NTML Half Year Dec 2012 for Website - nadeem.com.pk

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COMPANY INFORMATION

BOARD OF DIRECTORS : MR. ZAHID MAZHAR (Chief Executive / Chairman)MR. OMER BIN ZAHIDMR. HASSAN BIN ZAHIDMST. RAFIA SULTANAMRS. NAILA ZAHID

MISS. SARAH ZAHID

MR. MEHMOOD SIDDIQI

AUDITORS : M/S. RAHMAN SARFARAZ RAHIM IQBAL RAFIQCHARTERED ACCOUNTANTS

LEGAL ADVISOR : MR. ABDUL GHANI KHAN (ADVOCATE)

AUDIT COMMITTEE : MRS. NAILA ZAHID (MEMBER / CHAIRPERSON)MR. OMER BIN ZAHID (MEMBER)MST. RAFIA SULTANA (MEMBER)

H. R. AND REMUNERATIONCOMMITEE : MR. OMER BIN ZAHID (CHAIRMAN)

MR. ZAHID MAZHAR (MEMBER)

MRS. NAILA ZAHID (MEMBER)

CHIEF FINANCIAL OFFICER : MR. OMER BIN ZAHID (M.B.A.)

BANKERS : ALLIED BANK LIMITEDSONERI BANK LIMITEDJ. S. BANK LIMITEDBANK AL-FALAH LIMITEDCITI BANKASKARI BANK LIMITED

REGISTERED OFFICE : 201-202, COMMERCE CENTRE,

HASRAT MOHANI ROAD,KARACHI - PAKISTAN.

PHONE : (021) 32635807 - 32635809

FAX : (92-21) 32637896 - 32632712

SHARE REGISTRAR : M/S HAMEED MAJEED ASSOCIATES (PVT.) LTD.5TH FLOOR, KARACHI CHAMBERS, HASRAT MOHANI ROAD, KARACHI.

PHONE : 32424826-32412754 FAX : 32424835E-MAIL : [email protected]

HEAD OFFICE : A 801-804, LAKSON SQUARE BUILDING No. 3,SARWAR SHAHEED ROAD,

KARACHI - PAKISTAN.

PHONE : (021) 35220481-8

FAX : (92-21) 35220495-6

MILLS : A-265, S.I.T.E., NOORIABAD,DISTRICT DADU, SINDH.

URL : www.nadeem.com.pk

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DIRECTORS' REPORT

Karachi:February 22, 2013

Dear Shareholders,

The Directors of the Company are pleased to present their report alongwith the Reviewed Financial Statements of the Company for the half year ended December 31, 2012.

OVERVIEWThe Company has performed well during the first half of current financial year. The

Company managed to earn gross profit of Rs. 134.334 million at 6.73%. The Sales

turnover also increased drastically to Rs. 1,996 million during the period under review as

compared to Rs. 1,405 million during the comparative period of last year.

FINANCIAL RESULTSThe company made a pre-tax profit of Rs. 49.72 million and after tax profit of Rs. 23.49 million during the period as compared to after tax profit of Rs. 3.38 million of last year.

EARNING PER SHAREEarning per share for the period is Rs. 1.96 as compared to EPS of Rs. 0.28 of the comparative period.

EXPANSION AND MODERNIZATIONAn expansion program in the plant capacity is being carried on. The company is

enhancing its production facility by installing additional spindles along with allied

machinery. It is expected that after the implementation of current BMR the Company will

be able to increase its productivity with better quality and reduced cost per unit.

CURRENT AND FUTURE SUMMARY AND PROSPECTSCotton prices both in domestic and international markets remained stable within

acceptable limits. However, present trend of increase in inflation, never ending hike in

energy costs and load shedding are likely to continue. Poor situation of law and order in

the country has also affected the textile industry very badly. In spite of these

circumstances, the management is putting its best efforts to ensure continued growth,

operational efficiency and optimum results for the Company and its valued stakeholders.

The directors of your company foresee better results at the end of the financial year.

ACKNOWLEDGEMENTThe management would like to place on record its appreciation for the continuous support of its employees, customers, suppliers and bankers.

ZAHID MAZHARChief Executive

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Introduction We have reviewed the accompanying condensed interim balance sheet of Nadeem Textile Mills Limited as at December 31, 2012 and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim statement of changes in equity and condensed Interim cash flow statement for the six months then ended together with the notes forming part thereof for the six months then ended (here-in-after referred to as the "condensed interim financial information"). Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with approved accounting standards as applicable in Pakistan. Our responsibility is to express a conclusion on this condensed interim financial information based on our review. The figures of the condensed interim profit and loss account and condensed interim statement of comprehensive income for the quarters ended December 31, 2011 and 2012 have not been reviewed, as we are required to review only the cumulative figures for the half year ended December 31, 2012.

Scope of ReviewWe conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of condensed interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

ConclusionBased on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information as of and for the six months ended December 31, 2012 is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan.We draw attention to the outcome of pending proceedings being contested by the company as described in note 1.2 to the financial statements. Our opinion is not qualified in respect of this matter.

AUDITOR’S REPORT TO THE MEMBERSOn Review of Condensed Interim Financial Information

Karachi:February 22, 2013

RAHMAN SARFARAZ RAHIM IQBAL RAFIQ Chartered AccountantsEngagement Partner: Muhammad Waseem

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ASSETS NoteNON-CURRENT ASSETSProperty, plant and equipment 5

- -

734,024,569 700,681,475Long term deposits 7,823,667 7,823,667

741,848,236 708,505,142

CURRENT ASSETS

Stores, spares and loose tools 25,609,756 28,322,610Stock in trade 884,089,489 546,892,815Trade debtors - considered good 119,817,822 105,374,133Short term investment 10,415,165 5,828,051Loan and advance 99,106,961 7,874,307Trade deposits, prepayments and other receivable 17,740,816 17,061,164Taxation - net 2,067,516 1,431,851Cash and bank balances 9,936,246 7,648,827

1,168,783,771 720,433,758

1,910,632,007 1,428,938,900

CAPITAL AND LIABILITIESAuthorized share capital12,500,000 Ordinary shares of Rs. 10/- each 125,000,000 125,000,000Issued, subscribed and paid-up capital12,015,000 (June 30, 2012: 12,015,000) Ordinary shares of Rs. 10/- each 120,150,000 120,150,000Capital reserves 15,575,000 15,575,000Unappropriated profit 351,212,333 327,714,339

486,937,333 463,439,339NON CURRENT LIABILITIESLong term finances 34,067,705 52,002,741Deferred liabilities 54,778,585 43,629,769

88,846,290 95,632,510

CURRENT LIABILITIESTrade & other payable 405,304,688 135,958,179Accrued markup on financing 16,158,538 31,819,711Short- term borrowings 6 877,512,094 666,216,097Current portion of long term finances 35,873,064 35,873,064

1,334,848,384 869,867,051Contingencies and commitments 7

1,910,632,007 1,428,938,900

The annexed notes from 1 to 10 form an integral part of this condensed interim financial information.

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AuditedJun. 30, 2012

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Un-AuditedDec. 31, 2012

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NADEEM TEXTILE MILLS LIMITEDCONDENSED INTERIM BALANCE SHEET

AS AT DECEMBER 31, 2012

Omer Bin ZahidDirector

Zahid MazharChief ExecutiveKarachi: February 22, 2013

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NADEEM TEXTILE MILLS LIMITEDCONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)

DECEMBER 31, 2012FOR THE HALF YEAR AND QUARTER ENDED

Sales (Net) 1,996,170,338 1,405,378,161 1,084,594,171 761,354,912Cost of Sales (1,861,835,564) (1,300,539,054) (650,723,776)

Gross Profit 104,839,107 110,631,136

Operating Expenses

97,433,562 77,577,318 56,129,282 97,089,493

- -


(1,009,721,732)

134,334,774 74,872,439

Administrative expenses (26,134,431) (17,100,817) (12,655,170) (8,923,311)

Distribution cost (11,500,989) (10,209,404) (6,632,066) (4,803,547)

Other income 734,208 48,432 544,079 185,215

(36,901,212) (27,261,789) (18,743,157) (13,541,643)

Other ChargesFinance cost (34,571,647) (49,573,545) (17,868,534) (30,413,062)

Other charges (13,144,494) (1,550,189) (5,611,557) (1,550,189)

(47,716,141) (51,123,734) (23,480,091) (31,963,251)

49,717,421 26,453,584 32,649,191 65,126,242

Taxation

Current (19,386,266) (15,192,528) (12,126,995) (7,152,759)

Prior (1,762,519) (1,762,519)

Deferred (6,833,161) (6,117,496) (5,106,367) (2,197,328)

(26,219,427) (23,072,543) (17,233,362) (11,112,606)

Profit after tax 23,497,994 3,381,041 15,415,829 54,013,636

Earning per share -

basic and diluted 1.96 0.28 1.28 4.50

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FOR THE HALF YEAR ENDED FOR THE QUARTER YEAR ENDED

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Profit for the period 23,497,994 3,381,041 15,415,829 54,013,636

Other comprehensive income - - - -

Total comprehensive income

transferred to equity 23,497,994 3,381,041 15,415,829 54,013,636


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For the half year endedDecember 31,

For the quarter year endedDecember 31

2012 2011 2012 2011

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) DECEMBER 31, 2012FOR THE HALF YEAR AND QUARTER ENDED

NADEEM TEXTILE MILLS LIMITED



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NADEEM TEXTILE MILLS LIMITEDCONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)

FOR THE HALF YEAR ENDED DECEMBER 31, 2012

For the halfyear ended

Dec. 31, 2012RUPEES


Dec. 31, 2011RUPEES

CASH FLOW FROM OPERATING ACTIVITIESProfit before taxation

Adjustments for non - cash and other itemsDepreciationProvision for gratuity 6,856,247 3,718,804(Gain) / Loss on investment (322,403) 445,180(Gain) / Loss on disposal on property, plant and equipment - (248,496)Contribution to workers’ profit participation fund 2,616,706 1,400,189Contribution to workers’ welfare fund - 150,000 Finance cost

Operating profit before working capital changes

(Increase) / decrease in current assetsStore, spares and loose tools 2,712,854 (2,358,907)Stocks in trade (337,196,674) (730,366,107)Trade debtors - considered good (14,443,689) 134,824,641Loans and advances (91,232,654) (19,436,747)Trade deposits, prepayments and other receivables (679,652) 1,211,108

-

(440,839,815) (618,868,114)

Increase in current liabilities

Net cash used in operations

Taxes paid (20,021,930) (39,135,807)Gratuity paid (2,540,592) (2,519,937)Finance costs paid (50,232,820) (45,019,141)

Net cash used in operating activities (124,964,270) (482,344,714)c/f ...

49,717,421 26,453,584

28,501,466 25,324,487

34,571,647 49,573,545

72,223,663 80,363,709

121,941,084 106,817,293

Due from government (2,742,102)

Trade and other payable 266,729,803 116,380,992

(52,168,928) (395,669,829)

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CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment (61,844,561) (131,658,246)Proceeds from disposal of property, plant and equipment 375,000Net proceeds from (acquisition) / disposal of investments (4,264,711) 1,913,085

Net cash used in investing activities (66,109,272) (129,370,161)

CASH FLOWS FROM FINANCING ACTIVITIESShort term financing transferred to long term 79,993,115Repayments of long term finance (17,935,036) (16,701,110)Loan from Director - net 30,000,000

Net decrease in cash and cash equivalents (179,008,578) (538,422,870)Cash and cash equivalents at beginningof the period (658,567,270) (579,776,507)

Cash and cash equivalents at end of the period (837,575,848) (1,118,199,377)

Cash and cash equivalents comprise of :

Cash and bank balances 9,936,246 16,912,836

Short term borrowings (847,512,094) (1,135,112,213)

(837,575,848) (1,118,199,377)


b/f (124,964,270) (482,344,714)

-

-

10,000,000

Net cash generated from financing activities 12,064,964 73,292,005

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CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE HALF YEAR ENDED DECEMBER 31, 2012


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NADEEM TEXTILE MILLS LIMITEDCONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED DECEMBER 31, 2012

Balance as at July 01, 2011 120,150,000 15,575,000 322,435,861 458,160,861

Comprehensive income for the half year - - 3,381,041 3,381,041

Balance as at December 31, 2011(Unaudited) 120,150,000 15,575,000 325,816,902 461,541,902 Balance as at January 1, 2012 120,150,000 15,575,000 325,816,902 461,541,902

Comprehensive income for the half year - - 1,897,437 1,897,437

Balance as at June 30, 2012(Audited) 120,150,000 15,575,000 327,714,339 463,439,339

Balance as at July 01, 2012 120,150,000 15,575,000 327,714,339 463,439,339

Comprehensive incomefor the half year - - 23,497,994 23,497,994

Balance as at December 31, 2012(Unaudited) 120,150,000 15,575,000 351,212,333 486,937,333


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UN-APPRO-PRIATEDPROFIT

CAPITALRESERVE

PAID UPCAPITAL TOTAL

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NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED)FOR THE HALF YEAR ENDED DECEMBER 31, 2012

1 STATUS AND NATURE OF BUSINESS1.1 Nadeem Textile Mills Limited (the "Company") is a public listed company incorporated

under the Companies Ordinance, 1984 and is quoted on the Karachi Stock Exchange. The company is in the business of manufacturing and sale of cotton yarn. The manufacturing facility of the company is located at A-265, S.I.T.E, Nooriabad, District Dadu, Sindh. The registered business office of the company is situated at Suite 201-202, Commerce Centre, Hasrat Mohani Road, Karachi.

1.2 During the period on August 06, 2012 some of the shareholders of the company have filed petition in the High Court of Sindh against the company and its board of directors for winding up of the company by the Court under section 305 of the Companies Ordinance 1984. The matter was fixed for hearing on September 04, 2012 but adjourned without fixing any date. The matter is still pending in High Court of Sindh. The Company is contesting the matter and in the opinion of the legal counsel of the company it has a good case on merit and there is no likelihood of any unfavourable outcome.

2 STATEMENT OF COMPLIANCE This condensed interim financial report of the Company for the six months period ended

December 31, 2012 has been prepared in accordance with the requirements of the International Accounting Standards 34 - Interim Financial reporting and provisions of and directives issued under the Companies Ordinance,1984 (the Ordinance). In case where requirements differ, the provisions of or directives issued under the Ordinance have been followed.

This condensed interim financial report comprises of the condensed interim balance sheet as at December 31, 2012 and the condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim statement of changes in equity and the condensed interim cash flow statement for the six months period then ended which have been subjected to a review but not audited as required under Code of Corporate Governance. This condensed interim financial report also includes the condensed interim profit and loss account and condensed interim statement of comprehensive income for the quarter ended December 31,2012 which were not subject to a review.

The comparative condensed balance sheet, presented in this condense interim financial report, as at June 30, 2012 has been extracted from the annual audited financial statements of the Company for the year ended June 30, 2012 whereas the comparative condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim statement of changes in equity and condensed interim cash flow statement for the six months period ended December 31, 2011 were subjected to a review but not audited in accordance with the Code of Corporate Governance. The comparative condensed profit and loss account and condensed interim statement of comprehensive income for the quarter ended December 31, 2011 included in this condensed interim financial report was not subjected to a review.

3 SIGNIFICANT ACCOUNTING POLICIES These interim financial information have been prepared using the same accounting convention, basis of preparation and significant accounting policies as those applied in the preparation of the audited financial statements for the year ended June 30, 2012.

Adoption of new accounting standards There are certain new standards, amendments and interpretations that are mandatory for

Company's accounting periods beginning on or after July 1, 2012 but are considered not to be relevant or to have any significant effect on the modaraba's operations and are therefore not detailed in these condensed interim financial statements.

Standards, amendments to published standards and interpretations to existing standards that are not yet effective and have not been early adopted by the CompanyFollowing new standards, amendments and interpretation to existing standards have been issued but are not effective for the financial year beginning July 1, 2012 and have not been early adopted by the Company:


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- IAS 19 Employee benefits (Amendment) effective for periods beginning on or after January 1, 2013.

- IFRS 10, 'Consolidated financial statements', effective for periods beginning on or after January 1, 2013.

- IFRS 12, 'Disclosure of interests in other entities', effective for annual periods beginning on or after January 1, 2013.

- IAS 27 "Separate Financial Statements" , applicable to annual reporting periods beginning on or after 1 January 2013.

- IAS 28 "Investments in Associates and Joint Ventures", applicable to annual reporting periods beginning on or after 1 January 2013.

- IFRS 9 "Financial Instruments", Applies on a modified retrospective basis to annual periods beginning on or after 1 January 2015.

- Disclosures — Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) , Applicable to annual periods beginning on or after 1 January 2013 and interim periods within those periods.Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32), Applicable to annual periods beginning on or after 1 January 2014:There are a number of minor amendments in other IFRS and IAS which are part of annual improvement project published in April 2009 and May 2010(not addressed above). These amendments are unlikely to have any impact on the Company's financial statements and therefore have not been analysed in detail.IAS 16 Property, Plant and Equipment is amended to clarify the accounting of spare parts, stand-by equipment and servicing equipment. Applicable to annual periods beginning on or after 1 January 2013.IAS 32 Financial Instruments: Presentation - Applicable to annual periods beginning on or after 1 January 2013 ,is amended to clarify that IAS 12 Income Taxes applies to the accounting for income taxes relating to distributions to holders of an equity instrument and transaction costs of an equity transaction.IAS 34 Interim Financial Reporting is amended, Applicable to annual periods beginning on or after 1 January 2013, to align the disclosure requirements for segment assets and segment liabilities in interim financial reports with those in IFRS 8 Operating Segments.

4 ACCOUNTING ESTIMATES AND JUDGMENTSThe preparation of the condensed interim financial information in conformity with approved accounting standards requires management to make estimates, assumptions and use judgments that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates, assumptions and judgments are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. Revisions to accounting estimates are recognized prospectively commencing from the period of revision.

In preparing the condensed interim financial information, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the preceding published annual financial statements of the Company as at and for the year ended June 30, 2012..

5 PROPERTY, PLANT & EQUIPMENTOperating fixed assets 5.1 566,745,888 553,638,414

Capital work in progress 167,278,681 147,043,061

734,024,569 700,681,475

5.1 This details of operating property, plant and equipment that have been added / disposed of during the six months period ended December 31, 2012 is as follows:


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Additions Deletions Additions Deletions

Rupees

Factory building 702,056 - 1,360,784 -Office premises 422,979 - 1,187,920 -Plant and machinery 36,409,836* - 26,776,794 -Computer equipment 146,392 - 26,885 -Office equipment 1,618,084 - 92,500 -Furniture and fixture 58,000 - 146,090 -Vehicle 2,251,594 - 1,823,500 126,504

41,608,941 - 31,414,473 126,504

* This includes transfer from capital work in progress amounting to Rupees 32,817,952 (June 30, 2012 : 74,601,307).

6 SHORT TERM BORROWINGSDuring the period, the Company availed financing from financial institutions of Rs. 2,460.5 million and made repayments of short term term finance to financial institutions amounting to Rs. 2,283.8 million. Loan amounting to Rs. 67.5 million has been obtained from Director during the period and repayments of Rs. 37.5 million have been made in respect thereof.

7 CONTINGENCIES AND COMMITMENTS

Contingencies

No contingencies are known to exist at the balance sheet date (June 30, 2012: Nil).

commitments

Against letters of credit - 12,485,746Bank guarantee to Excise & Taxation department 2,000,000 2,000,000

Bank guarantee to HESCO 10,290,000 10,290,000Revolving letter of credit to SSGC 21,737,388 21,737,388FBP outstanding - 88,377,778

Civil contractor 8,827,261 19,989,577

8 TRANSACTIONS WITH RELATED PARTIESSale of raw material 183,731,732 477,628,629

Purchase of yarn 69,498,000 4,309,500

Reprocessing charges 124,400 5,436,850Sale of yarn - 13,190,350

Reprocessing Income - 84,000

9 DATE OF AUTHORIZATION FOR ISSUEThis condensed interim financial information has been authorized by the Board of Directors for issue in their meeting held on February 22, 2013.

10 GENERAL

Figures have been rounded off to the nearest rupee.

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December 31, 2012 June 30, 2012


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NTML Half Year Dec 2012 for Website - nadeem.com.pk