Textile Mills Limited

Annual Report

2014

“IN THE NAME OF ALLAH SUBHANA HU TAALA” 26th Annual Reports And Accounts For The Year Ended June 30, 2014

Contents 03

Company Information

04

Vision & Mission Statement

05

Statement of Ethics And Business Practices

06

Notice of Annual General Meeting

07-08 09 10-11

Directors' Report Key Financial Data of Six Years Statement of Compliance With The Code of Corporate Governance

12

Auditors' Review on Compliance Report

13

Auditors' Report to the Members

14-15

Balance Sheet

16

Profit and Loss Account

17

Statement of Comprehensive Income

18

Cash Flow Statement

19

Statement of Changes in Equity

20-36

Notes to the Accounts

37-40

Pattern of Share Holding Form of Proxy

Annual Report 2014 01

COMPANY INFORMATION BOARD OF DIRECTORS:

M. MUNIR MONNOO M. KHURSHID MONNOO M. NASIR MONNOO M. SHAKIL MONNOO HUMAYUN MONNOO AURANGZEB MONNOO ADEEL MONNOO

Chairman Chief Executive

SECRETARY:

MOHAMMAD SHAKIL KHAN

AUDIT COMMITTEE:

M. KHURSHID MONNOO AURANGZEB MONNOO ADEEL MONNOO MOHAMMAD SHAKIL KHAN

AUDITORS:

M/S SHEIKH & CHAUDHRI Chartered Accountants Lahore

LEGAL ADVISOR:

CHAUDHRY KARAMAT HUSSAIN (Advocate)

REGISTRARS AND SHARE TRANSFER OFFICE:

CORP LINK (PVT) LTD. Wing Arcade 1 -K (Commercial), Model Town, Lahore.

BANKERS:

UNITED BANK LIMITED.

REGISTERED OFFICE:

23 Davis Road, Lahore

FACTORY:

13th K.M. Sheikhupura Faisalabad Road, Sheikhupura

Chairman Member Member Secretary

Annual Report 2014 03

Vision Statement Olympia Textile Mills Limited aspires to become one of the top spinners of the country, to strive for excellence through commitments, integrity, honesty and dedicated team work.

Mission Statement To be a model amongst the textile spinning, capable of producing high quality blended and hundred percent cotton yarn both for knitting and weaving. Complete satisfaction of buyers / consumers is our Motto. Manufacturing of blended and hundred percent cotton yarn as per the customers' requirements and market demand. Keeping pace with the rapidly changing technology by continuously balancing, modernization and replacement (BMR) of plant and machinery. Enhancing the profitability by improved efficiency and cost controls. Betterment of mills employees as quality policy. Protecting the environment and contributing towards the economic strength of the country and function as a good corporate citizen.

04 Annual Report 2014

STATEMENT OF ETHICS AND BUSINESS PRACTICES Statement of Ethics and Business Practices prepared by the company for the observance of each director and employee to establish a standard of conduct. Formulate, implement, follow up and monitor the objectives, strategies, policies, procedures and overall business plan of the company. Oversee that the affairs of the company are being carried out prudently within the framework of objectives, existing laws/regulations and high business ethics. Ensure compliance of the company affairs as per legal and regulatory requirements and guidelines of the statutory authorities. Motive and encourage initiatives and self realization in fellow members. Protect the interest and assets of the company. Maintain organizational effectiveness for the achievement of the organizational goals. Foster the conducive environment through respective policies. Company employees will avoid making personal gain (other than approved benefits) at the company's expenses and/or participating in or assisting activities which are against the company's interest. Company employees will not engage directly or indirectly without the permission of the company in any other business or paid occupation while in the service of the company. The company will not knowingly assist fraudulent activities of others. Ensure that the company interest supersedes all other interest.

Annual Report 2014 05

NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the 26th Annual General Meeting of the shareholders of Olympia st Textile Mills Limited will be held on Friday 31 October 2014 at 11:30 a.m. at the Registered Office of the Company, 23-Davis Road Lahore, to transact the following business: 1. To confirm the minutes of the last Annual General Meeting of the company held on st Thursday 31 October 2013. 2. To receive, consider and adopt the Annual Audited Accounts for the year ended 30th June 2014 together with the Director's and Auditor's Report thereon. 3. To appoint auditors of the company and to fix their remuneration for the next financial year. 4. To transact any other business with the permission of the Chair. By Order of the Board

Lahore Dated: October 09, 2014

Mohammad Shakil Khan Company Secretary

Notes: 1. The share transfer books of the Company will remain closed from October 22, 2014 to October 31, 2014 (both days inclusive). 2. A member entitled to vote at the meeting may appoint any other member as his/her proxy at the registered office of the company dully stamped, signed and witnessed not later than 48 hours before the meeting. 3. Any individual beneficial owner of the Central Depository Company, entitled to vote at this meeting must bring his/her identity card and in case of proxy must enclose an attested copy of his/her N.I.C. Representatives of corporate members should bring the usual documents required for such purpose. 4. Shareholders are requested to notify the company's share registrar if any change in their addresses. REGISTRAR AND SHARE TRANSFER OFFICE

06 Annual Report 2014

CORP LINK (PVT) LTD. Wings Arcade 1-K (Commercial), Model Town, Lahore.

DIRECTORS' REPORT th

The Directors of your company are pleased to welcome you the 26 Annual General Meeting and present their report together with the financial statements and auditors' report for the year ended June 30, 2014. Following are the financial results of the company: Loss before taxation (Add) / Less: Provision for taxation Current Deferred

Loss after taxation

2014 Rupees 135,142,426

2013 Rupees 11,914,091

(18,691,817)

(311,040) 1,139,286

(18,691,817)

828,246

153,834,243

11,085,845

The Company suffered loss after tax Rs. 153.834 million as compared to corresponding period loss of Rs. 11.085 million. During this period almost nine months is production period and rest of the time is closed. We stopped operation during second week of March 2014 due to continued huge losses, mainly sustained by higher cost of raw materials, input cost and comparatively depressed yarn prices both in local and export market. The unscheduled WAPDA and Gas load shedding adversely affected projected profitability of the company. Inspite of the fact that we balanced our project by adding two Draw Frames, four Q-Pro machines and two Gas generating sets approximately investment amounting Rs. 200 million. The future of textile industry particularly spinning seems to be comparatively critical as the cotton prices are going down but yarn rates are more deteriorating. The export market is also depressed as few buyers are available in the market. The mills is fully energized with gas captive power and WAPDA connection. We have already applied for WAPDA load enhancement due to installation of new machines. The auditors of the company expressed their opinion without qualifying that the company equity is negative and have doubt on company's ability to continue as a going concern. In this respect it is mentioned that the sponsors/directors of the company are fully determined to operate the project. It is evident that directors have further contributed more than Rs. 30 million as loan to the company. Furthermore fixed investment in shape of capitalization for building, plant & machinery and others have been made during the year under review. There is no doubt that the company can continue as going concern for future period. Future Prospects Unfortunately, our mills operations are still closed due to overall textile sector in-viability. Since the cotton crop in Punjab is badly damaged by floods coupled with decrease in yarn prices are major factors to push the industry into crisis like situation. However, your directors are confident to restart the mills operation during the 2nd week of November 2014, when the Punjab cotton crop will be at full swing. Our major customers & suppliers have posed their full confidence upon us to restart the mills operation positively. Loss per share

2014

2013

(14.24)

(1.03)

Annual Report 2014 07

Dividend Due to accumulated losses and closed operation, the company is not in a position to pay any dividend. Corporate Governance a) The company has followed the best practices of corporate governance, “wherever applicable” as required by the listing regulations of KSE and LSE. b) The financial statements prepared by the management of the company, present fairly its state of affairs, the result of its operations, cash flows and changes in equity. c) Proper books of account of the company have been maintained. d) Appropriate accounting policies have been consistently applied in preparation of the financial statements. e) International Accounting Standards, applicable in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed. f) The system of internal control is sound in design and effectively monitored. g) Key operating and financial data for the last six (6) years in summarized form is annexed. h) There has been no material departure from the practices of corporate governance as detailed in the corporate governance scales. I) There are no statutory payments on account of taxes, duties, levies and charges, which are outstanding and have not been disclosed in this report. Board Meeting During the period meetings of board of directors were held. Attendance of each director was as follow: Meeting Attended 4 M. Munir Monnoo M. Khurshid Monnoo 4 M. Nasir Monnoo 4 M. Shakeel Monnoo 4 Humayun Monnoo 4 Aurangzeb Monnoo 4 Adeel Monnoo 4 -

The pattern of share holding is annexed. There has been no trading in company's shares by the CEO, Directors, CFO, Company Secretary and their spouse and minor children.

Auditors The present auditors, M/s. Sheikh & Chaudhri, Chartered Accountants, Lahore retire and being eligible, offer themselves for re-appointment for the next year. In the end, we also acknowledge and appreciate the dedication and devotion of the employees, staff and senior members of the team. For and on behalf of the Board. Lahore: Dated: October 09, 2014 M. Khurshid Monnoo 08 Annual Report 2014

KEY FINANCIAL DATA OF PAST SIX YEARS

OPERATING RESULT Sales Gross (loss) Operating (loss) (Loss) before tax (Loss) after tax BALANCE SHEET Paid up capital Equity portion of directors' loan Accumulated loss Surplus on revaluation of PPE Long term liabilities Current liabilities

Fixed assets Intangible asset Long term deposits Current assets

Gross (loss) % of sales Operating (loss) % of sales (Loss) before tax as % of sales (Loss) per share (Rs.)

2014 1,163,979 (81,201) (110,334) (135,142) (153,834)

2013 2012 Restated Restated 61,548 (952) (7,517) (10,696) (16,472) (11,914) (17,435) (11,086) (15,685)

(8,405) (15,854) (16,601) (16,601)

(Rs.in "000") 2010 2009 Restated 5,660 245,373 (10,038) (35,440) (20,195) (47,514) (20,740) (54,125) (20,740) (52,912)

108,040 108,040 (219,346) (198,606) 234,158 233,685 12,443 31,532 135,295 174,651

2011

108,040 267,654 (417,770) 272,625 393,467 106,107 730,124

108,040 256,676 (279,958) 288,648 232,733 37,919 644,058

108,040 (270,197) 241,229 15,761 94,834

108,040 (236,148) 223,337 12,040 107,269

651,094 409 3,191 75,430 730,124

511,072 513 3,191 129,283 644,058

73,549 1,991 19,294 94,834

81,645 1,991 23,634 107,270

-6.98% -9.48% -11.61% (14.24)

-1.55% -17.38% -19.36% (1.03)

0.00% 0.00% 0.00% (1.45)

0.00% 0.00% 0.00% (1.54)

87,294 1,991 46,010 135,295

117,879 3,569 53,203 174,651

-177.34% -356.78% -366.40% (1.92)

-14.44% -19.36% -22.06% (3.72)

Annual Report 2014 09

STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE This statement is being presented to comply with the Code of Corporate Governance contained in Regulation No.35 of listing regulations of Karachi Stock Exchange (G) Ltd and Lahore Stock Exchange (G) Ltd for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. The company has applied the principles contained in the COCG in the following manner: 1. The company encourages representation of independent non-executive directors and directors representing minority interests on its board of directors. At present the board includes:

Category Independent Directors Executive Directors 1. M. Khurshid Monnoo Non-Executive Directors 1. M. Munir Monnoo 2. M. Nasir Monnoo 3. M. Shakil Monnoo 4. Humayun Monnoo 5. Aurangzeb Monnoo 6. Adeel Monnoo

Name Nil

The requirement of Independent Director in composition of Board under COCG 2012 will be fulfilled at the time of next election of directors. 2. The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this company (excluding the listed subsidiaries of listed holding companies where applicable). 3. All the resident directors of the company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange. 4. No casual vacancy on the board occurred during the year. 5. The 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. 6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the company. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. 7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO, other executive and non-executive directors, have been taken by the board/shareholders. 8. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the board for this purpose and the board met at least once in every quarter. Written notices of the board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 9. Orientation Course: All the directors on the Board are fully conversant with their duties and responsibilities as directors of corporate bodies. The directors were apprised of their duties and responsibilities through orientation courses. 10 Annual Report 2014

Directors' Training Programs: Six (6) Directors of the Company are exempt due to 14 years of education and 15 years of experience on the board of a listed company. 10. No new appointment of CFO, Company Secretary and Head of Internal Audit has been made by the Board during the year. The remuneration of CFO, Head of Internal Audit and Company Secretary was revised during the year after due approval of the Board. 11. The directors' report for this year has been prepared in compliance with the requirements of the COCG 2012 and fully describes the salient matters required to be disclosed. 12. The financial statements of the company were duly endorsed by CEO and CFO before approval of the Board. 13. The directors, CEO and executives do not hold any interest in the shares of the company other than that disclosed in the pattern of shareholding. 14. The company has complied with all the corporate and financial reporting requirements of the COCG 2012. 15. The Board has formed an Audit Committee. It comprises of 4 members, of whom 2 are nonexecutive directors and the chairman of the committee is not an independent director and will be changed on next election date to bring the composition of audit committee in line with the requirements of COCG 2012. 16. The meetings of the audit committee were held at least once every quarter for the review of interim and final results prior to the approval by the Board of Directors. The terms of reference of the committee have been approved by the Board and advised to the committee for compliance. 17. The Board has formed a Human Resource and Remuneration (HR&R) Committee. It comprises of 3 members, of whom 2 are non-executive directors and the chairman of the committee is a Non-Executive director. 18. The Board has set up an effective internal audit function that are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the company and they are involved in the internal audit function on full time basis. 19. The 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. 20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 21. 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). 22. Material/price sensitive information has been disseminated among all market participants at once through stock exchange(s). 23. We confirm that all other material requirements of the COCG 2012 have been complied with.

Lahore: Dated: October 09, 2014.

M. Khurshid Monnoo Chief Executive NIC:35202-2588062-5 Annual Report 2014 11

REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF THE 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 OLYMPIA TEXTILE MILLS LIMITED ("the Company") for the year ended June 30, 2014, to comply with the Listing Regulations of the Karachi and Lahore 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 have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board’s statement on internal control covers all controls and the effectiveness of such internal controls. Further, Listing Regulations of the Karachi and Lahore 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, 2014.

Lahore October 09, 2014 12 Annual Report 2014

SHEIKH & CHAUDHRI Chartered Accountants Audit Engagement Partner: Mohammad Saeed Malik

AUDITORS' REPORT TO THE MEMBERS We have audited the annexed balance sheet of OLYMPIA TEXTILE MILLS LIMITED (''the Company'') as at June 30, 2014 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

the balance sheet and profit and loss account together with the notes thereon, have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; (ii) the expenditure incurred during the year was for the purpose of the company's business; and (iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company;

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, 2014 and of the loss, total comprehensive loss, 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).

Without qualifying our opinion, we draw attention to note 1.1 to the financial statements. During the current financial year, the Company has sustained loss before tax amounting to Rs.135,142,426 (2013: Rs.11,914,091) and at balance sheet date its accumulated losses have stood up to Rs. 417,770,590 (2013: Rs. 279,958,021). Further, the Company's equity is in negative. These conditions may cast significant doubt on Company's ability to continue as a going concern.

Lahore October 09, 2014

SHEIKH & CHAUDHRI Chartered Accountants Engagement Partner: Mohammad Saeed Malik

Annual Report 2014 13

BALANCE SHEET

EQUITY AND LIABILITIES

Note

2014 Rupees

2013 Rupees Restated

SHARE CAPITAL AND RESERVES Authorised 12,000,000 ordinary shares of Rs. 10 each

120,000,000

120,000,000

108,040,000 267,654,711 (417,770,590) (42,075,879) 272,625,985

108,040,000 256,675,599 (279,958,021) 84,757,578 288,647,659

8 9 10 11

118,539,491 119,218,750 12,000,000 143,708,746 393,466,987

96,258,603 12,000,000 124,474,890 232,733,493

Trade and other payables Current portion of long term financing Short term financing Interest / mark up accrued Provision for taxation

12 13 14 15

74,410,096 17,031,250 5,676,213 8,988,971 106,106,530

37,608,466 311,040 37,919,506

CONTINGENCIES AND COMMITMENTS

16

Issued, subscribed and paid-up capital Equity portion of directors' loan Accumulated (losses)

5 6

Surplus on revaluation of property, plant & equipment

7

NON - CURRENT LIABILITIES Loan from directors Long term financing Due to associated undertaking Deferred liabilities

CURRENT LIABILITIES

TOTAL EQUITY AND LIABILITIES

-

730,123,623

-

644,058,236

( M. KHURSHID MONNOO) CHIEF EXECUTIVE 14 Annual Report 2014

AS AT JUNE 30, 2014

ASSETS

Note

2014 Rupees

2013 Rupees Restated

NON - CURRENT ASSETS Property, plant and equipments

17

651,094,004

511,071,578

Intangible asset - Computer software

18

408,900

513,300

3,190,714

3,190,714

11,383,119 71,621 25,676,732 29,467,412 8,831,121 75,430,005

15,375,423 72,859,230 12,764,884 28,283,107 129,282,644

730,123,623

644,058,236

Long term deposits

CURRENT ASSETS Stores, spares and loose tools Trade debts - unsecured but consiedered good Stock in trade Advances and other receivables Cash and bank balances

19 20 21 22

TOTAL ASSETS The annexed notes (1-40) form an integral part of these financial statements.

(AURANGZEB MONNOO) DIRECTOR Annual Report 2014 15

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2014

Note

2014 Rupees

Sales

23

1,163,979,196

61,547,589

Cost of sales

24

(1,245,180,273)

(62,499,393)

(81,201,077)

(951,804)

Gross (loss)

2013 Rupees

Selling and distribution expenses

25

(7,079,539)

(81,506)

Administrative expenses

26

(22,524,076)

(7,771,967)

Other operating expenses

27

Other income

29

(Loss) before taxation Taxation

30

(Loss) after taxation Basic and diluted (loss) per share

(6,363,802)

(29,603,615)

(14,217,275)

(110,804,692)

(15,169,079)

28

(Loss) from operations Finance cost

-

470,366

4,473,159

(110,334,326)

(10,695,920)

(24,808,100)

(1,218,171)

(135,142,426)

(11,914,091)

(18,691,817)

828,246

(153,834,243)

(11,085,845)

(14.24)

(1.03)

36

The annexed notes (1-40) form an integral part of these financial statements.

( M. KHURSHID MONNOO) CHIEF EXECUTIVE 16 Annual Report 2014

(AURANGZEB MONNOO) DIRECTOR

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED JUNE 30, 2014 2014 Rupees

(Loss) after taxation

(153,834,243)

Other comprehensive income Total comprehensive (loss) for the year

(153,834,243)

2013 Rupees

(11,085,845) (11,085,845)

The annexed notes (1-40) form an integral part of these financial statements.

( M. KHURSHID MONNOO) CHIEF EXECUTIVE

(AURANGZEB MONNOO) DIRECTOR

Annual Report 2014 17

CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2014

2014 Rupees (135,142,426)

2013 Rupees (11,914,091)

60,205,655 104,400 542,039 24,808,100 85,660,194 (49,482,232)

8,174,350 8,700 (3,812,740) 603,697 597,135 6,363,802 11,934,944 20,853

3,992,304 47,182,498 (71,621)

(11,127,247) (72,859,230) -

5,571,271

(3,579,707)

36,801,630 93,476,082 43,993,850 (15,819,129) (22,584,839) 5,589,882

25,659,712 (61,906,472) (61,885,619) (597,135) (900,227) (63,382,981)

(200,228,081) (200,228,081)

(5,800,873) (522,000) (1,200,000) (42,128,147) (49,651,020)

CASH FLOW FROM FINANCING ACTIVITIES Long term finance Short term finance Loan from directors Net cash generated from financing activities

136,250,000 5,676,213 33,260,000 175,186,213

140,919,600 140,919,600

Net (decrease) / increase in cash and cash equivalents

(19,451,986)

27,885,599

Cash and cash equivalents at the beginning of the year

28,283,107

397,508

8,831,121

28,283,107

CASH FLOW FROM OPERATING ACTIVITIES (Loss) before taxation Adjustment for: Depreciation Amortization Liabilities written-back Gratuity Finance cost Assets written-off

Note

Cash flows before changes in working capital Changes in working capital Decrease / (increase) in current assets Stores, spares and loose tools Stock in trade Trade debts Advances and other receivables Increase in current liabilities Trade and other payables Net changes in working capital Cash generated from / (used in) operations Finance cost paid Taxes paid Net cash generated from / (used in) operating activities CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets Purchase of intangible asset Long term deposits Capital work in progress Net cash (used in) investing activities

Cash and cash equivalents at the end of the year 31 The annexed notes (1-40) form an integral part of these financial statements. ( M. KHURSHID MONNOO) CHIEF EXECUTIVE

18 Annual Report 2014

(AURANGZEB MONNOO) DIRECTOR

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2014 Equity portion Accumulated Share Capital of loan from (Loss) directors Rupees Rupees Rupees Balance as at July 01, 2012 - as previously reported

108,040,000

Effect of adjustment as referred to note 6.2 Balance as at July 01, 2012 - restated

108,040,000

-

(270,196,691)

266,771,615

-

266,771,615

(270,196,691)

(10,096,015)

-

Total Rupees (162,156,691) 266,771,615 104,614,924

Imputed interest on loan from directors

-

(10,096,015)

Total comprehensive (loss) for the year

-

-

(11,085,845)

(11,085,845)

Current year incremental depreciation - net of deferred tax

-

-

1,324,515

1,324,515

Balance as at June 30, 2013 - restated

108,040,000

256,675,599

(279,958,021)

84,757,578

Balance as at July 01, 2013

108,040,000

256,675,599

(279,958,021)

84,757,578

16,021,674

16,021,674

Current year incremental depreciation - net of deferred tax

-

-

Effect of adjustment due to loan from directors obtained during the year.

-

23,117,321

-

23,117,321

Imputed interest on loan from directors

-

(12,138,210)

-

(12,138,210)

Total comprehensive (loss) for the year

-

Balance as at June 30, 2014

108,040,000

267,654,711

(153,834,243)

(153,834,243)

(417,770,590)

(42,075,879)

The annexed notes (1-40) form an integral part of these financial statements.

( M. KHURSHID MONNOO) CHIEF EXECUTIVE

(AURANGZEB MONNOO) DIRECTOR

Annual Report 2014 19

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2014

1

LEGAL STATUS AND NATURE OF THE BUSINESS The company was incorporated in Pakistan as a (Private) Limited Company on March 7, 1989 under the Companies Ordinance, 1984. The status of the company was subsequently changed to a public company on December 01, 1989 and is listed in the Lahore and Karachi Stock Exchanges in Pakistan. The company is engaged in the manufacture and sale of cotton yarn. The company's mill is situated at 13 - KM, Sheikhupura - Faisalabad Road, Sheikhupura and its Head Office at 23 - Davis Road, Lahore. 1.1 During the current financial year, the Company has sustained loss before tax amounting to Rs.135,142,426 (2013: Rs.11,914,091) and at balance sheet date its accumulated losses have stood up to Rs. 417,770,590 (2013: Rs. 279,958,021). Further, the Company's equity is in negative. These conditions may cast significant doubt on Company's ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business. However, the management has taken various measures to improve the financial position of the Company which include the sponsors' continued assurance for arrangement of funds as and when required, prompt discharging of its liabilities including financial obligations and hiring of competent management personnel for managing Company's affairs.

2

BASIS OF PREPARATION 2.1 Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail. 2.2 Basis of measurement These financial statements have been prepared under the historical cost convention except stated otherwise. 2.3 Functional and presentation currency These financial statements are presented in Pakistan Rupee, which is also the company’s functional currency. All financial information presented in Pakistan Rupee has been rounded to the nearest rupee.

3

USE OF ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with approved accounting standards requires management to make judgments , estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions and judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

20 Annual Report 2014

The areas where various assumptions and estimates are significant to Company’s financial statements or where judgments were exercised in application of accounting policies are as follows: - Financial instruments - Staff retirement benefits - Useful lives, patterns of economic benefits and impairments - Provisions and contingencies - Taxation - Inventories

4

SIGNIFICANT ACCOUNTING POLICIES 4.1 Standards, amendments or interpretations which became effective during the year During the year certain amendments to Standards or new interpretations became effective, however, the amendments or interpretation did not have any material effect on the financial statements of the Company. 4.2 New / revised accounting standards, amendments to published accounting standards and interpretations that are not yet effective There are certain standards, amendments to the approved accounting standards and interpretations that are mandatory for the Company’s accounting periods beginning on or after July 01, 2014 but are considered not to be relevant or to have any significant effect on the Company’s operations and are, therefore, not detailed in these financial statements 4.3 Property, plant and equipment Owned assets Property, plant and equipment except freehold land, buildings on freehold land and plant and machinery are stated at cost less accumulated depreciation and impairment losses, if any. Buildings on freehold land and plant and machinery are stated at revalued amounts less accumulated depreciation and impairment losses, if any. Freehold land is stated at revalued amount and actual cost to date respectively. Subsequent cost 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. Major repairs and improvements are capitalized. All other repair and maintenance costs are charged to income during the year in which they are incurred. Depreciation Depreciation is charged to profit and loss account applying the reducing balance method over its estimated useful life at the rates specified in note 16.1 to the financial statements. Depreciation on additions to property, plant and equipment is charged from the month in which property, plant and equipment become available for use while no depreciation is charged for the month in which property, plant and equipment is disposed off. Assets residual values, if significant and useful lives are reviewed and adjusted, if appropriate at each balance sheet date. Gains or losses on disposal of property, plant and equipment are recognized in profit and loss account. Surplus on revalued property, plant and equipment Surplus arising on revaluation is credited to surplus on revaluation of property, plant and equipment. This surplus on revaluation, to the extent of incremental depreciation, is transferred to accumulated profit, net of deferred tax. Annual Report 2014 21

Impairment Where the carrying amount of asset exceeds its estimated recoverable amount it is written down immediately to its recoverable amount. 4.4 Capital work in progress Capital work in progress is stated at cost less any identified impairment loss. Transfers are made to relevant fixed assets category as and when assets are available for use. 4.5 Intangible asset Computer software is stated at cost less accumulated amortization. Software cost is only capitalized when it is probable that future economic benefits attributable to the software will flow to the Company and the same is amortized applying the straight-line method at the rate stated in note 17.1. 4.6 Long term deposits These are stated at cost which represents the fair value of consideration given. 4.7 Stores, spare parts and loose tools These are valued at lower of cost and net realizable value. Cost is determined by moving average method. Items considered obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon. 4.8 Stock in trade These are valued at lower of cost and net realizable value except waste which is valued at net realizable value. Cost is determined as follows. - Raw material - Work in process - Finished goods - Waste

Weighted average cost Raw materail plus appropriate manufacturing overheads. Lower cost or NRV Net realizable value

Net realizable value signifies the estimated selling prices in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sales. 4.9 Trade debts and other receivables Trade debts originated by the company are recognized and carried at original invoice value less any allowance for uncollectible amounts. An estimated provision for doubtful debts is made when there is objective evidence that collection of the full amount is no longer probable. The amount of provision is charged to income. Bad debts are written off as incurred. Other receivables are stated at amortized cost. Known impaired receivables are written off, while receivables considered doubtful are provided for. 4.10 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of cash flow statements, cash and cash equivalent comprise cash in hand, and with banks on current & saving accounts. 4.11 Staff retirement benefits (defined benefit plan) The Company operates an un-funded retirement gratuity scheme for its eligible employees. Provision for gratuity is made annually to cover obligation under the scheme in accordance with the actuarial recommendations. Latest actuarial valuation was conducted on the basis of the projected unit credit method by an Independent Actuary. 22 Annual Report 2014

4.12 Taxation -

Current 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 Deferred tax is provided, using the balance sheet liability method, on all temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences and carry forward of unused tax losses and tax credits to the extent that it is probable that future taxable profits will be available against which deferred tax asset can be utilized, except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability that, at the time of transaction, affects neither the accounting nor taxable profits. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized. Deferred tax asset and liability is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

4.13 Trade and other payables Liabilities for trade and other payable are carried at cost which is fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the company. 4.14 Provisions A provision is recognized in the balance sheet when the company has a legal or constructive obligation as a result of past event, and it is probable that an out flow of resource embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. 4.15 Borrowings and borrowing costs Borrowing costs are recognized as an expense in the period in which these are incurred except to the extent of the borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs are capitalized as part of the cost of that asset up to the date of its commissioning. 4.16 Revenue recognition Revenue is recognized on dispatch of goods. Return on deposits is recognized on a time proportion basis by reference to the principal outstanding and the applicable rate of return. Annual Report 2014 23

4.17 Financial instruments -

Financial assets Significant financial assets include advances, trade debts, long term deposits and bank balances. Advances and receivables are stated at their nominal value as reduced by provision for doubtful finances and receivable, while other financial assets are stated at cost.

-

Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into. Significant financial liabilities include loan from directors, loan from associated undertaking, trade and other payables and interest / mark up accrued. Markup based financial liabilities are recorded at gross proceeds received. Other liabilities are stated at their nominal value.

-

Recognition and derecognition All the financial assets and financial liabilities are recognized at the time when the Company becomes party to the contractual provisions of the instrument. Financial assets are derecognized when the Company looses control of the contractual rights that comprise of the financial assets. Financial liabilities are derecognized when they are extinguished i.e. when the obligation specified in the contract is discharged, cancelled or expires. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to profit and loss account.

4.18 Off setting of financial assets and liabilities Financial assets and financial liabilities are set off and only the net amount is reported in the balance sheet when there is a legally enforceable right to set off the recognized amount and the Company intends to either settle on a net basis, or to realize the asset and settle the liability simultaneously. 4.19 Impairment At each balance sheet date, the company reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Recoverable amount is the greater of net selling price and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognized as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined, had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as income immediately. 4.20 Related party transactions All transactions with related parties are carried out by the company at arms length price using the method prescribed under the Companies Ordinance, 1984 with the exception of loan taken from related parties which is interest / mark up free. 4.21 Dividend The dividend distribution to the shareholders is recognized as a liability in the period in which it is approved by the shareholders. 24 Annual Report 2014

5

ISSUED, SUBSCRIBED AND PAID-UP CAPITAL 10,804,000 (2013: 10,804,000) ordinary shares of Rs. 10 each fully paid in cash

6

2014 Rupees

2013 Rupees

108,040,000 2014 Rupees

108,040,000 2013 Rupees Restated 17,043,721 48,162,450 52,834,445 32,874,742 13,663,333 13,185,944 18,023,915 11,632,014 18,262,791 13,900,975 17,091,270 256,675,599

EQUITY PORTION OF DIRECTORS' LOAN M. Munir Monnoo M. Khurshid Monnoo M. Nasir Monnoo M. Shakil Monnoo Humayun Monnoo Aurangzeb Monnoo Raza Monnoo Adeel Monnoo Tayub Monnoo Zeeshan Monnoo Ghulam Mustafa Monnoo

16,245,564 45,907,005 50,360,211 33,715,762 13,023,479 19,404,252 17,179,856 18,037,775 24,358,033 13,131,888 16,290,886 267,654,711

6.1 It represents equity portion relating to interest free loan from directors amounting to Rs. 386,194,202 (2013: Rs. 352,934,202). 6.2 Interest free loan received from directors has been discounted at using effective rate of interest and classified seperately in equity portion and long term loan in the current year. The interest free loan has been adjusted as per accounting standard 8 (IAS 8) "Accounting policies, Changes in Accounting Estimates and Errors" the adjustment of such classification have been made respectively for in the said year. Consequently, directors' loan as at June 30,2013 have been increased / (decrease) by Rs. 10,096,015 [2012 : (Rs. 266,771,615)] with a corresponding (decrease) / increase in equity portion of directors' loan of (Rs. 10,096,015) [2012 : Rs. 266,771,615]. Such classification has no impact on basic and diluted loss per share of the company for the year ended June 30,2013 and 2012.

7

SURPLUS ON REVALUATION OF PROPERTY, PLANT & EQUIPMENT The company, during the current financial year, revalued its freehold land, buildings on freehold land and plant & machinery. The revaluation exercise was carried out by the independent valuers Harvester Services (Private) Limited (Approved Valuer of Pakistan Bank Association) on the basis of fair depreciative value of the assets. Balance at beginning of the year Add: surplus arisen on the revaluation carried-out during the year Less: transferred to accumulated loss on account of incremental depreciation for the year Less: deferred tax on: - surplus on revaluation of property, plant and equipment during the year - incremental depreciation

288,647,659 -

397,768,239

(24,275,264) (24,275,264)

(2,037,716) 395,730,523

(8,253,590) (8,253,590) 272,625,985

107,796,065 (713,201) 107,082,864 288,647,659

Annual Report 2014 25

8. LOAN FROM DIRECTORS

M. Munir Monnoo M. Khurshid Monnoo M. Nasir Monnoo M. Shakil Monnoo Humayun Monnoo Aurangzeb Monnoo Raza Monnoo Adeel Monnoo Tayub Monnoo Zeeshan Monnoo Ghulam Mustafa Monnoo

2014 2013 Interest Free Present Value Present Value Present Value Loan Adjustment of Interest Free of Interest Free Loan Loan Rupees Rupees Rupees Rupees 23,373,273 66,048,611 72,455,653 48,508,485 18,737,505 27,917,828 24,717,484 25,951,812 35,045,071 20,000,000 23,438,480 386,194,202

16,245,564 45,907,005 50,360,211 33,715,762 13,023,479 19,404,252 17,179,856 18,037,775 24,358,033 13,131,888 16,290,886 267,654,711

7,127,709 20,141,606 22,095,442 14,792,723 5,714,026 8,513,576 7,537,628 7,914,037 10,687,038 6,868,112 7,147,594 118,539,491

6,329,552 17,886,161 19,621,208 12,208,743 5,074,172 4,896,884 6,693,569 4,319,798 6,782,280 6,099,025 6,347,210 96,258,603

8.1

It represents long term loan portion relating to unsecured and interest free loan from directors amounting to Rs. 386,194,202 (2013: Rs. 352,934,202), and this loan is subordinate to the loan from Bank Al Falah Limited.

8.2

These have been recognized at amortized cost using discount rate of 12.61%. The resulting change has been charged equity portion of directors loan as referred to in note 6.

9. LONG TERM FINANCING From banking company - (Secured) - Term finance 9.1

9.1

119,218,750

-

The company has obtained term finance facility of Rs.200 Million (2013: Rs. Nil) from Bank Al- Falah Limited. This facility is secured by way of 1st exclusive char ge on fixed assets of the company for Rs. 400M, lien on import documents LC foreign Rs. 200M, subordination of director's loan amounting to Rs. 300M and personal guarentee of all directors of the company. The facility carries markup at the rate of 6 months KIBOR plus 2.50 % p.a. The loan is repayable in total five years ( including 1 year grace period) comprising 16 equal quarterly installments.

10. DUE TO ASSOCIATED UNDERTAKING Sheikhupura Feeds (Pvt) Ltd.

12,000,000 12,000,000

12,000,000 12,000,000

The company obtained unsecured loan from M/s Sheikhupura Feeds (Pvt) Limited- the associated company that carries mark up @ 12.61% per annum.

11. DEFERRED LIABILITES Staff retirement benefits - gratuity

11.1

Deferred Taxation

11.2

1,745,736

1,203,697

141,963,010 123,271,193 143,708,746 124,474,890

26 Annual Report 2014

11.1

2014 Rupees

Staff retirement benefits - gratuity

2013 Rupees

The amount recognized in the balance sheet is as follows: Present value of defined benefit obligation Unrecognized actuarial loss Net liability at end of the year

1,745,736 1,745,736

1,203,697 1,203,697

Net liability at beginning of the year Charge to profit and loss account Payments made during the year Net liability at end of the year

1,203,697 542,039 1,745,736

600,000 603,697 1,203,697

1,203,697 415,651 126,388 1,745,736

600,000 202,633 42,360 (196,567) 555,271 1,203,697

415,651 126,388 542,039

202,633 42,360 (196,567) 555,271 603,697

The movement in the present value of defined benefit obligation is as follows: Opening balance Current service cost Interest cost Transitional asset Benefits paid Actuarial loss Closing balance Expense recognized in profit and loss account Current service cost Interest cost Transitional asset Actuarial loss recognized Charge for the year

Comparison of present value of defined benefit obligation and experience adjustment on obligation for five years is as follows: 2014 2013 2012 2011 2010 ……………………………Rupees………………………… Present value of defined benefit obligation Experience adjustment on obligation

1,745,736 1,203,697 -

600,000

400,000

200,000

-

-

-

555,271

The future contribution rates of this scheme include allowance for deficit and surplus. Projected unit credit method, based on the following significant assumptions, is used for valuation: - discount rate - expected rate of growth per annum in future salaries - average expected remaining working life time of employees

2014

2013

10.5% 9.5% 3 years

10.5% 9.5% 3 years

Annual Report 2014 27

11.2 Deferred liability on temporary differences: Taxable temporary differences Surplus on revaluation of assets Accelerated tax depreciation

Note

Deductible temporary differences Provision for gratuity

2014 Rupees

2013 Rupees

95,769,764 46,786,796 142,556,560

107,082,864 16,609,623 123,692,487

(593,550) 141,963,010

(421,294) 123,271,193

1,782,115 55,623,062 7,582,618 7,541,149 144,518 432,639 1,303,995 74,410,096

2,252,257 17,597,930 8,304,386 6,920,113 144,518 -

6,920,113 621,036

6,299,077 621,036

7,541,149

6,920,113

12 TRADE AND OTHER PAYABLES Advances from customers Creditors Accrued liabilities Worker's profit participation fund Unclaimed dividend Income tax deducted at source Other liabilities

12.1

12.1 Balance at the beginning of the year Mark up on fund utilized in the company's business Balance at the end of the year

2,389,262 37,608,466

Mark up has been charged at the rate of 15.96% (2013: 15.96%) per annum.

13 CURRENT MATURITY OF LONG TERM FINANCING Current portion

17,031,250

-

5,676,213

-

14 SHORT TERM FINANCING From banking company - (Secured) - Cash finance

14.1

14.1 The company has obtained cash finance facility of Rs. 200 Million (2013: Rs. Nil) from Bank Al- Falah Limited, which is sub limit of Sight LC. This facility is secured by way of pledge of stocks Rs. 223M (pledge of local raw cotton at 10% margin over KCA rates), subordination of director's loan amounting to Rs. 300M and personal guarentee of all directors of the company. The facility carries markup at the rate of 3 months KIBOR plus 2% p.a.

15 INTEREST / MARK UP ACCRUED Mark up accrued on - Long term financing - Due from Associated Undertaking - Short term financing

3,757,020 1,513,200 3,718,751 8,988,971

-

16 CONTINGENCIES AND COMMITMENTS - Contingencies There is no contingency outstanding at the end of the year (2013: Nil). - Commitment Bank Al Falah Limited has issued bank guarantees on behalf of the company in favour of Sui Northern Gas Pipelines Limited for gas connection at the reporting date amounting to Rs. 23.247 M and Rs. 1.000 M in favour of The Director Excise and Taxation for Sindh Development Cess (Taxes - II), Karachi.

28 Annual Report 2014

17

Note

PROPERTY, PLANT AND EQUIPMENTS Operating fixed assets Capital work-in-progress

17.1 17.4

2014 Rupees

2013 Rupees

651,094,004 -

467,833,292 43,238,286

17.1 Operating fixed assets Owned assets Description

Land freehold

Buildings (on freehold land)

Plant and machinery

Furniture & Factory equipments equipments

Electric installations

Computers & Accessories

Vehicles

Total

…………….………..…………………………….…………… Rupees ………………….………………………….……………………… At July 01, 2013 Cost Accumulated depreciation

94,221,000 -

243,792,088

733,408,017

8,585,449

1,734,064

8,134,106

2,081,547

14,197,118

1,106,153,389

(46,424,337)

(382,375,732)

(6,275,143)

(1,516,986)

(5,276,701)

(262,352)

(12,928,134)

(455,059,385)

Net book amount

94,221,000

197,367,751

351,032,285

2,310,306

217,078

2,857,405

1,819,195

1,268,984

651,094,004

Net carrying value as at July 01, 2013 Opening net book value (NBV) Additions (at cost) Adjustments / Transfer Disposals (at NBV) Depreciation charge

94,221,000 -

147,271,537 64,137,528 (14,041,314)

221,154,167 175,138,526 (45,260,408)

1,421,094 1,066,884 (177,672)

241,198 (24,120)

880,620 2,154,623 (177,838)

1,057,446 968,806 (207,057)

1,586,230 (317,246)

467,833,292 243,466,367 (60,205,655)

Balance as at June 30, 2014 (NBV)

94,221,000

197,367,751

351,032,285

2,310,306

217,078

2,857,405

1,819,195

1,268,984

651,094,004

94,221,000

179,654,560

558,269,491

7,518,565

1,734,064

5,979,483

1,112,741

(32,383,023)

(337,115,324)

(6,097,471)

(1,492,866)

(5,098,863)

(55,295)

94,221,000

147,271,537

221,154,167

1,421,094

241,198

880,620

4,441,517

20,811,814

42,376,954

1,578,993

267,998

978,467

89,779,483 -

126,925,656 1,108,132 (1,574,065)

181,063,100 3,580,000 (5,865,887)

(157,899)

(26,800)

-

Additions (at cost) Adjustments / Transfer Disposals (at NBV) Depreciation charge

(97,847)

Balance as at June 30, 2013 (NBV)

94,221,000

147,271,537

221,154,167

1,421,094

241,198

880,620

At July 01, 2012 Cost Accumulated depreciation Net book amount Net carrying value as at July 01, 2012 Opening net book value (NBV) Surplus on revaluation

-

Depreciation rate (per annum) 5% 10% 10% 10% 17.2 Had there been no revaluation, the carrying value of revalued assets as at June 30, 2014 would have been as under:

10%

14,197,118

862,687,022

(12,610,888)

(394,853,730)

1,586,230

467,833,292

-

1,982,787

72,438,530

-

(396,557)

397,768,239

1,112,741 (55,295) 1,057,446

1,586,230

467,833,292

15%

20%

1,057,446

Note Land - freehold Buildings (on freehold land) Plant and Machinery

5,800,873 (8,174,350)

2014 Rupees 94,221,000 83,610,632 207,388,892 385,220,524

2013 Rupees 94,221,000 20,874,738 41,599,926 156,695,664 7,564,599

17.3 ALLOCATION OF DEPRECIATION Cost of goods sold

24

59,503,680

Administrative expenses

26

701,975

609,751

60,205,655

8,174,350

17.4 CAPITAL WORK-IN-PROGRESS Buildings (on freehold land)

6,539,684

6,539,684

Plant & machinery

15,642,353

15,642,353

Generators

21,056,249

21,056,249

43,238,286

43,238,286

Trasnsferred to - Plant and machinery - Building (on freehold land)

(36,698,602) (6,539,684) -

43,238,286

Annual Report 2014 29

Note 18

INTANGIBLE ASSET - Computer software Cost at the beginning of the year Addition during the year Less: amortization

2014 Rupees 522,000 -

- At beginning of the year

(8,700)

- Charge for the year

18.1

Book value at the end of the year

(104,400) (113,100) 408,900

2013 Rupees 522,000 (8,700) (8,700) 513,300

18.1 Amortization is charged to income applying the straight-line method at the rate of 20% per annum.

19 STORES, SPARES AND LOOSE TOOLS Stores Spares Loose tools

7,038,073 4,125,915 219,131 11,383,119

12,779,405 2,279,248 316,770 15,375,423

25,676,732 -

52,122,875 7,167,190

20 STOCK IN TRADE Raw material Work in process Finished goods - Yarn - Waste

-

12,174,107

-

1,395,058

25,676,732

13,569,165 72,859,230

416,264 23,307,841 1,496,557 4,246,750 29,467,412

25,000 8,593,056 1,034,042 3,112,786 12,764,884

14,244

317,087

6,729,772 2,087,105 8,816,877 8,831,121

22,625,054 5,340,966 27,966,020 28,283,107

21 ADVANCES AND OTHER RECEIVABLES Considered good: Advances - staff - supplier - income tax Sales tax receivable Other receivables

22 CASH AND BANK BALANCES Cash in hand with banks: Current accounts Saving accounts

22.1

22.1 Effective profit rate in respect of deposit accounts ranges from 6% to 7.5% per annum (2013: .6% to 9% per annum) 30 Annual Report 2014

Note

23 SALES - Net Yarn Cotton Waste and others Less: sales tax

2014 Rupees

2013 Rupees

986,602,750 180,608,995 16,461,442 1,183,673,187 (19,693,991) 1,163,979,196

63,043,694 63,043,694 (1,496,105) 61,547,589

925,823,440 68,928,176 14,371,025 11,261,374 130,828,737 4,452,612 3,213,024 6,061,850 59,503,680 1,224,443,918

37,828,386 12,843,093 5,364,067 1,378,879 15,633,786 1,159,653 976,863 486,422 7,564,599 83,235,748

24 COST OF SALES Raw material consumed Salaries, wages and other benefits Store and spares consumed Packing material consumed Fuel and power Repair and maintenance Insurance Other manufacturing expenses Depreciation Work in process Opening Closing Finished goods Opening Closing

24.1 Raw materials consumed Opening Purchases Closing

24.1

17.3

7,167,190 7,167,190

(7,167,190) (7,167,190)

13,569,165 13,569,165 1,245,180,273

(13,569,165) (13,569,165) 62,499,393

52,122,875 899,377,297 951,500,172 (25,676,732) 925,823,440

89,951,261 89,951,261 (52,122,875) 37,828,386

25 SELLING AND DISTRIBUTION EXPENSES Salaries, wages and other benefits Commission to distributors Advertising expenses

90,000 6,589,718 399,821

81,506

7,079,539

81,506

Annual Report 2014 31

Note

26 ADMINISTRATIVE EXPENSES Salaries, wages and other benefits Rent, rates and taxes Printing and stationary Postage and telephone Traveling and conveyance Legal and professional charges Fee and subscription Entertainment Utilities Repair and maintenance Vehicle running and maintenance Depreciation Amortization Auditor's remuneration Miscellaneous expenses

2014 Rupees

2013 Rupees

12,465,207 1,007,776 292,098 1,018,573 2,015,710 1,282,803 642,728 629,491 632,864 177,460 1,250,969 701,975 104,400 175,000 127,022

3,778,978 944,288 110,800 234,898 82,402 126,129 449,061 3,658 193,773 438,249 358,668 609,751 8,700 155,000 277,612

22,524,076

7,771,967

26.1 This includes Rs. 542,039 (2013: Rs. 603,697) on account of employee benefits. 26.2 Auditor's remuneration Audit fee 150,000 Half yearly review 25,000

130,000 25,000

175,000

155,000

-

6,363,802

-

6,363,802

428,138

660,419

-

3,812,740

42,228 470,366

4,473,159

6,365,276 1,513,200 14,823,474 621,036 1,485,114 24,808,100

621,036 597,135 1,218,171

26.1

17.3 18 26.2

27 OTHER OPERATING EXPENSES Assets written-off

28 OTHER INCOME Income from financial assets Profit received on deposits Income from non-financial assets Liabilities written-back Miscellaneous income

29 FINANCE COST Mark up on Long term financing Mark up on Due from Associated Undertaking Mark up on Short term financing Mark up on WPPF Bank charges and commission

32 Annual Report 2014

30 TAXATION Current Deferred

Note

2014 Rupees

2013 Rupees

30.1

(18,691,817)

(311,040) 1,139,286

(18,691,817)

828,246

30.1 Current year provision for taxation has not been made as the company has incurred gross loss during the year as per Section 113 of Income Tax Ordinance, 2001. 30.2 Reconciliation of tax expense and product of accounting profit multiplied by applicable tax rate is not required because the company has not charged tax expense in current year. Due to gross loss as per section 113 of Income Tax Ordinance, 2001.

31 CASH AND CASH EQUIVALENT Cash and bank balance

22

8,831,121

28,283,107

32 FINANCIAL INSTRUMENTS The company has exposures to the following risks from its use of financial instruments. - Credit risk - Liquidity risk - Market risk The Board of directors has overall responsibility for the establishment and oversight of company's risk management framework. The board is also responsible for developing and monitoring the Company's risk management polices. 32.1 Credit risk Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties fail completely to perform as contracted and arises principally from trade receivables and investment in debt securities. To manage exposure to credit risk in respect of trade receivables, management performs credit reviews taking into account the customer’s financial position, past experience and other factors. Sales tenders and credit terms are approved by the tender approval committee. Where considered necessary, advance payments are obtained from certain parties. All investing transactions are settled / paid for upon delivery as per the advice of investment committee. The Company’s policy is to enter into financial instrument contract by following internal guidelines such as approving counterparties and approving credits. Concentration of credit risk arises when a number of counter parties are engaged in similar business activities or have similar economic features that would cause their abilities to meet contractual obligation to be similarly effected by the changes in economic, political or other conditions. The Company believes that it is not exposed to major concentration

Annual Report 2014 33

The carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The maximum exposure to credit risk at the reporting date is: Note Long term deposits Trade debts Advances and other receivables Bank balances

2014 Rupees 3,190,714 71,621 29,467,412 8,816,877 41,546,624

2013 Rupees 3,190,714 12,764,884 27,966,020 43,921,618

32.2 Liquidity risk Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The Company is not exposed to liquidity risk as substantially all obligation / commitments of the Company are short term in nature and are fully paid The following are the contractual maturities of financial liabilities as at June 30, 2014: Carrying Less than More than amount one year one year --------------- Rupees --------------118,539,491 118,539,491 119,218,750 119,218,750 12,000,000 12,000,000 74,410,096 74,410,096 5,676,213 5,676,213 8,988,971 8,988,971 338,833,521 89,075,280 249,758,241

Loan from directors Long term financing Due to associated undertaking Trade and other payables Short term financing Interest / mark up accrued

The following are the contractual maturities of financial liabilities as at June 30, 2013: Carrying Less than More than amount one year one year --------------- Rupees --------------Loan from directors 96,258,603 96,258,603 Due to associated undertaking 12,000,000 12,000,000 Trade and other payables 74,410,096 74,410,096 Short term financing 5,676,213 5,676,213 188,344,912 80,086,309 108,258,603 32.3 Market risk Market risk is the risk that changes in market price, interest rate will affect the company's income or the value of its holding of financial instruments. 32.4 Interest rate risk At the reporting date the interest rate profile of the Company's significant interest bearing financial instruments is as follows: 2014 2013 2014 2013 Financial Assets Rupees Rupees Effective rate (in %age) Bank Balances 34 Annual Report 2014

6 to7.5

6 to 9

Carrying amount 2,087,105

5,340,966

32.5 Fair value of financial instruments The carrying values of the financial assets and financial liabilities approximate their fair values. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.

33 CHIEF EXECUTIVE, DIRECTORS' AND EXECUTIVES' REMUNERATION 33.1 The aggregate amount charged in the financial statements for the year against remuneration, including certain benefits, to the full time working directors and executives of the Company is as follows: Number of persons

Managerial remuneration

Gratuity

Rupees

Rupees

Chief Executive 2014

1

2,000,000

250,000

2013

1

1,800,000

250,000

Directors 2014

2

2,750,000 -

-

2013 Executives

1

-

2014

2

2,480,000

320,000

2013

1

1,800,000

150,000

The chief executive and director are entitled to use company maintained cars.

34 PLANT CAPACITY AND PRODUCTION No. of spindles installed

25,400

25,400

Installed capacity converted into 20's count

Kgs. 8,635,360

Kgs. 8,635,360

Actual production converted into 20's count

4,241,345

545,908

3

3

258

54

Number of shifts worked per day Days worked

35 TRANSACTIONS WITH RELATED PARTIES The related parties comprises associated companies and directors. Amount due to related parties are shown in the relevant notes to the financial statements. The other detail of transactions with the related parties are as follow:

Annual Report 2014 35

The transaction between the Company and related parties are carried out on normal commercial terms except as disclosed in relevant notes. Nature of relationship

Basis of relationship

Nature of transaction

Amount (Rupees)

Sheikhupura Feeds (Pvt) Limited

Associate

Common directorship

Loan including markup

13,513,200

Olympia Industries (Private) Limited

Associate

Common directorship

Organization expenses paid

561,520

Olympia Chemicals Limited

Associate

Common directorship

Organization expenses paid

716,237

Name of related party

36 BASIC AND DILUTED LOSS PER SHARE (Loss) for the year

Rupees

Rupees

(153,834,243) Number

(11,085,845) Number

10,804,000 Rupees

10,804,000 Rupees

Ordinary shares outstanding during the year Basic (Loss) per share

(14.24)

(1.03)

Total number of employees including permanent and contractual

443

588

Average number of employees including permanent and contractual

515

576

There is no dilutive effect on the basic (Loss) per share of the company.

37 NUMBER OF EMPLOYEES

38 EVENTS AFTER THE BALANCE SHEET DATE There are no reportable subsequent events occurring after the balance sheet date.

39 DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on October 09, 2014 in accordance with the resolution of the board of directors.

40 CORRESPONDING FIGURES Figures in these financial statements have been re-arranged wherever necessary, for the purpose of better comparison and rounded off to the nearest rupee.

( M. KHURSHID MONNOO) CHIEF EXECUTIVE 36 Annual Report 2014

(AURANGZEB MONNOO) DIRECTOR

THE COMPANIES ORDINANCE 1984 (Section 236(1) and 464) PATTERN OF SHAREHOLDING FORM - 34 1. Incorporation Number 2. Name of the Company

L - 01454 OLYMPIA TEXTILE MILLS LTD.

3. Pattern of holding of the shares held by the shareholders as at

4. No. of Shareholders

------Shareholding-----From

30-06-2014

To

3,357

81

1

626

101

500

301,936

42

501

1,000

41,495

65

1,001

5,000

175,282

12

5,001

10,000

100,440

3

10,001

15,000

35,699

5

20,001

25,000

108,500

1

25,001

30,000

26,500

1

30,001

35,000

32,763

1

35,001

40,000

40,000

1

45,001

50,000

50,000

1

80,001

85,000

82,000

4

130,001

135,000

534,864

1

150,001

155,000

151,500

4

295,001

300,000

1,200,000

1

355,001

360,000

358,359

1

460,001

465,000

462,452

1

595,001

600,000

598,266

2

1,795,001

1,800,000

3,592,672

1

2,905,001

2,910,000

2,907,915

854

100 100

Total Shares Held

10,804,000

Annual Report 2014 37

5. Categories of shareholders

Share held

5.1 Directors, Chief Executive Officers, and their spouse and minor childern

Percentage

8,914,805

82.5139%

5.2 Associated Companies, undertakings and related parties.

-

5.3 NIT and ICP

21,500

0.1990%

201

0.0019%

0

0.0000%

5.4 Banks Development Financial Institutions, Non Banking Financial Institutions. 5.5 Insurance Companies 5.6 Modarabas and Mutual Funds 5.7 Share holders holding 10% or more 5.8 General Public a. Local b. Foreign

-

358,359

3.3169%

6,500,587

60.1683%

1,400,122

12.9593%

75,100 32,763 1,150

0.6951% 0.3032% 0.0106%

5.9 Others (to be specified) Joint Stock Companies Pension Funds Others

6. Signature of Company Secretary 7. Name of Signatory

Mr. Shakeel Khan

8. Designation

Company Secretary

9. NIC Number 10 Date

38 Annual Report 2013

30

06

2014

CATEGORIES OF SHARE HOLDING REQUIRED UNDER C.C.G, AS ON 30TH JUNE, 2014 S. No.

NAME

HOLDING

% AGE

462,452 598,266 1,796,336 1,796,336 2,907,915 300,000 151,500 300,000 300,000 300,000 1,000 1,000 8,914,805

4.2804% 5.5374% 16.6266% 16.6266% 26.9152% 2.7767% 1.4023% 2.7767% 2.7767% 2.7767% 0.0093% 0.0093% 82.5139%

0

0.0000%

100 21,400 21,500

0.0009% 0.1981% 0.1990%

201 201

0.0019% 0.0019%

0

0.0000%

358,359

3.3169%

32,763

0.3032%

DIRECTORS, CEO THEIR SPOUSES & MINOR CHILDREN 1 2 3 4 5 6 7 8 9 10 11

MIAN M. MUNIR MONNOO MIAN M. KHURSHID MONNOO MIAN M. SHAKIL MONNOO MIAN M. NASIR MONNOO MIAN HUMAYUN MONNOO MIAN AURANGZEB MONNOO MIAN AURANGZEB MONNOO (CDC) MIAN M. RAZA MONNOO MR. M. ADEEL MONNOO MR. M. TAYYAB MONNOO MR. MUHAMMAD ZEESHAN MONNOO MR. GHULAM MUSTAFA MONNOO

ASSOCIATED COMPANIES NIT & ICP 1 2

NATIONAL BANK OF PAKISTAN TRUSTEE DEPTT. I.C.P.

BANKS, DEVELOPMENT FINANCE INSTITUTIONS, NON BANKING FINANCE INSTITUTIONS 1

NATIONAL BANK OF PAKISTAN (CDC)

INSURANCE COMPANIES MODARABAS & MUTUAL FUNDS 1

CDC - TRUSTEE NATIONAL INVESTMENT(UNIT) TRUST (CDC)

PENSION FUNDS 1

TRUSTEE NATIONAL BANK OF PAKISTAN EMPLOYEES PENSION FUND (CDC)

Annual Report 2014 39

JOINT STOCK COMPANIES 1 2 3

NAHEED NOOR (PVT) LTD. NAHEED NOOR ENTERPRISES LTD. FIKREE'S (SMC-PVT) LTD. (CDC)

50,000 20,100 5,000 75,100

0.4628% 0.1860% 0.0463% 0.6951%

1,150

0.0106%

1,400,122

12.9593%

10,804,000

100.0000%

1,796,336 1,796,336 2,907,915 6,500,587

16.6266% 16.6266% 26.9152% 60.1683%

1,796,336 1,796,336 2,907,915 598,266 7,098,853

16.6266% 16.6266% 26.9152% 5.5374% 65.7058%

OTHERS 1

TRUSTEE NATIONAL BANK OF PAKISTAN EMP BENEVOLENT FUND TRUST (CDC)

SHARES HELD BY THE GENERAL PUBLIC

SHAREHOLDERS HOLDING 10% OR MORE OF TOTAL CAPITAL 1 2 3

MIAN M. SHAKIL MONNOO MIAN M. NASIR MONNOO MIAN HUMAYUN MONNOO

SHAREHOLDERS HOLDING 5% OR MORE OF TOTAL CAPITAL 1 2 3 4

MIAN M. SHAKIL MONNOO MIAN M. NASIR MONNOO MIAN HUMAYUN MONNOO MIAN M. KHURSHID MONNOO

During the financial year the trading in shares of the company by the Directors, CEO, CFO, Company Secretary and their spouses and minor children is as follows S. No.

NAME

SALE NIL

40 Annual Report 2014

PURCHASE

FORM OF PROXY

I/We__________________________________________________________________________________ of____________________________________________________________________________________ Being a member of OLYMPIA TEXTILE MILLS LIMITED and a holder of_______________________ (No. of Shares) Ordinary Shares as per Share Register Folio No. _____________________________________________ Hereby________________________________________________________________________________ appo int_______________________________________________________________________________ of____________________________________________________________________________________ as my/our proxy in my/our absence to attend and vote for me/our on my/our behalf at the TWENTY SIXTTH ANNUAL GENERAL MEETING of the Company to be held on OCTOBER 31, 2014 or any adjournment thereof.

As witness my hand this_________________________day of___________________2014.

Signature________________________________ Five Rupees Revenue Stamp

NOTES: 1.

Signature should tally with the specimen signature registered with the Company.

2.

This form of proxy, duly completed and signed across five rupees Revenue Stamp, must be deposited at the Companys Registered Office not later than 48 hours before the meeting.

3.

The proxy must be member of the Company.

Annual Report 2014