5,614 6,105

Sale of goods 10,230 8,357

Mark-up income 446 571

Insurance claim received 65 758

Dividend income 230,527 213,112

Key Management Salaries and other

personnel employment benefits 65,031 23,654

Post employment Expense charged in respect of staff

benefit plans retirement benefits plans 37,514 8,248

All transactions with related parties have been carried out on commercial terms and conditions.


28 20111st QUARTER


13. Cash and cash equivalents Short term borrowings - secured (11,040,735) (11,914,064) Cash and bank balances 424,247 297,059 Total cash and cash equivalents (10,616,488) (11,617,005)


14. Operating segments Segment information is presented in respect of the group's business. The primary format, business segment,

is based on the group's management reporting structure. The group's operations comprise of the following main business segment types:

Type of segments Nature of business Cement Production and sale of clinker, Ordinary Portland and Sulphate Resistant Cements. Paper Manufacture and supply of paper products and packing material.

14.1 Segment analysis and reconciliation - condensed The information by operating segment is based on internal reporting to the Group executive committee,

identified as the 'Chief Operating Decision Maker' as defined by IFRS 8. This information is prepared under the IFRS's applicable to the consolidated financial statements. All group financial data are assigned to the operating segments.

Rupees in thousands Cement Paper Elimination - net Consolidated

2011 2010 2011 2010 2011 2010 2011 2,010

Revenue from

- External Customers 5,088,013 3,527,923 208,436 202,737 - - 5,296,449 3,730,660

- Inter-group - - 195,660 233,250 (195,660) (233,250) - -

5,088,013 3,527,923 404,096 435,987 (195,660) (233,250) 5,296,449 3,730,660

Segment gross profit 1,531,197 678,439 37,137 102,231 45,889 (15,392) 1,614,223 765,278

Segment expenses (782,483) (398,074) (5,007) (8,260) 203 470 (787,287) (405,864)

Other income 261,430 233,414 1,686 822 (14,113) (14,712) 249,003 219,524

Financial charges (448,863) (488,232) (39,862) (36,551) 13,910 14,872 (474,815) (509,911)

Taxation (243,532) (3,401) (2,064) (19,360) - - (245,596) (22,761)

Profit after taxation 317,749 22,146 (8,109) 38,884 45,888 (14,764) 355,528 46,266

Depreciation 348,329 352,184 8,315 8,513 - 2,509 356,644 363,206

Capital expenditure (217,525) (65,763) (3,579) (751) (5,037) 8 (226,141) (66,506)

Cash to operations (513,200) (1,460,758) (157,634) (17,000) 21,622 3,838 (649,212) (1,473,920)

Cash from investing 44,587 202,020 (1,362) 1,571 (5,817) (2,427) 37,408 201,164

Rupees in thousands 30.09.2011 30.06.2011 30.09.2011 30.06.2011 30.09.2011 30.06.2011 30.09.2011 30.06.2011

unaudited audited unaudited audited unaudited audited unaudited audited

Segment assets 48,637,205 49,673,050 2,051,801 1,885,943 (292,698) (317,487) 50,396,308 51,241,506

Segment liabilities 20,217,161 19,455,765 1,643,322 1,469,355 (363,636) (342,537) 21,496,847 20,582,583


292011 1st QUARTER

14.2 Geographical segments

All segments of the group are managed on nation-wide basis and operate manufacturing facilities and sales offices in Pakistan only.

15. Date of authorization

This interim financial information was authorized for issue by the Board of Directors of the Company on October 22, 2011.

16. Corresponding figures

In order to comply with the requirements of the International Accounting Standard 34: 'Interim Financial Reporting', the condensed interim consolidated balance sheet and condensed interim consolidated statement of changes in equity have been compared with the balances of annual audited financial statements of preceding year, whereas, the condensed interim consolidated profit and loss account, condensed interim consolidated statement of comprehensive income and condensed interim consolidated cash flow statement have been compared with the balances of comparable period of immediately preceding year.

Corresponding figures have been re-arranged wherever necessary for the purposes of comparison, however, no significant re-arrangements have been made.

Figures have been rounded off to the nearest thousand of Rupees.


Nishat House, 53-A, Lawrence Road, Lahore-Pakistan.UAN:+92-42-111-11-33-33

D.G. KHAN CEMENTCOMPANY LIMITED

Documents

D.G. KHAN CEMENT COMPANY LIMITED 1st Quarter Report.pdf · Khofli Sattai, Distt. Dera Ghazi Khan-Pakistan Phone: 92-641-460025-7 Fax: 92-641-462392 Email: [email protected] 2. 12,