fauji 3rd quarter report 2010

8/8/2019 Fauji 3rd Quarter Report 2010

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FAUJI CEMENT COMPANY LIMITED

1

CONTENTS

Company Information 2

Directors' Review 3

Condensed Interim Balance Sheet 4

Condensed Interim Profit & Loss Account 6

Condensed Interim Statement of Comprehensive Income 7

Condensed Interim Statement of Cash Flows 8

Condensed Interim Statement of Changes in Equity 9

Notes to the Condensed Interim Financial Statements 10


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COMPANY INFORMATIONat a glance

Board of Directors

Lt Gen Hamid Rab Nawaz, HI (M) (Retired) Chairman

Lt Gen Javed Alam Khan, HI (M) (Retired) Chief Executive / MD

Mr. Qaiser Javed Director

Mr. Riyaz H. Bokhari, IFU Director

Brig Arif Rasul Qureshi, SI (M) (Retired) Director

Brig Rahat Khan, SI (M) (Retired) Director

Dr. Nadeem Inayat Director

Brig Liaqat Ali, (Retired) Director

Brig Agha Ali Hassan, SI (M) (Retired) Director

Company Secretary: Brig Shabbir Ahmed (Retired)House No. 62, Khayaban-e-Iqbal(Margalla Road), F-7/2,Islamabad - Pakistan

Tel: (051) 9102451Fax: (051) 9102454E-mail: [email protected]

Chief Financial Officer Mr. Omer AshrafTel (051) 2651762

Registered Office, Marketing andSales Department:

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

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

Auditors: M/s KPMG Taseer Hadi & Co,

Chartered AccountantsFax No: (051) 2822671

Legal Advisors: M/s Orr Dignam & Co, AdvocatesFax No: (051) 2260653

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

Shares Registrar CORPLINK (PVT) LIMITEDWings Arcade, 1-K, Commercial, Model Town,LahorePh No: 042-5839182, 5887262Fax No: 042-5869037


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DIRECTORS REVIEW

1. The Board of Directors is pleased to present their review report along with the un-audited

accounts of the Company for the quarter ended 31 March 2010.

2. During the period under review, FCCL capacity utilization remained at 94.70% as compared

to 106.65% in the corresponding quarter of the last year. FCCL exported 86,475 tons as

compared to 69,077 tons in the same quarter last year depicting an increase of 25.19%. Local

dispatches stood at 189,468 tons as compared to 241,745 tons during the corresponding quarter

of the last year depicting a decrease of 21.63%.

3. The cost of sales per ton during the period under review was lower than the corresponding

period of last year but the average retention price for local and export sales fell by a higher rate

which adversely affected the profitability of the Company.

4. Presently, the prices of cement are showing a slight improvement and it is expected that the

same will further improve with the increase in demand of cement due to summer season. The

Board is hopeful that Inshallah the profitability will improve in the last quarter of the year.

Lt Gen Hamid Rab Nawaz, HI (M) (Retd)Chairman


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CONDENSED INTERIM BALANCE SHEETAS AT 31 MARCH 2010

31 March 2010 30 June 2009Un-audited Audited

Note Rupees'000 Rupees'000

SHARE CAPITAL AND RESERVES

Share capital 4 7,419,887 7,419,887Reserves 2,247,368 2,270,802

9,667,255 9,690,689

NON - CURRENT LIABILITIES

Long term financing - secured 5 12,012,356 6,224,227

Fair value of derivative 6 - -Deferred liability - compensated absences 14,702 10,766Deferred tax liability - net 722,869 728,154

Retention money payable 129,496 143,739Liability against shipmen in transit - 2,020,916

CURRENT LIABILITIES

Trade and other payables 1,164,868 1,441,825

Markup accrued 209,694 95,407

Short term borrowings - secured 7 968,816 765,778

Current portion of long term financing 510,419 325,000

2,853,797 2,628,010

25,400,475 21,446,501

CONTINGENCIES AND COMMITMENTS 8

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

Chief Executive


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31 March 2010 30 June 2009

Un-audited AuditedNote Rupees'000 Rupees'000

NON - CURRENT ASSETS

Property, plant and equipment 9 22,606,573 18,777,204

Long term advance 6,300 6,300

Long term deposits and prepayments 915,877 1,008,983

CURRENT ASSETS

Stores, spares and loose tools 1,053,927 1,038,078

Stock in trade 111,319 137,451

Trade debts 56,999 54,641

Advances 42,638 37,359

rade deposits, short term prepayments and balance withstatutory authority 456,669 164,353Interest accrued 2,347 717

Other receivables 55,923 45,468

Cash and bank balances 91,903 175,947

1,871,725 1,654,014

25,400,475 21,446,501

Director


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CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN - AUDITED)FOR THE NINE MONTHS ENDED 31 MARCH 2010

Quarter Ended Nine Months Ended

Note 31 March 2010 31 March 2009 31 March 2010 31 March 2009

Rupees'000 Rupees'000 Rupees'000 Rupees'000

TURNOVER 10 1,151,014 1,823,147 3,688,172 5,068,606

Less: Government levies 10 (257,723) (445,557) (864,800) (1,171,289)

NET TURNOVER 893,291 1,377,590 2,823,372 3,897,317

Less: Cost of sales 11 (836,490) (1,045,906) (2,418,452) (2,720,486)

GROSS PROFIT 56,801 331,684 404,920 1,176,831

Distribution cost (13,991) (7,333) (36,233) (34,427)

Administrative expenses (27,490) (21,501) (77,162) (69,255)

Other operating expenses (1,855) (19,639) (20,935) (73,486)

PROFIT FROM OPERATIONS 13,465 283,211 270,590 999,663

Finance cost (2,624) (37,798) (19,154) (202,515)

Other operating income 7,971 20,915 23,600 179,409

NET PROFIT BEFORE TAXATION 18,812 266,328 275,036 976,557

Taxation

Current (5,032) (2,752) (83,964) (9,471)

Prior year - - 10,802 -

Deferred (249) (76,668) 5,286 (265,801)

(5,281) (79,420) (67,876) (275,272)

NET PROFIT AFTER TAXATION 13,531 186,908 207,160 701,285

Earnings per share - Basic (Rs.) 0.020 0.270 0.299 1.012

Earnings per share - Diluted (Rs.) 0.018 0.252 0.279 0.945


Chief Executive Director


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CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN - AUDITED)FOR THE NINE MONTHS ENDED 31 MARCH 2010

Quarter ended Nine months ended

31 March 2010 31 March 2009 31 March 2010 31 March 2009Rupees'000 Rupees'000 Rupees'000 Rupees'000

Net profit after taxation 13,531 186,908 207,160 701,285

Other comprehensive income

Effective portion of changes in fairvalue of cash flow hedge-net 34,785 (109,347) (230,594) (84,364)

Total comprehensive income 48,316 77,561 (23,434) 616,921




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CONDENSED INTERIM STATEMENT OF CASH FLOWS (UN-AUDITED)FOR THE NINE MONTHS ENDED 31 MARCH 2010

31 March 2010 31 March 2009

Rupees'000 Rupees'000

Cash flows from operating activities

Net profit before taxation 275,036 976,557

Adjustment for:

Depreciation 238,162 230,645Provision for compensated absences 19,056 13,013

Workers' (Profit) Participation Fund including interest and Workers' Welfare Fund 21,733 72,376

Finance cost 18,232 2025 15

Reversal of provision for doubtful debts (1,567) -

(Gain)/loss on disposal of property, plant and equipment (2,020) 960

Interest income including interest on long term advance (10,039) (177,739)

283,557 341,770

Operating cash flows before working capital changes 558,593 1,318,327

Decrease in stores and stocks 10,283 279,408

Increase in long-term deposits - (39,992)

(Decrease)/increase in retention money (14,243) 89,954

(Increase)/decrease in trade debts (791) 3,539

Increase in advances (5,279) (8,497)

(Increase)/decrease in trade deposits, short term prepayments and balance with statutoryauthority (312,969) 55,077

Increase in other receivables (10,455) (2,310)

(Decrease)/increase in trade and other payables (81,575) 66,376

(415,029) 443,555

Cash generated from operations 143,564 1,761,882

Compensated absences paid (13,032) (11,457)Payment to Workers' (Profit) Participation Fund (74,951) (24,413)

Income tax paid (81,447) (52,339)

Net cash (used)/generated from operating activities (25,866) 1,673,673

Cash flows from investing activities

Additions in property, plant and equipment excluding borrowing cost capitalized (2,380,247) (4,618,121)

Proceeds from disposal of property, plant and equipment 4,324 473

Interest received on bank deposits 8,409 191,602

Net cash used in investing activities (2,367,514) (4,426,046)

Cash flows from financing activities

Repayment of long term financing (325,000) (550,000)

Proceeds from long-term financing 3,744,000 1,830,120

Payment of arrangement fee/ guarantee premium (43,709) (994,761)

Dividend paid on ordinary shares (7) (53)

Dividend paid on preference shares (16,721) (8,361)

Export re-finance and import finance (net) 130,000 (754,988)

Finance cost paid (1,252,265) (223,039)

Net cash generated /(used) in financing activities 2,236,298 (701,082)

Decrease in cash and cash equivalents (157,082) (3,453,455)

Cash and cash equivalents at beginning of the period (169,831) 3,160,532

Cash and cash equivalents at end of the period (326,913) (292,923)

Cash and cash equivalents comprise of the following:

Cash and bank balances 91,903 414,078

Short term running finances (418,816) (707,001)

(326,913) (292,923)




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CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE NINE MONTHS ENDED 31 MARCH 2010

Share capital Capital reserve Revenue reserve

Ordinary Preference Share Hedging Accumulated Total

premium reserve (loss)/profit

Rupees'000 Rupees'000 Rupees'000 Rupees'000 Rupees'000 Rupees'000

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

Total comprehensive income

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


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

Total other comprehensive income - - - (84,364) - (84,364)

Total comprehensive income for the period-

- - - (84,364) 701,285 616,921

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

Balance as at 30 June 2009 6,932,895 486,992 1,833,709 (499,830) 936,923 9,690,689

Total comprehensive income

Profit for the period - - - - 207,160 207,160


Changes in cash flow hedge - - - (230,594) - (230,594)

Total other comprehensive income - - - (230,594) - (230,594)

Total comprehensive income for the period - - - (230,594) 207,160 (23,434)

Balance as at 31 March 2010 6,932,895 486,992 1,833,709 (730,424) 1,144,083 9,667,255




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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED 31 MARCH 2010

1. Fauji Cement Company Limited ("the Company") is a public limited company incorporated in Pakistan on 23November 1992 under the Companies Ordinance, 1984 and commenced its business with effec t from 22 May 1 993.The shares of the Company are quoted on Karachi, Islamabad and Lahore stock exchanges in Pakistan. The

principal activity of the Company is manufacturing and sale of ordinary portland cement. The Company's registeredoffice is situated at Aslam Plaza, Adamjee Road, Rawalpindi. Fauji Foundation holds 26.86% ordinary and 100%preference shares in the Company.

2. These interim financial statements are un-audited and are being submitted to the shareholders' in accordance withthe requirements of Section 245 of the Companies Ordinance, 1984. These financial statements are presented incondensed form in accordance with the requirements of International Accounting Standard 34: "Interim FinancialReporting". These condensed interim financial statements do not include all of the information required for annualfinancial statements and should be read in conjunction with the annual financial statements of t he Company for theyear ended 30 June 2009. Comparative balance sheet is extracted from annual audited financial statements for theyear ended 30 June 2009 whereas comparative profit and loss account, statement of cash flows and statement ofchanges in equity are stated from un-audited condensed interim financial statements for nine months period ended31 March 2009.

3. Except as described below, the accounting policies, related judgments, estimates and assumptions adopted for thepreparation of these condensed interim financial statements are the same as those applied in preparation of theannual financial statements of the Company for the year ended 30 June 2009.

3.1 The Company has applied revised IAS-1 "Presentation of Financial Statement", which became effective as ofJanuary 01, 2009. As a result, t he Company presents in the statement of ch anges in equity all owner changes

in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income.This presentation has been applied in these condensed interim financial statements. Comparative informationhas been re-presented so that it also is in conformity with the revised standard. Since this change inaccounting policy only impacts presentation aspects, there is no impact on the Company's earnings per share.

4. SHARE CAPITAL

There is no change in composition of issued, subscribed and paid up share capital of the Company from 30 June2009.

Un-audited AuditedNote 31 March 2010 30 June2009

5. LONG TERM FINANCING - securedRupees'000 Rupees'000

- From banking companies

Syndicated term finance facilities - secured 5.1 12,522,775 6,549,227Less: Amount payable within 12 months shown as current portion (510,419) (325,000)

12,012,356 6,224,227

5.1 Movement in this account during t he period/year is as follows:

Opening balance 6,549,227 875,000Long-term finance obtained during the period/year includingrevaluation and transaction cost adjustment 6,298,548 6,224,227Repayments during the period/year (325,000) (550,000)

Closing balance 12,522,775 6,549,227

6. FAIR VALUE OF DERIVATIVE

Fair value of cross currency swap 488,177 586,348Less: current portion shown under current liabilities (488,177) (586,348)

- -


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The Company has entered into cross currency swap agreements to hedge its foreign currency exposure on foreigncurrency floating rate borrowing under a finance facility agreement with The Royal Bank of Scotland Limited. Fairvalue of derivative represents present value of future cash inflows/outflows.

7. SHORT TERM BORROWINGS- secured

The Company has running finance and export refinance limits to the tune of Rs. 1,630 million (30 June 2009: Rs.1,620 million) from banking companies. These facilities are secured against first pari passu/ranking charge by way ofhypothecation over the present and future assets of the Company (excluding land and building) retaining 25%margin. Running finance facility carries markup ranging from 1 month's KIBOR plus 1.5% - 2% per annum andexport refinance carries markup @ 7.5% per annum of the utilized amount and payable on a quarterly basis.

8. CONTINGENCIES AND COMMITMENTS

8.1 ContingenciesThere is no change in the contingent liabilities as reported in the annual financial statements for the yearended 30 June 2009.

8.2 Commitments

a) Capital commitments of Rs. 796.35 million (30 June 2009: Rs.1,495 million) in respect of new cementmanufacturing line. The Company has entered into agreements with various suppliers for the constructionof new line with 7,200 tons per day clinker capacity.

b) The Company has opened letters of credit for import of machinery,sp ares and coal valuing Rs. 401.74million (30 June 2009: Rs. 3,616 million). This includes letter of credit aggregating Rs 297.93 million (30June 2009: Rs. 3,203 million) for import of new cement manufacturing line.

Un-audited AuditedNote 31 March2010 30 June2009

9. PROPERTY, PLANT AND EQUIPMENT Rupees'000 Rupees'000

Opening carrying amount 18,777,204 7,106,599 Additions during the period/year 9.1 4,069,835 11,984,355Written down value of disposals 9.2 (2,304) (2,001)Depreciation for the period/year (238,162) (311,749)

Closing carrying amount 22,606,573 18,777,204

9.1 AdditionsPlant, machinery and eq uipment 115,536 321,058Building on freehold land - 27,048Office equipment 805 212Computers 12,158 2,263Electrical installation and other equipments 4,809 4,686Furniture and fittings 2,411 3,740Motor vehicles 12,667 37,186Capital work in progress 3,921,449 11,588,162

4,069,835 11,984,355

9.2 DisposalsCost 5,264 7,540

Accumulated depreciation (2,960) (5,539)

2,304 2,001


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Quarter Ended Nine Months Ended

31 March2010 31 March2009 31 March2010 31 March2009

Rupees'000 Ru pees'000 Rupees'000 Rupees'000

10. TURNOVER - Net

Sales: Local 851,618 1,547,962 2,920,080 4,121,491

Export 299,396 275,185 768,092 947,115

1,151,014 1,823,147 3,688,172 5,068,606

Less: Sales tax (118,149) (215,930) (405,642) (572,724)

Excise duties (138,678) (228,900) (456,997) (596,010)

Export development surcharge (896) (727) (2,161) (2,555)

(257,723) (445,557) (864,800) (1,171,289)

893,291 1,377,590 2,823,372 3,897,317

11. COST OF SALES

Raw material consumed 55,836 63,775 172,387 193,203

Packing material consumed 79,728 91,236 236,790 252,772

Stores and spares consumed 5,686 4,776 15,253 13,217

Salaries, wages and benefits 61,054 35,210 171,259 128,239

Rent, rates and taxes 979 1,545 3,273 5,028

Insurance 3,546 3,505 10,638 9,920

Fuel consumed 336,194 463,117 979,778 1,379,679

Power consumed 209,512 161,522 526,860 449,203

Depreciation 68,618 72,780 225,354 220,056

Repairs and maintenance ,874 29,877 62,547 76,956

Technical assistance - - - 6,746

Printing and stationery 295 328 781 758

Traveling and conveyance 1,842 682 5,268 1,911

Vehicle running and maintenance expenses 3,846 1,919 9,139 6,578

Communication, establishment and other expenses 1,517 1,266 4,596 3,139

857,527 931,538 2,423,923 2,747,405

Add: Opening work-in-process 20,193 236,066 41,405 152,529

Less: Closing work-in-process (13,115) (138,466) (13,115) (138,466)

Cost of goods manufactured 864,605 1,029,138 2,452,213 2,761,468

Add: Opening finishe d goods 32,699 63,732 50,332 46,289

Less: Closing finished goods (53,581) (15,800) (53,581) (15,800)

843,723 1,077,070 2,448,964 2,791,957

Less: Own consumption capitalized (7,233) (31,164) (30,512) (71,471)

836,490 1,045,906 2,418,452 2,720,486

12. RELATED PARTY TRANSACTIONS AND BALANCES

Fauji Foundation holds 26.86% ordinary shares and 100% preference shares of the Company, therefore allsubsidiaries and associated undertakings of Fauji Founda ion are related parties of the Company. Ot her related partiescomprise of directors, key management personnel, entities over which the directors are able to exercise significantinfluence and employees' fund. Transaction and balances with related parties are as follows:


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Nine Months Ended

31 March2010 31 March2009

Rupees'000 Rupees'000

Fauji Foundation

- Sale of cement 5,324 10,595

- Preference dividend paid 16,721 8,361

- Payment for use of medical facilities 28 79

- Advance paid on account of clearance of shipments 16,000 6,200

- Balance receivable on account of clearance of shipments 6,675 1,887 *

- Balance payable-unsecured 250,000 50,000 *

- Balance of advance against sale of cement 594 1,302 *

- Preference dividend payable - 16,721 *

Payments made into Employees' Provident Fund 8,775 6,149

Payments made to Workers' (Profit) Participation Fund 74,951 24,413

Remuneration including benefits and perquisites to Chief Executive 4,901 5,132

Remuneration including benefits and perquisites to Executives 67,869 37,874

Fee paid to directors for meetings - 23

* Comparative figures relate to 30 June 2009 balances

13. DATE OF AUTHORIZATION FOR ISSUE

These condensed interim financial statements were authorized for issue by the Board of Directors of the Company intheir meeting held on 26 April 2010.

14. GENERAL

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



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fauji 3rd quarter report 2010

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