Contents - Fazal Cloth Mills

Contents

Corporate

02 Company Information

03 Directors' Review

Condensed Interim Un-Consolidated Financial Statements

06 Condensed Interim Un- Consolidated Balance Sheet08 Condensed Interim Un- Consolidated Profit and Loss Account09 Condensed Interim Un- Consolidated Statement of Comprehensive Income10 Condensed Interim Un- Consolidated Cash Flow Statement11 Condensed Interim Un- Consolidated Statement of Changes in Equity12 Notes to the Condensed Interim Un- Consolidated Financial Statements

Condensed Interim C onsolidated Financial Statements

16 Condensed Interim C onsolidated Balance Sheet18 Condensed Interim C onsolidated Profit and Loss Account19 Condensed Interim C onsolidated Statement of Comprehensive Income20 Condensed Interim C onsolidated Cash Flow Statement21 Condensed Interim C onsolidated Statement of Changes in Equity22 Notes to the Condensed Interim C onsolidated Financial Statements

04

FAZAL CLOTH MILLS LIMITED Nine Months Ended Mar 31, 20171

Company Information

Board of Directors

Sh. Naseem Ahmad Chief Executive OfficerMr. Rehman Naseem ChairmanMr. Amir Naseem SheikhMr. Fazal Ahmed

SheikhMr. Faisal AhmedMr. Fahd MukhtarMr. Jamal Nasim Independent Director

Audit Committee

Mr.

Jamal Nasim ChairmanMr. Rehman Naseem MemberMr. Fahd Mukhtar Member

Human Resource andRemuneration Committee Mr. Rehman Naseem Chairman

Mr. Amir Naseem Sheikh

MemberMr. Faisal Ahmad Member

Company Secretary

Mr. Asad Mustafa

Chief Financial Officer

Mr. Faizan-ul-Haq

Auditors KPMG Taseer Hadi & Co., Chartered Accountants

Bankers

Allied Bank LimitedNational Bank of Pakistan

MCB Bank LimitedMeezan Bank Limited

United Bank Limited

Standard Chartered Bank Pakistan Limited

Habib Bank Limited

Soneri Bank Limited

NIB Bank Limited

Bank Al-Falah Limited

Faysal Bank LimitedAskari Bank LimitedThe Bank of PunjabThe Bank of KhyberPak Kuwait Investment Company (Pvt.) LimitedPak Brunei Investment Company LimitedPak Oman Investment Company LimitedSummit Bank LimitedSamba Bank LimitedDubai Islamic Bank (Pakistan) Limited

Head Office &Shares Department: 129/1, Old Bahawalpur Road, Multan.

Phone: (92) 61-4579001-7, 4781637 Fax: (92) 61-4583425, 4541832E-mail: [email protected]; [email protected]: www.fazalcloth.com

Shares Registrar: Vision Consulting Ltd.3-C, LDA Flats, Lawrence Road, Lahore. [email protected]: (92) 42-36283096, 36283097 Fax: (92) 42-36374839

Registered Office: 69/7, Abid Majeed Road, Survey No. 248/7, Lahore Cantt, Lahore.Phone: (92) 42-36684909

Mills: i) Fazal Nagar, Jhang Road, Muzaffargarh – PakistanPh. (92) 66-2422216, 18 Fax: (92) 66-2422217

ii) Qadirpur Rawan Bypass, Khanewal Road, Multan – PakistanPh. (92) 61-6740041-43, Fax : (92) 61-6740052


Bank Al-Habib Limited

DIRECTORS’ REVIEW

Dear Shareholders!

Assalam-o-Alaikum

Your Directors are pleased to present before you un-audited financial information of Fazal Cloth Mills Limited for the nine months ended March 31, 2017. Sales were recorded at Rs. 19,449 million during the nine months of the current financial year compared to Rs. 15,744 million during the corresponding period last year, registering an increase of 23.53%. Your Company earned after tax profit of Rs. 457.56 million (pre-tax profit of Rs. 536.45 million) as compared to Rs. 310.08 million (pre-tax profit of Rs. 489.60 million) for the corresponding period last year after charging depreciation of Rs. 559.25 million (March 31, 2016: Rs. 585.83 million). EBITDA of Rs. 1,718.72 million (March 31, 2016: Rs. 1,784.57 million) was generated.

Earnings Per Share of the Company for the nine month ended March 31, 2017 are Rs. 15.25 as compared to Rs. 10.34 for corresponding period in previous year.

Subsidiary Companies and Consolidated Financial Statements

The consolidated condensed interim un-audited financial information comprising Fazal Cloth Mills Limited and Fazal Weaving Mills Limited is annexed with separate interim condensed un-audited financial information of your Company in accordance with the requirements of International Accounting Standard 27 (Consolidated and Separate Financial Statements), 34 (Interim Financial Reporting) and applicable provisions of Companies Ordinance, 1984. During the nine months reported the Group earned after tax of Rs. 543.90 million (pre-tax profit of Rs. 690.45 million) as compared to Rs. 240.20 million (pre-tax profit of Rs. 429.92 million) earned in the same period last year after charging depreciation of Rs. 675.44 million as compare to Rs. 677.63 million in the same period last year. EBITDA of Rs. 2,113.33 million (March 31, 2016: Rs. 1,942.64 million) was generated.

Financial Highlights

Nine Months Ended 31 March Increase/

2017 2016 (Decrease) %

Net Sales (Rs. '000') 22,468,892 17,754,279 26.55

Gross Profit (Rs. '000') 1,922,061 1,590,394 20.85

Profit Before Tax (Rs. '000') 690,447 429,917 60.60

Profit After Tax (Rs. '000') 543,898 240,199 126.44

Gross Profit (%) 8.55% 8.96%

Profit After Tax (%) 2.42% 1.35%

Earning Per Share-Rs. 18.13 8.01

Future Outlook

Although demand for fabric and yarn remains lackluster, your management expects reasonable profits in the last quarter of the current financial year as your company was able to cover its raw material requirements at a reasonable cost.

Management and Labor Relations

The relations between the workers and management remained cordial throughout the period. Your Directors wish to thank all workers and staff members for their hard work.

For & on behalf of the Board Place: Multan Dated: April 28, 2017

Sd/- (Rehman Naseem) Chairman/Director



2017 2016

26.55

20.85

60.60

126.44

22,468,892

1,922,061

690,447

543,898

8.55%

2.42%

18.13

17,754,279

1,590,394

429,917

240,199

8.96%

1.35%

8.01

Dated: April 28, 2017

(Rs. ‘000’)

(Rs. ‘000’)

(Rs. ‘000’)

(Rs. ‘000’)

%

%

%

4

Fazal Cloth Mills Limited (The Company)Condensed Interim Un-Consolidated Financial Statements (Un-Audited)

For the period ended March 31, 2017


Condensed Interim Un-Consolidated Balance Sheet

(Un-audited) (Audited)

March 31, June 30,

2017 2016

Note Rupees Rupees

ASSETS

Non-current assets

Property, plant and equipment #REF! 17,689,920,972

16,789,493,325

Long term advance and investments #REF! 4,161,498,919

3,854,006,152

Loan to Subsidiary Company 530,000,000

530,000,000

Long term deposits 24,446,493

24,446,493

22,405,866,384

21,197,945,970

Current assets

Stores, spares and loose tools 603,388,459

424,638,107

Stock-in-trade 7,780,362,351

5,112,752,436

Trade debts #REF! 3,330,804,660

1,903,365,247

Loans and advances 1,281,516,864

1,433,588,257

Trade deposits and short term

prepayments 18,094,877

1,628,075

Mark-up accrued 91,182,017

59,935,983

Other receivables and deposits 86,977,629

81,096,577

Short term investments #REF! 254,214,800 221,288,800

Tax refunds due from the Government 634,989,002 502,413,719

Cash and bank balances #REF! 99,410,480 85,453,947

14,180,941,139 9,826,161,148

36,586,807,523 31,024,107,118

The annexed notes from 1 to 8 form an integral part of this condensed interim unconsolidated financial information.The annexed notes from 1 to 8 form an integral part of this condensed interim unconsolidated financial information.

sd/-(SHEIKH NASEEM AHMAD)

CHIEF EXECUTIVE OFFICER

sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR


As at March 31, 2017


March 31, June 30,

2017 2016

Note Rupees Rupees

EQUITY AND LIABILITIES

Share capital and reserves

Authorized share capital #### 700,000,000

700,000,000

Issued, subscribed and paid-up capital #### 300,000,000

300,000,000

Capital reserves 1,940,571,612

1,622,451,755

Unappropriated profits 7,336,104,600

6,782,748,947

9,576,676,212

8,705,200,702

Surplus on revaluation of fixed assets - net of tax 6,340,668,334

6,511,467,057

Non-current liabilities

Long term financing - secured #### 6,060,141,097

4,436,247,908

Long term musharika - secured #### 928,750,000

1,221,250,000

Deferred liabilities:

- Staff gratuity 199,521,015

209,641,455

- Deferred taxation 1,980,658,938

2,069,560,362

9,169,071,050

7,936,699,725

Current liabilities

Trade and other payables #### 2,162,801,092

1,945,616,935

Accrued profit / interest / mark-up 302,022,923

247,808,813

Short term borrowings - secured 7,219,402,225

3,885,590,245

Current portion of non-current liabilities 1,816,165,687 1,791,723,641

11,500,391,927 7,870,739,634

Contingencies and commitments ####

36,586,807,523 31,024,107,118

sd/-(FAIZAN-UL-HAQ)

CHIEF FINANCIAL OFFICER


Condensed Interim Un-Consolidated Profit and Loss Account (Un-Audited)

Nine Months Ended Nine Months Ended Three Months Ended Three Months Ended

March 31, March 31, March 31, March 31,

2017 2016 2017 2016

Note Rupees Rupees Rupees Rupees

Sales - net #### 19,449,187,283

15,744,341,782

6,535,143,749

5,551,808,990

Cost of sales #### (17,917,496,204)

(14,301,350,645)

(6,058,804,337)

(5,002,821,812)

Gross profit 1,531,691,079

1,442,991,137

476,339,412

548,987,178

Distribution cost (297,306,687)

(282,746,493)

(102,188,451)

(86,051,124)

Administrative expenses (194,926,561)

(183,256,293)

(66,557,658)

(57,884,318)

Other expenses (38,616,697)

(87,069,589)

(11,040,646)

(50,785,339)

(530,849,945)

(553,072,375)

(179,786,755)

(194,720,781)

Other income 158,633,886

308,824,238

28,086,434

(21,329,406)

Profit from operations 1,159,475,020

1,198,743,000

324,639,091

332,936,991

Finance cost (623,020,828)

(709,148,026)

(217,872,890)

(238,179,812)

Profit before taxation 536,454,192

489,594,974

106,766,201

94,757,179

Taxation 6 (78,897,266)

(179,511,947)

(57,229,463)

(31,055,987)

Profit after taxation 457,556,926 310,083,027 49,536,738 63,701,192

Earnings per share 15.25 10.34 1.65 2.12

For the Nine months ended March 31, 2017

The annexed notes from 1 to 8 form an integral part of this condensed interim unconsolidated financial information.

sd/-(FAIZAN-UL-HAQ)


sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR




Condensed Interim Un-Consolidated Statement of Comprehensive Income (Un-Audited)


Profit after taxation

Other comprehensive income - net of tax

Net change in fair value of available for

sale financial assets

Total comprehensive income for the period

ended

Nine Months

Ended

March 31,

2017

Rupees

457,556,926

318,119,857

775,676,783

Nine Months

Ended

March 31,

2016

Rupees

310,083,027

(364,735,439)

(54,652,412)

Three Months

Ended

March 31,

2017

Rupees

49,536,738

132,287,465

181,824,203

Three Months

Ended

March 31,

2016

Rupees

63,701,192

(721,281,655)

(657,580,463)


sd/-(FAIZAN-UL-HAQ)


sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR




Condensed Interim Un-Consolidated Cash Flow Statement (Un-Audited)


Nine Months Ended Nine Months Ended

March 31, March 31,

2017 2016

Note Rupees Rupees

Note

Cash flows from operating activities

Profit before taxation 536,454,192 489,594,974

Adjustments for:

Depreciation of property, plant and equipment 559,244,949 585,827,070

Unrealized (gain) / loss on re-measurement of investments (32,926,000) 41,143,886

Provision for gratuity 65,403,678 73,235,346

Provision for infrastructure cess 26,780,780 21,690,323

(Gain) on disposal of property, plant and equipment (126,095) (6,473)

(Gain) on disposal of investment - (82,311,224)

Dividend income (86,892,539) (191,556,417)

Finance cost 623,020,828 709,148,026

Cash generated from operations before working capital changes 1,690,959,793 1,646,765,511

Effect on cash flows due to working capital changes

(Increase) / decrease in current assets:

Stores, spares and loose tools (178,750,352) (51,067,906)

Stock-in-trade (2,667,609,915) (1,216,874,142)

Trade debts (1,427,439,413) 720,801,627

Loans and advances 399,293,970 (596,183,433)

Trade deposits and short term prepayments (16,466,802) (15,815,564)

Other receivables (5,881,052) 48,966,867

(3,896,853,564) (1,110,172,551)

Increase in current liabilities

Trade and other payables 190,094,432 210,486,060

Cash generated from operations (2,015,799,339) 747,079,020

Gratuity paid to employees (75,524,117) (62,254,776)

Taxes paid (300,373,955) 6,458,187

Finance cost paid - net (600,052,752) (659,860,186)

(975,950,824) (715,656,775)

Net cash generated / (used) in operating activities (2,991,750,163) 31,422,245

Cash flows from investing activities

Capital expenditure incurred (1,460,357,527) (94,203,731)

Proceeds from sale of property, plant and equipment 811,025 183,926

Investment in associates - net (236,595,487) -

Proceeds from sale of investment - 335,277,930

Dividend received 86,892,539 191,556,417

Net cash (used) in / generated from investing activities (1,609,249,450) 432,814,543

Cash flows from financing activities

Long term financing obtained 5 2,853,419,549 500,089,103

Long term financing repaid (1,348,834,317) (921,110,383)

Long term musharika obtained - 1,250,000,000

Long term musharika repaid (148,750,000) (55,000,000)

Short term borrowings - net 3,333,811,980 (1,057,819,455)

Cash dividend paid (74,691,065) (148,754,229)

Net cash generated from / (used) in financing activities 4,614,956,146 (432,594,964)

Net increase in cash and cash equivalents 13,956,533 31,641,824

Cash and cash equivalents at the beginning of the period 85,453,947 169,824,779

Cash and cash equivalents at the end of the period 99,410,480 201,466,603


sd/-(FAIZAN-UL-HAQ)


sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR




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Notes to the Condensed Interim Un-Consolidated Financial Information (Un-audited)For the Nine months ended March 31, 2017

1 Reporting entity

2 Basis of preparation

2.1 Basis of Accounting

the Company has following major investment:

1.1 Fazal Cloth Mills Limited ("the Company") was incorporated in Pakistan in 1966 as a Public Limited

Company under the Companies Act, 1913 (now the Companies Ordinance, 1984). Previously, the shares of

the Company were quoted on Karachi and Lahore Stock Exchanges of Pakistan. However, due to

integration of Karachi, Lahore and Islamabad Stock Exchanges into Pakistan Stock Exchange ("PSX") with

effect from 11 January 2016 the shares of the Company are now quoted on PSX. The registered office of the

Company is situated at 69/7, Abid Majeed Road, Survey No. 248/7, Lahore Cantt, Lahore. The

Company is principally engaged in manufacture and sale of yarn and fabric. The manufacturing facilities are

located at Fazal Nagar, Jhang Road, Muzaffargarh and Qadirpur Rawan Bypass, Khanewal Road, Multan in

the province of Punjab.

2.1.1 This condensed interim financial information comprises the condensed interim unconsolidated balance sheet

of the Company as at March 31, 2017 and the related condensed interim unconsolidated profit and loss

account, condensed interim unconsolidated statement of comprehensive income, condensed interim

unconsolidated cash flow statement and condensed interim unconsolidated statement of changes in equity

together with the notes forming part thereof.

2.1.2 This condensed interim financial information of the Company for the nine months period ended March 31,

2017 has been prepared in accordance with the requirements of the International Accounting Standard (IAS)

34 - Interim Financial Reporting, Islamic Financial Reporting Standards (IFAS) and provisions of and

directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of

or directives issued under the Companies Ordinance, 1984 have been followed.

2.1.3 This condensed interim financial information does not include all of the information required for full annual

financial statements and should be read in conjunction with the annual financial statements for the year

ended June 30, 2016.

2.1.4 Corresponding balance sheet numbers are extracted from the annual audited financial statements of the

Company for the year ended June 30, 2016, whereas Corresponding profit and loss account, statement of

comprehensive income, cash flow statement and statement of changes in equity are stated from unaudited

condensed interim financial information of the Company for the nine months ended March 31, 2017.

2.1.5 This condensed interim financial information is unaudited and being submitted to the shareholders as

required under Section 245 of the Companies Ordinance, 1984 and clause 5.19.13(b) of the Pakistan Stock

Exchange Regulations.

Name of the company Shareholding Nature

Subsidiary

- Fazal Weaving Mills Limited ("Subsidiary") 100% Spinning

Associates

- Fatima Energy Limited 24.24% Energy Generation

- Fatima Transmission Company Limited 23.99% Transmission of Energy

3 Significant accounting policies

3.1 The accounting policies and the methods of computation adopted in the preparation of this condensed

interim un-consolidated financial information are same as those applied in the preparation of the consolidated

financial statements for the year ended June 30, 2016.


4

4.1

4.2 Estimates and judgements made by the management in the preparation of this condensed interim

un-consolidated financial information are the same as those that were applied to the annual un-consolidated

financial statements of the Company as at and for the year ended June 30, 2016.

Estimates and judgements

The preparation of condensed interim un-consolidated financial information requires management to make

judgements, estimates and assumptions that affect the application of accounting policies and the reported

amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

5 Long term financing - secured

5.6 Pak Oman Investment Company Limited – TF

During the period a term finance of Rs. 350.00 million has been obtained to refinance the capex incurred by the

Company. It is repayable within the period of 7 years inclusive of grace period of 2 years in 20 equal quarterly

installments of principal amount. Initially it carried mark up at the rate of 3 months KIBOR + 1.25% per annum which

has been reduced to 3month KIBOR + 0.90% pa. This finance is secured against joint pari passu charge / mortgage of

Rs.772.00 million on all present and future fixed assets of the Company and personal guarantees of the sponsoring

directors.

5.5 Standard Chartered Bank (Pakistan) Limited – TF

During the period a term finance of Rs. 450.00 million has been obtained for the purpose of swap of expensive LTFF /

loans. It is repayable within the period of 5 years inclusive of grace period of 1 year in 8 equal half yearly installments of

principal amount. It carries mark up at the rate of six months KIBOR+ 1.00% per annum. This finance is secured against

joint pari passu charge/mortgage of Rs. 1,600.00 million on all present and future fixed assets of the Company and

personal guarantees of the sponsoring directors.

5.1 United Bank Limited – NIDF-II / SBP’s LTFF

During the period an amount of Rs. 796.927 million has been obtained for retirement of letter of credits for imported

machinery under CAPEX / BMR in existing units. Total limit of this finance is for Rs. 930 million. Entire finance has

been refinanced from State Bank of Pakistan under LTFF Scheme. This finance is repayable within the period of 10 years

inclusive of grace period of 2 years in 16 equal half yearly installments of principal amount. It carries mark at the rate of

SBP rate + 0.50% per annum. This finance is secured against joint pari passu charge / mortgage of Rs. 1,880.00 million

on all present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

5.2 United Bank Limited – NIDF-III

During the period a demand finance of Rs. 300.00 million has been obtained to refinance the capex incurred by the

Company in recent years. It is repayable within the period of 6 years inclusive of grace period of 2 years in 8 equal half

yearly installments of principal amount. It carries mark up at the rate of six months KIBOR + 1.10% per annum. It is

secured against the security as stated in note 5.1 above.

5.3 The Bank of Punjab – TF / SBP’s LTFF

During the period an amount of Rs. 304.645 million has been obtained for retirement of letter of credits for import of

textile machinery / generators / components for BMR/ expansion. Total limit of this finance is for Rs.500 million. An

amount equal to Rs. 42.590 million has been refinanced from State Bank of Pakistan under LTFF Scheme at pricing of

SBP rate + 0.50% pa. This finance is repayable within the period of 10 years inclusive of grace period of 2 years in 16

equal half yearly installments of principal amount. It carries mark up at the rate of six months KIBOR + 0.75% per

annum. Entire finance will be refinanced from SBP under LTFF scheme as entire imported machinery is eligible under

the LTFF scheme of SBP. This finance is secured against joint pari passu charge / mortgage of Rs. 954.00 million on all

present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

5.4 National Bank of Pakistan – DF-VII / SBP’s LTFF

During the period an amount of Rs. 140.955 million has been obtained for the purpose of retirement of letter of credits

for import of textile machinery for spinning, weaving, BMR / expansion projects and generators. An amount equal to Rs.

148.125, out of current & previous disbursals, was refinanced from State Bank of Pakistan under LTFF Scheme at

pricing of SBP Rate + 1.25% pa. This finance is repayable within the period of 7 years inclusive of grace period of 1 year

in 24 equal quarterly installments of principal amount. Last installment is falling due on December 03, 2021. It carries

mark up at the rate of six months KIBOR + 1.25% per annum. This finance is secured against joint pari passu

charge/mortgage of Rs.2,150.00 million on all present and future fixed assets of the Company and personal guarantees of

the sponsoring directors.


5.7 Habib Bank Limited – DF

5.8 Pak Brunei Investment Company Ltd -TF

5.9 Allied Bank Limited -TL-VII


2017 2016

Rupees Rupees

TaxationCurrent 167,798,691 172,741,987

Deferred (88,901,425)

6,769,959

78,897,266 179,511,947

6

7

8

During the period a demand finance of Rs. 13.265 million has been obtained to finance the retirement of letter of credits

for import of textile machinery for BMR purpose. It is repayable within the period of 10 years inclusive of grace period

of 2 years in 16 equal half yearly installments of principal amount. It carries mark up at the rate of six months KIBOR+

0.50% per annum. Entire finance will be refinanced from SBP under LTFF scheme as entire imported machinery is

eligible under the LTFF scheme of SBP. This finance is secured against joint pari passu charge/mortgage of Rs. 214.00

million on all present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

During the period a term finance of Rs. 250.00 million has been obtained to partially finance the capex already incurred

and adjustment of expensive debit / repayments. It is repayable within the period of 5 years inclusive of grace period of 1

years in 8 equal half yearly installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 0.90%

per annum. This finance is secured against joint pari passu charge/mortgage of Rs. 534.00 million on all present and

future fixed assets of the Company and personal guarantees of the sponsoring directors.

During the period a term finance of Rs. 247.628 million has been obtained for swap of other banks’ outstanding term

loans. It is repayable within the period of 10 years inclusive of grace period of 2 years in 16 equal half yearly installments

of principal amount. It carries mark up at the rate of six months KIBOR + 0.65% per annum. This finance is secured

against joint pari passu charge/mortgage of Rs. 2,640.00 million on all present and future fixed assets of the Company

and personal guarantees of the sponsoring directors.

The tax provision is charged by considering the provision of section 113, 65B and other tax credits available under the Income

Tax Ordinance, 2001. In addition to this, it also includes tax on exports and imports and income from other sources which is full

and final discharge of Company's tax liability in respect of income arising from such source.

The Finance Act, 2015 introduced a new tax under Section 5A of the Income Tax Ordinance, 2001 on every public company

other than a scheduled bank or modaraba, that derives profits for tax year and does not distribute cash dividend within six months

of the end of said tax year or distribute dividends to such an extent that its reserves, after such distribution, are in excess of 100%

of its paid up capital. However, this tax on undistributed reserves is not applicable to a public company which distributes profit

equal to either 40 percent of its after tax profits or 50 percent of its paid up capital, whichever is less, within six months of the end of

the tax year.

The Board of Directors of the Company intends to distribute sufficient cash dividend for the year ended 30 June, 2017 to comply

with the above stated requirements. Accordingly, no provision for tax on undistributed reserves has been recognized in this

condensed interim financial information for the period ended 31 March 2017.

Date of authorization for issue

This condensed interim Un-Consolidated financial information was authorized for issue by the Board of Directors on

April 28, 2017

General

Figures in the financial statements have been rounded-off to the nearest rupee.

sd/-(FAIZAN-UL-HAQ)


sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR




Fazal Cloth Mills Limited (The Group)Condensed Interim Consolidated Financial Statements (Un-Audited)

For the period ended March 31, 2017


Condensed Interim Consolidated Balance Sheet


March 31, June 30,

2017 2016

Note Rupees Rupees

ASSETS

Non-current assets

Property, plant and equipment #REF! 20,721,100,484

19,894,245,707

Intangible assets 687,713

824,175

Long term advance and investments #REF! 3,883,674,901

3,585,386,581

Long term deposits 24,446,493

24,446,493

24,629,909,591

23,504,902,956

Current assets

Stores, spares and loose tools 679,417,933

470,164,152

Stock-in-trade 9,439,596,557

6,218,623,311

Trade debts #REF! 3,714,018,042

2,140,698,115

Loans and advances 454,652,506

156,739,145

Trade deposits and short term

prepayments 21,071,901

1,628,075

Mark-up accrued 21,823,750

19,408,265

Other receivables and deposits 96,510,804

112,607,927

Short term investments #REF! 254,214,800 221,288,800

Tax refunds due from Government 813,112,580 656,625,409

Cash and bank balances #REF! 115,059,229 209,689,213

15,609,478,101 10,207,472,412

40,239,387,693 33,712,375,368

The annexed notes from 1 to 8 form an integral part of this condensed interim consolidated financial information.



sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR


EQUITY AND LIABILITIES

Share capital and reserves

Authorized share capital

Issued, subscribed and paid-up capital

Capital reserves

Unappropriated profits

Surplus on revaluation of fixed assets - net of tax

Non-current liabilities

Long term financing - secured

Long term musharika - secured

Deferred liabilities:

- Staff gratuity

- Deferred taxation

Current liabilities

Trade and other payables

Accrued profit / interest / mark-up

Short term borrowings - secured

Current portion of non-current liabilities

Contingencies and commitments


March 31, June 30,

2017 2016

Note Rupees Rupees

#### 700,000,000 700,000,000

#### 300,000,000 300,000,000

1,940,571,612 1,622,451,755

7,482,368,607 6,833,013,573

9,722,940,219 8,755,465,328

6,540,727,026 6,721,191,519

5 7,536,912,242 6,048,606,436

#### 940,191,381 1,235,301,919

206,183,964 218,740,982

1,882,001,095 1,943,356,018

10,565,288,682 9,446,005,355

#### 2,381,613,368 2,039,909,530

330,427,388 279,109,806

8,638,894,222 4,451,122,476

2,059,496,788 2,019,571,354

13,410,431,766 8,789,713,166

####

40,239,387,693 33,712,375,368

As at March 31, 2017

sd/-(FAIZAN-UL-HAQ)



Condensed Interim Consolidated Profit and Loss Account (Un-Audited)For the Nine months ended March 31, 2017

Nine Months

Ended Nine Months Ended

Three Months

Ended Three Months

Ended


2017 2016 2017 2016

Note

Sales - net #### 22,468,891,879 17,754,279,491

7,396,378,468

6,287,171,851

Cost of sales #### (20,546,830,753) (16,163,885,106)

(6,806,398,056)

(5,677,625,472)

Gross profit 1,922,061,126 1,590,394,385

589,980,412

609,546,379

Distribution cost (355,662,519) (324,557,109)

(125,858,215)

(99,045,747)

Administrative expenses (202,280,169) (189,676,000)

(68,669,839)

(60,002,547)

Other expenses (47,206,011) (87,069,589)

(12,725,061)

(50,785,339)

(605,148,699) (601,302,698)

(207,253,115)

(209,833,633)

Other income 130,188,573 278,206,793

18,646,759

(31,236,049)

Profit from operations 1,447,101,000 1,267,298,480 401,374,056 368,476,697

Share of loss of associate (9,204,451) (2,282,513) (5,411,328) -

Finance cost (747,449,840) (835,098,998) (262,603,972) (285,427,917)

Profit before taxation 690,446,709 429,916,969 133,358,756 83,048,780

Taxation 6 (146,548,718) (189,718,123) (78,297,936) (33,248,427)

Profit after taxation 543,897,991 240,198,846 55,060,820 49,800,353

Attributable to:

Equity holders of the Holding Company 543,897,991 240,198,846 55,060,820 49,800,353

Earnings per share - basic and diluted 18.13 8.01 1.84 1.66

- - - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - - - -


sd/-(FAIZAN-UL-HAQ)


sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR




Condensed Interim Consolidated Statement of Comprehensive Income (Un-Audited)For the Nine months ended March 31, 2017

Nine Months

Ended Nine Months

Ended

Three Months

Ended Three Months

Ended


2017 2016 2017 2016

Profit after taxation 543,897,991

240,198,846

55,060,820

49,800,353

Other comprehensive income - net of tax

Net change in fair value of available for

sale financial assets 318,119,857

(364,735,439)

132,287,465

(818,932,403)

Total comprehensive income for the period 862,017,848

(124,536,593)

187,348,285

(769,132,050)

Attributable to:

Equity holders of the Holding Company 862,017,848 (124,536,593) 187,348,285 (769,132,050)

862,017,848 (124,536,593) 187,348,285 (769,132,050)

- - - - - - - - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - - - - - - - - -


sd/-(FAIZAN-UL-HAQ)


sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR




Condensed Interim Consolidated Cash Flow Statement (Un-Audited)For the Nine months ended March 31, 2017


March 31, March 31,

2017 2016

Note Rupees Rupees

690,446,709 429,916,969

#REF! 675,437,147 677,627,711

136,462 136,462

#REF! (32,926,000) 41,143,886

70,257,972 73,235,346

26,780,780 21,690,323

(126,095) (6,473)

9,204,451 2,282,513

-

(82,311,224)

(86,892,539) (191,556,417)

747,449,840 835,098,998

2,099,768,727 1,807,258,094

(209,253,781) (63,081,082)

(3,220,973,246) (1,140,826,053)

(1,573,319,927) 752,197,247

(50,690,785) (164,169,802)

(19,443,826) (17,580,978)

16,097,123 48,962,577

(5,057,584,441) (584,498,091)

314,606,857 236,712,127

(2,643,208,857) 1,459,472,130

(82,814,989) (59,189,206)

(364,390,809) (50,052,024)

(698,547,743) (851,027,380)

(1,145,753,541) (960,268,610)

(3,788,962,398) 499,203,520

(1,502,976,858) (897,416,951)

811,025 183,926

(236,595,487) -

- 335,277,930

86,892,539 191,556,417

(1,651,868,781) (370,398,677)

5 2,853,419,549 1,000,089,103

5 (1,468,938,496) (922,159,596)

- 1,437,413,993

#REF! (151,360,538) (55,000,000)

4,187,771,746 (1,373,165,473)

(74,691,065) (148,754,229)

5,346,201,195 (61,576,202)

(94,629,984) 67,228,640

#REF! 209,689,213 177,228,341115,059,229 244,456,981

Cash flows from operating activities

Profit before taxation

Adjustments for:

Depreciation of property, plant and equipment

Amortization of intangible assets

(Gain) / loss on re-measurement of investments

Provision for gratuity

Provision for infrastructure cess

(Gain) on disposal of property, plant and equipment

Share of loss of associate

(Gain) on disposal of investment

Dividend income

Finance cost

Cash generated from operations before working capital changes

Effect on cash flows due to working capital changes

(Increase) / decrease in current assets:

Stores, spares and loose tools

Stock-in-trade

Trade debts

Loans and advances

Trade deposits and short term prepayments

Other receivables

Increase in current liabilities

Trade and other payables

Net cash (used in) / generated from operating activities

Gratuity paid

Taxes paid

Finance cost paid - net

Net cash generated / (used) in operating activities

Cash flows from investing activities

Capital expenditure incurred

Proceeds from sale of property, plant and equipment

Investment in associates - net

Proceeds from sale of investment

Dividend received

Net cash used in investing activities

Cash flows from financing activities

Long term financing obtained

Long term financing repaid

Long term musharika obtained

Long term musharika repaid

Short term borrowings - net

Cash dividend paid

Net cash generated from / (used) in financing activities

Net (decrease) / increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the periodCash and cash equivalents at the end of the period

-


--

-

sd/-(FAIZAN-UL-HAQ)


sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR




Conden

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Conso

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Sh

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Reven

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1, 2015

300,0

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77,6

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175,0

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1,6

92,9

95,1

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59,7

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-

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240,1

98,8

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240,1

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-

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(364,7

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-

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190,7

19,6

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190,7

19,6

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Transacti

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Cash d

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share

-

-

-

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(150,0

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(150,0

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00)

Bala

nce a

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31, 2016

300,0

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77,6

16,0

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175,0

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1,3

28,2

59,6

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6,7

40,6

82,8

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Bala

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1, 2016

300,0

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77,6

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175,0

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543,8

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543,8

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318,1

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543,8

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--

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180,4

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180,4

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--

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(75,0

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300,0

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77,6

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175,0

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1,6

87,9

55,6

12

7,4

82,3

68,6

07

9,7

22,9

40,2

19

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Notes to the Condensed Interim Consolidated Financial Information (Un-audited)For the Nine months ended March 31, 2017

1 Reporting entity

The Group comprises of

- Fazal Cloth Mills Limited ("the Holding Company"); and

- Fazal Weaving Mills Limited ("the Subsidiary Company").

Associates

- Fatima Energy Limited

- Fatima Transmission Company Limited

2 Basis of preparation

2.1 Basis of Accounting

1.1 Fazal Cloth Mills Limited ("the Holding Company") was incorporated in Pakistan in 1966 as a Public

Limited Company under the Companies Act, 1913 (now the Companies Ordinance, 1984). Previously, the

shares of the Holding Company were quoted on Karachi and Lahore Stock Exchanges of Pakistan. However,

due to integration of Karachi, Lahore and Islamabad Stock Exchanges into Pakistan Stock Exchange

("PSX") with effect from 11 January 2016 the shares of the Company are now quoted on PSX. The

registered office of the Holding Company is situated at 69/7, Abid Majeed Road, Survey No. 248/7, Lahore

Cantt, Lahore. The Holding Company is principally engaged in manufacture and sale of yarn and fabric. The

manufacturing facilities are located at Fazal Nagar, Jhang Road, Muzaffargarh and Qadirpur Rawan Bypass,

Khanewal Road, Multan in the province of Punjab.

1.2 The Subsidiary Company was incorporated in Pakistan in 1989 as a public limited company under the

Companies Ordinance, 1984. The registered office of the Subsidiary Company is situated at 69/7, Abid

Majeed Road, Survey No. 248/7, Lahore Cantt, Lahore. The Subsidiary Company is engaged in the

manufacture and sale of yarn. The manufacturing facility of the Subsidiary Company is located at Mauza

Khairabad Qadir Pur Rawan By Pass, Khanewal Road, Multan in the province of Punjab. The Subsidiary

Company commenced its commercial production on April 01, 2014.

2.1.1 This condensed interim financial information comprises the condensed interim consolidated balance sheet of

the Group as at March 31, 2016 and the related condensed interim consolidated profit and loss account,

condensed interim consolidated statement of comprehensive income, condensed interim consolidated cash

flow statement and condensed interim consolidated statement of changes in equity together with the notes

forming part thereof.

2.1.2 This condensed interim financial information of the Group for the nine months period ended March 31,

2017 has been prepared in accordance with the requirements of the International Accounting Standard (IAS)

34 - Interim Financial Reporting, Islamic Financial Reporting Standards (IFAS) and provisions of and

directives issued under the Companies Ordinance, 1984. In case where requirements differ, the provisions of

or directives issued under the Companies Ordinance, 1984 have been followed.

2.1.3 This condensed interim financial information does not include all of the information required for full annual

financial statements and should be read in conjunction with the annual financial statements for the year

ended June 30, 2016.

2.1.4 Corresponding balance sheet numbers are extracted from the annual audited financial statements of the

Group for the year ended June 30, 2016, whereas Corresponding profit and loss account, statement of

comprehensive income, cash flow statement and statement of changes in equity are stated from unaudited

condensed interim financial information of the Group for the nine months period ended March 31, 2017.

2.1.5 This condensed interim financial information is unaudited and being submitted to the shareholders as

required under Section 245 of the Companies Ordinance, 1984 and clause 5.19.13(b) of the Pakistan Stock

Exchange Regulations.

2.1.6 These condensed interim financial information are the separate financial statements of the Group in which

investments in subsidiaries are accounted for on the basis of direct equity interest rather than on the basis of

reported results and net assets of the investee. Condensed interim consolidated financial information of the

Group is prepared separately.


Associates

- Fatima Energy Limited 24.24% Energy Generation

- Fatima Transmission Company Limited 23.99% Transmission of Energy

3 Significant accounting policies

4.1 The preparation of condensed interim consolidated financial information requires management to make

judgements, estimates and assumptions that affect the application of accounting policies and the reported

amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

4.2 Estimates and judgements made by the management in the preparation of this condensed interim

consolidated financial information are the same as those that were applied to the annual consolidated

financial statements of the Group as at and for the year ended June 30, 2016.

3.1 The accounting policies and the methods of computation adopted in the preparation of this condensed

interim consolidated financial information are same as those applied in the preparation of the consolidated

financial statements for the year ended June 30, 2016.

4 Estimates and judgements

the Group has following major investment:

Name of the company Shareholding Nature

5 Long term financing - secured

The Holding Company

5.1 United Bank Limited – NIDF-II / SBP’s LTFF

5.2 United Bank Limited – NIDF-III

5.3 The Bank of Punjab – TF / SBP’s LTFF

5.4 National Bank of Pakistan – DF-VII / SBP’s LTFF

During the period an amount of Rs. 796.927 million has been obtained for retirement of letter of credits for imported

machinery under CAPEX / BMR in existing units. Total limit of this finance is for Rs. 930 million. Entire finance has

been refinanced from State Bank of Pakistan under LTFF Scheme. This finance is repayable within the period of 10 years

inclusive of grace period of 2 years in 16 equal half yearly installments of principal amount. It carries mark at the rate of

SBP rate + 0.50% per annum. This finance is secured against joint pari passu charge / mortgage of Rs. 1,880.00 million

on all present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

During the period a demand finance of Rs. 300.00 million has been obtained to refinance the capex incurred by the

Company in recent years. It is repayable within the period of 6 years inclusive of grace period of 2 years in 8 equal half

yearly installments of principal amount. It carries mark up at the rate of six months KIBOR + 1.10% per annum. It is

secured against the security as stated in note 5.1 above.

During the period an amount of Rs. 304.645 million has been obtained for retirement of letter of credits for import of

textile machinery / generators / components for BMR/ expansion. Total limit of this finance is for Rs.500 million. An

amount equal to Rs. 42.590 million has been refinanced from State Bank of Pakistan under LTFF Scheme at pricing of

SBP rate + 0.50% pa. This finance is repayable within the period of 10 years inclusive of grace period of 2 years in 16

equal half yearly installments of principal amount. It carries mark up at the rate of six months KIBOR + 0.75% per

annum. Entire finance will be refinanced from SBP under LTFF scheme as entire imported machinery is eligible under

the LTFF scheme of SBP. This finance is secured against joint pari passu charge / mortgage of Rs. 954.00 million on all

present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

During the period an amount of Rs. 140.955 million has been obtained for the purpose of retirement of letter of credits

for import of textile machinery for spinning, weaving, BMR / expansion projects and generators. An amount equal to Rs.

148.125, out of current & previous disbursals, was refinanced from State Bank of Pakistan under LTFF Scheme at

pricing of SBP Rate + 1.25% pa. This finance is repayable within the period of 7 years inclusive of grace period of 1 year

in 24 equal quarterly installments of principal amount. Last installment is falling due on December 03, 2021. It carries

mark up at the rate of six months KIBOR + 1.25% per annum. This finance is secured against joint pari passu

charge/mortgage of Rs.2,150.00 million on all present and future fixed assets of the Company and personal guarantees of

the sponsoring directors.

5.5 Standard Chartered Bank (Pakistan) Limited – TF

During the period a term finance of Rs. 450.00 million has been obtained for the purpose of swap of expensive LTFF /

loans. It is repayable within the period of 5 years inclusive of grace period of 1 year in 8 equal half yearly installments of

principal amount. It carries mark up at the rate of six months KIBOR+ 1.00% per annum. This finance is secured against

joint pari passu charge/mortgage of Rs. 1,600.00 million on all present and future fixed assets of the Company and

personal guarantees of the sponsoring directors.


5.6 Pak Oman Investment Company Limited – TF

5.7 Habib Bank Limited – DF

5.8 Pak Brunei Investment Company Ltd -TF

5.9 Allied Bank Limited -TL-VII

The Board of Directors of the Group intends to distribute sufficient cash dividend for the year ended 30 June, 2017 to comply

with the above stated requirements. Accordingly, no provision for tax on undistributed reserves has been recognized in this

condensed interim financial information for the period ended 31 March 2017.

7 Date of authorization for issue

This condensed interim consolidated financial information was authorized for issue by the Board of Directors on

April 28, 2017.

The Finance Act, 2015 introduced a new tax under Section 5A of the Income Tax Ordinance, 2001 on every public company

other than a scheduled bank or modaraba, that derives profits for tax year and does not distribute cash dividend within six months

of the end of said tax year or distribute dividends to such an extent that its reserves, after such distribution, are in excess of 100%

of its paid up capital. However, this tax on undistributed reserves is not applicable to a public company which distributes profit

equal to either 40 percent of its after tax profits or 50 percent of its paid up capital, whichever is less, within six months of the end of

the tax year.

During the period a term finance of Rs. 350.00 million has been obtained to refinance the capex incurred by the

Company. It is repayable within the period of 7 years inclusive of grace period of 2 years in 20 equal quarterly

installments of principal amount. Initially it carried mark up at the rate of 3 months KIBOR + 1.25% per annum which

has been reduced to 3month KIBOR + 0.90% pa. This finance is secured against joint pari passu charge / mortgage of

Rs.772.00 million on all present and future fixed assets of the Company and personal guarantees of the sponsoring

directors.

During the period a demand finance of Rs. 13.265 million has been obtained to finance the retirement of letter of credits

for import of textile machinery for BMR purpose. It is repayable within the period of 10 years inclusive of grace period

of 2 years in 16 equal half yearly installments of principal amount. It carries mark up at the rate of six months KIBOR+

0.50% per annum. Entire finance will be refinanced from SBP under LTFF scheme as entire imported machinery is

eligible under the LTFF scheme of SBP. This finance is secured against joint pari passu charge/mortgage of Rs. 214.00

million on all present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

During the period a term finance of Rs. 250.00 million has been obtained to partially finance the capex already incurred

and adjustment of expensive debit / repayments. It is repayable within the period of 5 years inclusive of grace period of 1

years in 8 equal half yearly installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 0.90%

per annum. This finance is secured against joint pari passu charge/mortgage of Rs. 534.00 million on all present and

future fixed assets of the Company and personal guarantees of the sponsoring directors.

During the period a term finance of Rs. 247.628 million has been obtained for swap of other banks’ outstanding term

loans. It is repayable within the period of 10 years inclusive of grace period of 2 years in 16 equal half yearly installments

of principal amount. It carries mark up at the rate of six months KIBOR + 0.65% per annum. This finance is secured

against joint pari passu charge/mortgage of Rs. 2,640.00 million on all present and future fixed assets of the Company

and personal guarantees of the sponsoring directors.

The tax provision is charged by considering the provision of section 113, 65B and other tax credits available under the Income

Tax Ordinance, 2001. In addition to this, it also includes tax on exports and imports and income from other sources which is full

and final discharge of Company's tax liability in respect of income arising from such source.


2017 2016

Rupees Rupees

6 TaxationCurrent 207,903,643 193,050,516

Deferred (61,354,925) (3,332,393)

146,548,718 189,718,123

8 General

Figures in the financial statements have been rounded-off to the nearest rupee.

sd/-(FAIZAN-UL-HAQ)


sd/-(REHMAN NASEEM)

CHAIRMAN / DIRECTOR




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