Half Yearly Report

Half Yearly Report
For The Period ended December 31, 2014
HALA ENTERPRISES LIMITED
Half Yearly Report
Hala Enterprises Limited
CONTENTS
Company Information
1
Director’s Report
2
Auditor Review Report To Members On Review Of
3
Condensed Interim Balance Sheet
4-5
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 of the Condensed Interim Financial Statement
10-12
Half Yearly Report
Hala Enterprises Limited
COMPANY INFORMATION
BOARD OF DIRECTORS
Mr. Tahir Jahangir
Mr. Jillani Jahangir
Chairman/Director
Chief Executive Officer
(Certified Director)
Miss Munizae Jahangir
Non-Executive Director
Mrs. Sulema Jahangir
Non-Executive Director
Sh. Ijaz Ahmad
Non-Executive Director
Mr. Rasheed Ahmad Khan Non-Executive Director
Mr. Abdul Munaf
Executive Director
AUDIT COMMITTEE
Miss Munizae Jahangir
Mrs. Sulema Jahangir
Sh. Ijaz Ahmad
Chairman/Member
Member
Member
HUMAN RESOURCE &
REMUNERATION COMMITTEE
Mr. Arshad Javed
Mr. Tahir Jahangir
Mr. Jillani Jahangir
Mr. Abdul Munaf
Chairman
Member
Member
Member
CHIEF FINANCIAL OFFICER
Mr. Abdul Munaf
COMPANY SECRETARY
Muhammad Mushtaq Saeed Iqbal
AUDITORS
M/s. Horwath Hussain Chaudhary & Co.
Chartered Accountants
LEGAL ADVISORS
A.G.H.S Law Associates
BANKERS
Faysal Bank Limited
NIB Bank Limited
Askari Bank Limited
REGISTERED OFFICE/WORKS
Factory Premises, 17.5 KM Sheikhupura Road,
Lahore Tel: 042-37970130, 37970230
Fax: 042-37970681
Email. [email protected]
Website: www.halaenterprises.com
SHARE REGISTRAR OFFICE
M/s Corplink (Private) Limited
Wings Arcade, 1-K, Commercial Model Town,
Lahore
Tel: 042-35916714, 35916719 Fax: 042-35869037
Email. [email protected]
1
Half Yearly Report
Hala Enterprises Limited
DIRECTORS’ REPORT
The Board of Directors at Hala Enterprises Limited hereby present the interim financial
report of the company for the half year ended December 31st 2014, together with the interim
financial information.
During the period under review, the company underwent a lower turnover rate due to a
number of internal and external constraints. While the first quarter was positive, the second
quarter brought about a number of difficulties and issues which hindered smooth
operations. One of the major contributing factors towards hindering production levels was
the short supply of gas to the textile industry. Furthermore, the devaluation of the Euro
reduced profitability which meant a decrease in the value of all Euro-based exports by
approximately 10-12%. Therefore, added costs and lower turnover meant a restricted cash
flow. Hence, a decision was made to honour all necessary ongoing contracts and curtail
production levels to a minimum – so heavy losses could be avoided. On the other hand,
cotton prices fell in the December period – and the company made a strategic decision to
invest in securing cotton yarn at better rates instead of using its resources on bumping up
production levels as gas supply was limited or virtually non-existent.
The Management is hopeful that this strategic decision will help the company in building up
its production levels in the upcoming period to achieve healthy turnovers and profitability.
There a number of positive factors which we estimate will lead to a profitable position in the
upcoming two quarters - period ending June 30th 2015. A few of the added advantages are
lower cotton prices, decreased energy costs and lower mark-up rates on Export refinance
facilities given to the Value Added Textile Sector. The targeted increase in turnover is
expected to be around 20% to take advantage of the favourable circumstances and break
out of the current loss cycle.
We would like to take this opportunity to thank our customers, suppliers and bankers for
their continued cooperation towards the progress of the company. We hope that this
support will continue in the future as well.
For & on behalf of the Board
(JILLANI JAHANGIR)
Dated: Feb 27, 2015
2
CHIEF EXECUTIVE OFFICER
Half Yearly Report
Hala Enterprises Limited
AUDITOR REVIEW REPORT TO MEMBERS ON REVIEW OF
Interim Financial Information
Introduction
We have reviewed the accompanying condensed interim balance sheet of Hala Enterprises
Limited as at December 31, 2014, the related condensed interim profit and loss account,
condensed interim statement of comprehensive income, condensed interim cash flow statement
and condensed interim statement of changes in equity and the notes to the accounts for the six
months period then ended (here-in-after referred to as the “interim financial information”).
Management is responsible for the preparation and presentation of this 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 interim financial
information based on our review. The figures included in the condensed interim profit and loss
account for the quarters ended December 31, 2013 and December 31, 2014 have not been
reviewed, as we are required to review only the cumulative figures for the six months period
ended December 31, 2014.
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 financial information consists of making inquiries, primarily of persons
responsible for the 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 interim financial information as of and for the half year ended December 31, 2014
is not prepared, in all material respects, in accordance with approved accounting standards as
applicable in Pakistan.
LAHORE
Dated: February 27, 2015
HORWATH HUSSAIN CHAUDHURY & CO.
Chartered Accountants
(Engagement Partner: Muhammad Nasir Muneer)
3
Half Yearly Report
Hala Enterprises Limited
CONDENSED INTERIM BALANCE SHEET
As At December 31, 2014
Note
CAPITAL AND LIABILITIES
December 31,
2014
Un-Audited
Rupees
June 30,
2014
Audited
Rupees
80,000,000
80,000,000
68,040,000
47,031,914
13,542,274
(126,465,798)
2,148,390
68,040,000
47,031,914
14,225,694
(122,532,881)
6,764,727
90,949,606
91,776,986
41,717,925
38,921,261
77,092,889
9,206,182
83,910,000
11,099,591
1,024,005
182,332,667
74,524,943
9,120,210
89,200,909
4,230,770
2,819,230
179,896,062
317,148,588
317,359,036
Share capital and reserves
Authorized share capital
8,000,000 ordinary shares of Rs. 10 each
Issued, subscribed and paid up capital
Share deposit money
Reserves
Accumulated loss
Surplus on revaluation of Property,
Plant and Equipment
4
Non Current Liabilities
Deferred liabilities
Current Liabilities
Trade and other payables
Accrued mark up
Short term borrowings
Due to associated undertakings
Provision for taxation
Contingencies and Commitments
4
5
Half Yearly Report
Hala Enterprises Limited
CONDENSED INTERIM BALANCE SHEET
As At December 31, 2014
December 31,
2014
June 30,
2014
Note
Un-Audited
Rupees
Audited
Rupees
6
120,818,203
122,987,051
5,451,621
3,666,217
6,135,041
3,666,217
129,936,041
132,788,309
ASSETS
Non Current Assets
Property, Plant and equipment
Long term Investments
Long term deposits
Current Assets
Stores and spares
8,608,127
10,026,610
Stock in trade
94,971,810
94,318,860
Trade debtors
Advances, deposits, prepayments and
other receivables
Sales tax refundable
26,506,803
31,968,620
29,598,293
7,605,410
37,705,359
7,444,801
16,270,620
3,651,484
187,212,547
307,241
2,799,236
184,570,727
317,148,588
317,359,036
Due from associated undertakings
Cash and bank balances
The annexed notes form an integral part of this condensed interim financial information.
CHIEF EXECUTIVE OFFICER
DIRECTOR
5
Half Yearly Report
Hala Enterprises Limited
CONDENSED INTERIM PROFIT AND LOSS ACCOUNT
For The Half Year And Quarter Ended December 31, 2014
Note
Half Year Ended
December 31, 2014 December 31, 2013
Rupees
Rupees
103,467,852
(86,099,583)
138,293,162
(116,253,082)
Gross Profit
17,368,269
Operating expenses:
- Selling and distribution
- Administrative
Quarter Ended
December 31, 2014 December 31, 2013
Rupees
Rupees
48,489,244
(40,243,025)
66,486,303
(59,625,375)
22,040,080
8,246,219
6,860,928
(5,857,923)
(9,152,866)
(9,853,151)
(11,026,285)
(2,805,986)
(4,625,714)
(5,971,496)
(6,372,906)
(15,010,789)
(20,879,436)
(7,431,700)
(12,344,402)
2,357,480
1,160,644
814,519
(5,483,474)
Finance costs
Other operating charges
Other income
(5,515,359)
(1,081,664)
503,251
(7,305,179)
(1,020,557)
1,159,919
(3,040,006)
(755,153)
278,251
(3,766,395)
(473,835)
949,919
Loss before Taxation
(3,736,292)
(6,005,173)
(2,702,389)
(8,773,785)
Taxation
(1,024,005)
(1,348,053)
(485,581)
(648,415)
Net Loss for the Period
(4,760,297)
(7,353,226)
(3,187,970)
(9,422,200)
Loss Per Share - Basic
(0.70)
(1.08)
(0.47)
(1.38)
Sales
Cost of sales
7
Operating Profit / (Loss)
The annexed notes form an integral part of this condensed interim financial information (un-audited).
CHIEF EXECUTIVE OFFICER
6
DIRECTOR
Half Yearly Report
Hala Enterprises Limited
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
For The Half Year And Quarter Ended December 31, 2014
Half Year Ended
Quarter Ended
December 31, December 31, December 31, December 31,
Net Loss for the Period
2014
2013
2014
2013
Rupees
Rupees
Rupees
Rupees
(4,760,297)
(7,353,226)
(3,188,060)
(9,422,200)
(683,420)
1,283,683
85,231
1,283,683
(5,443,717)
(6,069,543)
(3,102,829)
(8,138,517)
Other Comprehensive Income
Items that may be reclassified subsequently
to profit and loss
(Deficit) / Surplus on remeasurement of investment
available for sale
Total Comprehensive Loss for the Period
The annexed notes form an integral part of this condensed interim financial information (un-audited).
CHIEF EXECUTIVE OFFICER
DIRECTOR
7
Half Yearly Report
Hala Enterprises Limited
CONDENSED INTERIM CASH FLOW STATEMENT
For The Half Year Ended December 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation
Adjustments for :
- Depreciation
- Provision for gratuity
- Dividend income
- Exchange loss
- Gain on disposal of property, plant and equipment
- Finance costs
Operating profit before working capital changes
(Increase) / decrease in current assets
- Stores and spares
- Stock in trade
- Trade debts
- Advances, deposits, prepayments and other receivables
- Sales tax refundable
- Due from associated undertakings
(Decrease) / increase in current liabilities
- Trade and other payables
- Due to associated undertakings
Half Year Ended
December 31,
2014
Rupees
(3,736,292)
Half Year Ended
December 31,
2013
Rupees
(6,005,173)
2,168,848
3,429,338
(51,971)
851,664
5,515,359
11,913,238
2,133,378
3,412,833
(51,971)
870,557
(680,002)
7,305,179
12,989,974
8,176,946
6,984,801
1,418,483
(652,950)
4,610,153
6,864,359
(160,609)
(15,963,379)
(457,289)
1,076,762
1,754,550
(638,203)
(808,816)
(1,403,504)
2,567,947
6,868,821
5,552,825
3,994,732
(1,647,026)
1,871,206
Cash generated from operations
13,729,771
8,856,007
Income tax paid
Finance cost paid
Gratuity paid
(1,576,524)
(5,429,387)
(632,674)
(1,561,406)
(6,428,440)
(2,364,471)
6,091,186
(1,498,310)
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Dividend income
51,971
(19,000)
765,000
51,971
Net Cash generated from Investing Activities
51,971
797,971
Net Cash generated from / (used in) Operating Activities
CASH FLOW FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Liabilities against assets subject to finance lease
Short term borrowings
Net Cash used in from Financing Activities
Net Increase / (Decrease) 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
(5,290,909)
(5,290,909)
852,248
2,799,236
(59,944)
(59,944)
(760,283)
2,321,911
3,651,484
1,561,628
The annexed notes form an integral part of this condensed interim financial information (un-audited).
CHIEF EXECUTIVE OFFICER
8
DIRECTOR
Half Yearly Report
Hala Enterprises Limited
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
For The Half Year Ended December 31, 2014
Particulars
Share
Capital
Rupees
Rupees
Balance as at June 30, 2013 as previously
Reported
68,040,000
47,031,914
Impact of change in accounting policy
Share Deposit
Money
Reserves
Capital Investment
Revaluation
Reserves
Reserve
Rupees
Rupees
2,274,287
2,805,525
Revenue
Reserves
Accumulated
Loss
Total
Rupees
Rupees
Rupees
7,000,000
(122,112,478)
5,039,248
-
-
-
-
-
15,447,817
15,447,817
Balance as at June 30, 2013 as Restated
68,040,000
47,031,914
2,274,287
2,805,525
7,000,000
(106,664,661)
20,487,065
Net loss for the period ended Dec 31, 2013
-
-
-
-
-
(7,353,226)
(7,353,226)
Total comprehensive loss for the six months
period ended December 31, 2013
-
-
-
1,283,683
-
Transfer from surplus on revaluation of
property, plant and equipment in respect
of incremental depreciation charged in
current period
-
1,283,683
-
-
-
-
-
402,662
402,662
Balance as at December 31, 2013
68,040,000
47,031,914
2,274,287
4,089,208
7,000,000
(113,615,225)
14,820,184
Balance as at June 30, 2014
68,040,000
47,031,914
2,274,287
4,951,407
7,000,000
(122,532,881)
6,764,727
Net loss for the period ended Dec 31, 2014
-
-
-
-
-
(4,760,297)
(4,760,297)
Total comprehensive loss for the six months
period ended December 31, 2014
-
-
-
(683,420)
-
Transfer from surplus on revaluation of
property, plant and equipment in respect
of incremental depreciation charged in
current period
Balance as at December 31, 2014
-
-
-
-
-
68,040,000
47,031,914
2,274,287
4,267,987
7,000,000
-
(683,420)
827,380
(126,465,798)
827,380
2,148,390
The annexed notes form an integral part of this condensed interim financial information (un-audited).
CHIEF EXECUTIVE OFFICER
DIRECTOR
9
Half Yearly Report
Hala Enterprises Limited
NOTES TO AND FORMING PART OF THE CONDENSED INTERIM
FINANCIAL INFORMATION (UNAUDITED)
For The Half Year Ended December 31, 2014
Note 1
The Company and its Operations
The Company was incorporated in Pakistan as a Private Limited Company and was subsequently
converted into a Public Limited Company. The registered office of the Company is located at 17.5 Km
Sheikhupura Road Lahore. Its shares are listed on Karachi, Islamabad and Lahore Stock Exchanges.
The Company is primarily engaged in manufacturing and sale of terry towels, kitchen towels and terry
cloth.
Note
Basis of Preparation
2.1
This condensed interim financial information has been prepared in accordance with the
directives issued by the Securities & Exchange Commission of Pakistan (SECP) and is in
compliance with the International Accounting Standard - 34 (Interim Financial Reporting).
2.2
This condensed interim financial information is unaudited and has been subjected to limited
scope review by the external auditors as required by the Code of Corporate Governance
and is being submitted to the shareholders as required by Section 245 of the Companies
Ordinance, 1984. The figures for the quarters ending on December 31, 2013 and December
31, 2014 presented in the condensed interim profit and loss account have not been
reviewed by the external auditors.
2.3
This condensed interim financial information is presented in Pak rupees, which is the
Company's functional and presentational currency. Figures have been rounded off to
nearest thousand rupees, unless stated otherwise. This condensed financial information
does not include all the information required for annual financial statements and therefore,
should be read in conjunction with the annual financial statements for the year ended June
30, 2014.
Note 3
Accounting Policies
The accounting policies and methods of computation of this condensed interim financial information is
the same as those followed in the preparation of annual financial statements for the preceding financial
year ended on June 30, 2014.
Note 4
Surplus on Revaluation of Property, Plant and Equipment
December 31,
June 30,
2014
2014
(Un-audited)
(Audited)
Rupees
Rupees
Land - freehold
Building
Plant and machinery
Fittings and installations
Incremental depreciation charged on revalued property, plant and
equipment during the period / year transferred to retained earnings
68,387,085
13,684,613
9,671,905
33,383
91,776,986
68,387,085
14,000,687
10,157,446
37,092
92,582,310
(827,380)
90,949,606
(805,324)
91,776,986
Note 5
Contingencies and Commitments
There is no material change in the status of contingencies and commitments as reported in annual
financial statements for the preceding year ended June 30, 2014.
10
Half Yearly Report
Hala Enterprises Limited
NOTES TO AND FORMING PART OF THE CONDENSED INTERIM
FINANCIAL INFORMATION (UNAUDITED)
For The Half Year Ended December 31, 2014
Note 6
Property, Plant and Equipment
December 31,
2014
(Un-audited)
Rupees
June 30,
2014
(Audited)
Rupees
Opening written down value
122,987,051
92,695,692
Additions during the period / year (at cost)
Revaluation surplus on property, plant and equipment
122,987,051
122,987,051
(2,168,848)
120,818,203
38,431,386
131,127,078
(4,352,349)
126,774,729
(3,787,678)
122,987,051
Disposal during the period / year (at written down value)
Depreciation charged for the period / year
Note 7
Sales
Half Year Ended
December 31, 2014 December 31, 2013
(Un-audited)
(Un-audited)
Rupees
Rupees
Export
Local
Export rebate
93,531,377
8,720,567
102,251,944
1,215,908
103,467,852
131,031,035
5,558,724
136,589,759
1,703,403
138,293,162
Quarter Ended
December 31, 2014 December 31, 2013
(Un-audited)
(Un-audited)
Rupees
Rupees
44,205,929
3,550,796
47,756,725
732,519
48,489,244
63,488,598
2,172,354
65,660,952
825,351
66,486,303
Note 8
Transactions with Related Parties
Related parties comprise associated undertakings, related group companies, directors and key
management personnel. Transactions with related parties and associated undertakings, other than
remuneration and benefits to key management personnel under the terms of their employment are as
follows:
Half Year Ended Half Year Ended
December 31,
December 31,
2014
2013
(Un-audited)
(Un-audited)
Rupees
Rupees
Transactions
-
Associates
Goods sold / services rendered
Payments of lease rental
Income of lease rental
Utilities charged by associated undertakings
Interest charged by associate - net
6,583,452
1,500,000
450,000
1,367,257
208,404
Directors
- Interest charged by directors
- Loan received from directors
224,488
(7,555,923)
Balances
- Due to directors - net
- Due (to) / from associated undertakings - net
9,323,262
14,494,292
4,016,248
1,800,000
420,000
978,432
653,264
(783,132)
1,974,829
1,172,230
11
Half Yearly Report
Hala Enterprises Limited
NOTES TO AND FORMING PART OF THE CONDENSED INTERIM
FINANCIAL INFORMATION (UNAUDITED)
For The Half Year Ended December 31, 2014
Note 9
Segment Information
For management purposes, the activities of the Company are recognized into one operating segment,
i.e. manufacturing and sales of towel. The Company operates in the said reportable operating segment
based on the nature of the product, risk and return, organizational and management structure and
internal financial reporting systems. Accordingly, the figures reported in this condensed interim financial
information relate to the Company's only one reportable segment. Company-wide disclosures
regarding the reportable segments are as follows:
December 31,
2014
(Un-audited)
Percentage
June 30,
2014
(Audited)
Percentage
92.97%
97.20%
Major customers:
- 6 customers (2013: 6 customers)
55.93%
55.32%
Revenue from external customers attributed to foreign countries
91.47%
95.26%
Information about products:
- Terry towel
All non-current assets of the Company are located
in Pakistan as at the reporting date.
Note 10
Authorization of Interim Financial Information
This condensed interim financial information (un-audited) is authorized for issuance
on February 27, 2015 by the Board of Directors of the Company.
Note 11
General
Corresponding figures are re-arranged / re-classified, wherever is necessary, to facilitate comparison.
No material reclassifications have been made in this condensed interim financial information
(un-audited).
CHIEF EXECUTIVE OFFICER
12
DIRECTOR
If Undelivered Please Return to
HALA.
Enterprises Limited
17.5 km, Sheikhupura Road, Lahore, Pakistan.
T: + 92 (42) 3797 0130, 3797 0230
F: + 92 (42) 3797 0681
E: [email protected]
www.halaenterprises.com