Maple leaf Annual Report 2008

7/27/2019 Maple leaf Annual Report 2008

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Mission Statement 2

Corporate Strategy 3

Statement of Ethics and Business Practices 4

Company Profile 5

Company Information 6

Notice of Annual General Meeting 7

Directors Report to the Shareholders 9

Six Years Summary 16

Pattern of Shareholding 17

Statement of Compliance with the Code of Corporate Governance 22Review Report to the Members on Statement of Compliance

with Best Practices of Code of Corporate Governance 24

Auditors Report to the Members 25

Balance Sheet 26

Profit and Loss Account 28

Cash Flow Statement 29

Statement of Changes in Equity 30

Notes to the Accounts 31

Proxy Form

Table of Contents


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02

Mission Statement

The Maple Leaf Cement Factory Limited stated missionis to achieve and then remain as the most progressive and

profitable company in Pakistan in terms of industry standards

and stakeholders interests.

The company shall achieve its mission through a continuous

process of having sourced and implemented the best leading

edge technology, industry best practice, human resource and

by conducting its business professionally and efficiently with

responsibility to all its stakeholders and community.


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Corporate Strategy

We at Maple Leaf Cement Factory Limited manufacture

and market different types of consistently high quality cement,

according to the demanding requirements of the construction

industry. Our strategy is to be competitive in the market

through quality and efficient operations.

As a responsible member of the community, we are committed

to serve the interest of all our stakeholders and contribute

towards the prosperity of the country.


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04

Statement of Ethics and

Business PracticesFor the Year 2008 - 2009

The following principles constitute the code of conduct which all Directors and employees of Maple LeafCement Factory Limited are required to apply in their daily work and observe in the conduct of Companysbusiness. While the Company will ensure that all employees are fully aware of these principles, it is theresponsibility of each employee to implement the Companys policies. Contravention is viewed as misconduct.

The code emphasizes the need for a high standard of honesty and integrity which are vital for the successof any business.

PRINCIPLES

1. Directors and employees are expected not to engage in any activity which can cause conflict betweentheir personal interest and the interest of the Company such as interest in an organization supplyinggoods/services to the company or purchasing its products. In case a relationship with such anorganization exists the same must be disclosed to the Management.

2. Dealings with third parties which include Government officials, suppliers, buyers agents and consultantsmust always ensure that the integrity and reputation of the Company is not in any way compromised.

3. Directors and employees are not allowed to accept any favours, gif ts or kickbacks from any organization

dealing with the Company.

4. Directors and employees are not permitted to divulge any confidential information relating to theCompany to any unauthorized person. Nor should they issue any misleading statements pertainingto the affairs of the Company.

5. The Company has strong commitment to the health and safety of its employees and preservation ofenvironment and the Company will preserve towards achieving continuous improvement of its HSEperformance by reducing potential hazards preventing pollution and improving awareness. Employeesare required to operate the Companys facilities and processes keeping this commitment in view.

6. Commitment and team work are key elements to ensure that the Companys work is carried outeffectively and efficiently. Also all employees will be equally respected and actions such as sexualharassment and disparaging remarks based on gender, religion, race or ethnicity will be avoided.


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Company ProfileMaple Leaf Cement is a part of Kohinoor Maple Leaf Group (KMLG). The Group comprises of companies,

which are ranked amongst the top companies in the cement and textile sector. Maple Leaf Cement Factory

Limited (MLCFL) is one of the pioneers of cement industry in Pakistan. MLCFL owns and operates three

production lines for grey and three production lines for white cement. The plants are located at Daudkhel District

Mianwali. Total annual clinker capacity of Grey Cement is 2.84 million tons while capacity of white cement

is 180,000 tons.

MLCFL was established by the West PakistanIndustrial Development Corporation (WPIDC)in 1956 and was incorporated as Maple LeafCement Factory Limited in April, 1960. Thecapacity of the plant was 300,000 tons clinker

per annum.

In 1967, a company with the name of WhiteCement Industries Limited (WCIL) wasestablished with the clinker capacity of 15,000tons per annum.

In 1974, under the WPIDC Transfer of Projectsand Companies Ordinance, the management oftwo companies, namely MLCFL and WCILwere transferred to the newly established StateCement Corporation of Pakistan (SCCP).

In 1983, SCCP expanded WCILs white cementplant by adding another unit of the same capacityparallel to the existing one, increasing total capacityto 30,000 tons clinker per annum.

In 1986, SCCP set up another production unitof grey cement under the name of Pak CementCompany Limited (PCCL) with a capacity of180,000 tons per annum.

In 1992, MLCFL, WCIL, and PCCL wereprivatised and transferred to the KMLG. Allthree companies were merged into Maple LeafCement Factory Limited on July 01, 1992.

In 1994, the Company was listed on all StockExchanges in Pakistan.

In 1998, separate production line for grey Portlandcement of 990,000 tons per annum clinker capacitybased on most modern dry process technology wasinstalled.

In 2000, Maple Leaf Electric Company Ltd.(MLEC) a power generation unit was merged intothe Company.

In 2004, the coal conversion project at new dryprocess plant was completed.

In 2005, dry process plant capacity was increasedfr om 3, 300 tpd to 4, 000 tpd th rou ghdebottlenecking and up-gradation of equipmentand necessary adjustments in operational parameters.

In 2006, a project to convert the existing wetprocess line to a fuel efficient dry process whitecement line commenced its commercial production.

In 2007, Company has undertaken an expansionproject of 6,700 tpd clinker capaci ty whichcommenced its commercial production on November01, 2007.


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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 48th Annual General Meeting of the members of Maple Leaf Cement

Factory Limited will be held on Thursday, October 30, 2008 at 11:30 a.m. at its Registered Office,42 - Lawrence Road, Lahore, to transact the following business:

Ordinary Business:

1) To confirm the minutes of the Extra Ordinary General Meeting held on December 28, 2007.

2) To receive, consider and adopt Audited Accounts of the Company for the year ended June 30, 2008together with the Directors and Auditors Reports thereon.

3) To appoint Auditors for the financial year 2008-2009 and fix their remuneration.

Special Business

4) To consider and if thought fit to pass the following resolutions as Special Resolution with or withoutmodification.

SPECIAL RESOLUTION

Resolved that the Authorised Share Capital of the Company be and is hereby increased fromRs. 5,000,000,000 divided into 500,000,000 Shares of Rs. 10/- each, comprising 400,000,000Ordinary and 100,000,000 Preference Shares to Rs. 7,000,000,000 divided into 700,000,000 Sharesof Rs. 10/- each, comprising 600,000,000 Ordinary and 100,000,000 Preference Shares of Rs. 10/-each.

Further resolved that the Memorandum of Association of the Company be and is hereby altered bysubstituting the existing clause V with the following new clause:

V. The Authorised Share Capital of the Company is Rs. 7,000,000,000 (Rupees seven billion only)

divided into 700,000,000 (seven hundred million only) Shares of Rs. 10/- (Rupees ten only) each,comprising 600,000,000 Ordinary and 100,000,000 Preference Shares with the power to increaseor reduce the capital and to divide the shares in the capital for the time being into several classesin accordance with the provisions of the Companies Ordinance, 1984 and any rules madethereunder, and to attach thereto respectively such preferential, deferred, qualified or special rights,privileges or conditions as may be determined by or in accordance with the Articles of Associationor the Regulations of the Company for the time being, and to vary, modify or abrogate any suchrights, privileges or conditions in such manner as may for the time being be provided by theArticles of Association or Regulations of the Company.

Further resolved that any Director or Company Secretary of the Company be and are herebysingly authorised to do all acts, deeds, things and to take any or all necessary actions to completeall legal formalities and file all necessary documents in this regards as they think fit on behalf ofthe Company.

5) To transact any other business with the permission of the Chair.

By order of the Board

(Muhammad Ashraf)Lahore: October 09, 2008 Company Secretary


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STATEMENT UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984

The Board of Directors has recommended that the Memorandum of Association of the Company besubstituted with the existing clause V of the Memorandum of Association with a view to cover any future

increase in the Paid up Capital of the Company as and when necessary. The Directors of the Companyhave no special or extra-ordinary interest in the above resolutions except to the extent of their shareholdingin the Company. The said alteration(s) will not affect anyones interest unfavorably in the Company.

The Memorandum and Articles of Association of the Company has been kept at the Registered Office andcan be inspected from 9.00 a.m. to 11.30 a.m. on all working days upto October 30, 2008.

Notes:

1. BOOK CLOSURE FOR ORDINARY SHARES

Share Transfer Books for ordinary shares of the Company will remain closed from October 23, 2008to October 30, 2008 (both days inclusive). Physical transfers/CDS Transaction IDs received in orderat Share Registrar M/s Vision Consulting Ltd, 3-C, LDA Flats, Lawrence Road, Lahore upto the

close of business on October 22, 2008 will be considered in time.

2. BOOK CLOSURE FOR ENTITLEMENT OF 9.75% P.A. DIVIDEND ON PREFERENCE SHARES FOR THEYEAR ENDED JUNE 30, 2008

Share Transfer Books for preference shares (non-voting) of the Company will remain closed forentitlement of 9.75% p.a. preferred dividend from October 23, 2008 to October 30, 2008 (both daysinclusive). Physical transfers/CDS Transaction IDs received in order at Share Registrar M/s VisionConsulting Ltd, 3-C, LDA Flats, Lawrence Road, Lahore upto the close of business on October 22,2008 will be considered in time for entitlement of preferred dividend for the year ended June 30, 2008.The preference shareholders are not entitled to attend the meeting.

3. A member, in respect of ordinary shares held, eligible to attend and vote at this meeting may appointanother member, in respect of ordinary shares held, as his/her proxy to attend and vote instead of

him/her. Proxies in order to be effective must be received at the Companys Registered Office, 42-Lawrence Road, Lahore, not less than 48 hours before the time for holding the meeting and must beduly stamped, signed and witnessed.

4. CDC shareholders, entitled to attend and vote at this meeting, must bring with them their ComputerisedNational Identity Cards / Passport in original along with Participants ID Numbers and their AccountNumbers to prove his/her identity, and in case of Proxy, must enclose an attested copy of his/her CNICor Passport. Representatives of corporate members should bring the usual documents required forsuch purpose.

5. Shareholders are requested to immediately notify any change in their addresses if any to ShareRegistrar M/s Vision Consulting Ltd, 3-C, LDA Flats, Lawrence Road, Lahore.

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Your Directors are pleased to present the 48th Annual Report together with audited accounts of the Company

and Auditors Report thereon for the financial year ended June 30, 2008.

Overview

During the year under review, Pakistans economy had to face daunting challenges. Political instability,ongoing judicial crisis, unprecedented rise in oil, food and commodity prices all had a profound effect onthe economy. Low crop production, reduced output by the manufacturing sector, par ticularly large scaleindustry, unabated rise in rate of inflation, power shortages and ever increasing prices of coal, oil andnatural gas, resulted in increased cost of production. A steep depreciation of the exchange rate, outflowof portfolio investment and depleting foreign exchange reserves was witnessed with growing fiscal andtrade deficits. The general elections in the country in February 2008, from the political stand point, wereexpected to put to rest the turmoil which had prevailed hithertofore. However, the law & order situation inthe urban areas, as well as worsening situation in the nor thern areas has continued to have a dampeningeffect on the economy.

Despite these challenges, Pakistans economy recorded GDP growth rate of 5.8% in the current fiscal yearagainst the targeted rate of 7.2% and prior years 6.8%. Services sector has played a pivotal role in theoverall growth of the economy. Although depicting a significant slowdown, Pakistans medium term averagegrowth rate remains better than most other economies. This highlights its resilience but the global slowdownand financial turmoil is bound to mar the performance of the country this year. This is bound to impacton the performance of the Company.

Pakistan has emerged as a major exporter of cement during fiscal 2007-2008 which has not only aidedin capacity absorption but also earned precious foreign exchange to mitigate the trade deficit. The sectorachieved a new level of dispatches of 30.107million tons against last years dispatches of 24.22million tons and registered an overall growth of24% during FY07-08.

Performance of the Company

The Company made considerably higher dispatchesduring the year both in local and export markets,in particular to Afghanistan, India & the MiddleEast. The plants functioned efficiently throughoutthe year. By the Grace of Allah, the expansionproject of grey cement 6,700 tpd clinker capacitybased on most modern dry process technologyhas commenced commercial production fromNovember 01, 2007. By this addition, productionof grey and white cement was recorded at2,357,922 and 73,430 metric tons respectively,as compared to 1,342,021 and 48,231 metrictons during the corresponding period last year.

With rising natural gas, oil and fuel prices, therehas been a significant resurgence of interest inthe subject of energy conservation. In this regard,the Company has already established a letter ofcredit for a Waste Heat Recovery Plant which willreduce the process costs when it goes intoproduction in February 2010. The plant will produceapproximately 15 MW of electric power on asustainable basis.

DIRECTORS' REPORT TO THE SHAREHOLDERS

PROFIT / (LOSS)

RUPEESINMILLI

ON

Profit after taxProfit before tax

2003 2004 2005 2006 2007 2008(2,000)

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000

EQUITY

YEAR

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

RUPEESINMILLION

9,000

2008

8,361

3,210

2003

3,698

2004

6,290

2005

7,556

2006 2007

8,993


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As per issue terms of the Preference Shares, Rs. 90.246 million has been transferred to Preference SharesRedemption Reserve Account and dividend @9.75% per annum is declared for this year.

Fuel Prices

Unsettled global conditions, particularly in the Middle East, continued to create panic in the world marketsand prices of oil continued to rise. Consequently, global demand for coal also increased and China curtailedsupply of coal to the expor t markets. Coal prices remained high in the international and domestic markets.The Company mostly relies on coal being a much cheaper source of energy than furnace oil for calciningprocess. Price of natural gas also increased during the current year whereas furnace oil has become aprohibitively expensive fuel having direct impact on cost of power generation.

Export Markets

The cement industry of Pakistan entered the export markets a few years back and has established itsreputation as a good quality producer. This augurs well for cement manufacturers as the regional governmentshave increased spending on infrastructure development. Enhanced commercial activity and rising demand

for housing on account of higher per capita income has kept cement offtake growth in double digits.Demand of Pakistani cement, especially from India and Middle East, is expected to remain buoyant.

Future Prospects

The future prospects look a bit grimon the domestic front as the wholeindustry is under constant threat fromeconomic pressures. Demand isexpected to be negatively impacteddue to these reasons. However themanagement is hopeful for betterproduction and margins as the plants

are expected to operate almost at fullcapacity to meet the enhancedrequirements of the export markets.The major obstacle to achieving highcapacity utilization remain irregularpower supply and load shedding ofgas and electr icity.

Social Sector Projects

Your Company remains committed to play a role in development of social sector projects and has madefurther contribution towards Sayeed Saigol Cardiac Complex at the Gulab Devi Hospital, Lahore by donatinga sum of Rs. 14.150 million this year. This project is at finishing stage and is expected to commence

operations soon.

Research & Development

Research & Development is an integral par t of the Companys policy of development of new products andimproving efficiency of the plants to reduce cost. After development, trial production of oil well cementwas carried out which has had a positive feed back from potential customers. The Company has obtainedcertification from the appropriate organization, American Petroleum Institute (API). The old wet kilns havebeen earmarked for production of special products.


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ComplianceofCodeofCorporateGovernanceTheBoardreviewstheCompanysstrategic direction andbusiness plans on a regularbasis. TheAudit

CommitteeisempoweredforeffectivecomplianceofCodeofCorporateGovernance.TheBoardiscommitted

tomaintain a highstandardofgoodcorporategovernance.

YourDirectorsarepleasedtoreportthat:

a) Thefinancialstatements,preparedby the management present fairly its state ofaffairs,theresult of

itsoperations,cashflowsandchangesinequity.

b) Properbooksofaccounthavebeen maintained by the Company.

c) Internationalaccountingstandards, as applicable in Pakistan, have been followedinpreparation of

financialstatements.

d) Theexistinginternalcontrolsystem and procedures are continuously reviewed by theinternalauditor.

Theprocessofreviewwillcontinuebytheauditcommitteetomonitortheeffectiveimplementation.

e) Therearenosignificantdoubtsupon the Companys ability to continue as a goingconcern.

f) Therehasbeennomaterialdeparture from thebest practices ofcorporate governance,asdetailed

inthelistingregulationsofstockexchanges.

g) Keyoperatingandfinancialdata oflast six years is annexed.

14h) Thevalueofinvestmentofprovident fundandgratuity trust,basedon theirrespectiveauditedaccounts

ofJune30,2008isgivenhereunder:

Rupees in ThousandProvidentFund 291,391

GratuityFund 60,307

i) AtotalnumberoffourBoardofDirectors meetings were heldduring the year.

TheattendancebyeachDirectoris given as follows:

NameofDirectors No. ofMeetings AttendedMr. TariqSayeedSaigol 4Mr. SayeedTariqSaigol 3Mr. WaleedTariqSaigol 4

Ms.JahanaraSaigol 2Mr. UsmanSaid 1Mr. S.M.Imran 4Mr. ZamiruddinAzar 2

Mr. PerMejnertKristensen (Rep.FLS&IFU,Denmark) -

TheDirectorswhocouldnotattend the Board Meeting were duly grantedleave ofabsence.


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j) During the year, Mr. Usman Said resigned from the Board and Mrs. Shehla Tariq Saigol was appointedas Director in his place to fill the casual vacancy for the remainder of the term. Moreover, no Directorssold or purchased any shares of the Company other than Mrs. Shehla Tariq Saigol who acquired 2,500ordinary shares to meet qualification of director. During the year, election of Directors was held for

the next term commencing December 31, 2007.

Pattern of Shareholding

The shareholding pattern of the Company as on June 30, 2008 is annexed.

Appointment of Share Registrar

In compliance with Section 204-A of the Companies Ordinance, 1984, the Company has appointed anindependent Share Registrar M/s Vision Consulting Ltd. The members / Stock Brokers are directed tocontact and correspond regarding shares related matters and CDC approval with the concerned ShareRegistrar.

Auditors

The present auditors M/s Hameed Chaudhri & Co., Chartered Accountants, Lahore, retire and being eligible,have offered themselves for re-appointment.

Acknowledgements

The Directors take the opportunity to thank all the organizations associated with putting up of the 6,700tpd line for their support and commitment in complet ion of the project on time. We are also thankful toforeign and local financial institutions for their support and appreciate the efforts put in by the staff / workersand officers of the Company, their dedication and hard work and to those who contributed towardscompletion of the project.

For and on behalf of the Board

(Sayeed Tariq Saigol)Lahore: September 25, 2008 Chief Executive


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SIX YEARS SUMMARY

2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003

Quantitative Data (M. Tons)

Grey Cement:

Production 2,357,922 1,342,021 1,469,717 1,328,742 1,118,187 1,007,059

Sales 2,459,196 1,313,113 1,470,051 1,325,041 1,127,261 1,008,484

White Cement:

Production 73,430 48,231 34,780 35,647 36,759 39,183

Sales 75,024 46,049 34,739 36,057 36,217 40,160

Sales (Rs. 000)

Gross Sales 10,552,398 5,514,208 7,954,901 6,193,443 4,967,465 4,025,267

Less:Excise Duty 1,564,801 1,024,041 1,128,106 1,020,618 872,608 1,028,664Sales Tax 1,061,681 705,845 1,036,977 807,589 656,019 534,239

Commission 110,087 73,241 80,026 74,502 63,039 57,557

Net Sales 7,815,829 3,711,081 5,709,792 4,290,734 3,375,799 2,404,807

Profitability (Rs. 000)

Gross Profit / (Loss) 1,323,830 309,893 2,148,580 1,327,932 1,148,228 361,550

Profit / (Loss) Before Tax (1,364,244) (140,019) 1,634,814 1,027,378 751,507 (92,916)

Provision for Income Tax 688,109 182,066 (575,574) (299,928) (264,035) 243,019

Profit / (Loss) Af ter Tax (676,135) 42,047 1,059,240 727,450 487,472 150,103

Financial Position (Rs. 000)

Tangible Fixed Assets-Net 20,081,448 19,330,866 16,088,505 8,462,382 5,562,682 5,497,285

Other Non-Current Assets 75,217 54,151 391,931 110,953 25,660 272,809

20,156,665 19,385,017 16,480,436 8,573,335 5,588,342 5,770,094

Current Assets 5,994,896 4,051,957 2,664,462 1,940,059 1,499,266 1,551,334

Current Liabilities (7,382,464) (3,756,487) (2,649,519) (1,595,499) (1,188,435) (1,156,620)

Net Working Capital (1,387,568) 295,470 14,943 344,560 310,831 394,714

Capital Employed 18,769,097 19,680,487 16,495,379 8,917,895 5,899,173 6,164,808

Less Long Term Loan & Other Liab. (10,408,208) (10,687,450) (8,939,675) (2,543,012) (2,201,629) (2,954,736)

Share holders Equity 8,360,889 8,993,037 7,555,704 6,374,883 3,697,544 3,210,072

Represented By:

Share Capital 4,264,108 4,264,108 3,519,581 3,248,844 1,804,913 1,804,913

Reserves & Un-app. Profit 4,096,781 4,728,929 4,036,123 3,126,039 1,892,631 1,405,1598,360,889 8,993,037 7,555,704 6,374,883 3,697,544 3,210,072

Ratios:

Gross Profit / (Loss) to Sales (%age) 16.94 8.35 37.63 30.95 34.01 15.03

Net Profit / (Loss) to Sales (%age) (8.65) 1.13 18.55 16.95 14.44 6.24

Debt Equity Ratio 55:45 55:45 51:49 26:74 37:63 48:52

Current Ratio 0.81 1.08 1.01 1.22 1.26 1.34

Break Up Value per share of Rs. 10 each 19.61 21.09 21.47 19.62 20.49 17.79

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1,780 1 100 78,4903,145 101 500 963,9951,982 501 1,000 1,651,3303,294 1,001 5,000 8,162,132

671 5,001 10,000 5,147,598242 10,001 15,000 3,018,843135 15,001 20,000 2,445,299

96 20,001 25,000 2,215,73470 25,001 30,000 1,944,33339 30,001 35,000 1,277,57028 35,001 40,000 1,084,51719 40,001 45,000 831,81132 45,001 50,000 1,559,89815 50,001 55,000 788,62014 55,001 60,000 819,8989 60,001 65,000 562,985

13 65,001 70,000 886,4068 70,001 75,000 584,5895 75,001 80,000 394,9502 80,001 85,000 164,8104 85,001 90,000 344,9376 90,001 95,000 553,3347 95,001 100,000 698,6257 100,001 105,000 721,9096 105,001 110,000 648,9573 110,001 115,000 336,3533 115,001 120,000 356,0579 120,001 125,000 1,108,4173 125,001 130,000 377,2882 130,001 135,000 264,3962 135,001 140,000 274,8303 140,001 145,000 426,7503 145,001 150,000 450,0003 155,001 160,000 470,7463 160,001 165,000 491,0701 165,001 170,000 167,0001 170,001 175,000 170,5002 190,001 195,000 386,200

5 195,001 200,000 1,000,0001 200,001 205,000 201,0003 205,001 210,000 623,3861 220,001 225,000 225,0001 230,001 235,000 235,0001 240,001 245,000 242,5001 260,001 265,000 264,0001 265,001 270,000 268,0672 280,001 285,000 563,0001 285,001 290,000 290,000

PATTERN OF SHAREHOLDING (ORDINARY SHARES)

1. New CUIN Registration Number 0001107

2. Name of Company Maple Leaf Cement Factory Limited3. Pattern of holding of the shares held by the shareholders as at 30-06-2008

4. S i z e o f H o l d i n g

No. ofShareholders

Totalshares heldFrom To


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2 295,001 300,000 600,0002 300,001 305,000 604,2411 310,001 315,000 312,8251 315,001 320,000 320,0002 320,001 325,000 647,4341 335,001 340,000 335,7121 340,001 345,000 344,4382 345,001 350,000 698,0001 350,001 355,000 350,3121 365,001 370,000 368,8751 385,001 390,000 390,0001 405,001 410,000 409,0002 420,001 425,000 843,7551 425,001 430,000 425,3011 435,001 440,000 436,2002 460,001 465,000 922,6861 470,001 475,000 475,0003 495,001 500,000 1,496,5001 530,001 535,000 533,3901 595,001 600,000 599,0001 635,001 640,000 637,5621 800,001 805,000 800,5001 855,001 860,000 855,5001 895,001 900,000 900,0001 905,001 910,000 906,2501 915,001 920,000 916,3521 985,001 990,000 987,5002 995,001 1,000,000 2,000,0001 1,150,001 1,155,000 1,155,000

1 1,225,001 1,230,000 1,228,4951 1,830,001 1,835,000 1,835,0001 1,895,001 1,900,000 1,900,0001 1,930,001 1,935,000 1,931,4251 2,095,001 2,100,000 2,100,0001 2,105,001 2,110,000 2,108,7731 2,235,001 2,240,000 2,238,5001 2,300,001 2,305,000 2,304,0001 2,400,001 2,405,000 2,404,2941 3,525,001 3,530,000 3,529,5461 3,980,001 3,985,000 3,981,0001 5,030,001 5,035,000 5,034,0001 5,495,001 5,500,000 5,500,0001 5,765,001 5,770,000 5,767,8501 5,800,001 5,805,000 5,800,2501 8,000,001 8,005,000 8,000,1871 10,875,001 10,880,000 10,878,5001 11,645,001 11,650,000 11,650,0001 12,000,001 12,005,000 12,001,4871 14,140,001 14,145,000 14,140,1561 14,305,001 14,310,000 14,306,6221 186,605,001 186,610,000 186,608,808

11,744 372,263,356

S i z e o f H o l d i n g

No. ofShareholders

Totalshares heldFrom To

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5. CATEGORIESOFSHAREHOLDERSNo. of Shares Percentage

Shareholders Held ofCapital5.1 Directors,CEOandtheir spouses & minor children

Mr. TariqSayeedSaigol-Chairman / Director 5,156 0.0014

Mr. SayeedTariqSaigol-ChiefExecutive / Director 5,156 0.0014Mr. WaleedTariqSaigol-Director 5,156 0.0014Ms.JahanaraSaigol-Director 3,125 0.0008Mrs.ShehlaTariqSaigol-SpouseofMr. TariqSayeedSaigol 2,500 0.0007Mr. S.M.Imran-Director 21,213 0.0057Mr. ZamiruddinAzar-Director 10,573 0.0028Mr. PerMejnertKristensen-NomineeDirector - -

(Rep.FLS&IFU,Denmark) 8 58,035 0.0156

5.2 AssociatedCompanies,undertakingsandrelatedpar ties

KohinoorTextileMillsLtd. 186,608,808 50.1282Zimpex(Pvt)Ltd. 1,706 0.0005

2 186,610,514 50.1286

5.3 NITandICP

NationalBankofPakistan,TrusteeDeptt. 3,542,343 0.9516

InvestmentCorporationofPakistan 11,500 0.00312 3,553,843 0.9547

5.4 Banks,DevelopmentFinancial Institutions,Non-bankingFinancialInstitutions 28 44,414,525 11.9309

5.5 InsuranceCompanies 8 644,490 0.1731

5.6 Modarabas,LeasingandMutualFunds 24 9,501,930 2.5525

5.7 ShareholdersholdingTenPercentormorevotinginterestintheCompany - - -

Referto5.2

5.8 GeneralPublicIndividuals 11,483 62,912,553 16.9000ForeignShareholders 30 25,390,406 6.8205

5.9 Executives - - -

5.10 PublicSectorCompanies

andCorporations 2 1,230,505 0.33055.11 JointStockCompanies 135 36,702,663 9.8593

5.12 Others

1295TrusteeAvariHotelLahoreStaffProvidentFund 625 AlMasoom(Pvt)Ltd 2,312CooperandCompany(Pvt)Ltd 7,000G.R. Securities(SMC-Pvt)Ltd 70,000HaralSons(SMC-Pvt)Ltd 198 IslamabadStockExchange(G)Limited 762 LahoreStockExchange(Guarantee)Ltd. 62,700ManagCommttofTameer-e-MillatFound 355 ManagingCommitteeGhazaliEducationTrust 440 MolassesExportCo.(Private)Ltd. 500,000PakistanMemonEducational&WelfareSociety 5,000TrusteesArtalRestaurantsInt'lEmp.P.F 8,000TrusteeCheratCementCo.Ltd.Emp.ProvidentFund 24,500

Trustee-ArmyWelfareTrust 46,750Trustee-NestlePakistanLtd.EmployeesGratuityFund 150,000Trustee-NestlePakistanLtd.EmployeesProvidentFund 38,500Trustee-NestlePakistanLtd.ManagerialStaffPensionFund 69,500TrusteesAl-AbbasSugarMillsLtdEmp.G.F. 11,750TrusteesGlaxoWellcomePakLtd.SeniorStaffPensionFund 200,000TrusteesItimSystems(Pvt)LimitedEmployeesProvidentFund 25,000TrusteesofCanteenStoresDepartment(0517) 500 TrusteesWahNobel P. Ltd.Mang.StaffP. F. 20,000

22 1,243,892 0.3341

GrandTotal: 11,744 372,263,356 100


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PATTERNOFPREFERENCESHAREHOLDING (Non-voting)

1. NewCUINRegistrationNumber 0001107

2. Nameof

Company

Maple

Leaf

Cement

F

actoryLimited

3. Patternofholdingofthesharesheldbytheshareholdersasat30-06-2008

4.S i z e o f H o l d i n g

No.of TotalShareholders From To sharesheld

20

624 1 100 32,048901 101 500 232,062

192 501 1,000 133,613

199 1,001 5,000 402,427

19 5,001 10,000 131,450

14 10,001 15,000 189,1365 15,001 20,000 69,831

4 20,001 25,000 94,076

5 25,001 30,000 133,000

1 30,001 35,000 34,500

1 50,001 55,000 52,500

1 55,001 60,000 58,500

4 95,001 100,000 393,149

1 115,001 120,000 117,500

1 180,001 185,000 183,600

2 195,001 200,000 400,000

1 225,001 230,000 227,500

1 265,001 270,000 268,034

1 335,001 340,000 336,000

1 495,001 500,000 500,0001 545,001 550,000 548,250

1 825,001 830,000 826,000

2 24,390,001 24,395,000 48,784,222

1,982 54,147,398

5. CATEGORIESOFSHAREHOLDERS

No. of Shares PercentageShareholders Held ofCapital

5.1 Directors,CEOandtheir spouses & minor children

Mr. TariqSayeedSaigol-Chairman / Director 750 0.0014

Mr. SayeedTariqSaigol-ChiefExecutive / Director 750 0.0014Mr. WaleedTariqSaigol-Director 750 0.0014Mr. S.M.Imran-Director 3,085 0.0057

Mr. ZamiruddinAzar-Director 2,589 0.0048

6 8,674 0.0160


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5.2 Associated Companies, undertakings and related parties

Kohinoor Textile Mills Ltd - Provident Fund Trust 500,000Maple Leaf Cement Factory Ltd - Employees Provident Fund Trust 200,000

2 700,000 1.2928

5.3 NIT and ICP - - -

5.4 Banks, Development Financial Institutions,

Non-banking Financial Institutions 2 40,800 0.0753

5.5 Insurance Companies 2 15,000 0.0277

5.6 Modarabas, Leasing and Mutual Funds 1 7,500 0.0139

5.7 Shareholders holding Ten Percent

or more voting interest in the Company 2 48,784,222 90.0952

5.8 General Public

Individuals 1,923 3,540,743 6.5391 Foreign Shareholders 1 8,424 0.0156

5.9 Executives - - -

5.10 Public Sector Companies and Corporations 1 268,034 0.4950

5.11 Joint Stock Companies 40 346,501 0.6399

5.12 Others

Kohinoor Mills Ltd. - Staff Provident Fund Trust 200,000Trustees DGKC Emp P. F. Trust 227,500

2 427,500 0.7895

Grand Total: 1,982 54,147,398 100


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STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE FORTHE YEAR ENDED JUNE 30, 2008

This statement is being presented to comply with the Code of Corporate Governance contained in listing

regulations of stock exchanges in Pakistan for the purpose of establishing a framework of good governance,whereby a listed Company is managed in compliance with the best practices of corporate governance.

The Company has applied the principles contained in the Code in the following manner:

1. The Company encourages the representation of non-executive directors on its Board of Directors.At present the Board of Directors includes five independent non-executive directors.

2. The directors have confirmed that none of them is serving as a director in more than ten listedcompanies, including this Company.

3. All the resident directors of the Company are registered as taxpayers and none of them has defaultedin payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock

exchange, has been declared as a defaulter by that stock exchange.

4. One casual vacancy occurred in the Board during the period, was filled in within 30 days thereof.However, during the year election of Directors was held for the next term commencing December31, 2007 and eight Directors were elected as fixed by the Board.

5. The Company has prepared a Statement of Ethics and Business Practices which has been signedby all the directors and employees of the Company.

6. The Board has developed a vision/mission statement, overall corporate strategy and significantpolicies of the Company. A complete record of particulars of significant policies along with the dateson which they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions,including appointment and determination of remuneration and terms and conditions of employmentof the CEO and other executive directors, have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and, in his absence, by a directorelected by the Board for this purpose and the Board met at least once in every quarter. Writtennotices of the Board meetings, along with agenda and working papers, were circulated at leastseven days before the meetings. The minutes of the meetings were appropriately recorded andcirculated.

9. The Board arranged Orientation Course for its Directors during the year to apprise them of theirduties and responsibilities.

10. The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit,including their remuneration and terms and conditions of employment, as determined by the CEO.

11. The Directors report for this year has been prepared in compliance with the requirements of theCode and fully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by CEO and CFO before approval ofthe Board.

22


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13. The directors, CEO and executives do not hold any interest in the shares of the Company other thanthat disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the Code.

15. The Board has formed an audit committee. It comprises three members, of whom two are non-executive directors including the chairman of the committee.

16. The meetings of the audit committee were held at least once every quarter prior to approval ofinterim and final results of the Company and as required by the Code. The terms of reference ofthe committee have been framed and advised to the committee for compliance.

17. The Board has set up an effective internal audit function.

18. The statutory auditors of the Company have confirmed that they have been given a satisfactoryrating under the Quality Control Review programme of the Institute of Chartered Accountants ofPakistan, that they or any of the partners of the firm, their spouses and minor children do not hold

shares of the Company and that the firm and all its partners are in compliance with InternationalFederation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Char teredAccountants of Pakistan.

19. The statutory auditors or the persons associated with them have not been appointed to provideother services except in accordance with the listing regulations and the auditors have confirmedthat they have observed IFAC guidelines in this regard.

20. We confirm that all other material principles contained in the Code have been complied with.

For and on behalf of the Board

(Sayeed Tariq Saigol)Lahore: September 25, 2008 Chief Executive


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REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BESTPRACTICES OF CODE OF CORPORATE GOVERNANCE

We have reviewed the Statement of Compliance with the best practices contained in the Code of CorporateGovernance prepared by the Board of Directors of MAPLE LEAF CEMENT FACTORY LIMITED to comply

with the Listing Regulation No. 37 of the Karachi Stock Exchange (Guarantee) Limited, Chapter XIII of the

Lahore Stock Exchange (Guarantee) Limited and Chapter XI of the Islamabad Stock Exchange (Guarantee)

Limited where the Company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors

of the Company. Our responsibility is to review, to the extent where such compliance can be objectively

verified, whether the Statement of Compliance reflects the status of the Company's compliance with the

provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to

inquiries of the Company personnel and review of various documents prepared by the Company to comply

with the Code.

As part of our audit of financial statements we are required to obtain an understanding of the accounting

and internal control systems sufficient to plan the audit and develop an effective audit approach. We have

not carried out any special review of the internal control system to enable us to express an opinion as to

whether the Boards statement on internal control covers all controls and the effectiveness of such internal

controls.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of

Compliance does not appropriately reflect the status of the Company's compliance, in all material respects,

with the best practices contained in the Code of Corporate Governance as applicable to the Company for

the year ended 30 June, 2008.

Hameed Chaudhri & Co.Lahore: September 26, 2008 Chartered Accountants

24


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AUDITORS REPORT TO THE MEMBERS

We have audited the annexed balance sheet of MAPLE LEAF CEMENT FACTORY LIMITED as at 30 June,

2008 and the related profit and loss account, cash flow statement and statement of changes in equitytogether with the notes forming par t thereof, for the year then ended and we state that we have obtainedall the information and explanations which, to the best of our knowledge and belief, were necessary forthe purposes of our audit.

It is the responsibility of the Company's management to establish and maintain a system of internal control,and prepare and present the above said statements in conformity with the approved accounting standardsand the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion onthese statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the above said

statements are free of any material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the above said statements. An audit also includes assessingthe accounting policies and significant estimates made by management, as well as, evaluating the overallpresentation of the above said statements. We believe that our audit provides a reasonable basis for ouropinion and, after due verification, we report that:

(a) in our opinion, proper books of account have been kept by the Company as required by the CompaniesOrdinance, 1984;

(b) in our opinion:

(i) the balance sheet and profit and loss account together with the notes thereon have been drawnup in conformity with the Companies Ordinance, 1984 and are in agreement with the books of

account and are further in accordance with accounting policies consistently applied;

(ii) the expenditure incurred during the year was for the purpose of the Company's business; and

(iii) the business conducted, investments made and the expenditure incurred during the year werein accordance with the objects of the Company;

(c) in our opinion and to the best of our information and according to the explanations given to us,the balance sheet, profit and loss account, cash flow statement and statement of changes in equitytogether with the notes forming part thereof conform with approved accounting standards as applicablein Pakistan, and, give the information required by the Companies Ordinance, 1984 in the manner sorequired and respectively give a true and fair view of the state of the Company's affairs as at 30 June,

2008 and of the loss, its cash flows and changes in equity for the year then ended; and

(d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980),was deducted by the Company and deposited in the Central Zakat Fund established under section 7of that Ordinance.

Hameed Chaudhri & Co.Lahore: September 25, 2008 Chartered Accountants


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26

BALANCE SHEET

Note

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorised capital 7.1 5,000,000 5,000,000

Issued, subscribed and paid- up capital 7.2 4,264,108 4,264,108Reserves 8 4,644,355 4,457,328(Accumulated loss) / unappropriated profit (547,574) 271,601

8,360,889 8,993,037NON-CURRENT LIABILITIES

Loans from related parties 9 35,224 250,000Long term loans and finances 10 241,539 8,576,657Redeemable capital 11 8,000,000 -Syndicated term finances 12 1,000,000 -Liabilities against assets subject to finance lease 13 957,434 268,040Lease finance advances and accrued interest thereon 14 - 679,676Long term deposits 15 2,582 2,702Deferred taxation 16 154,741 897,183Employees' compensated absences 17 16,688 13,192

10,408,208 10,687,450CURRENT LIABILITIES

Current portion of :- long term loans and finances 10 - 1,792,519- syndicated term finances 12 1,080,000 -- liabilit ies against assets subject to finance lease 13 188,011 13,858

Short term finances 18 3,369,738 797,585Trade and other payables 19 2,495,559 719,311Accrued profit and interest / mark-up 20 194,568 378,675Dividends 21 54,588 54,539

7,382,464 3,756,487CONTINGENCIES AND COMMITMENTS 22

26,151,56123,436,974

The annexed notes form an integral part of these financial statements.

Zamiruddin AzarDirector


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AS AT JUNE 30, 2008

Note

Sayeed Tariq SaigolChief Executive

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 23 20,081,448 19,330,866Intangible assets 24 15,082 4,578Loans to employees 25 6,121 6,373Deposits and prepayments 26 54,014 43,200

20,156,665 19,385,017CURRENT ASSETS

Stores, spares and loose tools 27 3,325,744 2,014,580Stock-in-trade 28 433,952 369,709Trade debts 29 743,366 194,587Fair value derivative financial instruments 8.2 365,748 242,226Loans and advances 30 82,814 85,544Investments 31 734,859 944,669Deposits and short term prepayments 32 54,532 15,373Accrued profit 33 763 402Sales tax, customs and excise duty 34 57,769 37,742Due from gratuity fund trust 35 9,768 8,539Other receivables 36 21,780 1,198Taxation - net 37 44,907 14,029Cash and bank balances 38 118,894 123,359

5,994,896 4,051,957

26,151,56123,436,974


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28

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED JUNE 30, 2008

Note

.......... Rupees ..........

Sales 39 7,815,829 3,711,081

Cost of sales 40 6,491,999 3,401,188

Gross profit 1,323,830 309,893

Administrative expenses 41 121,236 67,291

Distribution cost 42 834,849 69,021

Other operating expenses 43 24,838 18,371

980,923 154,683

342,907 155,210

Other operating income 44 105,656 43,224

448,563 198,434

Finance cost 45 1,812,807 338,453

Loss before taxation (1,364,244) (140,019)

TaxationCurrent 37 44,815 (9,477)Deferred 16 (732,924) (172,589)

(688,109) (182,066)

(Loss) / profit after taxation (676,135) 42,047

Loss per share - basic 46 (1.96) (0.03)

- The annexed notes form an integral part of these financial statements.

- Appropriations have been reflected in the statement of changes in equity.




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Cash flow from operating activities

Loss for the year - before taxation (1,364,244) (140,019)Adjustments for non-cash charges and other items:Depreciation 865,546 439,254Amortisation 5,977 2,191Gain on disposal of operating fixed assets - net (725) (5,905)Employees' compensated absences 7,137 6,979Finance cost 1,812,807 338,453Provision for obsolete stores and spares - 2,273Profit on bank deposits (5,046) (1,294)Investment income - net (43,403) -Dividend income (12,021) (6,094)

Cash inflow from operating activities before working capital changes 1,266,028 635,838

(Increase) / decrease in current assetsStores, spares and loose tools (1,311,164) (168,927)Stock-in-trade (64,243) (168,763)Trade debts (548,779) (31,128)Loans and advances 2,873 213,626

Deposits and short term prepayments (39,159) (8,059)Sales tax, customs and excise duty (20,027) (3,131)Due from gratuity fund trust (1,229) (8,539)Other receivables (20,582) 8,254

Increase / (decrease) in trade and other payables 1,776,248 (32,861)

(226,062) (199,528)

Cash inflow from operating activities - before taxation 1,039,966 436,310Taxes paid (75,693) (36,380)Compensated absences paid (3,641) (4,037)

Net cash inflow from operating activities - after taxation 960,632 395,893

Cash flow from investing activitiesFixed capital expenditure (1,634,403) (3,690,937)Sale proceeds of operating fixed assets 2,519 8,458Loans to employees 109 841Investments 173,551 (200,000)Deposits and prepayments (10,814) (27,277)Profit on bank deposits received 4,685 1,451

Dividend income 12,021 6,094Investment income - net 43,403 -

Net cash outflow from investing activities (1,408,929) (3,901,370)

Cash flow from financing activities

Proceeds from issue of ordinary shares - 744,527Share premium on issue of ordinary shares - net - 184,183Term finance cer tificates redeemed - (41,650)Loans from related parties (214,776) 250,000Long term loans and finances (10,127,637) 1,961,698Redeemable capital 8,000,000 -Syndicated term finances - net 2,080,000 -Long term deposits from stockists - net (120) (275)Lease finances - net 183,871 870,721Short term finances - net 2,572,153 (149,575)Finance cost paid (1,996,914) (238,890)Ordinary dividend paid (14) (128)Preference dividend paid (52,731) (52,713)

Net cash inflow from financing activities 443,832 3,527,898

Net (decrease) / increase in cash and cash equivalents (4,465) 22,421

Cash and cash equivalents - at the beginning of the year 123,359 100,938

Cash and cash equivalents - at the end of the year 118,894 123,359


CASH FLOW STATEMENTFOR THE YEAR ENDED JUNE 30, 2008


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30

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED JUNE 30, 2008

. . . . . . . . . . . . . . . . . ( R u p e e s i n t h o u s a n d ) . . . . . . . . . . . . . . . . .

ShareCapital

SharePremium

Fair valuereserve on

measurementof available-

for-saleinvestments Total

Unappro-priatedprofit /

(AccumulatedLoss)

CapitalRedemption

ReserveHedgingReserve

GeneralReserve

Capital Reserves Revenue Reserves

Balance as at 30 June, 2006 3,519,581 1,884,153 268,362 111,014 - 800,000 972,594 7,555,704

Transfer to general reserve - - - - - 600,000 (600,000) -

Nominal value of rightordinary shares issued 744,527 - - - - - - 744,527

Premium received on issueof right ordinary shares - 186,131 - - - - - 186,131

Write-off of expenses incurredon issue of right ordinary shares - (1,948) - - - - - (1,948)

Fair value gain on measurementof available-for-sale investments - - 277,144 - - - - 277,144

Gain arising on derivative crosscurrency interest rate swapagreements - note 8.2 - - - - 242,226 - - 242,226

Profit for the year ended30 June, 2007 - - - - - - 42,047 42,047

Transfer to capitalredemption reserve - - - 90,246 - - (90,246) -

Dividend on preference shares forthe year ended 30 June, 2007 - - - - - - (52,794) (52,794)

Balance as at 30 June, 2007 4,264,108 2,068,336 545,506 201,260 242,226 1,400,000 271,601 8,993,037

Fair value loss on measurementof available-for-sale investments - - (26,741) - - - - (26,741)

Gain arising on derivative crosscurrency interest rate swapagreements - note 8.2 - - - - 123,522 - - 123,522

Loss for the year ended30 June, 2008 - - - - - - - (676,135) (676,135)

Transfer to capitalredemption reserve - - - 90,246 - - (90,246) -

Dividend on preference shares forthe year ended 30 June, 2008 - - - - - - (52,794) (52,794)

Balance as at 30 June, 2008 4,264,108 2,068,336 518,765 291,506 365,748 1,400,000 (547,574) 8,360,889





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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED JUNE 30, 2008

1. LEGAL STATUS AND OPERATIONS

Maple Leaf Cement Factory Limited (the Company) was incorporated in Pakistan on 13 April, 1960under the Companies Act, 1913 (now the Companies Ordinance, 1984) as a public company limitedby shares and was listed on stock exchanges in Pakistan on 17 August, 1994. The registered officeof the Company is situated at 42-Lawrance Road, Lahore, Pakistan. The Company is a subsidiary ofKohinoor Textile Mills Limited and is engaged in production and sale of cement.

2. STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with approved accounting standardsas applicable in Pakistan. Approved accounting standards comprise of such International FinancialReporting Standards (IFRS) issued by the International Accounting Standards Board as are notifiedunder the Companies Ordinance, 1984, provisions of and directives issued under the Companies

Ordinance, 1984. In case requirements differ, the provisions of, or directives issued under the CompaniesOrdinance, 1984 shall prevail.

3. BASIS OF MEASUREMENT

3.1 Accounting convention

These financial statements have been prepared under the historical cost convention, except forthe following:

- modification of foreign currency translation adjustments;- recognition of employee retirement benefits at present value;- measurement at fair value of certain financial assets; and

- recognition of derivative financial instruments at fair value.The method used to measure fair values are discussed in respective notes.

3.2 Functional and presentation currency

These financial statements are presented in Pakistan Rupees, which is also the Company'sfunctional currency. All financial information presented in Pakistan Rupees has been roundedto the nearest thousand.

4. USE OF ESTIMATES AND JUDGEMENTS

The preparation of financial statements in conformity with approved accounting standards, as applicablein Pakistan, requires management to make judgements, estimates and assumptions that affect theapplication of policies and the reported amounts of assets, liabilities, income and expenses. The

estimates and associated assumptions are based on historical experience and various other factorsthat are believed to be reasonable under the circumstances, the results of which form the basis ofmaking the judgements about the carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in period in which the estimate is revised if the revision affects only thatperiod, or in the period of the revision and future periods if the revision affects both current and futureperiods.


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32

Judgements made by management in the application of approved accounting standards, as applicablein Pakistan, that have significant effect on the financial statements and estimates with a significantrisk of material adjustment in the next year are as follows:

a) staff retirement benefits;b) taxation;c) useful life of depreciable assets and provision for impairment there against;d) classification of investments; ande) valuation at fair value of derivative financial instruments.

5. NEW ACCOUNTING STANDARDS AND IFRIC INTERPRETATIONS THAT ARE NOT YET EFFECTIVE

The following standards, amendments and interpretations of approved accounting standards are onlyeffective for accounting periods beginning on or after 01 July, 2008 and are either not relevant to theCompany's operations or are not expected to have significant impact on the Company's financialstatements other than certain increased disclosures in certain cases:

Revised IAS 1 - Presentation of Financial Statements;

Revised IAS 23 - Borrowing Costs; IAS 29 - Financial Reporting in Hyperinflationary Economies; IAS 32 (amendment) - Financial Instruments: Presentation and consequential amendments

to IAS 1 - Presentation of Financial Statements; IFRS 2 (amendment) - Share-based Payments; IFRS 3 (amendment) - Business Combinations and consequential amendments to IAS

27 - Consolidated and Separate Financial Statements, IAS 28 - Investment inAssociates and IAS 31 - Interest in Joint Ventures;

IFRS 7 - Financial Instruments: Disclosures; IFRS 8 - Operating Segments; IFRIC 12 - Service Concession Arrangements; IFRIC 13 - Customer Loyalty Programmes; IFRIC 14 - IAS 19 - The Limit on Defined Benefit Asset, Minimum Funding Requirements

and their Interaction;

IFRIC 15 - Agreement for the Construction of Real Estate; and IFRIC 16 - Hedge of Net Investment in a Foreign Operation.

6. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set-outbelow. These policies have been consistently applied through-out the year.

6.1 Equity instruments

These are recorded at their face value.

6.2 Borrowings

Loans and borrowings are initially recognised at the proceeds received; subsequent to initialrecognition, these are stated at amortised cost.

6.3 Staff retirement benefits

(a) Defined contribution plan

The Company operates a defined contributory approved provident fund for all its employees.Equal monthly contributions are made both by the Company and employees at the rateof 10% of the basic salary to the fund.


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(b) Defined benefit plan

The Company also maintains an approved gratuity fund under which the gratuity is payableon cessation of employment, subject to a minimum qualifying period of service. The

contributions are made to the fund in accordance with the actuary's recommendationsbased on the actuarial valuation of the fund using projected unit credit method. Actuarialgains / losses are recognised in accordance within the limits set-out by IAS 19 (EmployeeBenefits).

(c) Liability for employees' compensated absences

The Company accounts for the liability in respect of employees' compensated absencesin the year in which these are earned. Provision to cover the obligations is made usingthe current salary level of employees.

6.4 Trade and other payables

Creditors relating to trade and other payables are carried at cost which is the fair value ofconsideration to be paid in the future for goods and services received, whether or not billedto the Company.

6.5 Taxation

(a) Current

Provision for current taxation is based on taxable income at the current rates of taxationafter taking into account tax credits and tax rebates available, if any, or minimum tax atthe rate of 0.5% of turnover, whichever is higher.

(b) Deferred

Deferred tax is recognised using the balance sheet liability method in respect of alltemporary differences between the carrying amounts of assets and liabilities for financialreporting purposes and the amounts used for taxation purposes. Deferred tax assets arerecognised to the extent that it is probable that taxable profits will be available againstwhich the deductible temporary differences, unused tax losses and tax credits can beutilised. The carrying amount of all deferred tax assets is reviewed at each balance sheetdate and adjusted to the appropriate extent, if it is no longer probable that sufficient taxableprofits will be available to allow all or part of the deferred tax assets to be utilised. Deferredtax liab ility is based on the expected tax rates appl icable at the time of reversal.

6.6 Dividend distribution

Dividend distribution to shareholders is recognised as liability in the financial statements in the

period in which the dividend is approved.

6.7 Property, plant and equipment

Property, plant and equipment, except freehold land and capital work-in-progress, are statedat cost less accumulated depreciation and impairment losses (if any). Freehold land and capitalwork-in-progress are stated at cost. Cost in relation to certain plant & machinery representshistorical cost, exchange differences capitalised upto 30 June, 2004 and the cost of borrowingsduring the construction period in respect of loans and finances taken for the specific projects.


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34

Transactions relating to jointly owned assets with Pak American Fertilizers Limited (PAFL), asstated in note 23.5, are recorded on the basis of advices received from the housing colony.

Depreciation is calculated at the rates specified in note 23.1 on reducing balance method except

that straight-line method is used for the plant & machinery and buildings relating to dry processplant after deducting residual value. Depreciation on additions is charged from the month inwhich the asset is put to use and on disposals upto the month of disposal. The assets' residualvalues and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.

The carrying values of property, plant and equipment are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying value may not be recoverable.If any such indication exists and where the carrying values exceed the estimated recoverableamount, the assets or cash-generating units are written-down to their recoverable amount.

Subsequent costs are included in the asset's carrying amount or recognised as a separateasset, as appropriate, only when it is probable that future economic benefits associated withthe item will flow to the Company and cost of the item can be measured reliably. All other repair

and maintenance costs are charged to income during the period in which these are incurred.

Gains / losses on disposal or retirement of property, plant and equipment, if any, are taken toprofit & loss account.

6.8 Intangible assets

Expenditure incurred to acquire computer softwares are capitalised as intangible assets andstated at cost less accumulated amor tisation and any identified impairment loss. Intangibleassets are amortised using the straight-line method over a period of three years.

Amortisation on additions to intangible assets is charged from the month in which an asset isput to use and on disposal upto the month of disposal.

The Company assesses at each balance sheet date whether there is any indication that intangibleassets may be impaired. If such indication exists, the carrying amount of such assets arereviewed to assess whether they are recorded in excess of their recoverable amount. Wherecarrying values exceed the respective recoverable amount, assets are written down to theirrecoverable amounts and the resulting impairment loss is recognised in income currently. Therecoverable amount is the higher of an asset's fair value less costs to sell and value in use.Where an impairment loss is recognised, the amortisation charge is adjusted in the futureperiods to allocate the asset's revised carrying amount over its estimated useful life.

6.9 Assets subject to finance lease

Assets held under finance lease arrangements are initially recorded at the lower of present valueof minimum lease payments under the lease agreements and the fair value of the leased assets.

The related obligations under the leases less finance cost allocated to future periods are shownas a liability. Depreciation on leased assets is charged applying reducing balance method atthe rates used for similar owned assets, so as to depreciate the assets over their estimateduseful lives in view of certainty of ownership of assets at the end of lease term.

The finance cost is allocated to accounting periods in a manner so as to provide a constantperiodic rate of interest on the outstanding liability.


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6.10 Un-allocated capital expenditure

All cost or expenditure attributable to work-in-progress are capitalised and apportioned tobuildings and plant & machinery at the time of commencement of commercial operations.

6.11 Investments

Available-for-sale

Investments which are intended to be held for an undefined period of time but may be sold inresponse to the need for liquidity or changes in interest rates are classified as available-for-sale.

Subsequent to initial recognition at cost, these are remeasured at fair value. The Company useslatest stock exchange quotations to determine the fair value of its quoted investments whereasfair value of investments in un-quoted companies is determined by applying the appropriatevaluation techniques as permissible under IAS 39 (Financial Instruments: Recognition andMeasurement).

At fair value through profit or loss

Investments at fair value through profit and loss are those which are acquired for generating aprofit from short-term fluctuation in prices. All investments are initially recognised at cost, beingthe fair value of the consideration given. Subsequent to initial recognition, these investmentsare re-measured at fair value (quoted market price). Any gain or loss from a change in the fairvalue is recognised in income.

6.12 Stores, spares and loose tools

These are valued at moving average cost while items considered obsolete are carried at nilvalue. Items-in-transit are valued at cost comprising invoice value plus other charges incurredthereon.

6.13 Stock-in-tradeStock of raw materials, work-in-process and finished goods are valued at lower of average costand net realisable value. Cost of work-in-process and finished goods represents direct cost ofmaterials, labour and appropriate portion of production overheads.

Net realisable value signifies the ex-factory sale price less expenses and taxes necessary tobe incurred to make the sale.

6.14 Trade debts

Trade debts originated by the Company are recognised and carried at original invoice amountless an allowance for any uncollectible amounts. An estimate for doubtful debts is made whencollection of the amount is no longer probable. Bad debts are written-off when identified.

6.15 Loans and advances

These are stated at cost.

6.16 Cash and cash equivalents

Cash-in-hand and at banks and short term deposits which are held to maturity are carried atcost. For the purposes of cash flow statement, cash equivalents are short term highly liquidinstruments which are readily convertible to known amounts of cash and which are subjectto insignificant risk of changes in values.


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6.17 Provisions

Provisions are recognised when the Company has a present legal or constructive obligationas a result of past events and it is probable that an outflow of resources embodying economicbenefits will be required to settle the obligation and a reliable estimate can be made of theamount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflectthe current best estimate.

6.18 Impairment losses

The carrying amount of the Company's assets are reviewed at each balance sheet date todetermine whether there is any indication of impairment loss. If any such indication exists, therecoverable amount of the assets is estimated in order to determine the extent of impairmentloss, if any. Impairment losses are recognised as expense in the profit and loss account.

6.19 Revenue recognition

- Sales are recognised on dispatch of goods to customers.- Return on bank deposits is accounted for on 'accrual basis'.- Dividend income is accounted for when the right of receipt is established.

6.20 Borrowing costs

Borrowing costs incurred on finances obtained for acquisition of fixed assets are capitalisedupto the date of commissioning of the respective assets. All other borrowing costs are takento profit and loss account.

6.21 Foreign currency translations

Transactions in foreign currencies are accounted for in Pak Rupees at the exchange ratesprevailing at the date of transactions. Monetary assets and liabilities in foreign currencies aretranslated into Pak Rupees at rates of exchange prevailing at the balance sheet date. Foreignexchange differences are recognised in the profit and loss account.

6.22 Financial assets and liabilities

Financial assets and liabilities are recognised when the Company becomes a party to thecontractual provisions of the instrument. The particular recognition methods adopted aredisclosed in the individual policy statements associated with each item.

6.23 Off setting of financial instruments

Financial assets and liabilities are off-set and the net amount reported in the balance sheetwhen there is a legally enforceable right to set-off the recognised amounts and there is anintention to settle on a net basis, or realise the asset and settle the liability simultaneously.

6.24 Related party transactions

Transactions in relation to sales, purchases and technical services with related parties are madeat arm's length prices determined in accordance with the comparable uncontrolled price methodexcept for the allocation of expenses such as electricity, gas, water, repair and maintenance

relating to the head office, shared with the holding company / associates, which are on theactual basis.

6.25 Derivative financial instruments

These are initially recorded at cost on the date a derivative contract is entered into and areremeasured to fair value at subsequent reporting dates. The method of recognising the resultinggain or loss depends on whether the derivative is designated as a hedging instrument, and ifso, the nature of the item being hedged. The Company designates certain derivatives as cashflow hedges.


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The Company documents at the inception of the transaction the relationship between the hedginginstruments and hedged items, as well as its risk management objective and strategy forundertaking various hedge transactions. The Company also documents its assessment, bothat hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging

transactions are highly effect ive in offsetting changes in cash flow of hedged items.

The effective portion of changes in the fair value of derivatives that are designated and qualifyas cash flow hedges are recognised in equity. The gain or loss relating to the ineffective por tionis recognised immediately in the profit and loss account.

Amounts accumulated in equity are recognised in profit and loss account in the periods whenthe hedged item will effect profit or loss. However, when the forecast hedged transaction resultsin the recognition of a non-financial asset or a liability, the gains and losses previously deferredin equity are transferred from equity and included in the initial measurement of the cost of theasset or liability.

7. SHARE CAPITAL

7.1 Authorised:

400,000,000 (2007: 400,000,000) ordinary sharesof Rs. 10 each 4,000,000 4,000,000

100,000,000 (2007: 100,000,000) 9.75% redeemablecumulative preference sharesof Rs. 10 each 1,000,000 1,000,000

500,000,000 5,000,000 5,000,000

7.2 Issued, subscribed and paid-up:

Ordinary:

290,359,856 (2007: 290,359,856) ordinary sharesof Rs. 10 each fully paid in cash 2,903,599 2,903,599

35,834,100 (2007: 35,834,100) ordinary shares ofRs. 10 each issued as fully paid forconsideration other than cash 358,341 358,341

46,069,400 (2007: 46,069,400) ordinary shares ofRs. 10 each issued as fully paidbonus shares 460,694 460,694

372,263,356 3,722,634 3,722,634

Preference:

54,147,398 (2007: 54,147,398) 9.75% redeemablecumulative preference right shares(non-voting) of Rs. 10 each fullypaid in cash 541,474 541,474

426,410,754 4,264,108 4,264,108


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7.3 The Company, during the financial year ended 30 June, 2005, had offered to the shareholdersof the Company 54,147,398 preference shares - Series "A" of Rs. 10 each at par value. Thispreference shares right issue was made in the ratio of 30 preference shares (non-voting) forevery 100 ordinary shares held by the Company's shareholders as on 15 December, 2004.

These shares are listed on all Stock Exchanges of Pakistan. The salient terms of this issue areas follows:

(a) The preference shareholders are not entitled to:

- receive notice, attend general meetings of the Company and vote at meetings ofthe shareholders of the Company, except as otherwise provided by the CompaniesOrdinance, 1984 (the Ordinance), whereby the holders of such shares would beentitled to vote separately as a class i.e. with respect to voting entitlement ofpreference shareholders on matters/issues affecting substantive rights or liabilitiesof preference shareholders.

- bonus or right shares, in case the Company / Directors decide to increase the capitalof the Company by issue of further ordinary shares.

- participate in any further profit or assets of the Company, except the right of dividendattached to the preference shares - Series "A".

(b) Preference shares - Series "A" will be convertible at the option of the preference shareholdersinto ordinary shares of the Company at the expiry of the period of six years and thereafterof the date falling on the end of each semi annual period commencing thereafter. Conversionratio is to be determined by dividing the aggregate face value of the preference shares -Series "A" plus any accumulated dividends and/or accrued dividend by the conversionprice, which is higher of face value of ordinary share or 80% of the average price of theordinary share quoted in the daily quotation of the Karachi Stock Exchange (Guarantee)Limited during the three months immediately prior to the relevant conversion date.

(c) The Company may at its option call the issue in whole or in minimum tranches of 20%of the outstanding face value at the redemption price within 90 days of the end of each

semi annual period commencing from the expiry of a period of three years of the issue.

(d) Preference shareholders - Series "A" shall be paid preferred dividend @ 9.75% per annumon cumulative basis. If the Company does not pay dividend in any year, the unpaid dividendfor the relevant year will be paid in the immediately following year along with the dividendpayment for such year.

(e) The Company has created a redemption reserve and appropriates the required amounteach month from the profit and loss appropriation account to ensure that reserve balanceat the redemption date is equal to the principal amount of preference shares.

7.4 The Company, during the preceding financial year, had issued 74,452,671 right ordinary sharesof Rs. 10 each issued at Rs. 12.50 per share i.e. inclusive of premium of Rs. 2.50 per share.These right shares were offered in the ratio of 25 ordinary shares for every 100 ordinary sharesregistered in the name of the shareholders as on 24 February, 2007. These right shares rankpari passu with the existing ordinary shares of the Company in all respects.

7.5 Kohinoor Textile Mills Limited (the Holding Company) holds 186,608,808 (2007: 186,608,808)ordinary shares, which represents 50.13% (2007: 50.13%) of the total ordinary issued,subscribed and paid-up capital.

7.6 Zimpex (Pvt.) Ltd. (an Associated Company) held 1,706 (2007: 1,706) ordinary sharesat the year-end.


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8. RESERVES

Capital:- capital redemption reserve 7.3 (e) 291,506 201,260- share premium reserve 8.1 2,068,336 2,068,336- hedging reserve 8.2 365,748 242,226- fair value reserve on measurement of

available-for-sale investments(net of deferred taxation) 16 & 31 518,765 545,506

3,244,355 3,057,328

General reserve 1,400,000 1,400,000

4,644,355 4,457,3288.1 Share premium reserve

Opening balance 2,068,336 1,884,153

Add: premium received during the preceding yearon issue of 74,452,671 right ordinaryshares @ Rs. 2.50 per share - 186,131

Less: write-off of expenses incurred duringthe preceding year on issue ofright ordinary shares - (1,948)

2,068,336 2,068,3368.2 Hedging reserve

(a) The Company, during the preceding financial year, had entered into a derivative crosscurrency interest rate swap agreement with Standard Chartered Bank (Pakistan) Limitedto hedge for the possible adverse interest rate movements on 50% of National Bank ofPakistan (NBP) led consortium financing of Rs. 4.800 billion (i.e. Rs. 2.400 billion). Asper the swap agreement, the interest liability has been converted into U.S. Dollars andthe Company is liable to pay interest based on 6-months U.S.$ LIBOR + 1%. The NBPled consortium financing has been reprofiled during the current financial year as fullydetailed in note 11.

(b) The Company, during the preceding financial year, had entered into a derivative cross

currency interest rate swap agreement with Standard Chartered Bank (Pakistan) Limitedto hedge for the possible adverse interest rate movements on Allied Bank Limited (ABL)led consortium financing of Rs. 950 million. As per the swap agreement, the interestliability was converted into Euros and the Company was liable to pay interest based on6-months EURIBOR+ 0.98%. The terms of agreement, during the current financial year,have been revised whereby effective from the current financial year the Company is liableto pay interest based on 6-months U.S.$LIBOR+ 0.98%. The ABL led consortium financinghas been reprofiled during the current financial year as fully detailed in note 11.

Note


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(c) The Company, during the current financial year, has entered into further derivative cross currencyinterest rate swap agreements with Standard Chartered Bank (Pakistan) Limited to hedge forthe possible adverse interest rate movements on 98% of Allied Bank Limited led consor tiumfinancing of Rs. 1,000 million (i.e. Rs. 980 million). As per the swap agreement, the interest

liability has been converted into U.S. Dollars and the Company is liable to pay interest basedon 6-months U.S.$LIBOR+ 0.85%. The ABL led consortium financing has been reprofiledduring the current financial year as fully detailed in note 11.

(d) As the aforementioned hedging relationships are effective and meet the criteria of cash flowhedge, these arrangements qualify for hedge accounting as specified in IAS 39 (FinancialInstruments: Recognition and Measurement).

(e) The derivative cross currency interest rate swaps that are outstanding as at 30 June, 2008 havebeen marked to market and the effective unrealised gain aggregating Rs. 365.748 million (2007:Rs. 242.226 million) has been recognised in the statement of changes in equity.

9. LOANS FROM RELATED PARTIES - Secured

Loans from directors 9.1 35,224 160,000Loan from Zimpex Pakistan (Pvt.) Ltd. 9.2 - 90,000

35,224 250,000

9.1 The Company, during the preceding financial year, had obtained loans from two of its directors,Rs. 80 million each, for completion of the expansion project of 6,700 tpd clinker capacity. Theseloans carry mark-up at the rate of 1-month KIBOR + 1.5%; the effective mark-up rate chargedduring the year ranged between 10.89% to 14.06% per annum. These loans are secured againstdemand promissory notes and are repayable in lump sum after five years or earlier with mutualconsent of the parties. During the current financial year, loan amounting Rs. 80 million fromone of the directors was fully repaid whereas the other loan to the tune of Rs. 44.776 millionwas repaid.

9.2 This loan was also obtained for completion of the expansion project of 6,700 tpd clinker capacity.The effective mark-up rate charged, during the current financial year, ranged between 12.09%

to 12.40% per annum. The loan was secured against demand promissory note and was fullyrepaid during the current financial year.

10. LONG TERM LOANS AND FINANCES - Secured

MCB Bank Limited (MCB) 10.1 - 266,838Habib Bank Limited (HBL) 10.1 - 266,838

- 533,676

MCB 10.2 - 100,000Faysal Bank Limited (FBL) 10.2 - 175,000The Bank of Punjab (BoP) 10.2 - 40,000

Askari Commercial Bank Limited (ACB) 10.2-

20,000First Women Bank Limited (FWB) 10.2 - 14,000

- 349,000National Bank of Pakistan (NBP) 10.3 - 312,500Standard Chartered Bank (Pakistan)Limited (SCB) 10.4 - 200,000NBP 10.4 - 120,000PICIC Commercial Bank Limited (PCBL) 10.4 - 104,000

Balance carried forward - 424,000

Note


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Balance brought forward - 424,000

Allied Bank Limited (ABL) 10.5 - 475,000MCB 10.5 - 150,000The Hongkong & Shanghai Banking

Corporation Limited (HSBC) 10.5 - 115,000BoP 10.5 - 100,000Soneri Bank Limited (SBL) 10.5 - 75,000Pak Libya Holding Co. (Pvt.) Limited (PLHC) 10.5 - 50,000FWB 10.5 - 35,000

- 1,000,000

NBP 10.6 - 960,000HBL 10.6 - 960,000ABL 10.6 - 850,000FBL 10.6 - 705,000PCBL 10.6 - 700,000BoP 10.6 - 475,000Saudi Pak Industrial & Agriculture Investment

Company (Pvt.) Limited (Saudi Pak) 10.6 - 150,000

- 4,800,000

ABL 10.7 - 270,000MCB 10.7 - 250,000Saudi Pak Commercial Bank Limited (SPCB) 10.7 - 200,000PLHC 10.7 - 100,000

SBL 10.7 - 50,000Saudi Pak 10.7 - 50,000FWB 10.7 - 30,000

- 950,000

ABL 10.9 - 1,350,000PLHC 10.9 - 300,000Saudi Pak 10.9 - 100,000KASB Bank Limited (KASB) 10.9 - 100,000Pak Oman Investment Company Limited (Pak Oman) 10.9 - 100,000The Bank of Khyber (BoK) 10.9 - 50,000

- 2,000,000HBL 10.11 241,539 -

241,539 10,369,176Less: current portion grouped under current liabilities - 1,792,519

241,539 8,576,657

Note


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10.1 These loans were obtained from a consortium comprising of MCB and HBL and originally wererepayable in 14 half-yearly equal instalments commenced from December, 2003. These loans,during the current financial year, carried mark-up at the rates ranging from 12.29% to 12.31%per annum.

10.2 These loans were obtained from a consor tium comprising of MCB, FBL, BoP, ACBL and FWBin two tranches. First tranche of Rs. 550 million was disbursed during December, 2003 by FBLand MCB. Originally these loans were repayable in fourteen half-yearly equal instalmentscommenced from June, 2004.

Second and final tranche was disbursed by BoP, ACBL and FWB in April, 2004. Theseloans, during the current financial year, carried mark-up at the rates ranging from 11.65% to12.46% per annum. Originally these loans were repayable in ten half-yearly equal instalmentscommenced from October, 2004.

10.3 This loan, during the current financial year, carried mark-up at the rate of 12.48% per annum.Originally this loan was repayable in twelve equal half-yearly instalments commenced fromOctober, 2004.

10.4 These loans aggregating Rs. 530 million were obtained from a Syndicate of commercial banks( i.e. SCB, NBP and PCBL) to fund the conversion of one of the wet process lines of greycement to 500 tpd dry process line of white cement. Originally these loans were repayable in20 equal quarterly instalments commenced from September, 2006 and during the currentfinancial year carried mark-up at the rate of 12.27% per annum.

10.5 The Company, during the financial year ended 30 June, 2006, had raised a syndicated termfinance facility of Rs. 1.000 billion for financing its capital expenditure requirements. TheSyndicate comprised of ABL, MCB, HSBC, BoP, SBL, PLHC and FWB. Originally this financefacility was repayable in 9 equal half-yearly instalments commenced from 30 November, 2007and during the current financial year carried mark-up at the rate of 12.13% per annum.

10.6 This finance facility of Rs. 4.800 billion was available from a Syndicate of commercial banksand development finance institution (i.e. NBP, HBL, ABL, FBL, PCBL, BoP and Saudi Pak) forfinancing the expansion project of 6,700 tpd clinker capacity. Originally this finance facility was

repayable in 9 equal half-yearly instalments commenced from August, 2007 and during thecurrent financial year carried mark-up at the rate of 12% per annum.

10.7 ABL, during the preceding financial year, had converted its finance facility of Rs. 950 millioninto a syndicated term finance facility of the equivalent amount. The facility was utilised tofinance the capital expenditure requirements i.e. conversion from wet process plant of 650 tpdclinker capacity of grey cement to 500 tpd clinker capacity of dry process plant of whitecement. The Syndicate comprised of ABL, MCB, SPCB, PLHC, SBL, Saudi Pak and FWB.Originally this finance facility was repayable in 9 equal half-yearly instalments with effect fromOctober, 2008 and during the current financial year carried mark-up at the rate 12.46% perannum.

10.8 These loans, as detailed in notes 10.1 to 10.7 above, were secured by first pari passu chargeover present and future fixed assets of the Company, demand promissory notes and personalguarantee of some of the directors.

10.9 The Company, during the preceding financial year, had raised this syndicated term financefacility of Rs. 2.000 billion for financing its capital expenditure requirements of grey cementproject. The Syndicate comprised of ABL, PLHC, Saudi Pak, KASB, Pak Oman and BoK.Originally this finance facility was repayable in 9 equal half-yearly instalments with effect fromMarch, 2009 and during the current financial year carried mark-up at the rate of 12.51% perannum. This finance facility was secured against a ranking fixed charge by way of hypothecationover all of the Company's present and future fixed assets (excluding land and buildings), rankingmortgage charge over Company's land and buildings by deposit of title deeds and personalguarantees of two of the Company's directors.


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10.10 The Company, during the current financial year to reprofile its balance sheet and replaceconventional debts with Shariah Compliant Financing, has repaid premature long term loansand finances as detailed in note 10.1 to 10.7 and 10.9 through the proceeds received fromRedeemable Capital and Syndicated Term Finances.

10.11 The Company, during the current financial year, has arranged a term finance facility ofRs. 1.160 billion (equivalent to Japanese Yens 1.974 billion approximately) for financing theWaste Heat Recovery Plant from HBL. The tenor of this term finance facility is six years includinga grace period of two years. The principal balance of this term finance facility will be repaidin nine equal semi-annual instalments. This finance facility carries mark-up at the rate of 6-months KIBOR plus 1.5% per annum payable on quarterly basis. The finance facility is securedagainst first pari passu hypothecation charge of Rs. 1.600 billion over plant & machinery, firstpari passu equitable mortgage charge over land and buildings of the Company and personalguarantees o

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Maple leaf Annual Report 2008

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