Half Yearly Report - Ittehad Chemicals€¦ · DIRECTORS’ REPORT Half Yearly Report December 31, 2009 February 24, 2010 Lahore. On behalf of the Board Muhammad Siddique Khatri Chief
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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
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
Half Yearly Report December 31, 2009
4
AUDITORS’ REPORT ON REVIEW OF CONDENSED INTERIM FINANCIAL
INFORMATION TO THE MEMBERS
KARACHI
FEBRUARY 24, 2010
CHARTERED ACCOUNTANTS Engagement Partner: Zulfikar Ali Causer
Half Yearly Report December 31, 2009
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
(Rupees in thousand)
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.
CHIEF EXECUTIVE DIRECTOR
Half Yearly Report December 31, 2009
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
The annexed notes from 1 to 17 form an integral part of these financial statements.
Earning per share - basic and
diluted (Rupees)
December 31, December 31, December 31, December 31,
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
Half year ended Quarter ended
(Rupees in thousand)
CONDENSED INTERIM PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)
CHIEF EXECUTIVE DIRECTOR
Half Yearly Report December 31, 2009
8
CONDENSED INTERIM CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)
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
(Rupees in thousand)
The annexed notes from 1 to 17 form an integral part of these financial statements.
CHIEF EXECUTIVE DIRECTOR
Half Yearly Report December 31, 2009
9
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)
Balance as at July 01, 2008
Dividend paid
Total comprehensive income for the period
Balance as at December 31, 2008 Total comprehensive income for the period
Balance as at June 30, 2009
Dividend paid
Total comprehensive income for the period
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
(Rupees in thousand)
CHIEF EXECUTIVE DIRECTOR
Half Yearly Report December 31, 2009
The annexed notes from 1 to 17 form an integral part of these financial statements.
10
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)
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
Half Yearly Report December 31, 2009
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
Half Yearly Report December 31, 2009
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
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
Half year ended Quarter ended
(Rupees in thousand)
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.
Half Yearly Report December 31, 2009
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
From banking companies and financial institutions- secured
Balance as at July 01
Repayments made during the period / year
Current portion shown under current liabilities
11. LONG TERM MURABAHA
From banking companies - secured
Balance as at July 01
Repayments made during the period / year
Current portion shown under current liabilities
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
December 31, June 30,2009 2009
(Unaudited) (Audited)
(Rupees in thousand)
Half Yearly Report December 31, 2009
15
Directors’ Report on Consolidated Financial Statements....................................... 17
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.
Profit after taxation
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
CHIEF EXECUTIVE DIRECTOR
Half Yearly Report December 31, 2009
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
FOR THE HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)
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
The annexed notes from 1 to 17 form an integral part of these financial statements.
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
Half year ended Quarter ended
(Rupees in thousand)
19CHIEF EXECUTIVE DIRECTOR
Half Yearly Report December 31, 2009
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
The annexed notes from 1 to 17 form an integral part of these financial statements.
FOR THE HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)
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
The annexed notes from 1 to 17 form an integral part of these financial statements.
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
(Rupees in thousand)
CHIEF EXECUTIVE DIRECTOR
Half Yearly Report December 31, 2009
20
CONDENSED CONSOLIDATED 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
The annexed notes from 1 to 17 form an integral part of these financial statements.
December 31, December 31, December 31, December 31,
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
Half year ended Quarter ended
(Rupees in thousand)
CHIEF EXECUTIVE DIRECTOR
Half Yearly Report December 31, 2009
23
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)
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.
Half Yearly Report December 31, 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 banking companies and financial institutions- secured
Balance as at July 01
Obtained during the period / year
Repayments made during the period / year
From directors and others - unsecured
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
From banking companies and financial institutions- Secured
Balance as at July 01
Repayments made during the period / year
Current portion shown under current liabilities
11. LONG TERM MURABAHA
From banking companies - secured
Balance as at July 01
Repayments made during the period / year
Current portion shown under current liabilities
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
December 31, June 30,
2009 2009
(Unaudited) (Audited)
(Rupees in thousand)
350,000 350,000
(38,889) -
311,111 350,000
(77,778) (77,778)233,333 272,222
Half Yearly Report December 31, 2009
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
December 31, June 30,
2009 2009
Note (Unaudited) (Audited)
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
(Rupees in thousand)
500,000 500,000
250,000 250,000500,000 500,000
Half Yearly Report December 31, 2009
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).
Half Yearly Report December 31, 2009
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
December 31, December 31, December 31, December 31,
2009 2008 2009 2008 (Rupees in thousand)
Half year ended Quarter ended
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
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
Quarter ended
(Rupees in thousand)
Half year ended
Half Yearly Report December 31, 2009
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
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
Quarter ended
(Rupees in thousand)
Half year ended
15. EARNINGS PER SHARE - BASIC AND DILUTED
Profit after taxation
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.