Maple Leaf Annual Report 2008

Table of Contents
Mission Statement Corporate Strategy Statement of Ethics and Business Practices Company Profile Company Information Notice of Annual General Meeting Directors Report to the Shareholders Six Years Summary Pattern of Shareholding Statement of Compliance with the Code of Corporate Governance Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance Auditors Report to the Members Balance Sheet Profit and Loss Account Cash Flow Statement Statement of Changes in Equity Notes to the Accounts Proxy Form 2 3 4 5 6 7 9 16 17 22 24 25 26 28 29 30 31
Mission Statement
The Maple Leaf Cement Factory Limited stated mission is to achieve and then remain as the most progressive and profitable company in Pakistan in terms of industry standards and stakeholders interests.
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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.
Maple Leaf Cement Factory Limited

Annual Report 2008
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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Annual Report 2008
Statement of Ethics and Business Practices

For the Year 2008 - 2009 The following principles constitute the code of conduct which all Directors and employees of Maple Leaf Cement Factory Limited are required to apply in their daily work and observe in the conduct of Companys business. While the Company will ensure that all employees are fully aware of these principles, it is the responsibility 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 success of any business. PRINCIPLES 1. Directors and employees are expected not to engage in any activity which can cause conflict between their personal interest and the interest of the Company such as interest in an organization supplying goods/services to the company or purchasing its products. In case a relationship with such an organization exists the same must be disclosed to the Management. Dealings with third parties which include Government officials, suppliers, buyers agents and consultants must always ensure that the integrity and reputation of the Company is not in any way compromised. Directors and employees are not allowed to accept any favours, gifts or kickbacks from any organization dealing with the Company. Directors and employees are not permitted to divulge any confidential information relating to the Company to any unauthorized person. Nor should they issue any misleading statements pertaining to the affairs of the Company. The Company has strong commitment to the health and safety of its employees and preservation of environment and the Company will preserve towards achieving continuous improvement of its HSE performance by reducing potential hazards preventing pollution and improving awareness. Employees are required to operate the Companys facilities and processes keeping this commitment in view. Commitment and team work are key elements to ensure that the Companys work is carried out effectively and efficiently. Also all employees will be equally respected and actions such as sexual harassment and disparaging remarks based on gender, religion, race or ethnicity will be avoided.
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Annual Report 2008
Company Profile
Maple 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 Pakistan Industrial Development Corporation (WPIDC) in 1956 and was incorporated as Maple Leaf Cement Factory Limited in April, 1960. The capacity of the plant was 300,000 tons clinker per annum. In 1967, a company with the name of White Cement Industries Limited (WCIL) was established with the clinker capacity of 15,000 tons per annum. In 1974, under the WPIDC Transfer of Projects and Companies Ordinance, the management of two companies, namely MLCFL and WCIL were transferred to the newly established State Cement Corporation of Pakistan (SCCP). In 1983, SCCP expanded WCILs white cement plant by adding another unit of the same capacity parallel to the existing one, increasing total capacity to 30,000 tons clinker per annum. In 1986, SCCP set up another production unit of grey cement under the name of Pak Cement Company Limited (PCCL) with a capacity of 180,000 tons per annum. In 1992, MLCFL, WCIL, and PCCL were privatised and transferred to the KMLG. All three companies were merged into Maple Leaf Cement Factory Limited on July 01, 1992. In 1994, the Company was listed on all Stock Exchanges in Pakistan. In 1998, separate production line for grey Portland cement of 990,000 tons per annum clinker capacity based on most modern dry process technology was installed.
In 2000, Maple Leaf Electric Company Ltd. (MLEC) a power generation unit was merged into the Company. In 2004, the coal conversion project at new dry process plant was completed.
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In 2005, dry process plant capacity was increased from 3,300 tpd to 4,000 tpd through debottlenecking and up-gradation of equipment and necessary adjustments in operational parameters. In 2006, a project to convert the existing wet process line to a fuel efficient dry process white cement line commenced its commercial production.
Annual Report 2008
In 2007, Company has undertaken an expansion project of 6,700 tpd clinker capacity which commenced its commercial production on November 01, 2007.
COMPANY INFORMATION
Board of Directors Mr. Tariq Sayeed Saigol

Chairman
Mr. Sayeed Tariq Saigol

Chief Executive
Mr. Waleed Tariq Saigol Ms. Jahanara Saigol Mr. S. M. Imran Mr. Zamiruddin Azar Mr. Per Mejner t Kristensen
(Representing FLS & IFU, Denmark)
Audit Committee Mr. Zamiruddin Azar
National Bank of Pakistan NIB Bank Limited Pak-Libya Holding Company (Pvt.) Limited Pak Oman Investment Company Limited Saudi Pak Commercial Bank Limited Saudi Pak Industrial & Agricultural Investment Co. (Pvt.) Limited Soneri Bank Limited Standard Char tered Bank (Pakistan) Limited The Bank of Khyber The Bank of Punjab HSBC Bank Middle East Limited
(Formerly: The Hongkong & Shanghai Banking Corporation Ltd.)
Chairman
Mr. Waleed Tariq Saigol Mr. S. M. Imran
United Bank Limited Auditors Hameed Chaudhri & Co. Char tered Accountants Legal Advisors Mr. Nomaan Akram Raja
Barrister-At-Law
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Chief Financial Officer Ms. Bushra Naz Malik Company Secretary Mr. Muhammad Ashraf Internal Auditor Ms. Sadaf Latif Bankers of the Company Allied Bank Limited Alfalah Bank Limited Arif Habib Bank Limited Askari Bank Limited
(Formerly: Askari Commercial Bank Limited)
Raja Mohammad Akram & Co. Advocates and Legal Consultants, Lahore. Registered Office 42 - Lawrence Road, Lahore. Phone: (042) 6278904-5 Fax: (042) 6363184 E-mail: mlcfl@kmlg.com Website:www.kmlg.com Share Registrar Vision Consulting Ltd. Head Office: 3-C, LDA Flats, Lawrence Road, Lahore Phone: (042) 6375531 & 6375339 Fax: (042) 6374839 E-mail: info@vcl.com.pk & vclcom@yahoo.com Website:www.vcl.com.pk Factory Iskanderabad Distt. Mianwali. Phone: (0459) 392237-8
Atlas Bank Limited Bank Al-Habib Limited Barclays Bank plc Faysal Bank Limited First National Bank Modaraba First Women Bank Limited Habib Bank Limited Islamic Corporation for the Development of the Private Sector, Jeddah KASB Bank Limited MCB Bank Limited Meezan Bank Limited Mybank Limited
Annual Report 2008
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, 2008 together 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 without modification. SPECIAL RESOLUTION Resolved that the Authorised Share Capital of the Company be and is hereby increased from Rs. 5,000,000,000 divided into 500,000,000 Shares of Rs. 10/- each, comprising 400,000,000 Ordinary and 100,000,000 Preference Shares to Rs. 7,000,000,000 divided into 700,000,000 Shares of 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 by substituting 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 increase or reduce the capital and to divide the shares in the capital for the time being into several classes in accordance with the provisions of the Companies Ordinance, 1984 and any rules made thereunder, 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 Association or the Regulations of the Company for the time being, and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may for the time being be provided by the Articles of Association or Regulations of the Company. Further resolved that any Director or Company Secretary of the Company be and are hereby singly authorised to do all acts, deeds, things and to take any or all necessary actions to complete all legal formalities and file all necessary documents in this regards as they think fit on behalf of the Company.
Annual Report 2008
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5) To transact any other business with the permission of the Chair. By order of the Board
Lahore: October 09, 2008
(Muhammad Ashraf) Company Secretary
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 be substituted 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 Company have no special or extra-ordinary interest in the above resolutions except to the extent of their shareholding in 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 and can 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, 2008 to October 30, 2008 (both days inclusive). Physical transfers/CDS Transaction IDs received in order at 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 THE YEAR ENDED JUNE 30, 2008 Share Transfer Books for preference shares (non-voting) of the Company will remain closed for entitlement of 9.75% p.a. preferred dividend from October 23, 2008 to October 30, 2008 (both days inclusive). Physical transfers/CDS Transaction IDs received in order at 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 for entitlement of preferred dividend for the year ended June 30, 2008. The preference shareholders are not entitled to attend the meeting.
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3. A member, in respect of ordinary shares held, eligible to attend and vote at this meeting may appoint another 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, 42Lawrence Road, Lahore, not less than 48 hours before the time for holding the meeting and must be duly stamped, signed and witnessed. 4. CDC shareholders, entitled to attend and vote at this meeting, must bring with them their Computerised National Identity Cards / Passport in original along with Participants ID Numbers and their Account Numbers to prove his/her identity, and in case of Proxy, must enclose an attested copy of his/her CNIC or Passport. Representatives of corporate members should bring the usual documents required for such purpose. 5. Shareholders are requested to immediately notify any change in their addresses if any to Share Registrar M/s Vision Consulting Ltd, 3-C, LDA Flats, Lawrence Road, Lahore.

Annual Report 2008
DIRECTORS' REPORT TO THE SHAREHOLDERS

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 on the economy. Low crop production, reduced output by the manufacturing sector, particularly large scale industry, unabated rise in rate of inflation, power shortages and ever increasing prices of coal, oil and natural gas, resulted in increased cost of production. A steep depreciation of the exchange rate, outflow of portfolio investment and depleting foreign exchange reserves was witnessed with growing fiscal and trade deficits. The general elections in the country in February 2008, from the political stand point, were expected to put to rest the turmoil which had prevailed hithertofore. However, the law & order situation in the urban areas, as well as worsening situation in the northern areas has continued to have a dampening effect on the economy. Despite these challenges, Pakistans economy recorded GDP growth rate of 5.8% in the current fiscal year against the targeted rate of 7.2% and prior years 6.8%. Services sector has played a pivotal role in the overall growth of the economy. Although depicting a significant slowdown, Pakistans medium term average growth rate remains better than most other economies. This highlights its resilience but the global slowdown and financial turmoil is bound to mar the performance of the country this year. This is bound to impact on the performance of the Company. Pakistan has emerged as a major exporter of cement during fiscal 2007-2008 which has not only aided in capacity absorption but also earned precious foreign exchange to mitigate the trade deficit. The sector achieved a new level of dispatches of 30.107 PROFIT / (LOSS) million tons against last years dispatches of 24.22 million tons and registered an overall growth of 2,000 24% during FY07-08.
1,500 1,000 500 (500) (1,000) (1,500) (2,000)
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4,000 3,000 2,000 1,000 -
3,698 3,210
2003
2004
2005 YEAR
2006
2007
2008
Annual Report 2008
The Company made considerably higher dispatches during the year both in local and export markets, in particular to Afghanistan, India & the Middle East. The plants functioned efficiently throughout the year. By the Grace of Allah, the expansion project of grey cement 6,700 tpd clinker capacity based on most modern dry process technology has commenced commercial production from November 01, 2007. By this addition, production of grey and white cement was recorded at 2,357,922 and 73,430 metric tons respectively, as compared to 1,342,021 and 48,231 metric tons during the corresponding period last year. With rising natural gas, oil and fuel prices, there has been a significant resurgence of interest in the subject of energy conservation. In this regard, the Company has already established a letter of credit for a Waste Heat Recovery Plant which will reduce the process costs when it goes into production in February 2010. The plant will produce approximately 15 MW of electric power on a sustainable basis.
RUPEES IN MILLION
Performance of the Company
2003
2004
2005
2006
2007
2008
Profit before tax
Profit after tax
EQUITY
9,000 8,000 7,000 RUPEES IN MILLION 6,000 5,000
6,290 7,556 8,993 8,361
Sales volume was registered at 2,459,196 of grey and 75,024 metric tons of white cement during the financial year against sales for the corresponding period last year of 1,313,113 metric tons of grey and 46,049 metric tons of white cement in both local and export markets. However, despite much higher sales volume, the Company suffered post-tax loss of Rs. 676.135 million after adjusting the deferred tax amount of Rs. 732.924 million. The overall clinker capacity utilization amounted to 73% for grey and 42% for white during the year under review as compared to the corresponding period last year of 75% for grey and 34% for white cement. Financial Results The Company achieved considerably higher gross sales volume of Rs. 10,552 million during the year, with net sales amounting to Rs. 7,815.829 million after payment of Rs. 1,564.801 million towards Central & Special Excise Duty, Rs. 1,061.681 million as General Sales Tax and Rs. 110.087 million as commission to distributors. Inspite of much improved sales, the Company suffered pre-tax loss of Rs. 1,364.244 million after accounting for all charges including depreciation of Rs. 865.546 million and amor tisation of Rs. 5.977 million, financial charge of Rs. 1,812.807 million including exchange loss of Rs. 492.344 million on account of foreign currency loss due to loans and derivatives against preceding years pre-tax loss of Rs. 140.019 million. The basic earning per share (EPS) is Rs. 1.96 in negative for the year ended June 30, 2008 as compared to Rs. 0.03 in negative last year. Appropriation of Profit Your Company suffered losses due to imposition of high Federal & Provincial taxes, very low selling prices, cut throat domestic competition among producers, high export expenses, exorbitant fuel costs, rise in electricity charges, increase in financial and distribution costs and charge of depreciation of 6,700 tpd line to profit and loss account. There being loss from operations for the year and nil Earning Per Share, the Directors express inability to pay any dividend for the year. Your Directors propose the following appropriation for the financial year under review: (Rupees in Thousand) (Loss) before taxation Provision for taxation (Loss) after taxation Un-appropriated profit brought forward
GROSS TURNOVER
11000.00 10000.00 9000.00 8000.00 7000.00 RUPEES IN MILLION 6000.00 5000.00 4000.00 3000.00 2000.00 1000.00 0.00 2003 2004 2005 YEAR 2006 2007 2008
EARNINGS PER SHARE

4.00 3.00 2.00 1.00 (1.00) (2.00) 2003 2004 2005 YEAR 2006 2007 2008
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RUPEES
(1,364,244) 688,109 (676,135) 271,601 (404,534) 90,246 52,794 (547,574)
Accumulated loss Appropriations: Transfer to preference shares redemption reserve Dividend on preference shares Un-appropriated loss carried forward
Annual Report 2008
As per issue terms of the Preference Shares, Rs. 90.246 million has been transferred to Preference Shares Redemption 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 markets and prices of oil continued to rise. Consequently, global demand for coal also increased and China curtailed supply of coal to the export 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 calcining process. Price of natural gas also increased during the current year whereas furnace oil has become a prohibitively 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 its reputation as a good quality producer. This augurs well for cement manufacturers as the regional governments have 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 grim on the domestic front as the whole industry is under constant threat from economic pressures. Demand is expected to be negatively impacted due to these reasons. However the management is hopeful for better production and margins as the plants are expected to operate almost at full capacity to meet the enhanced requirements of the export markets. The major obstacle to achieving high capacity utilization remain irregular power supply and load shedding of gas and electricity. Social Sector Projects Your Company remains committed to play a role in development of social sector projects and has made further contribution towards Sayeed Saigol Cardiac Complex at the Gulab Devi Hospital, Lahore by donating a 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 part of the Companys policy of development of new products and improving efficiency of the plants to reduce cost. After development, trial production of oil well cement was carried out which has had a positive feed back from potential customers. The Company has obtained certification from the appropriate organization, American Petroleum Institute (API). The old wet kilns have been earmarked for production of special products.
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Compliance of Code of Corporate Governance The Board reviews the Companys strategic direction and business plans on a regular basis. The Audit Committee is empowered for effective compliance of Code of Corporate Governance. The Board is committed to maintain a high standard of good corporate governance. Your Directors are pleased to repor t that: a) The financial statements, prepared by the management present fairly its state of affairs, the result of its operations, cash flows and changes in equity. Proper books of account have been maintained by the Company. International accounting standards, as applicable in Pakistan, have been followed in preparation of financial statements. The existing internal control system and procedures are continuously reviewed by the internal auditor. The process of review will continue by the audit committee to monitor the effective implementation. There are no significant doubts upon the Companys ability to continue as a going concern. There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations of stock exchanges. Key operating and financial data of last six years is annexed. The value of investment of provident fund and gratuity trust, based on their respective audited accounts of June 30, 2008 is given hereunder: Rupees in Thousand 291,391 60,307
b) c)
d)
e) f)
g) h)
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Provident Fund Gratuity Fund i)
A total number of four Board of Directors meetings were held during the year. The attendance by each Director is given as follows: Name of Directors Mr. Tariq Sayeed Saigol Mr. Sayeed Tariq Saigol Mr. Waleed Tariq Saigol Ms. Jahanara Saigol Mr. Usman Said Mr. S. M. Imran Mr. Zamiruddin Azar Mr. Per Mejner t Kristensen (Rep. FLS & IFU, Denmark) No. of Meetings Attended 4 3 4 2 1 4 2 -
The Directors who could not attend the Board Meeting were duly granted leave of absence.
Annual Report 2008
j)
During the year, Mr. Usman Said resigned from the Board and Mrs. Shehla Tariq Saigol was appointed as Director in his place to fill the casual vacancy for the remainder of the term. Moreover, no Directors sold or purchased any shares of the Company other than Mrs. Shehla Tariq Saigol who acquired 2,500 ordinary 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 an independent Share Registrar M/s Vision Consulting Ltd. The members / Stock Brokers are directed to contact and correspond regarding shares related matters and CDC approval with the concerned Share Registrar. 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 6,700 tpd line for their support and commitment in completion of the project on time. We are also thankful to foreign and local financial institutions for their support and appreciate the efforts put in by the staff / workers and officers of the Company, their dedication and hard work and to those who contributed towards completion of the project. For and on behalf of the Board
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Lahore: September 25, 2008
(Sayeed Tariq Saigol) Chief Executive
Annual Report 2008
SIX YEARS SUMMARY

2007-2008 Quantitative Data (M. Tons) Grey Cement: Production Sales White Cement: Production Sales Sales (Rs. 000) Gross Sales Less: Excise Duty Sales Tax Commission Net Sales Profitability (Rs. 000) Gross Profit / (Loss) Profit / (Loss) Before Tax Provision for Income Tax Profit / (Loss) After Tax Financial Position (Rs. 000) Tangible Fixed Assets-Net Other Non-Current Assets 20,081,448 75,217 20,156,665 19,330,866 54,151 19,385,017 16,088,505 391,931 16,480,436 8,462,382 110,953 8,573,335 1,940,059 (1,595,499) 344,560 8,917,895 (2,543,012) 6,374,883 5,562,682 25,660 5,588,342 1,499,266 (1,188,435) 310,831 5,899,173 (2,201,629) 3,697,544 5,497,285 272,809 5,770,094 1,551,334 (1,156,620) 394,714 6,164,808 (2,954,736) 3,210,072 1,323,830 (1,364,244) 688,109 (676,135) 309,893 (140,019) 182,066 42,047 2,148,580 1,634,814 (575,574) 1,059,240 1,327,932 1,027,378 (299,928) 727,450 1,148,228 751,507 (264,035) 487,472 361,550 (92,916) 243,019 150,103 10,552,398 1,564,801 1,061,681 110,087 7,815,829 5,514,208 1,024,041 705,845 73,241 3,711,081 7,954,901 1,128,106 1,036,977 80,026 5,709,792 6,193,443 1,020,618 807,589 74,502 4,290,734 4,967,465 872,608 656,019 63,039 3,375,799 4,025,267 1,028,664 534,239 57,557 2,404,807 73,430 75,024 48,231 46,049 34,780 34,739 35,647 36,057 36,759 36,217 39,183 40,160 2,357,922 2,459,196 1,342,021 1,313,113 1,469,717 1,470,051 1,328,742 1,325,041 1,118,187 1,127,261 1,007,059 1,008,484 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003
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Current Assets Current Liabilities Net Working Capital Capital Employed Less Long Term Loan & Other Liab. Share holders Equity Represented By: Share Capital Reserves & Un-app. Profit
5,994,896 4,051,957 2,664,462 (7,382,464) (3,756,487) (2,649,519) (1,387,568) 295,470 14,943 18,769,097 19,680,487 16,495,379 (10,408,208) (10,687,450) (8,939,675) 8,360,889 8,993,037 7,555,704
4,264,108 4,096,781 8,360,889
4,264,108 4,728,929 8,993,037
3,519,581 4,036,123 7,555,704
3,248,844 3,126,039 6,374,883
1,804,913 1,892,631 3,697,544
1,804,913 1,405,159 3,210,072
Ratios: Gross Profit / (Loss) to Sales (%age) Net Profit / (Loss) to Sales (%age) Debt Equity Ratio Current Ratio Break Up Value per share of Rs. 10 each 16.94 (8.65) 55:45 0.81 19.61 8.35 1.13 55:45 1.08 21.09 37.63 18.55 51:49 1.01 21.47 30.95 16.95 26:74 1.22 19.62 34.01 14.44 37:63 1.26 20.49 15.03 6.24 48:52 1.34 17.79
Annual Report 2008
PATTERN OF SHAREHOLDING (ORDINARY SHARES)

1. 2. 3. 4. No. of Shareholders
1,780 3,145 1,982 3,294 671 242 135 96 70 39 28 19 32 15 14 9 13 8 5 2 4 6 7 7 6 3 3 9 3 2 2 3 3 3 3 1 1 2 5 1 3 1 1 1 1 1 2 1
New CUIN Registration Number Name of Company
0001107 Maple Leaf Cement Factory Limited Size of Holding From

1 101 501 1,001 5,001 10,001 15,001 20,001 25,001 30,001 35,001 40,001 45,001 50,001 55,001 60,001 65,001 70,001 75,001 80,001 85,001 90,001 95,001 100,001 105,001 110,001 115,001 120,001 125,001 130,001 135,001 140,001 145,001 155,001 160,001 165,001 170,001 190,001 195,001 200,001 205,001 220,001 230,001 240,001 260,001 265,001 280,001 285,001
Pattern of holding of the shares held by the shareholders as at 30-06-2008 Total shares held
78,490 963,995 1,651,330 8,162,132 5,147,598 3,018,843 2,445,299 2,215,734 1,944,333 1,277,570 1,084,517 831,811 1,559,898 788,620 819,898 562,985 886,406 584,589 394,950 164,810 344,937 553,334 698,625 721,909 648,957 336,353 356,057 1,108,417 377,288 264,396 274,830 426,750 450,000 470,746 491,070 167,000 170,500 386,200 1,000,000 201,000 623,386 225,000 235,000 242,500 264,000 268,067 563,000 290,000
To
100 500 1,000 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000 85,000 90,000 95,000 100,000 105,000 110,000 115,000 120,000 125,000 130,000 135,000 140,000 145,000 150,000 160,000 165,000 170,000 175,000 195,000 200,000 205,000 210,000 225,000 235,000 245,000 265,000 270,000 285,000 290,000
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Annual Report 2008
Size of Holding No. of Shareholders

2 2 1 1 2 1 1 2 1 1 1 1 2 1 1 2 1 3 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 11,744
From
To
Total shares held

600,000 604,241 312,825 320,000 647,434 335,712 344,438 698,000 350,312 368,875 390,000 409,000 843,755 425,301 436,200 922,686 475,000 1,496,500 533,390 599,000 637,562 800,500 855,500 900,000 906,250 916,352 987,500 2,000,000 1,155,000 1,228,495 1,835,000 1,900,000 1,931,425 2,100,000 2,108,773 2,238,500 2,304,000 2,404,294 3,529,546 3,981,000 5,034,000 5,500,000 5,767,850 5,800,250 8,000,187 10,878,500 11,650,000 12,001,487 14,140,156 14,306,622 186,608,808 372,263,356
18
295,001 300,000 300,001 305,000 Maple Leaf Cement Factory Limited 310,001 315,000 315,001 320,000 320,001 325,000 335,001 340,000 340,001 345,000 345,001 350,000 350,001 355,000 365,001 370,000 385,001 390,000 405,001 410,000 420,001 425,000 425,001 430,000 435,001 440,000 460,001 465,000 470,001 475,000 495,001 500,000 530,001 535,000 595,001 600,000 635,001 640,000 800,001 805,000 855,001 860,000 895,001 900,000 905,001 910,000 915,001 920,000 985,001 990,000 995,001 1,000,000 1,150,001 1,155,000 1,225,001 1,230,000 1,830,001 1,835,000 1,895,001 1,900,000 1,930,001 1,935,000 2,095,001 2,100,000 2,105,001 2,110,000 2,235,001 2,240,000 2,300,001 2,305,000 2,400,001 2,405,000 3,525,001 3,530,000 3,980,001 3,985,000 5,030,001 5,035,000 5,495,001 5,500,000 5,765,001 5,770,000 5,800,001 5,805,000 8,000,001 8,005,000 10,875,001 10,880,000 11,645,001 11,650,000 12,000,001 12,005,000 14,140,001 14,145,000 14,305,001 14,310,000 186,605,001 186,610,000
Annual Report 2008
5.
CATEGORIES OF SHAREHOLDERS No. of Shareholders 5.1 Directors, CEO and their spouses & minor children Mr. Tariq Sayeed Saigol - Chairman / Director Mr. Sayeed Tariq Saigol - Chief Executive / Director Mr. Waleed Tariq Saigol - Director Ms. Jahanara Saigol - Director Mrs. Shehla Tariq Saigol - Spouse of Mr. Tariq Sayeed Saigol Mr. S. M. Imran - Director Mr. Zamiruddin Azar - Director Mr. Per Mejnert Kristensen - Nominee Director
(Rep. FLS & IFU, Denmark)
Shares Held 5,156 5,156 5,156 3,125 2,500 21,213 10,573 58,035
Percentage of Capital 0.0014 0.0014 0.0014 0.0008 0.0007 0.0057 0.0028 0.0156
5.2
Associated Companies, undertakings and related parties Kohinoor Textile Mills Ltd. Zimpex (Pvt) Ltd. 2 NIT and ICP National Bank of Pakistan, Trustee Deptt. Investment Corporation of Pakistan 2 Banks, Development Financial Institutions, Non-banking Financial Institutions Insurance Companies Modarabas, Leasing and Mutual Funds Shareholders holding Ten Percent or more voting interest in the Company
Refer to 5.2
186,608,808 1,706 186,610,514 3,542,343 11,500 3,553,843 44,414,525 644,490 9,501,930 62,912,553 25,390,406 1,230,505 36,702,663 625 2,312 7,000 70,000 198 762 62,700 355 440 500,000 5,000 8,000 24,500 46,750 150,000 38,500 69,500 11,750 200,000 25,000 500 20,000 1,243,892 372,263,356
50.1282 0.0005 50.1286 0.9516 0.0031 0.9547 11.9309 0.1731 2.5525 16.9000 6.8205 0.3305 9.8593
5.3
5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12
28 8 24 -
General Public Individuals 11,483 Foreign Shareholders 30 Executives Public Sector Companies and Corporations 2 Joint Stock Companies 135 Others 1295 Trustee Avari Hotel Lahore Staff Provident Fund Al Masoom (Pvt) Ltd Cooper and Company (Pvt) Ltd G. R. Securities (SMC-Pvt) Ltd Haral Sons (SMC-Pvt) Ltd Islamabad Stock Exchange (G) Limited Lahore Stock Exchange (Guarantee) Ltd. Manag Commtt of Tameer-e-Millat Found Managing Committee Ghazali Education Trust Molasses Expor t Co. (Private) Ltd. Pakistan Memon Educational & Welfare Society Trustees Ar tal Restaurants Int'l Emp. P .F Trustee Cherat Cement Co. Ltd. Emp. Provident Fund Trustee-Army Welfare Trust Trustee-Nestle Pakistan Ltd. Employees Gratuity Fund Trustee-Nestle Pakistan Ltd. Employees Provident Fund Trustee-Nestle Pakistan Ltd. Managerial Staff Pension Fund Trustees Al-Abbas Sugar Mills Ltd Emp. G. F. Trustees Glaxo Wellcome Pak Ltd. Senior Staff Pension Fund Trustees Itim Systems (Pvt) Limited Employees Provident Fund Trustees of Canteen Stores Depar tment (0517) Trustees Wah Nobel P . Ltd. Mang. Staff P . F. 22 Grand Total: 11,744
19
0.3341 100
Annual Report 2008
PATTERN OF PREFERENCE SHAREHOLDING (Non-voting)

1. 2. 3. 4. No. of Shareholders
624 901 192 199 19 14 5 4 5 1 1 1 4 1 1 2 1 1 1 1 1 1 2 1,982 5. CATEGORIES OF SHAREHOLDERS No. of Shareholders 5.1 Directors, CEO and their spouses & minor children Mr. Tariq Sayeed Saigol - Chairman / Director Mr. Sayeed Tariq Saigol - Chief Executive / Director Mr. Waleed Tariq Saigol - Director Mr. S. M. Imran - Director Mr. Zamiruddin Azar - Director 750 750 750 3,085 2,589 0.0014 0.0014 0.0014 0.0057 0.0048 Shares Held Percentage of Capital
New CUIN Registration Number Name of Company
0001107 Maple Leaf Cement Factory Limited
Pattern of holding of the shares held by the shareholders as at 30-06-2008 Size of Holding From To Total shares held
32,048 232,062 133,613 402,427 131,450 189,136 69,831 94,076 133,000 34,500 52,500 58,500 393,149 117,500 183,600 400,000 227,500 268,034 336,000 500,000 548,250 826,000 48,784,222 54,147,398
20
1 101 501 1,001 5,001 10,001 15,001 20,001 25,001 30,001 50,001 55,001 95,001 115,001 180,001 195,001 225,001 265,001 335,001 495,001 545,001 825,001 24,390,001
100 500 1,000 5,000 10,000 15,000 20,000 25,000 30,000 35,000 55,000 60,000 100,000 120,000 185,000 200,000 230,000 270,000 340,000 500,000 550,000 830,000 24,395,000
8,674
0.0160
Annual Report 2008
5.2
Associated Companies, undertakings and related parties Kohinoor Textile Mills Ltd - Provident Fund Trust Maple Leaf Cement Factory Ltd - Employees Provident Fund Trust 2 500,000 200,000 700,000 40,800 15,000 7,500 48,784,222 3,540,743 8,424 268,034 346,501 200,000 227,500 2 Grand Total: 1,982 427,500 54,147,398 0.7895 100 1.2928 0.0753 0.0277 0.0139 90.0952 6.5391 0.0156 0.4950 0.6399
5.3 5.4 5.5 5.6 5.7 5.8
NIT and ICP Banks, Development Financial Institutions, Non-banking Financial Institutions Insurance Companies Modarabas, Leasing and Mutual Funds Shareholders holding Ten Percent or more voting interest in the Company General Public Individuals Foreign Shareholders Executives Public Sector Companies and Corporations Joint Stock Companies Others Kohinoor Mills Ltd. - Staff Provident Fund Trust Trustees DGKC Emp P . F. Trust
2 2 1 2 1,923 1 1 40
5.9 5.10 5.11 5.12
21
Annual Report 2008
STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE FOR THE 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 listed companies, including this Company. 3. All the resident directors of the Company are registered as taxpayers and none of them has defaulted in 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 December 31, 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 signed by all the directors and employees of the Company. 6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of particulars of significant policies along with the dates on 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 employment of 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 director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 9. The Board arranged Orientation Course for its Directors during the year to apprise them of their duties 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 the Code 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 of the Board.
22
Annual Report 2008
13. The directors, CEO and executives do not hold any interest in the shares of the Company other than that 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 nonexecutive directors including the chairman of the committee. 16. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by the Code. The terms of reference of the 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 satisfactory rating under the Quality Control Review programme of the Institute of Chartered Accountants of Pakistan, 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 International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan. 19. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 20. We confirm that all other material principles contained in the Code have been complied with.
23
For and on behalf of the Board
(Sayeed Tariq Saigol) Chief Executive
Annual Report 2008
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance 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.
24
Hameed Chaudhri & Co. Chartered Accountants

Annual Report 2008
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 equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require 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, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion 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 Companies Ordinance, 1984; (b) in our opinion: (i) the balance sheet and profit and loss account together with the notes thereon have been drawn up 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 were in 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 equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984 in the manner so required 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 7 of that Ordinance. Hameed Chaudhri & Co. Chartered Accountants
25
Annual Report 2008
BALANCE SHEET
Note EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorised capital Issued, subscribed and paid- up capital Reserves (Accumulated loss) / unappropriated profit NON-CURRENT LIABILITIES Loans from related parties Long term loans and finances Redeemable capital Syndicated term finances Liabilities against assets subject to finance lease Lease finance advances and accrued interest thereon Long term deposits Deferred taxation Employees' compensated absences 9 10 11 12 13 14 15 16 17 7.1 7.2 8 5,000,000 4,264,108 4,644,355 (547,574) 8,360,889 35,224 241,539 8,000,000 1,000,000 957,434 2,582 154,741 16,688 10,408,208 5,000,000 4,264,108 4,457,328 271,601 8,993,037 250,000 8,576,657 268,040 679,676 2,702 897,183 13,192 10,687,450
26
CURRENT LIABILITIES Current portion of : - long term loans and finances - syndicated term finances - liabilities against assets subject to finance lease Short term finances Trade and other payables Accrued profit and interest / mark-up Dividends CONTINGENCIES AND COMMITMENTS 10 12 13 18 19 20 21 22
1,080,000 188,011 3,369,738 2,495,559 194,568 54,588 7,382,464 26,151,561
1,792,519 13,858 797,585 719,311 378,675 54,539 3,756,487 23,436,974
The annexed notes form an integral part of these financial statements.
Zamiruddin Azar Director
Annual Report 2008
AS AT JUNE 30, 2008
Note ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Loans to employees Deposits and prepayments CURRENT ASSETS Stores, spares and loose tools Stock-in-trade Trade debts Fair value derivative financial instruments Loans and advances Investments Deposits and short term prepayments Accrued profit Sales tax, customs and excise duty Due from gratuity fund trust Other receivables Taxation - net Cash and bank balances 23 24 25 26 20,081,448 15,082 6,121 54,014 20,156,665 27 28 29 8.2 30 31 32 33 34 35 36 37 38 3,325,744 433,952 743,366 365,748 82,814 734,859 54,532 763 57,769 9,768 21,780 44,907 118,894 5,994,896 19,330,866 4,578 6,373 43,200 19,385,017 2,014,580 369,709 194,587 242,226 85,544 944,669 15,373 402 37,742 8,539 1,198 14,029 123,359 4,051,957
27
26,151,561
23,436,974
Sayeed Tariq Saigol Chief Executive
Annual Report 2008
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2008
Note Sales Cost of sales Gross profit Administrative expenses Distribution cost Other operating expenses 41 42 43 39 40 7,815,829 6,491,999 1,323,830 121,236 834,849 24,838 980,923 342,907 Other operating income 44 105,656 448,563 Finance cost 45 1,812,807 (1,364,244) 37 16 44,815 (732,924) (688,109) (Loss) / profit after taxation (676,135) 3,711,081 3,401,188 309,893 67,291 69,021 18,371 154,683 155,210 43,224 198,434 338,453 (140,019) (9,477) (172,589) (182,066) 42,047
28
Loss before taxation Taxation Current Deferred
.......... Rupees .......... 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.
Annual Report 2008
CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2008
Cash flow from operating activities Loss for the year - before taxation Adjustments for non-cash charges and other items: Depreciation Amortisation Gain on disposal of operating fixed assets - net Employees' compensated absences Finance cost Provision for obsolete stores and spares Profit on bank deposits Investment income - net Dividend income Cash inflow from operating activities before working capital changes (Increase) / decrease in current assets Stores, spares and loose tools Stock-in-trade Trade debts Loans and advances Deposits and short term prepayments Sales tax, customs and excise duty Due from gratuity fund trust Other receivables Increase / (decrease) in trade and other payables Cash inflow from operating activities - before taxation Taxes paid Compensated absences paid Net cash inflow from operating activities - after taxation Cash flow from investing activities Fixed capital expenditure Sale proceeds of operating fixed assets Loans to employees Investments Deposits and prepayments Profit on bank deposits received Dividend income Investment income - net Net cash outflow from investing activities Cash flow from financing activities Proceeds from issue of ordinary shares Share premium on issue of ordinary shares - net Term finance certificates redeemed Loans from related parties Long term loans and finances Redeemable capital Syndicated term finances - net Long term deposits from stockists - net Lease finances - net Short term finances - net Finance cost paid Ordinary dividend paid Preference dividend paid Net cash inflow from financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents - at the beginning of the year Cash and cash equivalents - at the end of the year The annexed notes form an integral part of these financial statements. (1,364,244) 865,546 5,977 (725) 7,137 1,812,807 (5,046) (43,403) (12,021) 1,266,028 (1,311,164) (64,243) (548,779) 2,873 (39,159) (20,027) (1,229) (20,582) 1,776,248 (226,062) 1,039,966 (75,693) (3,641) 960,632 (1,634,403) 2,519 109 173,551 (10,814) 4,685 12,021 43,403 (1,408,929) (214,776) (10,127,637) 8,000,000 2,080,000 (120) 183,871 2,572,153 (1,996,914) (14) (52,731) 443,832 (4,465) 123,359 118,894 (140,019) 439,254 2,191 (5,905) 6,979 338,453 2,273 (1,294) (6,094) 635,838 (168,927) (168,763) (31,128) 213,626 (8,059) (3,131) (8,539) 8,254 (32,861) (199,528) 436,310 (36,380) (4,037) 395,893 (3,690,937) 8,458 841 (200,000) (27,277) 1,451 6,094 (3,901,370) 744,527 184,183 (41,650) 250,000 1,961,698 (275) 870,721 (149,575) (238,890) (128) (52,713) 3,527,898 22,421 100,938 123,359
29

Annual Report 2008
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2008
Capital Reserves Fair value reserve on measurement of available- Capital Share for-sale Redemption Hedging Premium investments Reserve Reserve
i n
Revenue Reserves Unappropriated profit / General (Accumulated Reserve Loss)
Share Capital
Total
.................(R u p e e s
t h o u s a n d ).................
Balance as at 30 June, 2006 Transfer to general reserve Nominal value of right ordinary shares issued Premium received on issue of right ordinary shares Write-off of expenses incurred on issue of right ordinary shares Fair value gain on measurement of available-for-sale investments Gain arising on derivative cross currency interest rate swap agreements - note 8.2 Profit for the year ended 30 June, 2007 Transfer to capital redemption reserve Dividend on preference shares for the year ended 30 June, 2007
3,519,581 744,527 -
1,884,153 186,131 (1,948) -
268,362 277,144
111,014 -
800,000 600,000 -
972,594 (600,000) -
7,555,704 744,527 186,131 (1,948) 277,144
4,264,108 -
2,068,336 -
545,506 (26,741)
90,246 201,260 -
242,226 242,226 -
1,400,000 -
42,047 (90,246) (52,794) 271,601 -
242,226 42,047 (52,794) 8,993,037 (26,741)
30
Balance as at 30 June, 2007 Fair value loss on measurement of available-for-sale investments Gain arising on derivative cross currency interest rate swap agreements - note 8.2 Loss for the year ended 30 June, 2008 Transfer to capital redemption reserve Dividend on preference shares for the year ended 30 June, 2008 Balance as at 30 June, 2008
4,264,108
2,068,336
518,765
90,246 291,506
123,522 365,748
1,400,000
(676,135) (90,246) (52,794)
123,522 (676,135) (52,794)
(547,574) 8,360,889
The annexed notes form an integral part of these financial statements.
Annual Report 2008
NOTES TO THE FINANCIAL STATEMENTS FOR 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, 1960 under the Companies Act, 1913 (now the Companies Ordinance, 1984) as a public company limited by shares and was listed on stock exchanges in Pakistan on 17 August, 1994. The registered office of the Company is situated at 42-Lawrance Road, Lahore, Pakistan. The Company is a subsidiary of Kohinoor 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 standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions of, or directives issued under the Companies Ordinance, 1984 shall prevail. 3. BASIS OF MEASUREMENT 3.1 Accounting convention These financial statements have been prepared under the historical cost convention, except for the 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's functional currency. All financial information presented in Pakistan Rupees has been rounded to the nearest thousand. 4. USE OF ESTIMATES AND JUDGEMENTS The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires management to make judgements, estimates and assumptions that affect the application 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 factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
31
Annual Report 2008
Judgements made by management in the application of approved accounting standards, as applicable in Pakistan, that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are as follows: a) b) c) d) e) staff retirement benefits; taxation; useful life of depreciable assets and provision for impairment there against; classification of investments; and 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 only effective for accounting periods beginning on or after 01 July, 2008 and are either not relevant to the Company's operations or are not expected to have significant impact on the Company's financial statements 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 in Associates 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.
32
6. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set-out below. 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 initial recognition, 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 rate of 10% of the basic salary to the fund.
Annual Report 2008
(b)
Defined benefit plan The Company also maintains an approved gratuity fund under which the gratuity is payable on cessation of employment, subject to a minimum qualifying period of service. The contributions are made to the fund in accordance with the actuary's recommendations based on the actuarial valuation of the fund using projected unit credit method. Actuarial gains / losses are recognised in accordance within the limits set-out by IAS 19 (Employee Benefits).
(c)
Liability for employees' compensated absences The Company accounts for the liability in respect of employees' compensated absences in the year in which these are earned. Provision to cover the obligations is made using the 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 of consideration to be paid in the future for goods and services received, whether or not billed to the Company.
6.5
Taxation (a) Current Provision for current taxation is based on taxable income at the current rates of taxation after taking into account tax credits and tax rebates available, if any, or minimum tax at the rate of 0.5% of turnover, whichever is higher. (b) Deferred Deferred tax is recognised using the balance sheet liability method in respect of all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilised. The carrying amount of all deferred tax assets is reviewed at each balance sheet date and adjusted to the appropriate extent, if it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax assets to be utilised. Deferred tax liability is based on the expected tax rates applicable at the time of reversal.
33
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 stated at cost less accumulated depreciation and impairment losses (if any). Freehold land and capital work-in-progress are stated at cost. Cost in relation to certain plant & machinery represents historical cost, exchange differences capitalised upto 30 June, 2004 and the cost of borrowings during the construction period in respect of loans and finances taken for the specific projects.
Annual Report 2008
Transactions relating to jointly owned assets with Pak American Fertilizers Limited (PAFL), as stated 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 process plant after deducting residual value. Depreciation on additions is charged from the month in which the asset is put to use and on disposals upto the month of disposal. The assets' residual values 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 whenever events 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 recoverable amount, 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 separate asset, as appropriate, only when it is probable that future economic benefits associated with the 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 to profit & loss account. 6.8 Intangible assets Expenditure incurred to acquire computer softwares are capitalised as intangible assets and stated at cost less accumulated amortisation and any identified impairment loss. Intangible assets are amortised using the straight-line method over a period of three years.
34
Amortisation on additions to intangible assets is charged from the month in which an asset is put to use and on disposal upto the month of disposal. The Company assesses at each balance sheet date whether there is any indication that intangible assets may be impaired. If such indication exists, the carrying amount of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognised in income currently. The recoverable 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 future periods 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 value of 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 shown as a liability. Depreciation on leased assets is charged applying reducing balance method at the rates used for similar owned assets, so as to depreciate the assets over their estimated useful 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 constant periodic rate of interest on the outstanding liability.

Annual Report 2008
6.10 Un-allocated capital expenditure All cost or expenditure attributable to work-in-progress are capitalised and apportioned to buildings 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 in response to the need for liquidity or changes in interest rates are classified as available-forsale. Subsequent to initial recognition at cost, these are remeasured at fair value. The Company uses latest stock exchange quotations to determine the fair value of its quoted investments whereas fair value of investments in un-quoted companies is determined by applying the appropriate valuation techniques as permissible under IAS 39 (Financial Instruments: Recognition and Measurement). At fair value through profit or loss Investments at fair value through profit and loss are those which are acquired for generating a profit from short-term fluctuation in prices. All investments are initially recognised at cost, being the fair value of the consideration given. Subsequent to initial recognition, these investments are re-measured at fair value (quoted market price). Any gain or loss from a change in the fair value 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 nil value. Items-in-transit are valued at cost comprising invoice value plus other charges incurred thereon. 6.13 Stock-in-trade Stock of raw materials, work-in-process and finished goods are valued at lower of average cost and net realisable value. Cost of work-in-process and finished goods represents direct cost of materials, labour and appropriate portion of production overheads. Net realisable value signifies the ex-factory sale price less expenses and taxes necessary to be incurred to make the sale. 6.14 Trade debts Trade debts originated by the Company are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the amount is no longer probable. Bad debts are written-off when identified. 6.15 Loans and advances
35
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 at cost. For the purposes of cash flow statement, cash equivalents are short term highly liquid instruments which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in values.
Annual Report 2008
6.17 Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 6.18 Impairment losses The carrying amount of the Company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss, 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 capitalised upto the date of commissioning of the respective assets. All other borrowing costs are taken to profit and loss account. 6.21 Foreign currency translations Transactions in foreign currencies are accounted for in Pak Rupees at the exchange rates prevailing at the date of transactions. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at rates of exchange prevailing at the balance sheet date. Foreign exchange 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 the contractual provisions of the instrument. The particular recognition methods adopted are disclosed 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 sheet when there is a legally enforceable right to set-off the recognised amounts and there is an intention 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 made at arm's length prices determined in accordance with the comparable uncontrolled price method except 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 the actual basis. 6.25 Derivative financial instruments These are initially recorded at cost on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain derivatives as cash flow hedges.
36
Annual Report 2008
The Company documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items.
The effective portion of changes the fair value of derivatives thatLimited are designated and qualify Maple in Leaf Cement Maple Factory Leaf Cement LimitedFactory as cash flow hedges are recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the profit and loss account. Amounts accumulated in equity are recognised in profit and loss account in the periods when the hedged item will effect profit or loss. However, when the forecast hedged transaction results in the recognition of a non-financial asset or a liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.
7. SHARE CAPITAL
7.1
Authorised: 400,000,000 100,000,000 (2007: 400,000,000) ordinary shares of Rs. 10 each (2007: 100,000,000) 9.75% redeemable cumulative preference shares of Rs. 10 each 4,000,000 1,000,000 5,000,000 4,000,000 1,000,000 5,000,000
500,000,000 7.2 Issued, subscribed and paid-up: Ordinary: 290,359,856 35,834,100 46,069,400 (2007: 290,359,856) ordinary shares of Rs. 10 each fully paid in cash (2007: 35,834,100) ordinary shares of Rs. 10 each issued as fully paid for consideration other than cash (2007: 46,069,400) ordinary shares of Rs. 10 each issued as fully paid bonus shares
37
2,903,599 358,341 460,694 3,722,634
2,903,599 358,341 460,694 3,722,634

372,263,356 Preference: 54,147,398 (2007: 54,147,398) 9.75% redeemable cumulative preference right shares (non-voting) of Rs. 10 each fully paid in cash
541,474 4,264,108
541,474 4,264,108
426,410,754
Annual Report 2008
7.3
The Company, during the financial year ended 30 June, 2005, had offered to the shareholders of the Company 54,147,398 preference shares - Series "A" of Rs. 10 each at par value. This preference shares right issue was made in the ratio of 30 preference shares (non-voting) for every 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 are as follows: (a) The preference shareholders are not entitled to: receive notice, attend general meetings of the Company and vote at meetings of the shareholders of the Company, except as otherwise provided by the Companies Ordinance, 1984 (the Ordinance), whereby the holders of such shares would be entitled to vote separately as a class i.e. with respect to voting entitlement of preference shareholders on matters/issues affecting substantive rights or liabilities of preference shareholders. bonus or right shares, in case the Company / Directors decide to increase the capital of the Company by issue of further ordinary shares. participate in any further profit or assets of the Company, except the right of dividend attached to the preference shares - Series "A".
(b)
38
Preference shares - Series "A" will be convertible at the option of the preference shareholders into ordinary shares of the Company at the expiry of the period of six years and thereafter of the date falling on the end of each semi annual period commencing thereafter. Conversion ratio 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 conversion price, which is higher of face value of ordinary share or 80% of the average price of the ordinary share quoted in the daily quotation of the Karachi Stock Exchange (Guarantee) Limited during the three months immediately prior to the relevant conversion date. 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. Preference shareholders - Series "A" shall be paid preferred dividend @ 9.75% per annum on cumulative basis. If the Company does not pay dividend in any year, the unpaid dividend for the relevant year will be paid in the immediately following year along with the dividend payment for such year. The Company has created a redemption reserve and appropriates the required amount each month from the profit and loss appropriation account to ensure that reserve balance at the redemption date is equal to the principal amount of preference shares.
(c)
(d)
(e)
7.4
The Company, during the preceding financial year, had issued 74,452,671 right ordinary shares of 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 shares registered in the name of the shareholders as on 24 February, 2007. These right shares rank pari passu with the existing ordinary shares of the Company in all respects. 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. Zimpex (Pvt.) Ltd. (an Associated Company) held 1,706 (2007: 1,706) ordinary shares at the year-end.
7.5
7.6
Annual Report 2008
8. RESERVES Note Capital: - capital redemption reserve - share premium reserve - hedging reserve - fair value reserve on measurement of available-for-sale investments (net of deferred taxation) 7.3 (e) 8.1 8.2 16 & 31 291,506 2,068,336 365,748 518,765 3,244,355 General reserve 8.1 Share premium reserve Opening balance Add: premium received during the preceding year on issue of 74,452,671 right ordinary shares @ Rs. 2.50 per share Less: write-off of expenses incurred during the preceding year on issue of right ordinary shares 8.2 Hedging reserve (a) 1,400,000 4,644,355 2,068,336 201,260 2,068,336 242,226 545,506 3,057,328 1,400,000 4,457,328 1,884,153
186,131
2,068,336
(1,948) 2,068,336
39
The Company, during the preceding financial year, had entered into a derivative cross currency interest rate swap agreement with Standard Chartered Bank (Pakistan) Limited to hedge for the possible adverse interest rate movements on 50% of National Bank of Pakistan (NBP) led consortium financing of Rs. 4.800 billion (i.e. Rs. 2.400 billion). As per the swap agreement, the interest liability has been converted into U.S. Dollars and the Company is liable to pay interest based on 6-months U.S.$ LIBOR + 1%. The NBP led consortium financing has been reprofiled during the current financial year as fully detailed in note 11. The Company, during the preceding financial year, had entered into a derivative cross currency interest rate swap agreement with Standard Chartered Bank (Pakistan) Limited to 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 interest liability was converted into Euros and the Company was liable to pay interest based on 6-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 liable to pay interest based on 6-months U.S.$LIBOR+ 0.98%. The ABL led consortium financing has been reprofiled during the current financial year as fully detailed in note 11.
(b)
Annual Report 2008
(c)
The Company, during the current financial year, has entered into further derivative cross currency interest rate swap agreements with Standard Chartered Bank (Pakistan) Limited to hedge for the possible adverse interest rate movements on 98% of Allied Bank Limited led consortium financing of Rs. 1,000 million (i.e. Rs. 980 million). As per the swap agreement, the interest liability has been converted into U.S. Dollars and the Company is liable to pay interest based on 6-months U.S.$LIBOR+ 0.85%. The ABL led consortium financing has been reprofiled during the current financial year as fully detailed in note 11. As the aforementioned hedging relationships are effective and meet the criteria of cash flow hedge, these arrangements qualify for hedge accounting as specified in IAS 39 (Financial Instruments: Recognition and Measurement). The derivative cross currency interest rate swaps that are outstanding as at 30 June, 2008 have been 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.
(d)
(e)
9. LOANS FROM RELATED PARTIES - Secured
Loans from directors Loan from Zimpex Pakistan (Pvt.) Ltd. 9.1
9.1 9.2
35,224 35,224
160,000 90,000 250,000
40
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. These loans carry mark-up at the rate of 1-month KIBOR + 1.5%; the effective mark-up rate charged during the year ranged between 10.89% to 14.06% per annum. These loans are secured against demand promissory notes and are repayable in lump sum after five years or earlier with mutual consent of the parties. During the current financial year, loan amounting Rs. 80 million from one of the directors was fully repaid whereas the other loan to the tune of Rs. 44.776 million was repaid. 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 fully repaid during the current financial year.
9.2
10. LONG TERM LOANS AND FINANCES - Secured Note MCB Bank Limited (MCB) Habib Bank Limited (HBL) MCB Faysal Bank Limited (FBL) The Bank of Punjab (BoP) Askari Commercial Bank Limited (ACB) First Women Bank Limited (FWB)
10.1 10.1 10.2 10.2 10.2 10.2 10.2 10.3 10.4 10.4 10.4
266,838 266,838 533,676 100,000 175,000 40,000 20,000 14,000 349,000 312,500 200,000 120,000 104,000 424,000
National Bank of Pakistan (NBP) Standard Chartered Bank (Pakistan) Limited (SCB) NBP PICIC Commercial Bank Limited (PCBL) Balance carried forward
Annual Report 2008
Note Balance brought forward

Maple Leaf Cement Maple Factory Leaf Cement LimitedFactory Limited
424,000 475,000 150,000 115,000 100,000 75,000 50,000 35,000 1,000,000 960,000 960,000 850,000 705,000 700,000 475,000 150,000 4,800,000 270,000 250,000 200,000 100,000 50,000 50,000 30,000 950,000 1,350,000 300,000 100,000 100,000 100,000 50,000 2,000,000 10,369,176 1,792,519 8,576,657
Allied Bank Limited (ABL) MCB The Hongkong & Shanghai Banking Corporation Limited (HSBC) BoP Soneri Bank Limited (SBL) Pak Libya Holding Co. (Pvt.) Limited (PLHC) FWB
10.5 10.5
10.5 10.5 10.5 10.5 10.5
NBP HBL ABL FBL PCBL BoP Saudi Pak Industrial & Agriculture Investment Company (Pvt.) Limited (Saudi Pak)
10.6 10.6 10.6 10.6 10.6 10.6 10.6
ABL MCB Saudi Pak Commercial Bank Limited (SPCB) PLHC SBL Saudi Pak FWB
10.7 10.7 10.7 10.7 10.7 10.7 10.7
41
ABL PLHC Saudi Pak KASB Bank Limited (KASB) Pak Oman Investment Company Limited (Pak Oman) The Bank of Khyber (BoK) HBL Less: current portion grouped under current liabilities
10.9 10.9 10.9 10.9 10.9 10.9 10.11
241,539 241,539 241,539
Annual Report 2008
10.1
These loans were obtained from a consortium comprising of MCB and HBL and originally were repayable 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. These loans were obtained from a consortium comprising of MCB, FBL, BoP , ACBL and FWB in two tranches. First tranche of Rs. 550 million was disbursed during December, 2003 by FBL and MCB. Originally these loans were repayable in fourteen half-yearly equal instalments commenced from June, 2004. Second and final tranche was disbursed by BoP , ACBL and FWB in April, 2004. These loans, during the current financial year, carried mark-up at the rates ranging from 11.65% to 12.46% per annum. Originally these loans were repayable in ten half-yearly equal instalments commenced from October, 2004.
10.2
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 from October, 2004. 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 grey cement to 500 tpd dry process line of white cement. Originally these loans were repayable in 20 equal quarterly instalments commenced from September, 2006 and during the current financial year carried mark-up at the rate of 12.27% per annum. The Company, during the financial year ended 30 June, 2006, had raised a syndicated term finance facility of Rs. 1.000 billion for financing its capital expenditure requirements. The Syndicate comprised of ABL, MCB, HSBC, BoP , SBL, PLHC and FWB. Originally this finance facility was repayable in 9 equal half-yearly instalments commenced from 30 November, 2007 and during the current financial year carried mark-up at the rate of 12.13% per annum. This finance facility of Rs. 4.800 billion was available from a Syndicate of commercial banks and development finance institution (i.e. NBP , HBL, ABL, FBL, PCBL, BoP and Saudi Pak) for financing 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 the current financial year carried mark-up at the rate of 12% per annum. ABL, during the preceding financial year, had converted its finance facility of Rs. 950 million into a syndicated term finance facility of the equivalent amount. The facility was utilised to finance the capital expenditure requirements i.e. conversion from wet process plant of 650 tpd clinker capacity of grey cement to 500 tpd clinker capacity of dry process plant of white cement. 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 from October, 2008 and during the current financial year carried mark-up at the rate 12.46% per annum. These loans, as detailed in notes 10.1 to 10.7 above, were secured by first pari passu charge over present and future fixed assets of the Company, demand promissory notes and personal guarantee of some of the directors. The Company, during the preceding financial year, had raised this syndicated term finance facility of Rs. 2.000 billion for financing its capital expenditure requirements of grey cement project. 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 from March, 2009 and during the current financial year carried mark-up at the rate of 12.51% per annum. This finance facility was secured against a ranking fixed charge by way of hypothecation over all of the Company's present and future fixed assets (excluding land and buildings), ranking mortgage charge over Company's land and buildings by deposit of title deeds and personal guarantees of two of the Company's directors.
10.4
10.5
42
10.6
10.7
10.8
10.9
Annual Report 2008
10.10 The Company, during the current financial year to reprofile its balance sheet and replace conventional debts with Shariah Compliant Financing, has repaid premature long term loans and finances as detailed in note 10.1 to 10.7 and 10.9 through the proceeds received from Redeemable Capital and Syndicated Term Finances. 10.11 The Company, during the current financial year, has arranged a term finance facility of Rs. 1.160 billion (equivalent to Japanese Yens 1.974 billion approximately) for financing the Waste Heat Recovery Plant from HBL. The tenor of this term finance facility is six years including a grace period of two years. The principal balance of this term finance facility will be repaid in nine equal semi-annual instalments. This finance facility carries mark-up at the rate of 6months KIBOR plus 1.5% per annum payable on quarterly basis. The finance facility is secured against first pari passu hypothecation charge of Rs. 1.600 billion over plant & machinery, first pari passu equitable mortgage charge over land and buildings of the Company and personal guarantees of some of the Company's directors. 11. REDEEMABLE CAPITAL - Secured Islamic Sukuk Certificates under Musharakah Agreement The salient terms and conditions of secured Sukuk issue of Rs. 8.000 billion made by the Company during the current financial year are detailed below: - Lead Arranger - Shariah Advisor - Purpose - Investors - Tenor - Rental Benchmark - Base Rate Allied Bank Limited (ABL) Meezan Bank Limited Balance sheet reprofiling and replacement of conventional debts with Shariah Compliant Financing. Banks, DFIs, NBFIs and any other persons. Six years with two years grace period. Base rate plus 170 bps. Base rate is average 6 - months KIBOR prevailing on the base rate setting date. The base rate has been set for the first time on the issue date and then on immediately preceding date before the start of each six months periods. Musharakah Investment share of the Investors will be repurchased by the Company in eight equal semiannual instalments. The first of such Musharakah Investment Repurchase will be due at the end of 30th month from the date of Contribution. Rentals will be payable semi-annually in arrears calculated on a 365 days year basis on the outstanding Musharakah Investment of the Investors. The first such rental payment will fall due six months from the date of first Contribution and subsequently every six months thereafter. The Sukuk Certificates have been issued under section 120 (Issue of securities and redeemable capital not based on interest) of the Companies Ordinance, 1984. The Sukuk Certificates have been registered and induced into the Central Depository System of the Central Depository Company of Pakistan Limited (CDC).
43
- Musharakah Investment Repurchase
- Rental Payments
- Form & Delivery of Sukuk
Annual Report 2008
- Security - Trustee / Investors' Agent - Transaction Structure
First pari passu charge over all present and future fixed assets of the Company with 25% margin. ABL The Facility Structure as approved by Meezan Bank Limited, Shariah Advisor of the Issue, is as follows: a) Investors (as Investor Co-owners) and the Company (as Managing Co-owner) have entered into a Musharakah Agreement as Par tners for the purpose of acquiring Musharakah Assets from the Company (acting as Seller) and jointly own these Musharakah Assets. Investors have appointed ABL to act as Investors' Agent for the Sukuk Issue. Investor Co-owners have contributed their share in the Musharakah in cash that has been utilised by Managing Co-owner for acquiring Musharakah Assets. Managing Co-owner has contributed its musharakah share in kind. Upon acquisition of Musharakah Assets, Investors' Agent and Managing Co-owner have executed Assets Purchase Agreement with the Company (acting as Seller). The Company (as Issuer) has issued Sukuk Certificates to Investors that represent latter's undivided share in the Musharakah Assets. The Company will purchase Musharakah share of Investors on semi-annual basis after expiry of two years from the first Contribution date.
b) c)
d)
44
e)
f)
- Early Repurchase Option
The Company has an option for early Repurchase (Call Option) of partial or full Musharakah Investment from Investors. Musharakah Investment Repurchase will be allowed on Rental Payment dates falling due after expiry of twelve months from the date of Last Contribution and will be made through thirty days prior notice to the Trustee, in a minimum of Rs. 100 million or multiples thereof. Early Repurchase will be applicable for upcoming instalment as per the Musharakah Investment Repurchase schedule. In case of Sukuks induced into CDC, transfer will be in accordance with the Central Depository Act, 1997 and other applicable CDC regulations.
- Sell Down / Transferability
Annual Report 2008
Banks / Financial Institutions / Funds / Others' Sukuk Certificates holdings as at 30 June, 2008 were as follows: 2008 Number of Sukuk Maple Leaf Cement Maple Factory Leaf Limited Cement Factory Limited Certificates Face value of Consolidated Sukuk Certificates
(Rs. in thousand)
1,600,000
8,000,000
Annual Report 2008
Allied Bank Limited Faysal Bank Limited MCB Bank Limited Dawood Money Market Fund Meezan Bank Limited IGI Investment Bank Limited Invest & Finance Securities Limited CDC - Trustee United Growth & Income Fund CDC -Trustee Alfalah GHP Value Fund Saudi Pak Investment Company Limited Asian Stock Fund Limited Safeway Mutual Fund Limited CDC - Trustee Askari Income Fund CDC - Trustee AMZ Plus Income Fund CDC - Trustee NAFA Cash Fund CDC - Trustee KASB Liquid Fund CDC - Trustee Meezan Islamic Income Fund CDC - Trustee United Composite Islamic Fund CDC - Trustee NAFA Multi Asset Fund CDC - Trustee HBL Income Fund CDC - Trustee MCB Dynamic Cash Fund CDC - Trustee AKD Income Fund CDC - Trustee IGI Income Fund CDC - Trustee Alfalah GHP Income Multiplier Fund Dawood Islamic Bank Limited BMA Chundrigar Road Savings Fund CDC - Trustee Meezan Tahaffuz Pension Fund CDC - Trustee Dawood Islamic Fund CDC - Trustee Alfalah GHP Islamic Fund CDC - Trustee POBOP Advantage Plus Fund CDC - Trustee NAFA Islamic Fund CDC - Trustee NAFA Islamic Multi Asset Fund Pak Brunei Investment Company Limited CDC - Trustee United Islamic Income Fund MCFSL - Trustee JS Income Fund CDC - Trustee KASB Islamic Income Fund
638,000 60,000 75,000 37,000 30,000 6,000 5,000 76,000 10,000 30,000 2,000 2,000 35,000 45,000 80,000 43,000 64,000 10,000 3,000 7,000 71,000 12,000 6,000 20,000 10,000 24,000 1,000 7,000 5,000 12,000 20,000 10,000 25,000 25,000 80,000 14,000
3,190,000 300,000 375,000 185,000 150,000 30,000 25,000 380,000 50,000 150,000 10,000 10,000 175,000 225,000 400,000 215,000 320,000 50,000 15,000 35,000 355,000 60,000 30,000 100,000 50,000 120,000 5,000 35,000 25,000 60,000 100,000 50,000 125,000 125,000 400,000 70,000
45
12. SYNDICATED TERM FINANCES - Secured
Faysal Bank Ltd Pak Libya Holding Co. (Pvt.) Ltd. MCB Bank Ltd. Askari Bank Ltd. Arif Habib Bank Limited Pak Brunei Investment Co. Ltd. Soneri Bank Ltd. The Hongkong & Shanghai Banking Corporation Ltd. The Bank of Khyber Saudi Pak Industrial & Agriculture Investment Co. (Pvt.) Ltd. The Bank of Punjab First Women Bank Ltd. Atlas Bank Ltd.
600,000 400,000 250,000 175,000 175,000 150,000 150,000 150,000 100,000 100,000 100,000 100,000 50,000 2,500,000 420,000 2,080,000 1,080,000 1,000,000
Less: repayments made during the year Less: current portion grouped under current liabilities
12.1 The salient terms of this syndicated term finance facility obtained during the current financial year to prepay the outstanding long term debts of the Company are as follows:
46
- Lead Arranger & Agent Bank - Lenders - Facility Amount - Tenor - Mark-up rate
Allied Bank Ltd. (ABL) Banks and DFIs Rs. 2.000 billion with a green shoe option of Rs. 500 million. Upto two and a half years. Base rate plus 150 bps per annum with no floor and cap with quarterly reset; effective mark-up rate during the current financial year ranged between 11.25% to 14.57% per annum. Base rate is 3-months KIBOR for the relevant tenor. Principal is repayable in five equal semi-annual instalments commencing May, 2008. Partial or full prepayment of the Facility is available through-out the tenor of the Facility, on instalment payment dates after giving a 30 days prior notice to the Agent Bank, in a minimum of Rs.100 million or multiples thereof. Prepayments will be applicable for upcoming instalment as per the repayment schedule. First pari passu charge over all present and future fixed assets of the Company with 25% margin. The charge has been created in favour of the Agent Bank for the benefit of Syndicate.
- Base Rate - Principal Repayment - Prepayment Option

- Security
Annual Report 2008
13. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE - Secured

Particulars Upto one year From one to five years 2008 Upto one year From one to five years 2007
..............Rupees in thousand.............. Minimum lease payments Less: finance cost allocated to future periods 269,813 1,160,200 1,430,013 81,802 188,011 Less: security deposits adjustable on expiry of lease term Present value of minimum ease payments Less: current portion grouped under current liabilities 188,011 168,036 249,838 49,272 35,414 13,858 13,858 400,455 97,685 302,770 34,730 268,040 449,727 133,099 316,628 34,730 281,898 13,858 268,040
992,164 1,180,175 34,730 34,730
957,434 1,145,445 188,011 957,434
13.1 The Company, during the financial year ended 30 June, 2006, had entered into a lease agreement with First National Bank Modaraba (FNBM) to acquire two units of imported Volvo Wheel Loaders. The liabilities under the lease agreements are payable in 36 equal monthly instalments commenced from August, 2006 and are subject to finance charge at base rate plus a spread of 250 bps; base rate is defined as 6-months KIBOR prevailing at the base rate setting date. The effective interest rate charged during the year was 12.47% per annum. The Company intends to exercise its option to purchase the leased assets upon completion of the lease term. This lease finance facility is secured against title of the leased assets in the name of FNBM and a demand promissory note in favour of FNBM for the amount of the lease rentals payable during the lease term. 13.2 The Company, during the preceding financial year, had entered into another lease agreement having lease amount of Rs. 28.740 million with FNBM to acquire one Volvo Dump Truck. The liabilities under this agreement are payable in 36 equal monthly instalments commenced from September, 2006. The effective interest rate charged during the year was 12.76% per annum. The Company intends to exercise its option to purchase the leased asset upon completion of the lease term. The lease finance facility is secured against a demand promissory note in favour of FNBM for the amount of lease rentals payable during the lease term. 13.3 The Company, on 17 February, 2007, had entered into a lease agreement amounting Rs. 280 million with Meezan Bank Ltd. (MBL) to acquire eight units of Preheater Cyclones. The facility tenor is six years with a grace period of 18 months on principal component. Rentals, in respect of principal component, are payable in 9 equal half-yearly instalments commencing from 24th month from the date of draw down i.e. 23 November, 2006. Rentals, in respect of profit component, are payable in arrears on half-yearly basis commencing after 6 months from the date of draw down. The facility carries profit at the rate of 6-months KIBOR + 225 bps with a floor of 2.25% and cap of 28%. The effective profit rates, during the current financial year, ranged between 12.35% to 12.75% per annum. The facility is secured against exclusive ownership of leased assets in the name of MBL and personal guarantees of two of the Company's directors.
47
Annual Report 2008
14. LEASE FINANCE ADVANCES AND ACCRUED INTEREST THEREON - Secured
Islamic Corporation for Development of the Private Sector, Jeddah (ICD - a Subsidiary of Islamic Development Bank)Maple Balance as at Maple Leaf Cement Factory Leaf Cement LimitedFactory Limited 30 June, (2007 balance included accrued interest aggregating Rs. 35.761 million) -
679,676
14.1 The Company, during the financial year ended 30 June, 2006, had entered into a forward lease agreement with ICD to finance power generation equipment of the expansion project of 6,700 tpd. The lease agreement is for a period of 8 years including a grace period of 2 years. The first rentals will be due on 01 December, 2008 whereas the final lease rentals will be due on 04 May, 2014. The lease finance facility carries interest at the rate of 6 months U.S.$ LIBOR plus a spread of 2.5% per annum and is secured against the first exclusive charge on power generation plant. ICD, against the total commitment of U.S.$ 14,500,000 during the current financial year, has disbursed final instalment amounting U.S.$ 708,931. The total principal amount outstanding as at 30 June, 2008 aggregated U.S.$ 11,334,597 (2007:U.S.$ 10,625,666) whereas accrued interest thereon aggregated U.S.$ 1,465,317 (2007:U.S.$ 587,305). ICD has merged the interest balance of U.S.$1,465,317 accrued upto 15 June, 2008 into principal balance of lease finances and the adjusted principal balance of lease finances as per ICD year-end balance confirmation certificate was U.S.$12,799,914. After the disbursement of final instalment of lease finance facility by ICD during the current financial year , these finances have been grouped under liabilities against assets subject to finance lease (note 13).
48
15. LONG TERM DEPOSITS These represent interest-free security deposits from stockists and are repayable on cancellation or withdrawal of the dealerships. These are being utilised by the Company in accordance with the terms of dealership agreements. 16. DEFERRED TAXATION
Deferred taxation liability comprises of temporary differences arising due to: Credit balances arising in respect of: - accelerated tax depreciation allowances - fair value surplus on available-for-sale investments Debit balances arising in respect of: - unused tax losses - lease finances - employees' compensated absences - minimum tax recoverable against normal tax charge in future years 2,972,062 184,645 3,156,707
1,404,800 194,163 1,598,963 (580,043) (47,167) (4,617) (69,953) (701,780) 897,183
(2,751,166) (132,131) (4,536) (114,133) (3,001,966) 154,741
Annual Report 2008
Maple Leaf Cement Maple Factory Leaf Cement LimitedFactory Limited 17. EMPLOYEES' COMPENSATED ABSENCES
These represent amounts payable against un-availed leaves of employees. 18. SHORT TERM FINANCES Note Cash and running finances - secured Temporary bank overdrafts - unsecured 18.1 18.2 3,220,388 149,350 3,369,738 797,421 164 797,585
18.1 Short term finance facilities available from various commercial banks under mark-up arrangements aggregate Rs. 3.750 billion (2007: Rs. 2.305 billion). These facilities, during the year, carried mark-up at the rates ranging from 10.26% to 14.06% (2007: 9.87% to 12.42%) per annum; payable on quarterly basis. Facilities available for opening letters of credit / guarantee aggregate Rs. 2.357 billion (2007: Rs. 2.305 billion) of which the amount aggregating Rs. 0.293 billion (2007: Rs. 1.663 billion) remained unutilised at the year-end. The aggregate facilities are secured against charge on all present and future current assets of the Company, personal guarantees of some of the directors, lien over import documents and title of ownership of goods imported under letters of credit. These facilities are expiring on various dates by 31 March, 2009. 18.2 These have arisen due to issuance of cheques for amounts in excess of the balance in bank accounts. 19. TRADE AND OTHER PAYABLES Note Creditors Bills payable - secured Due to Kohinoor Textile Mills Ltd. (the holding company) Accrued liabilities Advances from customers Security deposits - interest free, repayable on demand Contractors' retention money Royalty and excise duty payable Provident fund payable Other taxes payable Sales tax payable Excise duty payable Other payables 19.1 431,718 1,505,980 458 213,192 110,513 33,193 22,962 7,136 1,565 2,726 157,404 8,712 2,495,559 19.1 These are secured against the securities as detailed in note 18.1. 19.2 The distributors and contractors give the Company a right to utilise these deposits in the normal course of business. 193,179 265,869 700 109,139 14,291 32,159 26,677 4,251 1,837 3,260 58,392 9,557 719,311
49
19.2
Annual Report 2008
19.3 Workers' (profit) participation fund (the Fund)
Balance as at 01 July, Less: - deposited with the Government Treasury - paid to the trustees of the Fund Balance as at 30 June, 20. ACCRUED PROFIT AND INTEREST / MARK-UP Mark-up / interest accrued on: - loans from related parties - long term loans and finances - redeemable capital - syndicated term finances - liabilities against assets subject to finance lease - short term finances 21. DIVIDENDS Unclaimed ordinary dividend Preference dividend 22. CONTINGENCIES AND COMMITMENTS Contingencies
86,043 83,055 2,988 86,043 -
1,148 1,724 91,134 24,563 13,576 62,423 194,568 1,594 52,994 54,588
3,308 342,021 33,346 378,675 1,608 52,931 54,539
50
22.1 The Company has filed writ petitions before the Lahore High Court (LHC) against the legality of judgment passed by the Customs, Excise & Sales Tax Appellate Tribunal whereby the Company was held liable on account of wrongful adjustment of input sales tax on raw materials and electricity bills; the amount involved pending adjudication before the LHC aggregate Rs. 13.252 million. 22.2 The Company has filed an appeal before the Customs, Central Excise and Sales Tax Appellate Tribunal, Karachi against the order of the Deputy Collector Customs whereby the refund claim of the Company amounting to Rs. 12.350 million was rejected and the Company was held liable to pay an amount of Rs. 37.051 million by way of 10% customs duty allegedly leviable in terms of SRO 584(I) / 95 and 585(I) / 95 dated 01 July, 1995. The impugned demand was raised by the Department on the alleged ground that the Company was not entitled to exemption from payment of customs duty and sales tax in terms of SRO 279(I) / 94 dated 02 April, 1994. The LHC, upon the Company's appeal, vide its order dated 06 November, 2001 has decided the matter in favour of the Company; however, the Collector of Customs has preferred a petition before the Supreme Court of Pakistan, which is pending adjudication. 22.3 The Additional Collector of Sales Tax, Faisalabad had preferred a petition before the Supreme Court of Pakistan against the judgment dated 07 December, 1999 delivered by the LHC in favour of the Company in a Customs Appeal. The Company, through the said appeal, had challenged the finding given by the Tribunal that the Company had wrongly adjusted input tax amounting Rs.88.490 million for the period from July, 1996 to June, 1997 involved in import of cementplant for the purpose of Phase-II of the Company against the supply of cement manufactured by Phase-I of the Company. Levy of penalty of Rs. 10 million along with additional tax as well
Annual Report 2008
as rejection of the refund claim of Rs. 2.245 million were also challenged. The Supreme Court of Pakistan, vide order dated 07 January, 2000, had directed that status quo be maintained. The Company has filed an application with the Federal Board of Revenue (FBR) under section 47A of the Sales Tax Act, 1990 for appointment of an Alternate Dispute Resolution Committee (ADRC), which decided the case in favour of the Company. The Department has issued the refund cheque amounting Rs. 19 million on 31 January, 2006 and is also in the process of Leaf Cement Factory Maple Limited Leaf Cement Factory Limited withdrawing its appeal filed Maple before the Supreme Court of Pakistan. 22.4 The FBR has filed an appeal before the Supreme Court of Pakistan against the judgment delivered by the LHC in favour of the Company in a writ petition. The Company, through the said writ petition, had challenged the demand raised by the FBR for payment of duties and taxes on the plant & machinery imported by the Company pursuant to the exemption granted in terms of SRO 484 (I) / 92 dated 14 May, 1992. The FBR, however, alleged that the said plant & machinery could be locally manufactured and duties and taxes were therefore not exempt. A total demand of Rs. 1.387 billion was raised by the FBR out of which an amount of Rs. 269.328 million was deposited by the Company as undisputed liability. As regards the balance disputed amount, the matter was decided in favour of the Company as per the judgment of the LHC. After preferring the appeal before the Supreme Court of Pakistan, the matter has been referred to ADRC, Islamabad. No provision has been made in these financial statements in respect of the aforementioned disputed demands aggregating Rs. 1.118 billion as the management is confident that the ultimate outcome of this case will be in favour of the Company. 22.5 The Company is negotiating with the Customs Authorities for refund of excess customs duty amounting Rs. 7.347 million paid on the import of two units of Volvo dump trucks. The Customs, Central Excise & Sales Tax Appellate Tribunal, Karachi has allowed the Company's appeal filed in this regard. 22.6 Claims Claims against the Company not acknowledged as debt aggregated Rs. 3.750 million as at 30 June, 2008 (2007: Rs. 3.750 million). 22.7 Commitments (i) Guarantees issued by various commercial banks, in respect of financial and operational obligations of the Company, to various institutions and corporate bodies aggregate Rs. 434.370 million as at 30 June, 2008 (2007: Rs. 261.061 million). Commitments against capital expenditure as at 30 June, 2008 were for Rs. 168.949 million (2007: Rs. 268.200 million).
51
(ii)
(iii) Commitments against irrevocable letters of credit outstanding as at 30 June were for: Note - capital expenditure - others 23. PROPERTY, PLANT AND EQUIPMENT Operating fixed assets Capital work-in-progress - at cost Stores and spares held for capital expenditure 23.1 23.7 19,776,950 304,498 20,081,448 7,711,462 11,541,516 77,888 19,330,866 1,026.164 603.940 1,630.104 257.730 122.841
380.571
Annual Report 2008
23.1 Operating fixed assets

As at 30 June, 2007
COST Additions / (disposals) / Transfers As at 30 June, 2008 Upto 30 June, 2007
PARTICULARS
.......................(R u p e e s
Rate %
i n
t h o u s a n d ).......................
DEPRECIATION For the year / (on As at disposals) / 30 June, on transfers 2008
Book value as at 30 June, 2008
OWNED Land - freehold Buildings on freehold land Roads, bridges and railway sidings Plant and machinery Furniture, fixtures and equipment Quarry equipment Vehicles Share of joint assets - note 23.5
53,710 1,255,553 75,466 9,836,089 124,540 131,524 80,741 4,120 11,561,743
2,678,215 12,148 10,206,455 17,397 (1,206) (25) 11,813 6,546 (2,490)
53,710 3,933,768 87,614 20,042,544 140,706 143,337 84,797
5-10 5-10 5-20 10-30 20 20 10
449,818 47,713 4,126,527 59,491 115,929 42,320 3,124 4,844,922
125,214 3,572 657,655 15,310 (163) (4) 4,633 8,324 (1,739) 102 814,810 (1,902) (4) 43,024 7,712 50,736 865,546 (1,902) (4)
575,032 51,285 4,784,182 74,634 120,562 48,905 3,226 5,657,826
53,710 3,358,736 36,329 15,258,362 66,072 22,775 35,892 1,169 18,833,045
275 4,395 12,932,849 24,490,871 (3,696) (25) 959,677 47,315 1,006,992 12,932,849 25,497,863 (3,696) (25)
COST
LEASED Plant and machinery Quarry equipment
959,677 47,315 1,006,992 12,568,735
20 20
3,599 8,752 12,351 4,857,273
46,623 16,464 63,087 5,720,913
913,054 30,851 943,905 19,776,950
52
PARTICULARS
.......................(R u p e e s
As at 30 June, 2006
Additions / (disposals) / Transfers
As at 30 June, 2007
Rate %
i n
t h o u s a n d ).......................
Upto 30 June, 2006
DEPRECIATION For the year / (on As at disposals) / 30 June, on transfers 2007
Book value as at 30 June, 2007
OWNED Land - freehold Buildings on freehold land Roads, bridges and railway sidings Plant and machinery Furniture, fixtures and equipment Quarry equipment Vehicles Share of joint assets - note 23.5
53,710 1,114,363 75,466 9,740,589 90,231 136,426 81,935 3,842 11,296,562
141,190 95,500 36,841 (2,040) (492) (4,902) 5,563 (6,757)
53,710 1,255,553 75,466 9,836,089 124,540 131,524 80,741
5-10 5-10 5-20 10-30 20 20 10
407,565 44,693 3,769,149 48,021 116,891 39,569 3,025 4,428,913
42,253 3,020 357,378 12,139 (612) (57) 3,900 (4,862) 8,423 (5,672) 99 427,212 (11,146) (57) 3,599 8,443 12,042 439,254 (11,146) (57)
449,818 47,713 4,126,527 59,491 115,929 42,320 3,124 4,844,922
53,710 805,735 27,753 5,709,562 65,049 15,595 38,421 996 6,716,821
278 4,120 279,372 11,561,743 (13,699) (492) 959,677 959,677 28,740 47,315 988,417 1,006,992 1,267,789 12,568,735 (13,699) (492)
LEASED Plant and machinery Quarry equipment
18,575 18,575 11,315,137
20 20
309 309 4,429,222
3,599 8,752 12,351 4,857,273
956,078 38,563 994,641 7,711,462
Annual Report 2008
23.2 The Company has given on lease, land measuring 6 Kanals and 18 Marlas to Sui Northern Gas Pipelines Ltd. in the year 1991 at an annual rent of Rs. 2,500. 23.3 Additions to plant & machinery include borrowing cost aggregating Rs. 1,740.316 million (2007: Rs. 38.234 million); the borrowing cost rates have been disclosed in notes 9, 10, 13 and 18.1.
23.4 Depreciation charge for the year has been allocated as follows:
- cost of goods sold - administrative expenses - other manufacturing expenses - unallocated capital expenditure - trial run operations
842,121 11,056 103 12,266 865,546
415,841 3,182 99 14,273 5,859 439,254
23.5 Ownership of the housing colony assets included in the operating fixed assets is shared by the Company jointly with Pak American Fertilizer Limited in the ratio of 101:245 since the time when both the companies were managed by Pakistan Industrial Development Corporation (PIDC). These assets are in possession of the housing colony establishment for mutual benefits. The cost of these assets at the year-end were as follows: 2008 (Rupees in thousand) 2,646 2,389 202 202 16 16 271 271 1,096 1,078 164 164 4,395 23.6 Disposal of operating fixed assets
Accumulated depreciation Book Value Sale proceeds / insurance claim Sold to / insurance claim received from:
2007
- buildings - roads and bridge - air strip - plant and machinery - furniture, fixtures and equipment - vehicles
53
4,120
Particulars
Cost
Gain
..............Rupees in thousand..............
Furniture, fixtures and equipment Diesel generator set 63 KVA Auto mains failure Sound attenuated canopy Items of net book value below Rs. 50,000 each Vehicles
793 104 75 234 1,206
69 9 6 79 163 406 228
724 95 69 155 1,043 360 340
793 104 75 137 1,109 418 361
69 9 6 (18) 66 58 21
Kohinoor Textile Mills Ltd. (the Holding Company) -do-doVarious parties.
Suzuki Cultus Items of net book value below Rs. 50,000 each
568
Muhammad Ashraf Bodla, Ex - employee. Various parties.
1,156 2,490 3,696
1,105 1,739 1,902
51 751 1,794
631 1,410 2,519
580 659 725
Annual Report 2008
Suzuki Baleno
766
Mr. Wasif Mahmood, Ex - employee.
23.7 Capital work-in-progress
Maple Leaf Cement Maple Factory Leaf Cement LimitedFactory Limited Civil works 3,455 Plant & machinery 29,923 Mechanical works Electrical works Un-allocated capital expenditure 23.8 3,367 Advances to suppliers against: - purchase of land 2,000 - civil works 2,307 - plant and machinery 261,875 - furniture, fixtures & equipment - electrical works - vehicles 1,571
59,488 7,995,748 1,320,122 480,318 1,569,449 636 111,432 332 2,454 1,537 11,541,516
304,498 23.8 Un-allocated capital expenditure - net Opening balance Add: expenditure incurred during the year - salaries and wages - travelling - vehicles' running and maintenance - training - finance cost - printing & stationery - postage, telegram and telephone - legal and professional - consultancy - depreciation - rent, rates and taxes - repair and maintenance - electricity and power - loss on trial run operations - others 1,569,449 425 358 1,724 225 635 265,444 1,838,260 Less: allocated during the year to: - buildings on freehold land - plant and machinery 381,237 1,453,656 1,834,893 3,367
492,073 50,077 2,825 3,595 21 630,925 2,164 1,723 27,346 5,520 14,274 29 688 13,285 351,576 13,070 1,609,191 39,742 39,742 1,569,449
54
23.9

Annual Report 2008
23.9 Trial run operations
01 July, 2007 to 31 Oct., 2007
01 March, 2007 to 30 June, 2007
Gross sales - local - export Less: - excise duty - sales tax - commission Sales - net Cost of sales Raw materials consumed Packing materials consumed Fuel and power Stores and spares consumed Salaries, wages and amenities Rent, rates and taxes Insurance Repair and maintenance Depreciation Other expenses Opening work-in-process Work-in-process transferred to normal operations during trial run operations for further processing Closing work-in-process A
. . . . . (Rupees in thousand) . . . . .
Maple Leaf Cement Factory Maple Limited Leaf Cement Factory Limited
781,232 342,139
72,769 50,255 123,024 18,468 9,739 233 28,440 94,584 34,940 905 396,464 15,612 23,295 934 1,317 5,859 4,925 484,251 (198,618) (141,702) (340,320) (26,313) (29,799) (56,112) 87,819 6,765
1,123,371 179,389 101,223 13,638 294,250 829,121 61,320 63,851 723,782 9,862 24,648 1,185 1,522 3,086 12,266 7,063 908,585 141,702 (331,228) (189,526) Opening finished goods Finished goods transferred to normal operations during trial run operations for further processing Closing finished goods B Trial run gross profit (A - B) Less: - Administrative expenses - Distribution cost - Finance cost 29,799 (186,630) (156,831) 562,228 266,893 42,577 124,214 365,601 532,392 (265,499) Other income Trial run net loss 55 (265,444)
55
13,949 358,605 372,554 (365,789) 14,213 (351,576)
Annual Report 2008
23.10 Operations of the expansion project for new production line of 6,700 tpd clinker capacity of grey cement plant (the project) for the period from 01 March, 2007 to 31 October, 2007 have been treated as trial run operations due to intermittent plant and machinery shut downs. Trial run net loss aggregating Rs. 617.020 million incurred upto 31 October, 2007 has been capitalised and allocated to buildings and plant & machinery during the current financial year. 24. INTANGIBLE ASSETS
Particulars Maple Leaf Cement Maple Factory Leaf Cement LimitedFactory Limited COST AMORTISATION As at 30 As at 30 As at 30 For the June, Additions June, Rate % June, Year 2007 2008 2007
Book value As at 30 as at 30 June, June, 2008 2008
..................Rupees in thousand..................
Computer softwares 2007:
6,769 16,481 - 6,769
23,250 6,769
33.33
2,191 -
5,977 2,191
8,168 15,082 2,191 4,578
25. LOANS TO EMPLOYEES - Secured
House building Vehicles Others Less: recoverable within one year grouped under current assets
6,750 2,576 401 9,727 3,606 6,121
6,749 2,709 378 9,836 3,463 6,373
56
25.1 These loans are secured against charge / lien on employees' retirement benefits and carry interest at the rates ranging from 6% to 15% per annum. These loans are recoverable in monthly instalments ranging from 30 to 120. 25.2 No amount was due from directors and chief executive at the year-end (2007: Rs. Nil). 25.3 Receivable from executives as at 01 July, 2007 amounted Rs. 26 thousand. Loans aggregating Rs. 850 thousand were advanced to executives during the current financial year and amounts aggregating Rs. 279 thousand were received-back from executives during the year. Receivable from executives as at 30 June, 2008 aggregated Rs. 597 thousand. 26. DEPOSITS AND PREPAYMENTS
Security deposits Prepayments 27. STORES, SPARES AND LOOSE TOOLS Stores [including in transit valuing Rs. 367.202 million (2007: Rs. 42.038 million)] Spares [including in transit valuing Rs. 78.863 million (2007: Rs. 165.283 million)] Loose tools
51,514 2,500 54,014
40,700 2,500 43,200
1,914,813 1,382,581 28,350 3,325,744
938,513 1,052,416 23,651 2,014,580
Annual Report 2008
27.1 No inventory was lying with any third party as at 30 June, 2008; (2007: inventory valuing Rs. 208.713 million and Rs. 210.479 million were in the possession of Descon Engineering Ltd. and Heavy Mechanical Complex (Pvt.) Ltd. respectively). 28. STOCK-IN-TRADE Note Raw materials Packing materials Work-in-process Finished goods 29. TRADE DEBTS Export - secured Local - unsecured, considered good 30. LOANS AND ADVANCES Current portion of loans to employees Due from a related party (D.G. Khan Cement Co. Ltd.) Advances - considered good - executives - employees - suppliers 13,926 81,254 215,740 123,032 433,952 570,932 172,434 743,366 25 30.1 3,606 361 12,386 66,461 82,814 18,647 18,146 232,550 100,366 369,709 62,378 132,209 194,587 3,463 1,158 373 2,483 78,067 85,544
30.1 This was in the normal course of business and was interest free. 31. INVESTMENTS (Available for sale) Note
Security General Insurance Company Ltd. (SGIC) un-quoted 4,570,389 (2007: 1,218,771) ordinary shares of Rs. 10 each including 3,351,618 bonus shares received during the year - cost Equity held: 6.71% (2007: 6.71%) Add: adjustment arising from measurement to fair value Through profit or loss Investments in Mutual Funds KASB Liquid Fund Nil Unit (2007: 1,802,289 Units of Rs. 110.970 per unit) United Composite Islamic Fund 128,504.97 Units of Rs. 116.727 each United Growth & Income Fund 19,886.745 Units of Rs. 100.569 each MCB Dynamic Cash Fund 28,180.7097 Units of Rs. 106.456 each Add: adjustment arising from measurement to fair value Balance carried forward
57
31.1 31.2
5,000 703,410 708,410
5,000 739,669 744,669
15,000 2,000 3,000 20,000 (1,461) 18,539
200,000 200,000 200,000

Annual Report 2008
Balance brought forward Investments in Listed Securities Fauji Cement Company Ltd. 121,800 ordinary shares of Rs. 10 each Highnoon Laboratories Ltd. 116,270 ordinary shares of Rs. 10 each Shakarganj Mills Ltd. 6,000 ordinary shares of Rs. 10 each Add: adjustment arising from measurement to fair value
18,539
200,000
1,949 9,916 250 12,115 (4,205) 7,910 734,859
944,669
31.1 The management has further extended the period to sell these investments upto 30 June, 2009. 31.2 The fair value of investments has been determined based on the valuation report prepared by independent Valuers M/s Maqbool Haroon & Co., Chartered Accountants 47-C-3, Gulberg III, Lahore. 32. DEPOSITS AND SHORT TERM PREPAYMENTS Note
58
Margins against letters of credit Prepayments 33. ACCRUED PROFIT This represents profit accrued on deposit / PLS bank accounts. 34. SALES TAX, CUSTOMS AND EXCISE DUTY Sales tax and customs duty Excise duty Sales tax refundable 34.1 34.2
24,834 29,698 54,532
2,050 13,323 15,373
16,797 40,972 57,769
16,797 20,945 37,742
34.1 The balance represents amounts paid against various cases as detailed in the contingencies note. The Company is still in litigation to get refund of these amounts. 34.2 This is in the normal course of business. 35. STAFF RETIREMENT BENEFITS - Gratuity
The future contribution rates of this scheme include allowance for deficit and surplus. Projected unit credit method, based on the following significant assumptions, is used for valuation of this plan: 2008 - discount rate - expected return on plan assets - expected rate of growth per annum in future salaries - average expected remaining working life time of employees 12% 12% 11% 11 years 2007 10% 14% 9% 11 year
Annual Report 2008
The amounts recognised in the balance sheet are as follows:
Fair value of plan assets 61,382 Present value of defined benefit obligation (50,663) Benefits payable to outgoing Members (864) Maple Leaf Cement Factory Maple Limited Leaf Cement Factory Limited Surplus Unrecognised actuarial gain Net asset as at 30 June, Net asset / (liability) as at 01 July, (Charge) / credit to profit and loss account Payments to fund during the year Net asset as at 30 June, The movement in the present value of defined benefit obligation is as follows: Present value of defined benefit obligation Current service cost Interest cost Benefits paid Benefits payable to outgoing Members Actuarial gain Present value of defined benefit obligation The movement in the fair value of plan assets is as follows: Fair value of plan assets as at 01 July, Expected return on plan assets Contributions Benefits paid Actuarial (loss) / gain Fair value of plan assets as at 30 June, Plan assets comprise of: Defence Saving Certificates (including accrued interest less zakat) National Investment Trust Units Cash at bank UBL deposits (including accrued interest) 20,605 35,961 241 4,575 61,382 Charge to profit and loss for the year Current service cost Interest cost Expected return on plan assets Reversal of excess provision for Officers 4,387 4,651 (7,294) 1,744 60,785 7,294 2,973 (2,973) (6,697) 61,382 46,512 4,387 4,651 (2,370) (864) (1,653) 50,663 9,855 (87) 9,768 8,539 (1,744) 2,973 9,768
60,785 (46,512) (603) 13,670 (5,131) 8,539 (2,040) 7,799 2,780 8,539
45,937 2,725 4,134 (1,856) (603) (3,825) 46,512
59
100,830 14,116 2,781 (59,545) 2,603 60,785
17,606 39,339 3,840 60,785

2,725 4,134 (14,116) (542) (7,799)
Annual Report 2008
Comparison of present value of defined benefit obligation, the fair value of plan assets and the surplus of gratuity fund for five years is as follows: 2008 2007 2006 2005 2004 ............Rupees in thousand............ Present value of defined benefit obligation Fair value of plan assets Surplus Experience adjustment on obligation Experience adjustment on plan assets (50,663) 61,382 10,719 (46,512) 60,785 14,273 (45,937) 100,830 54,893 (74,066) 147,812 73,746 (64,803) 125,714 60,911
.............. Percentage .............. -3.26% -10.91% -8.22% 4.28% 26.95% 6.95% 2.05% 3.47% 10.41% 0.86%
35.1 The Company's policy with regard to actuarial gains / losses is to follow the minimum recommended approach under IAS 19 (Employee Benefits). 35.2 The latest actuarial valuation of the gratuity scheme has been carried-out on 30 June, 2008. 36. OTHER RECEIVABLES
60
Letters of credit Receivable from stock broker Others
20,431 362 987 21,780
772 426 1,198
37. TAXATION - Net Tax deducted at source and advance tax deposited during the year Opening balance of advance tax (provision) Add: provision / (write-back) made for: - current year - prior years' - net 75,693 14,029 45,281 (466) 44,815 44,907
36,380 (31,828) 20,450 (29,927) (9,477) 14,029
37.1 Income tax assessments of the Company, except for the Tax Years 2003 and 2006 which have been selected for tax audit, are complete upto the Tax Year 2007. The tax audit has not yet been finalised. 37.2 In view of available tax losses, the current tax provision represents the minimum tax on turnover for the year due under section 113 and tax deducted at source under sections 5, 15 and 154 of the Income Tax Ordinance, 2001.
Annual Report 2008
37.3 The Income Tax Department has filed an appeal for the Assessment Year 1993-94 before the Income Tax Appellate Tribunal against the order of the Commissioner of Income Tax (Appeals), who vide his order dated 20 June, 2005 had allowed the Company adjustment of losses of Pak Cement Company Limited (which was merged into the Company during the financial year ended 30 June, 1992) amounting Rs. 37.670 million and deleted additional tax amounting Rs. 1.666 million. Maple Leaf Cement Maple Factory Leaf Cement LimitedFactory Limited 37.4 No numeric tax rate reconciliation is given as the Company is liable for minimum tax. 37.5 Tax losses available for carry forward at 30 June, 2008 aggregated Rs. 7.860 billion (2007: Rs. 1.657 billion), of which Rs. 1.459 billion (2007: Rs. 1.262 billion) are assessed losses. 38. CASH AND BANK BALANCES Note Cash-in: - hand - transit Cash at commercial banks on: PLS accounts current accounts 38.1 38.2 69,737 48,352 118,089 118,894 80,530 42,355 122,885 123,359 185 620 212 262
38.1 Profit and loss sharing accounts bear mark-up at the rates ranging from 1% to 5% (2007: 1% to 3%) per annum. 38.2 Current accounts include a sum of Rs. 14.760 million (2007: Rs. 14.733 million) held by various banks as margin against guarantees issued by them. 39. SALES - Net
61
Gross sales: - local - export Less: - excise duty - sales tax - commission
8,195,115 2,357,283 10,552,398 1,564,801 1,061,681 110,087 2,736,569 7,815,829
5,413,252 100,956 5,514,208

1,024,041 705,845 73,241 1,803,127 3,711,081
Annual Report 2008
40. COST OF SALES Note Raw materials consumed Packing materials consumed Fuel and power Stores and spares consumed Salaries, wages and amenities Rent, rates and taxes Insurance Repair and maintenance Depreciation and amortisation Other expenses Work-in-process Opening Transfer from trial run operations Closing 40.1 259,492 662,674 3,580,340 381,364 238,114 8,380 29,564 45,248 848,098 98,224 6,151,498 90,848 331,228 (215,740) 206,336 Cost of goods manufactured Finished goods stock Opening Transfer from trial run operations Closing 6,357,834 70,567 186,630 (123,032) 134,165 6,491,999 40.1 Raw materials consumed Opening Purchases Less: Closing stock 12,338 261,080 273,418 13,926 259,492 13,501 138,309 151,810 12,338 139,472 139,472 265,566 1,795,408 239,930 170,540 4,435 16,284 28,582 418,032 92,499 3,170,748 130,426 198,618 (90,848) 238,196 3,408,944 36,498 26,313 (70,567) (7,756) 3,401,188
40.2
40.3
62
40.2 Salaries, wages and amenities expense includes contribution to provident fund aggregating Rs. 7,220 thousand (2007: Rs. 6,990 thousand).
Salaries and amenities expense includes staff retirement benefits (gratuity) amounting Rs. 1608 thousand; (2007: salaries and amenities expense was reduced by Rs. 7,303 thousand as a result of actuarial valuation of the gratuity scheme). 40.3 Other expenses include housing colony expenses aggregating Rs. 47.527 million (2007: Rs. 48.569 million) and vehicles' running expenses aggregating Rs. 29.434 million (2007: Rs. 22.713 million).
Annual Report 2008
41. ADMINISTRATIVE EXPENSES Note Salaries and amenities 41.1 50,837 Travelling 14,357 Vehicles' running and maintenance 6,930 Maple Leaf Cement Maple Factory Leaf Cement LimitedFactory Limited Postage, telephone and fax 4,271 Printing and stationery 4,211 Entertainment 2,908 Repair and maintenance 2,894 Legal and professional 41.2 13,984 Provision for obsolete stores and spares Depreciation 11,056 Rent, rates and taxes 187 Other expenses 9,601 121,236 36,837 5,097 4,434 2,340 1,442 1,177 1,257 1,698 2,273 3,182 115 7,439 67,291
41.1 Salaries and amenities expense includes contribution to provident fund aggregating Rs. 2,028 thousand (2007: Rs. 1,686 thousand). Salaries and amenities expense includes staff retirement benefits (gratuity) amounting Rs. 66 thousand; (2007: salaries and amenities expense was reduced by Rs. 210 thousand as a result of actuarial valuation of the gratuity scheme). 41.2 Legal and professional charges include the following in respect of Auditors' services for:
statutory audit half yearly review certification charges out-of-pocket expenses
400 110 70 65 645 139 506
350 120 55 75 600 196 404
63
Less: grouped under unallocated capital expenditure
41.3 The Company has shared expenses aggregating Rs. 17.535 million (2007: Rs. 14.764 million) on account of the Combined Offices with its Associated Companies. These expenses have been booked in respective heads of account. 42. DISTRIBUTION COST Note Salaries and amenities Travelling Vehicles' running and maintenance Postage, telephone and fax Printing and stationery Entertainment Repair and maintenance Advertisement and sampling Freight and forwarding Other expenses 42.1 18,318 1,982 2,458 1,089 504 761 887 1,341 798,207 9,302 834,849 17,147 1,952 1,847 540 230 597 99 13,324 32,657 628 69,021
Annual Report 2008
42.1 Salaries and amenities expense includes contribution to provident fund aggregating Rs. 759 thousand (2007: Rs. 251 thousand). Salaries and amenities expense includes staff retirement benefits (gratuity) amounting Rs. 70 thousand; (2007: salaries and amenities expense was reduced by Rs. 286 thousand as a result of actuarial valuation of the gratuity scheme). 43. OTHER OPERATING EXPENSES
Note Donations Sales tax on sale of scrap goods deposited in compliance with the judgment of Supreme Court of Pakistan Stores and spares written-off 43.1 Donations for the year have been given to: Gulab Devi Hospital, Lahore District Court Mosque, Mianwali National Counsel for Rehabilitation of Disabled Persons 43.1 14,251 10,587 24,838 14,150 29 72 14,251 None of the directors or their spouses have any interest in any of the donees. 44. OTHER OPERATING INCOME Note 11,300 7,071 18,371 11,300 11,300
64
Income from financial assets Profit on bank deposits Dividend Investment income - net Income from non-financial assets Sale of scrap Gain on disposal of operating fixed assets Miscellaneous 45. FINANCE COST Mark-up / interest / profit on: - loans from related parties - long term loans and finances - redeemable capital - syndicated term finances - liabilities against assets subject to finance lease - short term finances Bank guarantees' commission Exchange fluctuation loss - net Realised loss on derivative cross currency interest rate swap agreement - net Bank and other charges
5,046 12,021 43,403 23.6 38,850 725 5,611 105,656
1,294 6,094 25,599 5,905 4,332 43,224
10,529 260,399 502,217 162,149 82,853 231,791 2,608 235,727 256,617 67,917 1,812,807
240,149 87,140 2,652 5,465 3,047 338,453
Annual Report 2008
46. LOSS PER SHARE - Basic
Loss after taxation attributable to ordinary shareholders Weighted average number of ordinary shares outstanding during the year Loss per share
(728,929)
(10,747)
Number of shares 372,263,356 (1.96) 324,920,106 (0.03)
Rupees
46.1 There is no dilutive effect on loss per share as the effect of conversion of preference shares into ordinary shares is anti-dilutive. 47. REMUNERATION OF CHAIRMAN, CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES The aggregate amounts charged in the financial statements for the year for remuneration, including certain benefits to the Chairman, Chief Executive, Working Director and other Executives of the Company are as follows:
Particulars Chairman Chief Executive Directors Executives 2008 2007 2008 2007 2008 2007 2008 2007 ..............Rupees in thousand..............
Managerial remuneration Contribution to provident fund trust Perquisites and benefits: - house rent - medical - conveyance/petrol - utilities
3,396
4,038
4,537
2,437
2,918
2,895 28,836 20,175
65
383 320 226 178 1,617 1,216
524 280 804 4,200
524 280 804 4,842 1
192 383 171 60 806 5,726 1
192 320 155 60 727 3,484 1
566 1 313 226 1,106 4,250 1
510 5 268 204
9,231 446 4,562 2,485
6,485 288 3,242 1,746
987 16,724 11,761 4,060 47,177 33,152 1 28 19

No. of persons
47.1 The Chairman, Chief Executive, Directors and some of the Executives are also provided with Company maintained cars in accordance with their terms of employment. Aggregate amount charged in these financial statements in respect of Directors' fees aggregated Rs. 53 thousand (2007: Rs.105 thousand). The effective interest / mark-up / profit rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.
Annual Report 2008
48. FINANCIAL ASSETS AND LIABILITIES

Interest / mark-up bearing Maturity Maturity upto one after one year year Subtotal 2008 Subtotal 2007 Non-interest / mark-up bearing Maturity Maturity upto one after one year year
i n
Total
Credit risk
Particulars
Subtotal 2008
Subtotal 2007
2008
2007
2008
2007
.....................(R u p e e s
t h o u s a n d ).....................
Financial assets: Financial assets: Investments Loans to employees Security deposits Trade debts Fair value derivative financial instruments Loans and advances Accrued profit Due from gratuity fund trust Other receivables Cash and bank balances Total Financial liabilities: Loans from related parties Long term loans and finances Redeemable capital Syndicated term finances Liabilities against assets subject to finance lease Lease finance advances and interest accrued thereon Long term deposits Short term finances Trade and other payables Accrued profit and interest / mark-up Preference dividend Unclaimed ordinary dividend Total Net financial assets / (liabilities) Off balance sheet items Letters of credit Contracts for capital expenditure Guarantees
3,606 69,737 73,343
6,121 6,121
9,727 69,737 79,464
9,836 80,530 90,366
734,859 743,366 365,748 12,747 763 9,768 987 49,157 1,917,395
51,514 51,514
734,859 51,514 743,366 365,748 12,747 763 9,768 987 49,157 1,968,909
944,669 40,700 194,587 242,226 2,856 402 8,539 426 42,829 1,477,234
734,859 9,727 51,514 743,366 365,748 12,747 763 9,768 987 118,894 2,048,373
944,669 9,836 40,700 194,587 242,226 2,856 402 8,539 426 123,359 1,567,600
734,859 51,514 743,366 365,748 12,747 763 9,768 987 118,089 2,037,841
944,669 40,700 194,587 242,226 2,856 402 8,539 426 122,885 1,557,290
1,080,000 188,011 3,220,388 -
35,224 241,539 8,000,000 1,000,000 957,434 -
35,224 250,000 241,539 10,369,176 8,000,000 2,080,000 1,145,445 3,220,388 281,898 679,676 797,421 -
149,350 2,217,322 194,568 52,994 1,594 2,615,828 (698,433)
2,582 2,582 48,932
2,582 149,350 2,217,322 194,568 52,994 1,594 2,618,410 (649,501)
2,702 164 638,417 378,675 52,931 1,608
35,224 250,000 241,539 10,369,176 8,000,000 2,080,000 1,145,445 2,582 3,369,738 2,217,322 194,568 52,994 1,594 281,898 679,676 2,702 797,585 638,417 378,675 52,931 1,608
66
4,488,399 10,234,197 14,722,596 12,378,171 (4,415,056) (10,228,076) (14,643,132) (12,287,805)
1,074,497 17,341,006 13,452,668 402,737 (15,292,633) (11,885,068)
1,630,104 168,949 434,370 2,233,423
1,630,104 168,949 434,370 2,233,423
380,571 268,200 261,061 909,832
1,630,104 168,949 434,370 2,233,423
380,571 268,200 261,061 909,832
The effective interest / mark-up / profit rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.
Annual Report 2008
48.1 Financial risk management objectives The Companys activities expose it to a variety of financial risks, including the effects of changes in foreign exchange rates, market interest rates such as KIBOR, LIBOR and Treasury Bills Rate, credit and liquidity risk associated with various financial assets and liabilities and cash flow risk associated with accrued interest in respect of borrowings. The Company finances its operations through equity, borrowings and management of working capital with a view to maintaining a reasonable mix between the various sources of finance to minimise risk. 48.2 Concentration of credit risk Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties failed completely to perform as contracted. The Company's credit risk is primarily attributable to its trade debts and its balances at banks. The credit risk on liquid funds is limited because the counter parties are banks with reasonably high credit ratings. The Company has no significant concentration of credit risk as exposure is spread over a large number of counter parties in the case of trade debts. To manage exposure to credit risk, the Company applies credit limits to its customers and also obtains collaterals, where considered necessary. 48.3 Foreign exchange risk Foreign currency risk arises where receivables and payables exist due to transactions with foreign undertakings. Payables exposed to foreign currency risks are monitored by the management and, if necessary, are covered through forward foreign exchange contracts. However, no forward foreign exchange contracts were outstanding at the year-end. 48.4 Interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Company usually borrows funds at fixed and market based rates and as such the risk is minimised. However, accrued interest on borrowings exposed to interest rate risk is covered partially through cross currency interest rate swap agreements. 48.5 Liquidity risk Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The Company follows an effective cash management and planning policy to ensure availability of funds and to take appropriate measures for new requirements. 48.6 Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values. Fair value is determined on the basis of objective evidence at each reporting date. 48.7 Capital risk management The objective of the Company when managing capital is to safeguard its ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain a strong capital base to support the sustained development of its business. The Company manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes in economic conditions. In order to maintain or adjust the capital structure, the Company may issue new shares.
67
Annual Report 2008
49. CAPACITY AND PRODUCTION Actual Production 2008 2007 2008 2007 . . . . . . . . . . . . . . M e t r i c To n s . . . . . . . . . . . . . . 2,840,000 180,000 1,500,000 180,000 2,062,209 75,235 1,125,833 60,820 Capacity
Clinker Grey White
- Shortfall in production of grey cement was mainly due to break-down in cement mills and market constraints. - Shortfall in production of white cement was mainly due to market constraints. - The capacity of the plants has been determined on the basis of 300 days. 50. TRANSACTIONS WITH RELATED PARTIES Related parties comprise of the holding company, related group companies, associates, key management personnel and staff retirement funds. The Company in the normal course of business carries-out transactions with various related parties. Amounts due from and to related parties are shown under receivables and payables and remuneration of key management personnel is disclosed in note 47. Other significant transactions with related parties are as follows:
68
purchase of goods and services purchase of fixed assets sale of fixed assets sale of goods and services
4,832 972 763
377 1,060 620
51. DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on 25 September, 2008 by the board of directors of the Company. 52. FIGURES Figures in the financial statements have been rounded-off to the nearest thousand Rupees except stated otherwise. Corresponding figures have been re-arranged, wherever necessary, for the purposes of comparison; however, no material re-arrangements have been made in these financial statements.
Annual Report 2008
PROXY FORM MAPLE LEAF CEMENT FACTORY LIMITED

I/We of being a member of MAPLE LEAF CEMENT FACTORY LIMITED hereby appoint
(Name)
of or failing him/her of
(Name)
another member of the Company
another member of the Company
(being a member of the Company) as my/our proxy to attend and vote for and on my/our behalf, at the Annual General Meeting of the Company to be held at its Registered Office, 42-Lawrence Road, Lahore on Thursday, October 30, 2008 at 11:30 a.m. and any adjournment thereof. As witnessed given under my/our hand(s) 1) Witness: Signature Name Address Signature of Member day of , 2008.
2) Witness: Signature Name Address Shares Held Shareholders Folio No. CDC A/c No. CNIC No. Note : 1) Proxies, in order to be effective, must be reached at the Companys Registered Office, not less than 48 hours before the time for holding the meeting and must be duly stamped, signed and witnessed. 2) CDC Shareholders, entitled to attend and vote at this meeting, must bring with them their Computerised National Identity Cards / Passport in original to prove his / her identity, and in case of Proxy, must enclose an attested copy of his / her CNIC or Passport. Representatives of corporate members should bring the usual documents required for such purpose.
Fold Here
Fold Here
Fold Here
Fold Here
AFFIX CORRECT POSTAGE The Company Secretary MAPLE LEAF CEMENT FACTORY LIMITED 42-Lawrence Road, Lahore. Phone Nos: (042) 6278904 - 05

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Table of Contents

Maple Leaf Cement Factory Limited

Annual Report 2008

Maple Leaf Cement Factory Limited

Statement of Ethics and Business Practices

Maple Leaf Cement Factory Limited

Annual Report 2008

Maple Leaf Cement Factory Limited

Board of Directors Mr. Tariq Sayeed Saigol

Mr. Sayeed Tariq Saigol

Audit Committee Mr. Zamiruddin Azar

Mr. Waleed Tariq Saigol Mr. S. M. Imran

Annual Report 2008

NOTICE OF ANNUAL GENERAL MEETING

Lahore: October 09, 2008

(Muhammad Ashraf) Company Secretary

Maple Leaf Cement Factory Limited

DIRECTORS' REPORT TO THE SHAREHOLDERS

4,000 3,000 2,000 1,000 -

Annual Report 2008

Maple Leaf Cement Factory Limited

Performance of the Company

Profit before tax

Profit after tax

EARNINGS PER SHARE

(1,364,244) 688,109 (676,135) 271,601 (404,534) 90,246 52,794 (547,574)

Annual Report 2008

Annual Report 2008

Maple Leaf Cement Factory Limited

Annual Report 2008

Annual Report 2008

Maple Leaf Cement Factory Limited

Provident Fund Gratuity Fund i)

Annual Report 2008

Lahore: September 25, 2008

(Sayeed Tariq Saigol) Chief Executive

Annual Report 2008

Maple Leaf Cement Factory Limited

SIX YEARS SUMMARY

4,264,108 4,096,781 8,360,889

4,264,108 4,728,929 8,993,037

3,519,581 4,036,123 7,555,704

3,248,844 3,126,039 6,374,883

1,804,913 1,892,631 3,697,544

1,804,913 1,405,159 3,210,072

Annual Report 2008

PATTERN OF SHAREHOLDING (ORDINARY SHARES)

New CUIN Registration Number Name of Company

0001107 Maple Leaf Cement Factory Limited Size of Holding From

Annual Report 2008

Maple Leaf Cement Factory Limited

Size of Holding No. of Shareholders

Total shares held

Maple Leaf Cement Factory Limited

Maple Leaf Cement Factory Limited

Annual Report 2008

5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12

Annual Report 2008

PATTERN OF PREFERENCE SHAREHOLDING (Non-voting)

New CUIN Registration Number Name of Company

0001107 Maple Leaf Cement Factory Limited

Annual Report 2008

5.3 5.4 5.5 5.6 5.7 5.8