Annual Accounts 2013

In the Name of Almighty Allah The Most Beneficient The Most Merciful
COLONY MILLS LIMITED Accounts For the Year Ended June 30, 2013
Colony Mills Limited
Vision To be the largest Pakistani yarn supplier, fully equipped to cater to all needs of ever evolving global markets. To explore and create growth opportunities to maximize return to all stakeholders.
Mission To take the company to a new height where it is rated as the best in all spheres of business and everyone concerned feels proud of being its integral part.
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COLONY MILLS LIMITED
Business Ethics and Practices

Our Core business is to produce and supply of spun yarn to local and international customers with best quality standards and efficient services. Customer satisfaction being our top priority, we follow the under mentioned business practices for the achievement of the desired results of customer satisfaction.
HUMAN RESOURCE DEVELOPMENT

We believe in individual respect and growth. Our employment and HR policies develop individuals without race, religion, gender or any discrimination factor. We provide equal opportunities to all the employees under a team based working environment. We provide all the possible support to all our employees to enhance their knowledge and vision keeping in view of their own limitations.
SOCIAL AND COMMUNITY COMMITMENTS

We believe in community development. We contribute our resources, both financial and ethical, in supporting all the deserving individuals of the society. We feel it is our responsibility to play our role in the development of the society and do maximum within our own limitations for the community at large.
RISK MANAGEMENT
Our risk management policies are geared to enhance share holders worth, improve credit worthiness and minimize credit risk while diversifying income, along with suppliers and customers base. We strongly believe in having an excellent relationship with our financial institutions as we take them as our business partners.
TRANSPARENT FINANCIAL POLICIES

Our financial polices are based on the principal of fairness and transparency. We are following all the applicable laws and best accounting practices while preparing the financial statements for the stakeholders. COLONY MILLS LIMITED 03
CORPORATE GOVERNANCE
We as a responsible corporate citizen strongly adhere to the Corporate Governance principles and comply with the regulatory obligations enforced by regulatory agencies for improving corporate performance. We believe in up rightness of performance and expect it to be a fundamental responsibility of our employees to act in the best interest of the company without compromising on the rules and regulations enforced by the regulators.
MARKETING AND INDUSTRY PRACTICES

All our marketing polices are customer focused. We believe in One Window Solution and customer satisfaction. Our marketing policy is only based on these two parameters and to achieve this we ensure best quality and efficient response to customers. As a long term marketing strategy we are focusing on diversification, value addition of our products while making a close liaison with markets, customers and their needs.
Contents
Company Information Notice of Annual General Meeting Directors Report to the Members Financial Highlights Review Report on Statement of Compliance Statement of Compliance Auditors Report Balance Sheet Profit & Loss Account Cash Flow Statement Statement of Changes in Equity Notes to the Accounts Pattern of Shareholding Pattern of Shareholding Under Code of Corporate Governance COLONY MILLS LIMITED Form of Proxy 5-6 7 8-13 14 15 16-17 18-19 20-21 22 23-24 25 26-56 57-58 59 61
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Company Information
BOARD OF DIRECTORS Mr. Fareed M. Sheikh Mr. Muhammad Azam Barki Malik Sohail Ahmed Mr. Bilal Ahmed Khan Niazi Mr. Muhammad Tariq Mr. Muhammad Farooq Syed Arif Hussain Mr. Nadeem Amir CHIEF FINANCIAL OFFICER Mr. Atta Mohyuddin Khan COMPANY SECRETARY Mr. Muhammad Abid HEAD OF INTERNAL AUDIT Mr. Muhammad Faisal Nasim BOARD COMMITTEES Audit Committee Mr. Muhammad Farooq Malik Sohail Ahmed Syed Arif Hussain HR & Remuneration Committee Malik Sohail Ahmed Mr. Bilal Ahmed Khan Niazi Syed Arif Hussain OTHER MANAGEMENT COMMITTEES Executive Committee Mr. Fareed M. Sheikh Mr. Muhammad Azam Barki Mr. Bilal Ahmed Khan Niazi Technical Committee Mr. Fareed M. Sheikh Mr. Muhammd Tariq Mr. Shahid Shahbaz Mr. Junaid Ahmad Finance Committee Mr. Fareed M. Sheikh Mr. Atta Mohyuddin Khan Mr. Muhammad Ahmad (Chairman) (Chief Financial Officer) (Manager Finance) 05 (Chairman) (Executive Director) (Senior General Manager) (General Manager) (Chairman) (Member) (Member) COLONY MILLS LIMITED (Chairman) (Member) (Member) (Chairman) (Member) (Member) (Chief Executive Officer)
Company Information
BANKERS Faysal Bank Limited Habib Bank Limited KASB Bank Limited Meezan Bank Limited National Bank of Pakistan Soneri Bank Limited Standard Chartered Bank (Pakistan) Limited Silk Bank Limited The Bank of Punjab United Bank Limited Summit Bank Limited AUDITORS M. Yousaf Adil Saleem & Co. Chartered Accountants LEGAL ADVISORS Ms. Aniqua Mughis Sheikh Advocate REGISTERED OFFICE M. Ismail Aiwan-e-Science Building 205 Ferozepur Road, Lahore-54600 Phone: 042-35758970-2 Fax: 042-35763247 PRODUCTION FACILITIES
(Unit No 1 - 7, 186,576 Spindles & 2,880 Rotors)
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Ismailabad (Multan) Phone: 061-6539021-3 Fax: 061-6539509 UAN: 111 265 669
Notice of Annual General Meeting

NOTICE is hereby given that the 8th Annual General Meeting of the members of Colony Mills Limited will be held on Thursday, October 31, 2013, at 10:00 a.m. at the Registered Office at Ismail Aiwan-e-Science Building, 205 Ferozepur Road, Lahore to transact the following business: 1. 2. 3. To receive, consider and adopt the Audited Accounts of the Company for the year ended June 30, 2013 together with the Directors' and Auditors' Reports thereon. To appoint Auditors for the year 2013-14 and to fix their remuneration. To transact any other business as may be placed before the meeting with the permission of the Chair.
By Order of the Board
Lahore October 08, 2013 Notes:i. ii.
Company Secretary
iii. iv.
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v.
The Share Transfer Books of the Company will remain closed from October 24, 2013 to October 31, 2013 (both days inclusive). A member entitled to attend and vote at this meeting may appoint another member as his proxy to attend and vote on his/her behalf. The proxy, in order to be effective, must be received at the registered office of the Company duly stamped and signed not less than 48 hours before time of the meeting. The CDC Account holders/sub-account holders are requested to bring with them their National ID Cards along with the Participant(s) ID Number and their account numbers at the time of attending the Annual General Meeting for identification purpose. In case of Corporate entity, the Board of directors' resolution/power of attorney with specimen signatures of the nominee shall be produced (unless it has been provided earlier) at the time of the meeting. The nominee shall produce his original CNIC at the time of attending the meeting for identification purpose. Members are requested to notify the change of address immediately, if any.
Directors Report to the Members

On behalf of the Board of Directors, I present before you the annual report of the company along with audited financial statements for the year ended June 30, 2013. In compliance with the Code of Corporate Governance, these financial statements have been endorsed by the Chief Executive Officer and Chief Financial Officer of the company, recommended for approval by the Audit Committee of the Board and approved by the Board of Directors for presentation. Your company has maintained a healthy trend of sales despite of high competition. The sales have increased from Rupees 12,174 million to Rupees 15,768 million as compared to last year. The gross profit during the year increased from Rupees 1,341 million to Rupees 1,598 million. The bottom line showed a net profit of Rupees 293 million with earnings per share of Rupees 1.20 as compared net loss of Rupees 329 million with loss per share of Rupees (1.35).
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Sales in million
Year 2008
Year 2009
Year 2010
Year 2011
Year 2012
Year 2013
In the year 2012-13 we were able to improve our performance significantly as compared with last year and succeeded in closing the year with a positive result. The main reason was that raw cotton started trading at realistic and stable price level. Despite of many challenges faced by the company in the current year, the performance of the company is very much satisfactory. However due to recent flood disaster, alarming rise in the cost of energy, increase in inflation affecting almost all factors of production and law and order situation create a difficult situation for every industrial sector in Pakistan.
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Power Depreciation Overheads 3% 9% 0.5% Labour 6% Store 2.5%
Material Store Labour Power Depreciation Overheads
Material 79%
Despite of the above factors, textile industry of Pakistan has been playing a pivotal role to derive national economy with its significant contribution to the industrial production, employment generation and foreign exchange earnings. The textile sector is undergoing tremendous change in light of globalization and current economic challenges. SUB-ORDINARTED LOAN The Sponsor Directors are truly committed to the well being of the company, interest free loan from an Executive Director still exists and increased up to Rs. 120 million to support this financial situation. MERGER OF COLONY MILLS LIMITED WITH COLONY INDUSTRIES (PVT) LIMITED As already mentioned in Interim Reports that merger activity of your company with Colony Industries (Private) Limited is in progress. We have obtained approval from Competition Commission of Pakistan about this merger and the shareholders have also approved the swap ratio in their Extra Ordinary General Meeting held on September 07, 2013. Now after getting merger order from Honorable Lahore High Court company will accomplish this project to achieve the desired objectives like vertical integration and value addition. OVERDUE LOANS The company has applied for rescheduling of the Finance Facility from National Bank of Pakistan therefore the company has not made principal and mark-up payment during the year. The matter of rescheduling / restructuring is under consideration of the Bank and is in final stage. DIVIDEND Considering the financial results of the company for the year ended June 30, 2013 the directors have not recommended any dividend in this year. FUTURE OUTLOOK The textile sector is observing serious financial threat due to increase in mark up rates. The State Bank of Pakistan has recently enhanced discount rate contrary to the aspirations of business community. If debt servicing is not rationalized, the industry will be unable to produce the favorable results. One of the major causes of underperformance of the textile industry is the persistent electricity and gas load shedding together with highest ever price in history plaguing the industry which has hindered the performance and competiveness of the industry. The security challenges in the country are also a big obstacle for the economic growth.
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Despite all the challenges mentioned above in the economic environment, the management of your company is optimistic for the financial year 2013-14. Company's business priorities and areas of focus will continue to be shaped by enhancement of company's value by achieving higher production and financial efficiencies, maintaining optimum quality, product diversification and exploring new markets. The current year has started on a positive note and we expect that due to strong demand of yarn, prices will remain stable with good operating margins. During the first quarter we have been able to maintain excellent sales and the company's operations have remained profitable. AUDIT COMMITTEE This is the most prime and effective committee of the Board. It has a vital role in the compliance of internal controls to ensure safeguard of all the interest of the company, through monitoring of internal audit functions, risk management policies. The committee recommends the appointment of the external auditors and also review the critical reporting made by the internal and external auditors. EXECUTIVE COMMITTEE The executive committee is responsible for setting overall corporate objectives and strategies, identification of opportunities, monitoring the business strategies and plans and thereafter the successful implementation of those plans. One of the major roles of the committee is to change the management policies and role of the company as required under the changing requirements of local and international customers, keeping in view the strengths and weaknesses of the company, so that the best possible results could be achieved. HUMAN RESOURCE COMMITTEE The human resource committee determines the compensation packages for all cadres of the company's employees. The committee is also responsible to create and maintain conducive working environment that instill trust and ensure respect, fair treatment, development opportunity and grooming and make succession plans for all employees. We feel that human resource is key element in our business strategy. TECHNICAL COMMITTEE The technical committee acts in an advisory capacity to the CEO, provides recommendation relating to the technical affairs of the company, formulation of technical policies required under the code of corporate governance specially keeping in view the environment protection plans of the Government. It is also responsible for overall factory operations, achievement of desired quality, production targets and efficiency of the mechanical works. This is also empowered to deal with the day to day technical issues under authorized limits.
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FINANCE COMMITTEE The role of the finance committee is to review and recommend the financial targets, annual and quarterly budgets, approval of the expenditures for amounts within its limits, investments of the surplus funds of the company and financial policies and controls including the policies required under the code of corporate governance. The committee works under the guidance of CEO. SOCIAL COMPLIANCE AND HUMAN RESOURCE A major factor in your company's success is its highly skilled and motivated workforce. Our strength comes from our people. We can rightly take pride in fact that Human Resources have always bee given a high priority. Today, when we look back on past years, we can see that while our objectives may have changed along the way, our human resource policies have always been based on the underlying values of fairness, merit, equal opportunity and social responsibility. These values manifest themselves in our policies of recruitment, performance appraisal, training and development, health and safety and industrial relations. BOARD MEETINGS During the year under review four (04) meetings of the Board of Directors were held. Participation of Directors is as follows: Names of Directors Mr. Fareed M. Sheikh Mr. Muhammad Azam Barki Malik Sohail Ahmed Mr. Muhammad Farooq Syed Arif Hussain Mr. Bilal Ahmad Khan Niazi Mr. Salman Zafar Mr. Muhammad Tariq Mr. Nadeem Amir Attendance 4 4 4 4 4 4 2 2 0 COLONY MILLS LIMITED 11
During the year under review five (05) meetings of the Audit Committee were held. Participation of Members is as follows: Names of Directors Mr. Muhammad Farooq Malik Sohail Ahmed Syed Arif Hussain Attendance 5 5 5
During the year under review two (02) meetings of HR & Remuneration Committee were held. Participation of Members is as follows: Names of Directors Malik Sohail Ahmed Mr. Bilal Ahmad Khan Niazi Syed Arif Hussain Attendance 2 2 2

Code of Ethics and Business Practices has been developed and are communicated and acknowledged by each Director and employee of the company. CORPORATE GOVERNANCE The management ensures that all requirements of the code of corporate governance were complied with. The statement of compliance with the best practices of Code of Corporate Governance is annexed. PATTERN OF SHAREHOLDING AND INFORMATION UNDER CLAUSE XIX(i) OF THE CODE OF CORPORATE GOVERNANCE The pattern of shareholding and information under clause XIX (i) of the Code of Corporate Governance as on June 30, 2013 is annexed. EXTERNAL AUDITOR The present auditors M/S M. Yousaf Adil Saleem and Company, Chartered Accountants retire and audit committee has recommended their reappointment for the ensuing year. CORPORATE AND FINANCIAL REPORTING FRAMEWORK In compliance with the Code of Corporate Governance, we are giving below statements on Corporate and Financial Reporting Framework. The financial statements prepared by the management of the company, presents fairly its state of affairs, the results of its operations, cash flows and changes in equity. Proper books of account of the company as per statutory requirements have been maintained. Code of Ethics and Business Practice has been developed and are communicated and acknowledged by each director and employee of the company. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. International Accounting Standards, as applied in Pakistan, have been followed in preparation of financial statements. The system of internal control is sound in design and has effectively implemented and monitored. There are no significant doubts upon the company's ability to continue as a going concern.
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There has been no departure from the best practices of the code of corporate governance, as detailed in the listing regulations. Key operating and financial data since incorporation is annexed in summarized form. The directors have not recommended any dividend in view of current financial scenario. Information about outstanding taxes and other Government levies are given in related note(s) to the accounts. The annexed audited accounts give the detail of outstanding taxes and levies. The company operates a contributory provident fund scheme for all employees and defined benefits gratuity fund scheme for its managerial and non managerial staff. The net value of investment in their respective accounts is as under: Provident Funds Gratuity Funds 48.720 million 1.027 million
The directors, CEO, CFO, Company Secretary and their spouses and minor children have made no transactions in the company's share during the year. The number of shares, if any, held by them is annexed. ACKNOWLEDGEMENT We would like to place on record our deep appreciation for the efforts of the executives, officers and other staff members for their hard work, cooperation and sincerity to the company in achieving the best possible results. The Board also wishes to record the appreciation to all banks for continued support to the company. The management is quite confident that these relation and cooperation will continue in the coming years.
On behalf of the Board of Directors
Lahore Dated: October 08, 2013
Fareed M. Sheikh Chief Executive Officer
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Financial Highlights
Year Ended June 30 2013 2012 2011 2010 2009 2008
----------(Rupees 000)---------Operating performance Sales-net Gross profit Profit before taxation Profit after taxation Financial position Property, plant and equipment-net Capital work in progress Fixed assets Total assets Current assets Stores, spare parts, loose tools and stock in trade Other current assets Cash and cash equivalents 1,455,703 49,032 4,740,256 Current liabilities Short term bank borrowings Current portion of long term financing Other current liabilities 3,065,418 1,126,099 1,522,932 5,714,449 Number of shares Ratios Gross profit ratio Net profit ratio 10.14% 1.86% 1.20 0.83 0.66 11.02% -2.70% (1.35) 0.94 0.69 14.17% 0.49% 0.28 0.81 0.64 18.56% 2.64% 1.08 0.72 0.67 11.84% -5.17% (1.59) 0.76 0.70 14.16% 4.01% 1.15 0.85 0.64 244,176 2,897,188 571,265 1,583,383 5,051,836 244,176 3,338,092 557,075 1,794,569 5,689,736 244,176 3,146,625 675,831 1,115,027 4,937,483 244,176 3,198,611 705,728 2,293,829 6,198,168 244,176 2,264,788 539,917 2,301,599 5,106,304 244,176 1,177,922 58,719 4,742,942 1,166,367 37,300 4,613,248 758,086 3,914 3,578,601 1,241,782 26,565 4,679,809 2,205,290 32,067 4,318,477 3,235,521 3,506,301 3,409,581 2,816,601 3,411,462 2,081,120 1,218,090 8,927,310 13,995,982 432,939 8,393,018 13,407,780 319,957 8,586,344 13,717,969 692,834 8,694,263 12,724,800 589,111 8,436,892 14,107,745 1,284,218 7,526,925 12,651,223 7,709,220 7,960,079 8,266,387 8,001,429 7,847,781 6,242,707 15,768,215 1,598,496 297,009 292,958 12,173,659 1,341,158 (274,918) (329,017) 13,956,779 1,977,032 298,731 68,199 10,015,687 1,859,340 332,847 263,934 7,526,905 890,887 (405,784) (389,213) 7,020,729 994,225 363,373 281,498
Earning per share Current ratio Captial structure ratio Debt to equity
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Review Report to the Members on Statement of Compliance with the Best Practices of Code of Corporate Governance
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of COLONY MILLS LIMITED to comply with the Listing Regulation No. 35 of the Karachi Stock Exchange (Guarantee) Limited. 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's personnel and review of various documents prepared by the Company to comply with the Code. As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Boards statement on internal controls covers all risks and controls, or to form an opinion on the effectiveness of such controls, the Company's corporate governance procedures and risks. Further, Listing Regulations 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 at 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 transaction by the Board of Directors and placement of such transactions before the audit committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the Company for the year ended June 30, 2013.
Lahore: October 08, 2013
M.Yousaf Adil Saleem & Co. Chartered Accountants Talat Javed (Engagement Partner)
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Statement of Compliance of the Code of Corporate Governance for the Year ended June 30, 2013
This statement is being presented to comply with the Code of Corporate Governance (CCG) contained in the regulation No. 35 of listing regulations of Karachi Stock Exchange (Guarantee) Limited 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 CCG 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 Non-Executive Directors Names 1 - Mr. Muhammad Farooq 1 - Mr. Fareed Mughis Sheikh 2 - Mr. Muhammad Tariq 3 - Mr. Muhammad Azam Barki 1 - Syed Arif Hussain 2 - Malik Sohail Ahmad 3 - Mr. Bilal Ahmad Khan Niazi
The independent directors meet the criteria of independent under the clause I (b) of the CCG. 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). All the resident directors of the Company are registered as tax payers and none of them has defaulted in payment of any loan to a banking company, a development financial institution or a non-banking financial company, or being a member of a stock exchange, has been declared as defaulter by the stock exchange. No casual vacancy occurred in the board during the year. 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. 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. 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. 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 has 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. Two in house orientation courses were arranged during the year. The management continues to appraise and familiarize with change in law to discharge their duties and responsibilities; however, no external orientation courses are arranged for the directors, as offered by the institutions which met the criteria as specified under the Code of Corporate Governance. The board has approved appointment of CFO, Company Secretary and Head of
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6) COLONY MILLS LIMITED
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Statement of Compliance of the Code of Corporate Governance for the Year ended June 30, 2013
Internal Audit, including their remuneration and terms and conditions of employment. 11) The Directors' report for this year has been prepared in compliance with the requirement of the Code of Corporate Governance and fully describes the salient matters required to be disclosed. The financial statements of the Company were duly endorsed by the CEO and CFO before approval of the Board. The directors, CEO and executives do not hold any interest in the shares of the Company other than those disclosed in the pattern of shareholdings. The Company has complied with all the corporate and financial reporting requirements of the Code of Corporate Governance. The Board has formed an Audit Committee. It comprises of three members, of whom all are the non-executive directors and the chairman of the committee is an independent director. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by CCG. The terms of reference of the committee have been formed and advised to the committee for compliance. The Board has formed an HR and Remuneration Committee. It comprisesthree members, of whom all are Non-Executive Director and the chairman of the committee is an independent director. The Board has set up an effective internal audit function who are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Company. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the Quality Control Review Program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on the code of ethics as adopted by the Institute of Chartered Accountants of Pakistan. COLONY MILLS LIMITED 17 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. The 'closed period', prior to the announcement of interim / final results, and business decisions, which may materially affect the market price of the Company's securities, was determined and intimated to directors and stock exchange. Material/price sensitive information has been disseminated among all market participants at once through stock exchange. We confirm that all other material principles enshrined in the Code of Corporate Governance have been complied with except for those as mentioned in paragraph 9 above for which reasonable progress is being made by the company to seek compliance by the end of next accounting period. For and On Behalf of the Board
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Fareed M. Sheikh Chief Executive Officer
Auditors Report to the Members

We have audited the annexed balance sheet of Colony Mills Limited (the Company) as at June 30, 2013 and the related profit and loss account, statement of changes in equity and cash flow statement 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 Companys 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 misstatements. 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; In our opinion: (i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; the expenditure incurred during the year was for the purpose of Companys business; and the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Company;
(b)
(ii)
(iii) COLONY MILLS LIMITED
(c)
In our opinion, and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, statement of changes in equity and cash flow statement together with the notes forming part thereof conform with the approved accounting standards as applicable in Pakistan, and give the information required by the Companies Ordinance, 1984, in the manner so required and,
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Auditors Report to the Members

respectively give a true and fair view of the state of the Companys affairs as at June 30, 2013 and of the profit, 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).
We draw attention to note 1 to the financial statements, which describes the scheme and current status of compromises, arrangements and reconstruction for amalgamation / merger of Colony Mills Limited and Colony Industries (Private) Limited. Our Opinion is not qualified in respect of this matter.
M.Yousaf Adil Saleem & Co. Chartered Accountants Talat Javed (Engagement Partner)
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Balance Sheet
as at June 30, 2013
Notes EQUITY AND LIABILITIES Share Capital and Reserves Share capital Unappropriated profit Surplus on remeasurement of investments 2013 (Rupees in 000) 5 2,441,763 366,806 637 2,809,206 2,441,763 73,848 640 2,516,251 2012
Non-Current Liabilities Long term finances Director subordinated loan Liabilities against assets subject to finance lease Deferred liabilities
6 7 8 9
4,092,881 120,000 11,087 1,248,359 5,472,327
4,801,258 100,000 31,298 907,137 5,839,693
Current Liabilities Trade and other payables Short term borrowings Accrued mark up Current portion of long term liabilities Provision for taxation
10 11 12 13
1,090,779 3,065,418 335,732 1,126,099 96,421 5,714,449
1,223,292 2,897,188 238,708 571,265 121,383 5,051,836
Contingencies and Commitments COLONY MILLS LIMITED
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13,995,982
13,407,780
20
Chief Financial Officer
Director
Balance Sheet
as at June 30, 2013
Notes ASSETS Non-Current Assets Property, plant and equipment Long term investments Long term deposits 2013 (Rupees in 000) 15 16 8,927,310 308,111 20,305 9,255,726 8,393,018 252,194 19,626 8,664,838 2012
Current Assets Stores, spares and loose tools Stock in trade Trade debts Loans, advances, deposits and other receivables Other financial assets Tax refunds due from Government Cash and bank balances
17 18 19 20 21 22 23
116,414 3,119,107 987,793 152,146 26 315,738 49,032 4,740,256
133,437 3,372,864 807,409 171,134 594 198,785 58,719 4,742,942
The annexed notes from 1 to 42 form an integral part of these financial statements.
Chief Executive Officer 21
13,995,982
13,407,780
Profit and Loss Account

for the year ended June 30, 2013
Notes Sales - net Cost of sales Gross profit Other income 26 24 25 2013 (Rupees in 000) 15,768,215 (14,169,719) 1,598,496 122,938 1,721,434 Distribution cost Administrative expenses Finance cost Other expenses 27 28 29 30 238,132 174,978 910,427 100,888 (1,424,425) Profit / (loss) before tax Taxation Profit / (loss) for the year Other comprehensive income Items that may be reclassified subsequently to profit or loss Loss on remeasurement of investments Other comprehensive income - net of tax Total comprehensive income / (loss) for the year COLONY MILLS LIMITED (3) (3) 292,955 Rupees (222) (222) (329,239) Rupees 31 297,009 (4,051) 292,958 12,173,659 (10,832,501) 1,341,158 88,325 1,429,483 241,687 141,834 1,178,269 142,611 (1,704,401) (274,918) (54,099) (329,017) 2012
Earnings / (loss) per share - basic and diluted
32
1.20)
(1.35)
The annexed notes from 1 to 42 form an integral part of these financial statements.
Chief Financial Officer 22
Director
Chief Executive Officer
Cash Flow Statement

A. 2013 CASH FLOWS FROM OPERATING ACTIVITIES Profit / (loss) before taxation Adjustments for: Provision for gratuity Depreciation Deferred income amortized Finance cost Share of profit from investment in CSUML Gain on disposal of short term investments Loss on remeasurement of long term investments Gain on remeasurement of short term investments Provision for contribution to workers' profit participation fund Provision for doubtful trade debts Provision for slow moving stores, spares and loose tools Foreign exchange gain Loss on disposal of investment in CSUML Gain on disposal of property, plant and equipment (Rupees in 000) 297,009 (274,918) 2012
26,000 355,785 910,427 (55,920) (111) 3 (10) 15,895 2,326 2,673 (48,722) (2,355)
11,747 368,189 (7,567) 1,178,269 (5,902) (106) (3,205) 142,611 (1,171)
1,205,991 Operating cash flows before working capital changes Changes in working capital: (Increase)/Decrease in current assets: Stores, spares and loose tools Stock-in-trade Trade debts Loans, advances, deposits and other receivables Tax refunds due from Government Increase/(Decrease) in current liabilities: Trade and other payables 1,503,000
1,682,865 1,407,947
14,350 253,757 (133,988) 19,636 (116,953) (148,408) (111,606)
(33,182) (63,538) (84,185) 31,965 18,315 (181,048) (311,673) 1,096,274 (839,976) (15,723) (27,396) (114,077) (997,172) 99,102 23 COLONY MILLS LIMITED
Cash generated from operating activities Finance cost paid Workers' profit participation fund paid Gratuity paid Income tax paid
1,391,394 (448,393) (26,278) (53,171) (527,842)
Net cash generated from operating activities
863,552
Cash Flow Statement

2013 (Rupees in 000) B. CASH FLOWS FROM INVESTING ACTIVITIES Fixed capital expenditure Proceeds from disposal of property, plant and equipment Proceeds from disposal of short term investments Addition to long term deposits Receipt of musharika loan from CSUML Proceeds from disposal of investment in CSUML Net cash used in investing activities C. CASH FLOWS FROM FINANCING ACTIVITIES Long term finances repaid Long term finances obtained Directors' subordinated loan obtained Lease rentals paid Short term borrowings - net Net cash generated from / (used in) financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year The annexed notes from 1 to 42 form an integral part of these financial statements. 2012
(891,890) 4,168 686 (679) (887,715)
(176,556) 2,864 87,626 22,000 (64,066)
(304,620) 159,940 20,000 (29,074) 168,230 14,476 (9,687) 58,719 49,032
(156,300) 639,747 (56,160) (440,904) (13,617) 21,419 37,300 58,719
Director
Statement of Changes in Equity

Share capital Unappropriated Profit Surplus on remeasurement of investments Total
----------(Rupees in 000)---------Balance as at July 01, 2011 Loss for the year Other comprehensive income Loss on remeasurement of investments Total comprehensive loss for the year Balance as at June 30, 2012 Profit for the year Other comprehensive income Loss on remeasurement of investments Total comprehensive income for the year Balance as at June 30, 2013 2,441,763 402,865 (329,017) 862 2,845,490 (329,017)
2,441,763 -
(329,017) 73,848 292,958
(222) (222) 640 -
(222) (329,239) 2,516,251 292,958
2,441,763
292,958 366,806
(3) (3) 637
(3) 292,955 2,809,206
The annexed notes from 1 to 42 form an integral part of these financial statements. COLONY MILLS LIMITED Chief Financial Officer Director Chief Executive Officer 25
Notes to the Financial Statements

1. LEGAL STATUS AND NATURE OF BUSINESS Colony Mills Limited, the Company, was incorporated in Pakistan on September 21, 2005. The Company is listed on Karachi Stock Exchange. The registered office of the Company is located at M. Ismail Aiwan-i-Science, 205 Ferozpur Road, Lahore and its manufacturing facilities are located at Multan, in the Province of Punjab. The principal businesses of the Company are manufacture and sale of yarn and trading in real estate. The Board of Directors of the Company has unanimously approved the scheme of compromises, arrangements and reconstruction for amalgamation / merger of Colony Mills Limited and Colony Industries (Private) Limited with and into Colony Textile Mills Limited and their respective share holders. The resolution has been passed to this effect by the members of the Company in their extra ordinary general meeting held on September 07, 2013. The swap ratio for amalgamation / merger has to be calculated on the basis of break up values of the merging companies by statutory auditors of Colony Textile Mills Limited as at June 30, 2013 after adjusting the carrying value of assets at fair values to be ascertained by the independent valuers as on that date. The scheme is subject to sanction by Lahore High Court and shall take effect upon and from the date of sanction and is in process. These financial statements are presented in Pak Rupees, which is the Company's functional and presentation currency. 2. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with the 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 (IASB) as are notified under the requirements of the Companies Ordinance, 1984, and directives issued by the Securities and Exchange Commission of Pakistan (SECP). Where ever the requirements of the Companies Ordinance, 1984 or the directives issued by the SECP differ with the requirements of the IFRS, the requirements of the Companies Ordinance, 1984, and the said directives shall take precedence. 2.1 New accounting standards / amendments and IFRS interpretations that are effective for the year ended June 30, 2013. The following standards, amendments and interpretations are effective for the year ended June 30, 2013. These standards, interpretations and the amendments are either not relevant to the Company's operations or are not expected to have significant impact on the Company's financial statements other than certain additional disclosures. Amendments to IAS 1 - Presentation of Financial Statements Presentation of Items of Other Comprehensive Income Effective from accounting period beginning on or after July 01, 2012
The amendments to IAS 1 change the grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, net gains on hedges of net investments, exchange differences on translation of foreign operations, net movements on cash flow hedges and net losses or gains on available-for-sale financial assets) would be presented separately from items that will never be reclassified (for example, actuarial gains and losses on defined benefit plans). Income tax on items of other comprehensive income is required to be allocated on the same basis i.e. the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments require retrospective application. New accounting standards and IFRS interpretations that are not yet effective The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after the date mentioned against each of them. These standards, interpretations and the amendments are either not relevant to the Company's operations or are not expected to have significant impact on the Company's financial statements other than certain additional disclosures except for amendments in IAS 19.
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Amendments to IAS 1 - Presentation of Financial Statements Clarification of Requirements for Comparative information
Effective from accounting period beginning on or after January 01, 2013
This improvement clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative information is the previous period. Amendments to IAS 16 - Property, Plant and Equipment Classification of servicing equipment Effective from accounting period beginning on or after January 01, 2013
This improvement clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory. Amendments to IAS 19 - Employee Benefits Effective from accounting period beginning on or after January 01, 2013
The amendments eliminate the corridor approach and therefore require an entity to recognize changes in defined benefit plans obligations and plan assets when they occur. All actuarial gains or losses arising during the year are recognized immediately through other comprehensive income. The amendments also require additional disclosures and retrospective application with certain exceptions. Amendments to IAS 32 Financial Instruments: Presentation - Tax effects of distributions to holders of an equity instrument, and transaction costs of an equity transaction Effective from accounting period beginning on or after January 01, 2013
This improvement clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes. Amendments to IAS 32 Financial Instruments: Presentation - Offsetting financial assets and financial liabilities Effective from accounting period beginning on or after January 01, 2014
These amendments clarify the meaning of currently has a legally enforceable right to set-off. It will be necessary to assess the impact to the entity by reviewing settlement procedures and legal documentation to ensure that offsetting is still possible in cases where it has been achieved in the past. In certain cases, offsetting may no longer be achieved. In other cases, contracts may have to be renegotiated. The requirement that the right of set-off be available for all counterparties to the netting agreement may prove to be a challenge for contracts where only one party has the right to offset in the event of default. Amendments to IAS 34 - Interim Financial Reporting - Interim reporting of segment information for total assets and total liabilities Effective from accounting period beginning on or after January 01, 2013 COLONY MILLS LIMITED 27
The amendment aligns the disclosure requirements for total segment assets with total segment liabilities in interim financial statements. This clarification also ensures that interim disclosures are aligned with annual disclosures. Amendments to IFRS 7 Financial Instruments: Disclosures - Offsetting financial assets and financial liabilities Effective from accounting period beginning on or after January 01, 2013
These amendments require an entity to disclose information about rights to set-off and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entitys financial position. The new disclosures are required for
all recognised financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation. IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine Effective from accounting period beginning on or after January 01, 2013
This interpretation applies to waste removal (stripping) costs incurred in surface mining activity, during the production phase of the mine. The interpretation addresses the accounting for the benefit from the stripping activity. Other than the aforesaid standards, interpretations and amendments, the International Accounting Standards Board (IASB) has also issued the following standards which have not been adopted locally by the Securities and Exchange Commission of Pakistan: - IFRS 1 First Time Adoption of International Financial Reporting Standards - IFRS 9 Financial Instruments - IFRS 10 Consolidated Financial Statements - IFRS 11 Joint Arrangements - IFRS 12 Disclosure of Interests in Other Entities - IFRS 13 Fair Value Measurement - IAS 27 (Revised 2011) Separate Financial Statements due to non-adoption of IFRS 10 and IFRS 11 - IAS 28 (Revised 2011) Investments in Associates and Joint Ventures due to non- adoption of IFRS 10 and IFRS 11 3. BASIS OF PREPARATION These financial statements have been prepared under the historical cost convention except for revaluation of certain financial instruments at fair value and recognition of certain employee retirement benefits at present value. The Company's significant accounting policies are stated in note 4. Not all of these significant policies require the management to make difficult, subjective or complex judgments or estimates. The following is intended to provide an understanding of the policies the management considers critical because of their complexity, judgment of estimation involved in their application and their impact on these financial statements. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances. These judgments involve assumptions or estimates in respect of future events and the actual results may differ from these estimates. The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates are significant to the financial statements are as follows: COLONY MILLS LIMITED 3.1 Critical accounting estimates and judgments The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that effect the application of policies and reported amounts of property, plant and equipment, liabilities, income and expenses. The estimate and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under circumstances, the result of which form the basis of making the judgment about carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on the ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised. - useful life of depreciable assets; - provision for doubtful receivables; 28
- provision for current tax and deferred tax; - staff retirement benefits; - net realisable value of stock-in-trade; and - impairment of assets. However, assumptions and judgments made by management in the application of accounting policies that have significant effect on the financial statements are not expected to result in material adjustments to the carrying amounts of assets and liabilities in the next year. 4. SIGNIFICANT ACCOUNTING POLICIES 4.1 Staff retirement benefits The Company operates two plans for its employees: Contributory provident fund Defined contributory provident fund for all eligible employees to which monthly contributions are made to cover the obligation. The Company and its employees make equal monthly contributions at the rate of 8.33 percent of basic salary. Unfunded gratuity scheme The Company operates an unfunded gratuity scheme for all its eligible employees who have completed their minimum qualifying period of service with the Company. Provisions are made in the financial statements to cover obligation on the basis of actuarial valuation using the Projected Unit Credit Method. Any actuarial gain or loss arisen is recognized immediately in Profit and Loss Account. 4.2 Taxation Current Provision for current taxation is based on taxable income at the current rates of taxation after taking into account tax credits and tax rebates available, if any. Deferred Deferred tax liability is accounted for in respect of all taxable temporary differences at the balance sheet date arising from difference between the carrying amount of the assets and liabilities in the financial statements and corresponding tax bases. Deferred tax assets are recognized for all deductible temporary differences, unused tax losses and tax credits to that extent it is probable that taxable profit will be available in future against which the deductible temporary differences can be utilized. In this regard, the effects on deferred taxation of the portion of income subject to final tax regime is also considered in accordance with the requirement of Technical Release 27 of Institute of Chartered Accountants of Pakistan. Deferred tax is calculated at the rates that are expected to apply to the period when the asset is to be realized or liability is to be settled. 4.3 Property, plant and equipment Operating fixed assets Operating fixed assets are stated at cost less accumulated depreciation except freehold land which is stated at cost and fully depreciated assets which are carried at residual value. Depreciation is charged to income applying reducing balance method to write off the cost over estimated remaining useful life of assets. The useful life and depreciation method are reviewed periodically to ensure
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that the method and period of depreciation are consistent with the expected pattern of economic benefits from properties, plant and equipments. Depreciation on addition to property, plant and equipment is charged from the date when asset is available for use up to the date of its de-recognition. Gains / losses on disposal of fixed assets are included in current year's income. Minor repairs and maintenance are charged to income, as and when incurred. Major renewals and replacements are capitalized and the assets so replaced, if any, other than those kept as stand by, are retired. Capital work in progress Capital work in progress is stated at cost. All expenditure connected with specific assets incurred during installation and construction period are carried under capital work in progress. These are transferred to specific assets as and when these assets are available for use. Assets subject to finance lease These are stated at the lower of present value of minimum lease payments under the lease agreements and the fair value of the assets. The related obligations of lease are accounted for as liabilities. Financial charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of financial cost on the remaining balance of principal liability for each period. Depreciation is charged on the basis similar to owned assets applying reducing balance method to write off the cost of the asset over its estimated remaining useful life in view of certainty of ownership of assets at the end of the lease period. Insurance and other maintenance costs are borne by the Company. Financial charges and depreciation on leased assets are charged to income currently. Operating leases Rentals payable under the operating leases are charged to profit and loss account on a straight line basis over the term of the relevant lease. 4.4 Investments Recognition Investments in securities are recognized on settlement date basis of accounting. Measurement COLONY MILLS LIMITED (i) Financial assets at fair value through profit and loss (Held for trading) These securities are either acquired for generating a profit from short term fluctuations in prices or are securities included in a portfolio in which a pattern of short term profit taking exists. These investments are initially measured at fair value being the consideration given. On subsequent reporting dates, these are measured at fair values on quoted market price and unrealized gains and losses arising from changes in the fair values are recognized in the income of the period in which these arise. (ii) Investments held to maturity These are securities with fixed or determinable payments and fixed maturity where the Company has a positive intent and ability to hold to maturity. These are initially measured at fair value being the consideration given plus transactions costs that are attributable to the acquisition of these investments. At subsequent reporting dates, these are measured at amortized cost using effective interest rate method. Mark-up calculated using the effective interest rate method is recognized in profit and loss. Impairment loss, if any, is recognized in profit and loss in the period it arises.
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(iii)
Investments available for sale These represent investments that do not fall under "financial assets at fair value through profit and loss" or "held to maturity" categories. These are initially recognized at fair value being the consideration given plus transaction costs that are attributable to the acquisition of these investments. On subsequent reporting date, these investments are remeasured at fair values on quoted market prices. Unrealized gains and losses arising from changes in the fair value of investments are recognized directly in equity through statement of changes in equity until the security is derecognized. Impairment loss, if any, is recognized in profit and loss in the period it arises.
(iv)
Investments in associates and related parties Investment in associates and related parties where the Company can exercise significant influence; has intention and ability to hold the investment for more than twelve months of acquisition and are not held for sale are accounted for using the equity method of accounting. Impairment in value, if any, is recognized in profit and loss in the period it arises.
(v)
Investment in unquoted securities Investment in unquoted securities are initially measured at cost. Impairment loss, if any, is charged to income.
4.5
Contingencies The Company has disclosed significant contingent liabilities for the pending litigation and claims against the Company based on its judgment and the advice of the legal advisors for the estimated financial outcome. The actual outcome of these litigations and claims can have an effect on the carrying amounts of the liabilities recognised at the balance sheet date. However, based on the best judgment of the Company and its legal advisors, the likely outcome of these litigations and claims is remote and there is no need to recognise any liability at the balance sheet date.
4.6
Stores, spares and loose tools These are valued at lower of cost and net realizable value. Cost is calculated using moving average method except for items in transit which are valued at cost comprising invoice value plus other charges paid thereon till the balance sheet date. Provision is made against obsolete items.
4.7
Stock in trade Basis of valuation are as follows: Particulars Raw materials: At mills At lower of annual average cost and net realizable value. In-transit At cost accumulated to the balance sheet date. Work in process At manufacturing cost. Finished goods At lower of cost and net realizable value. Waste At net realizable value. Cost in relation to work in process and finished goods represents the annual average manufacturing cost which consists of prime cost and attributable production overheads. Net realizable value signifies the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
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4.8
Trade debts and other receivables Receivables are carried at original invoice amount less an estimate made for doubtful receivable balances based on review of outstanding amounts at year end. Bad debts are written off when identified.
4.9
Cash and cash equivalents Cash and cash equivalents comprise of cash in hand and at banks.
4.10
Borrowings Loans and borrowings are recorded at the proceeds received. Financial charges are accounted for on the accrual basis. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are charged to income in the period in which these are incurred.
4.11
Trade and other payables Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services.
4.12
Provisions Provisions are recognized when the Company has a legal and constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle these obligations and a reliable estimate of the amounts can be made.
4.13
Impairment Financial assets The Company assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired, if and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of asset (an incurred "loss event") and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing a significant financial deficiency, default of delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Non financial assets The company assesses at each balance sheet date whether there is any indication that assets except deferred tax assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognized in profit and loss account. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Where impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised recoverable amount but limited to the carrying amount that would have been determined, had no impairment loss been recognized for assets in prior year. Reversal of impairment loss is recognized as income. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as an income or expense.
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4.14
Revenue recognition (i) (ii) (iii) (iv) (v) (vi) (vii) Local sales are recorded when goods are delivered to customers and invoices raised. Export sales are booked on shipment basis. Processing charges are recorded when goods are delivered to customers and invoices raised. Gain on 'sale and lease-back' transactions that result in finance lease, is deferred and amortized over the lease term. Dividend income is recognized when the right to receive payment is established. Profits on short term deposits is accounted for on time apportioned basis on the principal outstanding and at the rate applicable. Sale of investments is recognized on settlement date basis.
4.15
Related party transactions Transactions between the Company and a related party are measured at agreed commercial terms.
4.16
Dividend Dividend is recognized as liability in the period in which it is declared.
4.17
Foreign currency translations Transactions in foreign currencies are accounted for in Pak rupees at the rates of exchange prevailing at the date of transaction. Monetary assets and liabilities in foreign currencies are translated at rates of exchange prevailing at the balance sheet date and in case of forward exchange contracts at the committed rates. Gains or losses on exchange are charged to income.
4.18
Financial instruments All the financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of the instruments and are remeasured at fair value. Any gain/loss on derecognition and on remeasurement of such financial instruments other than investments available for sale, is included in the profit/loss for the period in which it arises.
4.19
Off Setting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet, when there is a legally enforceable right to set off the recognized amounts and the Company intends to either settle on net basis or to realize the asset and settle the liability simultaneously. Corresponding income on assets and charge on liability is also offset.
4.20
Non current assets held for sale COLONY MILLS LIMITED 33 These are measured at lower of their carrying amount and fair value less costs to sell and are classified as current assets. Notes 2013 (Rupees in 000) 2012
5.
SHARE CAPITAL Authorised capital 245,000,000 (2012: 245,000,000) Ordinary shares of Rs.10 each Issued, subscribed and paid up capital 50,200 (2012: 50,200) Ordinary shares of Rs.10 each fully paid in cash 244,126,100 (2012: 244,126,100) Ordinary shares of Rs.10 each issued as fully paid shares as per scheme of arrangement for amalgamation sanctioned by the Court
2,450,000 502 2,441,261 2,441,763
2,450,000 502 2,441,261 2,441,763
5.1
There has been no movement in share capital of the company during the year. Notes 2013 (Rupees in 000) Type of finance DF - IV DF - V DF - I DF - II TF - I TF - II TF - III TF - IV TF - IV 2012
6.
LONG TERM FINANCES Banking companies-Secured Name of the Bank National Bank of Pakistan National Bank of Pakistan Soneri Bank Limited Soneri Bank Limited Bank of Punjab Limited Bank of Punjab Limited Bank of Punjab Limited Bank of Punjab Limited Habib Bank Limited Less: Current portion
6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 13.1
45,444 401,400 633,231 205,356 2,431,097 46,875 856,915 458,708 119,955 5,198,981 (1,106,100) 4,092,881
45,444 401,400 766,431 210,290 2,471,098 109,375 876,915 462,708 5,343,661 (542,403) 4,801,258
6.1
The purpose of this facility is to finance the purchase of new fixed assets of the Company. The loan is repayable from the Company's own cash flows in 22 quarterly installments of Rs. 9.09 million each commencing from 19th March 2007. The remaining number of outstanding installments are 05 as at balance sheet date. Mark up is payable at the rate of 3 months KIBOR plus 2.50%. The effective mark up rate charged during the year ranges from 11.81% to 14.49% (2012: 14.48% to 16.03%) per annum. This finance facility is secured against pari passu charge over fixed assets of the Company to the extent of Rs. 334 million and personal guarantees of directors. The Company has applied for rescheduling of this finance facility. Therefore, the Company has not made principal payment of Rs. 45.44 million (2012: Rs. 45.44 million) and mark up payment of Rs. 14.69 million (2012: Rs.8.89 million) during the year. The matter of rescheduling is under consideration of National Bank of Pakistan and is in final stage.
6.2
This loan is availed for restructuring of balance sheet of the Company by converting short term liabilities into long term liabilities through adjustments / reduction of short term credit facilities. The loan is repayable in 20 equal quarterly installments commencing from 30th September, 2010. The remaining number of outstanding installments are 18 as at balance sheet date. Mark up is payable at the rate of 3 months KIBOR plus 2.50% per annum. The effective mark up rate charged during the year ranges from 11.81% to 14.49% (2012: 13.91% to 15.53%) per annum. This finance facility is secured against first joint pari passu charge over fixed assets of the Company with 30% margin by utilizing the cushion available in existing first joint pari passu charge over fixed assets of the Company on the basis of outstanding balance of DF - V and required joint pari passu charge for short term credit facilities and personal guarantee of C.E.O. The Company has applied for rescheduling of this finance facility. Therefore, the Company has not made principal payment of Rs. 200.70 million (2012: Rs. 111.50 million) and mark up payment of Rs. 129 million (2012: Rs. 77.834 million) during the year. The matter of rescheduling is under consideration of National Bank of Pakistan and is in final stage.
6.3
34
The purpose of this facility is restructuring / rescheduling of existing principal liability outstanding against DF, TF-1, TF-2 and Acceptance Inland to the tune of Rs. 809.63 million. Loan is repayable in 50 monthly installments of Rs.10.8 million. The remaining number of outstanding installments are 34 as at balance sheet date. Mark up is payable at the rate of 3 months KIBOR. The effective mark up rate charged during the year ranges from 9.25% to 11.95% (2012:11.88% to 16.02%) per annum. The loan is secured against joint pari passu charge of Rs. 423.50 million over land situated at Mahal Muzafarabad along with all present and future fixed assets. RM of 5 million & EM of 400 million over plot located at Garden Town Sher Shah Road Multan valuing 263 million. Specific hypothecation charge of Rs. 559.38 million over plant and machinery imported through the bank.
6.4
The purpose of this facility is restructuring of overdue mark up. Loan is repayable in 50 monthly installments of Rs.0.4 million. The remaining number of outstanding installments are 34 as at balance sheet date. No mark up is payable on this facility. The purpose of this facility is restructuring of existing principal liability outstanding against DF-I to the tune of Rs. 2,544.09 million to be repaid in 37 quarterly installments. Mark up is payable at the rate of 3 months average ask side KIBOR with no floor and cap. The remaining number of outstanding installments are 24 as at balance sheet date . The effective mark up rate charged during the year ranges from 9.27% to 11.95% (2012:11.91% to 13.52%) per annum. This facility is secured against joint pari passu charge over fixed assets of Rs. 4,720 million and over current assets of Rs. 814 million already registered with SECP alongwith pledged shares of Colony Sugar Mills as mentioned in note 16.1.1. The purpose of this facility is restructuring of existing principal liability outstanding against DF-I to the tune of Rs. 250 million to be repaid in 16 quarterly installments. The restructuring of loan was carried out in the year 2009. Mark up is payable at the rate of 3 months average ask side KIBOR with no floor and cap. The remaining number of outstanding installments are 3. The effective mark up rate charged during the year ranges from 9.27% to 11.95% (2012:11.91% to 13.52%) per annum. This facility is secured against joint pari passu charge over fixed assets of Rs.4,720 million and over current assets of Rs.814 million already registered with SECP alongwith pledged shares of Colony Sugar Mills as mentioned in note 16.1.1. The purpose of this facility is conversion of existing overdue acceptances including future acceptances on their due dates into TF-III. The restructuring of loan was carried out in the year 2009. The loan is repayable in 29 quarterly installments. Mark up is payable at the rate of 3 months average ask side KIBOR with no floor and cap. The remaining number of outstanding installments are 24 as at balance sheet date. The effective mark up rate charged during the year ranges from 9.27% to 11.95% (2012:11.91% to 13.52%) per annum. These facilities are secured against joint pari passu charge over fixed assets of Rs. 4,720 million and over current assets of Rs.814 million already registered with SECP alongwith pledged shares of Colony Sugar Mills as mentioned in note 16.1.1. The purpose of this facility is restructuring of overdue mark up. The restructuring of loan was carried out in the year 2009. Loan is repayable in 37 quarterly installments of different amounts. The remaining number of installments are 24 as at balance sheet date. No mark up is payable on this loan. This facility is secured against joint pari passu charge over fixed assets of Rs.4,720 million and over current assets of Rs. 814 million already registered with SECP alongwith pledged shares of Colony Sugar Mills as mentioned in note 16.1.1. The loan is conversion of CF facility into a term loan. The loan is repayable in 16 equal quarterly installments of Rs. 9.99 million commencing from June 30, 2012. Mark up is payable at the rate of 3 months KIBOR plus 4% (in case of timely payments effective mark up rate would be 3 months KIBOR plus 2.5%). The remaining number of outstanding installments are 12 as at balance sheet date. The effective mark up rate charged during the year ranges from 11.81% to 14.77% per annum. This finance facility is secured against personal security along with personal net worth statement of Mian Mughees Sheikh and Mian Fareed Sheikh. The Company remained regular for all long term financing during the year except as disclosed in note 6.1 and 6.2.
6.5
6.6
6.7
6.8
6.9
6.10 7.
DIRECTOR SUBORDINATED LOAN This is unsecured and interest free loan obtained from sponsor director, and is not repayable within next twelve months from the balance sheet date.
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Notes 8. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Present value of minimum lease payments Less: Current portion 8.1 8.1
2013 (Rupees in 000) 31,086 (19,999) 11,087
2012
60,160 (28,862) 31,298
These represent machinery under sale and lease back agreements. The principal plus financial charges are payable over the lease period in quarterly installments as per respective agreement ending in the month of November 2014. The liability as at balance sheet date represents the present value of total minimum lease payments discounted at 13.96% to 16.52% per annum (2012: 14.35% to 18.06% per annum) being the interest rates implicit in leases. The purchase option is available to the Company on payment of last installment and surrender of deposit at the end of lease period and the Company intends to exercise this option. Reconciliation of minimum lease payments and their present values is given below: 2013 Present value Minimum of minimum lease lease payments payments 2012 Present value Minimum of minimum lease lease payments payments
(Rupees in 000) Not later than one year Later than one year but not later than five years 23,353 11,677 35,030 Less: Future finance charges (3,944) 31,086 Notes 9. COLONY MILLS LIMITED DEFERRED LIABILITIES Deferred taxation Deferred mark up Staff retirement benefits - unfunded gratuity scheme 19,999 11,087 31,086 31,086 2013 (Rupees in 000) 9.1 9.2 9.3 1,247,332 1,027 1,248,359 23,510 882,322 1,305 907,137 38,131 35,948 74,079 (13,919) 60,160 28,862 31,298 60,160 60,160 2012
36
9.1
Deferred Taxation Composition of deferred taxation and movement in temporary differences during the year are as follows: Balance as at July 01, 2011 Recognised Balance Recognised in profit as at June in profit and 30, 2012 and loss loss account account (Rupees in 000) 165,930 15,744 181,674 (171,953) (79,979) 2,974 (248,958) (67,284) 936,966 46,951 983,917 (747,363) (212,743) (301) (960,407) 23,510 (936,966) (46,951) (983,917) 747,363 212,743 301 960,407 (23,510) Balance as at June 30, 2013
Taxable temporary differences Accelerated tax depreciation Assets subject to finance lease
771,036 31,207 802,243
Deductible temporary differences Tax losses carried forward Minimum tax available for carry forward Provision for gratuity
(575,410) (132,764) (3,275) (711,449) 90,794
9.2
It represents mark up on Soneri Bank DF, Soneri Bank CF, The Bank of Punjab TF-1 and The Bank of Punjab TF-3. The total mark up accrued on these loans is of Rs. 1,347.19 million (2012: Rs. 1012.32 million) out of which Rs. 99.86 million (2012: Rs. 130 million) is currently payable and the remaining is being deferred. 2013 (Rupees in 000) 2012
9.3 a)
Staff retirement benefits - unfunded gratuity scheme Reconciliation of amounts recognized in the balance sheet: Present value of defined benefit obligation Net liability at the end of the year
1,027 1,027 1,305 26,000 (26,278) 1,027 1,305 26,000 (26,278) 1,027 26,000 26,000
1,305 1,305 16,954 11,747 (27,396) 1,305 16,954 11,747 (27,396) 1,305 11,747 11,747
b)
Net liability at end of the year c) Changes in the present value of defined benefit obligation Defined benefit obligation at beginning of the year Current service cost Benefits paid during the year Defined benefit obligation at end of the year d) Charge for the year Current service cost
37
Movement in net liability Net liability at beginning of the year Charge for the year Benefits paid during the year
2013 e) The principal assumptions used in the actuarial valuation are as follows: Discount rate Expected rate of increase per annum in future salaries Expected average remaining working life of employees Mortality rate The rates assumed were based on the EFU 61-66 mortality table. f) Amounts for the current and four previous years are as follows: 2013 Present value of defined benefit obligation 2012 2011 2010 ---------------(Rupees in 000)--------------1,305 Notes 10. TRADE AND OTHER PAYABLES Trade creditors Accrued liabilities Bills payable Advances from customers Withholding tax payable Unclaimed dividend Workers' Profit Participation Fund Others 16,954 2013 (Rupees in 000) 147,872 189,771 409,463 254,227 51,894 1,328 15,895 20,329 1,090,779 10.1 10.2 32,219
2012
12% 11% 4 years
12% 11% 4 years
2009
1,027
39,580 2012
10.1
10.2
516,580 150,532 402,514 41,340 98,266 1,328 12,732 1,223,292
Bills payable include overdue amount of Rs. 199.99 million payable to National Bank of Pakistan. Workers' Profit Participation Fund Opening balance Provision for the year Amount paid to workers on behalf of the fund
15,895 15,895 15,895
15,723 15,723 (15,723) -
11.
SHORT TERM BORROWINGS Banking companies - secured 11.1
11.1
3,065,418
2,897,188
Short term borrowings are available from banking companies under markup arrangements. The rates of mark up range from 9.27% to 16.13% per annum (2012: 4.64% to 18.52% per annum). These are secured against pledge / hypothecation of stock-in-trade, hypothecation of stores and spares, lien over import / export documents, pari passu charge over present and future current assets of the Company, mortgage of 65.9 kanals of land and personal guarantees of directors of the Company. Short term borrowings include overdue amount of Rs. 559.81 million payable to National Bank of Pakistan. Of the aggregate facility of Rs. 5,141.86 million (2012: 4,233.33 million) the amount unutilized at June 30, 2013 amounts to Rs. 2,076.44 million (2012: Rs. 1,336.14 million).
11.2 11.3 38
Notes
2013 (Rupees in 000)
2012
12.
ACCRUED MARK UP Long term financing Liabilities against assets subject to finance lease Short term borrowings
12.1
178,830 598 156,304 335,732
105,427 2,342 130,939 238,708
12.1 13.
Accrued mark up on long term finance from National Bank of Pakistan include overdue mark up of Rs. 143.69 million as disclosed in note 6.1 and 6.2.
CURRENT PORTION OF LONG TERM LIABILITIES Long term financing Liabilities against assets subject to finance lease
13.1
1,106,100 19,999 1,126,099
542,403 28,862 571,265
13.1 14.
Current portion of long term financing includes principal installments amounting to Rs. 446.85 million (2012: Rs. 446.85 million) which became due for reasons as disclosed in note 6.1 and 6.2.
CONTINGENCIES AND COMMITMENTS Contingencies 14.1 Multan Electric Power Company Limited (MEPCO), taken-over by WAPDA in May 1981, had served notice on the Company under Martial Law Regulation No. 125 of 1972 for payment of Rupees 15.69 million on account of cost of two transformers and grid-station along with benefits derived and interest accrued thereon up to April 1981 as against a liability of Rs. 1.10 million admitted by MEPCO in the written statements filed by it in the civil suit instituted by the Company before the Senior Civil Judge, Lahore. The Company challenged the illegal proceedings through a writ petition in the Lahore High Court which is at the stage of intra-court appeal pending before the Lahore High Court, Multan Bench and in which a stay order has been issued against a bank guarantee of Rupees 1.100 million arranged by the Company. MEPCO on the other hand owes to the Company Rupees 1.445 million (including unpaid dividend and interest thereon not incorporated in these financial statements). A suit has been filed by the Company for recovery of balance amount which is pending with the Court of Senior Civil Judge, Lahore. The Collectors of Customs, Sales Tax and Central Excise, in preceding year raised a demand of Rs. 2.25 million relating to inadmissible input tax claim of sales tax on sui gas bills, transformers and high power cables. In addition to the above, the Collector also raised demand of sales tax on inadmissible input tax on electricity bills amounting to Rs. 1.52 million. The Company has filed an appeal with Customs, Excise and Sales Tax Appellate Tribunal against the aforementioned orders which is still pending adjudication with the Tribunal. The Company has deposited Rs. 1.102 million against demand raised by the Collector in respect of inadmissible input tax on electricity, under the directions of the Tribunal. The Company has deposited Rs. 0.56 million as one-fourth of the demand of Rs. 2.25 million raised in respect of other issues. The case is pending adjudication with the Tribunal and the Company expects a favourable outcome in this regard. The Company imported textile machinery availing exemptions from customs duty and sales tax on import thereof under S.R.Os. 554(I)/97,987 (I)/99, and 439(I)/2001. The Company has submitted indemnity bonds to the customs authorities in this regard. In case, the conditions of above mentioned S.R.Os are violated, the amount of customs duty and sales tax exempted aggregating Rs. 89.51 million shall be recovered along with such penalties imposed in this regard under section 202 of the Customs Act, 1969.The conditions of the said SRO vis--vis export of 50% of additional production during first three years and 60% of the additional production during subsequent two years has been complied with. Audit of first three years has been conducted by the department and has given compliance certificate and audit of second period is in the process. Since all the conditions have been complied with, no liability will accrue in this respect.
14.2
14.3
39
14.4
In 1981, the Company issued non-convertible debentures to a consortium of banks and financial institutions. Subsequently, under authority of State Bank of Pakistans circular No.19 dated June 05, 1997, the Company arrived at a settlement with all but one lender, State Life Insurance Corporation of Pakistan (SLIC), for its share of less than Rs. 01 million. On a petition by the Company, the Lahore High Court, Lahore, decreed the case in favour of the Company. However SLIC has filed an intra-court appeal against which the Company expects a favourable outcome. The Company filed a suit in the Court of Civil Judge, Multan for recovery of Rs.2.49 million from Cotton Trading Corporation of Pakistan Limited on account of loss of profit, damages and shortages caused due to nationalization of Model Ginning & Oil Mills Limited. In 1996, the Court issued a decree in favour of the Company for Rs. 1.30 million along with interest at the rate of 7% per annum to be calculated from the date of institution of the suit until the date of realization of the decreed amount. The Company, however, has not accepted the said decision and filed a writ petition with the Lahore High Court, Multan Bench which is pending adjudication. The Company has filed an appeal before the Appellate Tribunal, Customs, Central Excise & Sales Tax, Lahore under Section 46 of the Sales Tax Act, 1990 against rejection of its refund claim amounting Rupees 3.21 million on account of sales tax paid on processed fabrics, by the Collector of Customs, Central Excise & Sales Tax (Appeals) Lahore. Bank guarantees amounting to Rs. 223.75 million (2012: Rs. 223.75 million). Bills payable amounting to Rs. 219.98 million (2012: Rs. 267.19 million). Notes Commitments Under letters of credit 2013 (Rupees in 000) 22,343 55,776 2012
14.5
14.6
14.7 14.8
15.
PROPERTY, PLANT AND EQUIPMENT Operating assets Capital work in progress 15.1 Operating assets
COST Particulars As at July 01, 2012 Additions/ Transfer or (disposal)
15.1 15.4
7,709,220 1,218,090 8,927,310

DEPRECIAITON
7,960,079 432,939 8,393,018

WDV June 30, Rate % 2013
As at June 30, 2013
As at July 01, 2012
Charge for the year/ (disposal)
June 30, 2013
------(Rupees in 000)-----Owned Freehold land Building on freehold land Plant and machinery Factory tools and equipment Furniture and fixture Office and hospital equipment Library books Vehicles 939,180 1,970,535 7,143,385 1,514 11,138 13,164 44 62,983 10,141,943 Leased Plant and machinery Vehicles 355,267 11,536 366,803 (2,036) (2,036) 106,739 (5,838) 355,267 9,500 364,767 10,609,647 97,941 5,223 103,164 2,548,667 12,866 772 (1,407) 13,638 355,785 (4,025) 110,807 4,588 115,395 2,900,427 244,460 4,912 249,372 7,709,220 5 10 86,880 1,011 (18) 752 18,096 (3,784) 106,739 (3,802) 939,180 1,970,535 7,230,265 1,514 12,131 13,916 44 77,295 10,244,880 460,585 1,935,226 1,285 7,364 6,320 44 34,679 2,445,503 75,498 262,199 11 199 (4) 713 3,527 (2,614) 342,147 (2,618) 536,083 2,197,425 1,296 7,559 7,033 44 35,592 2,785,032 939,180 1,434,452 5,032,840 218 4,572 6,883 41,703 7,459,848 5 5 5 5 10 15 10
40
2013
(Rupees in thousand)
10,508,746
COST Particulars As at July 01, 2011 Additions/ Transfer or (disposal) As at June 30, 2012
DEPRECIAITON Charge As at July 01, for the year/ (disposal) 2011 ------(Rupees in 000)-----381,114 1,664,088 1,274 7,170 5,561 44 34,436 2,093,687 84,397 4,522 88,919 2,182,606 79,471 271,138 11 194 759 2,371 (2,128) 353,944 (2,128) 13,544 701 14,245 368,189 (2,128) June 30, 2012
WDV June 30, Rate % 2012
Owned Freehold land Building on freehold land Plant and machinery Factory tools and equipment Furniture and fixture Office and hospital equipment Library books Vehicles 939,180 1,970,535 7,084,969 1,363 11,038 13,121 44 61,940 10,082,190 Leased Plant and machinery Vehicles 355,267 11,536 366,803 2012 (Rupees in thousand) 10,448,993 63,574 (3,821) 355,267 11,536 366,803 10,508,746 97,941 5,223 103,164 2,548,667 257,326 6,313 263,639 7,960,079 5 10 58,416 151 114 (14) 43 4,850 (3,807) 63,574 (3,821) 939,180 1,970,535 7,143,385 1,514 11,138 13,164 44 62,983 10,141,943 460,585 1,935,226 1,285 7,364 6,320 44 34,679 2,445,503 939,180 1,509,950 5,208,159 229 3,774 6,844 28,304 7,696,440 5 5 5 5 10 15 10
Notes 15.2 Depreciation for the year has been allocated as under: Cost of sales 25 Administrative expenses 28
2013 (Rupees in 000) 346,928 8,857 355,785
2012
359,008 9,181 368,189
15.3
Details of property, plant and equipment disposed off:

Description Cost Accumulated Written Sales Down Depreciation value proceed Gain/ (loss) Particulars of buyers Mode of disposal
Operating assets Honda Civic Suzuki Mehran Yamaha Honda Honda Honda City Honda Suzuki Baleno Suzuki Mehran Suzuki Cultus Hyundai Santro Toyota Corolla Suzuki Cultus Furniture 2013 (Rupees in thousand) 2012 (Rupees in thousand) 796 492 54 73 73 793 94 739 319 504 579 800 504 18 5,838 3,821 565 339 30 46 36 528 15 527 189 359 302 733 352 4 4,025 2,128 231 153 24 27 37 265 79 212 130 145 277 67 152 14 1,813 1,693 545 153 62 64 54 680 100 500 250 400 378 577 390 15 4,168 2,864 314 38 37 17 415 21 288 120 255 101 510 238 1 2,355 1,171 Zaheer Abbas Hafiz Suleman Masood Ahmed Sohail Ahmad Samiullah Abdul Razzaq Munir Ahmad Abdul Bari Abdul Bari Rizwan Siddiqui Zaheer Abbas Zaheer Abbas Abdul Rauf Aqeel Ansari Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation
41
Notes 15.4 Capital work in progress Plant and machinery Civil work 15.4.1 15.4.1 Movement in capital work in progress Opening Addition during the period 15.4.2 Transferred to operating assets Adjustment Closing 15.4.2 16.
2013 (Rupees in 000) 838,387 379,703 1,218,090
2012
427,525 5,414 432,939
432,939 845,352 (60,201) 1,218,090
319,957 170,760 (55,000) (2,778) 432,939
It includes borrowing cost of Rs.37 million (2012: Rs. 42.44 million) which is capitalised at the rate of 10.56% (2012: 11.29%) per annum included in capital work in progress in plant and machinery.
LONG TERM INVESTMENTS Investment in Colony Sugar Mills Limited (related party) Available for sale investment
16.1 16.2
307,000 1,111 308,111
251,080 1,114 252,194
16.1
Investment in Colony Sugar Mills Limited "CSUML" (related party) At equity method - Quoted Being significant influence over CSUML Fully paid ordinary shares
16.1.1
307,000 307,000
251,080 251,080
16.1.1
Fully paid ordinary shares Cost Share of post acquisition profits Disposal of investment Carrying amount of investment
100,459 206,541 307,000 Rupees Number Percent 6.24 15,862,960 16.02%
265,070 150,621 (164,611) 251,080 3.18 15,862,960 16.02%
Market value per share No. of shares held Ownership interest
The shares held by the Company in CSUML are pledged with Bank of Punjab Limited as mentioned in note 6.5 to 6.8.
42
2013 (Rupees in 000) Summarised financial information in respect of the Company's related party is set out below: Non-Current Assets Current Assets 3,285,054 2,043,607 5,328,661 Non-Current Liabilities Current Liabilities 418,468 2,993,839 3,412,307 1,916,354 Revenue Profit for the year Company's share in CSUML's profit for the year 8,724,562 348,604 55,920
2012
3,387,253 3,722,694 7,109,947 825,343 4,716,855 5,542,198 1,567,749 4,547,229 36,480 5,902
Due to non availability of annual audited financial statements of Colony Sugar Mills Limited at the date of authorization for issue of these financial statements, equity method has been applied on latest available un-audited financial statements for nine months ended June 30, 2013 and audited financial statements for the quarter ended September 30, 2012. 16.2 Available for sales Investment Notes 2013 (Rupees in 000) 2012
2013 2012 No. of Shares / Bonds Quoted - at fair value Related Parties: 70,506 Colony Woolen Mills Limited 67,457 Azgard Nine Limited 6 Colony Thal Textile Mills Limited 137,969 Unquoted - at cost Government Compensation 400 Bonds 138,369 16.2.1
70,506 67,457 6 137,969
282 429 711
282 432 714
400 138,369
16.2.1
400 1,111
400 1,114
Government Compensation Bonds for Rs. 0.4 million (2012: Rs. 0.4 million) are receivable from the Federal Government in respect of shares held by the Company in the share capital of Multan Electric Supply Company Limited. The Company has challenged the withholding of these Bonds through writ petition filed in the Lahore High Court, Lahore, which is still pending for final adjudication.
17.
STORES, SPARES AND LOOSE TOOLS Stores Spares Loose tools Provision for slow moving stores, spares and loose tools
86,098 32,763 226 119,087 (2,673) 116,414
73,540 59,574 323 133,437 133,437
43
Notes 18. STOCK IN TRADE Textile Raw material Work in process Finished goods Real Estate Business Land held for development and resale
2013 (Rupees in 000) 1,029,735 258,394 1,334,231 2,622,360
2012
513,454 268,460 2,094,203 2,876,117 496,747 3,372,864
18.1
496,747 3,119,107
18.1 19.
This includes 65.9 kanals of land mortgaged with bank as mentioned in note 11.1.
TRADE DEBTS - considered good Foreign - secured Local - unsecured Considered good Considered doubtful Provision for doubtful trade debts
250,222 19.1 737,571 2,326 990,119 (2,326) 987,793
197,641 609,768 807,409 807,409
19.1 20.
These include balance due from an associate, Colony Industries (Pvt) Limited, of Rs. 368.39 million (2012: Rs. 369.58 million).
LOANS, ADVANCES, DEPOSITS AND OTHER RECEIVABLES Loans and advances 20.1 Trade deposit Other receivables 20.2
78,728 54,373 19,045 152,146
110,287 43,077 17,770 171,134
20.1
Loans and advances Considered good: Loans to employees Advances to: Suppliers Income tax Letters of credit fee, margin and expenses
12,697 20,068 23,312 22,651 78,728
2,907 60,688 22,664 24,028 110,287
20.2
It includes Rs. 1.792 million (2012: Rs. 1.792 million) deposited with the Collector of Sales tax, Multan. The appeal has been decided in favour of the Company and the amount of refund is yet to be determined.
44
21.
OTHER FINANCIAL ASSETS These include shares of listed companies classified as held for trading through profit and loss account. 2013 2012 No. of Shares 189 250 439 189 2,500 9,000 25,000 36,689 Notes Quoted - at fair value Oil and Gas Development Corporation Ltd. Bank Al-Falah Limited Kot Adu Power Company Limited Maple Leaf Cement Factory Limited 2013 (Rupees in 000) 20 6 26 30 43 405 116 594 2012
22.
TAX REFUNDS DUE FROM GOVERNMENT Sales tax Income tax refundable
126,157 189,581 315,738
95,496 103,289 198,785
23.
CASH AND BANK BALANCES Cash in hand Cash at banks -in current accounts -in deposit accounts
140 44,633 4,259 49,032
1,025 22,222 35,472 58,719
24.
SALES Local Yarn Fabric Raw material sales Waste
9,528,813 677 809,264 210,044 10,548,798
7,676,461 12,087 118,104 191,265 7,997,917 4,058,639 134,105 4,192,744 12,190,661 (17,002) 12,173,659
5,238,039 15,786,837 Commission (18,622) 15,768,215
45
Export Yarn Fabric
5,238,039 -
Notes 25. COST OF SALES Raw material consumed Cost of purchased goods sold Stores consumed Staff salaries, wages and benefits Power and fuel Repair and maintenance Insurance Rent, rates and taxes Depreciation Outsourced processing charges Work in process: Opening Closing
2012
25.1 25.2
15.2
10,099,320 455,791 339,473 863,957 1,228,609 27,090 36,623 1,890 346,928 13,399,681 268,460 (258,394) 10,066
8,334,410 293,036 280,719 612,465 986,771 9,701 38,924 2,364 359,008 25,082 10,942,480 251,915 (268,460) (16,545) 10,925,935 2,000,769 (2,094,203) (93,434) 10,832,501
Cost of goods manufactured Finished goods: Opening stock Closing stock
13,409,747 2,094,203 (1,334,231) 759,972 14,169,719
25.1
Raw material consumed Opening stock Purchases including purchase expenses
513,454 10,615,601 11,129,055
559,895 8,287,969 8,847,864 (513,454) 8,334,410
Closing stock
(1,029,735) 10,099,320
25.2 26.
These include Rs.26 million (2012: Rs.11.75 million) in respect of gratuity and Rs.5.18 million (2012: Rs.3.8 million) in respect of provident fund.
OTHER INCOME Income from financial assets Profit on deposits with banks Exchange gain - realised Exchange gain - unrealised Gain on remeasurement of investments Profit on Musharika financing to CSUML Income from other than financial assets Gain on sale of property, plant and equipment Deferred income amortized Share of profit from investment in CSUML Miscellaneous income
4,827 48,722 3,109 118 2,355 55,920 7,887 122,938
1,786 53,696 3,205 106 7,147 1,171 7,567 5,902 7,745 88,325
46
Notes 27. DISTRIBUTION COST Staff salaries and benefits Rent, rate and taxes Freight Telecommunication Export forwarding charges Bank charges Others
2012
27.1
3,884 1,369 17,086 3,793 204,053 3,798 4,149 238,132
2,504 1,098 16,709 3,345 211,787 5,667 577 241,687
27.1 28.
These include Rs.0.186 million (2012: Rs. 0.142 million) in respect of employees provident fund.
ADMINISTRATIVE EXPENSES Staff salaries and benefits Printing and stationery Travelling and conveyance Communication Rent, rate and taxes Repair and maintenance Insurance Advertisement Fee and subscription Entertainment Auditors' remuneration Donation Legal and professional charges Depreciation Provision for doubtful trade debts Provision for slow moving stores, spares and loose tools Others
28.1
28.2 28.3 15.2
103,196 413 13,835 257 1,775 19,217 1,393 47 4,063 4,460 1,465 1,899 6,247 8,857 2,326 2,673 2,855 174,978
85,062 410 11,062 263 1,728 20,906 1,313 48 1,906 3,429 1,275 1,647 3,420 9,181 184 141,834
28.1 28.2
These include Rs.2.59 million (2012: Rs. 1.96 million) in respect of employees provident fund. Auditors' remuneration Statutory audit fee Review fee CCG fee
1,465 28.3 29. No director or his / her spouse had any interest in the donees' fund.
1,275
FINANCE COST Bank charges and commission Inland bill discounting Markup on; - Long term finance - Short term borrowings - Liabilities against assets subject to finance lease
22,137 71,632 460,236 350,308 6,114 816,658 910,427
51,786 94,585 569,100 448,875 13,923 1,031,898 1,178,269
47
1,240 175 50
1,050 175 50
Notes
2012
30.
OTHER EXPENSES Workers' profit participation fund Loss on disposal of investment in CSUML Sales Tax
30.1
15,895 84,993 100,888
142,611 142,611
30.1 31.
The sales tax has been paid at the rate of 2% of the value of supplies through special return as required by S.R.O. 179 (I) / 2013 issued by the Federal Board of Revenue.
TAXATION Current year: Current Deferred Prior year: Current
96,421 (23,510) 72,911 (68,860) 4,051
121,383 (67,284) 54,099 54,099
Relationship between tax expense and accounting profit has not been presented in these financial statements as tax liability of the Company for the year is determined under section 113 of the Income Tax Ordinance, 2001. 32. EARNINGS / (LOSS) PER SHARE - BASIC AND DILUTED Profit / (loss) for the year (Rupees in thousand) Weighted average number of ordinary shares (in thousand) Earnings / (loss) per share - basic and diluted (Rupees) 32.1 33. There is no dilutive effect on the basic earnings per share of the Company.
292,958 244,176 1.20
(329,017) 244,176 (1.35)
REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES Chief Executive Executives 2012 2013 2012 2013
--------------- Rupees in 000 --------------Managerial remuneration Housing, conveyance and utilities Retirement benefits Medical 2,728 227 272 3,227 Number, including those who worked for part of the year 1 2,728 227 272 3,227 1 11,353 946 1,135 13,434 16 12,905 946 1,236 15,087 19
Certain executives including the Chief Executive Officer of the Company are also provided with free use of Company's cars in accordance with their entitlements. 48
34.
TRANSACTIONS WITH RELATED PARTIES The Company in the normal course of business carries out transactions with various related parties which comprise of associated undertakings, directors, key management personnel and post employment benefits plan. Amounts due from related parties and investments are shown under note 19 and note 16, to these financial statements and remuneration of Chief Executive Officer is disclosed in note 33. Other significant transactions with related parties are as follows: 2013 2012 (Rupees in 000) Associated undertakings Sale of goods and services 1,017,894 760,768 Other related parties Mark up income earned on musharika facility to CSUML Contribution to provident fund trust 7,962 2013 1,088 186,576 181,167 64,785,386 48,851,517 1,088 2,880 2,805 3,996,199 3,627,765 2012 1,026 186,576 180,515 64,785,386 56,919,442 1,053 2,880 2,417 3,996,199 3,774,728 7,147 6,370
35.
PLANT CAPACITY AND ACTUAL PRODUCTION Ring end spinning Total number of shifts Number of spindles installed Number of spindles worked Installed capacity after conversion into 20/S count (Kgs.) Actual production of yarn after conversion into 20/S count (Kgs.) Open end spinning Total number of shifts Number of roters installed Number of roters worked Installed capacity after conversion into 20/S count (Kgs.) Actual production of yarn after conversion into 20/S count (Kgs.) Reason for shortfall
36.
Cost of investments made Percentage of investments made Fair value of investments 36.1 The break-up of fair value of investments is:
36.1
48,720 80% 48,720
45,546 88% 45,546 2012
2013 (Rupees in 000) Loan to members Bank balances Government securities 14,241 33,493 986 48,720 29.23% 68.75% 2.02% 100% 13,259 31,360 927 45,546
29.11% 68.85% 2.04% 100% 49
It is difficult to describe precisely the production capacity in spinning mills since it fluctuates widely depending on various factors such as count of yarn spun, spindles and twist. It also varies according to the pattern of production adopted in a particular year. Notes 2013 2012 (Rupees in 000) PROVIDENT FUND The following information is based on latest un-audited financial statements of the trust: Size of the fund - Total assets 61,258 51,850
37.
NUMBER OF EMPLOYEES The total average number of employees during the year and as at June 30, 2013 and 2012 respectively are as follows: 2013 Number of employees as at year end Average number of employees during the year 6,591 6,406 2012 6,288 5,692
38.
FINANCIAL INSTRUMENTS 38.1 The Company has exposure to the following risks from its use of financial instruments: Credit risk Liquidity risk Market risk This note presents information about the Companys exposure to each of the above risks, the Companys objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout these financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Companys risk management framework. The Board is responsible for developing and monitoring the Companys risk management policies. 38.2 Credit risk Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from deposits, trade debts, loans, advances and other receivables and bank balances. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: 2013 2012 (Rupees in 000) Financial assets as per balance sheet Loan and receivable Long term deposits 20,305 19,626 Trade debts 987,793 807,409 Loans and advances, deposits & other receivables 86,115 148,470 Bank balances 48,892 58,719
Held for trading Investments Quoted - at fair value Available for sale Investments Quoted - at fair value Unquoted - at cost
26 711 400 1,144,242
594 714 400 1,035,932
50
The Companys credit risk exposures are categorized under the following headings: Counterparties The Company conducts transactions with the following major counterparties: Trade debtors Banks and other financial institutions The Company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Companys exposure is continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management annually. 38.2.1 Credit risk related to trade debtors Trade debts are essentially due from local and foreign customers against sale of yarn and waste material and the Company does not expect these counterparties to fail to meet their obligations. The majority of sales to the Companys customers are made on specific terms. Customer credit risk is managed subject to established policies, procedures and controls relating to customer credit risk management. Credit limits are established for all customers based on past experience with the customer. Outstanding customer receivables are regularly monitored and any shipments to foreign customers are generally covered by letters of credit. Trade receivables are non-interest bearing and are generally on 60 to 90 days credit terms. Impairment losses The aging of trade debts at the reporting date was: 2013 Gross Impairment Gross (Rupees in 000) 409 309 1,608 2,326 760,508 12,871 18,149 7,586 8,295 807,409 2012 Impairment
5,623 11,751 990,119
Trade debtors include debtors with a carrying amount of Rs. 93.43 million (2012: Rs. 46.90 million) which are past due at the reporting date but not impaired as there has not been a significant change in credit quality and the amounts are still considered recoverable. Concentration of credit risk Trade debts consist of a large number of diversified customers, spread across geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable where appropriate. At June 30, 2013, the Company has approximately 1 customer (2012: 1 customer) that owed more than Rs. 368.38 million (2012: Rs. 369.58 million) and accounted for approximately 50% (2012: 61%) of all trade debts.
51
Not yet due Past due for: - more than 03 months but less than 01 year - more than 01 year but less than 02 years - more than 02 years but less than 03 years - more than 03 years
894,360 68,048 10,337
38.2.2
Credit risk related to banks and other financial institutions Credit risk on balances with banks is managed by management in accordance with the Companys policy. Excess funds are placed in deposits with reputable banks and financial institutions.
38.3
Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Management closely monitors the Companys liquidity and cash flow position. This includes maintenance of balance sheet liquidity ratios, debtors and creditors concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual customer. The Company manages liquidity risk by maintaining adequate reserves and borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 11.2 is a listing of additional undrawn facilities that the Company has at its disposal to further reduce liquidity risk.
38.3.1 Liquidity risk table Financial liabilities in accordance with their contractual maturities are presented below:
..........................................................June 30, 2013......................................................... Interest/Markup bearing Maturity within One Year
Financial Liabilities Long term finance Director subordinated loan Liabilities against assets subject to finance lease Short-term borrowings Trade and other payables Accrued mark up
Non interest/Markup bearing Maturity within One Year Maturity after One Year Sub Total Total
Maturity after One Year
Sub Total
..........................................................Rupees in 000....................................................
1,032,300 19,999 3,065,418 335,732 4,453,449 3,502,617 11,087 3,513,704 4,534,917 31,086 3,065,418 335,732 7,967,153 73,800 768,763 842,563 590,264 120,000 710,264 664,064 120,000 768,763 1,552,827 5,198,981 120,000 31,086 3,065,418 768,763 335,732 9,519,980
..........................................................June 30, 2012......................................................... Interest/Markup bearing Maturity within One Year

Financial Liabilities Long term finance Director subordinated loan Liabilities against assets subject to finance lease Short-term borrowings Trade and other payables Accrued mark up
Non interest/Markup bearing Maturity within One Year Maturity after One Year Sub Total Total
Maturity after One Year
Sub Total
..........................................................Rupees in 000................................................
542,403 28,862 2,897,188 238,708 3,707,161 4,801,258 31,298 4,832,556 5,343,661 60,160 2,897,188 238,708 8,539,717 1,223,292 1,223,292 100,000 100,000 100,000 100,000 5,343,661 100,000 60,160 2,897,188 1,223,292 238,708 9,863,009
52
38.4
Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Companys income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing returns. 38.4.1 Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. In respect of other monetary assets and liabilities denominated in foreign currencies, the Company ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. Exposure to currency risk The Company is exposed to currency risk on trade debts which are denominated in currency other than the functional currency of the Company. The Company's exposure to foreign currency risk is as follows: 2013 (Rupees in 000) US Dollar Trade debts 250,222 250,222 2,534 2,534 2012 (Rupees in 000) US Dollar 197,641 197,641 2,096 2,096
The following US Dollar exchange rates were applied during the year: 2013 (Rupees in 000) Average rate Balance sheet date rate Sensivitivity analysis - foreign currency COLONY MILLS LIMITED 53 At June 30, 2013, if the Rupee had weakened / strengthened by 5% against the US Dollar with all other variables held constant, Profit for the year would have been lower / higher by Rs. 12.51 million (2012 : Rs. 9.88 million), as a result of foreign exchange gains / losses on translation of foreign currency trade debts. Profit / (loss) is more sensitive to movement in Rupee / foreign currency exchange rates in 2013 than 2012 because of increase in foreign currency exchange rate. 38.4.2 Interest rate risk Interest / mark-up rate risk arises from the possibility that changes in interest / mark-up rates will affect the value of financial instruments. The Company has significant amount of interest based financial assets and financial liabilities which are largely based on variable interest / mark-up rates, therefore the Company has to manage the related finance cost which exposes it to the risk of 01 month, 3 months and 6 months KIBOR. Since the impact on interest rate exposure is significant to the Company, management is considering the alternative arrangement to manage interest rate exposure in future. 96.50 98.75 89.44 94.30 2012
2013 Interest rate (Rupees in 000) Fixed rate instruments Financial assets Cash in deposit accounts Variable rate instruments Financial liabilities: Long term finance Short term finance Liabilities subject finance lease
2012 Interest rate (Rupees in 000)
7.5% - 8.75% 9.25% - 14.49% 9.27% - 16.13%
4,259 4,534,917 3,065,418 31,086 7,631,421
8.73% - 9.25% 11.88% - 16.03% 4.64% - 18.52%
35,472 5,343,661 2,897,188 60,160 8,301,009
Sensitivity analysis - interest rate If interest rates had been 50 basis points higher / lower and all other variables were held constant, the Companys profit / loss for the year ended June 30, 2013 would decrease / increase by Rs. 120.70 million (2012: Rs. 41.51 million). This is mainly attributable to the Companys exposure to interest rates on its variable rate financial instruments. 38.4.3 Other price risk Other price risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate due to changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not materially exposed to other price risk on financial assets and liabilities. 38.4.4 Financial instruments by category
The Company finance its operation through equity, borrowings and management of working capital with a view to maintaining an approximate mix between various sources of finance to minimize risk. Taken as a whole, the Company's risk arising from financial instruments is limited as there is no significant exposure to price and cash flow risk in respect of such instruments. 2013 2012 (Rupees in 000) Financial assets as per balance sheet Loan and receivable Long-term deposits Trade debts Loans and advances, deposits & other receivables Bank balances Held for trading Investments Quoted - at fair value Available for sale Investments Quoted - at fair value Unquoted - at cost 20,305 987,793 86,115 48,892 26 711 400 1,144,242 Financial liabilities as per balance sheet Financial liabilities measured at amortized cost Long term finance Director subordinated loan Liabilities against assets subject to finance lease Short-term borrowings Trade and other payables Accrued mark up 19,626 807,409 63,754 58,719 594 714 400 951,216
5,198,981 120,000 31,086 3,065,418 768,763 335,732 9,519,980
5,343,661 100,000 4,000 2,897,188 1,223,292 238,708 9,806,849
54
38.5
Fair values Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arms length transaction other than in a forced or liquidation sale. The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values. 38.5.1 Fair value hierarchy Following are three levels in fair value hierarchy that reflects the significance of the inputs used in measurement of fair values of financial instruments. Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities. Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. drive from prices). Level 3: Inputs for asset or liability that are not based on observable market data (unobservable inputs). The Company has financial assets at fair value of Rs. 0.46 million (2012: Rs. 1.026 million) which is valued under level 1 valuation method. The Company does not have any investment in level 2 and 3 category.
39.
CAPITAL MANAGEMENT The Company's objectives, policies and processes for managing capital are as follows: The Company is not subject to any externally imposed capital requirements. The Companys objectives when managing capital are to safeguard the companys ability to continue as a going concern in order to provide returns for shareholders and beets for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Consistently with others in the industry, the company monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt (as shown in the balance sheet) less cash and cash equivalents. Adjusted capital comprises all components of equity (i.e., share capital and unappropriated profit). The Company's strategy is to maintain its debt-to-adjusted capital ratio between 40% to 60%. The debt-toadjusted capital ratios at June 30, 2013 and June 30, 2012 were as follows: 2013 (Rupees in 000) Total debt Less: Cash and cash equivalents Net debt Total equity Adjusted capital Debt-to-adjusted capital ratio 8,295,485 48,892 8,246,593 2,809,206 11,055,799 75% 8,301,009 58,719 8,242,290 2,516,251 10,758,541 77% 2012
55
40.
RECLASSIFICATION Following reclassifications have been made in the financial statements to give better presentation: Previous classification Loans, advances, deposits and other receivables Tax refunds due from government Exchange gain - realised Exchange gain - unrealised Current classification Tax refunds due from government Loans, advances, deposits and other receivables Exchange gain - unrealised Exchange gain - realised Rupees in thousand 103,289
22,664 3,205 53,696
41.
DATE OF AUTHORISATION FOR ISSUE These financial statements have been authorized for issue on October 08, 2013 by the Board of Directors of the Company.
42.
GENERAL Figures have been rounded off to the nearest Rupees in thousand except where stated otherwise.
Director
Pattern of Shareholding
as on June 30, 2013
Number of Shareholders
154 357 429 1,078 439 158 111 80 42 27 34 45 65 6 12 3 8 10 7 5 7 3 36 5 2 4 3 2 2 4 2 1 5 2 3 1 1 4 4 10 1 1 2 2 1 4 1 2 1 3 1 1 2 1 1 3 1 3 2 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3,225
Shareholdings From
1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 130001 135001 140001 145001 150001 155001 160001 165001 170001 190001 195001 205001 215001 220001 225001 240001 245001 260001 295001 300001 320001 325001 330001 350001 395001 425001 495001 505001 595001 645001 650001 720001 765001 915001 930001 1095001 1185001 1380001 1520001 2270001 2495001 2990001 3010001 3285001 8625001 13200001 13295001 15475001 23805001 95350001
To
100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 135000 140000 145000 150000 155000 160000 165000 170000 175000 195000 200000 210000 220000 225000 230000 245000 250000 265000 300000 305000 325000 330000 335000 355000 400000 430000 500000 510000 600000 650000 655000 725000 770000 920000 935000 1100000 1190000 1385000 1525000 2275000 2500000 2995000 3015000 3290000 8630000 13205000 13300000 15480000 23810000 95355000
Total Shares held

5,105 126,278 378,571 3,309,835 3,628,872 2,076,017 2,082,888 1,916,544 1,216,225 910,168 1,335,028 1,944,404 3,215,575 325,070 701,140 186,057 553,420 741,500 542,272 413,900 620,705 281,000 3,591,500 522,000 220,000 456,148 349,253 246,229 256,000 535,007 275,255 145,000 747,648 304,400 475,804 165,000 170,000 689,215 767,500 1,995,500 208,553 216,000 450,000 457,500 244,349 996,000 264,500 600,000 305,000 973,280 327,500 333,500 703,500 400,000 428,390 1,500,000 506,500 1,795,397 1,296,900 652,750 1,450,000 765,500 920,000 934,158 1,100,000 1,185,890 1,382,500 1,521,599 2,272,000 2,500,000 2,992,500 3,014,854 3,288,900 8,625,021 13,204,050 13,299,050 15,476,485 23,807,791 95,354,350 244,176,300
57
Categorial Pattern of Shareholding as on June 30, 2013

Categories of Shareholders IINDIVIDUALS FINANCIAL INSTITUTIONS INSURANCE COMPANIES JOINT STOCK COMPANIES INVESTMENT COMPANIES MUTUAL FUND OTHERS Number of Shareholders 3,157 6 7 38 6 1 10 3,225 Number of Shares held 225,624,342 1,606,255 372,289 13,912,806 239,286 1,521,599 899,723 244,176,300 Percentage
92.40 0.66 0.15 5.70 0.10 0.62 0.37 100.00
58
Pattern of Shareholding Under Code of Corporate Governance as on June 30, 2013

Shareholding Directors, CEO, and their spouse and minor children: Mr. Fareed M. Sheikh Mr. Muhammad Tariq Mr. Muhammad Azam Barki Malik Sohail Ahmed Mr. Bilal Ahmed Khan Niazi Mr. Muhammad Farooq Syed Arif Hussain Mrs. Mahnaz Fareed Sheikh Shahmeel Fareed Sheikh Nadine Fareed Sheikh Executive Associated Companies, Undertakings & related parties NIT ICP Public Sector Companies & Corporation Banks, DFIs, NBFI & Insurance Comapines, Takaful, Modarabas and Mutaual funds Others Public Total: (Chief Executive Officer) 95,354,350 6,742 100 23,850 2,000 7,600 95 73,000 13,204,050 3,288,900 Nill Nill 1,521,599 113,648 9 39.05 0.00 0.00 0.01 0.00 0.00 0.00 0.03 5.41 1.35 Nill Nill 0.62 0.05 0.00 Percentage
3,500,143 13,416,559 113,663,655 244,176,300
1.43 5.49 46.55 100.00 COLONY MILLS LIMITED 59
Shareholding 5% and More Mr. Fareed M. Sheikh Mr. Mughis A. Sheikh Mrs. Fozia Mughis Sheikh Mr. Ismail Fareed Sheikh Shahmeel Fareed Sheikh 95,354,350 23,807,791 15,476,485 13,299,050 13,204,050 39.05 9.75 6.34 5.45 5.41
There has been no trading of shares by CEO, Directors, CFO and Company Secretary, their spouse and children.

Annual Accounts 2013

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Annual Accounts 2013

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In the Name of Almighty Allah The Most Beneficient The Most Merciful

Colony Mills Limited

COLONY MILLS LIMITED

Colony Mills Limited

Business Ethics and Practices

HUMAN RESOURCE DEVELOPMENT

SOCIAL AND COMMUNITY COMMITMENTS

TRANSPARENT FINANCIAL POLICIES

MARKETING AND INDUSTRY PRACTICES

Colony Mills Limited

Colony Mills Limited

Colony Mills Limited

COLONY MILLS LIMITED

Colony Mills Limited

Notice of Annual General Meeting

By Order of the Board

Lahore October 08, 2013 Notes:i. ii.

COLONY MILLS LIMITED

Colony Mills Limited

Directors Report to the Members

COLONY MILLS LIMITED

Colony Mills Limited

Directors Report to the Members

Material Store Labour Power Depreciation Overheads

COLONY MILLS LIMITED

Colony Mills Limited

Directors Report to the Members

COLONY MILLS LIMITED

Colony Mills Limited

Directors Report to the Members

Colony Mills Limited

Directors Report to the Members

COLONY MILLS LIMITED

Colony Mills Limited

Directors Report to the Members

On behalf of the Board of Directors

Lahore Dated: October 08, 2013

Fareed M. Sheikh Chief Executive Officer

COLONY MILLS LIMITED

Colony Mills Limited

COLONY MILLS LIMITED

Colony Mills Limited

Lahore: October 08, 2013

COLONY MILLS LIMITED

Colony Mills Limited

6) COLONY MILLS LIMITED

Colony Mills Limited

12) 13) 14) 15)

Lahore: October 08, 2013

Fareed M. Sheikh Chief Executive Officer

Colony Mills Limited

Auditors Report to the Members

(iii) COLONY MILLS LIMITED

Colony Mills Limited

Auditors Report to the Members

Lahore: October 08, 2013

COLONY MILLS LIMITED

Colony Mills Limited

4,092,881 120,000 11,087 1,248,359 5,472,327

4,801,258 100,000 31,298 907,137 5,839,693

1,090,779 3,065,418 335,732 1,126,099 96,421 5,714,449

1,223,292 2,897,188 238,708 571,265 121,383 5,051,836

Contingencies and Commitments COLONY MILLS LIMITED