D.G. Khan Cement Company Limited CONTENTS 3rd Quarter... · 2014-08-25 · D.G. Khan Cement Company Limited CONTENTS D.G. Khan Cement Company Limited Corporate Profile 2 Directors’

D.G. Khan Cement Company Limited

CONTENTS


Corporate Profile 2

Directors’ Report 3

Condensed Interim Unconsolidated Balance Sheet 6

Condensed Interim Unconsolidated Profit and Loss Account 8

Condensed Interim Unconsolidated Cash Flow Statement 9

Condensed Interim Unconsolidated Statement of Comprehensive Income 10

Condensed Interim Unconsolidated Statement of Changes in Equity 11

Notes to the Condensed Interim Unconsolidated Financial Information 12

Directors’ Report 21

Condensed Interim Consolidated Balance Sheet 22

Condensed Interim Consolidated Profit and Loss Account 24

Condensed Interim Consolidated Cash Flow Statement 25

Condensed Interim Consolidated Statement of Comprehensive Income 26

Condensed Interim Consolidated Statement of Changes in Equity 27

Notes to the Condensed Interim Consolidated Financial Information 28

D.G. Khan Cement Company Limited and its Subsidiary


02 20103rd Quarter

Board of Directors Mrs. Naz Mansha ChairpersonMian Raza Mansha Chief ExecutiveMr. Khalid Qadeer QureshiMr. Zaka-ud-DinMr. Muhammad AzamMr. Inayat Ullah Niazi Chief Financial OfficerMs. Nabiha Shahnawaz Cheema

Audit Committee Mr. Khalid Qadeer Qureshi Member/ChairmanMr. Muhammad Azam MemberMs. Nabiha Shahnawaz Cheema Member

Company Secretary Mr. Khalid Mahmood Chohan

Bankers Allied Bank LimitedAskari Bank LimitedBank Alfalah LimitedBarclays BankBank Islami Pakistan LimitedCitibank N.A.Deutsche Bank AGDubai Islamic Bank Pakistan LimtedFaysal Bank LimitedHabib Bank LimitedHSBC LimitedMCB Bank LimitedMeezan Bank LimitedNational Bank of PakistanNIB Bank LimitedSamba Bank LimitedStandard Chartered Bank (Pakistan) LimitedSilk Bank Limited (Formerly Saudi Pak Commercial Bank Limited)The Bank of PunjabThe Royal Bank of Scotland (Formerly ABN AMRO Bank (Pakistan) Limited)United Bank Limited

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-PakistanPhone: 92-42-36367812-20 UAN: 111 11 33 33Fax: 92-42-36367414Email: [email protected] site: www.dgcement.com

Factory 1. Khofli Sattai, Distt. Dera Ghazi Khan-PakistanPhone: 92-641-460025-7 UAN: 92 642 111 11 33 33Fax: 92-641-462392Email: [email protected]

2. 12, K.M. Choa Saidan Shah Road,Khairpur, Tehsil Kallar Kahar,Distt. Chakwal-PakistanPhone: 92-543-650215-8 UAN: 92 543 111 11 33 33Fax: 92-543-650231

CORPORATE PROFILE


03 20103rd Quarter

DIRECTORS' REPORT

I am pleased to present the financial statements of 3rd quarter ended March 31, 2010 along withreview thereon.

INDUSTRY REVIEW

Economic growth which was already dangling due to weak political posture and fading law andorder situation received further set back due to deepening energy crisis in the country. Severeenergy shortage both of electricity and gas in the country hit the wheels of industry badly. Bothindustrial and commercial activities almost halted in almost all parts of the country due to all timerecord scarcity of electricity and gas. Continued dry weather in the country also impacted thehydel power generation to its ever lowest. All these badly effected the micro economic fundamentalsin general and developmental and construction activities in particular, in the country.

Cement sales in the country during the nine months ended March 31, 2010 witnessed a growthof 17% compared with the same period last year. Total cement sales in the local market duringthe period touched to 17.413 million tons against 14.858 million tons during the correspondingperiod. Rock bottom prices of cement ensued from knock down competition among cementmanufacturers were the major reason behind this growth in sale of cement. Going forward therising input costs also boded negatively in the financial performance of the cement industry.

Export of Cement from the country is at stand still. During the period under report cementexports grew merely by 3%, whereas during the 3rd quarter i.e. Jan-Mar 2010 exports witnesseda decline of 11% compared with the same period last year. The decline in export is due to decreasein prices in international market coupled with resumption of export of cement from a few Gulfregion countries. This has proved to be serious setback for the cement industry in Pakistan.

January-March July-March

ClinkerProduction 1,143,003

114%

642,062

64%

3,442,240

114%

2,773,030

92%

CementProduction 1,260,741 1,019,166 3,573,887 2,820,343

Utilization%

M-Tons M-Tons

2010 2009 2010 2009


CementSales 1,276,425 1,026,837 3,585,608 2,778,367

- 27,186 71,041 63,474ClinkerSales

M-Tons M-Tons

2010 2009 2010 2009

PLANT OPERATION ANDPRODUCTION

All the three plants operated well during theperiod under report. Clinker productionstood at 114% against 92% same period lastyear of the installed capacity.

Cement production also grew by 26%during July-March 2010 compared withcorresponding period ensued from increasedcement demand in the country.

SALES

Historic low prices of cement in countryprovided stimulus to the cement demand.Despite less spending by the Govt. ondevelopment activities during the periodunder review the cement sales balloonedsignificantly from the corresponding periodlast year, mainly on account of activities inhousing sector and commercial activities.Whereas, during the 3rd quarter of FY 2010the local sales augmented by nearly 24%compared with the same period last year.


04 20103rd Quarter

report specially coal and furnace oil remained at low level compared with the same period lastyear which is evident from the fact that cost of goods sold increased marginally despite volumetricgrowth in sales.

Finance cost for the period registered a decline compared with same period last year. The declineduring the current year is due to that fact that heavy exchange losses incurred due to sharpdevaluation of Pak Rupee witnessed during the last year same period.

Other income for the period is inclusive of dividend income and gain on sale of shares of Rs. 586million and 79 million respectively against a dividend of Rs. 546 million last year same period.

After accounting for depreciation/amortization, and provision for taxation (including deferred tax),your company earned a net profit of Rs. 388.170 million (FY 2009 Rs.321.117 million)

FUTURE OUTLOOK

Ongoing recessionary waves led to poor economic growth across the board. The situation isfurther aggravating due to historic energy crisis in the country. Dry weather across the countryis expected to impact Hydel power generation and agriculture sector which will have a bad affecton GDP growth. It is hoped that with the improvement in energy supply and security concernsthe investor friendly climate will emerge and industrial and commercial activities will revive in thecountry.

Govt. spending under PSDP as announced in the last budget has been reportedly curtailed significantlyon account of liquidity crunch and mounting issue of circular debt. But it is anticipated that in thecoming Federal budget the Govt. will focus on infrastructural and water course projects which willboost cement demand in the country. On the other hand newly agreed NFC Award will also beimplemented from July 1st, which will yield more revenue to the provinces. This will off coursegive provinces more financial resources for developmental activities.

Going forward, recent historical move of 18th constitutional amendment which was passed withconsensus by the all the political parties in not less than a landmark for the country. This has givenmore financial autonomy to the provinces coupled with increased breadth to undertake projectswhich were not allowed earlier. Now the provinces may undertake small Hydel power projects

On the other hand export of cement decreased sharply by 34% during the nine months comparedwith the same period last year, on account of almost no demand from the Gulf States andcompetitive prices in other regional markets. The less attractive export prices of cement compelledus to focus more on local market, the market share of your company in local market increasedby 3% to 17% from 14% during the same period last year.

3,893,024

407,500

(81,800)

(0.27)

4,514,053

1,139,655

194,069

0.64

11,851,235

2,112,316

388,170

1.28

13,166,445

3,733,220

321,117

1.06

Net Sales

Gross Profit

Net (Loss) /Profit

(Loss) /Earning perShare (Rs.)

(Rupees in thousand)(Rupees in thousand)


2010 2009 2010 2009

OPERATING RESULTS

Sizeable growth in sales volume failed to yieldsale revenue at par with the same period lastyear. The net sale revenue declined by 10%during the period under review comparedwith the same period last year. The declineis attributed to poor cement prices in thelocal market owing to competition amongcement manufacturers in a move to capturethe market share.

Gross profit during the period under reviewsharply declined ensued from reduced salesprices. Cost of inputs during the period under


05 20103rd Quarter

on their own. If such a spirit and gesture showed by all the stake holders of the country, the dayis not far when all the pending disputes would be resolved for the well being of the general publicand economic development of the country.

Pakistan has over supply situation in cement. Cement industry is trying all out efforts to boostexports of cement from the country. Govt. of Pakistan has recently announced long outstandingissue of inland freight subsidy on exports of cement. Govt. has earmarked Rs. 622 million for freightsubsidy up to June 30, 2010 for different products including cement. The cement sector is thelargest beneficiary in terms of allocation of Rs. 597 million. The subsidy will be to the tune of 35%of the inland freight. If this subsidy continues after June, this will give a breath to cement exporterand in times to come cement export is expected to achieve a decent growth.

ISSUANCE OF RIGHT SHARES

The board has decided to raise further capital by issuance of right shares to finance the waste heatrecovery project. The right share announced was 20% of the issued share capital at a price of Rs.20/- per share. The amount generated from new capital will reduce the finance cost of the company.

ON GOING PROJECTS

Power generation project from waste heat recovery is all set to start its trial operations by theend of April 2010. Cold test of various equipments has already started. The project is expectedto generate about 10.4MW power without any fuel, which will reduce the cost of electricity.

ACKNOWLEDGMENT

The management strongly acknowledges the efforts and hard work of all the employees forachieving above average production during the period under report.

for and on behalf of the Board

(Mian Raza Mansha)Chief Executive

Lahore: April 22, 2010


06 20103rd Quarter

CONDENSED INTERIM UNCONSOLIDATED BALANCE SHEET

Chief Executive

March 31, June 30, 2010 2009

Unaudited AuditedNote (Rupees in thousand)

EQUITY AND LIABILITIES

CAPITAL AND RESERVESAuthorised capital- 950,000,000 (June 30,2009: 950,000,000)ordinary shares of Rs 10 each 9,500,000 9,500,000- 50,000,000 (June 30,2009: 50,000,000)preference shares of Rs 10 each 500,000 500,000

10,000,000 10,000,000

Issued, subscribed and paid up capital 3,042,494 3,042,494Reserves 22,966,168 17,401,220Accumulated profit 862,898 474,728

26,871,560 20,918,442

NON-CURRENT LIABILITIES

Long term finances 5 3,870,177 4,375,837Long term deposits 79,861 73,765Retirement and other benefits 98,229 78,622Deferred taxation 1,424,800 1,441,576

5,473,067 5,969,800

CURRENT LIABILITIES

Trade and other payables 2,048,759 1,435,420Accrued markup 434,853 531,772Short term borrowing-secured 8,980,972 9,068,575Current portion of non-current liabilities 4,266,865 4,763,942Provision for taxation 35,090 35,090

15,766,539 15,834,799

CONTINGENCIES AND COMMITMENTS 6

48,111,166 42,723,041

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


07 20103rd Quarter

March 31, June 30, 2010 2009


ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 7 23,406,516 24,345,793Capital work in progress 2,300,490 1,750,208Investments 8 4,807,859 3,172,508Long term loans, advances and deposits 164,793 166,940

30,679,658 29,435,449

CURRENT ASSETS

Stores, spares and loose tools 3,239,365 2,935,880Stock-in-trade 874,696 899,836Trade debts 424,925 513,966Investments 8 11,668,218 7,785,968Advances, deposits, prepayments andother receivables 968,363 908,100Cash and bank balances 255,941 243,842

17,431,508 13,287,592

48,111,166 42,723,041

AS AT MARCH 31, 2010 (UN-AUDITED)

Director


08 20103rd Quarter

CONDENSED INTERIM UNCONSOLIDATED PROFIT AND LOSS ACCOUNT - UNAUDITEDFOR THE NINE MONTHS ENDED MARCH 31, 2010

Chief Executive Director

Quarter ended Nine months ended March 31, March 31, March 31, March 31,

2010 2009 2010 2009(Rupees in thousand) (Rupees in thousand)

NoteSales 3,893,024 4,514,053 11,851,235 13,166,445

Cost of sales 9 (3,485,524) (3,374,398) (9,738,919) (9,433,225)

Gross profit 407,500 1,139,655 2,112,316 3,733,220

Administrative expenses (42,685) (33,889) (123,641) (99,759)Selling and distribution expenses (165,990) (280,254) (689,754) (1,370,419)Impairment loss - (154,723) - (154,723)Other operating expenses 3,109 (53,866) (136,673) (712,315)Other income 232,318 157,752 703,044 590,152

Profit from operations 434,252 774,675 1,865,292 1,986,156

Finance cost (465,698) (609,606) (1,421,673) (2,067,039)

(Loss) / profit before taxation (31,446) 165,069 443,619 (80,883)

Taxation (50,354) 29,000 (55,449) 402,000

(Loss) / profit after taxation (81,800) 194,069 388,170 321,117

Restated Restated

(Loss)/ earning per sharebasic and diluted Rupees (0.27) 0.64 1.28 1.06



09 20103rd Quarter

CONDENSED INTERIM UNCONSOLIDATED CASH FLOW STATEMENT - UNAUDITEDFOR THE NINE MONTHS ENDED MARCH 31, 2010

Nine Months Nine Monthsended ended

March 31, March 31,2010 2009

Note (Rupees in thousand)

Cash flows from operating activities

Cash generated from operations 11 2,805,798 3,195,576Financial cost paid (1,518,592) (1,845,524)Retirement and other benefits paid (9,360) (6,374)Taxes paid (187,953) (144,855)long term deposits - Net 6,096 520

Net cash from operating activities 1,095,989 1,199,343

Cash flows from investing activities

Capital expenditure including purchase of property, plant and equipment (653,098) (307,884)Proceeds from sale of investments 126,554 -Proceeds from sale of property, plant and equipment 6,418 3,275Long term loans and deposits - Net 2,147 357,073Interest received 22,145 36,591Dividend received 586,918 545,542

Net cash from investing activities 91,084 634,597

Cash flows from financing activities

Proceeds from long term finances 1,000,000 -Repayment of long term finances (2,087,371) (2,394,852)Repayment of liabilities against assets subject to finance lease - (1,141)Dividend paid - (528)

Net cash used in financing activities (1,087,371) (2,396,521)Net increase/ (decrease) in cash and cash equivalents 99,702 (562,581)Cash and cash equivalents at the beginning of year (8,824,733) (7,370,648)Cash and cash equivalents at the end of period 12 (8,725,031) (7,933,229)




10 20103rd Quarter

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - UNAUDITEDFOR THE NINE MONTHS ENDED MARCH 31, 2010





Other comprehensive income

Available for sale financial assets- Change in fair value 356,300 1,908,454 5,623,720 (11,544,585)- Realized gain through profit and loss account - - (58,772) -- Tax expense - - - -

Other comprehensive income(loss) for the period 356,300 1,908,454 5,564,948 (11,544,585)

Total comprehensive income(loss) for the period 274,500 2,102,523 5,953,118 (11,223,468)



11 20103rd Quarter

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12 20103rd Quarter

1. Legal status and nature of business

D. G. Khan Cement Company Limited ("the Company") is a public limited companyincorporated 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 SulphateResistant Cement. The registered office of the Company is situated at 53-A LawrenceRoad, Lahore.

2. Basis of preparation

The unaudited condensed interim unconsolidated financial information (hereafter "interimfinancial information") for the third quarter has been prepared and is being submitted toshareholders in accordance with the provisions contained in section 245 of the CompaniesOrdinance, 1984 and the pronouncements of International Accounting Standard (IAS) 34- 'Interim Financial Reporting'. The interim financial information does not include all of theinformation required for full annual financial statements and accordingly, should be readin conjunction with the annual financial statements for the year ended June 30, 2009 asthey provide an update of previously reported information.

The preparation of the interim financial information requires management to makejudgments, estimates and assumptions that affect the application of accounting policies,the presentation of assets, liabilities, incomes and expenses and the amounts reportedthere against as well as disclosure of contingent liabilities at the date of the interim financialinformation. If in future such estimates and assumptions, which are based on management'sbest judgment at the date of the interim financial information, deviate from the actualcircumstances, the original estimates and assumptions will be modified as appropriateduring the period in which the circumstances change.

In preparing the interim financial information, the significant judgments made by themanagement 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 ofthe interim financial information are generally based on the same policies and methods

SELECTED NOTES TO AND FORMING PART OF THE CONDENSEDINTERIM UNCONSOLIDATED FINANCIAL INFORMATION - UNAUDITEDFOR THE NINE MONTHS ENDED MARCH 31, 2010


13 20103rd Quarter

as applied in preparation of the annual financial statements for the year ended June30, 2009.

3.2 The following amendments to the International Accounting Standards have becomeapplicable for the first time being mandatory for the financial year beginning on orafter July 1, 2009.

International Accounting Standard 1 (revised), 'Presentation of financialstatements'

The revised accounting standard prohibits the presentation of certain items of incomeand expenses (non-owner changes in equity) in the statement of changes in equity thatwere earlier required by other International Financial Reporting Standards (IFRS) tobe accounted for in the statement of changes in equity and thus requires 'non-ownerchanges in equity' to be presented separately from 'owner changes in equity'. All 'non-owner changes in equity' are required to be shown in the performance statement.Companies can choose whether to present one performance statement (Statementof Comprehensive Income) or two statements (Profit and Loss Account and Statementof Comprehensive Income).

The company, however, has preferred to present two statements i.e., a Profit andLoss Account and a Statement of Comprehensive Income. This interim financialinformation has been prepared on the basis of revised disclosure requirements.

Other amendments relating to other accounting standards

In addition to above, following new accounting standards and amendments to theaccounting standards are mandatory for the first time for the financial year beginningon or after July 1, 2009, however, the adoption of these new standards and amendmentsto standards did not have any significant impact on the financial information of thecompany.

- IFRS 2 (amendment) - Share Based Payments- IFRS 3 (amendment) - Business Combinations- IAS 23 (revised) - Borrowing costs - IAS 27 (revised) - Consolidated and separate financial statements- IAS 32 (amendment) - Financial Instruments: Presentation and consequential

amendment to IAS 1 Presentation of financial Statements.- IFRIC 15 - Agreements for the construction of Real Estate- IFRIC 16 - Hedges of a Net Investment in a Foreign Operation

4. The provision for taxation for the nine months ended March 31, 2010 has been made onan estimated basis.


14 20103rd Quarter

March 31, June 30, 2010 2009


5. Long term financesThese are composed of:

- Long term loans 6,137,042 7,135,311- Loan under musharika arrangement 2,000,000 2,000,000

5.1 8,137,042 9,135,311Less: Current portion shown under

current liabilities 4,266,865 4,759,4743,870,177 4,375,837

5.1 Long term loans

Opening balance 9,135,311 11,094,112Add: Disbursements during the period 1,000,000 300,000

Exchange loss during the period 89,102 730,88810,224,413 12,125,000

Less: Repayment during the period 2,087,371 2,989,689Closing balance 8,137,042 9,135,311

6. Contingencies and commitments

6.1 Contingencies

There is no significant change in contingencies from the annual financial statements of thecompany for the year ended June 30, 2009.

6.2 Commitments in respect of

(i) Contracts for capital expenditure Rs 140.044 million (June 30, 2009: Rs 196.252 million).(ii) Letters of credit for capital expenditure Rs 107.028 million (June 30, 2009: Rs 0.068

million).(iii) Letters of credit other than capital expenditure Rs 1,283.373 million (June 30, 2009:

Rs 986.898 million).


15 20103rd Quarter

March 31, June 30, 2010 2009


7. Property, Plant and Equipment

Opening book value 24,345,793 22,977,894

Add: Additions during the period/ year 7.1 102,815 2,733,729 Transfer in during the period/ year - 5,046

102,815 2,738,775

Less: Disposals during the period/ year - net book value 4,268 2,011 Depreciation charged during the period/ year 1,037,824 1,368,865

1,042,092 1,370,876

Closing book value 23,406,516 24,345,793

7.1 Major additions during the period

Free hold land - 64,893Building on freehold land - 292,731Roads - 56,058Plant and machinery 84,721 2,081,601Quarry equipment - 174,380Furniture, fixtures and office equipment 4,662 23,285Motor vehicles 13,432 4,886Power and water supply lines - 35,895

102,815 2,733,729

8. Investments

Cost of investments 2,153,712 2,201,059Add: Fair value adjustments 14,322,365 8,757,417

16,476,077 10,958,476

Less: Investments classified in current assets 11,668,218 7,785,968Closing balance 4,807,859 3,172,508


16 20103rd Quarter



9. Cost of sales

Raw and packing materials consumed 482,121 388,883 1,384,291 1,107,829Salaries, wages and other benefits 164,490 151,435 498,016 466,731Electricity, gas and water 517,417 245,822 1,392,161 985,213Furnace oil/coal 1,562,448 883,491 4,314,401 5,258,583Stores and spares consumed 259,491 282,236 719,355 667,544Repair and maintenance 40,076 32,213 105,535 92,712Insurance 10,732 10,057 37,087 32,166Depreciation on property, plant and equipment 343,295 338,789 1,028,198 994,793Depreciation on assets subject to

finance lease - - - 80Royalty 45,135 12,745 135,198 54,649Excise duty 4,207 4,819 12,602 9,959Vehicle running 5,072 4,096 15,127 13,809Postage, telephone and telegram 933 1,011 3,168 3,177Printing and stationery 889 1,058 3,504 2,882Legal and professional charges 567 748 1,378 2,420Traveling and conveyance 1,288 1,684 4,226 3,883Estate development 2,113 2,567 8,039 6,703Rent, rates and taxes 3,522 1,694 13,205 5,045Freight charges 1,505 1,389 3,336 4,266Other expenses 4,470 3,120 14,027 25,865Total manufacturing cost 3,449,771 2,367,857 9,692,854 9,738,309

Opening work-in-process 469,008 1,240,801 387,444 118,292Closing work-in-process (466,246) (230,530) (466,246) (230,530)

2,762 1,010,271 (78,802) (112,238)Cost of goods manufactured 3,452,533 3,378,128 9,614,052 9,626,071

Opening stock of finished goods 155,199 262,309 249,916 78,369Closing stock of finished goods (121,491) (263,229) (121,491) (263,229)

33,708 (920) 128,425 (184,860)

Less: Own consumption capitalized (717) (2,810) (3,558) (7,986)3,485,524 3,374,398 9,738,919 9,433,225


17 20103rd Quarter

10. Transactions with related parties

The related parties comprise subsidiary company, associated companies, other relatedcompanies, directors of the company, key management personnel and post employmentbenefit plans. Significant transactions with related parties are as follows:

Nine months endedMarch 31, March 31,

2010 2009 (Rupees in thousand)

Relationship with the party Nature of transaction

Subsidiary company Purchase of goods and services 750,810 653,755Rental income 582 114Interest income 19,590 31,822

Other related parties Purchase of goods and services 537,233 498,567Insurance premium 56,092 40,468Sale of goods 14,301 30,022Mark-up income on balances with related parties 1,898 3,529Insurance claim received 202 417Dividend income 539,802 545,513

Key Management Salaries and other personnel employment benefits 56,910 50,836

Post employment Expense charged in respect of benefit plans staff retirement benefits plans 32,020 24,565

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



11. Cash flow from operating activities

Profit / (loss) before tax 443,619 (80,883)

Adjustment for :- Depreciation on property, plant and equipment 1,037,824 1,004,767- Depreciation on assets subject to finance lease - 89- Profit on disposal of property, plant and equipment (2,149) (1,521)- Gain on disposal of investments (79,207) -- Dividend income (586,918) (545,531)- Impairment loss - 154,723- Provision for WPPF 23,945 -- Provision for WWF 11,328 -- Retirement and other benefits accrued 24,499 20,411


18 20103rd Quarter



- Markup income (21,489) (35,447)- Exchange loss - net 89,102 705,963- Finance cost 1,421,673 2,067,039

Profit before working capital changes 2,362,227 3,289,610

Effect on cash flow due to working capital changes:- (Increase)/ decrease in stores, spares and loose tools (303,485) 488,251- Decrease / (Increase) in stock-in-trade 25,140 (347,647)- Decrease / (Increase) in trade debts 89,041 (153,851)- Decrease / (Increase) in advances, deposits, prepayments and other receivables 54,809 (278,867)- Increase in trade and other payables 578,066 198,080

443,571 (94,034)

Cash generated from operations 2,805,798 3,195,576

12. Cash and cash equivalents

Short term borrowings - secured (8,980,972) (8,110,403)Cash and bank balances 255,941 177,174

(8,725,031) (7,933,229)

13. Date of authorization

This interim financial information was authorized for issue by the Board of Directors of theCompany on April 22, 2010.

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 andcondensed interim unconsolidated statement of changes in equity have been comparedwith the balances of annual audited financial statements of preceding year, whereas, thecondensed interim unconsolidated profit and loss account, condensed interim unconsolidatedstatement of comprehensive income and condensed interim unconsolidated cash flowstatement have been compared with the balances of comparable period of immediatelypreceding year.

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

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



19 20103rd Quarter

D.G. Khan Cement Company LimitedCondensed Interim Consolidated

Financial Statements (Un-Audited)For the nine months

ended March 31, 2010


21 20103rd Quarter

I am pleased to present before you the consolidated financial statements of D.G. Khan CementCompany Ltd. and its subsidiary Nishat Paper Products Company Ltd.

Consolidated financial performance of the both companies is as follows:

July-Mar 2010 July-Mar 2009

(Rupees in thousand)

Sale 12,328,553 13,467,917Gross profit 2,374,776 3,844,724Profit/(loss) before tax 574,139 (167,762)Profit after tax 467,549 249,238Earning per share 1.41 0.82

A separate report on affairs of D.G. Khan Cement Company Ltd for the period ended March31,2010 has been sparately presented.

for and on behalf of the Board

(Mian Raza Mansha)Chief Executive

Lahore: April 22, 2010

DIRECTOR’S REPORT ON CONDENSED INTERIM CONSOLIDATEDFINANCIAL STATEMENTS (UN-AUDITED)


22 20103rd Quarter

March 31, June 30, 2010 2009


EQUITY AND LIABILITIES

CAPITAL AND RESERVESAuthorised capital- 950,000,000 (June 30,2009: 950,000,000) ordinary shares of Rs 10 each 9,500,000 9,500,000- 50,000,000 (June 30,2009: 50,000,000) preference shares of Rs 10 each 500,000 500,000

10,000,000 10,000,000

Issued, subscribed and paid up capital 3,042,494 3,042,494Reserves 23,005,192 17,440,244Accumulated profit 911,816 483,954

26,959,502 20,966,692

NON-CONTROLLING INTEREST 329,121 289,43427,288,623 21,256,126

NON-CURRENT LIABILITIESLong term finances 6 4,070,177 4,675,837Liabilities against assets subject to finance lease 214 155Long term deposits 79,861 73,765Retirement and other benefits 98,229 78,622Deferred taxation 1,389,800 1,361,576

5,638,281 6,189,955

CURRENT LIABILITIESTrade and other payables 2,172,036 1,446,235Accrued markup 434,853 569,329Short term borrowing-secured 9,456,082 9,446,856Current portion of non-current liabilities 4,436,865 4,924,181Provision for taxation 35,090 35,090

16,534,926 16,421,691

CONTINGENCIES AND COMMITMENTS 7

49,461,830 43,867,772

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

CONDENSED INTERIM CONSOLIDATED BALANCE SHEET

Chief Executive


23 20103rd Quarter

March 31, June 30, 2010 2009


ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 8 24,556,497 25,550,453Assets subject to finance lease 731 731Capital work in progress 2,300,490 1,750,208Investments 9 4,604,230 2,968,879Long term loans, advances and deposits 165,812 167,959

31,627,760 30,438,230

CURRENT ASSETSStores, spares and loose tools 3,278,157 2,964,840Stock-in-trade 1,310,875 1,023,230Trade debts 612,648 656,986Investments 9 11,668,229 7,785,979Advances, deposits, prepayments and other receivables 671,637 737,493Cash and bank balances 292,524 261,014

17,834,070 13,429,542

49,461,830 43,867,772

AS AT MARCH 31, 2010 (UN-AUDITED)

Director


24 20103rd Quarter

CONDENSED INTERIM CONSOLIDATED PROFIT AND LOSS ACCOUNT - UNAUDITEDFOR THE NINE MONTHS ENDED MARCH 31, 2010




Sales - net 4,039,085 4,616,853 12,328,553 13,467,917

Cost of sales 10 (3,537,846) (3,434,763) (9,953,777) (9,623,193)

Gross profit 501,239 1,182,090 2,374,776 3,844,724

Administrative expenses (43,514) (34,712) (126,454) (102,498)Selling and distribution expenses (168,485) (282,645) (697,688) (1,376,936)Impairment loss - (154,723) - (154,723)Other operating expenses (884) (53,871) (149,336) (740,050)Other income 225,889 152,688 684,023 560,795

Profit from operations 514,245 808,827 2,085,321 2,031,312

Finance cost (494,281) (659,296) (1,511,182) (2,199,074)

Profit/ (loss) before taxation 19,964 149,531 574,139 (167,762)

Taxation (67,405) 29,000 (106,590) 417,000


Attributable to:

Equity holders of the parent (64,619) 193,074 427,862 285,177Non-Controlling interest 17,178 (14,543) 39,687 (35,939)

(47,441) 178,531 467,549 249,238

Restated Restated

Combined (loss)/ earningper share basic anddiluted Rupees (0.21) 0.59 1.41 0.82

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


25 20103rd Quarter

CONDENSED INTERIM CONSOLIDATED CASHFLOW STATEMENT - UNAUDITEDFOR THE NINE MONTHS ENDED MARCH 31, 2010

Nine Months Nine Monthsended ended

March 31, March 31,2010 2009

Note (Rupees in thousand)Cash flows from operating activities

Cash generated from operations 12 2,958,768 3,552,704Financial cost paid (1,645,658) (2,030,832)Retirement and other benefits paid. (9,360) (6,374)Taxes paid (222,009) (160,630)long term deposits - Net 6,096 520

Net cash from operating activities 1,087,837 1,355,388

Cash flows from investing activities

Capital expenditure including purchase of property, plant and equipment (655,610) (310,144)Proceeds from sale of investments 126,554 -Proceeds from sale of property, plant and equipment 31,661 3,275Long term loans and deposits - Net 2,147 357,072Interest received 20,370 4,769Dividend received 586,918 545,542

Net cash from investing activities 112,040 600,514

Cash flows from financing activities

Proceeds from long term finances 1,000,000 -Repayment of long term finances (2,177,371) (2,464,852)Repayment of liabilities against assets subject to finance lease (222) (1,576)Dividend paid - (528)

Net cash used in financing activities (1,177,593) (2,466,956)Net increase/ (decrease) in cash and cash equivalents 22,284 (511,054)Cash and cash equivalents at the beginning of year (9,185,842) (7,950,250)Cash and cash equivalents at the end of period 13 (9,163,558) (8,461,304)

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



26 20103rd Quarter

CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - UNAUDITEDFOR THE NINE MONTHS ENDED MARCH 31, 2010





Other comprehensive income

Available for sale financial assets- Change in fair value 356,300 1,908,454 5,623,720 (11,544,585)- Realized gain through profit and loss account - - (58,772) -- Tax expense - - - -

Other comprehensive income(loss) for the period 356,300 1,908,454 5,564,948 (11,544,585)

Total comprehensive income(loss) for the period 308,859 2,086,985 6,032,497 (11,295,347)

Equity holders of the parent 308,859 2,086,985 6,032,497 (11,295,347)Non-controlling interest - - - -

308,859 2,086,985 6,032,497 (11,295,347)

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


27 20103rd Quarter

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28 20103rd Quarter

1. 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 onKarachi, Lahore and Islamabad Stock Exchanges. It is principally engaged in production andsale of Clinker, Ordinary Portland and Sulphate Resistant Cement. The registered officeof the Company is situated at 53-A Lawrence Road, Lahore.

The subsidiary company is an unlisted public limited company incorporated in Pakistanunder the Companies Ordinance 1984 on July 23, 2004. It is principally engaged inmanufacture and sale of paper products and packaging material.

2. Basis of preparation

The unaudited condensed interim consolidated financial information (hereafter "interimconsolidated financial information") for the third quarter has been prepared and is beingsubmitted to shareholders in accordance with the provisions contained in section 245 ofthe Companies Ordinance, 1984 and the pronouncements of International AccountingStandard (IAS) 34 - 'Interim Financial Reporting'. The interim consolidated financial informationdoes not include all of the information required for full annual financial statements andaccordingly, should be read in conjunction with the annual financial statements for the yearended June 30, 2009 as they provide an update of previously reported information.

The preparation of the interim consolidated financial information requires management tomake judgments, estimates and assumptions that affect the application of accounting policies,the presentation of assets, liabilities, incomes and expenses and the amounts reportedthere against as well as disclosure of contingent liabilities at the date of the interimconsolidated financial information. If in future such estimates and assumptions, which arebased on management's best judgment at the date of the interim consolidated financialinformation, deviate from the actual circumstances, the original estimates and assumptionswill be modified as appropriate during the period in which the circumstances change.

In preparing the interim consolidated financial information, the significant judgments madeby 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

SELECTED NOTES TO AND FORMING PART OF THE CONDENSED INTERIMCONSOLIDATED FINANCIAL INFORMATION - UNAUDITEDFOR THE NINE MONTHS ENDED MARCH 31, 2010


29 20103rd Quarter

3. Consolidated companies

Besides D. G. Khan Cement Company Limited, the Group's Financial Information for thefirst nine months of the financial year includes one subsidiary. Furthermore, no entitieswere consolidated for the first time during the period.

4. Significant accounting policies

4.1 The accounting policies adopted for the preparation of this interim consolidated financialinformation are the same as those applied in the preparation of the preceding annualpublished consolidated financial statements of the group for the year ended June 30,2009.

4.2 The following amendments to the International Accounting Standards have becomeapplicable for the first time being mandatory for the financial year beginning on or afterJuly 1, 2009.

International Accounting Standard 1 (revised), 'Presentation of financialstatements'

The revised accounting standard prohibits the presentation of certain items of incomeand expenses (non-owner changes in equity) in the statement of changes in equity thatwere earlier required by other International Financial Reporting Standards (IFRS) to beaccounted for in the statement of changes in equity and thus requires 'non-ownerchanges in equity' to be presented separately from 'owner changes in equity'. All 'non-owner changes in equity' are required to be shown in the performance statement.Companies can choose whether to present one performance statement (Statementof Comprehensive Income) or two statements (Profit and Loss Account and Statementof Comprehensive Income).

The group, however, has preferred to present two statements i.e., a Profit and LossAccount and a Statement of Comprehensive Income. This interim consolidated financialinformation has been prepared on the basis of revised disclosure requirements.

Other amendments relating to other accounting standards

In addition to above, following new accounting standards and amendments to theaccounting standards are mandatory for the first time for the financial year beginningon or after July 1, 2009 and are also relevant to the group. However, the adoption ofthese new standards and amendments to standards did not have any significant impacton the financial information of the group.

- IFRS 2 (amendment) - Share based payments- IFRS 3 (amendment) - Business Combinations- IFRS 8 - Operating segments


30 20103rd Quarter

- IAS 23 (revised) - Borrowing costs - IAS 27 (revised) - Consolidated and separate financial statements- IAS 32 (amendment) - Financial Instruments: Presentation and consequential

amendment to IAS 1 Presentation of financial Statements.- IFRIC 15 - Agreements for the construction of Real Estate- IFRIC 16 - Hedges of a Net Investment in a Foreign Operation

5. The provision for taxation for the nine months ended March 31, 2010 has been made onan estimated basis.

March 31, June 30, 2010 2009


6. Long term finances

These are composed of:Long term finances 6.1 8,507,042 9,595,311Less: Current portion shown under

current liabilities 4,436,865 4,919,474Balance shown under non-current liabilities 4,070,177 4,675,837

6.1 Long term finances

Opening balance 9,595,311 11,721,939Add: Disbursements during the period 1,000,000 300,000

Exchange loss during the period 89,102 730,88810,684,413 12,752,827

Less: Repayment during the period 2,177,371 3,157,516Closing balance 8,507,042 9,595,311

7. Contingencies and commitments

7.1 Contingencies

There is no significant change in contingencies from the preceding annual publishedconsolidated financial statements of the group for the year ended June 30, 2009.

7.2 Commitments in respect of

(i) Contracts for capital expenditure Rs 140.044 million (June 30, 2009: Rs 196.252million).

(ii) Letters of credit for capital expenditure Rs 107.028 million (June 30, 2009: Rs0.068 million).

(iii) Letters of credit other than capital expenditure Rs 1,655.635 million (June 30,2009: Rs 1,174.602 million).


31 20103rd Quarter

March 31, June 30, 2010 2009


8. Property, Plant and Equipment

Opening book value 25,550,453 24,224,269Add: Additions during the period / year 8.1 106,150 2,737,825

Transfer in during the period / year - 5,046106,150 2,742,871

Less: Disposals during the period / year - net book value 30,291 2,011 Depreciation charged during the period 1,069,815 1,414,676

1,100,106 1,416,687Closing balance 24,556,497 25,550,453

8.1 Major additions during the period

Free hold land - 64,893Building on freehold land - 292,731Roads - 56,058Plant and machinery 84,977 2,084,833Quarry equipment - 174,380Furniture, fixtures and office equipment 4,661 23,305Motor vehicles 14,733 5,712Power and water supply lines 1,779 35,913

106,150 2,737,825

9. Investments

Cost of investments 1,950,094 1,997,441Add: Fair value adjustments 14,322,365 8,757,417

16,272,459 10,754,858

Less: Investments classified in current assets 11,668,229 7,785,979Closing balance 4,604,230 2,968,879


32 20103rd Quarter



10.Cost of sales

Raw and packing materials consumed 531,166 435,261 1,535,251 1,220,695Salaries, wages and other benefits 168,094 154,296 508,661 475,194Electricity, gas and water 515,858 247,120 1,392,164 994,923Furnace oil/coal 1,562,448 883,491 4,314,401 5,258,583Stores and spares consumed 262,371 284,784 727,100 675,341Repair and maintenance 40,084 32,235 105,797 92,785Insurance 10,732 11,187 39,368 35,841Depreciation on property, plant and equipment 361,503 349,544 1,063,928 1,027,050Depreciation on assets subject to finance lease 14 18 42 133Royalty 45,135 12,745 135,198 54,649Excise duty 4,207 4,819 12,602 21,100Vehicle running 5,244 4,251 15,735 14,231Postage, telephone and telegram 936 1,017 3,182 3,194Printing and stationery 934 1,071 3,559 2,910Legal and professional charges 567 748 1,478 2,520Traveling and conveyance 1,288 1,684 4,226 3,883Estate development 2,113 2,567 8,039 6,703Rent, rates and taxes 4,134 1,694 13,817 5,065Freight charges 1,532 1,413 3,363 4,311Other expenses 4,343 3,504 14,178 15,285Total manufacturing cost 3,522,703 2,433,449 9,902,089 9,914,396

Opening work-in-process 469,008 1,240,801 387,444 118,292Closing work-in-process (466,246) (230,530) (466,246) (230,530)

2,762 1,010,271 (78,802) (112,238)

Cost of goods manufactured 3,525,465 3,443,720 9,823,287 9,802,158

Opening stock of finished goods 138,735 283,696 259,685 118,864Closing stock of finished goods (125,637) (289,843) (125,637) (289,843)

13,098 (6,147) 134,048 (170,979)

Less: Own consumption capitalized (717) (2,810) (3,558) (7,986)

3,537,846 3,434,763 9,953,777 9,623,193


33 20103rd Quarter

11. Transactions with related parties

The related parties comprise associated companies, other related companies, directors ofthe company, key management personnel and post employment benefit plans. Significanttransactions with related parties are as follows:



Relationship with the company Nature of transaction

Other related parties Purchase of goods and services 514,289 498,567Insurance premium 37,009 40,468Sale of goods 7,749 30,022Mark-up income on balances with related parties 1,119 3,529Insurance claim received 202 417Dividend income 317,531 -

Key Management Salaries and other personnel employment benefits 32,939 50,836

Post employment Expense charged in respect of staff benefit plans retirement benefits plans 21,926 24,565

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



12. Cash flow from operating activities

Profit / (loss) before tax 574,139 (167,762)Adjustment for :- Depreciation on property, plant and equipment 1,069,815 1,035,861- Depreciation on assets subject to finance lease 42 1,778- Profit on disposal of property, plant and equipment (2,192) (1,521)- Gain on disposal of investments (79,207) -- Dividend income (586,918) (545,531)- Impairment loss - 154,723- Provision for WPPF 23,945 -- Provision for WWF 11,328 -- Retirement and other benefits accrued 24,499 20,411- Markup income (21,489) (3,625)- Exchange loss - net 89,102 705,963- Finance cost 1,511,182 2,226,809

Profit before working capital changes 2,614,246 3,427,106


34 20103rd Quarter




Effect on cash flow due to working capital changes:- (Increase)/decrease in stores, spares and loose tools (313,317) 486,529- (Increase)/ decrease in stock-in-trade (287,645) 115,590- Decrease / (Increase) in trade debts 44,338 (185,984)- Decrease / (Increase) in advances, deposits, prepayments and other receivables 210,618 (483,992)- Increase in trade and other payables 690,528 193,455

344,522 125,598

Cash generated from operations 2,958,768 3,552,704

13. Cash and cash equivalents

Short term borrowings - secured (9,456,082) (8,658,336)Cash and bank balances 292,524 197,032

(9,163,558) (8,461,304)

14. Date of authorization

This un-audited condensed interim consolidated financial information was authorized forissue by the Board of Directors of the Parent Company on April 22, 2010.

15. Corresponding figures

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

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

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

Documents

D.G. Khan Cement Company Limited CONTENTS 3rd Quarter... · 2014-08-25 · D.G. Khan Cement Company Limited CONTENTS D.G. Khan Cement Company Limited Corporate Profile 2 Directors’