half yearly report - ittehad chemicals€¦ · directors’ report half yearly report december 31,...

Head Office:39-Empress Road, Lahore 54000, P.O. Box 1414, - PakistanPABX: (042) 36306586 - 88 & 36306482 Fax: (042) 36365697E-mail: [email protected]: www.ittehadchemicals.com

Works:G.T. Road, Kala Shah Kaku, Distt. Sheikhupura - Pakistan.PABX: (042) 37950222 - 25 Fax: (042) 37950206Grams: UNICAUSTIC, LAHORE. Telex: 47851 LPG PK ISO 9001-2008

CBA - 001

PNAC

Half Yearly Report December 31, 2009


1

CONTENTS

ITTEHAD CHEMICALS LIMITEDCONDENSED INTERIM FINANCIAL STATEMENTSFOR THE PERIOD ENDED DECEMBER 31, 2009(UN-AUDITED)

Corporate Information................................................................................................. 2

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

.........................................................................................

Condensed Interim Balance Sheet............................................................................... 5

Condensed Interim Profit & Loss Account................................................................. 6

Condensed Interim Statement of Comprehensive Income........................................ 7

Condensed Interim Cash Flow Statement.................................................................. 8

Condensed Interim Statement of Changes in Equity................................................ 9

Notes to the Condensed Interim Financial Statements............................................. 10

Condensed Consolidated Interim Financial Statements........................................... 15

Auditors’ Review Report...... 4

3

DIRECTORS’ REPORT


February 24, 2010Lahore.

On behalf of the Board

Muhammad Siddique KhatriChief Executive

CORPORATE INFORMATION

2


BOARD OF DIRECTORS Mr. Muhammad Siddique Khatri Mr. Abdul Ghafoor KhatriMr. Abdul Sattar Khatri Mr. Mansoor Ahmed KhatriMs. Farhana Abdul Sattar Mr. Fawad YousufMs. Noor -ul-Huda

Chairman & Chief ExecutiveDirectorDirectorDirectorDirectorDirectorDirector

AUDIT COMMITTEE Mr. Mansoor Ahmed Khatri

Mr. Abdul Sattar KhatriMr. Abdul Ghafoor Khatri

ChairmanMemberMember

CHIEF FINANCIAL OFFICER Mr. Javed Iqbal

COMPANY SECRETARY Mr. Waheed Ashraf

REGISTERED OFFICE/HEADOFFICE

39-Empress Road, P.O. Box 1414, Lahore-54000.Tel : 042 - 36306586 - 88Fax : 042 - 36365697

www.ittehadchemicals.com

E-mail: [email protected]

PLANT G.T. Road, Kala Shah Kaku, District Sheikhupura.Ph : 042 - 37950222-25

Fax : 042 - 37950206

SHARE REGISTRARS M/s. Corplink (Pvt.) LimitedCorporate and Financial Consultants Wings Arcade, 1-K Commercial,

Model Town, Lahore. Ph: 042 - 35839182

Fax: 042 - 35869037

AUDITORS M/s. BDO Ebrahim & Co., Chartered Accountants,nd2 Floor, Block-C, Lakson Square Building No.1,

Sarwar Shaheed Road, Karachi.Ph: 021-35683189-35683498 Fax: 021-35684239

LEGAL ADVISORS M/s. Tahir Ali Tayebi & Co.310, Marine Point, Schon Circle,Block 9, Clifton, Karachi.Ph : 021-35370458 Fax : 021-35370459

BANKERS TO THE COMPANY

Askari Bank Limited

Habib Metropolitan Bank Limited

MCB Bank Ltd

Pak Libya Holding Co. (Pvt.) LimitedPakistan Kuwait Investment Co. (Pvt.) LimitedThe Bank of Punjab

Allied Bank Limited

Faysal Bank Limited

United Bank Limited

KASB Bank Limited

Standard Chartered Bank LimitedCiti BankAtlas Bank LimitedDawood Islamic Bank LimitedNational Bank of Pakistan

5

CONDENSED INTERIM BALANCE SHEET

AS AT DECEMBER 31, 2009 (UN-AUDITED)

The annexed notes from 1 to 17 form an integral part of these financial statement.

ASSETS

NON CURRENT ASSETS

Property, plant and equipment

Operating fixed assets

Capital work in progress

Intangible assets

Investment properties

Long term investments

Long term deposits

CURRENT ASSETS

Stores, spares and loose tools

Stock in trade

Trade debts

Loans and advances

Trade deposits and short term prepayments

Other receivables

Tax refunds due from Government

Taxation - net

Cash and bank balances

TOTAL ASSETS

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized share capital

75,000,000 (June 30, 2009: 75,000,000) shares of Rs. 10/- each

Issued, subscribed and paid up capital

36,000,000 (June 30, 2009: 36,000,000) ordinary shares of Rs.10/- each

Reserves

Shareholders' equity

SURPLUS ON REVALUATION OF FIXED ASSETS

NON CURRENT LIABILITIES

Long term financing

Long term diminishing musharaka

Long term murabaha

Deferred liabilities

CURRENT LIABILITIES

Trade and other payables

Mark-up accrued

Short term borrowings

Current portion of long term liabilities

Provision for taxation - net

CONTINGENCIES AND COMMITMENTS

TOTAL EQUITY AND LIABILITIES

December 31, June 30,

2009 2009

Note (Unaudited) (Audited)

6 2,417,191 2,422,693

7 31,518 32,919

2,448,709 2,455,612

2,317 3,310

78,700 78,700

87,828

87,786

16,449

11,321

2,634,003

2,636,729

385,388

341,790

207,417

105,732

524,404

573,001

56,488

61,151

8,447

14,120

17,830

1,404

23,562

45,723

23,602

-

26,133

26,037

1,273,271

1,168,958

3,907,274

3,805,687

8.1 750,000

750,000

8.2 360,000

360,000

536,503

530,505

896,503

890,505

749,059

749,059

9 95,833

18,750

10 499,998

583,333

11 233,333 272,222

362,909 357,528

1,192,073 1,231,833

451,018 445,311

63,156 72,387

281,591 130,143

273,874 276,193

- 10,256

1,069,639 934,290

12 - -

3,907,274 3,805,687

(Rupees in thousand)

CHIEF EXECUTIVE DIRECTOR


4

AUDITORS’ REPORT ON REVIEW OF CONDENSED INTERIM FINANCIAL

INFORMATION TO THE MEMBERS

KARACHI

FEBRUARY 24, 2010

CHARTERED ACCOUNTANTS Engagement Partner: Zulfikar Ali Causer


7

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)

Profit for the period

Other comprehensive income

Surplus / (deficit) on remeasurement of

available for sale financial assets

Total comprehensive income for the period

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

Note 2009 2008 2009 2008

Half year ended Quarter ended


59,956 85,197 21,524 32,818

42 (466) (52) (205)

59,998 84,731 21,472 32,613

The annexed notes from 1 to 17 form an integral part of these financial statements.



6

Sales - net

Cost of sales

Gross profit

Selling and distribution expenses

General and administrative expenses

Other operating expenses

Other operating income

Operating profit

Financial charges

Profit before taxation

Taxation

Profit after taxation


Earning per share - basic and

diluted (Rupees)


Note 2009 2008 2009 2008

1,473,538 1,675,235 732,693 816,544

13 (1,137,270)

(1,272,492)

(592,283)

(615,671)

336,268

402,743

140,410

200,873

(90,432)

(89,669)

(36,165)

(51,620)

(52,459)

(45,387)

(24,759)

(21,617)

(6,907)

(10,716)

(2,154)

(4,584)

7,891

5,155

3,267

2,356

(141,907)

(140,617)

(59,811)

(75,465)

194,361

262,126

80,599

125,408

(104,868)

(121,235)

(49,726)

(66,079)

89,493 140,891 30,873 59,329

(29,537) (55,694) (9,349) (26,511)

59,956 85,197 21,524 32,818

15 1.67 2.37 0.60 0.91



CONDENSED INTERIM PROFIT AND LOSS ACCOUNT




8

CONDENSED INTERIM CASH FLOW STATEMENT


CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation

Adjustments for items not involving movement of funds:

Depreciation

Amortization of intangible assets

Provision for gratuity

Gain on sale of fixed assets

Financial charges

Net cash flow before working capital changes

Decrease / (increase) in current assets

Stores, spares and loose tools

Stock in trade

Trade debts

Loans and advances

Trade deposits and short term prepayments

Other receivables

Increase in current liabilities

Trade and other payables

Cash generated from operations

Income taxes paid

Gratuity paid

Financial charges paid

Net cash inflow from operating activities

CASH FLOW FROM INVESTING ACTIVITIES

Additions to operating fixed assets-net

Additions to intangible assets

Additions to capital work in progress

Proceeds from sale of operating fixed assets

Long term investments

Long term deposits

Net cash (used in) investing activities

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from long term financing

Repayment of long term financing

Repayment of long term diminishing musharaka

Repayment of long term murabaha

Repayment of liabilities against assets subject to finance lease

Dividend paid

Short term borrowings

Net cash inflow from financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

December 31, December 31,

2009 2008

89,493 140,891

91,164 88,535

993 831

981 980

(244)

(121)

104,868

121,235

287,255

352,351

(43,598)

(125,777)

(101,685)

(76,379)

48,597

(242,237)

4,663

(23,730)

5,673

(40,352)

(16,426)

(2,339)

(102,776) (510,814)

9,782

278,081

194,261

119,618

(40,588)

(9,497)

(322)

(285)

(114,099)

(96,490)

39,252

13,346

(86,092)

(45,858)

-

(62)

1,401

(25,823)

675

235

-

(23,000)

(5,128)

-

(89,144)

(94,508)

100,000 -

(25,000) (25,000)

(83,335)

(38,889) -

(236) (199)

(54,000) (54,000)

151,448 196,983

49,988 117,784

96 36,622

26,037 40,859

26,133 77,481

Half year ended





9

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY


Balance as at July 01, 2008

Dividend paid


Balance as at December 31, 2008 Total comprehensive income for the period

Balance as at June 30, 2009

Dividend paid


Balance as at December 31, 2009

Issued,

subscribed

and paid-up

capital

Capital

reserve - Fair

value reserve

Unappropriated

profits Total

360,000

699

414,951

775,650

-

-

(54,000)

(54,000)

-

(466)

85,197

84,731

360,000 233 446,148 806,381

-

145

83,979

84,124

360,000

378

530,127

890,505

- - (54,000) (54,000)

- 42 59,956 59,998

360,000 420 536,083 896,503





10

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS


1. NATURE AND STATUS OF BUSINESS

2. STATEMENT OF COMPLIANCE

Ittehad Chemicals Limited (the Company) was incorporated on September 28, 1991 to takeover the assets of

Ittehad Chemicals and Ittehad Pesticides under a Scheme of Arrangement dated June 18, 1992 as a result of

which the Company became a wholly owned subsidiary of Federal Chemical and Ceramics Corporation

(Private) Limited. The Company was privatized on July 03,

the buyer.

The Company was listed on Karachi Stock Exchange on April 14, 2003 when sponsors of the Company

offered 25% of the issued, subscribed and paid up shares of the Company to the general public.

The registered office of the Company is situated at 39, Empress Road, Lahore. The Company is engaged in

business of manufacturing and selling caustic soda and other allied chemicals.

These condensed interim financial statements are unaudited but subject to limited scope review by auditors and

being requiredare submitted to the shareholders as under Section 245 of the Companies Ordinance, 1984.

These condensed interim financial statements have been prepared in accordance with approved accounting

standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial

Reporting Standards (IFRS) issued by the International Accounting Standard Board as are notified underthe Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984.

In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.

The disclosures made in these condensed interim financial statements have, however, been limited in accordance

with the requirements of the International Financial Reporting Standards (IFRS) IAS - 34, Interim FinancialReporting. They do not include all the information and disclosures made in the annual published financial

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

June 30, 2009.

These condensed interim financial statements have been presented in Pakistan Rupees, which is the functional

currency of the Company.

3. ACCOUNTING POLICIES

4. TAXATION

Income tax expense is recognized based on management's best estimate of the weighted average annual

income tax rate expected for the full financial year.

The accounting policies adopted and methods of computation followed in the preparation of these financial

statements are the same as those of the preceding published annual financial statements for the year ended

June 30, 2009.

5. ESTIMATES

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

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

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

judgments made by management in applying the

Company's accounting policies and key sources of

estimation of uncertainty are the same as those that were applied to the financial statements for the year ended

June 30, 2009.

1995 when 90% of the shares were transferred to


11

6. OPERATING FIXED ASSETS

Additions during the period / year

Disposals during the period / year

Depreciation charged during the period / year

Closing book value

6.1 Details of additions during the period / year are as follows:

Owned assets:

Freehold land

Building on freehold land

Plant and machinery

Other equipment Furniture and fixtures Office and other equipment Vehicles

6.2 Details of disposals during the period / year are as follows:

Vehicles

7. CAPITAL WORK-IN -PROGRESS

Plant and machinery

Building

Opening book value

8. SHARE CAPITAL

8.1 Authorized share capital

50,000,000 (June 30, 2009: 50,000,000) ordinary shares of Rs. 10/- each 25,000,000 (June 30, 2009: 25,000,000) preference shares of Rs. 10/- each

December 31, June 30,2009 2009

(Unaudited) (Audited)

Note (Rupees in thousand)

2,422,693 2,316,478

6.1 86,092 294,625

2,508,785 2,611,103

6.2 (430) (316)

(91,164) (188,094)

(91,594) (188,410)2,417,191

2,422,693

-

106,287

-

7,636

78,088 163,265

906 1,02146

2491,561

4,8915,491

11,27686,092

294,625

430 316

30,936 32,487

582 432

31,518 32,919

500,000 500,000

250,000 250,000750,000 750,000


7.1 An amount of Rs. 62.220 million (June 30, 2009: Rs. 128.771 million) has been transferred to

assets during the period.

operating fixed

13

c)

d)

e)

f)

12.2 Commitments

Commitments as on December 31, 2009 were as follows:

a)

b)

The Income Tax Department had passed an order under section 161/205 of the Income Tax Ordinance, 2001 for taxyear 2006 creating demand of Rs. 1.297 million (June 30, 2009: Rs. Nil). The company has filed an appeal before

Commissioner of Income Tax (Appeals) Zone-1 who deleted the impugned order. The department has preferred an appeal

before Income Tax Appellate Tribunal who partially set aside the case. Company may be liable to pay tax of Rs. 1.297 million,

if the reassessment is made against the favour of the company.

The company has received an order under section 161/205 of the Income Tax Ordinance, 2001 for tax year 2008 creating

demand of Rs. 8.661 million (June 30, 2009: Rs. Nil). The company has filed an appeal before Commissioner of Income

Tax (Appeals) Zone-1 who has granted certain reliefs to the company. Both Income Tax Department and company has

filed an appeal before Income Tax Appellate Tribunal. In the event of adverse decision the Company would be faced

with a charge of Rs. 8.661 million against profit.

Against purchase of land amounting to Rs.1.838 million (June 30, 2009: Rs 1.838 million).

Letters of guarantee outstanding as at December 31, 2009 were Rs. 199.824 million (June 30, 2009: Rs. 198.240

million) and corporate guarantee on behalf of Chemi Chloride Industries Limited amounting to Rs. 203 million

(June 30, 2009: Rs. 203 million).

Against letters of credit outstanding amounting to Rs. 39.986 million (June 30, 2009: Rs. 128.073 million)

13. COST OF SALES

Raw materials consumedOther overheads

Salaries, wages and other benefits

Stores, spares and consumables

Packing materials consumed

Fuel and power

Repair and maintenance

InsuranceVehicle running expensesPostage, printing and stationeryDepreciation Other expenses

Opening work in processClosing work in process

Cost of goods manufacturedOpening stock of finished goodsClosing stock of finished goods

169,595

209,001

77,374

97,344

81,260

69,626

41,023

34,703

57,070

108,556

29,504

54,469

3,668

7,053

1,902

2,529

744,769

835,803

369,048

391,445

27,545

9,317

13,461

4,718

4,296 4,259 2,084 2,142

6,120 5,586 2,838 2,761

410 744 175 363

88,483 86,376 44,802 44,795

1,842 1,261 987 515

1,015,463 1,128,581 505,824 538,440

4,384 3,694 4,789 3,694

(4,844) (4,174) (4,844) (4,174)

(460) (480) (55) (480)

1,184,598 1,337,102 583,143 635,304

53,587 46,537 110,055 91,514

(100,915) (111,147) (100,915) (111,147)

(47,328) (64,610) 9,140 (19,633)1,137,270 1,272,492 592,283 615,671


2009 2008 2009 2008



The Company is facing claims, launched in the labour courts, pertaining to staff retirement benefits. In the event

of an adverse decision the Company would be required to pay an amount Rs 1.640 million (June 30, 2009: of

Rs. 2.497 million) against these claims.


12

b) An order has also been received under section 161/205 of the Income Tax Ordinance, 2001 for tax year 2004 creating demand

of Rs. 12.069 million (June 30, 2009: Rs. Nil). The company has challenged it before Commissioner of Income Tax

(Appeals) Zone-1 and a favourable outcome is expected. In the event of adverse decision the Company would be faced

with a charge of Rs. 12.069 million against profit.

9. LONG TERM FINANCING

From banking companies and financial institutions- secured

Balance as at July 01

Obtained during the period / year

Repayments made during the period / year

Current portion shown under current liabilities

10. LONG TERM DIMINISHING MUSHARAKA





11. LONG TERM MURABAHA

From banking companies - secured




50,000 100,000

100,000 -

150,000

100,000

(25,000)

(50,000)

125,000 50,000

(29,167) (31,250)

95,833 18,750

750,000 750,000

(83,335) -

666,665 750,000

(166,667) (166,667)

499,998 583,333

350,000 350,000

(38,889) -

311,111 350,000

(77,778) (77,778)

233,333 272,222

12. CONTINGENCIES AND COMMITMENTS

12.1 Contingent liabilities

a) The company has received assessment order under section 122(5) of the Income Tax Ordinance, 2001 for tax year

a result of which brought forward losses of the company have decreased by Rs. 24.849 million(June 30, 2009: Rs. Nil). The company has filed an appeal before Commissioner of Income Tax (Appeals) Zone-1 againstthe impugned order and a favorable outcome is expected in this regard. In the event of adverse decision the Company

would be faced with a charge of Rs. 24.849 million against profit.

8.2 Issued, subscribed and paid up share capital

100,000 ordinary shares (June 30, 2009: 100,000)

fully paid in cash

24,900,000 (June 30, 2009: 24,900,000) issued for

consideration other than cash

11,000,000 ( June 30, 2009: 11,000,000 )

fully paid bonus shares

1,000 1,000

249,000 249,000

110,000 110,000

360,000 360,000





15

Directors’ Report on Consolidated Financial Statements....................................... 17

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

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

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

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

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

Notes to the Condensed Consolidated interim Financial Statements..................... 23

CONTENTS

ITTEHAD CHEMICALS LIMITEDCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTSFOR THE PERIOD ENDED DECEMBER 31, 2009(UN-AUDITED)


14

14. TRANSACTIONS WITH RELATED PARTIES

The related parties comprise group companies, other associated companies, staff retirement funds, directors and key management

undertakings are given as under:

personnel. Transactions with related parties and associated


2009 2008 2009 2008

Quarter ended


Half year ended

Relationship with the Company

Associated companyAssociated companySubsidiary / Associated companiesSubsidiary companySubsidiary companySubsidiary companySubsidiary companyAssociated companyDirectors and RelativesRetirement benefit plans

Key management personnel

Nature of transaction

Marketing services charges 14,687 16,916 6,696 8,270

Purchase of goods 1,103 - 1,103 -

Sales of good and services 35,003 10,666 22,098 5,295

Land rentals 2,400 2,400 1,200 1,200

Loans and advances made 81,482 15,939 61,649 10,305

Mark up on loans and advances 1,701 665 888 264

Advance against issue of shares -

23,000

-

23,000

Loan received -

2,250

-

2,250

Loan received -

17,750

-

17,750

Contribution to staff retirementbenefit plans 96

82

49

41

Remuneration and other benefits 21,301

22,933

9,222

13,849

15. EARNINGS PER SHARE - BASIC AND DILUTED

16. DATE OF AUTHORIZATION

17. GENERAL

Amounts have been rounded off to the nearest rupees in thousand unless otherwise stated.

These financial statements were authorized for issue on February 24, 2010 by the Board of Directors of the Company.


Weighted average number of ordinary shares

Earnings per share - basic and diluted

59,956 85,197 21,524 32,818

36,000 36,000 36,000 36,000

1.67 2.37 0.60 0.91

Number of Shares (in thousand)

Amount in Rupees



17

DIRECTORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

On behalf of the Board

Lahore

February 24, 2010Muhammad Siddique Khatri

Chief Executive

Half Yearly Report December 31, 2009Half Yearly Report December 31, 2009

CONDENSED CONSOLIDATED INTERIM PROFIT AND LOSS ACCOUNT


Sales - net

Cost of sales

Gross profit

Selling and distribution expenses

General and administrative expenses

Other operating expenses

Other operating income

Operating profit

Financial charges

Profit before taxation Taxation Profit after taxation

Minority Interest - share of (profit) / loss

Profits attributable to equity holders of parent


Earning per share - basic and

diluted (Rupees)

December 31, December 31, December 31, December 31,Note 2009 2008 2009 2008

1,559,258

1,681,709

783,869

820,527

13 (1,172,660)

(1,277,183)

(610,565)

(620,697)

386,598

404,526

173,304

199,830

(119,107)

(90,948)

(54,714)

(51,780)(53,259)

(45,928)

(25,471)

(21,911)(6,953)

(11,121)

(2,177)

(4,492)4,159

1,154

1,830

425

(175,160)

(146,843)

(80,532)

(77,758)

211,438

257,683

92,772

122,072

(110,891)

(126,944)

(51,980)

(69,032)

100,547 130,739 40,792 53,040

(30,197)

(55,769)

(9,862)

(26,512)

70,350

74,970

30,930

26,528

(2,436)

(145)

(1,536)

46

67,914 74,825 29,394 26,574

15 1.89 2.08 0.82 0.74



19CHIEF EXECUTIVE DIRECTOR


CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

AS AT DECEMBER 31, 2009 (UN-AUDITED)

ASSETSNON CURRENT ASSETS

Property, plant and equipmentOperating fixed assetsCapital work in progress

Intangible assetsGoodwillInvestment propertiesLong term investmentsLong term deposits

CURRENT ASSETSStores, spares and loose toolsStock in tradeTrade debtsLoans and advancesTrade deposits and short term prepaymentsOther receivablesTax refunds due from GovernmentTaxation - netCash and bank balances

TOTAL ASSETS

EQUITY AND LIABILITIESSHARE CAPITAL AND RESERVES

Authorized share capital75,000,000 (June 30, 2009: 75,000,000) shares of Rs. 10/- each

Issued, subscribed and paid up capital36,000,000 (June 30, 2009: 36,000,000) ordinary shares of Rs.10/- each

Reserves

Minority interest

SURPLUS ON REVALUATION OF FIXED ASSETS

NON CURRENT LIABILITIESLong term financingLong term diminishing musharakaLong term murabahaDeferred liabilities

CURRENT LIABILITIESTrade and other payablesMarkup accruedShort term borrowingsCurrent portion of long term liabilitiesProvision for taxation - net

CONTINGENCIES AND COMMITMENTSTOTAL EQUITY AND LIABILITIES




6 2,585,307 2,598,2937 31,518 32,919

2,616,825 2,631,2122,317 3,3106,445 6,445

61,200 61,200428 386

17,314

12,1862,704,529

2,714,739

389,175

344,471236,842

128,307572,165

601,68743,012

50,5118,934

14,4098,100

1236,379

45,72325,126

-27,003

26,4941,346,736

1,211,6144,051,265

3,926,353

8.1 750,000

750,000

8.2 360,000

360,000492,364

478,408852,364

838,4086,697

4,261859,061

842,669748,559

748,559

9 183,477

128,05810 499,998

583,33311 233,333 272,222

362,909 357,5281,279,717 1,341,141

471,912 448,24765,004 74,560

306,856 152,327320,156 309,263

- 9,5871,163,928 993,984

12 - -4,051,265 3,926,353


18 CHIEF EXECUTIVE DIRECTOR


21

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT


CASH FLOW FROM OPERATING ACTIVITIESProfit before taxationAdjustments for items not involving movement of funds:DepreciationAmortization of intangible assetsProvision for gratuityGain on sale of fixed assetsLoss on foreign exchangeFinancial charges

Net cash flow before working capital changes

Decrease / (increase) in current assets Stores, spares and loose tools Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Tax refunds due from Government

(Decrease) / increase in current liabilities Trade and other payablesCash generated from operations

Taxes paidGratuity paidFinancial charges paid

Net cash inflow from operating activities

CASH FLOW FROM INVESTING ACTIVITIES Additions to operating fixed assets-net Additions to intangible assets Additions to capital work in progress Proceeds from sale of operating fixed assets

Long term depositsNet cash outflow from investing activities

CASH FLOW FROM FINANCING ACTIVITIES Proceeds from long term financing Repayment of long term financing Repayment of long term musharaka Repayment of long term murabaha Repayment of liabilities against assets subject to finance lease

Dividend paid Short term borrowingsNet cash inflow from financing activitiesNet increase in cash and cash equivalentsCash and cash equivalents at the beginning of the periodCash and cash equivalents at the end of the period


100,547 130,739

99,702 98,588993 831981 980

(244) (121)- 367

110,891 126,944

312,870 358,328

(44,704)

(126,019)(108,535)

(92,835)29,522

(237,041)7,499

(34,068)5,475

(41,076)(8,088)

9(17,430)

-(136,261)

(531,030)

27,740

275,974204,349

103,272(37,490)

(8,441)(322)

(285)(120,447)

(102,226)46,090

(7,680)

(87,146)

(45,858)-

(62)1,401

(25,823)675

235

(5,128)

-(90,198) (71,508)

100,000

5,000

(33,452) (31,845)(83,335) -(38,889) -

(236) (199)(54,000) (54,000)154,529 196,983

44,617 115,939509 36,751

26,494 42,07027,003 78,821

December 31, December 31, 2009 2008

Half year ended




20

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME


Profit for the period

Other comprehensive income

Surplus / (deficit) on remeasurement of

available for sale financial assets




Note 2009 2008 2009 2008

67,914

74,825

29,394

26,574

42

(466)

(52)

(205)

67,956 74,359 29,342 26,369





23

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS


1. NATURE AND STATUS OF BUSINESS

2. STATEMENT OF COMPLIANCE

3. ACCOUNTING POLICIES

4. TAXATION

Income tax expense is recognized based on management's best estimate of the weighted average annual income tax

rate expected for the full financial year.

These condensed consolidated interim financial statements have been prepared in accordance with approved accounting

standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting

Standards (IFRS) issued by the International Accounting Standard Board as are notified under the Companies

Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ,

the provisions or directives of the Companies Ordinance, 1984 shall prevail.

The disclosures made in these condensed consolidated interim financial statements have, however, been limited in

accordance with the requirements of the International Financial Reporting Standards (IFRS) IAS - 34, Interim Financial

Reporting. They do not include all the information and disclosures made in the annual published financial statements and

should be read in conjunction with the financial of the Company for the year ended June 30, 2009.statements

These condensed consolidated interim financial statements have been presented in Pakistan Rupees, which is the functional currency of the Company.

The accounting policies adopted and methods of computation followed in the preparation of these financial statements

are the same as those of the preceding published annual financial statements of the for the year ended June 30, 2009.group

Ittehad Chemicals Limited (the Company) was incorporated on September 28, 1991 to takeover the assets of Ittehad

Chemicals and Ittehad Pesticides under a Scheme of Arrangement dated June 18, 1992 as a result of which the Company

became a wholly owned subsidiary of Federal Chemical and Ceramics Corporation (Private) Limited. The Company was

privatized on July 03, 1995 when 90% of the shares were transferred to the buyer.

The Company was listed on Karachi Stock Exchange on April 14, 2003 when sponsors of the Company offered

25% of the issued, subscribed and paid up shares of the Company to the general public.

These condensed consolidated interim financial statements include financial statements of Ittehad Chemicals Limited

(Holding company) and Chemi Chloride Industries Limited (Subsidiary company), in which holding company has 95% shareholding.

The registered office of the Company is situated at 39, Empress Road, Lahore. The Company is engaged in business of manufacturing and selling caustic soda and other allied chemicals.

5. ESTIMATES

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

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

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

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

of uncertainty are the same as those that were applied to the consolidated financial statements for the year ended June 30, 2009.


22

Iss

ued

,

sub

scri

bed

an

d p

aid

-up

cap

ital

Cap

ital

rese

rve

- F

air

valu

e re

serv

e

Un

ap

pro

pri

ate

d

pro

fits

S

ub

tota

l M

inori

ty -

Sh

are

Cap

ital

Min

ori

ty -

Sh

are

of p

rofi

t

/ (l

oss

)

Su

b t

otal

G

ran

d T

ota

l

Bal

ance

as

at J

uly 0

1, 2

008

360

,000

699

378

,424

739

,123

4,60

0

(1,4

76)

3,1

24

742

,247

Div

iden

d p

aid

-

-

(54,0

00)

(54,0

00)

-

-

-(5

4,0

00)

Tota

l co

mpre

hens

ive

inco

me

for

the

peri

od-

(466)

74,

825

74,3

59

-

145

145

74,

504

Bal

ance

as

at D

ecem

ber

31,

200

8360

,000

233

399

,249

759

,482

4,60

0

(1

,331)

3,2

69

762

,751

Tota

l co

mpre

hens

ive

inco

me

for

the

peri

od-

145

78,

781

78,9

26

-

992

992

79,

918

Bal

ance

as

at J

une

30,

2009

360

,000

378

478

,030

838

,408

4,60

0

(339

)

4,2

61

842

,669

Div

iden

d p

aid

-

-

(54,0

00)

(54,0

00)

-

-

-(5

4,0

00)

Tota

l co

mpre

hens

ive

inco

me

for

the

peri

od-

42

67,

914

67,9

56

-2,4

362,4

36

70,

392

Bal

ance

as

at D

ecem

ber

31,

200

9360

,000

420

491

,944

852

,364

4,60

02,0

976,6

97

859

,061

The

annex

ed n

ote

s fr

om

1 t

o 17

form

an

inte

gral

par

t of

thes

e fi

nanc

ial

stat

emen

ts.

( R

up

ees

in t

hou

san

d )

CH

IEF

EX

EC

UT

IVE

D

IRE

CT

OR

Half Yearly Report December 31, 2009C

ON

DE

NSE

D C

ON

SOL

IDA

TE

D I

NT

ER

IM S

TAT

EM

EN

T O

F C

HA

NG

ES

IN E

QU

ITY

FO

R T

HE

HA

LF

YE

AR

EN

DE

D D

EC

EM

BE

R 3

1, 2

009

(UN

-AU

DIT

ED

)

25

8.2 Issued, subscribed and paid up capital

100,000,000 (June 30, 2009: 100,000,000) fully

paid in cash

24,900,000 (June 30, 2009: 24,900,000) issued

for consideration other than cash

11,000,000 (June 30, 2009: 11,000,000)

fully paid bonus shares

9. LONG TERM FINANCING





From directors and others - unsecured





10. LONG TERM DIMINISHING MUSHARAKA

From banking companies and financial institutions- Secured




11. LONG TERM MURABAHA

From banking companies - secured




162,568 230,010

100,000 -

262,568 230,010

(27,452)

(67,442)

235,116 162,568

29,810 23,810

4,000

6,000

(10,000) -

23,810 29,810

258,926 192,378

(75,449) (64,320)183,477 128,058

750,000 750,000

(83,335) -

666,665 750,000

(166,667) (166,667)499,998 583,333

1,000 1,000

249,000 249,000

110,000

110,000360,000

360,000

Half year ended Year ended


2009 2009



350,000 350,000

(38,889) -

311,111 350,000

(77,778) (77,778)233,333 272,222


24

6. OPERATING FIXED ASSETS

Opening book value

Additions during the period / year

Disposals during the period / year

Depreciation charged during the period / year

Closing book value

6.1

Owned assets:

Freehold land

Building on freehold land

Plant and machinery

Other equipment

Furniture and fixtures

Vehicles

6.2 Details of disposals during the period / year are as follows:

Plant and machinery

Vehicles

7. CAPITAL WORK-IN -PROGRESS

Plant and machinery

Building

Details of additions during the period / year are as

Office and other equipment

8. SHARE CAPITAL

8.1 Authorized Share Capital

50,000,000 (June 30, 2009: 50,000,000)

ordinary shares of Rs. 10/- each

25,000,000 (June 30, 2009: 25,000,000)

preference shares of Rs. 10/- each

Half year ended Year ended


2009 2009


2,598,293 2,523,899

6.1 87,146 294,221

2,685,439

2,818,120

6.2 (430)

(13,553)

(99,702)

(206,274)

(100,132) (219,827)2,585,307

2,598,293

-

105,787

- 7,636

78,088 163,265

906

1,021

46

249

1,949

4,987

6,157 11,27687,146 294,221

- 13,237

430 316430 13,553

30,936 32,487

582 43231,518 32,919


500,000 500,000

250,000 250,000500,000 500,000


7.1 An amount of Rs. 62.220 million (June 30, 2009: Rs. 128.771 million) has been transferred to

assets during the period.

operating fixed

26

12. CONTINGENCIES AND COMMITMENTS

12.1 Contingent liabilities

a)

b)

c)

d)

e)

f)

12.2 Commitments

Commitments as on December 31, 2009 were as follows:

The company has received an order under section 161/205 of the Income Tax Ordinance, 2001 for tax year 2008creating demand of Rs. 8.661 million (June 30, 2009: Rs. Nil). The company has filed an appeal beforeCommissioner of Income Tax (Appeals) Zone-1 who has granted certain reliefs to the company. Both IncomeTax Department and company has filed an appeal before Income Tax Appellate Tribunal. In the event ofadverse decision the Company would be faced with a charge of Rs. 8.661 million against profit.

The Income Tax Department had passed an order under section 161/205 of the Income Tax Ordinance, 2001 for taxyear 2006 creating demand of Rs. 1.297 million (June 30, 2009: Rs. Nil). The company has filed an appeal before

Commissioner of Income Tax (Appeals) Zone-1 who deleted the impugned order. The department has preferred an

appeal before Income Tax Appellate Tribunal who partially set aside the case. Company may be liable to pay tax

of Rs. 1.297 million, if the reassessment is made against the favour of the company.

The company has received assessment order under section 122(5) of the Income Tax Ordinance, 2001 for tax year

2004 as a result of which brought forward losses of the company have decreased by Rs. 24.849 million(June 30, 2009: Rs. Nil). The company has filed an appeal before Commissioner of Income Tax (Appeals) Zone-1

against the impugned order and a favorable outcome is expected in this regard. In the event of adverse decision the

Company would be faced with a charge of Rs. 24.849 million against profit.

An order has also been received under section 161/205 of the Income Tax Ordinance, 2001 for tax year 2004 creating

demand of Rs. 12.069 million (June 30, 2009: Rs. Nil). The company has challenged it before Commissioner ofIncome Tax (Appeals) Zone-1 and a favourable outcome is expected. In the event of adverse decision the Company

would be faced with a charge of Rs. 12.069 million against profit.

The Company is facing claims, launched in the labour courts, pertaining to staff retirement benefits. In the event of an

adverse decision the Company would be required to pay an amount of Rs 1.640 million (June 30, 2009: Rs. 2.497

million) against these claims.

Letters of guarantee outstanding as at December 31, 2009 were Rs. 199.824 million (June 30, 2009: Rs. 198.240

million).

a) Against letters of credit outstanding amounting to Rs. 46.529 million (June 30, 2009: Rs. 128.073 million).

b) Against purchase of land amounting to Rs.1.838 million (June 30, 2009: Rs 1.838 million).


27

13. COST OF SALES

Raw materials consumed

Other overheads

Salaries, wages and other benefits

Stores, spares and consumables

Packing materials consumed

Fuel and power

Repair and maintenance

Insurance

Vehicle running expenses

Postage, printing and stationery

Depreciation

Other expenses

Opening work in process

Closing work in process

Cost of goods manufactured

Opening stock of finished goods

Closing stock of finished goods

Relationship with Nature of transactionthe Company

Associated company Marketing services chargesAssociated company Purchase of goodsAssociated company Sales of good and servicesAssociated company Loans and advances madeAssociated company Loan receivedDirectors and Relatives Loan receivedRetirement benefit plans Contribution to staff retirement

benefit plansKey management personnel Remuneration and other benefits


2009 2008 2009 2008 (Rupees in thousand)


168,435 209,537 76,593 98,398

85,708 73,105 43,015 36,399

67,036 111,974 36,448 56,487

6,431 8,978 3,731 4,446

753,144 841,059 373,505 394,864

29,625 9,636 14,397 4,948

4,584 4,518 2,231 2,272

6,163 5,586 2,881 2,761

423

789

181

408

96,964

96,323

49,059

49,769

1,842

1,261

987

515

1,051,920 1,153,229

552,869

4,384

3,694

4,789

3,694

(4,844)

(4,174)

(4,844)

(4,174)

(460)

(480)

(55)

(480)

1,219,895 1,362,286

650,787

71,280

48,756

126,107

103,769

(118,514) (133,859)

(118,514)

(133,859)

(47,234)

(85,103)

7,593

(30,090)

1,172,661 1,277,183

620,697

14,687 16,916 6,696 8,2701,103 - 1,103 -

787 218 321 49- - - -

4,000 2,250 4,000 2,250- 22,750 - 22,750

-

96 82 49 4121,942 23,833 9,540 14,299


2009 2008 2009 2008

Quarter ended


Half year ended


14. TRANSACTIONS WITH RELATED PARTIES

The related parties comprise group companies, other associated companies, staff retirement funds, directors and key management

undertakings are given as under:

personnel. Transactions with related parties and associated


2009 2008 2009 2008

Quarter ended


Half year ended

15. EARNINGS PER SHARE - BASIC AND DILUTED


Weighted average number of ordinary shares

Earnings per share - basic and diluted

67,914 74,825 29,394 26,574

36,000 36,000 36,000 36,000

1.89 2.08 0.82 0.74

Number of Shares (in thousand)

Amount in Rupees

28

16. DATE OF AUTHORIZATION

17. GENERAL

Amounts have been rounded off to the nearest rupees in thousand unless otherwise stated.

These financial statements were authorized for issue on February 24, 2010 by the Board of Directors of the Company.



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