CONTENTS Company Information 3 Directors’ Review 4 Independent Auditors Report on Review of Condensed Interim Financial Information to the Members 5 Condensed Interim Balance Sheet 6 Condensed Interim Profit and Loss Account 8 Condensed Interim Statement of Comprehensive Income 9 Condensed Interim Cash Flow Statement 10 Condensed Interim Statement of Changes in Equity 11 Selected Explanatory Notes to the Condensed Interim Financial Information 12 1 2 COMPANY INFORMATION Board of Directors Mr. Tariq Sayeed Saigol Chairman Mr. Sayeed Tariq Saigol Chief Executive Mr. Taufique Sayeed Saigol Mr. Waleed Tariq Saigol Mr. Danial Taufique Saigol Syed Mohsin Raza Naqvi Mr. Zamiruddin Azar Mr. Masood Karim Shaikh Audit Committee Mr. Zamiruddin Azar Chairman Mr. Waleed Tariq Saigol Member Mr. Masood Karim Shaikh Member Chief Financial Officer Syed Mohsin Raza Naqvi Company Secretary Mr. Muhammad Ashraf Chief Internal Auditor Mr. Bilal Hussain Bankers of the Company Auditors Allied Bank Limited KPMG Taseer Hadi & Co. Askari Bank Limited Chartered Accountants Bank Alfalah Limited Bank Al-Habib Limited Legal Advisors BankIslami Pakistan Limited Raja Mohammed Akram & Co. Burj Bank Limited Advocates and Legal Consultants, Deutsche Bank Limited Lahore. Faysal Bank Limited First Dawood Islamic Bank Limited Registered Office First Women Bank Limited 42 - Lawrence Road, Lahore. Habib Bank Limited Phone: (042) 36278904-5 Habib Metropolitan Bank Limited Fax: (042) 36368721 IGI Investment Bank Limited E-mail: [email protected] Islamic Corporation for the Development Website: www.kmlg.com of the Private Sector, Jeddah KASB Bank Limited Share Registrar MCB Bank Limited Vision Consulting Ltd Meezan Bank Limited Head Office: 3-C, LDA Flats, National Bank of Pakistan Lawrence Road, Lahore NIB Bank Limited Phone: (042) 36375531 & 36375339 Pak Brunei Investment Company Limited Fax: (042) 36374839 Pak-Libya Holding Company (Pvt.) Limited E-mail: [email protected] Pak Oman Investment Company Limited Website: www.vcl.com.pk Saudi Pak Industrial & Agricultural Investment Co. Limited Factory Silk Bank Limited Iskanderabad Distt. Mianwali. Soneri Bank Limited Phone: (0459) 392237-8 Standard Chartered Bank (Pakistan) Limited Summit Bank Limited The Bank of Khyber The Bank of Punjab Trust Investment Bank Limited HSBC Bank Middle East Limited United Bank Limited 3 diRectoRS’ REVieW The Directors of your Company have pleasure to present the financial statements of the Company for the half year ended December 31, 2011 duly reviewed by the Auditors, in compliance with Section 245 of the Companies Ordinance, 1984. The Company recorded net sales of Rs.7,021 Million during the first half year against sales of Rs.6,212 Million in the corresponding period. Sales revenue depicted growth of 13% mainly due to increased local and export retention prices. Increase in prices was mainly driven by substantial increase in production costs. Gross profit increased to Rs.1,583 Million in current period as compared to Rs.856 Million in the corresponding period last year. Operating profit of Rs.1,044 Million was achieved during the period under review as compared to operating loss of Rs.8 Million in the corresponding period. Significant growth in operating earnings emanated partially from higher cement prices and greatly from efficiencies in operations through commissioning and running of Waste Heat Recovery Plant along with other cost reduction measures adopted by the Company. International coal prices remained stable during the period. However, frequent power and gas shortages, increased power tariffs and rise in other input costs continued to push the cost of production upwards during the current period. Distribution, administration and other operating costs were effectively controlled. Financial cost increased by 16% mainly due to capitalization of Waste Heat Recovery Plant during the current period and foreign exchange losses owing to Pak Rupee devaluation. During the 2nd quarter of the current period, Company recorded pre-tax profit of Rs.16 Million as compared to pre-tax loss of Rs.503 Million in the corresponding period. Overall, during the first half year, Company suffered pre-tax loss of Rs.205 Million after accounting for financial charges of Rs.1,228 Million. During the corresponding period last year, pre-tax loss was recorded at Rs.1,112 Million. Future Outlook Due to continuous increase in production costs and inflationary pressures, going forward it is reasonable to expect that cement prices will increase further. We are endeavoring to improve our margins and profit through greater use of alternate fuels, efficient operation of plants, both grey and white and by meticulously adhering to measures adopted to reduce overhead costs. In addition, increase in dispatches to Afghanistan due to improved law and order situation, coupled with improved prices, shall support export growth and margins. Exports by sea are expected to remain at a lower level than last year due to diminished margins and increase in overland freight costs from plant to Karachi. The Company is looking keenly to positive developments in trade relations between Pakistan and India as it is ideally located for export of cement by road to adjoining states. Acknowledgment The Board takes this opportunity to express their deep sense of gratitude and thanks to the shareholders, employees, customers, bankers and other stakeholders for their confidence and faith that they have always reposed in us. For and on behalf of the Board (Sayeed Tariq Saigol) Lahore: February 23, 2012 Chief Executive 4 Independent Auditors Report on Review of Condensed Interim Financial Information to the Members Introduction We have reviewed the accompanying condensed interim balance sheet of Maple Leaf Cement Factory Limited (“the Company”) as at 31 December 2011, and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim cash flow statement, condensed interim statement of changes in equity and notes to the condensed interim financial information for the six months period then ended (here-in-after referred 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 for interim financial reporting. Our responsibility is to express a conclusion on this condensed interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” A review of 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. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. The figures for the three months period ended 31 December 2011 and 31 December 2010, in the condensed interim profit and loss account and condensed interim statement of comprehensive income have not been reviewed and we do not express a conclusion thereon. The corresponding figures presented are based on financial statements of the Company for the six months period ended 31 December 2010 and year ended 30 June 2011, which were reviewed / audited by another firm of auditors, whose reports dated 23 February 2011 and 27 September 2011, respectively, expressed an unqualified conclusion / opinion thereon. KPMG Taseer Hadi & Co. Lahore: Chartered Accountants Date: 23 February 2012 (Kamran Iqbal Yousafi) 5 CONDENSED INTERIM BALANCE SHEET AS AT DECEMBER 31, 2011 Un-audited Audited Note December 31, June 30, 2011 2011 (Rupees in thousand) EQUITY AND LIABILITIES Share capital and reserves Authorised share capital 7,000,000 7,000,000 Issued, subscribed and paid up capital 5,803,617 5,803,458 Reserves 3,305,762 3,306,480 Accumulated losses (6,100,484) (5,976,651) 3,008,895 3,133,287 Surplus on revaluation of property, plant and equipment - net of tax 4 5,423,260 5,548,120 Non-current liabilities Long term loans from banking company 5 2,452,380 2,557,185 Redeemable capital 7,583,000 7,983,000 Syndicated term finances 1,422,000 1,497,000 Liabilities against assets subject to finance lease 356,802 464,366 Long term deposits 5,919 5,569 Deferred liabilities: - deferred taxation 6 2,061,787 2,114,100 - employee compensated absences 21,391 19,149 13,903,279 14,640,369 Current liabilities Trade and other payables 3,389,808 4,115,879 Accrued profit / interest / markup 1,017,725 791,161 Short term borrowings 7 3,849,891 4,084,666 Current portion of: - long term loans from banking company 665,442 448,473 - redeemable capital 703,400 306,800 - syndicated term finance 75,600 1,200 - liabilities against assets subject to finance lease 8 726,058 620,161 10,427,924 10,368,340 Contingencies and commitments 9 - -