D.G. Khan Cement Company Limited CONTENTS D.G. Khan Cement Company Limited Corporate Profile 3 Directors’ Report 4 Review Report to the members 7 Condensed Interim Balance Sheet 8 Condensed Interim Profit and Loss Account 10 Condensed Interim Cash Flow Statement 11 Condensed Interim Statement of Changes in Equity 12 Selected Notes to the Condensed Interim Financial Statements 13 D.G. Khan Cement Company Limited and its Subsidiary Directors’ Report 23 Condensed Interim Consolidated Balance Sheet 24 Condensed Interim Consolidated Profit and Loss Account 26 Condensed Interim Consolidated Cash Flow Statement 27 Condensed Interim Consolidated Statement of Changes in Equity 28 Selected Notes to the Condensed Interim Consolidated Financial Statements 29 2 D.G. Khan Cement Company Limited CORPORATE PROFILE Board of Directors Mrs. Naz Mansha Chairperson Mian Raza Mansha Chief Executive Mr. Khalid Qadeer Qureshi Mr. Zaka-ud-Din Mr. Muhammad Azam Mr. Inayat Ullah Niazi Chief Financial Officer Ms. Nabiha Shahnawaz Cheema Audit Committee Mr. Khalid Qadeer Qureshi Member/Chairman Mr. Muhammad Azam Member Ms. Nabiha Shahnawaz Cheema Member Company Secretary Mr. Khalid Mahmood Chohan Bankers Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Citibank N.A. Deutsche Bank AG Dubai Islamic Bank Pakistan Limted Faysal Bank Limited Habib Bank Limited HSBC Limited MCB Bank Limited Meezan Bank Limited National Bank of Pakistan NIB Bank Limited Standard Chartered Bank (Pakistan) Limited The Bank of Punjab The Royal Bank of Scotland (Formerly ABN AMRO Bank (Pakistan) Limited) United Bank Limited Auditors KPMG Taseer Hadi & Co., Chartered Accountants Legal Advisor Mr. Shahid Hamid, Bar-at-Law Registered Office Nishat House, 53-A, Lawrence Road, Lahore-Pakistan UAN: 92-42-111-11- 33 - 33 92-42-6367812 Fax: 92-42-6367414 Email: [email protected] web site: www.dgcement.com Factory 1. Khofli Sattai, Distt. Dera Ghazi Khan-Pakistan UAN: 92-642-111-11- 33 - 33 92-642-460025 Fax: 92-642-462392 Email: [email protected] 2. 12, K.M. Choa Saidan Shah Road, Khairpur, Tehsil Kallar Kahar, Distt. Chakwal-Pakistan UAN: 92-543-111-11- 33 - 33 92-543-650215 Fax: 92-543-650231 3 D.G. Khan Cement Company Limited 4 D.G. Khan Cement Company Limited INDEPENDENT REPORT ON REVIEW OF CONDENSED INTERIM FINANCIAL INFORMATION TO THE MEMBERS OF D.G. KHAN CEMENT COMPANY LIMITED INTRODUCTION We have reviewed the accompanying condensed interim balance sheet of D. G. Khan Cement Company Limited ("the Company") as at 31 December 2008 and the related condensed interim profit and loss account, condensed interim cash flow statement and condensed interim statement of changes in equity for the six months period then ended (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 relating to 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 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. CONCLUSION Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information as at and for the six months period ended 31 December 2008 is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan relating to interim financial reporting. The figures for the quarter ended 31 December 2008 in the condensed interim profit and loss account have not been reviewed and we do not express an opinion on them. KPMG Taseer Hadi & Co. Chartered Accountants (Farid uddin Ahmed) Date: February 20, 2009 Lahore 7 D.G. Khan Cement Company Limited CONDENSED INTERIM BALANCE SHEET AS AT December 31, June 30, 2008 2008 Note (Rupees in thousand) EQUITY AND LIABILITIES CAPITAL AND RESERVES Authorised capital - 950,000,000 (June 30,2008: 950,000,000) ordinary shares of Rs 10 each 9,500,000 9,500,000 - 50,000,000 (June 30,2008: 50,000,000) preference shares of Rs 10 each 500,000 500,000 10,000,000 10,000,000 Issued, subscribed and paid up capital 253,541,157 (30 June 2008: 253,541,157) ordinary shares of Rs 10 each 2,535,412 2,535,412 Reserves 14,142,659 27,595,698 Accumulated profit / (loss) 76,195 (50,853) 16,754,266 30,080,257 NON-CURRENT LIABILITIES Long term finances 6 7,093,914 8,411,051 Long term deposits 73,094 73,890 Retirement and other benefits 66,392 54,018 Deferred taxation 879,000 1,319,000 8,112,400 9,857,959 CURRENT LIABILITIES Trade and other payables 1,278,552 1,370,336 Accrued markup 571,693 364,664 Short term borrowing-secured 9,337,471 7,597,020 Current portion of non-current liabilities 3,768,758 2,687,608 Provision for taxation 35,090 35,090 14,991,564 12,054,718 CONTINGENCIES AND COMMITMENTS 7 39,858,230 51,992,934 The annexed notes 1 to 15 form an integral part of these condensed interim financial statements. The details of valuation of investments, impairment and impact on profit and loss account are given in note 9.3 Chief Executive 8 D.G. Khan Cement Company Limited DECEMBER 31, 2008 (UN-AUDITED) December 31, June 30, 2008 2008 Note (Rupees in thousand) ASSETS NON-CURRENT ASSETS Property, plant and equipment 8 22,639,893 22,977,894 Assets subject to finance lease - 5,135 Capital work in progress 2,615,339 2,488,307 Investments 9.1 2,631,312 6,795,961 Long term loans, advances and deposits 525,630 523,046 28,412,174 32,790,343 CURRENT ASSETS Stores, spares and loose tools 1,851,724 2,299,250 Stock-in-trade 1,826,217 445,856 Trade debts 925,501 366,173 Investments 9.2 5,794,192 15,082,582 Advances, deposits, prepayments and other receivables 910,975 782,358 Cash and bank balances 137,447 226,372 11,446,056 19,202,591 39,858,230 51,992,934 Director 9 D.G. Khan Cement Company Limited CONDENSED INTERIM PROFIT AND LOSS ACCOUNT FOR THE HALF YEAR ENDED DECEMBER 31, 2008 (UN-AUDITED) 2008 2007 July to October to July to October to December December December December Note (Rupees in thousand) (Rupees in thousand) Sales - net 8,652,392 4,314,960 4,822,709 2,589,526 Cost of goods sold 10 (6,058,827) (3,021,505) (4,061,773) (2,202,254) Gross profit 2,593,565 1,293,455 760,936 387,272 Administrative and general expenses (65,870) (34,403) (52,705) (27,712) Selling and distribution expenses (1,090,165) (661,986) (119,149) (72,981) Other operating expenses (658,449) (37,883) (80,942) (60,417) Other operating income 432,400 239,816 367,754 169,384 (1,382,084) (494,456) 114,958 8,274 Profit from operations 1,211,481 798,999 875,894 395,546 Finance cost (1,457,433) (698,300) (785,217) (414,981) Share of loss of associated company - - (802) (958) (1,457,433) (698,300) (786,019) (415,939) (Loss) / profit before taxation (245,952) 100,699 89,875 (20,393) Taxation 373,000 195,000 239,786 82,120 Profit after taxation 127,048 295,699 329,661 61,727 Earnings per share basic and diluted 0.50 1.17 1.30 0.24 Appropriations have been reflected in the statement of changes in equity. The annexed notes 1 to 15 form an integral part of these condensed interim financial statements. The details of valuation of investments, impairment and impact on profit and loss account are given in note 9.3 Chief Executive Director 10 D.G. Khan Cement Company Limited INTERIM CONDENSED CASH FLOW STATEMENT FOR THE HALF YEAR ENDED DECEMBER 31, 2008 (UN-AUDITED) July to July to December December 2008 2007 Note (Rupees in thousand) Cash flows from operating activities Cash generated from operations 12 434,281 292,903 Finance cost paid (1,250,404) (848,174) Retirement and other benefits paid (4,270) (5,342) Taxes paid (101,359) (14,052) Long term deposits - net (796) 1,444 Net cash used in operating activities (922,548) (573,221) Cash flows from investing activities Purchase of property, plant and equipment (446,304) (850,532) Purchase of investments - (356,983) Long term loans, advances and deposits-net (2,800) (3,234) Sales proceeds of property, plant and equipment 844 24,922 Dividend received 401,202 354,171 Interest received 25,453 185 Net cash used in investing activities (21,605) (831,471) Cash flows from financing activities Proceeds from long term finances - 1,042,304 Repayment of long term finances (883,541) (693,767) Repayment of liabilities against assets subject to finance lease (1,141) (19,280) Dividend paid (541) (123,304) Net cash (used in)/generated from financing activities (885,223) 205,953 Net decrease in cash and cash equivalents (1,829,376) (1,198,739) Cash and cash equivalents at the beginning of period (7,370,648) (3,826,799) Cash and cash equivalents at the end of period 13 (9,200,024) (5,025,538) The annexed notes 1 to 15 form an integral part of these condensed interim financial statements.