annual report 2013 - crescent textile mills limitedcrescenttextile.com/wp-content/uploads/fn/annual...

1Annual Report 2013

2 Crestex

3Annual Report 2013

Contents

Company informationMission, Vision and ValuesManagement Structure / Organization ChartKey FiguresGraphical Representations Directors' ReportKey Operating and Financial DataPerformance IndicatorsVertical AnalysisHorizontal AnalysisStatement of ComplianceReview Report to the Members on Statement of ComplianceAuditors' Report to the MembersBalance Sheet as at June 30, 2013Profit and Loss AccountStatement of Comprehensive IncomeCash Flow StatementStatement of Changes in EquityNotes to the Financial StatementsPattern of ShareholdingNotice of Annual General MeetingProxy Form

45678

1021222324252829303233343537889295

Company information

Board of Director

Audit Committee

HR & R Committee

Chief Financial Officer

Corporate Secretary

Head of Internal Audit

Auditors

Legal Advisor

Stock Exchange Listing

Mr. Muhammad Anwar

Mr. Ahsan MehantiMr. Khalid BashirMr. Khurram Mazhar KarimMr. Muhammad ArshadMr. Muhammad Asif (Nominee NIT)Mr. Nasir ShafiMr. Zeshan Afzal

Mr. Khalid BashirMr. Nasir ShafiMr. Ahsan Mehanti

Mr. Nasir ShafiMr. Khalid BashirMr. Muhammad Anwar

Mr. Sadiq Saleem

Mr. Naseer Ahmad Chaudhary

Mr. Kashif Saleem

Riaz Ahmed & CompanyChartered Accountants

Mujtaba Jamal Law AssociatesSyed Masroor Ahmad

The Crescent Textile Mills Limited is a listed Companyand its shares are traded on all three Stock Exchangesin pakistan.

The Company's shares are quoted in leading dailiesunder personal goods sector.

Chairman &Chief Executive

DirectorDirectorDirectorDirector

DirectorDirectorDirector

ChairmanMemberMember

ChairmanMemberMember

Advocate

Bankers

Mills & Head Office

Registered Office

Share Registrar

Al Baraka Bank (Pakistan) LimitedAllied Bank LimitedBurj Bank LimitedHabib Bank LimitedMeezan Bank LimitedMCB Bank LimitedNational Bank of PakistanNIB Bank LimitedStandard Chartered Bank (Pakistan) LimitedUnited Bank Limited

Sargodha Road,Faisalabad, PakistanT: + 92-041-111-105-105F: + 92-041-111-103-104E: [email protected]

45-A, Off: Zafar Ali Road, Gulberg-V,Lahore, PakistanT: + 92-042-111-245-245F: + 92-042-111-222-245E: [email protected]

Crescent Group (Pvt) Ltd.,306, 3rd Flr, Siddiq Trade Centre,72-Main Boulevard, Gulberg,Lahore, PakistanT: + 92-042-35787592 F: + 92-042-35787594E: [email protected]

www.ctm.com.pk

4 Crestex

5Annual Report 2013

Mission, Vision and Values

To be the 1st Choice of Customers and achieve a leading role in the economy through enhancement of quality of life style for Stakeholders.

Man

agem

ent S

truc

ture

/ Or

gani

zatio

n Ch

art

Boar

d of

Dire

ctor

s

Hum

an R

esou

rce

and

Rem

uner

atio

n Co

mm

ittee

Head

of I

nter

nal A

udit

Audi

t Com

mitt

ee

Chie

f Exe

cutiv

e Of

ficer

Exec

utiv

e Di

rect

or

Proc

essin

gTe

xtile

Electr

ical

Proces

sing

& Lab

Electr

ical

Spinn

ing &We

aving

Powe

rGe

nerati

onUti

lities

Proces

sing

Home

Textile

Tex

tile BTex

tile ATex

tile C

Engin

eering

Finan

ce

Inform

ation

Techn

ology

Accoun

ts& Cos

t

Treasu

ry

Marke

ting

Export

Produc

tion

Plann

ing &Con

trol

Comme

rcial

Grey

Procur

ement

Servi

ces Invent

oryHu

man

Resou

rceBu

ying

Qualit

y

6 Crestex

Key Figures

Sales revenue(Rs in million)

Profit before tax and depreciation(Rs in million)

Earning per share(Rupees)

Non current assets(Rs in million)

Shareholder's equity(Rs in million)

Contribution to national exchequers(Rs in million)

13,262

482

2.27

7,439

2,826

206

12,729

233

(2.38)

6,598

2,442

165

2013 2012

7Annual Report 2013

Graphical Representations

8 Crestex

Sourcesof Earnings

1,488 1,514800

1,0001,2001,4001,6001,8002,000

Inm

illion

s

Sourcesof Earnings

206 194

1,488 1,514

0200400600

2013 2012

Rs.In

mi

Years

584 761

135 99112

1,000

1,500

2,000

nm

illion

s

Utilization of EarningsUtilization of Earnings

892 842

(117)

(500)

0

500

1,

2013 2012

Rs.In

milli

Years

Admin, distribution & others Finance cost

Taxation Share of associate loss

Transferred to retained earnings

Share capital andreserves

Surplus on revaluationof operating fixed assets

Non current liabilities

Current liabilities

23%

18%2%

57%

2013 2012

Shareholder Equity and Liabilities

Assets

Analysis of Profit and Loss Account

30 123

Other operating income Gross profit

Share of associate profit

19%12%4%

65%

2013

29%

20%13%

32%

6%

2012

Property, plant andequipment

InvestmentsInventories

Trade debts

Other assets

35%

24%13%

20%8%

Purchase of raw material and finished productsFuel and PowerSalaries, wages and other benefits

Taxes and dutiesFinance costOthers

2013

20%

54%

14%

7%1%

4%

2012

6%

18%

60%9%

6%1%

Cost Break up

Utilization of Available / Generated Cash during the year

17%4%

79%

2012

27%27%

71%

2%

2013

Investing Activities Financing Activities

Cash and Cash Equivalents

Graphical Representations

9Annual Report 2013

Operational and financial performance of the company:

Directors' Reportfor the year ended June 30, 2013

The directors are pleased to present the Annual Report along with audited Financial Statements of the Company and the Auditors' Report for the year ended Jun 30, 2013.

Performance review of the Industry:

resulted in decline of its profitability. Despite having enough raw materials resources, a d e q u a t e c a p a c i t y a n d abundance of unemployed labour exports of value added textiles shrank from 61.40% to 60.40%. The sector; which is heavily reliant on gas was affected due its curtailments and even the advantage of sliding PKR could not bring positivity to its exports. Other factors which contributed to the weak performance of texti les were polit ical and security issues, strong cotton prices, increase in energy tariff and mini wage rate, rising i n f l a t i o n d u e c o n t i n u o u s depreciation PKR and last but not least the inadequate banking support and blockade of GST Refunds by FBR which put stress on its cash flows and attrition in margins. These were reasons which constrained to ramp up exports of value added textiles.

Overall operational performance

of company was satisfactory as better eff ic iency achieved t h r o u g h o u t a l l b u s i n e s s segments except some severe gas curtailments in 2nd Qtr FY13 and increased power shutdowns during 4th Qtr of FY13 forced underutilization of the capacities and increased unabsorbed fixed costs. Still company was able to achieve better performance year on year basis due availability of 2nd FESCO Connection of 4.950 MWs in March, 2013 which increased total capacity on FESCO to 9.730 MWs. This along with start of Coal Thermo Oil Boiler in Processing in middle of 4th Qtr helped in improving overall production levels on better capacity utilization.

In FY13 the improved mills running of all business segments increased production; which ultimately depicted growth in sales volumes as shown in tables below:

In FY13 exports of the country increased to US$ 24.515 billion from US$ 23.625 billion showing moderate growth of 3.80% in comparison to previous year. Textiles recorded 5.90% growth o v e r t h e y e a r w i t h y a r n contributing 24% improvement on higher Chinese demand and proved fortune changer for the spinning sector. PKR continued to plunge and depreciated gradually from 94.20 on Jul-12 to 99.20 on Jun-13 due bulging current account deficit emanating from repayments of IMF and didn't help to spur exports or discourage imports. Gas off days increased from 73 in previous year to 168 during in current year.

Once again energy crises proved main hurdle in boosting exports of value added textiles and

Processing

81 77

HomeTextiles

74 69

PowerGeneration

89 88

Year

20132012

Mills Running: Capacity utilization (%)Spinning

8876

Weaving(Fsd)

80 76

Weaving(Hattar)

97 100

10 Crestex


Financial highlights:Company's gross margins were down by 1.73% (it reduced from Rs.1,514 million to Rs.1,488 million) due high input. Main cost factors which led to attrition in margins were fuel and power (up by 55.40%), Salaries and wages (up by 32.83%), purchases of semi finished goods and processing

charges (up by 25.11%), packing cost (up by 20.06%) raw materials cost (up by 18.30%) and stores consumption(up by 14.93%).

But on better performance of spinning segment and saving in finance cost due reduction in discount rate helped in improving bottom line

of the company which posted a higher net profit year on year basis.

Net after tax profit of the company was increased by Rs.76.649 million (as the company achieved net after tax profit of Rs.82.399 million during FY2013 as against Rs.5.750 million during FY2012).

Production: Qty in 000Year

20132012

Incr%

Processing

(Mtrs)30,65129,636

1,0153.42

HomeTextiles

(Mtrs)15,35814,866

4923.31

PowerGeneration

(KWHs)113,415104,334

9,0818.70

Spinning

(Kgs 20s)33,07828,690

4,38815.29

Weaving(Fsd)

(Sqr Mtrs) 43,05441,246

1,8084.38

Weaving(Hattar)

(Sqr Mtrs)18,23814,883

3,35522.54

Quarterly performance review:Looking at the Qtr wise financial performance of the company the picture gives more clearer view and

explains that better results would have been achieved had there been no adverse impact of higher gas curtai lments and severe load

shedding; which resulted into subdued performance of FY13.

Profit and loss

Sales revenueGross profitOperating expensesOther operating incomeProfit from operationsFinance costTaxationNet after tax profitEarnings per share (Rs.)

Summary of key financial results in comparison to last year are highlighted as below: FY2013

Million Rs.13,262

1,488892206802585135

821.67

%100.0

11.36.71.66.04.41.00.6

-

FY2012Million Rs.

12,7291,514

843194867761100

60.12

%100.0

11.96.61.56.86.00.80.0

-

Incr / (decr)Million Rs.

533(26)

4912

(65)176

3576

1.55

%4.2

(1.7)6.06.0

(7.5)23.2

35--

11Annual Report 2013


Profit and loss

Sales revenueGross profitOperating expensesOther operating incomeProfit from operationsFinance costTaxationNet after tax profit / (loss)Earnings / (loss) per share (Rs.)

The summary of Qtr wise financial performance for FY2013 is as below:st1 Qtr

Million Rs. 3,766 453 254 51 250 158 42 50 1.02

%100.0 12.0 6.7 1.4 6.6 4.2 1.1 1.3

-

Million Rs. 3,192 334 228 52 158 149 31 (22)

(0.45)

%100.0

10.5 7.1

1.6 4.9

4.71.0

(0.7)-

Million Rs. 3,390 409 223 51 237 149 38 50 1.02

%100.0 12.1

6.6 1.5

7.0 4.4

1.1 1.5

-

Million Rs.2,914

292187

52157

129 24

40.08

%100.0 10.1

6.5 1.8

5.54.50.70.2

-

nd2 Qtr rd3 Qtr th4 Qtr

Uneven quarterly revenues affected our profitability as 2nd Qtr and 4th Qtr suffered from decreased sales activity and gross margins were down from 12% to 10% and dragged overall profitability of the company. The lean sales volumes during these quarters due underutilization of capacities also increased unabsorbed fixed costs as gas and power crises forced to use alternate expensive fuel and energy resources to accomplish only urgent

export commitments.

Company registered sales revenues of own manufactured goods to Rs.11,514 million in FY2013 elevating by 22.86% over the FY2012. The main reasons for rising revenues were (a) an overall increase both in volume and rates on improved mills running backed on better domestic and international demand (b) and gradual

Sales revenues:

a s w e l l a s c o n s i s t e n t P K R depreciation throughout the year. Although company recorded an overall growth in sales revenues but trend could not sustain in 2nd Qtr due lack of gas and in 4th Qtr higher power shutdowns as well as sluggish market conditions prevailed on slow down of Chinese demand for yarn. Pressure on yarn prices also led to attrition in margins. Growth in sales revenues were achieved as below:

Sales revenues

Local:

Local sales - Ttl. Export:

Export sales - Ttl. Local and export sales - Ttl.

Sales revenues - Ttl.

Yarn Fabric Others

Yarn Fabric Home textiles

Fabric - Direct purchases

FY2013Million Rs.

3,833 768 220

4,821

293 2,222 4,178 6,693 11,514 1,746 13,262

%

33 7 2

42

3 19 36 58 100

FY2012 Million Rs.

2,614 403 256 3,273

252 2,448 3,468 6,168 9,441

3,288 12,729

%

28 4 3 35

3 26 37 65 100

Incr / (decr) Million Rs.

1,219 365 (36) 1,548

41 (226) 710 525 2,073

(1,542) 533

%

47 91 (14) 47

16 (9)

20 9 22 (47) 4

Sales revenue posted an overall upsurge of 22% on yearly basis mainly emanating from local revenues which

were higher by 47% over the same period of corresponding year. In the sales mix the shift towards local

revenues was evident as i ts proportion was increased from 35% during previous year to 42% during the

12 Crestex


current year due higher retention prices. Exports were modestly higher despite consistent PKR depreciation as lower margins due use of alternate expensive fuel in value added segment curtailed margins and thus shrunk volumes.

Cost of sales:Throughout the year all major cost c o m p o n e n t s re m a i n e d u n d e r pressure and kept rising due mainly inflationary impact, use of alternate expensive fuel during gas and power load shedding, stable raw materials

prices on higher yarn demand, increase in gas tariff and minimum wage rate and also unabsorbed fixed costs due underuti l izat ion of capacities. Main components of costs which rose signif icantly have highlighted as below:

Cost of sales

Raw materials cost

Semi finished goods purchased

Fuel and power

Stores and packing cost

Salaries, wages and other benefits

Million Rs. %FY2013

4,186

1,791

1,857

1,048

745

FY2012 3,507

1,341

1,195

898

561

Incr 679

450

662

150

184

19

34

55

17

33

Analysis

Energy crisisThe industry confronted worst energy crises and our company was no exception to this. It gave steep rise to

fuel and power cost (up by 55%) as per above table, increased from Rs.1,195 million in last year to Rs.1,857 million in current year. Due to this the

company not only incurred an extra fuel cost but it also eroded margins as unabsorbed fixed cost increased during shutdown as per below:

Cotton/ polyester prices remained stable due lower crop size, strong demand and PKR depreciation.

Inputs cost was higher as raw material prices remained stable and kept rising.

During gas and power load shedding alternate expensive fuel was used to run operations. Tariff was also increased effective Jul-12.

Cost was higher as prices succumbed to inflationary pressure.

Mini Wage Rate increased from Rs.7,000 pm ~ Rs.9,000 pm and annual increase in pay was given.

Million Rs.- Unabsorbed fixed cost due energy shutdowns 303.040 - Extra fuel cost due use of alternate expensive fuel 608.703- G. Total 911.743

Distribution cost and other income:Distribution cost was higher as ocean f r e i g h t i n c r e a s e d d u e P K R depreciation and higher oil prices in the international market. Other income marginally increased on higher dividends received from

associates; mark up income and other items.

Finance cost was lower as most of FCY short term loans were converted to PKR liability which avoided adverse

Finance cost and profitability:

e x c h a n g e d i f f e r e n t i a l . A l s o deleveraging of debts on improved cash flows and with lower mark up rates, down from 10.55% in previous year to 8.71% during current year, helped in saving finance cost of the company.


FYStatement of Value Addition

Net Wealth Generated

To Employees

To Government

To Providers of Finance

To Society

Retained within the business for future growth

Wealth Distributed

Total revenueBought-in-material and services

Salaries, wages and other benefits

Taxes and duties

Finance cost

Donation toward health and education

Retained earnings and depreciation

2013 Million Rs.

2012


The saving in finance cost by 23.21% over previous year which was down by Rs.176.665 million (reduced from Rs.761.125 million to Rs.584.460 million) strengthened the bottom line of company.

Net after tax profit of the company during the year was Rs.82.399 million with an improved EPS of Rs.1.67 against Rs.0.12 during the same period of last year. Similarly ROA and ROE were also higher in comparison to previous year.

Net non-current assets of the company at the end of the year were up by 13% due revaluation of land,

Financial position analysis:

installation of Coal Thermo Oil Boiler, new Cone Winders and Compact attachments for spinning. Current assets with the exception of other receivables were significantly down by 22.84% mainly due trade debts which was helpful in improving operating cycle. However, other receivables were by 60.11% as FBR resorted to block huge GST and Tax Refunds.

Equity and reserves were up by 16% due profit for the year and fair value gain on investments on improved market rates. Long term loans and current liabilities were reduced on repayments and redemption of trade and other payables on improved

liquidity. But level of short term borrowing remained same as non release of GST refunds by FBR. Company contributed a substantial amount of Rs.206 million to National Exchequer during the year by way of taxes, levies and duties. In terms of value addition to foreign exchange it contributed US$79.360 million by repatriating through exports during year under review.

Total value addition to the economy was Rs.1,998 million, detailed distribution of the same has been reflected in the table below:

13,26211,264

1,998

883

206

584

7

317 1,998

12,74910,867

1,882

692

165

761

6

257 1,882

14 Crestex


Corporate social responsibility: Throughout history of the company it remains hallmark to consistently remunerate its shareholders except some lean years in recent periods. It haemployment opportunities, risk free and healthy environment and has always discharged its commitments financial as well as abiding country's laws in true letter and spirit like a responsible corporate institution. s been contributing to the community f o r g e n e r a t i n g C o n d u c t a n d performance of the business is carried out with a spirit that the regulatory requirements to its activities which have impact on human and natural environment are fully observed and implemented.

On welfare front the company actively participates and invests to discharge its obligations towards employees,

Education and welfare:

Environmental safety:

To contribute into socio and economic development of community the company regularly contributes for this cause. During the year company paid to TCF (The Citizen Foundation) for annual running expenses of the primary school constructed against grant provided by the company in earlier years. It also provided financial assistance to various charitable and health care units run by reputable organizations and Govt agencies which provide medical facilities to deserving patients.

Plant operations and business activities are conducted with genuine concern of public safety and required measures are adopted to achieve standards set by the relevant regulatory requirement. These

Wealth Distribution

EmployeesGovernmentShareholders

Providers of financeSocietyRetained within the business

2013

44%

10%

0%

29%

1%

16%

2012

37%

9% 0%

40%

0% 14%


community and to the homeland as a responsib le corporate ent i ty. Company realizes the concerns of the all stake holders and has taken i n i t i a t i v e s a n d a d d r e s s e d comprehensively to these social responsibilities.

Being a distinct and responsible employer for the provision of occupational safety of the employees for discharge of their obligation at plant and offices is ensured. Systems and controls are in place for timely Implementation and statutory regulations for remunerations, compensation, retirement and separat ion are demonstrated consistently. Employees association is rewarded with elevation and growth to make and feel them part of the company's progress.

Employees:


measures ensure minimum effects of the activities carried out by the company on natural and human environments.

To add value to the national exchequer and discharge its financial commitments the company has history to fulfill obligations by timely payments of taxes, duties and levies. It has never defaulted or involved into any financial relief, remission or

Value addition and discharge of commitments:

adjustment of its financial obligations towards any financial and banking institution. Company enjoys very good repute, high credit rating and worthiness in the eyes of financial community l ike a responsible corporate citizen. It has been generating employment and business opportunities for thousands of families throughout its history of more than 50 years through operations and earning revenues of approximately US$ 137.300 million annually.

For smooth conduct of business and in compliance of international s t a n d a r d s a n d r e g u l a t o r y r e q u i r e m e n t s n a t i o n a l a n d international agencies company obtained third party certifications through the accredited agencies for the following product, management a n d e n v i r o n m e n t a l s y s t e m s standards:

16 Crestex

ISO 9001:2008 Quality Management SystemsISO 14001:2004 Environment Management SystemsC-TPAT/ GSV Security Management SystemsOeko-Tex 100 Product Standards for Fabric, Human Ecology Oeko-Tex 100 Product Standards for Home TextilesSA 8000 Social accountability SADEX Audit Data Bank for sharing with customers


Relations with personnel and the community:The company has a long and established history of keeping its cordial relations at all levels with mutual trust, respect, cooperation and confidence. This ensures and improves ultimate efficiency of the company. Under a defined and documented criteria in line with national and international laws people are recruited. This is demonstrated at all levels beyond any racism, cast, sex or religion and respects human rights ethics and standards. Appropriate opportunity is provided to employees to participate i n C B A a c t i v i t i e s a n d e l e c t representatives of their choice under free and fair environment.

Every year company pays incentive bonuses besides profit bonus, sponsors Hajj expenses for 06 employees every year with 15 days paid holidays, allows maternity leaves to females employees, provides cycle, fan, sewing machines on easy installments and has arranged FP Shop/ Utility Stores, School Bus and Canteen facilities for its employees. To address grievances of employees W o r k C o u n c i l , c o n s i s t i n g m a n a g e m e n t a n d e m p l oye e s representatives, conducts regular m e e t i n g s . C o m p a n y i s a l s o maintaining Workers Welfare Funds from where needy / distressed employees are helped besides it has full coverage of employees under the Group Insurance Scheme. It ensures on job health and safety protection measures for employees including arranged First Aid Facility and a Dispensary to tackle minor accidents

along with Social Security Protection for all the work force as well as 24 hours Ambulance facility for handling emergency situations and serious cases of employees and their dependence.

Under the terms of agreement executed each year with CBA employees are provided financial aid for marriage of daughters and funeral expenses and also financial help to very needy cases. Company has been providing residential facilities to essential workforce with free provision of utilities according to cadre and status. To perform religious and sports affairs the company has mosque, club and ground inside its mills colony. For learning and growth of employees in house and outside training courses are arranged at the time of hiring and then during job.

To ensure workable environment company has set procedures, rules and regulations which regulates employment. Harmonious working environment and cordial industrial relations prevailed during the year. The operations of the company were carried out keeping in view the dignity, respect, support, protection as per national and international standards set to meet the working environment. All workmen performed their duties and jobs at standard hours and if they were required to put extra workings to meet exigencies and to fill man power shortage they were compensated and paid per legal criteria. There were no such complaints of any work abuse or not fulfilling their requirements. They were provided usual working environment and work relations

remained very cordial.

Company has set up an 'Employees' Provident Fund Trust' to manage and control its financial affairs. Trust is recognized under Income Tax Laws and its income and contributions are exempt from tax. I t receives subscription from employees with equal contribution from company. The value of investments of the trust, as per unaudited accounts, on close of financial year were Rs.869.092 million (Rs.782.323 million FY12).

To meet the corporate strategy r e q u i r e m e n t s t h e c o m p a n y implemented OF (ERP System) since 2004 and was later updated with new vers ion in 2011. This onl ine monitoring system enables the management to have an updated MIS / financial status of its financial monitoring. Other ERP solutions of HR and Inventory management (Stores and spares) were linked with this to add value to the ERP monitoring system.

Employees' retirement benefits:

ERP and Oracle Financial (OF):

Key advantages of the systems implemented so far are:- OF enables completion of

f inanc ia l statements with monthly reporting of segmental results for management to exercise better control over the affairs of the different segments and also keep watch an overall performance of the company. This on line system up dates the flow of financial information w h i c h i n t e g r a t e s a n d disseminates the data for


contribute for betterment of the company.

During the year company posted a net after tax profit of Rs.82.399 million (Rs.5.750 million during last year) and an improved EPS of Rs.1.67 (Rs.0.12 during last year).

The Board is fully aware of the importance of local and international p r i n c i p l e s o f b e s t c o r p o r a t e governance. All periodic financial statements were circulated to the board duly endorsed by the Chief Executive Officer and the Chief Financial Officer for approval and then circulation. Quarterly financial statements duly approved by the Board were circulated and placed on the website of the company within stipulated period. These financial statements included review of the period involved and future plans of the company with analysis so that the stakeholders remain updated and well informed about the prospects of the company.

The company complies with the Code o f Co r p o r a t e G ove r n a n c e a s contained in the Listing Regulations of the Stock Exchanges. The role of the Board is primarily to protect and enhance shareholders long term value. To fulfill the same it is responsible for overall corporate governance of the company including approval of strategic policies, defining and monitoring management's goals and ensuring the integrity of internal

Appropriations:

Best Corporate Practices

Corporate Governance:


The department takes guidance from the Audit Committee and performs function as per the approved annual audit plan. The Internal Audit Department independently reviews and monitors various internal control systems, policies and regulations framed for this purpose. This department is headed by qualified Head of Internal Audit Department.

Audit reports and findings are regularly discussed in the Audit Committee meetings which are submitted to the Chief Executive after completion of audit for evaluation and taking required decisions in view of priority of the issues highlighted in the audit reports.

Yo u r co m p a ny d e m o n s t r a t e d improved performance in the FY13 despite very challenging business conditions. Gas crises for Punjab industry remains a serious issue and it is likely to intensify in coming winter months. Local cotton prices are currently very tight on lower crop estimate, PKR depreciation and stable yarn prices based on Chinese demand. This will improve spinning margins but not favourable for value added textiles; already affected due to consistent gas curtailments.

Moreover, lack of enough banking support and delay in release of GST refunds has negative effects on performance of value added textiles. But we look forward to counter these challenges and are committed to deliver best possible results despite these pressures and will continue to meet our objectives, goals and

Future outlook and challenges:

-

-

-

The company has an internal audit department under the supervision of HIA (Head of Internal Audit) who is directly reporting to the Internal Audit Committee and functions under the supervision of the Chief Executive.

Internal Audit and review system:

decision making. It reduces efforts of reconciliation and ensures accuracy of data which provides integrated financial data.Purchase and Inventory System ( P I S ) p r o v i d e s r e a l t i m e information flow, reduces the efforts, avoids duplication and fac i l i tates physical stores reconciliation and monitoring. It maintains carrying value of the store inventory and facilitates users to run and plan plant operations smoothly.Human Resource Management (HRM) system is helpful to maintain and update human resource data and payrol l processing very efficiently and s w i f t l y . E v e r s i n c e i t s implementation along with e m p l o y e e s s w a p p i n g o f attendance is fac i l i tat ing, recruiting, transfers, relieving and payroll preparation. This error free and online system and avoids dupl icat ion and de lays in disbursement of payroll or other dues of employees.B e s i d e s a f o r e s a i d o n l i n e monitoring systems the flow of specific and micro level MIS is also monitored and updated through LAN and Portal arrangement. This is very helpful for smooth operations of company's affairs.

18 Crestex

Human Resource and Remuneration (HR&R) Committee:Terms of reference:The Committee comprises of three members including the Chairman. All members are non executive including one independent. It reviews HR related matters of company and during the year one meeting of committee was held and all the members were present.

Name AttendanceMr. Muhammad AnwarMr. Ahsan MehantiMr. Khalid BashirMr. Khurram Mazhar KarimMr. Muhammad ArshadMr. Muhammad Asif- Nominee NITMr. Nasir ShafiMr. Zeshan Afzal

55445454

During the year five meetings of the Board were held and following were in attendance:

Leave of absence was granted to the directors who could not attend the Board meetings.

During the year five meetings of the committee were held and following were in attendance: Audit Committee:

Mr. Ahsan MehantiMr. Khalid BashirMr. Nasir Shafi

455

Transactions undertaken with related parties during the financial year have been ratified by the Audit Committee and approved by the Board.

c o n t r o l s a n d m a n a g e m e n t information system. It also approves and monitors financial and other reporting. The Board has formally delegated the responsibility for administration and operation of the company to the Chief Executive. Following committees have been

constituted to work under the guidance of the Board:--

The company adheres to the best Code of Conduct:

ethical standards in the conduct of business. Accordingly, Code of Conduct of the company has been approved by the Board of Directors and placed on the website of the company.


Internal Audit Committee; andH u m a n R e s o u r c e a n d Remuneration Committee.

Regulatory requirements for the Board:As per requirements of the regulatory framework all the directors fulfill the criterion as per the Code of Corporate Governance and are well conversant to their responsibilities due to their standing as Board member of the c o m p a n y a n d a l s o o f o t h e r companies. During the year one of the directors completed training course

as per requirement of the code from recognized body for this purpose.

a.

Directors' statement: Directors of the company are pleased to state that:

Financial statements prepared by company's management present fairly its state of affairs, results of its operations, cash flows and changes in equity;


b.

c.

d.

e.

f.

g.

h.

Proper books of accounts have been maintained;Appropriate accounting policies have been consistently applied in p r e p a r a t i o n o f f i n a n c i a l statements and accounting e s t i m a t e s a r e b a s e d o n r e a s o n a b l e a n d p r u d e n t judgment;International Financial Reporting Standards, as applicable in Pakistan, have been followed in p r e p a r a t i o n o f f i n a n c i a l statements and any departure there from has been adequately disclosed;System of internal control is sound in design and has been effectively implemented and monitored;T h e c o m p a n y h a s s o u n d potentials to continue as going concern;There has been no material departure from best practices of corporate governance;Information about outstanding taxes and levies is given in Notes to Accounts; and

shareholding of the company as at June 30, 2013 is included in these financial statements. Company's shares are listed on all the Stock Exchanges of Pakistan. Company has a free float of 8.40% shares and remaining are closely held by the sponsors, investment / banking companies, insurance companies and other corporate bodies.

The auditors M/s. Riaz Ahmad & Co., Chartered Accountants, retire and offer themselves for re-appointment for the year 2014.

On behalf of the Board I would like to express its appreciation for the efforts and support of all stake holders inc luding employees, suppl iers , bankers and most importantly our customers for attaining better performance. I would also like to express our sincere thanks to our shareholders for having confidence and trust in the company.

Auditors:

Acknowledgements:


i.

Transactions undertaken with related parties during the financial year have been ratified by the Audit Committee and approved by the Board.

There was no significant balance sheet event which warrants mention in the report.

The committee comprises of three members and all of them are non-executives independent directors including Chairman. The committee meets every quarter for review of audit reports, interim and annual financial results prior to the approval of the Board.

A statement showing the pattern of

Related party transactions:

Post balance sheet events:

Audit Committee:

Pattern of shareholding:

For and on behalf of the Board of Directors

(Muhammad Anwar)Chief Executive Officer

S t a t e m e n t o f v a l u e o f investments in respect of employees' retirement plan has been given in Note 41 of the financial statements.

20 Crestex

Key Operating and Financial Data

Summary of Profit and Loss Account

Summary of Balance Sheet

Summary of Cash Flow Statement

SalesGross profitProfit from operationsProfit / (loss) before taxationProfit / (loss) after taxation

Property, plant and equipmentStock in tradeTrade debtsCurrent assetsTotal assets

Shareholders equitySurplus on revaluation of operating fixed assetsLong term financingTrade and other payablesShort term borrowingsCurrent liabilitiesTotal equity and liabilities

Cash and cash equivalents at the beginning of the yearNet cash (used in) / generated fromoperating activitiesNet cash used in investing activitiesNet cash from / (used in) financing activitiesNet increase / (decrease) inCash and cash equivalentsCash and cash equivalents at the beginning of the year

Rupees in million 2009 2008

8,845 968 515 (47) (62)

4,226 1,241 2,106

4,387 11,146

2,412 1,640 1,287

386 4,586 5,806

11,146

7

(1,084)(72)

1,157

1

9

10,751 1,575

889 239 179

4,182 940

2,562 4,086

10,816

2,262 1,640 1,108

315 4,883 5,806

10,816

9

162 (228)

76

10

19

10,863 1,457

910 463 345

3,981 1,047 2,580 4,203

10,989

2,672 1,640

656 521

4,840 6,011

10,989

19

453 (56)

(400)

(3)

16

14,759 1,365

659 (13)

(113)

4,035 1,658 3,392 5,827

12,616

2,513 1,640

567 1,319 5,936 7,896

12,616

16

(601)(302)

905

2

19

12,729 1,514

866 (18)

(117)

3,905 1,550 4,173 6,615

13,213

2,442 1,640

499 2,501 5,598 8,632

13,213

19

599 (104)(489)

6

25

13,262 1,488

802 247 112

4,468 1,541 2,476

5,104 12,543

2,826 2,291

287 1,070 5,568

7,139 12,543

25

379 (110)(288)

(19)

6

2010201120122013


Performance Indicators

Profitability Ratios

Liquidity Ratios

Activity / Turnover Ratios

Investment / Market Ratio

Capital Structure Ratios

Gross profit ratioNet profit to salesEBITDA margin to sales *Operating leverage ratioReturn on equityReturn on capital employed

Current ratioQuick ratioCash to current liabilities Cash flow from operations to sales

Inventory turnoverNo of days in inventoryDebtor turnoverNo of days in receivablesCreditors turnoverNo of days in payablesTotal assets turnoverProperty, plant and equipment turnoverOperating cycle

Basic and diluted earning /(loss) per sharePrice earning ratioDividend Yield ratio **Dividend Payout ratio **Dividend Cover ratio **Cash dividend **Stock dividend **Market value per share - At the end of the year- Highest during the year- Lowest during the yearBreak up value w/o surplus on revaluationBreak up value with surplus on revaluation

Financial leverage ratioWeighted average cost of debtLong term debt to Equity ratioInterest Cover ratio

2009 2008

10.95 (0.70)

9.77 (5)

(2.56) (0.74)

0.76 0.50 0.15

(4.62)

7 51

5 69 23 16

0.79 2.09 105

(1.25) (46.67)

- - - - -

58.52 75.00 48.75 49.02 82.35

2.60 10.77 53.37

0.92

14.65 1.67

12.37 400 7.91 2.07

0.70 0.51 0.33 9.39

8 43

5 79 27 14

0.99 2.57 109

3.64 6.73

- - - - -

24.50 70.10 18.50 45.96 79.30

2.81 12.93 48.99

1.29

13.41 3.17

11.90 (218)

12.90 4.00

0.70 0.50 0.27

10.68

9 39

4 86 23 16

0.99 2.73 109

7.00 3.08 6.95

21.42 4.67

15.00 -

21.57 34.26 18.79 54.31 87.64

2.23 9.22

24.56 1.82

9.25 (0.77)

5.20 (140) (4.52) (1.26)

0.74 0.51 0.23 0.98

10 37

5 74 15 24

1.17 3.66

87

(2.31) (6.90)

- - - - -

15.90 28.00 13.25 51.06 84.40

2.73 8.24

22.55 0.97

11.89 (0.92)

7.81 (324) (4.79) (1.29)

0.77 0.57 0.29

11.67

7 52

3 108

6 59

0.96 3.26 102

(2.38) (3.74)

- - - - -

8.90 15.90

7.27 49.62 82.95

2.61 11.52 20.43

0.98

11.22 0.84 8.04 283 3.96 1.26

0.71 0.48 0.08 8.40

8 48

4 91

7 52

1.06 2.97

87

2.27 7.78

- - - - -

17.70 20.05

8.60 57.43

103.98

2.15 9.39

10.16 1.42

2010201120122013

%%%%%%

TimesTimes

%%

TimesDays

TimesDays

TimesDays

TimesTimes

Days

RsTimes

%%

Times%%

RsRsRsRsRs

Times%%

Times

* EBITDA stands for earning before interest, taxes, depreciation and amortization.** This includes final dividend recommended by Board of Directors subsequent to year end.

22 Crestex

Vertical Analysis

Balance Sheet (Rs. in millions)

Total assets

Shareholders equity

Total equity and liabilities

Profit and Loss Account (Rs. in millions)

Gross profit

Profit from operations

Profit / (loss) before taxation

Profit / (loss) after taxation

Property, plant and equipmentIntangible assetsInvestment in an associateLong term investmentsLong term loans and advancesLong term deposits and prepayments Deferred income tax assetStores, spare parts and loose toolsStock in tradeTrade debtsLoans and advancesShort term deposits and prepaymentsAccrued interestOther receivablesShort term investmentsCash & bank balances

Issued, subscribed and paid up share capitalReserves

Surplus on revaluation of operating fixed assetsLong term financingLiabilities against assets subject to finance leaseDeferred liabilityTrade and other payablesAccrued mark-up Short term borrowingsCurrent portion of non-current liabilitiesProvision for taxation

SalesCost of sales

Distribution costAdministrative expensesOther operating expensesOther income

Finance costShare of profit / (loss) from associate

Taxation

For the last six financial years 2013

4,468 2

358 2,553

4 7

47 124

1,541 2,476

305 25

5 566

56 6

492 2,334

2,291 210

77 -

1,070 161

5,568 221 119

13,262 11,774

686 187

19 206

584 29

135

12,543

2,826

12,543

1,488

802

247

112

2012

3,905 4

329 2,287

3 7

63 152

1,550 4,173

267 41

4 353

50 25

492 1,950

1,640 401

98 -

2,501 145

5,598 267 121

12,729 11,215

629 200

13 194

761 (123)

99

13,213

2,442

13,213

1,514

866

(18)

(117)

2011

4,035 -

452 2,255

3 3

42 160

1,658 3,392

309 67

3 182

37 19

492 2,021

1,640 512 55

- 1,319

141 5,936

350 151

14,759 13,395

641 203

41 179

527 (145)

100

12,616

2,513

12,616

1,365

659

(13)

(113)

2010

3,981 -

618 255

1,929 3 -

170 1,047 2,580

225 6 -

109 50 16

492 2,180

1,640 656

- 9

521 107

4,840 452

91

10,863 9,407

470 182

79 185

567 120

119

10,989

2,672

10,989

1,457

910

463

345

2009

4,182 -

485 228

1,812 2

20 174 940

2,562 239

1 22 62 65 19

492 1,770

1,640 1,108

- -

315 177

4,883 357

73

10,751 9,175

393 168 376 251

816 165

59

10,816

2,262

10,816

1,575

889

239

179

2008

4,226 -

320 570

1,632 4 6

215 1,241 2,106

458 2

10 115 231

9

492 1,920

1,640 1,287

- -

386 119

4,586 399 316

8,845 7,877

374 128 165 215

613 51

15

11,146

2,412

11,146

968

515

(47)

(62)

37.9 -

2.9 5.1

14.6 0.0 0.1 1.9

11.1 18.9

4.1 0.0 0.1 1.0 2.1 0.1

4.4 17.2

14.7 11.6

- -

3.5 1.1

41.1 3.6 2.8

100.0 89.1

4.2 1.4 1.9 2.4

6.9 0.6

0.2

100

21.6

100

10.9

5.8

(0.5)

(0.7)

%

38.7 -

4.5 2.1

16.8 0.0 0.2 1.6 8.7

23.7 2.2 0.0 0.2 0.6 0.6 0.2

4.5 16.4

15.2 10.2

- -

2.9 1.6

45.1 3.3 0.7

100.0 85.3

3.7 1.6 3.5 2.3

7.6 1.5

0.6

100

20.9

100

14.7

8.3

2.2

1.7

%

36.2 -

5.6 2.3

17.6 0.0

- 1.5 9.5

23.5 2.0 0.1

- 1.0 0.5 0.1

4.5 19.8

14.9 6.0

- 0.1 4.7 1.0

44.0 4.1 0.8

100.0 86.6

4.3 1.7 0.7 1.7

5.2 1.1

1.1

100

24.3

100

13.4

8.4

4.3

3.2

%

32.0 -

3.6 17.9

0.0 0.0 0.3 1.3

13.1 26.9

2.4 0.5 0.0 1.4 0.3 0.1

3.9 16.0

13.0

4.1 0.4

- 10.5

1.1 47.0

2.8 1.2

100.0 90.8

4.3 1.4 0.3 1.2

3.6 (1.0)

0.7

100

19.9

100

9.2

4.5

(0.1)

(0.8)

%

29.6 0.0 2.5

17.3 0.0 0.1 0.5 1.2

11.7 31.6

2.0 0.3 0.0 2.7 0.4 0.2

3.7 14.8

12.4 3.0 0.7

- 18.9

1.1 42.4

2.0 0.9

100.0 88.1

4.9 1.6 0.1 1.5

6.0 (1.0)

0.8

100

18.5

100

11.9

6.8

(0.1)

(0.9)

%

35.6 0.0 2.9

20.4 0.0 0.1 0.4 1.0

12.3 19.7

2.4 0.2 0.0 4.5 0.4 0.0

3.9 18.6

18.3 1.7 0.6

- 8.5 1.3

44.4 1.8 0.9

100.0 88.8

5.2 1.4 0.1 1.6

4.4 0.2

1.0

100

22.5

100

11.2

6.0

1.9

0.8

%


Horizontal Analysis

Balance Sheet (Rs. in millions)

Total assets

Shareholders equity

Total equity and liabilities

Profit and Loss Account (Rs. in millions)

Gross profit

Profit from operations



Property, plant and equipmentIntangible assetsInvestment in an associateLong term investmentsLong term loans and advancesLong term deposits and prepayments Deferred income tax assetStores, spare parts and loose toolsStock in tradeTrade debtsLoans and advancesShort term deposits and prepaymentsAccrued interestOther receivablesShort term investmentsCash & bank balances


Surplus on revaluation of operating fixed assetsLong term financingLiabilities against assets subject to finance leaseDeferred liabilityTrade and other payablesAccrued mark-up Short term borrowingsCurrent portion of non-current liabilitiesProvision for taxation

SalesCost of sales

Distribution costAdministrative expensesOther operating expensesOther income

Finance costShare of profit / (loss) from associate

Taxation

For the last six financial years

4,468 2

358 2,553

4 7

47 124

1,541 2,476

305 25

5 566

56 6

492 2,334

2,291

210 77

- 1,070

161 5,568

221 119

13,262 11,774

686 187

19 206

584 29

135

12,543

2,826

12,543

1,488

802

247

112

2013

14.4 100.0

8.8 11.6 33.3

- 100.0 (18.4)

(0.6) (40.7)

14.2 (39.0) 100.0

60.3 12.0

(76.0)

- 19.7

39.7

(47.6) (21.4)

(57.2) 11.0 (0.5)

(17.2) (1.7)

4.2 5.0

9.1 (6.5) 46.2

6.2

(23.3) (123.6)

36.4

(5.1)

15.7

(5.1)

(1.7)

(7.4)

(1,472)

(195.7)

3,905 4

329 2,287

3 7

63 152

1,550 4,173

267 41

4 353

50 25

492 1,950

1,640 401

98 -

2,501 145

5,598 267 121

12,729 11,215

629 200

13 194

761 (123)

99

13,213

2,442

13,213

1,514

866

(18)

(117)

2012

(3.2) 100.0 (27.1)

1.4 10.0

177.8 100.0

(5.1) (6.5) 23.0

(13.6) (38.9) 100.0

94.1 33.5 34.9

- (3.5)

(0.0) (21.7)

79.4

89.7 3.0

(5.7) (23.8) (19.9)

(13.8) (16.3)

(1.9) (1.4)

(68.2) 8.4

44.4 (15.2)

(1.0)

4.7

(2.8)

4.7

10.9

31.5

33.7

3.1

4,035 -

452 2,255

3 3

42 160

1,658 3,392

309 67

3 182

37 19

492 2,021

1,640 512 55

- 1,319

141 5,936

350 151

14,759 13,395

641 203

41 179

527 (145)

100

12,616

2,513

12,616

1,365

659

(13)

(113)

2011

1.4 -

(26.9) 783.8 (99.9) (10.9) 100.0

(5.7) 58.3 31.5 37.6

1,027 100.0

66.2 (24.7)

12.9

- (7.3)

(0.0) (22.0) 100.0

(100.0) 152.9

31.9 22.6

(22.4) 66.2

35.9 42.4

36.3 11.5

(48.1) (3.1)

(7.0) (220.8)

(15.8)

14.8

(6.0)

14.8

(6.3)

(27.6)

(102.9)

(132.9)

3,981 -

618 255

1,929 3 -

170 1,047 2,580

225 6 -

109 50 16

492 2,180

1,640

656 - 9

521 107

4,840 452

91

10,863 9,407

470 182

79 185

567 120

119

10,989

2,672

10,989

1,457

910

463

345

2010

(4.8) -

27.3 12.0

6.4 27.5

(100.0) (2.5) 11.3

0.7 (6.1)

318.8 (100.0)

76.8 (23.8) (13.3)

- 23.2

0.0 (40.8)

- 100.0

65.5 (39.8)

(0.9) 26.6 23.9

1.0 2.5

19.7 8.1

(79.1) (26.5)

(30.5) (27.4)

99.7 92.5

1.6

18.2

1.6

(7.5)

2.4

94.3

4,182 -

485 228

1,812 2

20 174 940

2,562 239

1 22 62 65 19

492 1,770

1,640 1,108

- -

315 177

4,883 357

73

10,751 9,175

393 168 376 251

816 165

59 179

10,816

2,262

10,816

1,575

889

239

2009

(1.0) -

51.7 (60.0)

11.0 (37.7) 213.9 (19.1) (24.2)

21.7 (47.8)

(8.6) 117.4 (46.3) (71.8) 120.8

- (7.8)

(0.0) (13.9)

- -

(18.4) 48.8

6.5 (10.5) (76.8)

21.5 16.5

4.9 31.9

127.7 17.1

33.1 225.6

303.1

(3.0)

(6.2)

(3.0)

62.7

72.5

(608.2)

(390.2)

4,226 -

320 570

1,632 4 6

215 1,241 2,106

458 2

10 115 231

9

492 1,920

1,640 1,287

- -

386 119

4,586 399 316

8,845 7,877

374 128 165 215

613 51

15 (62)

11,146

2,412

11,146

968

515

(47)

% % % % % 2008 %

(5.0) -

100.0 (49.1)

9.4 10.0

100.0 5.8

26.8 67.4

495.4 (70.9)

33.5 (24.6) (53.7)

16.4

10.0 (24.5)

(0.0) (23.1)

- (100.0)

20.0 4.2

49.3 7.8

100.0

54.3 51.4

61.2 6.7

76.7 (56.8)

32.0 100.0

(49.6)

8.7

(19.3)

8.7

82.9

(11.4)

(140.1)

(170.3)

24 Crestex

Statement of Compliancewith Best Practices of Code of Corporate Governance

This statement is being presented to comply with the Code of Corporate Governance contained in Listing Regulations of Karachi, Lahore and Islamabad Stock Exchanges 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.

Company has applied the principles contained in the CCG in the following manner:

1 Company encourages representation of independent non-executive Directors and directors representing minority interests on its Board of Directors. At present Board includes:

CategoryNon-Executive Directors

Executive DirectorIndependent Director

NameMr. Ahsan MehantiMr. Khalid BashirMr. Khurram Mazhar KarimMr. Muhammad ArshadMr. Nasir ShafiMr. Zeshan AfzalMr. Muhammad AnwarMr. Muhammad Asif

2

3

4

5

6

7

8

Independent directors meets the criteria of independence under clause i (b) of the CCG.

Directors have confirmed that none of them is serving as a Director in more than ten listed companies, including this company (excluding the listed subsidiaries of listed holding companies where applicable).

All resident Directors of 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.

No casual vacancy has occurred in the Board during the year ended 2013.

Company has prepared a 'Code of Conduct' and has ensured that appropriate steps have been taken to disseminate it throughout the company along with its supporting policies and procedures.

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 dates on which they were approved or amended has been maintained.

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. No new appointment of CEO has been made neither there is any change in remuneration of non-executive directors during the year.

Meetings of the Board were presided over by the Chairman and the Board meets 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

10

11

12

13

14

15

16

17

18

19

20

21

Directors of the company have participated in Orientation Course at group level to apprise them of their duties and responsibilities. Director(s), who have not participated in these, have been apprised and adequately briefed.

Board has approved the terms of appointment and remuneration of Chief Financial Officer (CFO), Corporate Secretary and Head of Internal Audit as recommended by the Human Resource and Remuneration Committee.

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

Financial Statements of the company were duly endorsed by CEO and CFO before approval by the Board.

Directors, CEO and Executives do not hold any interest in the shares of the company other than that disclosed in the pattern of shareholding.

Company has complied with all corporate and financial reporting requirements of the CCG.

Board has formed an Audit Committee. It comprises three members, all of them are non-executive Directors including Chairman of the Committee.

Meetings of the audit committee were held at least once in every quarter prior to approval of interim and final results of company and as required by the CCG. The terms of reference of the Committee have been formed and advised to the Committee for compliance.

Board has formed a Human Resource and Remuneration Committee. It comprises three members, whom two are non-executive Directors and the Chairman of the Committee is a non-executive Director.

Board has set-up an effective internal audit function manned by suitably qualified and experienced personnel who are conversant with policies and procedures of the company.

Statutory auditors of the company have confirmed that they have been given a satisfactory rating under the Quality Control Review program of the ICAP, 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 the ICAP.

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.

The 'closed period', prior to the announcement of interim/final results, and business decisions, which may materially affect the market price of company's securities, was determined and intimated to directors, employees and stock exchange(s).


26 Crestex

22

23

Material/price sensitive information has been disseminated among all market participants at once through stock exchange(s).

We confirm that all other material principles contained in CCG have been complied with.

(Muhammad Anwar)Chief Executive Officer

On behalf of the Board



Review Report to the Members on Statement of Compliancewith 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 THE CRESCENT TEXTILE MILLS LIMITED ("the Company") for the year ended June 30, 2013 to comply with the Listing Regulations of the respective Stock Exchanges, 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 are not required to consider whether the Board's statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.

Further, Listing Regulations of the Karachi, Lahore and Islamabad Stock Exchanges require the Company to place before the Board of Directors for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price recording proper justification for using such alternate pricing mechanism. Further, all such transactions are also required to be separately placed before the audit committee. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the audit committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not.

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 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 June 30, 2013.

RIAZ AHMAD & COMPANYChartered Accountants

Name of engagement partner:Liaqat Ali PanwarDate: October 03, 2013Faisalabad

28 Crestex

AUDITORS' REPORT TO THE MEMBERS

We have audited the annexed balance sheet of THE CRESCENT TEXTILE MILLS LIMITED as at June 30, 2013 and the related profit and loss account, statement of comprehensive income, 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; andiii) 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, statement of comprehensive income, 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 June 30, 2013 and of the profit, its comprehensive income, its cash flows and changes in equity for the year then ended; and

(d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

RIAZ AHMAD & COMPANYChartered Accountants

Name of engagement partner:Liaqat Ali PanwarDate: October 03, 2013Faisalabad


Balance Sheet as at June 30, 2013

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Total equity

LIABILITIES

NON-CURRENT LIABILITIES

CURRENT LIABILITIES

TOTAL LIABILITIES

TOTAL EQUITY AND LIABILITIES

Authorized share capital100 000 000 (2012: 100 000 000) ordinary shares of Rupees 10 each


Surplus on revaluation of operating fixedassets - net of deferred income tax

Long term financingLiabilities against assets subject to finance lease

Trade and other payablesAccrued mark-up Short term borrowingsCurrent portion of non-current liabilitiesProvision for taxation

CONTINGENCIES AND COMMITMENTS

2013 2012

1,000,000

492,099 1,949,587 2,441,686

1,640,374

400,816 97,700

498,516

2,500,919 144,982

5,598,601 266,963 120,944

8,632,409 9,130,925

13,212,985

1,000,000

492,099 2,333,608 2,825,707

2,290,846

209,517 77,488

287,005

1,070,136 161,267

5,567,762 221,264 119,226

7,139,655 7,426,660

12,543,213

34

5

67

89

1011

12

Note(Rupees in thousand)

(Muhammad Anwar)Chairman & Chief Executive

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

30 Crestex

(Muhammad Arshad)Director

Balance Sheet as at June 30, 2013

ASSETS

NON-CURRENT ASSETS

CURRENT ASSETS

Property, plant and equipmentIntangible assetsInvestment in an associateLong term investmentsLong term loans and advancesLong term deposits and prepayments Deferred income tax asset

Stores, spare parts and loose toolsStock-in-tradeTrade debtsLoans and advancesShort term deposits and prepaymentsAccrued interestOther receivablesShort term investmentsCash and bank balances

TOTAL ASSETS

2013 2012

3,905,398 3,801

328,711 2,286,826

3,035 7,442

63,179 6,598,392

151,628 1,550,144 4,173,190

267,075 40,549

3,758 353,211

50,363 24,675

6,614,593

13,212,985

4,467,905 1,900

358,244 2,552,989

3,961 7,106

47,185 7,439,290

124,229 1,540,529 2,476,089

304,652 25,012

5,433 565,548

56,275 6,156

5,103,923

12,543,213

13141516171819

20 21 22 23 24 25 26 27 28



SalesCost of salesGross profit

Distribution costAdministrative expensesOther expenses

Other incomeProfit from operations

Finance costShare of profit / (loss) from associateProfit / (loss) before taxation

TaxationProfit / (loss) after taxation

Earnings / (loss) per share - basic and diluted (rupees)

2013 2012

12,728,719 (11,214,543)

1,514,176

(628,788) (200,428)

(12,629) (841,845)

672,331

194,192 866,523

(761,125) (122,839)

(17,441)

(99,648) (117,089)

(2.38)

13,262,052 (11,774,006)

1,488,046

(686,176) (187,080)

(18,550) (891,806)

596,240

205,722 801,962

(584,460) 29,533

247,035

(135,103) 111,932

2.27

2930

313233

34

35

36

37



Profit and Loss Accountfor the Year Ended June 30, 2013



32 Crestex


Other comprehensive income

Items that will not be reclassified to profit or (loss)

Items that may be reclassified subsequently to profit or (loss):

Surplus arising on remeasurement of available for saleinvestments to fair value

Other comprehensive income for the year

Total comprehensive income / (loss) for the year

2013 2012

(117,089)

-

45,876

45,876

(71,213)

111,932

-

272,075

272,075

384,007

(Rupees in thousand)

Statement of Comprehensive Incomefor the Year Ended June 30, 2013





Cash Flow Statementfor the Year Ended June 30, 2013

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations

CASH FLOWS FROM INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Finance cost paid Income tax paidDividend paid Workers' profit participation fund paidNet increase in long term loans and advances Net decrease / (increase) in long term deposits and prepaymentsNet cash generated from operating activities

Capital expenditure on property, plant and equipmentCapital expenditure on intangible assetsProceeds from sale of property, plant and equipmentDividend receivedNet cash used in investing activities

Proceeds from long term financingRepayment of long term financingLiabilities against assets subject to finance lease - netShort term borrowings - net

Net cash used in 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 (note 28)

2013 2012

1,485,183 (756,229) (117,303)

(4) (7,789)

(308) (4,922)

598,628

(123,216) (5,702)

8,838 16,314

(103,766)

150,000 (357,132)

55,503 (337,089)

(488,718)

6,144

18,531

24,675

1,113,506 (567,775) (160,395)

(12) (5,605)

(926) 336

379,129

(162,904) -

32,072 21,233

(109,599)

- (245,480)

(11,730) (30,839)

(288,049)

(18,519)

24,675

6,156

38





34 Crestex

Statement of Changes in Equityfor the Year Ended June 30, 2013



CAPITALRESERVE

Fair valueGeneral

Dividendequalization

Unappropriatedprofit /

(accumulatedloss)

Sub total TOTAL

SHARECAPITAL

TOTALEQUITY

REVENUE RESERVES

RESERVES


Balance as at June 30, 2011



Transfer from surplus on revaluationof operating fixed assets on accountof incremental depreciation - net ofdeferred income tax

Loss for the yearOther comprehensive income for the year Total comprehensive loss for the year

Transfer from surplus on revaluationof operating fixed assets on accountof incremental depreciation - net ofdeferred income tax

Profit for the yearOther comprehensive income for the year Total comprehensive income for the year


103,912

-

-45,87645,876

149,788

-

-272,075272,075

421,863

1,773,643

-

---

1,773,643

-

---

1,773,643

30,000

-

---

30,000

-

---

30,000

113,231

14

(117,089)-

(117,089)

(3,844)

14

111,932-

111,932

108,102

1,916,874

14

(117,089)-

(117,089)

1,799,799

14

111,932-

111,932

1,911,745

2,020,786

14

(117,089)45,876

(71,213)

1,949,587

14

111,932272,075384,007

2,333,608

2,512,885

14,

(117,089)45,876

(71,213)

2,441,686

14

111,932272,075384,007

2,825,707

492,099

-

- - -

492,099

-

- - -

492,099


Notes to theFinancial Statements

36 Crestex

Notes to the Financial Statements

THE COMPANY AND ITS ACTIVITIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

Statement of compliance

Accounting convention

Critical accounting estimates and judgments

Useful lives, patterns of economic benefits and impairments

Inventories

The Crescent Textile Mills Limited (the Company) is a public limited company incorporated in Pakistan under the Companies Act, 1913 (Now Companies Ordinance, 1984). The registered office of the Company is situated at 45-A, Off: Zafar Ali Road, Gulberg-V, Lahore. Its shares are quoted on all the Stock Exchanges in Pakistan. The Company is engaged in the business of textile manufacturing comprising of spinning, combing, weaving, dyeing, bleaching, printing, stitching, buying, selling and otherwise dealing in yarn, cloth and other goods and fabrics made from raw cotton and synthetic fiber(s) and to generate, accumulate, distribute, supply and sale of electricity. The Company also operates a cold storage unit.

The significant accounting policies applied in the preparation of these financial statements are set out below.These policies have been consistently applied to all years presented, unless otherwise stated:

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 or directives of the Companies Ordinance, 1984 shall prevail.

These financial statements have been prepared under the historical cost convention, except for the freehold andleasehold land measured at revalued amounts and certain financial instruments carried at fair value.

The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Company'sfinancial statements or where judgments were exercised in application of accounting policies are as follows:

Estimates with respect to residual values and useful lives and pattern of flow of economic benefits are based on the analysis of the management of the Company. Further, the Company reviews the value of assets for possible impairment on annual basis. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with a corresponding effect on the depreciation charge and impairment.

Net realizable value of inventories is determined with reference to currently prevailing selling prices lessestimated expenditure to make sales.

1.

2.1

a)

b)

c)

for the Year Ended June 30, 2013


38 Crestex


Taxation

Provision for doubtful debts

Impairment of investment in equity method accounted for associated company

Amendments to published approved standards that are effective in current year and are relevant to the Company

Amendments to published approved standards that are effective in current year but not relevant to the Company

Standards and amendments to published approved standards that are not yet effective but relevant to the Company

In making the estimates for income tax currently payable by the Company, the management takes into accountthe current income tax law and the decisions of appellate authorities on certain issues in the past.

The Company reviews its receivable balances against any provision required for any doubtful balances on anongoing basis. The provision is made while taking into consideration expected recoveries, if any.

In making an estimate of recoverable amount of the Company's investment in equity method accounted for associated company, the management considers future cash flows.

Following amendments to published approved standards are mandatory for the Company's accounting periods beginning on or after July 01, 2012:

IAS 1 (Amendments), ‘Presentation of Financial Statements’ (effective for annual periods beginning on or after July 01, 2012). The main change resulting from these amendments is a requirement for entities to group items presented in Other Comprehensive Income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in OCI. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

There are other amendments to the published approved standards that are mandatory for accounting periods beginning on or after July 01, 2012 but are considered not to be relevant or do not have any significant impact onthe Company's financial statements and are therefore not detailed in these financial statements.

Following standards and amendments to existing standards have been published and are mandatory for theCompany's accounting periods beginning on or after July 01, 2013 or later periods:

IFRS 7 (Amendment), ‘Financial Instruments: Disclosures’ (effective for annual periods beginning on or after January 01, 2013). The International Accounting Standards Board (IASB) has amended the accounting requirements and disclosures related to offsetting of financial assets and financial liabilities by issuing amendments to IAS 32 ‘Financial Instruments: Presentation’ and IFRS 7. These amendments are the result of IASB and US Financial Accounting Board undertaking a joint project to address the differences in their respective accounting standards regarding offsetting of financial instruments. The clarifying amendments to IAS 32 are effective for annual periods beginning on or after January 01, 2014. However, these amendments are not expected to have a material impact on the Company’s financial statements.

d)

e)

f)




IFRS 9 'Financial Instruments' (effective for annual periods beginning on or after January 01, 2015). It addresses the classification, measurement and recognition of financial assets and financial liabilities. This is the first part of a new standard on classification and measurement of financial assets and financial liabilities that shall replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. IFRS 9 has two measurement categories: amortized cost and fair value. All equity instruments are measured at fair value. A debt instrument is measured at amortized cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. For liabilities, the standard retains most of the IAS 39 requirements. These include amortized-cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. This change shall mainly affect financial institutions. There shall be no impact on the Company’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss, and the Company does not have any such liabilities.

IFRS 12 ‘Disclosures of Interests in Other Entities’ (effective for annual periods beginning on or after January 01, 2013). This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles. This standard is notexpected to have a material impact on the Company’s financial statements.

Amendments to IFRS 12 (effective for annual periods beginning on or after January 01, 2013) provide additional transition relief in by limiting the requirement to provide adjusted comparative information to only the preceding comparative period. Also, amendments to IFRS 12 eliminate the requirement to provide comparative informationfor periods prior to the immediately preceding period.

IFRS 13 ‘Fair value Measurement’ (effective for annual periods beginning on or after January 01, 2013). This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. This standard is not expected to have a material impact on the Company’s financial statements.

IAS 36 (Amendments) ‘Impairment of Assets’ (effective for annual periods beginning on or after January 01, 2014). Amendments have been made in IAS 36 to reduce the circumstances in which the recoverable amount of assets or cash-generating units is required to be disclosed, clarify the disclosures required and to introduce an explicit requirement to disclose the discount rate used in determining impairment (or reversals) where recoverable amount (based on fair value less costs of disposal) is determined using a present value technique. However, theamendments are not expected to have a material impact on the Company’s financial statements.

On May 17, 2012, IASB issued Annual Improvements to IFRSs: 2009 – 2011 Cycle, incorporating amendments to five IFRSs more specifically in IAS 1 'Presentation of Financial Statements' and IAS 32 ‘Financial Instruments: Presentation’, that are considered relevant to the Company's financial statements. These amendments are effective for annual periods beginning on or after January 01, 2013. These amendments are unlikely to have asignificant impact on the Company's financial statements and have therefore not been analyzed in detail.


40 Crestex


Standards, interpretations and amendments to published approved standards that are not yet effective and not considered relevant to the Company

Employees retirement benefits

Liabilities against assets subject to finance lease

Provisions

Dividend and other appropriations

Taxation

Current

Deferred

There are other standards, amendments to published approved standards and new interpretations that are mandatory for accounting periods beginning on or after July 01, 2013 but are considered not to be relevant or do not have any significant impact on the Company's financial statements and are therefore not detailed in these financial statements.

The Company operates a recognized provident fund for all its permanent employees. Equal monthly contributions are made to the fund both by the Company and the employees at the rate of 6.25 percent of the basic salary plus cost of living allowance. Obligation for contributions to defined contribution plan is recognized as an expense in the profit and loss account as and when incurred. Employees are eligible under the scheme on completion of prescribed qualifying period of service.

Leases, where the Company has substantially all the risks and rewards of ownership of assets are classified as finance leases. At inception, finance leases are recorded at the lower of present value of minimum lease payments under the lease agreement and the fair value of the assets. The related rental obligations, net of finance cost, are included in liabilities against assets subject to finance lease. The liabilities are classified as current and non-current depending upon the timing of the payment. Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate on the balance outstanding. The interest element of the rental is charged to profit and loss account over the lease term.

Provisions are recognized when the Company has a 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 obligations and a reliable estimate of the amount can be made.

Dividend distribution to the Company's shareholders is recognized as a liability in the Company's financial statements in the period in which the dividends are declared and other appropriations are recognized in the period in which these are approved by the Board of Directors.

Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year, if enacted. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years.

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the

g)

2.2

2.3

2.4

2.5

2.6




corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets 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 utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

Property, plant and equipment

Operating fixed assets and depreciation

2.7

2.7.1


Cost / Revalued amount

Depreciation

Fixed assets are stated at cost less accumulated depreciation and any identified impairment loss, except freehold land which is stated at revalued amount less any identified impairment loss and leasehold land which is stated at revalued amount less accumulated depreciation and any identified impairment loss. Capital work-in-progress is stated at cost less any identified impairment loss. Cost of operating fixed assets consists of purchase cost, borrowing cost pertaining to the construction / erection period ofqualifying assets and directly attributable costs of bringing the assets to working condition.

Valuations are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its carrying amount.

Subsequent costs are included in the asset's carrying amount or recognized 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 the cost of the item can be measured reliably. All other repair and maintenance costs are charged to profit and loss account during the period in which they are incurred.

Any revaluation surplus is credited to surplus on revaluation of operating fixed assets except to the extent that it reverses a revaluation decrease of the same asset previously recognized in profit and loss account, in which case the increase is recognized in profit and loss account. A revaluation deficit is recognized in profit and loss account, except to the extent that it offsets an existing surplus on the same asset recognized in surplus on revaluation of operating fixed assets.

An annual transfer from surplus on revaluation of operating fixed assets to unappropriated profit / (accumulated loss) is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation based on the assets original cost. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. All transfers from surplus on revaluation of operating fixed assets are net of applicable deferred taxation.

Depreciation on assets is charged from the month in which an asset is acquired while no depreciation is

a)

b)

Assets subject to finance lease

Assets subject to operating lease

Intangible assets

These are initially recognized at lower of present value of minimum lease payments under the lease agreements and fair value of assets. Subsequently, these assets are stated at cost less accumulated depreciation and any identified impairment loss. Assets so acquired are depreciated over their expected useful lives. Depreciation of leased assets is charged to profit and loss account.

Depreciation on additions to leased assets is charged from the month in which an asset is acquired while no depreciation is charged for the month in which the asset is disposed of.

Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit and loss account on a straight line basis over the lease term.

Intangible assets represent the cost of computer software acquired and are stated at cost less accumulated amortization and any identified impairment loss.

Amortization is charged to profit and loss account on straight line basis so as to write off the cost of an asset over its estimated useful life. Amortization is charged from the month in which the asset is acquired or capitalized while no amortization is charged for the month in which the asset is disposed of. Intangible assets are amortized over a period of three years.

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 amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. When carrying value exceeds the respective recoverable amount, assets are written down to their recoverable amounts and resulting impairment is recognized in profit and loss account currently. The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. When an impairment loss is recognized, the amortization charge is adjusted in the future periods to allocate the asset's revised carrying amount over its estimated useful life.

2.7.2

2.7.3

2.8

42 Crestex

Notes to the Financial Statementsfor the Year Ended June 30, 2013

charged for the month in which the asset is disposed of.

Depreciation is charged to profit and loss account on reducing balance method, except leasehold land on which depreciation is charged on straight line method to write off the cost of operating fixed assets over their expected useful lives at the rates mentioned in Note 13.1. The residual values and useful lives are reviewed by the management, at each financial year-end and adjusted if impact on depreciation is significant.

An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in the profit and loss account in the year the asset is de-recognized.

De-recognitionc)



Investments

Investments at fair value through profit or loss

Held-to-maturity investments

Available for sale investments

Quoted

Unquoted

Classification of an investment is made on the basis of intended purpose for holding such investment. Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such designation on regular basis.

Investments are initially measured at fair value plus transaction costs directly attributable to acquisition, except for “Investment at fair value through profit or loss” which is initially measured at fair value.

The Company assesses at the end of each reporting period whether there is any objective evidence that investments are impaired. If any such evidence exists, the Company applies the provisions of IAS 39 'Financial Instruments: Recognition and Measurement' to all investments, except investment in an associate, which is tested for impairment in accordance with the provisions of IAS 36 'Impairment of Assets' .

Investments classified as held-for-trading and those designated as such are included in this category. Investments are classified as held-for-trading if these are acquired for the purpose of selling in the short term. Gains or losses on investments held-for-trading are recognized in profit and loss account.

Investments with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long-term investments that are intended to be held to maturity are subsequently measured at amortized cost. This cost is computed as the amount initially recognized minus principal repayments, plus or minus the cumulative amortization, using the effective interest method, of any difference between the initially recognized amount and the maturity amount. For investments carried at amortized cost, gains and losses are recognized in profit and loss account when the investments are de-recognized or impaired, as well as through the amortization process.

Investments intended to be held for an indefinite period of time, which may be sold in response to need for liquidity, or changes to interest rates or equity prices are classified as available for sale. After initial recognition, investments which are classified as available for sale are measured at fair value. Gains or losses on available for sale investments are recognized directly in statement of other comprehensive income until the investment is sold, de-recognized or is determined to be impaired, at which time the cumulative gain or loss previously reported in statement of other comprehensive income is included in profit and loss account. These are sub-categorized as under:

For investments that are actively traded in organized capital markets, fair value is determined by reference to stock exchange quoted market bids at the close of business on the balance sheet date.

The investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, subsequent to after initial recognition are carried at cost less any identified impairment loss.

2.9

2.9.1

2.9.2

2.9.3


44 Crestex


Investment in an associate

Inventories

Stores, spare parts and loose tools

Stock-in-trade

Cash and cash equivalents

Revenue recognition

The Company’s investment in its associate is accounted for under the equity method of accounting. An associate is an entity in which the Company has significant influence and which is neither a subsidiary nor a joint venture. Under the equity method, the investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the Company’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortized. The profit and loss account reflects the share of the results of operations of the associate. Where there has been a change recognized directly in the equity of the associate, the Company recognizes its share of any changes and discloses this, when applicable, in the statement of changes in equity.

The reporting dates of the associate and the Company are identical and the associate’s accounting policies conform to those used by the Company for like transactions and events in similar circumstances.

Inventories, except for stock in transit and waste materials, are stated at lower of cost and net realizable value. Net realizable value signifies the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make a sale. Cost is determined as follows:

Usable stores, spare parts and loose tools are valued principally at moving average cost, while items considered obsolete are carried at nil value. Items-in-transit are stated at invoice amount plus other charges paid thereon.

Stock of raw materials, except for stock-in-transit, is valued principally at the lower of weighted average cost and net realizable value.

Stocks-in-transit are valued at cost comprising invoice value plus other charges paid thereon.

Cost of work-in-process and finished goods comprises of cost of direct materials, labour and appropriate manufacturing overheads.

Stock of waste materials is stated at net realizable value.

Cash and cash equivalents comprise cash in hand, cash at banks on current accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Following specific recognition criteria must also be met before revenue is recognized:

2.9.4

2.10

2.11

2.12




Sale of goods and electricity

Interest income

Dividends

Rental income

Financial instruments

Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on the delivery of the goods. Revenue from sale of electricity is recognized at the time of transmission.

Revenue is recognized as interest accrues (using the effective interest method that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).

Dividend on equity instruments is recognized when right to receive the dividend is established.

Revenue is recognized when rent is accrued.

Financial instruments carried on the balance sheet include investments, deposits, trade debts, loans and advances, interest accrued, other receivables, cash and bank balances, long term financing, liabilities against assets subject to finance lease, short term borrowings, accrued mark-up and trade and other payables etc.

Financial assets and liabilities are recognized when the Company becomes a party to contractual provisions of the instrument.

Initial recognition is made at fair value plus transaction costs directly attributable to acquisition, except for "financial instruments at fair value through profit or loss" which are initially measured at fair value.

The particular measurement methods adopted are disclosed in the following individual policy statements associated with each item and in the accounting policy of investments.

2.13


Borrowings

Trade debts

Loans and receivables

Borrowings are recognized initially at fair value and are subsequently stated at amortized cost. Any difference between the proceeds and the redemption value is recognized in the profit and loss account over the period of the borrowings using the effective interest method.

Trade debts originated by the Company are recognized and carried at original invoice amount less an allowance for any uncollectible amounts. Known bad debts are written off and provision is made against debts considered doubtful when collection of the full amount is no longer probable.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortized cost using the effective interest method. Gains and losses are recognized in profit and loss account when the loans and receivables are derecognized or impaired, as well as through the amortization process.

a)

b)

c)

Derivative financial instruments

Borrowing cost

Impairment

The Company uses derivative financial instruments such as forward currency contracts and forward currency swaps to hedge its risks associated with interest rate and foreign currency fluctuations. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting are taken directly to profit and loss account.

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of cross currency swap contracts is determined by reference to market values for similar instruments.

If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognized in equity are transferred to profit and loss account. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognized in equity remain in equity until the forecast transaction or firm commitment occurs.

Interest, mark-up and other charges on long-term finances are capitalized up to the date of commissioning of respective qualifying assets acquired out of the proceeds of such long-term finances. All other interest, mark-up and other charges are recognized in profit and loss account.

2.14

2.15

2.16

46 Crestex


Trade and other payablesLiabilities for trade and other amounts payable are initially recognized at fair value, which is normally the transaction cost.

d)

Financial assets

Assets carried at amortized cost

Available for sale financial assets

The Company assesses at the end of each reporting period whether there is a objective evidence that a financial asset or group of financial assets is impaired.

If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account. The amount of the loss is recognized in profit and loss account.

If an available for sale asset is impaired, an amount comprising the difference between its cost and its current fair value, less any impairment loss previously recognized in profit and loss, is transferred from

a)

equity to the profit and loss account. Reversals in respect of equity instruments classified as available for sale are not recognized in profit and loss account. Reversals of impairment losses on debt instruments are reversed through profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognized in profit and loss account.

The carrying amounts of the Company's non-financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of such asset is estimated. An impairment loss is recognized wherever the carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognized in profit and loss account. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit and loss account.

Non-financial assetsb)



Derecognition of financial assets and liabilities

Financial assetsA financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized where:

2.17

the rights to receive cash flows from the asset have expired;

the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass-through' arrangement; or

the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

-

-

-

Where the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Company’s continuing involvement is the amount of the transferred asset that the Company may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Company’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired.Financial liabilities

48 Crestex


Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit and loss account.

Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is legal enforceable right to set off and the Company intends either to settle on a net basis or to realize the assets and to settle the liabilities simultaneously.

These financial statements are presented in Pak Rupees, which is the Company’s functional currency. All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date, while the transactions in foreign currencies during the year are initially recorded in functional currency at the rates of exchange prevailing at the transaction date. All non-monetary items are translated into Pak Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. Exchange gains and losses are recorded in the profit and loss account.

Segment reporting is based on the operating (business) segments of the Company. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to the transactions with any of the Company's other components. An operating segment's operating results are reviewed regularly by the Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the Chief Executive Officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Those income, expenses, assets, liabilities and other balances which cannot be allocated to a particular segment on a reasonable basis are reported as unallocated.

The Company has six reportable business segments. Spinning (Producing different quality of yarn using natural and artificial fibres), Weaving (Producing different quality of greige fabric using yarn), Processing and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles), Trading (Buying and selling of garments and home textile articles), Power Generation (Generating and distributing power) and Cold Storage (Making of ice and warehousing of perishable goods).

Transactions among the business segments are recorded at arm's length prices using admissible valuation methods. Inter segment sales and purchases are eliminated from the total.

Off setting

Foreign currencies

Segment reporting

2.18

2.19

2.20




ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL3.

Ordinary shares of Rupees 10 eachfully paid in cash

Ordinary shares of Rupees 10 eachissued as fully paid bonus shares

197,811

294,288

492,099

197,811

294,288

492,099

2013 2012(Rupees in thousand)

19 781 136

29 428 787

49 209 923

19 781 136

29 428 787

49 209 923

2013 2012(Number of Shares)

Ordinary shares of the Company held by related parties as at year end are as follows:3.1

Arif Habib Corporation Limited Crescent Cotton Mills Limited Crescent FoundationCrescent Steel and Allied Products LimitedThe Crescent Textile Mills Limited-Employees Provident Fund-TrusteePremier Insurance LimitedShakarganj Mills LimitedAhsan Associates (Private) Limited

12 158 6112 681 8751 030 861

452 3791 387 048

262 000 5 898 1 563

17 980 235

12 207 1112 681 8751 030 861

452 3791 383 125

262 000 5 898 1 563

18 024 812

RESERVES4.

Composition of reserves is as follows:

Capital reserve

Revenue reserves

Fair value reserve (Note 4.1)

Dividend equalization reserveGeneral reserveUnappropriated profit / (accumulated loss)

421,863

30,000 1,773,643

108,102 1,911,745 2,333,608

149,788

30,000 1,773,643

(3,844) 1,799,799 1,949,587


2013 2012(Number of Shares)

This represents the unrealized gain on remeasurement of available for sale investments at fair value and is not available for distribution. This will be transferred to profit and loss account on realization. Reconciliation of fair value reserve is as under:

4.1

50 Crestex


Balance as at July 01Add: Fair value adjustment during the yearBalance as at June 30

149,788 272,075 421,863

103,912 45,876

149,788


SURPLUS ON REVALUATION OF OPERATINGFIXED ASSETS - NET OF DEFERRED INCOME TAX

Surplus on revaluation of operating fixed assets as at July 01Surplus on revaluation of operating fixed assetsTransferred to unappropriated profit / (accumulated loss) in respect ofincremental depreciation charged during the year - net of deferredincome tax Related deferred income tax liability

5.

1,640,487 650,603

14 1

15 2,291,075

1,640,502 -

14 1

15 1,640,487

Less:

Deferred income tax liability as at July 01Adjustment of deferred income tax liability due to re-assessment at year endIncremental depreciation charged during the yeartransferred to profit and loss account

113

117

(1) 229

2,290,846

114

-

(1) 113

1,640,374

This represents surplus resulting from revaluation of freehold land and leasehold land carried out on June 30, 2013 by Messrs Hamid Mukhtar and Company (Private) Limited, an independent valuer enrolled on panel of the State Bank of Pakistan (SBP) as per the basis stated in Note 13.1.1 to the financial statements. Previously revlaution was carried out on June 30, 2007 by an independent valuer.

5.1

6. LONG TERM FINANCING - SECURED

Financing from banking companies (Note 6.1)Less: Current portion shown under current liabilities (Note 11)

400,816 191,299 209,517

646,296 245,480 400,816



National Bank ofPakistan

National Bank ofPakistan

Allied BankLimited

Habib BankLimited

Allied BankLimited

Habib BankLimited

Habib BankLimited

MCB BankLimited

United Bank Limited

SBP refinance ratefor LTF-EOP plus

2%


2%


2%


2%


2%


3%


3%

6 months KIBORplus 2% withoutany floor or cap

3 months KIBORplus 1.25 % without

any floor or cap

-

-

23,167

113,343

22,973

14,583

32,190

91,928

102,632

400,816

12,515

41,667

46,333

188,905

32,162

20,417

41,387

128,699

134,211

646,296

12 equal halfyearly

installments

12 equal halfyearly

installments

12 equal halfyearly

installments

10 equal halfyearly

installments

12 equal halfyearly

installments

12 equal halfyearly

installments

12 equal halfyearly

installments

8 equal halfyearly

installments

19 equalquarterly

installments

January 03,2006

September 22,2006

December 29,2007

January 23,2010

February 23,2010

March 03,2010

June 08,2011

January 27,2012

February 29,2012

Quarterly

Quarterly

Quarterly

Quarterly

Quarterly

Quarterly

Quarterly

Half yearly

Quarterly

Joint pari passu charge over fixedand current assets of the Company.










6.1 Lender 2013 2012 Rate ofinterest per

annum

Number ofinstallments

Date ofrepayment of

first installment

Interestpayable

Security


52 Crestex


130,703 23,250

107,453 29,965 77,488

LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

Future minimum lease paymentsLess: Un-amortized finance chargePresent value of future minimum lease paymentsLess: Current portion shown under current liabilities (Note 11)


7.

162,224 43,041

119,183 21,483 97,700

The minimum lease payments have been discounted at an implicit interest rate of six months KIBOR plus 2.75% (2012: six months KIBOR plus 2.75%) per annum with floor of 13% per annum. The implicit interest rate used to arrive at the present value of minimum lease payments ranges from 12.16% to 13.01% (2012: 14.71% to 15.11% ) per annum. Since the implicit interest rate is linked with KIBOR so the amount of minimum lease payments and finance charge may vary from period to period. Taxes, repairs and insurance costs are to be borne by the Company. These are secured against the leased assets.

7.1

Minimum lease payments and their present values are regrouped as under:7.2

2013 2012

Not later thanone year

Later than oneyear and not later

than five years

Not later thanone year

Later than oneyear and not later

than five years

37,797 16,314

21,483

124,427 26,727

97,700

89,158 11,670

77,488

41,545 11,580

29,965

Future minimum lease paymentsLess: Un-amortized finance charge

Present value of future minimum lease payments


TRADE AND OTHER PAYABLES

Creditors (Note 8.1)Accrued liabilitiesAdvances from customersRetention money payableIncome tax deducted at sourceSales tax deducted at sourceUnclaimed dividend Payable to Employees' Provident Fund TrustWorkers' profit participation fund (Note 8.2)Other payablesWorkers' welfare fund

8.

2,116,030 287,411

81,017 66

1,981 -

6,724 112

5,436 1,908

234 2,500,919

597,804 399,996

43,726 62

723 3,187 6,712 4,333

11,700 1,893

- 1,070,136





The Company retains workers' profit participation fund for its business operations till the date of allocation to workers. Interest is paid at prescribed rate under the Companies Profit (Workers' Participation) Act, 1968 on funds utilized by the Company till the date of allocation to workers.

8.2.1

This includes amounts in aggregate of Rupees 15.309 million (2012: Rupees 26.533 million) due to related parties.

8.1

5,436 400

11,469 17,305

5,605 11,700

Workers' profit participation fund

Balance as on July 01Interest for the year (Note 35)Provision for the year (Note 33)

Less: Payments during the yearBalance as on June 30

8.2

7,389 631

5,205 13,225

7,789 5,436

14,246 685

146,336 161,267

3,378,119 1,697,600

381,469 5,457,188

110,574 5,567,762

ACCRUED MARK-UP

SHORT TERM BORROWINGS

From banking companies - secured

Long term financingLiabilities against assets subject to finance leaseShort term borrowings

Short term finances (Note 10.1 and Note 10.4)State Bank of Pakistan (SBP) refinance (Note 10.2 and Note 10.4)Short term foreign currency finances (Note 10.3 and Note 10.4)

Others - unsecured (Note 10.5)

9.

10.

18,052 464

126,466 144,982

751,069 1,700,629 3,021,429 5,473,127

125,474 5,598,601

The finances aggregating to Rupees 4,055 million (2012: Rupees 1,342 million) are obtained from banking companies under mark-up agreements and carry mark up ranging from KIBOR plus 1.75 to 3.00 percent (2012: KIBOR plus 1.75 to 3.00 percent) per annum.

Export refinances have been obtained from banking companies under SBP’s refinance scheme on which service charges at the rate of 9.20 to 11.00 percent (2012: 11.00 percent) per annum are payable. These form part of aggregate borrowing limits of Rupees 1,698 million (2012: Rupees 1,701 million).

Short term foreign currency finances amounting to Rupees 407 million (2012: Rupees 3,082 million) are available at mark up ranging from LIBOR plus 3 to 4 percent (2012: LIBOR plus 2.00 to 5.07 percent) per annum.

10.1

10.2

10.3

54 Crestex


The aggregate short term finances from banking companies are secured by way of joint pari passu charge over fixed and current assets of the Company.

This represents loan obtained from Crescent Model Farm which is repayable on demand. It carries mark up at the rate of one month KIBOR plus 1.50 percent per annum (2012: one month KIBOR plus 1.50 percent).

10.4

10.5


191,299 29,965

221,264

CURRENT PORTION OF NON-CURRENT LIABILITIES

Current portion of long term financing (Note 6)Current portion of liabilities against assets subject to finance lease (Note 7)

11.

245,480 21,483

266,963

CONTINGENCIES AND COMMITMENTS12.

Contingencies

Commitments

Guarantees of Rupees 144.833 million (2012: Rupees 127.961 million) are given by the banks of the Company to Sui Northern Gas Pipeline Limited against gas connections and Faisalabad Electric Supply Company against electricity connections.

Post dated cheques of Rupees 57.079 million (2012: Rupees 32.775 million) are issued to custom authorities in respect of duties on imported material availed on the basis of consumption and export plans. If documents of exports are not provided on due dates, cheques issued as security shall be encashable.

The Company is contingently liable to the extent of Rupees 219.200 million (2012: Rupees 183.648 million) as its share of contingent liabilities of its associate.

The Company has filed appeal with Appellate Tribunal Inland Revenue for the revision of assessment order issued under section 122(5A) of the Income Tax Ordinance, 2001 for the tax year 2008. In case of adverse decision, the Company may face tax liability of Rupees 40.691 million (2012: Appeals for the tax years 2006 and 2008 against tax liability of Rupees 44.466 million). The Company's management is confident that appeal is likely to succeed.

Commissioner Inland Revenue has filed appeals with Honourable Supreme Court of Pakistan for the recovery of sales tax liabilities on account of various provisions of Sales Tax Act, 1990. In case of adverse decision, the Company may face tax liability of Rupees 16.673 million (2012: Rupees Nil). The Company's management is confident that appeals are likely to be dismissed.

Contracts for capital expenditure are of Rupees Nil (2012: Rupees 56.114 million).

a)

i)

ii)

iii)

iv)

v)

b)

i)


Not later than one yearLater than one year and not later than five years



Letters of credit other than for capital expenditure are of Rupees 24.851 million (2012: Rupees 235.866 million).

Ijarah (operating lease) commitments - Company as lesseeThe Company obtained vehicles under ijarah (operating lease) agreement. The lease terms are of three years. The Company has given undertaking to purchase the leased vehicles on agreed purchase price at maturity.

ii)

iii)

The future aggregate minimum lease payments under ijarah (operating lease are as follows:

4,108 1,120 5,228

4,483 5,728

10,211

PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets (Note 13.1) -Owned -LeasedCapital work-in-progress (Note 13.2)

13.

4,327,131 140,774

- 4,467,905

3,756,742 139,888

8,768 3,905,398

56 Crestex

OPERATING FIXED ASSETS13.1


At June 30, 2011

Year ended June 30, 2012

At June 30, 2012

Year ended June 30, 2013

At June 30, 2013

Cost / revalued amountAccumulated depreciationNet book value

Opening net book value AdditionsDisposals: Cost / revalued amount Accumulated depreciation

Depreciation chargeClosing net book value


Opening net book value Effect of surplus on revaluationas at June 30, 2013AdditionsDisposals: Cost / revalued amount Accumulated depreciation

Depreciation chargeClosing net book value


Annual rate of depreciation (%)

1,652,700 -

1,652,700

1,652,700 -

- - -

- 1,652,700

1,652,700 -

1,652,700

1,652,700

649,470 -

- - -

- 2,302,170

2,302,170 -

2,302,170

-

6,000 (1,007)

4,993

4,993 -

- - -

(63) 4,930

6,000 (1,070)

4,930

4,930

1,133 -

- - -

(63) 6,000

7,133 (1,133)

6,000

1.01

326,516 (203,066)

123,450

123,450 -

- - -

(10,156) 113,294

326,516 (213,222)

113,294

113,294

- 13,277

- - -

(9,360) 117,211

339,793 (222,582)

117,211

5, 10

49,431 (34,095)

15,336

15,336 -

- - -

(1,502) 13,834

49,431 (35,597)

13,834

13,834

- -

- - -

(1,353) 12,481

49,431 (36,950)

12,481

5, 10

4,378,100 (2,292,273)

2,085,827

2,085,827 17,152

(7,781) 6,017

(1,764)

(209,454) 1,891,761

4,387,471 (2,495,710)

1,891,761

1,891,761

- 125,753

(26,921) 22,964 (3,957)

(192,530) 1,821,027

4,486,303 (2,665,276)

1,821,027

10

18,667 (11,695)

6,972

6,972 1,886

- - -

(1,641) 7,217

20,553 (13,336)

7,217

7,217

- 18

- - -

(1,444) 5,791

20,571 (14,780)

5,791

20

46,830 (33,017)

13,813

13,813 7,492

(2,512) 2,313 (199)

(3,136) 17,970

51,810 (33,840)

17,970

17,970

- 12,630

- - -

(4,436) 26,164

64,440 (38,276)

26,164

20

6,104 (4,069)

2,035

2,035 -

- - -

(407) 1,628

6,104 (4,476)

1,628

1,628

- 78

- - -

(333) 1,373

6,182 (4,809)

1,373

20

24,166 (19,516)

4,650

4,650 138

(131) 131

-

(2,374) 2,414

24,173 (21,759)

2,414

2,414

- 1,291

- - -

(1,470) 2,235

25,464 (23,229)

2,235

50

113,523 (98,411)

15,112

15,112 -

- - -

(1,511) 13,601

113,523 (99,922)

13,601

13,601

- -

- - -

(1,360) 12,241

113,523 (101,282)

12,241

10

6,707,795 (2,736,113)

3,971,682

3,971,682 28,421

(15,908) 12,125 (3,783)

(239,578) 3,756,742

6,720,308 (2,963,566)

3,756,742

3,756,742

650,603 156,672

(61,844) 43,484

(18,360)

(218,526) 4,327,131

7,465,739 (3,138,608)

4,327,131

26,814 (447)

26,367

26,367 122,933

- - -

(9,412) 139,888

149,747 (9,859)

139,888

139,888

- 15,000

- - -

(14,114) 140,774

164,747 (23,973) 140,774

10

85,758 (38,964)

46,794

46,794 1,753

(5,484) 3,664

(1,820)

(9,334) 37,393

82,027 (44,634)

37,393

37,393

- 3,625

(34,923) 20,520

(14,403)

(6,177) 20,438

50,729 (30,291)

20,438

20

Land-Freehold

Land-Leasehold

Buildings onfreehold land

Buildings onleasehold land

Plant andmachinery

Factory tools& equipment

Gas andelectric

InstallationsVehicles Stand-by

equipmentTotalOffice

equipment

Furnitureand

fixtures

Plant andmachinery

Leased AssetsOwned Assets



The land of the Company, except the land situated at Faisalabad, had been revalued as on June 30, 2013 using the present market value at Rupees 95.600 million. Whereas the land situated at Faisalabad granted to the Company by the Government of Punjab in 1958 under Land Acquisition Act, 1894 for the specific purpose of using it as an industrial undertaking had been revalued at Rupees 2,212.570 million taking into account conditions specified under various directives of the Government by an independent valuer, Messrs Hamid Mukhtar and Company (Private) Limited. The Company had revalued this land based on the advice from its legal counsel. Previously land of the Company, except the land situated at Faisalabad was revalued on June 30, 2007 at Rupees 62 million and the land situated at Faisalabad at Rupees 1,597 Million by Messrs Hamid Mukhtar and Company (Private) Limited.

Fixed assets of the Company with carrying amount of Rupees 4,307 million (2012: Rupees 3,719 million) are subject to first pari passu charge to secured bank borrowings.

If the freehold and leasehold land were measured using the cost model, the carrying amount would be as follows:

13.1.1

13.1.2

13.1.3


2013 2012Cost Net book

valueCost Accumulated

depreciationNet book

value


13,403 3,740

17,143

13,403 3,692

17,095

- 979 979

- 1,027 1,027

13,403 4,719

18,122

13,403 4,719

18,122

Land - FreeholdLand - Leasehold

Depreciation charge for the year has been allocated as follows:13.1.4


207,204 14,114

221,318 11,322

232,640

Cost of sales (Note 30) -Owned assets -Leased assets

Administrative expenses (Note 32)

224,815 9,412

234,227 14,763

248,990

Accumulateddepreciation

58 Crestex

Detail of operating fixed assets, exceeding the book value of Rupees 50,000 disposed of during the year is as follows:13.1.5


Plant and MachineryArtoz Babcock Stenter7-Compartment

Generator Set 45 KVA

Simplex Frame

Suzuki Cultus

Suzuki MehranSuzuki Cultus

Suzuki Cultus

Suzuki Mehran

Suzuki Cultus

Suzuki Cultus

Suzuki Cultus

Suzuki Mehran

Honda Civic

Suzuki Cultus

Honda City

Honda City

Suzuki Cultus

Suzuki Mehran

Vehicles

1

1

1

1

11

1

1

1

1

1

1

1

1

1

1

1

1

25,232

745

595

26,572

609

400 629

629

499

863

857

629

400

1,313

754

864

863

621

469

22,050

162

484

22,696

432

265 425

425

251

315

334

425

265

992

448

622

621

411

278

3,182

583

111

3,876

177

135 204

204

248

548

523

204

135

320

306

242

242

210

191

3,300

515

1,425

5,240

525

340 510

499

356

630

634

465

255

803

548

716

690

499

323

Negotiation

Negotiation

Negotiation

Negotiation

NegotiationCompany Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Adnan Idrees,House No. 106-M, AllamaIqbal Colony, Faisalabad.Green Dots School, ShadmanRoad, Near Gaaye SoapFactory, Faisalabad.Khalid Mehmood, Rasool Pura,Tehsil Sohawa, District Jhelum

Ch. Muhammad Sadiq Ali,Gulistan Colony, Tahir Road,Faisalabad -do-Mr. Daud Hussain Malik,Company EmployeeMr. Abdul Shakoor,Company EmployeeMr. Naseer Ahmad,Company EmployeeMr. Muhammad Manzoor, Company EmployeeMr. Nasir Ali,Company EmployeeMr. Muhammad Ejaz,Company EmployeeMr. Ghulam Mustafa,Company EmployeeMr. Ilyas Tahir,Company EmployeeMr. Asim Siddique,Company EmployeeMr. Younis,Company EmployeeMr. Awais Waris,Company EmployeeMr. Nadeem Tahir,Company EmployeeMr. Shahbaz Ali,Company Employee



Net bookvalue

SaleproceedsCostQtyDescription Mode of disposal Particulars of purchasers

425

193

251

217

216

618

681

193

444

265

421

618

278

278

958 320

681

628

542

447

621

1

1

1

1

1

1

1

1

1

1

1

1

1

1

11

1

1

1

1

1

629

529

499

514

524

1,206

947

529

609

400

699

1,206

469

525

1,285 878

902

1,206

1,311

609

863

204

336

248

297

308

588

266

336

165

135

278

588

190

247

327 558

221

578

769

162

242

484

375

353

390

353

870

480

386

394

274

566

862

330

341

1,050 641

683

881

986

401

679

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Insurance ClaimCompany Policy

Company Policy

Company Policy

Company Policy

Company Policy

Company Policy

Ms. Sadia Yasmin,Company EmployeeMr. Muhammad Zubair,Company EmployeeMr. Anwar ul Haq,Company EmployeeMr. Ilyas Tahir,Company EmployeeMr. Fayyaz Hussain,Company EmployeeMr. Nasir Mahmood,Company EmployeeMr. Sohail Maqbool,Company EmployeeMr. Imran Arif,Company EmployeeMr. Mansoor Tariq,Company EmployeeMr. Shahzad Nagi,Company EmployeeMr. Zeeshan Ahmed,Company EmployeeMr. Ijaz Ahmed Bashir,Company EmployeeMr. Muhammad Aslam,Company EmployeeMr. Eitzaz Ahmad,Company EmployeePremier Insurance LimitedMr. Muhammad Akram Khan,Company EmployeeMr. Talib Butt,Company EmployeeMr. Arshad Mehmood,Company EmployeeMr. Tahir Shafique,Company EmployeeMs. Rehana MalIk,Company EmployeeMr. Attiq ur Rehman,Company Employee

Suzuki Cultus

Suzuki Mehran

Suzuki Mehran

Suzuki Mehran

Suzuki Mehran

Honda City

Mitsubishi Lancer

Suzuki Mehran

Suzuki Cultus

Suzuki Mehran

Suzuki Cultus

Honda City

Suzuki Mehran

Suzuki Mehran

Honda CivicSuzuki Cultus

Honda City

Honda City

Honda City

Suzuki Cultus

Honda City





Net bookvalue


60 Crestex


Suzuki Cultus

Honda City

Honda City

Toyota Corolla

Honda City

Honda Civic

Aggregate of other itemsof property, plant andequipment with individualbook values not exceedingRupees 50,000

1

1

1

1

1

1

629

1,436

1,256

1,269

1,316

1,524

34,168

1,10461,844

435

429

570

715

801

1,014

19,768

1,01843,482

194

1,007

686

554

515

510

14,398

8618,360

499

1,026

1,310

870

788

1,050

25,112

1,72032,072

Company Policy

Company Policy

Negotiation

Company Policy

Company Policy

Company Policy

Mr. Saqib Gulveiz,Company EmployeeMr. Sakhawat Ali,Company EmployeeRana Haroon RasheedMadina Town, Faisalabad.Mr. Murtaza Sadiq Butt,Company EmployeeMr. Kashif Javed,Company EmployeeMr. Ikram Haider,Company Employee


- -

3,801 -

(1,901) 1,900 5,702

(3,802) 1,900

33.33%

Capital work in progress

INTANGIBLE ASSETS

Plant and machinery

Computer SoftwareOpening net book valueAddition during the yearAmortization (Note 32)Closing net book valueCost Accumulated amortizationNet book valueAmortization rate (per annum)

13.2

14.

8,768 8,768

- 5,702

(1,901) 3,801 5,702

(1,901) 3,801

33.33%



Net bookvalue




The Company holds 32.99% (2012: 32.99%) interest in Crescent Bahuman Limited (CBL), an unquoted public limited company involved in manufacturing of textile products. The summarized financial information of CBL is as follows:

15.1


269,264

59,447 29,533 88,980

358,244

INVESTMENT IN AN ASSOCIATE

Crescent Bahuman Limited - unquoted26 926 433 (2012: 26 926 433) ordinary shares ofRupees 10 each (Note 15.1)Share of post acquisition reserve:As at July 01Share of profit / (loss) after income taxAs at June 30

15.

16.

269,264

182,286 (122,839)

59,447 328,711

5,623,838 3,911,565

(6,716,693) (990,655)

1,828,055

9,473,950 180,021

89,521

1,123

5,124

Associate's balance sheet:

Associate's revenue and profit:

LONG TERM INVESTMENTS

Available for saleRelated partiesQuotedCrescent Jute Products Limited

Crescent Cotton Mills Limited

Current assetsNon-current assetsCurrent liabilitiesNon-current liabilitiesNet assets

RevenueProfit / (loss) before taxation for the yearProfit / (loss) after taxation for the year

2 738 637 (2012: 2 738 637) fully paid ordinary shares ofRupees 10 each. Equity held 11.52% (2012: 11.52%)

975 944 (2012: 975 944) fully paid ordinary shares of Rupees 10 each. Equity held 4.56% (2012: 4.56%)

4,875,092 3,753,559

(6,043,475) (901,607)

1,683,569

6,473,307 (334,557) (372,351)

1,643

5,124



4,629

35

20,624

5,924

91,625

1,976,000

500

213

2,162

Shams Textile Mills Limited

Premier Insurance Limited

Shakarganj Mills Limited

Crescent Steel and Allied Products Limited

Unquoted

Crescent Bahuman Limited

Others

Quoted

Jubilee Spinning and Weaving Mills Limited

Crescent Fibres Limited



5 427 488 (2012: 5 427 488) fully paid ordinary shares of Rupees 10 each. Equity held 7.81% (2012: 7.81%)

2 746 050 (2012: 2 746 050) fully paid preference shares of Rupees 10 each. Equity held 7.94% (2012: 7.94%)

6 209 676 (2012: 6 209 676) fully paid ordinary shares of Rupees 10 each. Equity held 11% (2012: 11%)

197 600 000 (2012: 197 600 000) fully paid preference shares of Rupees 10 each. Equity held 73.37% (2012: 73.37%) (Note 16.1)

Premier Financial Services (Private) Limited500 (2012: 500) fully paid ordinary shares ofRupees 1,000 each. Equity held 2.22% (2012: 2.22%)



4,629

35

20,624

6,728

91,625

1,976,000

500

454

2,162

62 Crestex




41,998 2,149,957

- 403,032

2,552,989

Unquoted

Cresox (Private) Limited4 199 792 (2012: 4 199 792) fully paid ordinary shares of Rupees 10 each. Equity held 11.66% (2012: 11.66%)

Less: Impairment loss charged to profit and loss account (Note 33)Add: Fair value adjustment

41,998 2,151,522

(1,565) 136,869

2,286,826

This represents 5 % unlisted, non-voting, cumulative, participatory and convertible preference shares issued by Crescent Bahuman Limited.

16.1

5,660 1,699 3,961

LONG TERM LOANS AND ADVANCES

Considered good - secured:EmployeesLess: Current portion shown under current assets (Note 23)

4,427 1,392 3,035

17.

7,074 58

7,132 26

7,106

(118,691) (8,898)

(227) (127,816)

LONG TERM DEPOSITS AND PREPAYMENTS

DEFERRED INCOME TAX ASSET

Security depositsPrepayments

Less: Current portion shown under current assets (Note 24)

Taxable temporary differencesTax depreciation allowanceTax on investment in associateSurplus on revaluation of operating fixed assets

7,123 647

7,770 328

7,442

(114,147) (5,945)

(113) (120,205)

18.

19.

These represent Qarz-e-Hasna given to employees and are secured against balance to the credit of employees in the provident fund trust. These are recoverable in equal monthly installments.

The fair value adjustment in accordance with the requirements of IAS 39 'Financial Instruments: Recognition and Measurement' arising in respect of staff loans is not considered material and hence not recognized.

17.1

17.2

64 Crestex



Deductible temporary differences

STORES, SPARE PARTS AND LOOSE TOOLS

STOCK-IN-TRADE

TRADE DEBTS

Considered good:

Considered doubtful:

Unused tax losses

StoresSpare partsLoose tools

Raw materials (Note 21.1)Work-in-processFinished goods (Note 21.2)Waste

Raw materials include stock in transit of Rupees Nil (2012: Rupees 107.249 million).

Finished goods include stock in transit of Rupees 84.800 million (2012: Rupees 85.220 million).

Secured (against letters of credit)Unsecured (Note 22.2)

Others - unsecured

Less: Provision for doubtful debts

As at July 01, Less: Provision reversed during the year As at June 30,

183,384 63,179

131,449 20,112

67 151,628

327,394 140,101

1,077,513 5,136

1,550,144

191,500 3,981,690 4,173,190

26,078

33,747 7,669

26,078 -

20.

21.

21.1

21.2

22.

175,001 47,185

108,307 15,852

70 124,229

431,837 158,593 944,565

5,534 1,540,529

258,340 2,217,749 2,476,089

26,078

26,078 -

26,078 -



As at June 30, 2013, trade debts due from other than related parties of Rupees 526.673 million (2012: Rupees 864.387 million) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default. The ageing analysis of these trade debts is as follows:

22.1

167,988 325,058

33,627 526,673

361,803 -

361,803

Upto 1 month1 to 6 monthsMore than 6 months

Crescent Bahuman LimitedSuraj Cotton Mills Limited

This represents amounts due from following related parties:

356,616 311,429 196,342 864,387

260,405 1,341

261,746

22.2

As at June 30, 2013, trade debts due from related parties amounting to Rupees 355.047 million (2012: Rupees 256.896 million) were past due but not impaired. The Company is charging mark up on all overdue balances receivable from Crescent Bahuman Limited. The ageing analysis of these trade debts is as follows:

22.2.1


6,051 63,203

285,793 355,047

Upto 1 month1 to 6 monthsMore than 6 months

5,614 29,626

221,656 256,896

As at June 30, 2013, trade debts of Rupees 26.078 million (2012: Rupees 26.078 million) were impaired and provided for. The ageing of these trade debts was more than three years. These trade debts do not include amounts due from related parties.

22.3

80 1,699

46,554 619

255,700 304,652

LOANS AND ADVANCES

Considered good:Employees - interest freeCurrent portion of long term loans and advances (Note 17)Advances to suppliers Letters of creditIncome tax

93 1,392

48,536 805

216,249 267,075

23.

66 Crestex



SHORT TERM DEPOSITS AND PREPAYMENTS

Considered good:

OTHER RECEIVABLES

Considered good:

Considered doubtful:

SHORT TERM INVESTMENTS

Available for saleOthers - quoted

Margin depositShort term prepaymentsCurrent portion of long term deposits and prepayments (Note 18)

Due from related partiesExport rebate and claimsSales tax and special excise duty refundableDividend receivable from related partiesMiscellaneous

Export rebate and sales tax refundableLess: Provision for doubtful debts As at July 01 Less: Provision written off during the year As at June 30

Samba Bank Limited 21 897 007 (2012: 21 897 007) fully paid ordinary sharesof Rupees 10 each. Equity held 1.53% (2012: 1.53%) Add: Fair value adjustment

38,254 1,967

328 40,549

1,000 29,764

142,072 178,489

1,886 353,211

11,018

12,952 1,934

11,018 -

37,444 12,919 50,363

24.

26.

27.

23,557 1,429

26 25,012

107 35,711

241,005 277,441

11,284 565,548

11,018

11,018 -

11,018 -

37,444 18,831 56,275

ACCRUED INTEREST

This includes interest receivable from the associate, Crescent Bahuman Limited on overdue receivable balance.

25.

29.2




CASH AND BANK BALANCES

With banks:

Cash in hand

SALES

Local

On current accounts Including US$ 7,173 (2012: US$ 224,400)

Local (Note 29.1)Export (Note 29.2)Export rebateDuty drawback

SalesWasteProcessing incomeCold storage

Less: Sales tax

23,832 843

24,675

3,273,048 9,349,671

49,955 56,045

12,728,719

3,021,453 166,800

74,574 14,597

3,277,424 4,376

3,273,048

28.

29.

29.1

5,692 464

6,156

4,858,067 8,338,548

48,884 16,553

13,262,052

4,683,267 131,002

78,200 14,820

4,907,289 49,222

4,858,067

Exchange gain due to currency rate fluctuations relating to export sales amounting to Rupees 81.653 million (2012: Rupees 235.998 million) has been included in export sales.

68 Crestex



COST OF SALES

Raw material consumed

Raw material consumed (Note 30.1)Cloth and yarn purchasedStores, spare parts and loose tools consumedPacking materials consumedProcessing and weaving chargesSalaries, wages and other benefits (Note 30.2)Fuel and powerRepair and maintenanceInsuranceDepreciation (Note 13.1.4)Other factory overheads

Work-in-processOpening stockClosing stock

Cost of goods manufacturedFinished goodsOpening stockClosing stock

Cost of sales - purchased for resale

Opening stockAdd: Purchased during the year

Less: Closing stock

3,506,791 961,255 583,741 314,365 379,961 560,550

1,194,684 58,222 16,789

234,227 15,845

7,826,430

133,539 (140,101)

(6,562) 7,819,868

1,167,910 (1,082,649)

85,261 7,905,129 3,309,414

11,214,543

356,554 3,370,382 3,726,936 (220,145)

3,506,791

30.

30.1

4,185,876 1,470,371

670,922 377,434 476,165 744,563

1,856,535 58,857 15,723

221,318 16,635

10,094,399

140,101 (158,593)

(18,492) 10,075,907

1,082,649 (950,099)

132,550 10,208,457

1,565,549 11,774,006

220,145 4,397,568 4,617,713 (431,837)

4,185,876

Salaries, wages and other benefits include provident fund contribution of Rupees 12.476 million (2012: Rupees 10.962 million) by the Company.

30.2

31.1




DISTRIBUTION COST

ADMINISTRATIVE EXPENSES

Auditors' remuneration:

Salaries, wages and other benefits (Note 31.1)Freight and shipmentDuties and other chargesCommission to selling agentsAdvertisement

Salaries, wages and other benefits (Note 32.1)Meeting fee to non-executive directorsTraveling, conveyance and entertainmentRent, rates and taxes (Note 32.2)Repair and maintenanceInsurancePrinting and stationeryCommunicationSubscriptionLegal and professional Auditors' remuneration (Note 32.3)Software maintenance Amortization (Note 14)Depreciation (Note 13.1.4)Other charges

Audit feeHalf yearly reviewReimbursable expenses

17,902 195,077

79,829 335,212

768 628,788

109,455 370

14,096 5,774

22,554 2,614 1,781 3,642 3,769 5,741 1,190 7,109 1,901

14,763 5,669

200,428

1,000 150

40 1,190

31.

32.

32.3

24,123 220,299

88,548 352,958

248 686,176

113,905 450

11,986 6,129

16,418 2,445 1,807 2,762 1,790 7,221 1,200 1,272 1,901

11,322 6,472

187,080

1,000 150

50 1,200


32.1

32.2


This includes ijarah (operating lease) rentals amounting to Rupees 4.327 million (2012: Rupees 3.006 million) of vehicles.

70 Crestex



OTHER EXPENSES

Donations (Note 33.1)Impairment loss on investments (Note 16)Workers' profit participation fund (Note 8.2)

There is no interest of any director or his spouse in donees’ fund.

Dividend income (Note 34.1)Mark-up on loans and advances (Note 34.2)

Sale of empties and scrapRental incomeGain on sale of property, plant and equipmentReversal of provision for doubtful debtsReversal of workers' welfare fund Sundry receipts

Crescent Bahuman Limited-Preference dividend Premier Insurance Limited Crescent Steel and Allied Products Limited Shams Textile Mills Limited Crescent Cotton Mills Limited

Crescent Fibres Limited

This relates to markup charged on overdue receivables from Crescent Bahuman Limited (an associate).

OTHER INCOME

Income from financial assets

Income from non-financial assets

Dividend Income

From related parties:

From others:

5,859 1,565 5,205

12,629

114,493 43,508

158,001

15,521 818

5,055 7,669 7,125

3 36,191

194,192

98,800 169

15,524 - -

114,493

- 114,493

33.

33.1

34.

34.1

34.2

7,081 -

11,469 18,550

120,185 49,739

169,924

20,990 841

13,712 -

234 21

35,798 205,722

98,800 169

18,629 1,015 1,220

119,833

352 120,185




FINANCE COST

PROVISION FOR TAXATION

Deferred income tax effect due to:

Mark up on:Long term financingLiabilities against assets subject to finance leaseShort term borrowingsInterest on workers' profit participation fund (Note 8.2)Bank charges and commission

Charge for the year: Current (Note 36.1) Prior year adjustment

Deferred (Note 36.2)

Tax depreciation allowanceUnused tax lossesTax on investment in associateSurplus on revaluation of operating fixed assets

Opening balance as at July 01,Related to surplus on revaluation of operating fixed assets

75,016 12,884

662,707 631

9,887 761,125

120,944 (468)

120,476 (20,828)

99,648

114,147 (183,384)

5,945 113

(63,179) 42,351

- (20,828)

35.

36.

36.2

46,709 16,312

510,756 400

10,283 584,460

119,226 -

119,226 15,877

135,103

118,691 (175,001)

8,898 227

(47,185) 63,179

(117) 15,877

35.1

35.2

Net gain on fair value of derivative financial instruments amounting to Rupees 29.778 million (2012: Rupees 36.067 million) is adjusted against finance cost.

Exchange loss on foreign currency loans of the Company amounting to Rupees 61.382 million (2012: Rupees 188.699 million) is included in finance cost.

36.1 Provision for current taxation represents the tax deducted against export sales, minimum tax on local sales and tax on different heads of other income under the relevant provisions of the Income Tax Ordinance, 2001. Tax losses available as at June 30, 2013 are Rupees 514.709 million (2012: Rupees 523.953 million). Reconciliation of tax expenses and product of accounting profit multiplied by the applicable tax rate is not presented, being impracticable.

72 Crestex



EARNINGS / (LOSS) PER SHARE - BASIC AND DILUTED

CASH GENERATED FROM OPERATIONS


Adjustments for non-cash charges and other items:

Working capital changes

There is no dilutive effect on the basic earnings /(loss) per share which is based on:Profit / (loss) for the year (Rupees in thousand)Weighted average number of ordinary shares (Numbers)Earnings / (loss) per share (Rupees)

Depreciation AmortizationGain on sale of property, plant and equipmentDividend incomeImpairment loss on investmentsProvision for workers' profit participation fundReversal of workers' welfare fundShare of (profit) / loss from associateFinance costWorking capital changes (Note 38.1)

Decrease / (increase) in current assets:- Stores, spare parts and loose tools- Stock-in-trade- Trade debts- Loans and advances- Short term deposits and prepayments- Accrued Interest - Other receivables

(Decrease) / increase in trade and other payables

(117,089) 49 209 923

(2.38)

(17,441)

248,990 1,901

(5,055) (114,493)

1,565 5,205

(7,125) 122,839 761,125 487,672

1,485,183

8,519 107,859

(781,279) 13,365 26,555

(952) (73,156)

(699,089) 1,186,761

487,672

37.

38.

38.1

111,932 49 209 923

2.27

247,035

232,640 1,901

(13,712) (120,185)

- 11,469

(234) (29,533) 584,460 199,665

1,113,506

27,399 9,615

1,697,101 1,874

15,537 (1,675)

(113,385) 1,636,466

(1,436,801) 199,665



39. REMUNERATION OF CHIEF EXECUTIVE OFFICER AND EXECUTIVES

The aggregate amount charged in the financial statements for the year for remuneration including all benefits to Chief Executive Officer and Executives of the Company is as follows:

Chief Executive Officer2013 2012 2013 2012

Executives

62,601

14,119 243

5,660 600

5,264 5,866 1,498 3,474

99,325 55

49,445

11,591 192

4,443 548

3,989 4,463

986 2,764

78,421 46

6,000

2,700 -

600 - - -

1,554 375

11,229 1

6,000

2,700 -

600 - - -

1,497 375

11,172 1

Managerial remuneration AllowancesHouse rentCost of livingUtilitiesServantMedicalSpecialReimbursable expensesContribution to provident fund

Number of persons

39.1

39.2

39.3

Certain Executives are provided with rent free furnished accommodation and free use of Company maintained vehicles. The Chief Executive Officer is provided with free use of the Company maintained vehicles and residential telephone.

Aggregate amount charged in the financial statements for meeting fee to seven directors (2012: seven directors) was Rupees 450,000 (2012: Rupees 370,000).

No remuneration was paid to any director of the Company.


17,023 22,911 39,934

EMPLOYEES’ RETIREMENT BENEFITS

Contribution to Employees’ Provident Fund TrustContribution to Employees’ Old Age Benefit Institution

15,078 19,084 34,162

40.

41. PROVIDENT FUND RELATED DISCLOSURE

Following information is based on un-audited financial statements of the provident fund for the years ended June 30, 2013 and June 30, 2012. The audit of the provident fund for the years ended June 30, 2011 and June 30, 2012 is in progress.


74 Crestex


Size of the fund - Total assetsCost of investmentsPercentage of investments madeFair value of investments

The break-up of cost of investments is as follows:

782,449 782,323

99.98 767,604

41.1

42.

873,431 869,092

99.50 875,613

690,834 95,693 64,536 18,029

869,092

609,623 95,671 59,030 17,999

782,323

2013 2012

78%12%

8%2%

100%

80%11%

7%2%

100%

Bank depositsAdvances to membersDefence saving certificatesListed securities

(Number of persons)

2013 2012(Percentage)

41.2 The above investments out of provident fund have been made in accordance with the provisions of Section 227 of the Companies Ordinance, 1984 and the rules formulated for this purpose.


6 0526 229

6 3436 071

NUMBER OF EMPLOYEES

Number of employees as on June 30,Average number of employees during the year

43. TRANSACTIONS WITH RELATED PARTIES

The related parties comprise associated companies, staff retirement fund and key management personnel. The Company in the normal course of business carries out transactions with various related parties. Detail of transactions with related parties, other than those which have been specifically disclosed elsewhere in these financial statements are as follows:

124,904 128,768

3,554 119,833

22,702 -

49,739 17,023

122,347 92,998

2,138 114,493

21,348 67,500 43,508 15,078

Associated companiesPurchase of goods and servicesSale of goods and servicesProcessing incomeDividend income Insurance premium paidInsurance claim receivedInterest incomeContribution to Employees' Provident Fund Trust




2013 2012(Figures in thousand)

PLANT CAPACITY AND ACTUAL PRODUCTION

Spinning

Weaving

Power Plant

100 % plant capacity converted to 20s count basedon 3 shifts per day for 1 095 shifts (2012: 1 098 shifts)

Actual production converted to 20s count basedon 3 shifts per day for 966 shifts (2012: 855 shifts)

100 % plant capacity at 50 picks based on 3 shiftsper day for 1 095 shifts (2012: 1 098 shifts)

Actual production converted to 50 picks basedon 3 shifts per day for 849 shifts (2012: 798 shifts)

Generation capacityActual generation

38 668

28 690

97 344

56 128

258 100

44.

38 562

33 078

97 078

61 293

258 84

Dyeing, Finishing and Home Textile

The plant capacity of these divisions is indeterminable due to multi product plants involving varying processes of manufacturing.

44.1 REASONS FOR LOW PRODUCTION

Under utilization of available capacity of textile facilities is mainly due to gas and electricity shutdowns. Actual power generation in comparison to installed capacity is low due to periodical scheduled maintenance and availability of FESCO connections.

(Kgs.)

(Kgs.)

(Sq. Mtr.)

(Sq. Mtr.)

(MWH)(MWH)

76 Crestex


SEGMENT INFORMATION

Sales External Intersegment

Cost of salesGross profit

Distribution costAdministrative expenses

Profit / (loss) beforetaxation and unallocatedincome and expensesUnallocated income and expenses:

Other expensesOther incomeFinance cost Share of profit / (loss)from associate TaxationProfit / (loss) after taxation

Total assets for reportablesegmentsUnallocated assetsTotal assets as per balance sheetAll segment assets are allocated to reportable segments other than those directly relating Total liabilities for reportablesegmentsUnallocated liabilitiesTotal liabilities as per balance sheetAll segment liabilities are allocated to reportable segments other than trade and other

Reconciliation of reportable segment assets and liabilities:

45.

45.1

4,274,796 2,597,308 6,872,104

(6,155,196) 716,908

(69,761) (65,183)

(134,944)

581,964

1,681,435

2,606,539

1,317,940 3,964,825 5,282,765

(5,153,502) 129,263

(82,047) (25,172)

(107,219)

22,044

1,339,314

1,304,806

5,702,923 -

5,702,923 (5,069,340)

633,583

(530,693) (86,462)

(617,155)

16,428

1,771,541

2,011,342

5,028,812 -

5,028,812 (4,201,922)

826,890

(479,232) (92,636)

(571,868)

255,022

1,910,854

2,829,470

1,523,164 5,006,634 6,529,798

(6,448,917) 80,881

(72,253) (23,479) (95,732)

(14,851)

1,224,549

1,464,948

3,009,911 2,329,617 5,339,528

(4,955,907) 383,621

(55,449) (69,881)

(125,330)

258,291

1,547,193

2,018,138

2013

Spinning

2012 2013 2012 2013 2012

Weaving Processing & Home Textile

2013

Spinning

2012 2013 2012 2013 2012

Weaving Processing & Home Textile




12,728,719 -

12,728,719 (11,214,543)

1,514,176

(628,788) (200,428) (829,216)

684,960

(12,629)194,192

(761,125)(122,839)

(99,648)(117,089)

3,357,459 -

3,357,459 (3,310,020)

47,439

(10,166) -

(10,166)

37,273

2,572,070

-

- 1,582,308 1,582,308

(1,555,975) 26,333

(2,235) (11,274) (13,509)

12,824

359,235

154,469

- 1,156,326 1,156,326

(1,034,852) 121,474

(1,894) (12,086) (13,980)

107,494

404,524

356,658

14,820 -

14,820 (9,088)

5,732

- (682) (682)

5,050

17,240

1,383

14,597 -

14,597 (9,108)

5,489

- (653) (653)

4,836

14,868

1,351

- (9,186,250) (9,186,250)

9,186,250 -

- - -

-

6,006,5426,536,671

12,543,213

6,238,6811,187,9797,426,660

- (7,450,768) (7,450,768)

7,450,768 -

- - -

-

7,788,8235,424,162

13,212,985

6,510,4132,620,5129,130,925

13,262,052 -

13,262,052 (11,774,006)

1,488,046

(686,176) (187,080) (873,256)

614,790

(18,550)205,722

(584,460)29,533

(135,103)111,932

1,746,349 -

1,746,349 (1,721,740)

24,609

(11,234) -

(11,234)

13,375

952,542

-

Trading

2012 2013 2012

Power Generation Cold Storage

2013 2012

Elimination of inter-segment transactions2013 2012

Total - Company

2013 20122013

Trading

2012 2013 2012

Power Generation Cold Storage

2013 2012

Total - Company

2013 20122013


to corporate and tax assets.

payables, corporate borrowings and current tax liabilities.

Market riska)

78 Crestex


All non-current assets of the Company as at reporting date are located and operating in Pakistan.

Revenue from major customers of Company's trading segment represent Rupees 1,682 million (2012: Rupees 3,112 million). Revenue from other segments of the Company does not include any major customer.

The Company's activities expose it to a variety of financial risks: market risk (including currency risk, other price risk and interest rate risk), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The Company uses derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by the Company's finance department under policies approved by the Board of Directors. The Company's finance department evaluates and hedges financial risks. The Board provides principles for overall risk management, as well as policies covering specific areas such as currency risk, other price risk, interest rate risk, credit risk, liquidity risk, use of derivative financial instruments and non-derivative financial instruments and investment of excess liquidity.

Revenue from major customers

FINANCIAL RISK MANAGEMENT

Financial risk factors

45.3

45.4

46.

46.1


3,370,069 1,983,371 3,050,545 4,858,067

13,262,052

Geographical Information

The Company's revenue from external customers by geographical locations is detailed below:

EuropeAmerica Asia, Africa and AustraliaPakistan

45.2

3,403,935 1,473,353 4,578,383 3,273,048

12,728,719

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies.

i)


The Company is exposed to currency risk arising from various currency exposures, primarily with respect to the United States Dollar (USD) and Euro. Currently, the Company's foreign exchange risk exposure is restricted to bank balances and the amounts receivable / payable from / to the foreign entities. The Company uses forward exchange contracts to hedge its foreign currency risk, when considered appropriate. The Company's exposure to currency risk was as follows:



7,173 18,411,711

290,642 (1,786,942)

(14,355) (3,861,022)

- 12,770,920

276,287

96.6098.60

125.01128.85

Cash at banks - USDTrade debts - USDTrade debts - EuroTrade and other payables - USDTrade and other payables - EuroShort term borrowings - USDDerivative financial instruments - USDNet exposure - USDNet exposure - Euro

Following significant exchange rates were applied during the year:

Average rate Reporting date rate

Average rate Reporting date rate

Rupees per US Dollar

Rupees per Euro

224,400 39,128,776

- (427,067)

- (32,139,077) (11,630,612)

(4,843,580) -

89.4094.20

-117.90

Sensitivity analysis

Currency risk management

If the functional currency, at reporting date, had weakened / strengthened by 5% against the USD and Euro with all other variables held constant, the impact on profit / (loss) after taxation for the year would have been Rupees 59.813 million and 1.691 million (2012: Rupees 21.673 million and Rupees Nil) respectively lower / higher, mainly as a result of exchange losses / gains on translation of foreign exchange denominated financial instruments. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. In management's opinion, the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year.

The Company manages its exposure to currency risk through continuous monitoring of expected / forecast committed and non-committed foreign currency payments and receipts. Reports on forecast foreign currency transactions, receipts and payments are prepared on monthly bases, exposure to currency risk is measured and appropriate steps are taken to ensure that such exposure is minimized while optimizing return. This includes matching of foreign currency liabilities / payments to assets / receipts, using source inputs in foreign currency and arranging cross currency swaps. The Company maintains foreign currency working capital lines in order to

80 Crestex

finance production of exportable goods. Proceeds from exports are used to repay / settle / rollover the Company's obligations under these working capital lines which substantially reduces exposure to currency risk in respect of such liabilities. Balances in foreign currency are also maintained in current accounts with banking companies.

Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not exposed to commodity price risk.

The table below summarizes the impact of increase / decrease in the Karachi Stock Exchange (KSE) Index on the Company's profit / (loss) after taxation for the year and on equity (fair value reserve). The analysis is based on the assumption that the equity index had increased / decreased by 5% with all other variables held constant and all the Company's equity instruments moved according to the historical correlation with the index.

Other price risk

Sensitivity analysis

ii)


2013 2012 2013 2012

Impact on statement of comprehensiveincome (fair value reserve)

Impact on profit /(loss) after taxation

29,538 (29,538)

KSE 100 (5% increase)KSE 100 (5% decrease)

15,923 (15,923)

Equity (fair value reserve) would increase / decrease as a result of gains / losses on equity investments classified as available for sale.

This represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company has no significant interest bearing assets except for preference shares obtained from Crescent Bahuman Limited (CBL) and trade debts from CBL. The Company's interest rate risk arises from long term financing, liabilities against assets subject to finance lease, short term borrowings and trade debts of CBL. Financial instruments obtained at variable rates expose the Company to cash flow interest rate risk. Financial instruments obtained at fixed rate expose the Company to fair value interest rate risk.

At the balance sheet date the interest rate profile of the Company’s interest bearing financial instruments was:

Interest rate riskiii)

10 (10)

--

Index




Fair value sensitivity analysis for fixed rate instruments

Cash flow sensitivity analysis for variable rate instruments

Interest rate risk management

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rate at the balance sheet date would not affect profit or loss of the Company.

If interest rates, at the year end date, fluctuates by 1% higher / lower with all other variables held constant, profit / (loss) after taxation for the year would have been Rupees 36.199 million lower / higher (2012: Rupees 38.187 million higher / lower), as a result of higher / lower interest expense on floating rate financial instruments. This analysis is prepared assuming the amounts of financial instruments outstanding at balance sheet date were outstanding for the whole year.

The Company manages interest rate risk by analyzing its interest rate exposure on dynamic basis. Cash flow interest rate risk is managed by simulating various scenarios taking into consideration refinancing, renewal of existing positions and alternative financing. Based on these scenarios, the Company calculates impact on profit after taxation and equity of defined interest rate shift, mostly 100 basis points. Cross currency swaps are also arranged to transfer exposure to more stable markets.


1,976,000

206,2561,697,600

361,803

194,560107,453

3,870,162

Fixed rate instruments

Financial assets

Financial liabilities

Floating rate instruments

Financial assets

Financial liabilities

Preference shares-CBL

Long term financingShort term borrowings

Trade debts-CBL

Long term financingLiabilities against assets subject to finance leaseShort term borrowings

1,976,000

383,3861,700,629

260,405

262,910119,183

3,897,972

82 Crestex

Credit risk

Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

b)


InvestmentsLoans and advances DepositsTrade debtsAccrued interestOther receivablesBank balances

National Bank of PakistanAllied Bank LimitedHabib Bank LimitedHabib Metropolitan Bank LimitedMCB Bank LimitedNIB Bank LimitedStandard Chartered Bank(Pakistan) LimitedUnited Bank LimitedAl-Baraka Bank (Pakistan) LimitedMeezan Bank LimitedBurj Bank Limited

Banks

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate:

677 3,911 4,251

177 5,395

401 3,280

3,442 263

2,019 16

23,832

211 1,039

117 609 149

5 331

526 340

2,365 -

5,692

JCR-VISPACRAJCR-VISPACRAPACRAPACRAPACRA

JCR-VISPACRAJCR-VISJCR-VIS

AAAAA+AAAAA+AAAAA -AAA

AA+A

AAA

A-1+A1+A-1+A1+A1+A1+A1+

A-1+A1

A-1+A-1

Rating 20122013(Rupees in thousand)

AgencyLongTerm

ShortTerm


2,609,264 5,740

30,631 2,476,089

5,433 288,832

5,692 5,421,681

2,337,189 4,520

45,377 4,173,190

3,758 181,375

23,832 6,769,241

The Company's exposure to credit risk and impairment losses related to trade debts is disclosed in Note 22.


Credit risk management

Liquidity risk

The Company's financial assets do not carry significant credit risk, with the exception of trade debts, which are exposed to losses arising from any non-performance by counterparties. In respect of trade debts, the Company manages credit risk by limiting significant exposure to any single customer. Formal policies and procedures of credit management and administration of receivables are established and executed. In monitoring customer credit risk, the ageing profile of total receivables and individually significant balances, along with collection activities are reviewed on a regular basis. High risk customers are identified and restrictions are placed on future trading, including suspending future shipments and administering dispatches on a prepayment basis or confirmed letters of credit.

Due to the Company's long standing business relationships with these counterparties and after giving due consideration to their strong financial standing, the management does not expect non-performance by these counterparties on their obligations to the Company. Accordingly the credit risk is minimal.

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. At June 30, 2013 the Company had Rupees 703 million (2012: Rupees 652 million) available borrowing limits from financial institutions and Rupees 6.156 million (2012: Rupees 24.675 million) cash and bank balances. The management believes the liquidity risk to be low.

Following are the contractual maturities of financial liabilities, including interest payments. The amounts disclosed in the table are undiscounted cash flows:

Contractual maturities of financial liabilities as at June 30, 2013:

c)


147,296

41,545 - - -

188,841

Non-derivative financial liabilities:

Long term financingLiabilities against assetssubject to finance leaseTrade and other payablesAccrued mark-upShort term borrowings

85,724

47,613 - - -

133,337

110,157

20,773 - -

690,243 821,173

114,314

20,772 1,006,467

161,267 5,451,118 6,753,938

457,491

130,703 1,006,467

161,267 6,141,361 7,897,289

400,816

107,453 1,006,467

161,267 5,567,762 7,243,765

1-2 years More than2 years

6-12months

6 monthsor less

Contractualcash flows

Carryingamount


84 Crestex


1-2 years More than2 years

6-12months

6 monthsor less

Contractualcash flows

Carryingamount


Contractual maturities of financial liabilities as at June 30, 2012:

Non-derivative financial liabilities:Long term financingLiabilities against assetssubject to finance leaseTrade and other payablesAccrued mark-upShort term borrowings

The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates / mark up rates effective as at June 30. The rates of interest / mark up have been disclosed in Note 6, 7 and 10 to these financial statements.

The carrying values of all financial assets and liabilities reflected in financial statements approximate their fair values. Following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped in to levels 1 to 3 based on the degree to which fair value is observable:

Fair values of financial assets and liabilities46.2

228,530

37,798 - - -

266,328

235,658

86,629 - - -

322,287

142,717

18,899 - -

766,215 927,831

161,103

18,898 2,412,139

144,982 4,945,768 7,682,890

768,008

162,224 2,412,139

144,982 5,711,983 9,199,336

646,296

119,183 2,412,139

144,982 5,598,601 8,921,201

(Rupees in thousand) Level 1 Level 2 Level 3 Total

-

-

590,766

318,691

-

-

590,766

318,691

As at June 30, 2013Assets

As at June 30, 2012Assets



The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial instruments held by the Company is the current bid price. These financial instruments are classified under level 1 in above referred table.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value a financial instrument are observable, those financial instruments are classified under level 2 in above referred table. The Company has no such type of financial instruments as on June 30, 2013.



Financial instruments by categories46.3

(Rupees in thousand) Loans andreceivables

Availablefor sale Total

If one or more of the significant inputs is not based on observable market data, the financial instrument is classified under level 3. The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments.

2,609,264 - - - - - -

2,609,264

2,609,264 5,740

30,631 2,476,089

5,433 288,832

6,156 5,422,145

- 5,740

30,631 2,476,089

5,433 288,832

6,156 2,812,881

As at June 30, 2013Assets as per balance sheetInvestmentsLoans and advances DepositsTrade debtsAccrued interestOther receivablesCash and bank balances

(Rupees in thousand) Financial liabilities atamortized cost

400,816 107,453 161,267

5,567,762 1,006,467 7,243,765

Liabilities as per balance sheetLong term financingLiabilities against assets subject to finance leaseAccrued mark-upShort term borrowingsTrade and other payables

86 Crestex


(Rupees in thousand) Loans andreceivables

Availablefor sale Total

(Rupees in thousand) Financial liabilities atamortized cost

646,296 119,183 144,982

5,598,601 2,412,139 8,921,201

Liabilities as per balance sheetLong term financingLiabilities against assets subject to finance leaseAccrued mark-upShort term borrowingsTrade and other payables

Capital risk management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends to be paid to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry and the requirements of the lenders, the Company monitors the capital structure on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital employed. Borrowings represent long term financing, liabilities against assets subject to finance lease and short term borrowings obtained by the Company as referred to in Note 6, 7 and 10 respectively. Total capital employed includes 'total equity' as shown in the balance sheet plus 'borrowings'. The Company's strategy, which was unchanged from last year, was to maintain a gearing ratio of 60% debt and 40% equity.

46.4

2,337,189 - - - - - -

2,337,189

2,337,189 4,520

45,377 4,173,190

3,758 181,375

24,675 6,770,084

- 4,520

45,377 4,173,190

3,758 181,375

24,675 4,432,895

As at June 30, 2012Assets as per balance sheetInvestmentsLoans and advances DepositsTrade debtsAccrued interestOther receivablesCash and bank balances






6,076,031 2,825,707 8,901,738

68.26

6,364,080 2,441,686 8,805,766

72.27

BorrowingsTotal equityTotal capital employed

Gearing ratio

(Percentage)

The decrease in the gearing ratio resulted primarily from increase in total equity of the Company.

These financial statements were authorized for issue on October 03, 2013 by the Board of Directors of the Company.

Corresponding figures have been re-arranged, wherever necessary for the purpose of comparison. However, no significant re-arrangements have been made except those required by revised Fourth Schedule to the Companies Ordinance, 1984.

Figures have been rounded off to the nearest thousand of Rupees unless otherwise stated.

DATE OF AUTHORIZATION FOR ISSUE

CORRESPONDING FIGURES

GENERAL

47.

48.

49.

Pattern of Shareholding - (Form “34”)as at June 30, 2013

528447182319833316191027742114233321313111123212612

Shareholders Total

SharesForm to

21111321111111121112121111111111111111

1754

Shareholders Total

SharesForm to

1101501

1,0015,001

10,00115,00120,00125,00130,00135,00140,00145,00150,00155,00160,00165,00170,00175,00180,00185,00090,00195,001

100,001110,001115,001120,001135,001140,001150,001155,001160,001170,001185,001190,001195,001200,001205,001

210,001215,001220,001230,001235,001240,001260,001270,001295,001300,001305,001310,001315,001320,001345,001390,001395,001400,001405,001430,001450,001460,001485,001495,001510,001550,001795,001

1,030,0011,045,0011,070,0011,080,0011,270,0011,295,0011,445,0011,485,0012,060,0012,680,001

12,155,001

100500

1,0005,000

10,00015,00020,00025,00030,00035,00040,00045,00050,00055,00060,00065,00070,00075,00080,00085,00090,00095,000

100,000105,000115,000120,000125,000140,000145,000155,000160,000165,000175,000190,000195,000200,000205,000210,000

215,000220,000225,000235,000240,000245,000265,000275,000300,000305,000310,000315,000320,000325,000350,000395,000400,000405,000410,000435,000455,000465,000490,000500,000515,000555,000800,000

1,035,0001,050,0001,075,0001,085,0001,275,0001,300,0001,450,0001,490,0002,065,0002,685,000

12,160,000

17,488116,107135,856764,499612,978412,944278,537430,192270,408

65,940265,591300,471194,451104,043

58,68161,484

266,663147,614226,913253,961264,768184,302

97,312317,436111,626356,087121,207137,973144,252154,255314,490489,013347,119188,340388,516

1,188,545204,637418,003

422,286218,780221,981231,306239,473729,599524,867273,883299,662300,027307,005313,122315,823324,663349,000789,452400,000400,489409,271860,986452,379925,107488,951500,000510,309552,245799,981

1,030,8611,049,7991,073,9261,080,0771,271,6331,295,0311,446,1291,488,5632,060,0682,681,875

12,158,61149,209,922

88 Crestex


Categories of Shareholders

IndividualJoint Stock CompaniesAssociated CompaniesExecutivesInsurance CompaniesMutual FundsFinancial InstitutationModaraba & Modaraba CosNon-ResidentsG. Total

Numbers

1,67350

9422725

1,754

Shares Held

19,122,0017,472,268

17,980,2351,876,572

800,6851,513,946

438,245842

5,12849,209,922

% age

38.915.236.5

3.81.63.10.90.00.0

100


Directors, Chief Executive Officer, Their Spouse and Minor Children

Chief Executive/Director

Muhammad Anwar

DirectorsNasir ShafiMuhammad ArshadKhurram Mazhar KarimKhalid BashirAhsan MehantiZeshan AfzalMuhammad Asif Nominee NIT

Directors' SpouseTanveer Khalid BashirShaheen NasirAbida Anwar

Executives

(Number of shares held)Physical

0

000

26000

12100

147

80,183

CDC510,309

239,473212,011

83,99924,310

2,5002,500

0

58,6818,1575,122

1,147,062

1,796,389

Total510,309

239,473212,011

83,99924,336

2,5002,500

0

58,8028,1575,122

1,147,209

1,876,572

% age1.0

0.50.40.20.00.00.00.0

0.10.00.02.3

3.8

1

2

Associated Companies, Undertaking & Related PartiesArif Habib Corporation LimitedCrescent Cotton Mills LtdTrustee-The Crescent Textile Mills Ltd Empl.Provident FundCrescent FoundationCrescent Steel And Allied Products Ltd.Premier Insurance LimitedShakarganj Mills LimitedAhsan Associates (Private) Ltd.

00

01,030,861

00

5,898271

1,037,030

12,158,6112,681,875

1,387,0480

452,379262,000

01,292

16,943,205

12,158,6112,681,875

1,387,0481,030,861

452,379262,000

5,8981,563

17,980,235

24.75.4

2.82.10.90.50.00.0

36.5

3

90 Crestex


Categories of Shareholders



NIT & ICPNational Bank of Pakistan-Trustee Deptt. Ni(U)T FundNational Bank Of PakistanTrustee National Bank Of PakistanEmployees Pension FundInvestment Corporation Of PakistanTrustee NBP Emp Benevolent Fund TrustNational Bank Of Pakistan Investar Accounts NdfcIdbl (Icp Unit)National Bank Of Pakistan.

00

09,000

02,054

00

11,054

2,060,0681,049,799

188,3400

6,6090

1,8901,156

3,307,862

2,060,0681,049,799

188,3409,0006,6092,0541,8901,156

3,318,916

4.22.1

0.40.00.00.00.00.06.7

4

Mutual Funds

Shareholders more than 5% shareholding

Safeway Mutual Fund LimitedTri. Star Mutual Fund Ltd.

Banks, NBFC's, DFI's, Takaful, Pension Funds

Modarabas

Insurance Companies

Non-Residents

Other companies, Corporate Bodies, Trust etc.

General PublicGrand Total

Arif Habib Corporation LimitedCrescent Cotton Mills Ltd

000

7,916

842

704

5,128

53,485

3,560,8014,757,290

00

1,488,56325,383

1,513,946

430,329

0

799,981

0

4,099,867

14,413,99144,452,632

12,158,6112,681,875

1,488,56325,383

1,513,946

438,245

842

800,685

5,128

4,153,352

17,974,79249,209,922

12,158,6112,681,875

3.00.1

3

0.9

0.0

1.6

0.0

8.4

36.5100

24.75.4

5

6

7

8

9

10

11

thNotice is hereby given that the 64 Annual General Meeting of the shareholders of the Crescent Textile Mills Limited (the "Company") will be held on Wednesday, the October 30, 2013 at 9:00 a.m. at the registered office of the company at 45-A, Off: Zafar Ali Road, Gulberg-V, Lahore to transact the following business:-

1

2

To consider and approve the disposal of plant and machinery having book value of Rs.234.656 million as of June 30, 2013 by passing the following resolution as an ordinary resolution, with or without modification, addition or deletion in terms of Section 196 (3) (a) of the Companies Ordinance, 1984:

Ordinary Business:

Special Business:

To receive, consider and approve the audited financial statements of the Company for the year ended June 30, 2013 together with the Directors' and Auditors' Reports thereon.

To appoint Auditors of the Company and fix their remuneration for the year ending June 30, 2014. Present auditors M/s. Riaz Ahmed and Company, Chartered Accountants, retire and being eligible offer themselves for re-appointment.

"Resolved That consent of the general meeting be and is hereby accorded to the disposal of the following plant and machinery:

Resolved Further That Mr. Muhammad Anwar, Chief Executive Officer and Mr. Ahmad Shafi, Executive Director of the Company, be and are hereby authorized and empowered on behalf of the Company to sell or otherwise dispose of the machinery in such lot or lots and in such manner and on such basis and on such terms and conditions and for such consideration as may be determined by them. They are further authorized to do all acts, deeds and things and take all necessary steps for the disposal of the plant and machinery including negotiations and signing and execution of documents, deeds, papers, agreements and all other documents as may be necessary in order to give effect to, implementation and complete the sale of the assets as aforesaid and all matters connected, necessary and incidental thereto.”

Notice of Annual General Meeting

92 Crestex

Particulars of Assets Air Jet Looms (Weaving Machines)Sizing MachinesWarping MachinesAccessoriesProcessing Machines Sewing MachinesTotal

16822

859

205 471

QtyNo.s

Cost(Rupees in thousand)

436.79839.21626.10073.672

119.74611.567

707.099

Registered Office:45-A, Off: Zafar Ali Road, Gulberg-V, Lahore:T: +92-042-111-245-245F: +92-042-111-222-245Dated: October 03, 2013

By Order of the Board(Naseer Ahmad Chaudhary)

Corporate Secretary



The Members' Register will remain closed from October 21, 2013 to October 30, 2013 (both days inclusive). Physical / CDC transfers received at the Registered Office of the Company by the close of business on October 20, 2013.A member eligible to attend and vote in this meeting may appoint another member as proxy to attend and vote in the meeting. Proxies in order to be effective must be received by the company at the Registered Office not later than 48 hours before the time for holding the meeting.Shareholders are requested to immediately notify the change in address, if any.CDC account holders will further have to follow the guidelines as laid down in circular No.1 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan:

For attending the meeting:

For Appointing Proxies:

Note:1.

2.

3.4.

a.

b.

In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations, shall authenticate his/her identity by showing his original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting.

In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signatures of the nominee shall be produced (unless it has been provided earlier) at the time of the Meeting

In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations, shall submit the proxy form as per the above requirement.

The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form.

Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form.

The proxy shall produce his original CNIC or original passport at the time of the Meeting.

In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signatures shall be submitted (unless it has been provided earlier) along with proxy form to the company.

i).

ii).

i).

ii).

iii).

iv).

v).

The detail of assets to be disposed off or sold is as under:

The proposed manner of disposal.

Reasons for the disposal of assets.

Benefits expected to accrue to the shareholders.

Book value as on June 30,2013 is Rs. 234.656 million and the market price/fair value is expected to be higher to the same.

The Plant & Machinery will be disposed of on competitive Prices Offered or settled through negotiations with the buyers.

There are multiple factors, which have led to the decision by the directors of the company to dispose of such assets. Due to energy crises and curtailment in gas supply particularly in winter season, company has to incur heavy fixed cost which badly affects the profitability.

The proceeds from disposal of such assets will be utilized in reduction of its borrowing and resultantly increase in company's profitability.

Directors of the Company or their spouses have no direct or indirect interest in the above said business except as shareholders of the Company.


STATEMENT U/S160(1)(b) 0FTHECOMPANIESORDINANCE, 1984

This statement sets out the material facts pertaining to the special business to be transacted at the Annual General Meeting of the Company scheduled to be held on October 30, 2013.

The Company is operating a Composite Textile Unit comprising on Spinning, Combing, Weaving, Dying, Bleaching, Printing, Stitching, located at located at Sargodha Road, Faisalabad. Consent of the shareholders is sought in the general meeting for disposal of plant and machinery. The Board of Directors has already approved the disposal of such assets subject to theconsent/authorization of the Company's shareholders in a general meeting. The information required under Notification # SR0 1227/2005 dated December 12, 2005 is as follows:

94 Crestex

Particulars of Assets Air Jet Looms (Weaving Machines)Sizing MachinesWarping MachinesAccessoriesProcessing Machines Sewing MachinesTotal

16822

859

205 471

QtyNo.s

Cost(Rupees in thousand)

436.79839.21626.10073.672

119.74611.567

707.099


64th Annual General Meeting

The Corporate Secretary,The Crescent Textile Mills Limited,45-A, Off: Zafar Ali Road, Gulberg-V,Lahore.

PROXY FORM

Affix RevenueStamp of Rs. 5/-

Member’s Signature

CNIC #

CDC A/C #

The Form of Proxy should be deposited at the Registered Office of the Company not later than 48 hours before thetime for holding the meeting.

CDC Shareholders, entitled to attend and vote at this meeting, must bring with them their Computerized National Identity Cards/Passport in original to provide his/her identity, and in case of Proxy, must enclosed an attested copy of his/her CNIC or Passport. Representatives of corporate members should bring the usual documents for such purpose.

As witness my hand this day of 2013.

Witness’s SignatureName:CNIC:Address:

Witness’s SignatureName:CNIC:Address:

Date:

Place: Lahore

Note:1

2

I/We of Faisalabad a member/member of

T h e C r e s c e n t Te x t i l e M i l l s L i m i t e d a n d h o l d e r o f s h a r e s

as per Registered Folio # / CDC Participant ID # / Sub A/C # / Investor A/C #

do hereby appoint

of or failing him

of who is also member of the Company vide Registered Folio

# as my/our Proxy to attend, speak and vote for me/us and on my/our

behalf at the 64th Annual General Meeting of the Company to be held on Wednesday the

October 30, 2013 at 9:00 a.m. at Registered Office 45-A, Off: Zafar Ali Road, Guliberg V, Lahore

and at any adjournment thereof.

96 Crestex

annual report 2013 - crescent textile mills limitedcrescenttextile.com/wp-content/uploads/fn/annual...

Documents