DuPont Analysis Financial Ratios

Unit 2019 2018 2017 2016 2015 2014

2019 2018 Profitability Ratios
Gross Profit Ratio % 28.80 31.05 32.17 33.13 35.36 35.05
Operating Profit to Sale % 8.27 6.34 8.48 8.97 12.64 11.80
Net Profit before Tax to Sales % 7.10 5.43 7.86 8.37 12.26 10.88
Tax Burden Interest Burden Tax Burden Interest Burden Net Profit after Tax to Sales % 5.65 4.76 5.80 5.87 8.51 7.55
EBITDA Margin to Sales % 10.54 8.26 10.10 10.57 14.31 13.38
80% 86% 88% 86% Operating Leverage Ratio % 351.25 (13.39) 71.94 (110.39) 142.69 60.01
Return on Equity % 30.34 27.77 32.80 29.88 39.57 37.55
Return on Capital Employed % 37.33 32.19 42.36 43.89 55.92 54.68
Return on Assets % 11.32 10.10 12.05 12.92 18.82 15.94

Liquidity Ratios
Current Ratio Times 1.06 0.88 1.05 1.13 1.49 1.42
Operating Margin Asset Turnover Operating Margin Asset Turnover Quick / Acid Test Ratio Times 0.34 0.31 0.41 0.33 0.64 0.56
8% 2.00 6% 2.12 Cash to Current Liabilities Times (0.03) (0.15) (0.12) (0.16) (0.04 ) (0.33)
Cash Flow from Operations to Sales % 7.93 6.07 8.49 3.63 12.09 5.65
Working Capital Turnover Times (130.96) (78.60) 64.91 24.66 8.91 8.97

Efficiency Ratios
No. of Days in Inventory Days 91.06 87.04 107.40 111.63 108.65 119.66
No. of Days in Receivables Days 16.98 21.38 24.99 26.97 29.23 27.25
No. of Days in Payables Days 25.58 20.79 14.00 13.27 17.14 15.40
Operating Cycle Days 82.46 87.63 118.39 125.34 120.73 131.51
Leverage Ratio Leverage Ratio Asset Turnover Times 2.00 2.12 2.08 2.20 2.21 2.11
2.68 2.75 Inventory Turnover Times 4.01 4.19 3.40 3.27 3.36 3.05
Receivables Turnover Times 21.49 17.07 14.61 13.53 12.49 13.40
Payables Turnover Times 14.27 17.56 26.08 27.51 21.29 23.71
Revenue / Employee Rs in 000s 44,269 41,430 34,034 28,668 23,986 21,485
Net Income / Employee Rs in 000s 1,820 1,480 1,442 1,188 1,459 1,189

Investment / Market Ratios

Earnings Per Share (recalculated) Rs. 10.42 8.12 7.67 6.41 8.00 5.91
Price Earning Ratio Times 17.67 32.75 29.46 36.52 35.37 113.03
Return on Equity Return on Equity Dividend Yield Ratio % 2.17 1.30 1.57 0.98 2.94 1.00
30% 28% Dividend Payout Ratio % 36.29 37.83 45.24 35.74 104.11 56.41
Dividend Cover Ratio Times 2.76 2.64 2.21 2.80 0.96 1.77
Cash Dividend Per Share Rs. 4 3.75 4.25 2.75 10.00 8.00
Cash Dividend % 80 75 85 55 200 80
Stock Dividend Per Share Rs. 1 1 - - - - - - - -
Stock Dividend % 20 20 - - - - - - - -
Market Value Per Share at the end of the year Rs. 184.16 318.99 271.00 281.00 339.73 801.43
Low during the year Rs. 147.48 295.00 260.00 276.50 318.12 302.25
High during the year Rs. 310.00 352.00 413.71 366.65 433.73 801.43
Breakup Value Per Share without
Surplus on Revaluation of Fixed Assets Rs. 40.46 38.65 32.73 24.55 26.94 43.21
Market Capitalisation (in millions) Rs. 22,896.29 33,049.55 28,077.46 29,113.53 35,198.34 41,514.07

Capital Structure Ratios

Financial Leverage Ratio % 63.50 74.22 56.75 51.55 13.76 42.68
Weighted Average Cost of Debt % 9.12 7.90 6.44 10.44 6.60 9.22
Debt to Equity Ratio % 18.45 4.98 20.35 - - - - - -
Interest Coverage Ratio Times 7.08 7.00 13.58 15.00 33.10 12.83
No. of Ordinary Shares (in millions) EA 124.33 103.61 103.61 103.61 103.61 51.80
Financial Statements at a Glance Financial Statements at a Glance
Assets (Rupees in Million)
516 13,283
1,253 (73) Profit and Loss Account (Rupees in Million)
506 150 30,000
12,000
10,932 24,253 17,269
25,000
10,000
20,000
8,000
15,000
6,000
5,095
10,000
4,000
5,000 415
2,000 248 352 1,371
-
-
FY 18 Property, plant Other Non-Current Stock in trade Trade debts Other Current FY 19 Net Turnover Cost of sales Operating Expenses Finance Cost & Other Income Taxation Profit After Taxation
and equipment Assets Assets Other Charges

Equity and Liabilities (Rupees in Million) Cash Flow (Rupees in Million)

2,000
860 (303) (110) 13,283 1,923
75 879
950 1,500
10,932
10,000 1,000

500
8,000 46
(110)
-
6,000
(500) (225)
4,000 (1,000) (978)
(1,107)
2,000 (1,500)

- (2,000)
Cash & Cash Operating Investing Financing Currency translation Cash & Cash
FY 18 Paid up Capital Non controlling Non-Curent Trade and other Short term Other FY 19 Equivalent 2018 Activities Activities Activities difference on cash Equivalent 2019
and Revenue interest Liabilities payables borrowing & Current and cash equivalents
Reserves Running Finance Liabilities
Financial Highlights Financial Highlights
Our results compared to same period last year at a glance
Earnings Per Share (in Rupees)
FY-19 2014 5.91
• Turnover up by 12 %
• Gross profit up by 4 % 2015 8.00

• Profit after Taxation up by 33 % 2016 6.41

• Earning per Share PKR 10.42 (FY-18 PKR 8.12)
2017 7.67

2018 8.12
Turnover by Business Operating Profit by Business
2019 10.42
- 2 4 6 8 10 12
A-1 Bags
23% 17%

Dividend Per Share (in Rupees)

International Division
5% 72% without A-1 Bags 2014 8.00
Local Division
19%
64% 2015 10.00

2016 2.75

2017 4.25

2018 3.75
Local Division International Division without A-1 Bags A-1 Bags
2019 4.00
- 1 2 3 4 5 6 7 8 9 10

Turnover by Business (Rupees in Million)

Local Division International Division without A-1 Bags A-1 Bags Market Value Per Share at the end of the year (in Rupees)

2014 801.43
2014 8,551 1,178
2015 339.73

2015 10,414 1,302

2016 281.00

2016 12,200 1,369 2017 271.00

2018 318.99
2017 13,561 1,604 1,651
2019 184.16
2018 14,985 1,514 5,092 - 100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00 900.00

2019 23,915 1,618 7,802

Breakup Value Per Share (in Rupees)

2014 43.21

Gross Profit (Rupees in Million)* 2015 26.94

Local Division International Division without A-1 Bags A-1 Bags 2016 24.55

2017 32.73

2014 3,015 394 2018 38.65

2015 3,733 424 2019 40.46

- 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00
2016 4,035 461

2017 4,651 494 288 Price Earning Ratio

2018 5,311 514 880 2014 56.52

2019 5,047 494 1,443 2015 35.37

2016 36.52

* 2019 Incorporate the impact of implementation of IFRS-15 “Revenue” which has been applied prospectively. 2017 29.46

2018 32.75

2019 17.67
- 10.00 20.00 30.00 40.00 50.00 60.00
Financial Highlights Financial Highlights
A. Profitability Ratios

Gross Profit Ratio %

Return on Equity %

2014 35.05 2014 37.55

2015 35.36
2015 39.57
2016 33.13
2016 29.88
2017 32.17
2017 32.80
2018 31.05

2019 28.80 2018 27.77

- 30.00 32.00 34.00 36.00 38.00

2019 30.34
- 10.00 20.00 30.00 40.00 50.00 60.00
Operating Profit to Sale %

2014 11.80

2015 12.64
Return on Capital Employed %
2016 8.97
2014 54.68
2017 8.48
2015 55.92
2018 6.34

2019 8.27 2016 43.89

- 2.00 4.00 6.00 8.00 10.00 12.00 14.00 2017 42.36

Net Profit before Tax to Sales % 2018 32.19

2019 37.33
2014 10.88
- 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00
2015 12.26

2016 8.37

2017 7.86 Revenue / Employee in Thousands

2018 5.43

2019
2014 21,485
7.10

- 2.00 4.00 6.00 8.00 10.00 12.00 14.00 2015 23,986

2016 28,668
Net Profit after Tax to Sales %
2017 34,034
2014 7.55
7.95

2015 8.51 2018 41,430

2016 5.87 2019 44,269

2017 5.80 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
2018 4.76

2019 5.65
Net Income / Employee in Thousands
- 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

2014 1,189
Return on Assets %
2015 1,459
2014 15.94

2015 18.82
2016 1,188

2016 12.92 2017 1,442

2017 12.05
2018 1,480
2018 10.10
2019 1,820
2019 11.32
- 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000
- 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00
Financial Highlights Financial Highlights

B. Liquidity Ratios D. Efficiency Ratios

Current Ratio Inventory Days (No. of Days)

2014 119.66
2014 1.42
2015 108.65
2015 1.49
2016 111.63
2016 1.13
2017 107.40
2017 1.05
2018 87.04
2018 0.88
2019 91.06
2019 1.06 - 20 40 60 80 100 120 140
- 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60

Receivables Days (No. of Days)

2014 27.25
C. Gearing Ratios
2015 29.23

Debt to Equity Ratio% 2016 26.97

2014 2017 24.99

2018 21.38
2015

2019 16.98
2016

- 5.00 10.00 15.00 20.00 25.00 30.00 35.00

2017 20.35

2018 4.98
Payables Days (No. of Days)
2019 18.45
- 5 10 15 20 25 2014 15.40

2015 17.14

2016 13.27

2017 14.00

2018 20.79

2019 25.58

- 5.00 10.00 15.00 20.00 25.00 30.00

Horizontal Analysis Vertical Analysis
2019 2018 2017 2016 2015 2014 2019 2018 2017 2016 2015 2014
% % % % % % % % % % % %

INCOME STATEMENT INCOME STATEMENT

Sales 12.33% 28.66% 23.67% 16.05% 20.18% 13.85% Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of Sales 16.00% 30.79% 25.45% 20.04% 19.63% 13.06% Cost of Sales 71.20% 68.95% 67.83% 66.87% 64.64% 64.95%
Gross Profit 4.19% 23.39% 20.09% 8.75% 21.21% 15.32% 28.80% 31.05% 32.17% 33.13% 35.36% 35.05%
Administrative cost 24.92% 75.54% (0.31%) 10.55% 24.93% 40.41% Administration 4.70% 4.23% 3.10% 3.85% 4.04% 3.88%
Impairment loss on trade debts -72.75% 100.00% - - - - - - - - Distribution cost 16.17% 19.66% 20.72% 19.77% 18.48% 19.23%
Distribution cost -5.26% 20.15% 29.67% 24.16% 15.48% 16.10% Other operating cost 0.54% 1.07% 0.65% 0.73% 1.05% 0.87%
Other Operating Expense -43.04% 110.64% 10.15% (18.88%) 45.23% 0.41% Financial Charges 1.17% 0.91% 0.62% 0.66% 0.38% 0.92%
Administration, Distribution & Other Other Income 1.02% 0.25% 0.59% 0.24% 0.85% 0.72%
Opertating Exp. -3.00% 31.16% 24.35% 19.92% 18.09% 18.76% 7.10% 5.43% 7.67% 8.36% 12.26% 10.88%
Financial Charges 44.85% 86.73% 17.58% 99.56% (50.08%) 19.50% Taxation 1.45% 0.68% 2.06% 2.49% 3.75% 3.33%
Other Income 364.36% (45.99%) 202.80% (67.14%) 41.35% 5.19% 5.65% 4.76% 5.60% 5.87% 8.51% 7.55%
Profit before Tax 46.83% (8.69%) 13.17% (20.81%) 35.47% 7.46%
Taxation 140.74% (57.65%) 2.18% (22.89%) 35.47% 6.09% BALANCE SHEET
Profit after taxation 33.44% 9.33% 17.84% (19.89%) 35.47% 8.07%
Issued, subscribed and paid up capital 5.47% 11.71% 12.69% 19.63% 17.84% 21.73%
BALANCE SHEET 35.16% 73.11% 65.83% 76.67% 78.24% 72.24%
Non Controling Interest 2.39% 4.44% 4.39%
Issued, subscribed and paid up capital 20.00% 0.00% 0.00% 0.00% 0.00% 25.00% Exchange revaluation reserve 1.26% 1.27% 0.18% 0.11% 0.03% -0.05%
Unappropriated Profit 23.50% 20.35% 32.83% (10.98%) 31.97% 36.63% Total Equity 44.29% 90.53% 83.09% 96.42% 96.11% 93.93%
Non controlling interest 38.36% 9.54% 100.00% - - - - - - Long Term Obligations 11.42% 9.47% 16.91% 3.58% 3.89% 6.07%
Exchange revaluation reserve 154.94% 671.33% 155.63% 203.41% 183.17% - - Total Long-term Liabilities an
shareholder equities 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Long Term Obligations 209.70% (39.28%) 629.64% (16.23%) (21.96%) 3.11%
Total Long-term Liabilities and Fixed Assets, CWIP & Intangibles 92.42% 117.36% 92.81% 78.00% 53.63% 53.55%
shareholder equities 43.05% 8.37% 54.70% (9.16%) 21.85% 31.32% Other Non current assets 0.65% 0.94% 0.83% 1.17% 1.20% 0.93%
Current Assets 116.87% 128.86% 137.03% 176.38% 137.85% 154.43%
Fixed Assets, CWIP & Intangibles 12.64% 37.04% 84.03% 32.16% 22.04% 19.05% Total Assets 209.93% 247.15% 230.90% 255.57% 192.67% 208.90%
Other Non current assets -1.36% 21.02% 10.45% (10.90%) 57.14% 89.17% Current Liabilites & Provisions -109.93% -147.15% -130.90% -155.56% -92.67% -108.90%
Current Assets 29.75% 1.91% 20.19% 16.22% 8.77% 16.64% Net Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Total Assets 21.51% 16.11% 39.64% 20.49% 12.39% 17.45%
Current Liabilites & Provisions 6.87% 22.04% 29.96% 52.48% 3.70% 7.06%
Total Assets Net of Current Liabilities 43.05% 8.37% 54.70% (9.16%) 21.85% 31.32%

BALANCE SHEET ANALYSIS - ASSETS

Fixed Assets & CWIP Current Assets Other Non current assets
BALANCE SHEET ANALYSIS - EQUITY & LIABILITIES
Current Liabilites & Provisions Shareholders' Equity Non Current Liabilities 2014 1276 3681 22

2015 1558 4004 35

2014 2596 2240 145
2016 2058 4653 31
2015 2692 2791 113
2017 3788 5593 34
2016 4104 2544 95
2018 5191 5699 41
2017 5334 3391 690
2019 5848 7395 41
2018 6509 4004 419

2019 6956 5030 1297

Summary of Cash Flow Statement Six Year Cash Flows Using Direct Method
2019 2018 2017 2016 2015 2014 2019 2018 2017 2016 2015 2014
(Rupees in thousand)
(Rupees in Millions)
Cash received from customers 23,954,765 21,685,050 16,382,637 13,709,694 11,416,540 9,580,403
Cash flows from operating activities 1,923 1,311 1,425 490 1,414 550 Cash paid for goods & services (21,607,696 ) (19,808,411 ) (14,463,131 ) (12,908,168 ) (9,742,647 ) (8,763,322 )
Cash flows (used in) investing activities (1,107) (1,676) (1,556) (312) (354) (460)
Cash generated from operations 2,347,069 1,876,639 1,919,506 801,526 1,673,893 817,081
Cash flows from / (used in) financing activities (110) (1) 167 (732) (713) (597)
Net increase / (decrease) in cash and cash equivalents 706 (367) 37 (554) 347 (507) Financial cost paid CF (269,647 ) (181,164 ) (102,522 ) (82,689 ) (53,490 ) (101,683 )
Cash and cash equivalents at the beginning of the year (978) (624) (662) (110) (456) 50 Net increase in long term deposits CF 862 (6,716 ) (3,209 ) 3,789 (12,643 ) (10,429 )
Currency translation difference on cash and cash equivalents 46 12 1 2 - - - - Deferred rent CF 2,455 17,596 1,898 - - - - - -
Cash and cash equivalents at the end of the year (225) (978) (624) (662) (109) (456) Retirement benefit obligation CF (42,366 ) (6,023 ) (17,881 ) (23,876 ) (61,382 ) (3,811 )
Income tax refund / (paid) CF (115,528 ) (389,804 ) (372,357 ) (208,625 ) (132,640 ) (151,202 )

Operating activities Net cash flow from operating activities 1,922,845 1,310,528 1,425,435 490,125 1,413,738 549,956

The Company’s operating cash flow has increased at a CAGR of 33% over the past 6 years due to improved business
performance. Purchase of property, plant & equipment CF (952,272 ) (1,657,468 ) (1,299,100 ) (684,088 ) (467,793 ) (346,618 )
Purchase of intangible assets CF (42,370 ) (42,031 ) (96,948 ) (46,958 ) (22,740 ) (21,212 )
Investing activities Sale proceeds from disposal of property,
plant and equipment CF 95,021 23,176 22,402 21,767 29,988 7,761
Cash used in investing activities has increased at a CAGR of 27% over the past 6 years and mainly comprises investment Sale proceeds of open ended
in capital expenditure including Recipe packing machine, Salt plant, A1 expansion & land and building extension at
manufacturing sites of the Company. mutual fund units CF - - - - - - 546,048 884,555 50,000
Deferred Consideration paid CF (207,017)
Financing activities Purchased of open ended mutual fund units CF - - - - - - (150,000 ) (777,988 ) (150,000 )
Investment in National Foods DMCC,
Financing activities mainly comprise long-term loans obtained for Investment in A-1 Bags & Supplies Inc and LTFF for new Acquisition of subsidiary CF - - - - (182,429 ) - - - - - -
Salt plant. The Company has financed its expansion needs by obtaining long-term loans which were partially offset by
dividend payments. Purchase of treasury bills CF - - - - - - (147,810 ) - - - -
Proceeds from sale of treasury bills CF - - - - - - 148,731 - - - -

Cash flows used in investing activities Cash flows (used in) financing activities Cash flows from/ (used in) operating activities Net cash flow from investing activities (1,106,638 ) (1,676,323 ) (1,556,075 ) (312,310 ) (353,978 ) (460,069 )
2,000

1,500 Proceeds from short term borrowings CF - - 288,000 1,262,000 1,000,000 508,696 550,000
Proceeds from long term finance CF 504,387 325,290 289,613 - - - - - -
1,000 Repayment of short term borrowings CF (50,000 ) - - (1,100,000 ) (700,000 ) (808,722 ) (980,000 )
Decrease in long term financing - net (177,354 ) (55,416 ) - - - - - -
500
Deferred consideration paid - - (126,531 ) - - - - - -
- Dividend paid CF (386,925 ) (432,477 ) (284,158 ) (1,031,839 ) (412,814 ) (166,781 )

(500) Net cash flow from financing activities (109,892 ) (1,134 ) 167,455 (731,839 ) (712,840 ) (596,781 )

(1,000) Net cash flows 706,315 (366,929 ) 36,815 (554,024 ) 346,920 (506,894 )
(1,500)
(2,000)
2019 2018 2017 2016 2015 2014
Statement of Value Added and its Distribution Pattern of Shareholding
As of June 30, 2019

2019 2018
Categories of Shareholders Shareholders Shares Held Percentage
(Rupees in thousand) % (Rupees in thousand) %
Value Addition
Directors and their spouse(s) and minor children
Revenue 24,253,797 21,591,559 ABDUL MAJEED 1 4,751,968 3.82
Other Income 248,281 53,467 ABRAR HASAN 1 12,261,914 9.86
24,502,078 100% 21,645,026 100% ZAHID MAJEED 1 7,321,994 5.89
NOREEN HASAN 1 27,600 0.02
Value Distribution TOWFIQ H. CHINOY 1 1,000 0.00
EHSAN ALI MALIK 1 600 0.00

Cost of Sales 16,152,890 66% 13,864,956 64% Associated Companies, undertakings and related parties
Distributon Expense 2,646,428 11% 3,109,263 14% ATC HOLDINGS (PRIVATE) LIMITED (FORMERLY: ASSOCIATED
Administration and Other TEXTILE CONSULTANTS (PVT) LTD) 1 41,229,268 33.16
Operating Expense 849,025 3% 830,318 4%
Executives - --- ---
Employees Renumeration 2,847,332 12% 2,471,353 12%
Finance Cost 283,306 1% 195,728 1% Public Sector Companies and Corporations 1 674 0.00
Income Tax 352,381 1% 146,374 1%
Dividend to shareholders 621,642 3% 492,130 2% Banks, development finance institutions, non-banking finance companies,
insurance companies, takaful, modarabas and pension funds 9 2,185,008 1.76
Profit retained for Investment &
Future Growth 748,873 3% 534,904 2% Mutual Funds
24,502,078 100% 21,645,026 100% CDC - TRUSTEE AKD INDEX TRACKER FUND 1 7,780 0.01
CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 1 246,000 0.20
CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND 1 13,200 0.01
GOLDEN ARROW SELECTED STOCKS FUND LIMITED 1 100,000 0.08
CDC - TRUSTEE ALHAMRA ISLAMIC STOCK FUND 1 152,400 0.12
CDC - TRUSTEE AKD OPPORTUNITY FUND 1 346,300 0.28
CDC-TRUSTEE ALHAMRA ISLAMIC ASSET ALLOCATION FUND 1 80,400 0.06
CDC - TRUSTEE AL MEEZAN MUTUAL FUND 1 4,600 0.00
CDC - TRUSTEE MEEZAN ISLAMIC FUND 1 197,100 0.16
CDC - TRUSTEE ATLAS ISLAMIC STOCK FUND 1 900 0.00
CDC - TRUSTEE MEEZAN TAHAFFUZ PENSION FUND - EQUITY SUB FUND 1 100,000 0.08
CDC - TRUSTEE APIF - EQUITY SUB FUND 1 1,500 0.00
2019 2018
CDC - TRUSTEE MCB PAKISTAN ASSET ALLOCATION FUND 1 149,400 0.12
3% 2%
1% 1% 3% 1% 1% 2% CDC-TRUSTEE ALHAMRA ISLAMIC PENSION FUND - EQUITY SUB FUND 1 40,800 0.03
12% 12% CDC - TRUSTEE PAKISTAN PENSION FUND - EQUITY SUB FUND 1 67,200 0.05
3%
4%
General Public
11% 14% a. Local 1707 35,843,764 28.83
66% 64% b. Foreign 1 4,000 0.00

Foreign Companies 2 19,038,348 15.31

Others 24 154,375 0.12

Profit retained for Investment Employees Remuneration Profit retained for Investment Employees Remuneration Totals 1766 124,328,227 100.00
and future growth and future growth

Dividend to shareholders Administration and other Dividend to shareholders Administration and other
operating expense operating expense

Income tax Distribution expense Income tax Distribution expense Shareholders holding 5% or more Shares Held Percentage

Finance cost Cost of sales Finance cost Cost of sales

ATC Holdings (Private) Limited (Formerly: Associated Textile Consultants (Pvt) Ltd) 41,229,268 33.16
ARISAIG INDIA FUND LIMITED 18,639,828 14.99
KHAWAR M. BUTT 15,275,344 12.29
ABRAR HASAN 12,261,914 9.86
ZAHID MAJEED 7,321,994 5.89
Pattern of Shareholding Statement of Compliance with the Code of
As of June 30, 2019 Corporate Governance
FOR THE YEAR ENDED JUNE 30, 2019
Number of
Shareholdings' Slab Total Shares Held
Share Holders The company has complied with the requirements of the Regulations in the following manner:

548 1 to 100 16,263 1. The total number of directors are seven (07) as per the following:
538 101 to 500 139,548 a. Five (5) Males b. Two (02) Female
177 501 to 1000 130,523
283 1001 to 5000 668,992 2. The composition of board is as follows:
65 5001 to 10000 463,560
49 10001 to 15000 602,504 Independent Director
14 15001 to 20000 240,934
Mr. Ehsan A Malik
10 20001 to 25000 232,711
5 25001 to 30000 137,973 Mr. Towfiq H Chinoy
3 30001 to 35000 95,894
5 35001 to 40000 184,204 Executive Director
6 40001 to 45000 257,500
5 45001 to 50000 243,784 Mr. Abrar Hasan
1 50001 to 55000 54,900
2 55001 to 60000 118,500 Non-Executive Directors
9 60001 to 65000 558,033
1 65001 to 70000 67,200 Mr. Abdul Majeed
1 75001 to 80000 78,840 Mrs. Noreen Hasan
Mrs. Saadia Naveed
1 80001 to 85000 80,400
Mr. Zahid Majeed
3 85001 to 90000 261,916
2 95001 to 100000 200,000 3. The directors have confirmed that none of them is serving as a director on more than five listed companies, including
1 110001 to 115000 112,300 this company (excluding the listed subsidiaries of listed holding companies where applicable).
1 140001 to 145000 144,000
2 145001 to 150000 299,400 4. The company has prepared a Code of Conduct and has ensured that appropriate steps have been taken to
2 150001 to 155000 304,400 disseminate it throughout the company along with its supporting policies and procedures.
2 195001 to 200000 395,100
2 235001 to 240000 474,480 5. The board has developed a vision/mission statement, overall corporate strategy and significant policies of the
1 245001 to 250000 246,000 company. A complete record of particulars of significant policies along with the dates on which they were approved
1 275001 to 280000 276,000 or amended has been maintained.
1 330001 to 335000 331,700
6. All the powers of the board have been duly exercised and decisions on relevant matters have been taken by
1 345001 to 350000 346,300
board/shareholders as empowered by the relevant provisions of the Act and these Regulations.
1 395001 to 400000 398,520
1 405001 to 410000 408,000 7. The meetings of the board were presided over by the Chairman and, in his absence, by a director elected by the
1 450001 to 455000 451,893 board for this purpose. The board has complied with the requirements of Act and the Regulations with respect to
1 475001 to 480000 480,000 frequency, recording and circulating minutes of meeting of board.
1 490001 to 495000 491,016
1 510001 to 515000 514,382 8. The board of directors have a formal policy and transparent procedures for remuneration of directors in accordance
1 515001 to 520000 516,840 with the Act and these Regulations.
3 805001 to 810000 2,424,060
1 825001 to 830000 827,524 9. The Board of Directors of the Company consists of 7 eminent directors, out of which six (6) directors are already
1 895001 to 900000 896,419 certified under the Directors Training Program. Therefore, the Company is compliant with Regulation 20 of the Code
1 1100001 to 1105000 1,105,000 of Corporate Governance, 2017.
1 1340001 to 1345000 1,340,073
10. The board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their
1 1460001 to 1465000 1,462,500
remuneration and terms and conditions of employment and complied with relevant requirements of the Regulations.
1 1520001 to 1525000 1,524,376
1 2115001 to 2120000 2,116,279 11. CFO and CEO duly endorsed the financial statements before approval of the board.
1 2125001 to 2130000 2,127,170
1 4750001 to 4755000 4,751,968
1 7320001 to 7325000 7,321,994
1 12260001 to 12265000 12,261,914
1 15275001 to 15280000 15,275,344
1 18635001 to 18640000 18,639,828
1 41225001 to 41230000 41,229,268
1766 124,328,227
Statement of Compliance with the Code of Review Report to the Members on the Compliance with the
Corporate Governance Code of Corporate Governance

12. The board has formed committees comprising of members given below::
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance)
a) Audit Committee
Regulations, 2017 (“the Regulations”) prepared by the Board of Directors of National Foods Limited for the year ended
Mr. Ehsan A. Malik Chairman 30 June 2019 in accordance with the requirements of regulation 40 of the Regulations.
Mrs. Noreen Hasan Member
Mrs. Saadia Naveed Member The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our responsibility
Mr. Zahid Majeed Member is to review whether the Statement of Compliance reflects the status of the Company’s compliance with the provisions
of the Regulations and report if it does not and to highlight any non-compliance with the requirements of the Regulations.
b) HR and Remuneration Committee 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 Regulations.
Mr. Towfiq H Chinoy Chairman
Mr. Abrar Hasan Member As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and
Mr. Ehsan A Malik Member internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to
Mr. Zahid Majeed Member
consider whether the Board of Directors’ statement on internal control covers all risks and controls or to form an opinion
on the effectiveness of such internal controls, the Company’s corporate governance procedures and risks.
13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committee
for compliance.
The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit
14. The frequency of meetings (quarterly/half yearly/ yearly) of the committee were as per following: Committee, place before the Board of Directors for their review and approval, its related party transactions and also
ensure compliance with the requirements of section 208 of the Companies Act, 2017. We are only required and have
a) Audit Committee – Four (04) ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of
b) HR and Remuneration Committee – Three (03) Directors upon recommendation of the Audit Committee. We have not carried out procedures to assess and determine
the Company’s process for identification of related parties and that whether the related party transactions were undertaken
15. The board has outsourced the internal audit function to M/s EY Ford Rhoades & Co. Chartered Accountants, who at arm’s length price or not.
are considered suitably qualified and experienced for the purpose and are conversant with the policies and
procedures of the company. 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 requirements contained in
16. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the the Regulations as applicable to the Company for the year ended 30 June 2019.
quality control review program of the ICAP and registered with Audit Oversight Board of Pakistan, that they or any
of the partners of the firm, their spouses and minor children do not hold shares of the company and that the firm
and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of
ethics as adopted by the ICAP

17. The statutory auditors or the persons associated with them have not been appointed to provide other services Date: 29 August 2019 KPMG Taseer Hadi & Co.
except in accordance with the Act, these regulations or any other regulatory requirement and the auditors have Karachi Chartered Accountants
confirmed that they have observed IFAC guidelines in this regard.

18. We confirm that all other requirements of the Regulations have been complied with.
Name of the Engagement Partner: Moneeza Usman Butt

Chief Executive Officer Director

 Independent Auditors' Report to the Members
of National Foods Limited
Report on the Audit of the Financial Statements

Standalone Opinion

We have audited the annexed financial statements of National Foods Limited (the Company), which comprise the

Financial
statement of financial position as at 30 June 2019, and the statement of profit or loss and other comprehensive income,
the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory information, and we state that
we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary

Statements 2019
for the purposes of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement of financial
position, statement of profit or loss and comprehensive income, the statement of changes in equity and the statement
of cash flows together with the notes forming part thereof conform with the accounting and reporting standards as
applicable in Pakistan and give the information required by the Companies Act, 2017 (XIX of 2017), in the manner so
required and respectively give a true and fair view of the state of the Company's affairs as at 30 June 2019 and of the
profit and other comprehensive loss, the changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered
Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Independent Auditors' Report to the Members Independent Auditors' Report to the Members
of National Foods Limited of National Foods Limited
Following are the Key audit matters:
S. No. Key audit matters How the matters were addressed in our audit S. No. Key audit matters How the matters were addressed in our audit

1. Revenue recognition Our audit procedures to assess the recognition of The Company has a significant balance of trade debts. key internal controls relating to credit control process
revenue, amongst others, included the following: Provision against doubtful debts is based on loss (including credit account application approvals and
Refer notes 4.1.1, 4.14, 22 and 34 to the Company’s allowance for Expected Credit Loss (ECL). credit limit review);
financial statements. • obtaining an understanding of the Company’s
sale of goods process and related controls, The ECL model has been adopted during the year due • obtaining an understanding of management’s
Revenue is recognized from sale of goods in including assessing the design and testing of the to the application of IFRS 9 ‘Financial Instruments’. basis for the determination of provision required
accordance with applicable accounting standards and implementation and operating effectiveness of Details about the application of the IFRS and its effect at the year end and the receivables collection
measured at net of discounts, rebates, allowances and the relevant key controls over revenue recognition, is given in note 4.1.2 to the financial statements. process;
sales return. Further, 96% of export sales are made to the calculation of discounts and rebates and
related parties. allowance for sales return including timing of We identified valuation of trade debts as a key audit • assessing the method used by the company for
revenue recognition; matter as it involves significant judgments and recognition of the impact of application of IFRS
We identified revenue recognition as key audit matter estimates in application of the expected credit loss 9 with respect to provision for doubtful debts as
because of risk of incorrect measurement of revenue • considering the appropriateness of the model. allowable under IFRS 9 and assessing the
due to adjustments for discounts and rebates offered Company’s accounting policies for revenue reasonableness of assumptions of ECL;
to customers and allowance for sales return. Further, recognition including those relating to discounts,
revenue is one of the key performance indicators and rebates and allowance for sales return and • testing the accuracy of the data on a sample
there is a potential risk that revenue transactions may assessing compliance of those policies with basis extracted from the Company’s accounting
not be recognized in the appropriate period and risk applicable accounting standards; system which has been used to calculate the
of misapplication of the new accounting standard IFRS provision required including subsequent recoveries;
15 “Revenue from Contracts with Customers”. • obtaining and inspecting a sample of contracts
with customers to understand the conditions • involving our specialist to review the methodology
required for discounts, rebates and allowance for used in the ECL model and compare it against
sales return; accepted best practice; and

• testing, on a sample basis, the accuracy of the • reviewing the adequacy of the Company’s
amounts of discounts, rebates and allowance for disclosure included in note 9 and note 37.2.1 to
sales return recognized by agreeing to individual the accompanied unconsolidated financial
customer agreements and performing recalculations; statements.

• testing, on a sample basis, invoices and 3. Valuation of Stock-in-trade Our audit procedures to assess the valuation of
inspecting credit notes issued subsequent to year stock-in-trade, amongst others, included the following:
end for completeness and accuracy of revenue Refer notes 4.8, 4.9 and 8 to the Company’s financial
and accruals for discounts, rebates and statements. • obtaining an understanding of and assessing the
allowances to the customers; design and testing implementation of management’s
Stock-in-trade forms a significant part of the Company’s controls designed to identify expired, obsolete as
• comparing, on a sample basis, specific revenue total assets. Stock-in-trade comprise of raw material, well as slow moving and stocks close to expiry;
transactions recorded before and after the work in process and finished good which are stated at
reporting date with underlying documentation to lower of cost and estimated net realizable value. • obtaining an understanding of and testing, on a
assess whether revenue has been recognized in We identified the valuation of stock-in-trade as a key sample basis, management’s determination of NRV
the appropriate accounting period; audit matter because determining an appropriate and the key estimates adopted, including future
write-down as a result of net realizable value (NRV) selling prices, future costs to complete
• reviewing management’s IFRS 15 assessment to being lower than their cost and provisions for expired work-in-process and costs necessary to make the
verify the reasonableness, accuracy and and obsolete inventories involves significant sales, their basis of calculation, justification for the
completeness of the impact on the financial management judgment and estimation. amount of the write-downs and provisions; and
statements of the Company including adequacy
of disclosures; and • checking on a sample basis specific provision for
expired, obsolete as well as slow moving and stocks
• obtaining an understanding of the nature of the close to expiry.
revenue contracts entered into by the Company,
tested a sample of sales contracts to confirm our 4. Capitalization of Property, Plant and Equipment Our audit procedures to assess the capitalization of
understanding and assessed whether or not property, plant and equipment, amongst others, included
management’s application of IFRS 15 requirements Refer notes 4.2 and 5 to the Company’s financial the following:
was in accordance with the standard. statements.
• obtaining an understanding of the design and
2. Valuation of Trade Debtors Our audit procedures to assess the valuation of debtors, The Company has made significant capital expenditure implementation of management controls over
among others involved the following: on building on leasehold land and plant and machinery. capitalization and performing tests of control over
Refer notes 4.1.2, 4.5, 9 and 37.2.1 to the Company’s authorization of capital expenditure and accuracy
financial statements. • obtaining an understanding of and assessing the We identified capitalization of property, plant and of its recording in the system;
design and testing implementation of management’s equipment as a key audit matter because there is a
Independent Auditors' Report to the Members Independent Auditors' Report to the Members
of National Foods Limited of National Foods Limited
S. No. Key audit matters How the matters were addressed in our audit is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
risk that amounts capitalized may not meet the • testing, on sample basis, the costs incurred on
capitalization criteria with related implications on projects with supporting documentation and • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
depreciation charge for the year. contracts;
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control.
• assessing the nature of costs incurred for capital • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
projects through testing, on sample basis, of related disclosures made by management.
amounts recorded and considering whether the
expenditure meets the criteria for capitalization • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
as per the applicable accounting standards; and the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty
• inspecting supporting documents for the date of exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements
capitalization when project was ready for its or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
intended use to assess whether depreciation obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to
commenced and further capitalization of costs cease to continue as a going concern.
ceased from that date and assessing the useful
life assigned by management including testing • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
the calculation of related depreciation. whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.

We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit
Information Other than the Financial Statements and Auditor’s Report Thereon and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Management is responsible for the other information. The other information comprises the information included in the We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
Annual Report but does not include the financial statements and our auditor’s report thereon. independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon. From the matters communicated with the board of directors, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these
In connection with our audit of the financial statements, our responsibility is to read the Other Information and, in doing matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
so, consider whether the Other Information is materially inconsistent with the financial statements or our knowledge rare circumstances, we determine that a matter should not be communicated in our report because the adverse
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
conclude that there is a material misstatement of this Other Information, we are required to report that fact. We have
nothing to report in this regard. Report on Other Legal and Regulatory Requirements
Responsibilities of Management and Board of Directors for the Financial Statements Based on our audit, we further report that in our opinion:
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017(XIX of 2017)
and for such internal control as management determines is necessary to enable the preparation of financial statements b) the statement of financial position, the statement of profit or loss and other comprehensive income, the statement
that are free from material misstatement, whether due to fraud or error. of changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity
with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the
unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but Company’s business; and
to do so.
d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Company
Board of directors are responsible for overseeing the Company’s financial reporting process. and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
Auditor’s Responsibilities for the Audit of the Financial Statements The engagement partner on the audit resulting in this independent auditor’s report is Moneeza Usman Butt.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as
applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, Date: 29 August 2019
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and KPMG Taseer Hadi & Co.
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud Karachi Chartered Accountants
Statement of Financial Position Statement of Profit or Loss and
AS AT JUNE 30, 2019
Other Comprehensive Income
Note 2019 2018 FOR THE YEAR ENDED JUNE 30, 2019
(Rupees in thousand) Note 2019 2018
ASSETS (Rupees in thousand)

Non-current assets
Property, plant and equipment 5 4,576,755 4,150,606 Sales 22 16,602,206 16,178,301
Intangibles 6 80,218 85,652 Cost of sales 23 (11,283,038) (10,614,639 )
Long-term investment - subsidiary 7 31,719 31,719 Gross profit 5,319,168 5,563,662
Long-term deposits 39,611 40,473
4,728,303 4,308,450
Current assets Distribution costs 24 (2,922,212) (3,361,085 )
Stores, spare parts and loose tools 86,725 41,880 Impairment loss on trade debts 9.1 (17,283) (107,681 )
Stock in trade 8 3,955,698 3,072,291 Administrative expenses 25 (1,005,904) (767,127 )
Trade debts 9 901,348 889,385
Advances 10 108,256 102,144 Other expenses 26 (108,753) (210,531 )
Trade deposits and prepayments 11 42,290 36,863 Other income 27 254,662 53,920
Other receivables 12 1,909 5,764 Operating profit 1,519,678 1,171,158
Sales tax refundable 133,789 121,424
Cash and bank balances 13 400,298 229,728
5,630,313 4,499,479 Finance costs 28 (157,070) (108,388 )
TOTAL ASSETS 10,358,616 8,807,929 Profit before taxation 1,362,608 1,062,770

EQUITY AND LIABILITIES Taxation 29 (271,746) (116,164 )

Share Capital and reserves Profit after taxation 1,090,862 946,606
Authorised share capital
1,000,000,000 (30 June 2018: 200,000,000)
ordinary shares of Rs. 5 each 14.1 5,000,000 1,000,000 Other comprehensive income
Share Capital Items that will not be reclassified to profit and loss account:
Issued, subscribed and paid-up capital 14 621,641 518,034
Revenue Reserve
Unappropriated profit 3,695,688 3,140,259 Remeasurements of retirement benefit liability (60,986) (37,491 )
4,317,329 3,658,293 Related deferred tax thereon 17,686 9,818
Non - current liabilities (43,300) (27,673 )
Total comprehensive income for the period 1,047,562 918,933
Long-term finance 15 417,972 - -
Deferred taxation - net 16 226,873 117,010
Deferred liabilities 17 70,346 42,366 (Rupees)
715,191 159,376 Earnings per share - basic and diluted 30 8.77 7.61
Current liabilities

Trade and other payables 18 2,776,167 2,330,786

Contract liability 19 138,282 - -
Short term borrowings 20 1,901,632 2,148,720
Unclaimed dividend 19,920 18,323
Long-term finance classified as current - secured 15 69,144 193,152
Mark-up accrued 28,624 14,766
Taxation - net 392,327 284,513
5,326,096 4,990,260

Commitments 21

TOTAL EQUITY AND LIABILITIES 10,358,616 8,807,929

The annexed notes 1 to 40 form an integral part of these financial statements. The annexed notes 1 to 40 form an integral part of these financial statements.

Chief Executive Officer Chief Financial Officer Director Chief Executive Officer Chief Financial Officer Director
Statement of Changes in Equity Statement of Cash Flow
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

Issued, Revenue reserve - Note 2019 2018

subscribed unappropriated Total (Rupees in thousand)
and paid-up profit
capital CASH FLOWS FROM OPERATING ACTIVITIES
(Rupees in thousand)
Cash generated from operations 31 1,576,603 1,847,460
Finance cost paid (143,212) (102,313 )
Balance as at 30 June 2017 518,034 2,661,655 3,179,689 Income taxes paid (36,383) (363,102 )
Retirement benefits (42,367) (5,785 )
Transaction with owners in the capacity as Long term deposits - net 862 (6,861 )
owners directly recorded in equity - distribution Net cash generated from operating activities 1,355,503 1,369,398

Final dividend for the year ended CASH FLOWS FROM INVESTING ACTIVITES
30 June 2017 @ Rs. 4.25 per share - - (440,329 ) (440,329 )
Capital expenditure (897,534) (1,429,178 )
Total comprehensive income for the Intangible assets (42,370) (42,031 )
year ended 30 June 2018 Proceeds from disposal of property, plant and equipment 95,021 23,176
Net cash used in investing activities (844,883) (1,448,033 )
Profit for the year - - 946,606 946,606
Other comprehensive income - - (27,673 ) (27,673 ) CASH FLOWS FROM FINANCING ACTIVITES
- - 918,933 918,933
Balance as at 30 June 2018 518,034 3,140,259 3,658,293
Proceeds from long term finance 293,964 51,358
Transaction with owners in the capacity as Proceed from short term borrowings - net (50,000) 288,000
owners directly recorded in equity - distribution Dividends paid (386,925) (432,477 )
Net cash used in generated from financing activities (142,961) (93,119 )
1 Ordinary share for each 5 shares held - alloted as
bonus shares for the year ended 30 June 2018 103,607 (103,607 ) - - Net increase / (decrease) in cash and cash equivalents 367,659 (171,753 )
Cash and cash equivalents at beginning of the period (1,068,993) (897,240 )
Final dividend for the year ended Cash and cash equivalents at end of the period 32 (701,334) (1,068,993)
30 June 2018 @ Rs. 3.75 per share - - (388,526 ) (388,526)

Total comprehensive income for the

year ended 30 June 2019

Profit for the year - - 1,090,862 1,090,862

Other comprehensive income - - (43,300 ) (43,300)
- - 1,047,562 1,047,562
Balance as at 30 June 2019 621,641 3,695,688 4,317,329

The annexed notes 1 to 40 form an integral part of these financial statements.

The annexed notes 1 to 40 form an integral part of these financial statements.

Chief Executive Officer Chief Financial Officer Director Chief Executive Officer Chief Financial Officer Director
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2.4 Use of significant estimates and judgments

The preparation of financial statements in conformity with the accounting and reporting standards as applicable in Pakistan,
requires management to make judgments, estimates and assumptions that affect the application of the Company's
accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods. Information about judgments made by
the management in the application of accounting policies, that have the most significant effects on the amount recognized
in the financial statements and information about assumptions and estimation uncertainties with significant risk of resulting
in a material adjustment to the carrying amounts of assets and liabilities in the next year are described in the following:

Property, plant and equipment / intangible assets

The Company reviews the rate of depreciation / amortization, useful life, residual value and value of assets for possible
impairment on an annual basis. Any change in the estimates in future years might affect the carrying amounts of the
respective items of property, plant and equipment / intangible assets with a corresponding effect on the depreciation /
amortization charge and impairment.

Stock in trade / stores, spares and loose tools

The management continuously reviews its inventory for existence of any items which may have become obsolete. These
estimates are based on historical experience and are continuously reviewed and the cost of such stocks is fully provided
for.

Trade debts and other receivables - expected credit loss

These financial assets are adjusted for loss allowances that are measured at amount equal to lifetime expected credit loss
that result from all possible default events over expected life of the financial asset.

Provision for refund liability

Refund liability provisions are recognized as deduction from revenue based on terms of the arrangements with the customer
and are included in trade and other payables. No asset is recognized for refunds as they are not anticipated to be resold.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional
because only the passage of time is required before the payment is due.

Retirement benefits obligations

Certain actuarial assumptions have been adopted for valuation of present value of defined benefitobligations and fair value
of plan assets. Changes in these assumptions in future years may affect theliability under this scheme in those years.

Taxation

In making the estimates for income taxes currently payable by the Company, the management looks at the current income
tax law and the decisions of appellate authorities on certain matters in the past.

3 ACCOUNTING STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED

ACCOUNTING STANDARDS

3.1 Standards, interpretations and amendments to published approved accounting standards that are effective but not relevant:

- There are certain new standards, amendments to the approved accounting standards and new interpretations that are
mandatory for accounting periods beginning on or after 1 July 2018. However, these do not have any significant impact
on the Company's financial reporting and therefore have not been detailed in these financial statements.

3.2 Standards, interpretations and amendments to published approved accounting standards that are not yet effective:

The following International Financial Reporting Standards (IFRS Standards) as notified under the Companies Act, 2017
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

and the amendments and interpretations thereto will be effective for accounting periods beginning on or after - Annual Improvements to IFRS Standards 2015-2017 Cycle - the improvements address amendments to following
01 January2019: approved accounting standards:
- IFRIC 23 ‘Uncertainty over Income Tax Treatments’ (effective for annual periods beginning on or after 1 January 2019) - IFRS 3 Business Combinations and IFRS 11 Joint Arrangement - the amendment aim clarify the accounting treatment
clarifies the accounting for income tax when there is uncertainty over income tax treatments under IAS 12. The when a company increases its interest in a joint operation that meets the definition of a business. A company remeasures
interpretation requires requires the uncertainty over tax treatment be reflected in the measurement of current and its previously held interest in a joint operation when it obtains control of the business. A company does not remeasure
deferred tax. The application of interpretation is not likely to have an impact on Company's financial statements. its previously held interest in a joint operation when it obtains joint control of the business.
- IFRS 16 ‘Leases’ (effective for annual period beginning on or after 1 January 2019). IFRS 16 replaces existing leasing - IAS 12 Income Taxes - the amendment clarifies that all income tax consequences of dividends (including payments
guidance, including IAS 17 ‘Leases’, IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, SIC-15 ‘Operating on financial instruments classified as equity) are recognized consistently with the transaction that generates the
Leases- Incentives and SIC-27 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’. IFRS distributable profits.
16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognizes a right-of-use asset
representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. - IAS 23 Borrowing Costs - the amendment clarifies that a company treats as part of general borrowings any borrowing
There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains originally made to develop an asset when the asset is ready for its intended use or sale.
similar to the current standard i.e. lessors continue to classify leases as finance or operating leases. Management is
assessing the potential impact of the standard on Company’s lease arrangements. - The above amendments are effective from annual period beginning on or after 1 January 2019 and are not likely to
have an impact on Company' financial statements.
- Amendment to IFRS 9 'Financial Instruments' - Prepayment Features with Negative Compensation (effective for annual
periods beginning on or after 1 January 2019). For a debt instrument to be eligible for measurement at amortised cost
or FVOCI, IFRS 9 requires its contractual cash flows to meet the SPPI criterion - i.e. the cash flows are 'solely payments 4. SIGNIFICANT ACCOUNTING POLICIES
of principal and interest'. Some prepayment options could result in the party that triggers the early termination receiving
compensation from the other party (negative compensation). The amendment allows that financial assets containing The significant accounting policies set out below are consistently applied for all periods presented in these
prepayment features with negative compensation can be measured at amortised cost or at fair value through other financial statements.
comprehensive income (FVOCI) if they meet the other relevant requirements of IFRS 9. The application of amendment
is not likely to have an impact on Company's financial statements. 4.1 Changes in accounting policies
- Amendment to IAS 28 'Investments in Associates and Joint Ventures' - Long Term Interests in Associates and Joint Explained below is the impact of the adoption of IFRS 15 'Revenue from Contracts with Customers' and early adoption
Ventures (effective for annual period beginning on or after 1 January 2019). The amendment will affect companies that of IFRS 9 'Financial Instruments' on the Company’s unconsolidated financial statements and also discloses the new
finance such entities with preference shares or with loans for which repayment is not expected in the foreseeable future accounting policies that have been applied from 1 July 2018, where they are different to those applied in prior periods.
(referred to as long-term interests or 'LTI'). The amendment and accompanying example state that LTI are in the scope
of both IFRS 9 and IAS 28 and explain the annual sequence in which both standards are to be applied. The amendments 4.1.1 IFRS 15 ‘REVENUE FROM CONTRACTS WITH CUSTOMERS’
are not likely to have an impact on Company's financial statements.
IFRS 15 replaced IAS 18 'Revenue', IAS 11 'Construction Contracts' and related interpretations. The Company has applied
- Amendments to IAS 19 'Employee Benefits'- Plan Amendment, Curtailment or Settlement (effective f o r a n n u a l the modified retrospective method upon adoption of IFRS 15 as allowed under the Standard. This method requires the
periods beginning on or after 1 January 2019). The amendments clarify that on amendment, curtailment or settlement recognition of the cumulative effect (without practical expedients) of initially applying IFRS 15 to retained earnings.
of a defined benefit plan, a company now uses updated actuarial assumptions to determine its current service cost Accordingly, the information presented for comparative period in these financial statements have not been restated i.e. it
and net interest for the period; and the effect of the asset ceiling is disregarded when calculating the gain or loss on is presented, as previously reported under IAS 18 and related interpretations.
any settlement of the plan and is dealt with separately in other comprehensive income. The application of amendments
is not likely to have an impact on Company's financial statements. The timing of revenue recognition of the Company under IFRS 15 is generally consistent with the previous standard, IAS
18 and related interpretations. Therefore, the adoption of IFRS 15 did not have an impact on the timing of revenue recognition
- Amendment to IFRS 3 'Business Combinations' - Definition of a Business (effective for business combinations for of the Company. However, the amount of revenue to be recognized was affected as it changed the way Company accounts
which the acquisition date is on or after the beginning of annual period beginning on or after 1 January 2020). The IASB for consideration payable to customers, cost of fulfilling the service (performance obligation) to customer and certain
has issued amendments aiming to resolve the difficulties that arise when an entity determines whether it has acquired payments to customers or consumers, all of which were previously shown as distribution expenses, to be shown as
a business or a group of assets. The amendments clarify that to be considered a business, an acquired set of activitiesand deductions from revenue or included in cost of sales.
assets must include, at a minimum, an input and a substantive process that together significantly contribute to the
ability to create outputs. The amendments includ The standard is effective for transactions in the future and therefore Prior to adoption of IFRS 15, a provision for sales discounts and advance consideration received from customers was
would not have an impact on past financial statements. included in ‘Trade and other payables’ which now is reclassified in 'Contract liabilities' presented separately on statement
of financial position. In addition, reclassification has been made from 'Trade and other payables' to 'Contract liabilities' for
- Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting outstanding balance of advance from customers and sales discounts payable for prior year to provide comparison. Advances
Estimates and Errors (effective for annual periods beginning on or after 1 January 2020). The amendments are intended from customers amounting to Rs. 61.48 million represents advance consideration received from customers at the beginning
to make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of of the period have been recognised as revenue for year ended 30 June 2019.
materiality in IFRS Standards. In addition, the IASB has also issued guidance on how to make materiality judgments
when preparing their general purpose financial statements in accordance with IFRS Standards. The impact of adoption of IFRS 15 on the statement of profit or loss and other comprehensive income for the year ended
30 June 2019 is as follows:
- On 29 March 2018, the International Accounting Standards Board (the IASB) has issued a revised Conceptual Framework
for Financial Reporting which is applicable immediately contains changes that will set a new direction for IFRS in the As reported Adjustments "Amounts
future.. The Conceptual Framework primarily serves as a tool for the IASB to develop standards and to assist the IFRS without
Interpretations Committee in interpreting them. It does not override the requirements of individual IFRSs and any adoption
inconsistencies with the revised Framework will be subject to the usual due process - this means that the overall impact of IFRS 15"
on standard setting may take some time to crystallise. The companies may use the Framework as a reference for ------------------------ (Rupees '000) ------------------------
selecting their accounting policies in the absence of specific IFRS requirements. In these cases, companies should
review those policies and apply the new guidance retrospectively as of 1 January 2020, unless the new guidance
contains specific scope outs. Revenue 16,602,206 804,580 17,406,786
Cost of Sales (11,283,038) 58,463 (11,224,575)
Distribution Costs (2,922,212) (863,043) (3,785,255)
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

Had the Company applied IFRS 15 retrospectively, the impact on the statement of profit or loss and other comprehensive
income for the year ended 30 June 2018 would have been as follows:
"Original "New "Original "New carrying
classification classification carrying amount amount under
As reported without Adjustments Amounts with under IAS 39" under IFRS 9" under IAS 39" IFRS 9"
adoption of IFRS 15 adoption of IFRS 15
------------------------ (Rupees '000) ------------------------ Financial Assets
Long-term deposits "Loans and
Receivables" Amortised Cost 39,611 39,611
Revenue 16,178,301 496,777 15,681,524 Trade debts "Loans and
Cost of Sales (10,614,639) 65,424 (10,680,063) Receivables" Amortised Cost 901,348 901,348
Distribution Costs (3,468,766) (562,201) (2,906,565) Advances to employees "Loans and
Receivables" Amortised Cost 942 942
Further contract liability as at 30 June 2018 amounting to Rs. 70 million would have been separately reported on statement Trade deposits "Loans and
of financial position which is included in trade and other payables. Moreover, the adoption of IFRS 15 requires more Receivables" Amortised Cost 9,000 9,000
comprehensive disclosures of revenue, than the previous standard IAS 18 and its related interpretations, as disclosed in Other receivables "Loans and
Note 22 of these Financial Statements. Apart from these changes, the application of IFRS 15 has not had a significant Receivables" Amortised Cost 1,909 1,909
impact on the financial position and / or financial performance of the Company for the reasons described above. Accordingly Cash and bank balances "Loans and
there was no adjustment to retained earnings on application of IFRS 15 at 1 July 2018. Receivables" Amortised Cost 400,298 400,298
1,353,108 1,353,108
IFRS 15 did not have a significant impact on the accounting policies of the company.
ii Impairment
4.1.2 IFRS 9 'Financial Instruments'
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model. The new impairment model
IFRS 9 replaces the provisions of IAS 39 ‘Financial Instruments: Recognition and Measurement’ that relate to the recognition, applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to
classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment investments in equity instruments. ECLs are based on the difference between the contractual cash flows due in accordance
of financial assets and hedge accounting. The IFRS 9 has been adopted without restating comparative information as with the contract and all the cash flows that the Company expects to receive. The shortfall is then discounted at an
allowed under the standard. approximation to the asset’s original effective interest rate.

The details of new significant accounting policies and the nature and effect of the changes to previous accounting policies The financial assets at amortised cost consist of trade receivables, cash and cash equivalents, and other receivables. For
are set out below: trade receivables, the Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses
a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have
i Classification and measurement of financial assets and financial liabilities been grouped based on shared credit risk characteristics and the days past due. Majority of debtors are regular customers
of the Company and management uses actual historical credit loss experience, based on payment profile of credit sales
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities. over past year, adjusted for forward-looking factors specific to the debtors and the economic environment to determine
However, it eliminates the previous IAS 39 categories for financial assets of held to maturity, loans and receivables and lifetime expected loss allowance. There is no significant impact from the new expected credit loss (ECL) impairment model
available for sale. under IFRS 9 on allowances and provisions for trade receivables and retained earnings of the Company as at 1 July 2018.
Trade receivables are written off when there is no reasonable expectation of recovery.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
Impairment losses related to trade and other receivables are presented separately in the statement of profit or loss and
At present the Company has financial assets measured at amortized cost. Trade debts, deposits, advances, other receivables other comprehensive income. As a result, the Company reclassified impairment losses amounting to Rs 107.7 million
and cash and cash equivalents that were classified as loans and receivables under IAS 39 are now classified at amortised recognised under IAS 39 for comparative period, from ‘distribution costs’ to ‘impairment loss on trade and other receivables
cost. The classification and measurement under IFRS 9 does not have any impact on Company’s accounting policy. in the statement of profit or loss and other comprehensive income. During the year the Company recognised an impairment
loss of trade debts under IFRS 9 expected credit loss model amounting to Rs. 17.28 million.
Trade receivable is initially measured at transaction price and are subsequently measured at amortised cost using the
effective interest method, net of impairment losses. Interest income, foreign exchange gains and losses and impairment 4.2 Property, plant and equipment
are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Operating assets and depreciation
The following explains the original and new classification and measurement categories under IAS 39 and under IFRS 9
respectively of the Company’s significant financial assets: Initial recognition

The cost of an item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits
associated with the item will flow to the entity and the cost of such item can be measured reliably.

Recognition of the cost in the carrying amount of an item of property, plant and equipment ceases when the items is in
the location and condition necessary for it to be capable of operating in the manner intended by the management.

Measurement

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The cost
of property, plant and equipment includes:

(a) its purchase price including import duties, non refundable purchase taxes after deducting trade discounts and rebates

(b) any other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable
of operating in the manner intended by the management; and
(c) Borrowing costs, if any.
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

principal amount outstanding.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
items (major components) of property, plant and equipment.
- it is held within a business model whose objective is achieved by both collecting contractualcash flows and selling
Subsequent expenditure (including normal repairs and maintenance)
financial assets; and
Expenditures incurred to replace a significant component of an item of property, plant and equipment is capitalised and
- its contractual terms give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the
the asset so replaced is retired. Other subsequent expenditure is capitalised only when it is probable that future economic
principal amount outstanding.
benefits associated with the item will flow to the entity and the cost of the items can be measured reliably. All other
expenditures (including normal repairs and maintenance) is recognised in the profit or loss as an expense when it is
A financial asset shall be measured at fair value through profit or loss unless it is measured at amortised cost or at FVOCI.
incurred.
However the Company may make an irrevocable election at initial recognition for particular investments in equity instruments
that would otherwise be measured at FVTPL to present subsequent changes in fair value in other comprehensive.
Depreciation
On initial recognition, the Company may, irrevocably designate a financial asset as measured at FVTPL if doing so eliminates
Depreciation on all items is charged on straight line method. The useful lives for depreciation are indicated in note 5.1.
or significantly reduces a measurement or recognition inconsistency ('accounting mismatch') that would otherwise arise
from measuring assets or liabilities or recognising the gains and losses on them on different bases.
Depreciation on additions to property, plant and equipment is charged from the month the asset is available for use upto
the month of disposal.
Initial measurement - Financial Assets
Depreciation methods, useful lives and residual values of each part of property, plant and equipment that is significant in
A financial asset is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable
relation to the total cost of the asset are reviewed, and adjusted if appropriate, at each balance sheet date.
to its acquisition. However, at initial recognition, the Company measures trade receivables at their transaction price if the
trade receivables do not contain a significant financing component.
Gains and losses on disposal
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from
Subsequent measurement
disposal with the carrying amount of the property, plant and equipment, and is recognized in the profit or loss.
Debt Investments at FVOCI These assets are subsequently measured at fair value. Interest / markup
Capital work in progress
income calculated using the effective interest method, foreign exchange
gains and losses and impairment are recognised in the statement of
Capital work in progress is stated at cost less impairment loss, if any and consists of expenditures incurred (including any
profit or loss. Other net gains and losses are recognised in other
borrowing cost, if applicable) and advances made in the course of their construction and installation. Transfers are made
comprehensive income. On de-recognition, gains and losses accumulated in
to relevant asset category as and when assets are available for intended use.
other comprehensive income are reclassified to the statement of profit
or loss.
4.3 Intangibles

These are stated at cost less accumulated amortisation and impairment, if any. Generally, costs associated with developing
Equity Investments at FVOCI These assets are subsequently measured at fair value. Dividends are
or maintaining computer software programmes are recognised as an expense as incurred. However, costs that are directly
recognised as income in the statement of profit or loss unless the dividend
associated with identifiable software and have probable economic benefit exceeding one year are recognised as intangible
clearly represents a recovery of part of the cost of the investment. Other
assets. Direct costs include the purchase cost of software and related overhead cost.
net gains and losses are recognised in other comprehensive income
and are never reclassified to the statement of profit or loss.
Amortisation charge is based on the straight-line method whereby the cost of an intangible is written off over its estimated
useful life of three years.

4.4 Long term investment - subsidiary

Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and
losses, including any interest / markup or dividend income, are
Investment in subsidiary is stated at cost less impairment losses, if any.
recognised in profit or loss.
4.5 Financial Instruments
Financial assets measured These assets are subsequently measured at amortised cost using the
at amortised cost effective interest method. The amortised cost is reduced by impairment
4.5.1 Classification, recognition and measurement - Financial Assets
losses. Interest / markup income, foreign exchange gains and losses
and impairment are recognised in the statement of profit or loss.
Classification

The Company classifies its financial assets in the following measurement categories:
4.5.2 Non-derivative Financial assets
- fair value through other comprehensive income (FVOCI);
All non-derivative financial assets are initially recognised on trade date i.e. date on which the Company becomes party to
- fair value through profit or loss (FVTPL); and
the respective contractual provisions. Non-derivative financial assets comprise loans and receivables that are financial
- measured at amortised cost.
assets with fixed or determinable payments that are not quoted in active markets and includes trade debts, advances,
other receivables and cash and cash equivalent.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of
the cash flows.
The Company derecognises the financial assets when the contractual rights to the cash flows from the asset expires or it
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at fair
transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risk and rewards
value through profit or loss:
of ownership of the financial assets are transferred or it neither transfers nor retain substantially all of the risks and rewards
of ownership and does not retain control over the transferred asset.
- it is held within business model whose objective is to hold assets to collect contractual cash flows; and

- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

of the total deferred tax liability based on the assumptions that export sales will continue under Final Tax Regime and historical
4.5.2.1 Trade debts, deposits, advances and other receivables trend of export and local sales ratio will continue to be approximately the same in foreseeable future.

These are classified at amortized cost and are initially recognised when they are originated and measured at fair value of 4.7 Employee retirement benefits
consideration receivable. These assets are written off when there is no reasonable expectation of recovery. Further, these
assets are adjusted for loss allowances that are measured at amount equal to lifetime expected credit loss that result from Defined benefit plans
all possible default events over expected life of the financial asset.
The Company operates a funded pension scheme and post retirement medical benefit for chief executive, one non-executive
4.5.2.2 Cash and cash equivalents director and one former director. The liability recognised in the balance sheet in respect of the defined benefit plans is the
present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The
For the purpose of presentation in statement of cash flow, cash and cash equivalents includes cash in hand, balances with defined benefit obligation is calculated annually by independent actuary using the projected unit credit method.
banks and short term borrowings availed by the Company, which are repayable on demand and form an integral part of Remeasurements which comprise actuarial gains and losses and the return on plan assets (excluding interest) are recognised
the Company’s cash management. immediately in other comprehensive income. The latest actuarial valuation of the defined benefit plans was conducted at
30 June 2019.
4.5.3 Financial Liabilities
Past service cost and the amount arising as a result of remeasurements are recognised in the balance sheet immediately,
Financial liabilities are initially recognised on trade date i.e. date on which the Company becomes party to the respective with a charge or credit to other comprehensive income in the periods in which they occur.
contractual provisions. Financial liabilities include mark-up bearing borrowings and trade and other payables. The Company
derecognises the financial liabilities when contractual obligations are discharged or cancelled or expire. Financial liability Defined contribution plan
other than at fair value through profit or loss are initially measured at fair value less any directly attributable transaction
cost. Subsequent to initial recognition, these liabilities are measured at amortised cost using effective interest rate method. The Company operates an approved contributory provident fund for all employees. Equal monthly contributions are made,
both by the Company and the employees, to the fund at the rate of 10% per annum of the basic salary.
4.5.3.1 Mark-up bearing borrowings and borrowing costs
4.8 Stores, spare parts and loose tools
Mark-up bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent to initial
recognition, mark-up bearing borrowings are stated at amortized cost, while the difference between the cost (reduced for These are valued at weighted average cost less provision for slow moving and obsolete stores, spare parts and loose tools,
periodic payments) and redemption value is recognized in the profit and loss account over the period of the borrowings if any. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon.
using the effective interest method.
4.9 Stock in trade
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized
as part of the cost of the relevant asset. All stocks are stated at the lower of cost and estimated net realisable value. Cost is determined by weighted average
method except for those in transit where it represents invoice value and other charges incurred thereon. Net realisable
4.5.3.2 Trade and other payables value signifies the estimated selling price in the ordinary course of business less cost necessarily to be incurred in order
to make the sale. Cost of work in process and finished goods includes direct cost of materials, direct cost of labour and
Trade and other payables are recognised initially at fair value plus directly attributable costs, if any, and subsequently production overheads.
measured at amortised costs.
4.10 Impairment losses
4.5.4 Offsetting of financial assets and financial liabilities
4.10.1 Financial assets
Financial assets and financial liabilities are offset and the net amount is reported in the financial statements only when the
Company has currently legally enforceable right to set-off the recognised amounts and the Company intends either to The Company recognises loss allowances for Expected Credit Losses (ECLs) in respect of financialassets measured at
settle on a net basis or to realize the assets and to settle the liabilities simultaneously. The legally enforceable right must amortised cost.
not be contingent on future events and must be enforceable in normal course of business and in the event of default,
insolvency or winding up of the Company or the counter parties. The Company measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured
at 12-month ECLs:
4.6 Taxation
- debt securities that are determined to have low credit risk at the reporting date; and
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates
to, or items recognised directly in equity or in other comprehensive income, in which case the tax amounts are recognized - other debt securities and bank balance for which credit risk (i.e. the risk of default occuring over the expected life of
directly in other comprehensive income or equity, as the case may be. the financial instrument) has not increased significantly since initial recognition.

i) Current Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year; calculated using tax rates When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when
enacted or substantively enacted by the end of the reporting period. The calculation of current tax takes into account tax estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without
credit and tax rebates, if any, and is inclusive of any adjustments to income tax payable or recoverable in respect of previous undue cost or effort. This includes both quantitative and quanlitative information and analysis, based on the Company's
years. historical experience and informed credit assessment and including forward-looking information.

ii) Deferred The Company assumes that the credit risk on a financial asset has increased significantly if it is more than past due for a
reasonable period of time. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of
Deferred tax is accounted for using the balance sheet liability method on all temporary differences arising between tax a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the
base of assets and liabilities and their carrying amounts in the fi statements. Deferred tax liability is generally recognised 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The
for all taxable temporary differences and deferred tax asset is recognised to the extent that it is probable that future taxable maximum period considered when estimating ECLs is the maximum contractual period over which the Company is expoed
profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be to credit risk.
utilised. Deferred tax is charged or credited in the profit or loss. Deferred tax liability is restricted to 92.99% (2018: 90.3%)
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

recognised for expected discount payable to customers in relation to sales made until the end of the reporting period. Further, a
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. contract liablity is also recognised for short term advances that the Company receives from its customers.

4.15 Miscellaneous income

The gross carrying amount of a financial asset is written off when the Company has no reasonableexpectations of recovering
of a financial asset in its entirety or a portion thereof. The Company individually makes an assessment with respect to the Miscellaneous income including export rebate is recognised on receipt basis.
timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no
significant recovery from the amount written off. However, financial assets that are written off could still be subject to 4.16 Interest / Mark up income / late payment by trade debtors
enforcementactivities in order to comply with the Company's procedures for recovery of amounts due.
Income on late payment by trade debtors is recognised on accrual basis.
The adoption of the expected loss approach has not resulted in any material change in impairment provision for any financial
asset. 4.17 Dividend income

4.10.2 Non-financial assets Dividend income is recognised when the Company's right to receive payment is established.

The carrying amount of the Company's non-financial assets are reviewed at each balance sheet date to determine whether 4.18 Income from debt securities
there is any indication of impairment loss. If such indications exist, the assets'recoverable amount is estimated in order to
determine the extent of impairment loss, if any. Impairment losses are recognised as expense in the profit and loss account. Income on bank deposit and debt securities is recognised on a time proportion basis using effective interest rate method.

An impairment loss is reversed if there is a change in the estimates used to determine the recoverable amount. An impairment 4.19 Segment information
loss is reversed only to the extent that the assets' carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance
4.11 Ijarah of the operating segments, has been identified as the Board of Directors of the Company that makes strategic decisions.

In ijarah transactions' significant portion of the risks and rewards of ownership are retained by the lessor. Islamic Financial 4.20 Research and development
Accounting Standard 2 – 'Ijarah' requires the recognition of ‘ujrah payments’ (lease rentals) against ijarah financing as an
expense in the profit or loss on a straight-line basis over the ijarah term. Research and development expenditure is charged to profit and loss account in the period in which it is incurred.

4.12 Provisions 4.21 Dividends

Provisions are recognised when the Company has a present legal or constructive obligation as a resultof past event, it is Dividend distribution to the Company's shareholders and appropriations to / from reserves are recognised in the period
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable in which these are approved.
estimate of the amount can be made.

4.13 Foreign currency transactions and translation 2019 2018

(Rupees in thousand)
Foreign currency transactions are translated into Pak Rupee using the exchange rates approximating those prevailing at 5. PROPERTY, PLANT AND EQUIPMENT
the dates of the transactions. All monetary assets and liabilities in foreign currencies are translated into Pak Rupee at the
rates of exchange approximating those prevailing at the balance sheet date. Exchange gains / losses on translation are
included in income currently. Operating fixed assets 5.1 4,078,212 3,355,740
Capital work-in-progress 5.4 498,543 794,866
4.14 Revenue recognition 4,576,755 4,150,606

Revenue is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by transferring
control over the promised goods and services to the customer. It also specifies the accounting for the costs directly related
to fulfilling a contract. Revenue from sale of goods is recognised at the point in time when control of the product has
transferred, being when the products are delivered to the customer. Invoices are generated and revenue is recognised on
delivery of goods. Delivery occurs when the products have been shipped to / or and delivered to the customer’s destination
/ specific location, the risks of loss have been transferred to the customer and the customer has accepted the product.

The consideration which the Company receives in exchange for its goods or services may be fixed or variable. Variable
consideration is only recognized when it is highly probable that a significant reversal will not occur. Revenue is measured
based on the consideration specified in a contract with acustomer, net of returns, amounts collected on behalf of third
parties (sales taxes etc), pricing allowances, other trade discounts, volume rebates and couponing, price promotions to
consumers / customers and any other consideration payable to customers. The level of discounts, allowances andpromotional
rebates are recognized, on estimated basis using historical experience and the specific terms of the arrangement, as a
deduction from revenue at the time that the related sales are recognized or when such incentives are offered to the customer
or consumer. Sales return provisions are recognized as deduction from revenue based on terms of the arrangements
with the customer and are included in trade and other payables. No asset is recognized for returns as they are not
anticipated to be resold. A receivable is recognised when the goods are delivered as this is the point in time that the
consideration is unconditional because only the passage of time is required before the payment is due.

The Company provides retrospective discounts to its customers on all products purchased by the customer once the
quantity of products purchased during the period exceeds a threshold specified in the contract. A contract liability is
5.1 Operating fixed assets: 5.3 The details of property, plant and equipment having net book value of Rs. 500,000 and above sold / disposed
of during the year are as follows:
2019
Accumulated Gain / (loss) on Particulars of purchaser
Building on Office and Description Cost depreciation Net book value Sale proceeds disposal Mode of disposal and relationship
Leasehold leasehold Plant and Furniture other Computers Laboratory Vehicles Total
land machinery and fittings equipments
land equipments
(Rupees in thousand)
Vehicles 897 30 867 897 30 Company Policy Khwaja Omer
(Rupees in thousand) Company's Executive
At 1 July 2018
Cost 232,549 1,957,832 2,050,344 151,332 218,534 183,724 40,968 80,454 4,915,737 Vehicles 1,204 60 1,144 1,177 33 Company Policy Muhammad Farooq
Accumulated depreciation (32,664) (285,244 ) (884,124) (68,103 ) (75,237 ) (152,671) (19,187) (42,767 ) (1,559,997 ) Company's Executive
Net book value 199,885 1,672,588 1,166,220 83,229 143,297 31,053 21,781 37,687 3,355,740
Vehicles 799 40 759 948 189 Company Policy Syed Waqar Ahmed
Additions / transfer - note 5.4.1 - - 432,233 619,090 9,623 18,690 45,241 5,435 31,136 1,161,448
Company's Executive
Disposals
Cost - - (8,454 ) (74,734) (21,698 ) (26,593 ) (45,440) (5,985) (54,455 ) (237,359 )
Accumulated depreciation - - 6,189 72,623 21,511 23,677 44,997 5,682 32,394 207,073 Total 2,900 130 2,770 3,022 252
- - (2,265 ) (2,111) (187 ) (2,916 ) (443) (303) (22,061 ) (30,286 )

Depreciation charge for the year (4,195) (59,611 ) (246,372) (22,800 ) (34,528 ) (26,228) (3,569) (11,387 ) (408,690 )

Closing net book value 195,690 2,042,945 1,536,827 69,865 124,543 49,623 23,344 35,375 4,078,212

At 30 June 2019 2019 2018

Cost 232,549 2,381,611 2,594,700 139,257 210,631 183,525 40,418 57,135 5,839,826
Accumulated depreciation (36,859) (338,666 ) (1,057,873) (69,392 ) (86,088 ) (133,902) (17,074) (21,760 ) (1,761,614 ) (Rupees in thousand)
Net book value 195,690 2,042,945 1,536,827 69,865 124,543 49,623 23,344 35,375 4,078,212
5.4 Capital work-in-progress (CWIP)
Useful life (years) 38 - 99 5 - 60 5 - 10 5 5 - 10 3 5 - 10 5
Civil works 173,484 252,008
2018 Plant and machinery 107,473 323,112
At 1 July 2017 Office equipment 7,092 8,972
Cost 232,549 909,103 1,780,054 70,064 114,535 159,488 34,617 60,188 3,360,598
Accumulated depreciation (28,469 ) (237,505 ) (698,256 ) (53,049 ) (51,357 ) (129,131 ) (16,105 ) (43,093 ) (1,256,965 ) Advance against acquisition of land 210,494 210,194
Net book value 204,080 671,598 1,081,798 17,015 63,178 30,357 18,512 17,095 2,103,633 Advance against furniture - - 580
Additions / transfer - note 5.4.1 - - 1,048,729 283,452 84,237 104,807 25,112 6,720 40,061 1,593,118
498,543 794,866
Disposals
Cost - - - - (8,700 ) (2,806 ) (121 ) (385 ) - - (12,406 ) (24,418 )
Accumulated depreciation - - - - 4,800 2,806 97 313 - - 7,596 15,612
- - - - (3,900 ) - - (24 ) (72 ) - - (4,810 ) (8,806 )
5.4.1 During the year the additions to CWIP and transfer of respective assets amounted to Rs. 548.296 million (2018:
Depreciation charge for the year (4,195 ) (47,739 ) (190,668 ) (17,860 ) (23,977 ) (23,853 ) (3,082 ) (7,270 ) (318,644 ) Rs. 951.8 million) and Rs. 850.59 million (2018: Rs. 1,102.4 million) respectively.
Assets written off - - - - (4,462 ) (163 ) (687 ) (491 ) (369 ) (7,389 ) (13,561 )
5.5 Particulars of immovable property (i.e. land and building) in the name of the Company are as follows:
Closing net book value 199,885 1,672,588 1,166,220 83,229 143,297 31,053 21,781 37,687 3,355,740

At 30 June 2018 Location Usage of immovable property Total Area (In Sq. Ft.) Covered Area (In Sq. Ft.)
Cost 232,549 1,957,832 2,050,344 151,332 218,534 183,724 40,968 80,454 4,915,737
Accumulated depreciation (32,664 ) (285,244 ) (884,124 ) (68,103 ) (75,237 ) (152,671 ) (19,187 ) (42,767 ) (1,559,997 )
Net book value 199,885 1,672,588 1,166,220 83,229 143,297 31,053 21,781 37,687 3,355,740 Corporate office Office Building 45,099 40,589
S.I.T.E. Manufacturing plant 76,491 62,029
Useful life (years) 38 - 99 5 - 60 5 - 10 5 5 - 10 3 5 - 10 5
Port Qasim Manufacturing plant 435,600 265,556
Nooriabad Manufacturing plant 602,951 120,112
Muridke Manufacturing plant 137,196 22,500
5.2 The depreciation charge for the year has been allocated as follows:
Gujranwala Manufacturing plant 130,000 36,000
2019 2018 Multan Warehouse 43,560 43,560
(Rupees in thousand)

Cost of sales 23 305,912 238,447

Distribution costs 24 16,966 16,451
Administrative expenses 25 85,812 63,746
408,690 318,644
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

National Epicure Inc.

2019 2018
National Epicure Inc. ("NEI") was incorporated in Canada on 16 October 2013 under the Canada Business
(Rupees in thousand) Corporations Act. NEI is a wholly owned subsidiary of National Foods DMCC. NEI is principally engaged in the
6. INTANGIBLES trading of food products.

Computer software and ERP System 6.1 77,083 70,196 A-1 Bags & Supplies Inc.
Systems under development 6.2 3,135 15,456
80,218 85,652 A 1 Bags & Supplies Inc. (the “Company”) was incorporated under the Business Corporations Act of Ontario on
March 14, 2001. National Epicure Inc. acquired 60% holding in A-1 Bags and Supplies in the year 2017 and is
6.1 Computer software and ERP System principally engaged in distribution and wholesale of food products, disposables, janitorial and
sanitation products.
Net carrying value basis
Opening net book value 70,196 53,087
Additions (at cost) / transfer 54,732 59,062 2019 2018
Amortisation for the year (47,804) (41,953 ) (Rupees in thousand)
Closing net book value 77,124 70,196
8. STOCK-IN-TRADE

Gross carrying value basis Raw materials including goods in transit

Cost 272,920 259,116 of Rs. Nil (2018: Rs.Nil) 924,038 847,256
Accumulated amortisation (195,837) (188,920 ) Provision for obsolescence (19,652) (72,358 )
Net book value 77,083 70,196 904,386 774,898
Useful life (years) 3 3
Packing materials 463,356 361,458
6.1.1 The amortization charge for the year has been allocated as follows: Provision for obsolescence (42,867) (68,306 )
420,489 293,152
2019 2018
(Rupees in thousand) Work in process 1,671,610 1,372,107
Provision for obsolescence (31,133) (4,086 )
1,640,477 1,368,021
Distribution costs 24 591 886
Administrative expenses 25 47,213 41,067 Finished goods 8.1 & 8.2 1,047,006 694,746
47,804 41,953 Provision for obsolescence (56,660) (58,526 )
990,346 636,220
6.2 This represent amount given to vendor for the development of software which is expected to be capitalised next year.
3,955,698 3,072,291
2019 2018
(Rupees in thousand) 8.1 Stock in trade includes Rs. 2.04 billion (2018: Rs. 1.69 billion) held with third parties for the purpose of further
7. LONG TERM INVESTMENT distribution to end customers and packaging purposes.

National Foods DMCC, Dubai, UAE 8.2 The above balances include items costing Rs. 65.17 million (2018: Rs. 43.69 million) valued at net realisable value
1,188 shares of AED 1,000 each 31,719 31,719
of Rs. 47.29 million (2018: Rs. 32.1 million).

7.1 This represents investment in wholly owned (100%) subsidiary which was set up in United Arab Emirates in 2012 and
is carried at cost. The subsidiary was formed as a limited liability company and commenced operations from March 8.3 During the year, the Company has made a provision of Rs. 59.2 million for obsolescence (2018: Rs. 107.64 million)
2013. and has written off stocks against the provision amounting to Rs. 53.9 million (2018: Rs. 24.3 million).

7.2 National Foods DMCC (NF DMCC) was registered on 7 November 2012 in Dubai Multi Commodities Centre (“DMCC”)
pursuant to Dubai (DMCC) Law No. 4 of 2001 and operates in the United Arab Emirates (“UAE”) under a trade license 2019 2018
issued by DMCC. (Rupees in thousand)
The primary objective of NF DMCC is to boost export sales of its parent company through trading in food stuff and 9. TRADE DEBTS
other services. NF DMCC also has following two wholly owned direct subsidiaries and one indirect subsidiary as
follows:
Considered good - unsecured
National Foods Pakistan (UK) Limited - Related parties 9.2 597,371 625,471
National Foods Pakistan (UK) Limited was incorporated in United Kingdom on 29 May 2013 as a private company - Others 303,977 263,914
under the UK Companies Act, 2006. The company is a wholly owned subsidiary of National Foods DMCC and is 901,348 889,385
principally engaged in the trading of food products.
Considered doubtful 69,564 113,774
970,912 1,003,159
Allowance for impairment 9.3 (69,564 ) (113,774 )
901,348 889,385
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

9.1 The movement in the allowance for impairment for trade debts is as follows: 2019 2018
2019 2018 (Rupees in thousand)
(Rupees in thousand) 10. ADVANCES

Considered good
Opening allowance for impairment 113,774 6,093 Employees - against expenses 10.1 942 - -
Charge for the year - net* 17,283 107,681 Suppliers 10.1 107,314 102,144
Write-off during the period (61,493 ) - - 108,256 102,144
Considered doubtful
Closing allowance for impairment 69,564 113,774
Suppliers 27,684 3,413
135,940 105,557
*During the year the Company has recovered Rs. 7 Million Provision for doubtful advances to suppliers (27,684 ) (3,413 )
which had been written off in the prior period. 108,256 102,144
10.1 These advances do not carry any mark up arrangement.
9.2 Receivable from related parties
11. TRADE DEPOSITS AND PREPAYMENTS
Premier Distributor* - - 32,806
Considered good
Premier Agency* - - 50,707 Deposits 9,000 9,000
National Foods DMCC 597,371 541,958 Prepayments 33,290 27,863
597,371 625,471 42,290 36,863
Considered doubtful
9.2.1 The maximum aggregate amount due from the related party at the end of any month during the year are as follows: Deposits - - 1,553
42,290 38,416
2019 2018 Provision for doubtful deposits - - (1,553 )
42,290 36,863
(Rupees in thousand)
11.1 These trade deposits and prepayments are mainly against rent, insurance and utilities. These do not carry any
Premier Distributor* - - 193,237 mark up arrangement.
Premier Agency* - - 120,496 2019 2018
National Foods DMCC 615,200 654,445 (Rupees in thousand)
615,200 968,178 12. OTHER RECEIVABLES

Due from related parties

These parties were no more related to the Company during the current period. - ATC Holdings (Private) Limited (formerly Associated
Textile Consultants (Private) Limited) 1,511 861
As at 30 June 2019, the gross amount of trade debts due from related parties is Rs. 597.4 million (2018: Rs. 625.5 - Director - - 197
1,511 1,058
million) out of which Rs. 207.67 million (2018: Rs. 49.08 million) were past due. The age analysis of these trade
Others 12.1 398 4,706
debts is as follows: 1,909 5,764
2019 2018
(Rupees in thousand)
12.1 The balances due from related parties are past due by more than six months but not considered impaired.
Up to 3 months 207,673 37,763
3 to 6 months - - 10,981
More than 6 months - - 333
207,673 49,077

9.3 This includes allowance for impairment against recievable from related party amounting to Rs. NIL (2018: Rs. 3.68
million).

9.4 The Company has made export sales amounting to Rs. 1,223.3 million. Exports sales represents sales made to
NF DMCC - a wholly owned subsidiary of the Company and other customers, in United Arab Emirates and
Afghanistan.
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2019 2018 2019 2018

15. LONG TERM FINANCE
(Rupees in thousand) (Rupees in thousand)

13. CASH AND BANK BALANCES Secured long-term finances utilised under mark-up arrangements 487,116 - -

Cash in hand 984 1,295

Classified under current liability 69,144 193,152
Cash at bank - current account 417,972 193,152
- local currency 13.1 149,872 94,649
- foreign currency 249,442 133,784 15.1 This represents long term finance facility of Rs. 250 million for ten years and long term loan of Rs. 300 million for
399,314 228,433 six years obtained from commercial bank having mark-up at the rate of State Bank of Pakistan base rate + 0.3%
400,298 229,728
(effective rate: 3.3%) and 3 months Kibor + 0.1% respectively. The loan is secured by way of hypothecation of
13.1 The current accounts are placed with banks under conventional banking arrangements. Company's present and future fixed assets. The unavailed portion of the facility at the reporting date is Rs. 62.88
million.

14. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL

2019 2018 2019 2018 2019 2018

Number of Shares (Rupees in thousand) (Rupees in thousand)
16. DEFERRED TAXATION - net
2,511,980 2,511,980 Ordinary shares of Rs. 5 (2018: Rs. 5) each
issued for consideration paid in cash Credit / (debit) balance arising in respect of:
12,560 12,560
Accelerated tax depreciation / amortisation 371,105 254,458
Ordinary shares of Rs. 5 (2018: Rs. 5) each Provision for stock obsolescence (40,536 ) (53,232 )
121,816,247 101,144,878
as fully paid bonus shares Provision for doubtful trade debts (18,760 ) (29,794 )
609,081 505,724
Provision for retirement benefits obligations and other provisions (84,936 ) (54,422 )
124,328,227 103,656,858 621,641 518,284 226,873 117,010
17. DEFERRED LIABILITIES
14.1 The Company in its annual general meeting held on 18 October 2018 passed special resolution for the increase in
Pension Plan 34,276 11,715
authorized capital from 1,000 million to 5,000 million with power to increase or reduce as the Company may think fit. Pensioners' Medical Plan 36,070 30,651
The Company may subdivide or consolidate its share in accordance with the provisions of the Companies Act, 2017. 70,346 42,366

14.2 As at 30 June 2019, ATC Holdings (Private) Limited (formerly Associated Textile Consultants (Private) Limited) (ultimate 17.1 The Company operates a funded pension scheme and post retirement medical benefit for chief executive, one
parent company) held 41,229,268 (2018: 34,357,724) ordinary shares of the Company. non-executive and one former director. Actuarial valuation of these plans is carried out every year and the latest
actuarial valuation was carried out as at 30 June 2019.

17.2 Plan assets held in trust are governed by local regulations which mainly include the Trust Act, 1882, the Companies
Act, 2017, the Income Tax Rules, 2002 and Rules under the Trust Deed of the Plans. Responsibility for governance
of the Plans, including investment decisions and contribution schedules, lies with the Board of Trustees. The
Company appoints the Trustees and all Trustees are employees of the Company.

17.3 The latest actuarial valuation of the Fund as at 30 June 2019 was carried out using the Projected Unit Credit
Method. Details of the Fund as per the actuarial valuation are as follows:
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

17.4 Balance sheet reconciliation 2019 2018

Pension Plan Pensioners’ Medical Plan 17.11 Principal actuarial assumptions

2019 2018 2019 2018 Expected rate of increase in salaries 14.50% 10.00%
(Rupees in thousand) (Rupees in thousand) Expected rate of increase in pension 9.50% 5.00%
Present value of defined
Expected rate of increase in medical benefits 14.50% 10.00%
benefit obligations 156,293 126,254 81,984 49,965 Discount factor used 14.50% 10.00%
Fair value of plan assets (122,017 ) (114,539 ) (45,914 ) (19,314 ) Mortality rate SLIC 2001 - 2005 SLIC 2001 - 2005
34,276 11,715 36,070 30,651
17.5 Movement in the net liability Rates of employee turnover Moderate Moderate
recognised in the
2020
Opening balance 11,715 3,685 30,651 2,338
Remeasurements recognised in Pension Pensioners'
other comprehensive income 28,914 4,015 32,072 33,476 17.12 Components of defined benefit cost for the next year Plan Medical Plan
Charge / (income) for the year 5,362 4,015 3,999 622
Contribution made (11,715 ) - - (30,651 ) (5,785 ) (Rupees in thousand)
Payments made to members (beneficiaries) - - - - (4,131 )
Closing balance 34,276 11,715 31,940 30,651
Current service cost 5,551 1,840
17.6 Remeasurements recognised in other Interest cost on defined benefit obligation 22,733 11,666
comprehensive income Interest income on plan assets (17,734) (7,338)
Re-measurements: Actuarial Net interest cost 4,999 4,328
(gain) / loss on obligation Cost for the next year to be recognized in statement of profit and loss 10,550 6,168
- Loss due to change in financial
assumptions 1,904 452 (852 ) (141 )
- Loss due to change in 17.13 In case of the funded plans, the Company ensures that the investment positions are managed within an Asset-Liability
experience adjustments 16,044 3,078 31,017 33,580
Actuarial (gain) / loss on defined Matching (ALM) framework that has been developed to achieve long-term investments that are in line with the
benefit obligation 17,948 3,530 30,165 33,439 obligations under the retirement benefit plan. Within this framework, the Company’s ALM objective is to match
Re-measurements: Actuarial assets to the retirement benefit obligations by investing in long-term fixed interest securities with maturities that
(gain) / loss on plan assets match the benefit payments as they fall due and in the appropriate currency. The Company actively monitors how
- Actual return on plan assets 472 9,120 80 1,477
- Interest income on plan assets 11,438 9,605 1,986 1,514 the duration and the expected yield of the investments are matching the expected cash outflows arising from the
Net re-measurement recognised in other retirement benefit plan obligations. The Company has not changed the processes used to manage its risks from
comprehensive income 10,966 485 1,906 37
previous periods. The Company does not use derivatives to manage its risk. Investments are well diversified, such
Total defined benefit cost that the failure of any single investment would not have a material impact on the overall level of assets. A large
recognised in profit and
loss account and other portion of assets in 2019 consists of special savings certificates ("SSC") majority of which has matured near the
comprehensive income 28,914 4,015 32,071 33,476 end of the year. The Company believes that SSC offer the best returns over the long term with an acceptable level
17.7 Expense recognised in of risk.
profit and loss account

Component of defined benefit costs The expected return on plan assets was determined by considering the expected returns available on the assets
recognized in profit and loss account underlying the current investment policy. Expected yields on fixed interest investments are based on gross
Current service cost 4,185 3,691 1,076 426
Net interest cost redemption yields as at the balance sheet date.
- Interest cost on defined
benefit obligation 12,615 9,929 4,909 1,710
- Return on plan assets (11,438 ) (9,605 ) (1,986 ) (1,514 ) 17.14 Sensitivity analysis for actuarial assumptions
1,177 324 2,923 196
5,362 4,015 3,999 622 The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
17.8 Movement in the present
value of defined benefit obligations
Change in Impact on defined benefit obligation
Obligation as at July 1 126,254 113,813 49,965 20,175 - Increase / decrease in liability
Current service cost 4,185 3,691 1,076 426 assumption
Interest cost 12,615 9,929 4,909 1,710
Benefits paid (4,709 ) (4,709 ) (4,131 ) (5,785 ) (Rupees in thousand)
Actuarial loss / (gain) 17,948 3,530 30,165 33,439
Obligation as at June 30 156,293 126,254 81,984 49,965 2019
17.9 Movement in the fair value of plan assets
Discount rate at June 30 1.00% 210,078 272,585
As at July 1 114,539 110,128 19,314 17,837 Future salary increases 1.00% 164,462 148,562
Expected return on plan assets 11,438 9,605 1,986 1,514
Contribution made 11,715 - - 30,651 5,785 Future pension increases 1.00% 170,879 143,602
Benefits paid (4,709 ) (4,709 ) (4,131 ) (5,785 ) Medical cost increases 1.00% 92,648 73,114
Actuarial (loss) / gain (10,966 ) (485 ) (1,906 ) (37 )
As at June 30 122,017 114,539 45,914 19,314 2018
17.10 Plan assets comprise of the following:
Discount rate at June 30 1.00% 154,368 203,098
Special Savings Certificates 5,880 83,753 2,412 14,123 Future salary increases 1.00% 133,575 119,402
Cash at bank 105,808 16,024 4,237 2,702
Investment in mutual fund 10,330 14,762 43,396 2,489 Future pension increases 1.00% 138,098 115,973
122,018 114,539 50,045 19,314
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

The sensitivity analysis is based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating
the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present 2019 2018
value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting
period) has been applied when calculating the pension liability recognised within the balance sheet.
(Rupees in thousand)
19. CONTRACT LIABILITY
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to
the previous period. Sales discount payable 4.1.1 63,320 - -
Advances from customers 4.1.1 74,962 - -
17.15 The expected return on plan assets is based on the market expectations and depends upon the asset portfolio
138,282 - -
of the plan, at the beginning of the period, for returns over the entire life of the related obligation.

17.16 The weighted average duration of defined benefit obligation of pension plan and pensioners' medical plan is 20. SHORT-TERM BORROWINGS
12.32 years and 10.92 years respectively.
Secured
17.17 During the year, the Company contributed Rs. 80.98 million (2018: Rs. 93.68 million) to the provident fund.

Conventional
2019 2018
Running finance under mark up arrangements 20.1 805,047 935,671
(Rupees in thousand)
Export re-finance 20.2 500,000 400,000
18. TRADE AND OTHER PAYABLES
Money market loan 20.3 300,000 450,000

Creditors 293,092 450,814

Islamic
Accrued liabilities 2,035,709 1,476,889
Running finance under Musharakah 20.4 296,585 363,049
Workers' Profit Participation Fund 18.1 67,623 58,111
1,901,632 2,148,720
Workers' Welfare Fund 99,364 79,903
Payable to Provident Fund 18.2 4,218 11,799
Refund Liabilities 18.3 38,752 - -
20.1 The facilities for running finance available from various commercial banks are for the purpose of meeting working
Advances from customers - unsecured - - 65,254
capitalrequirements. The effective rates of mark-up on these finances range from 7.00% to 13.9% (2018: 6.30%
Tax deducted at source 137,668 92,192
to 7.02%) per annum.
Advances from employees against sale of vehicles 85,426 78,387
Other liabilities 14,284 17,437
20.2 The Company has short term running finance facility under Export Refinance Scheme of the State Bank of Pakistan
Due to related party
from a commercial bank. The effective rates of mark-up on this facility is 3.0% (2018: 3.5%) per annum.
- Director 18.4 31 - -
2,776,167 2,330,786
20.3 The loan is availed from various commercial banks for the purpose of meeting working capital requirements. The
18.1 Workers' Profit Participation Fund
effective rates of mark-up on these finances range from 7.01% to 13.3% (2018: 6.26 to 7.06%) per annum.

Payable / (receivable) as at July 1 58,111 68,713

20.4 The Company has obtained facilities for short term finance under Running Musharakah. The effective rate of profit
Allocation for the year 64,887 57,736
is 7.00% to 13.9% (2018: 6.18% to 6.97%) per annum. This facility matures within twelve months
122,998 126,449
and is renewable.
Amount paid during the year (55,375 ) (68,338 )
Payable as at June 30 67,623 58,111
20.5 The facilities available from various banks amount to Rs. 2.74 billion (2018: Rs. 3.19 billion). The arrangements
18.2 All investments out of provident fund have been made in accordance with the provisions of Section 218 of the are secured by way of pari-passu charge against hypothecation of Company's current and future movable assets
Companies Act 2017 and the conditions specified thereunder. of the Company having aggregate charge amounting to Rs. 3.99 billion.

18.3 This relates to consideration received from the customers for goods sold which the Company expects to fully or 20.6 As at 30 June 2019, the unavailed facilities from the above borrowings amounted to Rs. 0.84 billion
partially refund to the customers in accordance with the requirements of IFRS 15 for goods to be returned. (2018: Rs.1.09 billion).

18.4 This relates to remuneration payable to director.

Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

21. COMMITMENTS 22.2 DISAGGREGATION OF REVENUE

21.1 The facilities for opening letters of credit amount to Rs. 1.79 billion (2018: Rs. 1.59 billion) and for letters of As required for the unconsolidated financial statements, the Company disaggregated revenue recognised from
guarantee amount to Rs. 141 million (2018: Rs. 141 million) as at 30 June 2019 of whichthe amount remaining contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue
unutilised at year end were Rs. 1.34 billion (2018: Rs. 1.34 billion) and Rs. 104.26 million (2018: Rs. 104.26 million) and cash flows are affected by economic factors.
respectively.
In the following table, revenue is disaggregated by primary geographical markets and major product lines:
21.2 Aggregate commitments for capital expenditure as at 30 June 2019 amount to Rs. 411.96 million
(2018: Rs. 527.18million).
2019 2018
21.3 Aggregate commitments in respect of ujrah payments for ijarah financing of motor vehicles bearing a mark up (Rupees in thousand)
ranging from six months KIBOR + 0.6% to six months KIBOR + 0.9% (2018: six months KIBOR + 0.6% to six Primary geographical markets:
months KIBOR + 0.9%) per annum for rentals payable monthly as at 30 June 2019 amount to: Local 23,915,210 21,785,441
United Arab Emirates 1,170,480 1,194,877
2019 2018 Afghanistan 52,820 - -
(Rupees in thousand) 25,138,509 22,980,318
Major Product Lines:
Not later than one year 86,338 73,447 Food Products 9,471,689 9,271,868
Later than one year but not later than five years 140,617 114,997 Kitchen Products 15,666,820 13,708,450
226,955 188,444 25,138,509 22,980,318

2019 2018 2019 2018

(Rupees in thousand)
(Rupees in thousand)
23. COST OF SALES
22. SALES

- Local sales 23,915,209 21,785,441 Raw material consumed 6,287,378 6,031,394

- Export sales 22.1 1,223,300 1,194,877 Packing material consumed 3,025,852 2,636,651
Gross sales 25,138,509 22,980,318 Stores and spares consumed 242,001 174,744
Less: Sales tax (3,344,034 ) (2,923,000 )
Brine and cutting charges 39,829 85,794
21,794,475 20,057,318
Less: Salaries, wages and other benefits 1,098,637 1,008,075
- Discount, rebates and allowances (4,787,473 ) (3,632,561 ) Contribution to provident fund 17,949 14,789
- Sales return (404,796 ) (246,456 ) Depreciation 5.2 305,912 238,447
(5,192,269 ) (3,879,017 ) Ujrah payments 24,944 19,334
16,602,206 16,178,301 Fuel and power 344,335 290,241
Insurance 20,391 21,721
Laboratory, research and development 12,296 9,525
22.1 Exports sales represents sales made to NF DMCC - a wholly owned subsidiary of the Company and other
customers, in United Arab Emirates and Afghanistan. Postage and communications 5,276 3,455
Printing and stationery 870 807
Rent, rates and taxes 186,017 149,012
Travelling 154,423 110,512
Repairs and maintenance 71,714 73,351
Security charges 23,090 14,908
Inventory destruction charges 23,303 37,578
Others 25,403 12,460
11,909,620 10,932,798
Opening work in process 1,368,021 1,056,507
Closing work in process (1,640,477 ) (1,368,021 )
Cost of goods manufactured 11,637,164 10,621,284
Opening stock of finished goods 636,220 629,575
Closing stock of finished goods (990,346 ) (636,220 )
11,283,038 10,614,639
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2019 2018 2019 2018

(Rupees in thousand) (Rupees in thousand)
24. DISTRIBUTION COSTS 26. OTHER EXPENSES

Workers' Profits Participation Fund 64,887 57,736

Salaries, wages and other benefits 761,530 749,085
Workers' Welfare Fund 22,317 13,217
Advertising and sales promotion 896,967 1,356,381 Auditors' remuneration 26.1 3,462 3,055
Commission expense - - 45,283 Donations 26.2 18,087 11,233
Outward freight and handling charges 709,108 614,729 Others - - 125,290
Contribution to provident fund 20,987 18,373 108,753 210,531
Depreciation 5.2 16,966 16,451 26.1 Auditors' remuneration
Amortisation 6.1.1 591 886
Ujrah payments 37,187 30,070 Audit fee 1,850 1,998
Fuel and power 3,451 6,440 Limited review, special reports and other certifications 1,332 837
Forwarding charges 91,984 75,065 Out of pocket expenses 280 220
3,462 3,055
Insurance 15,161 20,371
Laboratory, research and development 868 663
Professional charges 733 36 26.2 Donations to following Organizations and Trusts exceed
Printing and stationery 3,448 3,223 10% of the company's total amount of donation or
Rent, rates and taxes 172,647 177,736 Rs. 1 million, whichever is higher:
Travelling 164,855 144,944
Repairs and maintenance 23,725 11,387 The Citizens Foundation 10,400 6,500
Security charges 3 - - Saylani Welfare Trust - - 4,019
Others 2,001 89,962 10,400 10,519
2,922,212 3,361,085
Donations did not include any amount paid to any person or organization or institution in which a director or
his/her spouse had any interest.
2019 2018
(Rupees in thousand)
25. ADMINISTRATIVE EXPENSES 2019 2018
27. OTHER INCOME (Rupees in thousand)
Salaries, wages and other benefits 25.1 408,550 301,628
Exchange gain 27.1 204,949 24,790
Contribution to provident fund 14,311 11,472 Return on savings account and term deposits - conventional 4,776 2,190
Depreciation 5.2 85,812 63,746 Return on late payments by trade debtors - - 2,386
Amortisation 6.1.1 47,213 41,067 Profit on disposal of property, plant and equipment 32,324 14,370
Ujrah payments 27,501 22,082 Export rebate 1,915 3,443
Fuel and power 30,781 27,101 Rental income 8,687 6,741
Insurance 11,639 5,058 Others 2,011 - -
Legal and professional charges 52,062 43,907 254,662 53,920
Postage and communications 22,745 43,272
Printing and stationery 5,520 5,411
Rent, rates and taxes 6,365 12,776 27.1 Income earned from exchange gain is actual currency and not from derivative financial instrument.
Travelling 65,339 47,225
Repairs and maintenance 126,570 110,760
Security charges 10,692 18,517 2019 2018
Others 88,127 13,105
Advertising and sales promotion 2,677 - - (Rupees in thousand)
1,005,904 767,127 28. FINANCE COSTS

Mark-up on:
25.1 Salaries, wages and other benefits include Rs. 9.36 million (2018: Rs. 4.64 million) in respect of charge for retirement - Short-term running finances 28.1 69,002 37,183
- Export refinance facility 9,521 12,721
benefit plans. - Short-term loans 28.2 19,269 35,011
- Long-term loans 28.3 31,558 4,709
Bank charges and other costs 27,720 18,764
157,070 108,388
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

28.1 This represents markup on running finance balance obtained from commercial banks. 2019 2018
28.2 This represents markup on short term loans obtained from Islamic banks. (Rupees in thousand)
30. EARNINGS PER SHARE
28.3 This represents markup on long term loan obtained from conventional banks.
30.1 Basic

2019 2018 Profit after taxation attributable to ordinary shareholders 1,090,862 946,606

(Rupees in thousand) (Number of shares)

29. TAXATION - net Profit after taxation from discontinued operations attributable to
Weighted average number of ordinary shares
Current outstanding during the year* 124,328,227 124,328,227
- for the year 236,999 296,610
- prior year (92,800) (209,784) (Rupees)
Deferred 127,547 29,338
271,746 116,164 Earnings per share 8.77 7.61

29.1 Income tax assessments of the Company are deemed to be finalised upto and including tax year 2018 on the * weighted average number of ordinary shares outstanding during the comparative year has been adjusted for
basis of tax return filed under section 120 of Income Tax Ordinance 2001. However, the return may be selected issuance of bonus shares.
for detailed audit within five years from the date of filing of return and the Income Tax Commissioner may amend
the assessment if any objection is raised in audit. 30.2 A diluted earnings per share has not been presented as the Company did not have any convertible instruments
2019 2018 in issue as at balance sheet date which would have any effect on the earnings per share if the option to convert
is exercised.
(Rupees in thousand)
29.2 Relationship between income tax expense and accounting profit 2019 2018
(Rupees in thousand)
Profit before taxation 1,362,608 1,062,770 31. CASH GENERATED FROM OPERATIONS

Tax at applicable rate of 29% (2018: 30%) 395,274 318,831 Profit before taxation 1,362,608 1,062,770
Tax effect of permanent differences 445 2,164
Tax effect of final tax regime (12,233) (10,153) Adjustments for non-cash charges and other items
Effect of prior year tax (92,800) (209,784) Depreciation 408,690 318,644
Effect of change in tax rate (3,900) (4,228) Amortisation 47,804 41,953
Effect of super tax - - 33,570 Profit on disposal of property, plant and equipment (32,324) (14,370)
Effect of tax credits (32,158) (58,031) Provision for slow moving stock (52,964) 83,343
Others 17,118 43,795 Impairment loss on trade debts 17,283 --
271,746 116,164 Finance costs 157,070 108,388
Retirement benefits expense 9,361 4,637
554,920 542,595
Profit before working capital changes 1,917,528 1,605,365
29.3 The excess provisions mainly pertains to super tax and expenses allocation ratio difference, booked in the
respective years for which the Company has filed petitions in the High Court of Sindh. Working capital changes
(Increase) / decrease in current assets
29.4 Under section 5A of Income Tax Ordinance, 2001, a tax shall be imposed at the rate specified therein on the Stores, spare parts and loose tools (44,845) (31,000)
accounting profit before tax on the every public company, other than schedule bank or modaraba, that drives Stock in trade (830,443) (146,803)
profit for a tax year but does not distribute dividend upto a prescribed amount (requisite dividend) within six Trade debts (29,246) 384,441
months of the end of the tax year. Advances (6,112) 107,332
Trade deposits and prepayments (5,427) (23,084)
Other receivables 3,855 65,218
The Board of Directors in their meeting held on August 29, 2019 have recommended sufficient dividend for the
Sales tax refundable (12,365) (80,791)
year ended 30 June 2019 for the consideration and approval of the shareholders of the Company in the forthcoming
(924,583) 275,313
annual general meeting which complies with the above stated requirements. Accordingly, no provision for tax on
Increase / (decrease) in current liabilities
undistributed profit has been recognised in these financial statements for the year ended 30 June 2019. Trade and other payables 445,376 (33,218)
Contract Liability 138,282 - -
583,658 (33,218)

1,576,603 1,847,460
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2019 2018 34. RELATED PARTY DISCLOSURES

(Rupees in thousand) Related parties comprise the Holding Company, subsidiaries (direct and indirect), entities with common directors,
32. CASH AND CASH EQUIVALENTS key management personnel, staff retirement funds, directors, major shareholders and key management personnel.
The Company continues to have a policy whereby transactions with related parties are entered into at commercial
Cash and bank balances 400,298 229,728
terms, approved policy and at rates agreed under a contract/arrangement/agreement.
Running finance 20.1 & 20.4 (1,101,632) (1,298,720)
(701,334) (1,068,992)
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the Company. The Company considers its Chief Executive Officer, Chief Financial
Officer, Company Secretary, Non-Executive Directors and Departmental Heads to be its key management personnel.
33. REMUNERATION TO CHIEF EXECUTIVE OFFICER, DIRECTORS AND EXECUTIVES There are no transactions with key management personnel other than their terms of employment / entitlement.

33.1 The aggregate amounts charged in these financial statements in respect of remuneration including all benefits to Disclosure of transactions between the Company and related parties:
chief executive, directors and executives of the Company are as follows:

2019 2018
Chief Executive Officer Directors Executives Relationship with the Company Nature of transaction (Rupees in thousand)
2019 2018 2019 2018 2019 2018
Parent Company Rental income 8,687 6,741
(Rupees in thousand) Rent charges paid / payable - - 2,262
Managerial Dividend paid 128,841 146,020
remuneration
and allowances 23,135 20,637 - - - - 267,361 221,958 Bonus Shares issued (No. of Shares) 6,871,545 - -
Technical advisory fee - - - - - - - - - - - -
Utilities 2,314 2,064 4 168 26,736 22,196
Bonus / variable pay 3,856 3,192 - - - - 71,907 38,838 Subsidiary Company Sale of goods 1,170,480 1,194,877
Housing 10,411 9,287 - - - - 120,313 99,881
Associates Sale of goods - - 1,558,144
Retirement benefits 2,314 2,099 - - - - 24,264 18,889 Commission expense - - 45,283
Other expenses 1,267 2,476 5,194 9,021 120,397 73,532 Purchases of good or services 2,291 - -
43,297 39,755 5,198 9,189 630,978 475,294 Advance given 305 - -
Number of persons 1 1 2 2 86 74 Dividend paid 78,665 96,635

Bonus Shares issued (No. of Shares) 4,195,466 - -

Staff retirement funds Expense charged for the year 53,247 44,634
33.2 In addition to the above, fee paid to 6 (2018: 6) non-executive directors for attending Board of Directors meetings Payments to retirement contribution plan 80,983 93,677
during the year amounted to Rs. 1.45 million (2018: Rs. 2 million). Contribution to defined benefit plans 42,367 5,785

Key management personnel compensation:

33.3 The Chief Executive, two non-executive directors and certain executives of the Company are also provided with Salaries and other short-term employee benefits 655,736 786,616
Company maintained cars, residence and mobile telephones. The approximate value of this benefit is Rs. 35.81 Contribution to Provident Fund 25,306 37,853
million (2018: 32.55 million). Retirement benefits 9,361 4,637
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

34.1 Outstanding balances related parties as at year end have been included in trade debts, other receivables and 37.2 Financial assets and liabilities by category and their respective maturities:
trade and other payables respectively. These are settled in ordinary course of business.

34.2 The following are the related parties with whom the Company had entered into transaction or have arrangement Interest / Mark up bearing Non-interest / Non-mark up bearing
/ agreement in place:
Maturity Maturity Maturity Maturity
up to one after one Sub-total up to one after one Sub-total Total
Aggregate % year year year year
Name of the Related Party Basis of association
of Shareholding
(Rupees in thousand)
ATC Holdings (Private) Limited (formerly
Associated Textile Consultants (Private) Limited) Holding Company* 33% Financial Assets
National Foods Dubai Multi Commodities Centre Subsidiary Company 100% Trade debts - - - - - - 901,348 - - 901,348 901,348
Pakistan Business Council Associated Company due to common directorship N/A
Trade deposits - - - - - - 9,000 39,611 48,611 48,611
Other receivables - - - - - - 1,909 - - 1,909 1,909
*It is the ultimate parent company based on control model as provided under IFRS 10. Cash and bank balances - - - - - - 400,298 - - 400,298 400,298
30 June 2019 - - - - - - 1,312,555 39,611 1,352,166 1,352,166
30 June 2018 - - - - - - 1,133,877 40,473 1,174,350 1,174,350
2019 2018
Metric Tons
35. PLANT CAPACITY AND PRODUCTION
Financial liabilities
Actual production of plants 94,743 100,616 Trade and other payables - - - - - - 2,471,512 - - 2,471,512 2,471,512
Accrued interest/mark up - - - - - - 28,624 - - 28,624 28,624
35.1 The capacity and production of the Company's plants are indeterminable as these are multi-product and involve
varying processes of manufacture. Long term finance 69,144 487,116 556,260 - - - - - - 556,260
Short term borrowings 1,901,632 - - 1,901,632 - - - - - - 1,901,632
2019 2018
36. NUMBER OF EMPLOYEES 30 June 2019 1,970,776 487,116 2,457,892 2,500,136 - - 2,500,136 4,958,028

The detail of number of employees are as follows: 30 June 2018 2,341,872 - - 2,341,872 1,959,906 - - 1,959,906 4,301,778
Total employees of the Company at the year end 753 694
Average employees of the Company during the year 744 680 On balance sheet gap
30 June 2019 (1,970,776) (487,116) (2,457,892 ) (1,187,581) 39,611 (1,147,970) (3,605,862)

37. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 30 June 2018 (2,341,872) - - (2,341,872 ) (826,029) 40,473 (785,556) (3,127,428)

37.1 Financial risk factors

Off balance sheet items
The Board of Directors of the Company has overall responsibility for the establishment and oversight of the Company's Letters of credit
risk management framework. The Company's activities expose it to variety of financial risks namely credit risk, liquidity 30 June 2019 450,000
risk and market risk (including foreign exchange risk and interest rate risk). The Company's overall risk management
programme focuses on having cost effective funding as well as manage financial risk to minimise earnings volatility and
provide maximum return to shareholders. 30 June 2018 250,000

Letters of guarantees
30 June 2019 36,740

30 June 2018 36,740

All the financial instruments of the Company are designated as loans and receivables and hence measured at amortised
cost. The effective interest / mark up rates for the monetary financial assets and liabilities are mentioned in respective
notes to the financial statements.
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

37.2.1 Credit risk Loss rates are based on historical credit loss experience and are adjusted to reflect differences between economic
conditions during the period over which the historical data has been collected, current conditions and the Group’s
Credit risk represents the financial loss that would be recognised at the reporting date if counterparties failed view of economic conditions over the expected lives of the receivables.
to perform as contracted. Out of the total financial assets of Rs. 1.4 billion (2018: Rs. 1.25 billion) the financial
assets exposed to the credit risk amounted to Rs. 1.4 billion (2018: Rs. 1.21 billion). The cash and bank balances represent low credit risk as major balances are placed with banks having credit ratings
of A1+ or above as assigned by PACRA or JCR-VIS.
For trade debts, internal risk assessment process determines the credit quality of the customers, taking into
account their financial positions, past experiences and other factors. Individual risk limits are set based on The other financial assets are neither material to the financial statements nor exposed to any significant credit risk.
internal or external credit worthiness ratings in accordance with limits set by the management. The management does not expect any losses from non-performance by these counterparties.

The Company's maximum exposure to credit risk as at the reporting date is as follows: Concentration of credit risk

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in
2019 2018 the same geographical region, or have economic features that would cause their ability to meet contractual obligations
(Rupees in thousand) to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative
sensitivity of the Company’s performance to developments affecting a particular industry. In order to avoid excessive
Financial assets: concentrations of risk, management focus on the maintenance of a diversified portfolio. Identified concentrations
Long-term deposits 39,611 40,473 of credit risks are controlled and managed accordingly. Management does not consider that it has any concentration
Trade debts 901,348 889,385 of credit risk at reporting date.
Advances to employees 942 - -
Trade deposits 9,000 9,000 37.2.2 Liquidity risk
Other receivables 1,909 5,764
Cash and bank balances 400,298 229,728 Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
1,353,108 1,174,350 liabilities that are settled by delivering cash or another financial asset. Liquidity risk reflects the Company's inability
in raising funds to meet commitments. The Company manages liquidity risk by maintaining sufficient cash and
bank balances and the availability of financing through banking arrangements. Management monitors rolling
forecasts of the Company’s liquidity reserve which comprises of undrawn borrowing facility and cash and cash
Trade debts are shown net of allowance for impairment for expected credit loss. The Group applies the IFRS 9
equivalents on the basis of expected cash flows. The maturity of the Company's financial assets and liabilities are
simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
provided in these financial statements.
receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics and the days past due. The historical loss rates are adjusted to reflect current and forward-looking
37.2.3 Market risks
information on macroeconomic factors affecting the ability of the customers to settle the receivables.
Foreign exchange risk

The following table provides information about the exposure to credit risk for trade receivables from individual Foreign exchange risk arises mainly where receivables and payables exist in foreign currency. As at 30 June 2019
customers as at June 30, 2019: net financial assets of Rs. 846.81 million (2018: Rs. 645.92 million) were denominated in foreign currency which
were exposed to foreign currency risk.
"Gross "Net
"Expected As at 30 June 2019 if the Pak Rupee had weakened / strengthened by 4% (2018: 4%) against US Dollar with all
carrying carrying
credit loss"
amount" amount" other variables held constant, profit before tax for the year would have been lower / higher by Rs. 33.87 million
(2018: Rs. 26.97 million), mainly as a result of foreign exchange losses / gains on translation of US Dollar denominated
(Rupees in thousand)
June 30. 2019 trade debts.
Current (not past due) 561,116 122 560,994
1–30 days past due 242,779 33,897 208,882
31–60 days past due 100,146 110 100,036
61–90 days past due 7,435 178 7,257
90–120 days past due 2,734 133 2,601
120-180 days past due 19,728 1,447 18,281
180-360 days past due 3,892 595 3,297
More than 360 days past due 33,082 33,082 - -
970,912 69,564 901,348
Notes to the Financial Statements Notes to the Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

The sensitivity of foreign exchange rate looks at the outstanding foreign exchange balances of the Company only 2019 2018
as at the balance sheet date and assumes this is the position for a full twelve-month period. The volatility percentages
for movement in foreign exchange rates have been used due to the fact that historically (five years) rates have (Rupees in thousand)
moved on average basis by the mentioned percentage per annum.
Total borrowings 2,163,486 2,163,486
Interest rate risk Cash and bank balances (400,298) (229,728)
Net debt 1,763,188 1,933,758
The Company’s only interest rate risk arises from borrowings as the Company has no interest-bearing assets. Total Equity 4,317,329 3,658,293
Borrowings issued at variable rates expose the Company to cash flow interest rate risk. Total capital 6,080,517 5,592,051

At 30 June 2019 the Company had variable interest bearing financial liabilities of Rs. 2,388.75 million (2018: Rs. Gearing ratio 29% 35%
2,340.24 million), had the interest rates varied by 100 basis points (2018: 100 basis points) with all the other variables
held constant, profit before tax for the year would have been lower / higher by approximately Rs. 37.8 million (2018: The Company finances its operations through equity, borrowings and management of working capital with a view
Rs. 23.4 million), mainly as a result of higher / lower interest expense on floating rate borrowings. to maintain an appropriate mix between various sources of finance to minimise risk.

The sensitivity of 100 basis points (2018: 100 basis points) movement in interest rates has been used as historically
37.4 Fair values of financial assets and liabilities
(five years) floating interest rates have moved by an average of 100 basis points (2018: 100 basis points) per annum.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Management considers fair value of financial assets
approximate its fair value owing to their short term maturities and credit quality of counter parties.
37.2.3.1 Reconciliation of movements of liabilities to cash flows arising from financing activities
38. OPERATING SEGMENT
2019
Short term Other short term Long term Retained Total 38.1 These financial statements have been prepared on the basis of a single reportable segment.
borrowings used for borrowings including borrowings classified earnings
cash management related accrued as current [including
purpose markup related accrued
markup] (refer note 38.2 All non current assets of the Company as detailed in note 6 to these financial statements as of reporting date are
16.2) located in Pakistan.
(Rupees in thousand)
38.3 The Company's customer base is diverse with no single customer accounting for more than 10% of net sales.
Balance as at 1 July 2018 1,307,267 855,023 194,348 3,140,259 5,496,897 Sales to domestic customers in Pakistan are 95.1% (2018: 94.8%) and to customer outside Pakistan are 4.9%
(2018: 5.2%) of the revenue.
Changes from financing cash flows
Repayment of loan - - - - (6,036 ) - - (6,036 )
Proceeds from long term loan - - - - 300,000 - - 300,000 38.4 Management consider that revenue from its ordinary activities are shariah compliant.
Payments and repayments - - (150,000 ) - - - - (150,000 )
Dividend paid - - - - - - (386,925 ) (386,925 )
Total changes from financing activities - - (150,000 ) 293,964 (386,925 ) (242,961 ) 39. EVENTS OCCURRING AFTER BALANCE SHEET DATE

Other changes - interest cost The Board of Directors of the Company in their meeting held on August 29, 2019 has proposed a final cash dividend
Interest expense 69,002 28,790 31,558 - - 129,350
Interest paid (57,14 ) (31,117 ) (27,226 ) - - (115,492 )
of Rs. 4 per share amounting to Rs. 497.3 million and bonus issue of 1 share for every 5 shares held amounting
Changes in running finance (197,088 ) 100,000 - - - - (97,088 ) to book value of Rs.124.3 million for the year ended 30 June 2019. The approval of the shareholders of the Company
Total loan related other changes (185,235 ) 97,673 4,332 - - (83,230 ) for the dividend and bonus issue shall be obtained at the upcoming Annual General Meeting for the year ended
30 June 2019. The financial statements for the year ended 30 June 2019, do not include the effect of the proposed
Total equity related other changes - - - - - 942,354 942,354
final cash dividend and bonus issue which will be accounted for in the year ending 30 June 2020.
Balance as at 30 June 2019 1,122,032 802,696 492,644 3,695,688 6,113,060

40. DATE OF AUTHORISATION

37.3 Capital risk management
These financial statements were authorised for issue by the Board of Directors of the Company on August 29, 2019.
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern
in order to provide returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital. During 2018, the Company's strategy was to maintain leveraged gearing. The gearing ratio
as at 30 June 2019 was as follows:

Chief Executive Officer Chief Financial Officer Director

 Independent Auditors' Report to the Members
of National Foods Limited

Consolidated
Opinion

We have audited the annexed consolidated financial statements of National Foods Limited and its subsidiaries (the
Group), which comprise the consolidated statement of financial position as at 30 June 2019, and the consolidated

Financial
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity, and the
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies and other explanatory information.

Statements 2019
In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the
Group as at 30 June 2019, and of its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with the accounting and reporting standards as applicable in Pakistan.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered
Accountants of Pakistan (the Code), and we have fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Independent Auditors' Report to the Members Independent Auditors' Report to the Members
of National Foods Limited of National Foods Limited
Following are the Key audit matters:
S. No. Key audit matters How the matters were addressed in our audit S. No. Key audit matters How the matters were addressed in our audit

1. Revenue recognition Our audit procedures to assess the recognition of 2. Valuation of Trade Debtors Our audit procedures to assess the valuation of debtors,
revenue, amongst others, included the following: among others involved the following:
Refer notes 4.1.1, 4.15, 24 and 36 to the Group’s Refer notes 4.1.2, 4.5, 4.10.1, 8 and 39.2.1 to the
consolidated financial statements. • obtaining an understanding of the Group’s sale Group’s consolidated financial statements. • obtaining an understanding of and assessing the
of goods process and related controls, including design and testing implementation of
Revenue is recognized from sale of goods in assessing the design and testing of the The Group has a significant balance of trade debts. management’s key internal controls relating to
accordance with applicable accounting standards and implementation and operating effectiveness of Provision against doubtful debts is based on loss credit control process (including credit account
measured at net of discounts, rebates, allowances and the relevant key controls over revenue recognition, allowance for Expected Credit Loss (ECL). application approvals and credit limit review);
sales return. the calculation of discounts and rebates and
allowance for sales return including timing of The ECL model has been adopted during the year due • obtaining an understanding of management’s
We identified revenue recognition as key audit matter revenue recognition; to the application of IFRS 9 ‘Financial Instruments’. basis for the determination of provision required
because of risk of incorrect measurement of revenue Details about the application of the IFRS and its effect at the year end and the receivables collection process;
due to adjustments for discounts and rebates offered • considering the appropriateness of the Group’s is given in note 4.1.2 to the consolidated financial
to customers and allowance of sales return. Further, accounting policies for revenue recognition statements. • assessing the method used by the Group for
revenue is one of the key performance indicators and including those relating to discounts, rebates and recognition of the impact of application of IFRS
there is a potential risk that revenue transactions may allowance for sales return and assessing We identified valuation of trade debts as a key audit 9 with respect to provision for doubtful debts as
not be recognized in the appropriate period and risk compliance of those policies with applicable matter as it involves significant judgments and allowable under IFRS 9 and assessing the
of misapplication of the new accounting standard IFRS accounting standards; estimates in application of the expected credit loss reasonableness of assumptions of ECL;
15 “Revenue from Contracts with Customers”. model.
• obtaining and inspecting a sample of contracts • testing the accuracy of the data on a sample
with customers to understand the conditions basis extracted from the Group’s accounting
required for discounts, rebates and allowance for system which has been used to calculate the
sales return; provision required including subsequent recoveries;

• testing, on a sample basis, the accuracy of the • involving our specialist to review the methodology
amounts of discounts, rebates and allowance for used in the ECL model and compared this against
sales return recognized by agreeing to individual accepted best practice; and
customer agreements and perform recalculations;
• reviewing the adequacy of the Group’s disclosure
• testing, on a sample basis, invoices and included in note 8 and note 39.2.1 to the
inspecting credit notes issued subsequent to year accompanied consolidated financial statements.
end for completeness and accuracy of revenue
and accruals for discounts, rebates and 3. Valuation of Stock-in-trade Our audit procedures to assess the valuation of
allowances to the customers; stock-in-trade, amongst others, included the following:
Refer notes 4.9 and 7 to the consolidated financial
statements. • obtaining an understanding of and assessing the
• comparing, on a sample basis, specific revenue design and testing implementation of
transactions recorded before and after the Stock-in-trade forms a significant part of the Group’s management’s controls designed to identify
reporting date with underlying documentation to total assets. Stock-in-trade comprise of raw material, expired, obsolete as well as slow moving stocks
assess whether revenue has been recognized in work in process and finished good which are stated at close to expiry;
the appropriate accounting period; lower of cost and estimated net realizable value.
• obtaining an understanding of and testing, on a
• reviewing management’s IFRS 15 assessment to sample basis, management’s determination of
verify the reasonableness, accuracy and NRV and the key estimates adopted, including
completeness of the impact on the consolidated We identified the valuation of stock-in-trade as a key future selling prices, future costs to complete
financial statements of the Group including audit matter because determining an appropriate work-in-process and costs necessary to make
adequacy of disclosures; and write-down as a result of net realizable value (NRV) the sales, their basis of calculation, justification
being lower than their cost and provisions for expired for the amount of the write-downs and provisions;
• obtaining an understanding of the nature of the and obsolete inventories involves significant and
revenue contracts entered into by the Group, management judgment and estimation.
tested a sample of sales contracts to confirm our • checking on a sample basis specific provision
understanding and assessed whether or not for expired, obsolete as well as slow moving
management’s application of IFRS 15 requirements stocks close to expiry.
was in accordance with the standard.
4. Capitalization of Property, Plant and Equipment Our audit procedures to assess the capitalization of
property, plant and equipment, amongst others, included
Refer notes 1.2, 4.3 and 5 to the consolidated the following:
financial statements.
Independent Auditors' Report to the Members Independent Auditors' Report to the Members
of National Foods Limited of National Foods Limited
S. No. Key audit matters How the matters were addressed in our audit
Responsibilities of Management and Board of Directors for the Consolidated Financial Statements
The Group has made significant capital expenditure • obtaining an understanding of the design and Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
on building on leasehold land and plant and machinery. implementation of management controls over with accounting and reporting standards as applicable in Pakistan and Companies Act, 2017 and for such internal control as
capitalization and performing tests of control over management determines is necessary to enable the preparation of consolidated financial statements that are free from material
We identified capitalization of property, plant and authorization of capital expenditure and accuracy misstatement, whether due to fraud or error.
equipment as a key audit matter because there is a of its recording in the system;
risk that amounts capitalized may not meet the In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue
capitalization criteria with related implications on • testing, on sample basis, the costs incurred on as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
depreciation charge for the year. projects with supporting documentation and unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
contracts; The Board of Directors is responsible for overseeing the Group’s financial reporting process.
• assessing the nature of costs incurred for capital Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
projects through testing, on sample basis, of
amounts recorded and considering whether the Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
expenditure meets the criteria for capitalization from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
as per the applicable accounting standards; and assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable
in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
• inspecting supporting documents for the date of considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these consolidated financial statements.
capitalization when project was ready for its
intended use to assess whether depreciation As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional
commenced and further capitalization of costs skepticism throughout the audit. We also:
ceased from that date and assessing the useful
life assigned by management including testing • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
the calculation of related depreciation. error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
Impairment assessment of goodwill and other Our audit procedures to assess the impairment of higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
5. or the override of internal control.
indefinite life intangible assets goodwill and other indefinite life intangible assets,
amongst others, included the following: • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Refer notes 4.4 and 6.1 to the consolidated financial • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
statements. • obtaining management’s future cash flow forecasts disclosures made by management.
and testing the mathematical accuracy of the • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
The Group has recognized goodwill and other indefinite underlying value-in-use calculations, comparision of evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
life intangible assets from past acquisition. The Group historical budgets against actual result to assess the on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
is required to, at least annually, perform impairment quality of management’s forecast and agreeing them draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures
assessments of goodwill and intangible assets that to approved budgets and business plans; are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
have an indefinite useful life. auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• using our own valuation specialist to assist us in • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that
We identified annual impairment testing of goodwill evaluating the assumptions and methodologies used
achieves fair presentation.
and intangible assets that have an indefinite useful life by the group, in particular relating to the forecast • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
as a key audit matter because of the inherent revenue growth, profit margins, discount rate as well the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision
uncertainty and significant judgment involved in as assessing the integrity of the models used, and performance of the group audit. We remain solely responsible for our audit opinion.
determining the assumptions to be used in forecasting including the accuracy of the underlying calculation
and discounting future cash flows. of formulas and also assessing the sensitivity of key We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
assumptions and inputs; and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• assessing the appropriateness of the disclosures in We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
the consolidated financial statements in accordance independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
with the applicable accounting standards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
Management is responsible for the other information. The Other Information comprises the information included in the Annual circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
Report but does not include the consolidated financial statements and our auditor’s report thereon. doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of The engagement partner on the audit resulting in this independent auditor’s report is Moneeza Usman Butt.
assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the Other Information and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, Date: 29 August 2019 KPMG Taseer Hadi & Co.
we conclude that there is a material misstatement of this Other Information, we are required to report that fact. We have nothing
to report in this regard. Karachi Chartered Accountants
Consolidated Statement of Financial Position Consolidated Statement of Profit or Loss and
AS AT JUNE 30, 2019
Other Comprehensive Income
FOR THE YEAR ENDED JUNE 30, 2019
Note 2019 2018
Note 2019 2018
(Rupees in thousand)
(Rupees in thousand)
ASSETS
Sales 24 24,253,797 21,591,559
Non-current assets Cost of sales 25 (17,269,476) (14,887,820 )
Property, plant and equipment 5 5,037,451 4,531,638
Intangibles and goodwill 6 810,134 659,555 Gross profit 6,984,321 6,703,739
Long term deposits 40,846 41,409
5,888,431 5,232,602 Distribution costs 26 (3,920,912) (4,138,503 )
Current assets
Stores, spare parts and loose tools 86,725 41,880 Impairment loss on trade debts 8.1 (33,402) (106,149 )
Stock-in-trade 7 4,934,693 3,682,064 Administrative expenses 27 (1,140,774) (913,220 )
Trade debts 8 1,091,974 1,164,931 Other expenses 28 (131,112) (230,198 )
Advances 9 117,463 176,735
Trade deposits and prepayments 10 133,962 112,347 Other income 29 248,281 53,467
Other receivables 11 20,166 23,315 Operating profit 2,006,402 1,369,136
Sales tax refundable 133,789 121,424 Finance costs 30 (283,506) (195,728 )
Cash and bank balances 12 876,244 376,794
7,395,016 5,699,490 Profit before taxation 1,722,896 1,173,408
TOTAL ASSETS 13,283,447 10,932,092 Taxation - net 31 (352,381) (146,374 )
EQUITY AND LIABILITIES
Profit after tax 1,370,515 1,027,034

Shareholders' equity
Share capital and reserves
Other comprehensive income
Authorised share capital Items that will not be reclassified to profit and loss account:
1,000,000,000 ordinary shares of Rs. 5 each 13.1 5,000,000 1,000,000
Share Capital Remeasurements of retirement benefit liability (60,986) (31,786 )
Issued, subscribed and paid-up capital 13 621,641 518,034
Revenue Reserves Related deferred tax thereon 17,686 9,818
Unappropriated profit 3,993,506 3,233,729 (43,300) (21,968 )
Foreign exchange translation reserve 143,217 56,176 Items that are or may be reclassified subsequently to profit
Equity attributable to owners of the Company 4,758,364 3,807,939
Non-controlling interest 14 271,598 196,293 and loss account:
Total equity 5,029,962 4,004,232 Foreign operations - foreign currency transalation differences 87,041 48,090
Non - current liabilities
43,741 26,122

Long term finance - secured 15 928,142 199,259 Total comprehensive income for the year 1,414,256 1,053,156
Long term deposits 4,190 3,235
Deferred liabilities 17 75,760 45,065
Deferred rent 35,266 25,003 Profit attributable to:
Liabilities against assets subject to finance lease 18 38,619 34,470 Owners of the Parent Company 1,295,210 1,009,134
Deferred taxation - net 19 215,508 111,913 Non-controlling interest 75,305 17,900
1,297,485 418,945
Current liabilities 1,370,515 1,027,034
Total comprehensive income attributable to:
Trade and other payables 20 4,092,714 3,232,678 Owners of the Parent Company 1,341,865 1,036,059
Unclaimed Dividend 19,921 18,323
Contract Liability 21 146,650 - Non-controlling interest 72,391 17,097
Mark-up accrued 32,832 17,605 1,414,256 1,053,156
Short-term borrowings - secured 22 1,901,632 2,204,869
Long-term finance classified as current - secured - - 193,152 (Rupees)
Current maturity of long term finance - secured 15 315,881 333,750
Current maturity of deferred consideration 16 - - 188,128 Earnings per share (basic and diluted) 32 10.42 8.12
Current maturity of liabilities against assets subject to finance lease 18 9,598 6,604
Taxation - net 436,772 313,806
6,956,000 6,508,915
8,253,485 6,927,860
Commitments 23
TOTAL EQUITY AND LIABILITIES 13,283,447 10,932,092 The annexed notes 1 to 42 form an integral part of these consolidated financial statements.

The annexed notes 1 to 42 form an integral part of these consolidated financial statements.

Chief Executive Officer Chief Financial Officer Director Chief Executive Officer Chief Financial Officer Director
Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

Attributable to shareholders of the Parent Company Note 2019 2018

Revenue Reserve Non (Rupees in thousand)
Share Sub-total Total
capital Unapproprated Foreign currency controlling
translation interest Equity CASH FLOWS FROM OPERATING ACTIVITIES
profit
(Rupees in thousand) Cash generated from operations 33 2,347,069 1,876,639
Finance cost paid (269,647) (181,164 )
Balance as at 1 July 2017 518,034 2,686,892 7,283 3,212,209 179,196 3,391,405
Income tax paid (115,528) (389,804 )
Deferred rent 2,455 17,596
Total comprehensive income for the year ended
Retirement benefits obligations paid (42,366) (6,023 )
30 June 2018
Long term deposits 862 (6,716 )
Net cash generated from operating activities 1,922,845 1,310,528
Profit for the year - - 1,009,134 - - 1,009,134 17,900 1,027,034
Other comprehensive income - - (21,968) 48,893 26,925 (803) 26,122
CASH FLOWS FROM INVESTING ACTIVITIES
- - 987,166 48,893 1,036,059 17,097 1,053,156
Transaction with owners of the Company -
GOAT
distribution
Purchase of property, plant and equipment (952,272) (1,657,468 )
Sale proceeds from disposal of property, plant and equipment 95,021 23,176
Final dividend for the year ended 30 June
Purchase of intangible assets (42,370) (42,031 )
2017 @ Rs. 4.25 per share - - (440,329) - - (440,329) - - (440,329 )
Deferred consideration paid (207,017) - -
Net cash used in investing activities (1,106,638) (1,676,323)
Balance as at 30 June 2018 518,034 3,233,729 56,176 3,807,939 196,293 4,004,232
CASH FLOWS FROM FINANCING ACTIVITIES

Balance as at 1 July 2018 518,034 3,233,729 56,176 3,807,939 196,293 4,004,232

Proceeds from short term borrowings - - 288,000
Proceeds from long term finance 504,387 (55,416 )
Repayment of long term finance (177,354) 325,290
Total comprehensive income for the year
Repayment of short term borrowings (50,000) - -
ended 30 June 2019
Deferred consideration paid - - (126,531 )
Dividend paid (386,925) (432,477 )
Profit for the year - - 1,295,210 - - 1,295,210 75,305 1,370,515
Net cash from / (used in) financing activities (109,892) (1,134 )
Other comprehensive income - - (43,300) 87,041 43,741 (0) 43,741
- - 1,251,910 87,041 1,338,951 75,305 1,414,256
Net increase / (decrease) in cash and cash equivalents 706,315 (366,929 )
Transaction with owners in their capacity
as owners directly recorded in equity
Cash and cash equivalents at beginning of the year (978,075) (623,506 )
Currency translation difference on cash and cash equivalents 46,372 12,360
Final dividend for the year ended 30 June (388,526) - - (388,526) - - (388,526)
Cash and cash equivalents at end of the year 34 (225,388) (978,075 )
2017 @ Rs. 4.25 per share

1 Ordinary shares for each 5 shares

held alloted as bonus shares 103,607 (103,607) - - - - - - - -

Balance as at 30 June 2019 621,641 3,993,506 143,217 4,758,364 271,598 5,029,962

The annexed notes 1 to 42 form an integral part of these consolidated financial statements.
The annexed notes 1 to 42 form an integral part of these consolidated financial statements.

Chief Executive Officer Chief Financial Officer Director Chief Executive Officer Chief Financial Officer Director
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

1. THE GROUP AND ITS OPERATIONS - 1st Floor Bilal Complex Main PWD Road sector O-9, Islamabad.
- Unit No. R30-26, Floor No. 30, R Serviced Offices JLT, Reef Tower, Plot No. 01 Jumeirah Lakes Towers
1.1 The group consists of: Dubai, United Arab Emirates.
- 193 Maxome Avenue, Toronto, Ontario, Canada.
i) Parent Company - National Foods Limited - 27 Second Floor, Gloucester Place, London, United Kingdom.
ii) Subsidiary Company - National Foods DMCC, Dubai - 6400 Kennedy Road, Mississauga, Ontario
- 1110 Dearness Dr, Toronto, Ontario
National Foods Limited
2. BASIS OF PREPARATION
National Foods Limited ("Parent Company") was incorporated in Pakistan on February 19, 1970 as a private limited
company under the Companies Act, 1913 and subsequently converted into a public limited company under the 2.1 Statement of compliance
repealed Companies Ordinance, 1984 (now Companies Act, 2017) by special resolution passed in the extra
ordinary general meeting held on 30 March 1988. The Parent Company is principally engaged in the manufacture These consolidated financial statements have been prepared in accordance with the accounting and reporting
and sale of convenience based food products. It is listed on Pakistan Stock Exchange. The registered office of standards as applicable in Pakistan. The accounting and reporting standards as applicable in Pakistan comprise
the Parent Company is situated at 12 / CL - 6, Claremont Road, Civil Lines, Karachi. of:

The ultimate parent entity of the National Foods Limited is ATC Holdings (Private) Limited (formerly Associated - International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards
Textile Consultants (Private) Limited) based on control model as provided under International Financial Reporting Board (IASB) as notified under the Companies Act, 2017;
Standards 10 - 'Consolidated Financial Statements'.
- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan
National Foods DMCC as are notified under the Companies Act, 2017; and

National Foods DMCC ("NF DMCC") was registered on 7 November 2012 in Dubai Multi Commodities Centre - Provisions of and directives issued under the Companies Act, 2017 .
(“DMCC”) pursuant to Dubai (DMCC) Law No. 4 of 2001 and operates in the United Arab Emirates (“UAE”) under
a trade license issued by DMCC. The NF DMCC is a wholly owned subsidiary of National Foods Limited. Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards or IFAS,
the provisions of and directives issued under the Companies Act, 2017 have been followed.
Primary objective of NF DMCC is to boost export sales of Parent Company through trading in food stuff and other
services. NF DMCC also has following two wholly owned direct subsidiaries and one indirect subsidiary as follows: 2.2 Basis of measurement

National Foods Pakistan (UK) Limited These consolidated financial statements have been prepared under the historical cost convention, except as
stated otherwise.
National Foods Pakistan (UK) Limited was incorporated in United Kingdom on 29 May 2013 as a private company
under the UK Companies Act, 2006. The company is a wholly owned subsidiary of National Foods DMCC. The 2.3 Functional and presentation currency
company is principally engaged in the trading of food products.
These consolidated financial statements are presented in Pakistan Rupees which is Group's functional currency.
National Epicure Inc. All financial information presented in Pakistan Rupees has been rounded to the nearest thousand of rupees, unless
stated otherwise.
National Epicure Inc. ("NEI") was incorporated in Canada on 16 October 2013 under the Canada Business
Corporations Act. NEI is a wholly owned subsidiary of National Foods DMCC. NEI is principally engaged in the 2.4 Use of significant estimates and judgments
trading of food products.
The preparation of these consolidated financial statements in conformity with approved accounting standards,
A-1 Bags & Supplies Inc. as applicable in Pakistan, requires management to make judgments, estimates and assumptions that affect the
application of policies and the reported amounts of assets, liabilities, income and expenses. The estimates and
A 1 Bags & Supplies Inc. (the “Company”) was incorporated under the Business Corporations Act of Ontario on associated assumptions are based on historical experience and various other factors that are believed to be
March 14, 2001. National Epicure Inc. acquired 60% holding in A-1 Bags and Supplies in the year 2017 and is reasonable under the circumstances, the results of which form the basis of making the judgments about the
principally engaged in distribution and wholesale of food products, disposables, janitorial and sanitation products. carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates.
1.2 The manufacturing facilities and sales offices of the Group companies are situated at the following
locations: The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period
Factories: of the revision and future periods if the revision affects both current and future periods. Judgments made by the
- Unit F-160/ C, F- 133, S.I.T.E., Karachi. management in the application of approved accounting standards, as applicable in Pakistan, that have significant
- Office A-13, North Western Industrial Zone, Bin Qasim, Karachi. effect on the consolidated financial statements and estimates with significant risk of material adjustment in the
- 53-KM G.T. Road, Chainwala Mord Amanabad, Gujranwala. next year are described in the following:
- 5-A/1, New Muslim Town, Muridke.
- A 393 Nooriabad industrial estate, Nooriabad, Karachi. Property, plant and equipment / intangible assets

Sales offices: The Group reviews the rate of depreciation / amortization, useful life, residual value and value of assets for possible
- Office No.107, 1st Floor Parsa Tower Sharah-e-Faisal, Karachi. impairment on an annual basis. Any change in the estimates in future years might affect the carrying amounts of
- Banglow No. 225, Shahrah-e-Abbasi Akhuwat Nagar Society, Sukkur. the respective items of property, plant and equipment / intangible assets with a corresponding effect on the
- 2nd Floor Mall 2 Plaza Main Boulevard Kohinoor City Jaranwala Road, Faisalabad. depreciation / amortization charge and impairment.
- 18-CCA (Commercial Area) Phase V111 DHA Lahore, Cantt.
- Plot # 25 Din Plaza Canal Road Main Gate Canal View Housing Society, Gujranwala.
 Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

Stock in trade / stores, spares and loose tools Legal Form of a Lease’. IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A
lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability
The Group's continuously reviews its inventory for existence of any items which may have become obsolete. representing its obligation to make lease payments. There are recognition exemptions for short-term leases and
These estimates are based on historical experience and are continuously reviewed and the cost of such stocks leases of low-value items. Lessor accounting remains similar to the current standard i.e. lessors continue to
is fully provided for. classify leases as finance or operating leases. Management is assessing the potential impact of the standard on
Group’s lease arrangements
Trade debts and other receivables
- Amendment to IFRS 9 'Financial Instruments' - Prepayment Features with Negative Compensation (effective
These financial assets are adjusted for loss allowances that are measured at amount equal to lifetime expected for annual periods beginning on or after 1 January 2019). For a debt instrument to be eligible for measurement
credit loss that result from all possible default events over expected life of the financial asset. at amortised cost or FVOCI, IFRS 9 requires its contractual cash flows to meet the SPPI criterion - i.e. the cash
flows are 'solely payments of principal and interest'. Some prepayment options could result in the party that
Provision for refund liability triggers the early termination receiving compensation from the other party (negative compensation). The
amendment allows that financial assets containing prepayment features with negative ompensation can be
Refund liability provisions are recognized as deduction from revenue based on terms of the arrangements with measured at amortised cost or at fair value through other comprehensive income (FVOCI) if they meet the
the customer and are included in trade and other payables. No asset is recognized for refunds as they are not other relevant requirements of IFRS 9. The application of amendment is not likely to have an impact on Groups'
anticipated to be resold. A receivable is recognised when the goods are delivered as this is the point in time that financial statements.
the consideration is unconditional because only the passage of time is required before the payment is due.
- Amendment to IAS 28 'Investments in Associates and Joint Ventures' - Long Term Interests in Associates and
Retirement benefits obligations Joint Ventures (effective for annual period beginning on or after 1 January 2019). The amendment will affect
companies that finance such entities with preference shares or with loans for which repayment is not expected
Certain actuarial assumptions have been adopted for valuation of present value of defined benefit obligations and in the foreseeable future (referred to as long-term interests or 'LTI'). The amendment and Grouping example
fair value of plan assets. Changes in these assumptions in future years may affect the liability under this scheme tate that LTI are in the scope of both IFRS 9 and IAS 28 and explain the annual sequence in which both
in those years. standards are to be applied. The amendments are not likely to have an impact on Groups' financial statements.

Taxation - Amendments to IAS 19 'Employee Benefits'- Plan Amendment, Curtailment or Settlement (effective for annual
periods beginning on or after 1 January 2019). The amendments clarify that on amendment, curtailment or
In making the estimates for income taxes currently payable by the Group, the management looks at the current settlement of a defined benefit plan, a Group now uses updated actuarial assumptions to determine its
income tax law and the decisions of appellate authorities on certain matters in the past. current service cost and net interest for the period; and the effect of the asset ceiling is disregarded when
calculating the gain or loss on any settlement of the plan and is dealt with separately in other comprehensive
Goodwill and indefinite life intangible assets income. The application of amendments is not likely to have an impact on Groups' financial statements.

Goodwill and indefinite life intangible assets are tested for impairment on an annual basis and also when there - Amendment to IFRS 3 'Business Combinations' - Definition of a Business (effective for business combinations
is an indication of impairment. Impairment loss on goodwill is not reversed. On disposal of subsidiary, the attributable for which the acquisition date is on or after the beginning of annual period beginning on or after 1 January
amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill arising from is 2020). The IASB has issued amendments aiming to resolve the difficulties that arise when an entity determines
allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those whether it has acquired a business or a group of assets. The amendments clarify that to be considered a
cash-generating units or groups of cash-generating units that are expected to benefit from the business business, an acquired set of activities and assets must include, at a minimum, an input and a substantive
combination in which the goodwill arose. process that together significantly contribute to the ability to create outputs. The amendments includ The
standard is effective for transactions in the future and therefore would not have an impact on past financial
3. ACCOUNTING STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED statements.
ACCOUNTING STANDARDS
- Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting
3.1 Standards, interpretations and amendments to published approved accounting standards that are effective Estimates and Errors (effective for annual periods beginning on or after 1 January 2020). The amendments are
but not relevant: intended to make the definition of material in IAS 1 easier to understand and are not intended to alter the
underlying concept of materiality in IFRS Standards. In addition, the IASB has also issued guidance on how
- There are certain new standards, amendments to the approved accounting standards and new interpretations to make materiality judgments when preparing their general purpose financial statements in accordance with
that are mandatory for accounting periods beginning on or after 1 July 2018. However, these do not have any IFRS Standards.
significant impact on the Group's financial reporting and therefore have not been detailed in these consolidated
financial statements. - On 29 March 2018, the International Accounting Standards Board (the IASB) has issued a revised Conceptual
Framework for Financial Reporting which is applicable immediately contains changes that will set a new
3.2 Standards, interpretations and amendments to published approved accounting standards that are not direction for IFRS in the future.. The Conceptual Framework primarily serves as a tool for the IASB to develop
yet effective: standards and to assist the IFRS Interpretations Committee in interpreting them. It does not override the
requirements of individual IFRSs and any inconsistencies with the revised Framework will be subject to the
The following International Financial Reporting Standards (IFRS Standards) as notified under the Companies Act, usual due process - this means that the overall impact on standard setting may take some time to crystallise.
2017 and the amendments and interpretations thereto will be effective for accounting periods beginning on or The companies may use the Framework as a reference for selecting their accounting policies in the absence
after 01 January 2019: of specific IFRS requirements. In these cases, companies should review those policies and apply the new
guidance retrospectively as of 1 January 2020, unless the new guidance contains specific scope outs.
- IFRIC 23 ‘Uncertainty over Income Tax Treatments’ (effective for annual periods beginning on or after 1 January
2019) clarifies the accounting for income tax when there is uncertainty over income tax treatments under IAS - Annual Improvements to IFRS Standards 2015-2017 Cycle - the improvements address amendments to
12. The interpretation requires requires the uncertainty over tax treatment be reflected in the measurement of following approved accounting standards:
current and deferred tax. The application of interpretation is not likely to have an impact on Groups' financial
statements. - IFRS 3 Business Combinations and IFRS 11 Joint Arrangement - the amendment aims to clarify the accounting
treatment when a Group increases its interest in a joint operation that meets the definition of a business. A
- IFRS 16 ‘Leases’ (effective for annual period beginning on or after 1 January 2019). IFRS 16 replaces existing Group remeasures its previously held interest in a joint operation when it obtains control of the business. A
leasing guidance, including IAS 17 ‘Leases’, IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, Group does not remeasure its previously held interest in a joint operation when it
SIC-15 ‘Operating Leases- Incentives and SIC-27 ‘Evaluating the Substance of Transactions Involving the
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

obtains joint control of the business.

- IAS 12 Income Taxes - the amendment clarifies that all income tax consequences of dividends (including As reported Adjustments Amounts without
payments on financial instruments classified as equity) are recognized consistently with the transaction that adoption of IFRS 15
generates the distributable profits. ----------------- (Rupees in thousand) -------------------

- IAS 23 Borrowing Costs - the amendment clarifies that a Group treats as part of general borrowings any
borrowing originally made to develop an asset when the asset is ready for its intended use or sale. Revenue 24,253,797 937,539 25,191,336
Cost of Sales (17,269,476) 58,463 (17,211,013)
Distribution Costs (3,920,912) (996,002) (4,916,914)
The above amendments are effective from annual period beginning on or after 1 January 2019 and are not likely
to have an impact on Groups' financial statements. Had the Group applied IFRS 15 retrospectively, the impact on the consolidated statement of profit or loss and
other comprehensive income for the year ended 30 June 2018 would have been as follows:
- IAS 12 Income Taxes - the amendment clarifies that all income tax consequences of dividends (including
payments on financial instruments classified as equity) are recognized consistently with the transaction that
generates the distributable profits. As reported Adjustments Amounts with
adoption of IFRS 15
- IAS 23 Borrowing Costs - the amendment clarifies that a Group treats as part of general borrowings any ----------------- (Rupees in thousand) -------------------
borrowing originally made to develop an asset when the asset is ready for its intended use or sale.

The above improvements to standards are not likely to have material / significant impact on Group's financial Revenue 21,591,559 (592,295) 20,999,264
statements. Cost of Sales (14,887,820) (65,424) (14,953,244)
Distribution Costs (4,138,503) 657,719 (3,480,784)
4. SIGNIFICANT ACCOUNTING POLICIES
Further contract liability as at 30 June 2018 amounting to Rs. 70 million would have been separately reported on
The significant accounting policies as set out below are consistently applied for all periods presented in these statement of financial position which is included in trade and other payables. Apart from these changes, the
consolidated financial statements. application of IFRS 15 has not had a significant impact on the financial position and / or financial performance of
the Group for the reasons described above. Accordingly there was no adjustment to retained earnings on application
4.1 Changes in accounting policies of IFRS 15 at 1 July 2018.

4.1.1 IFRS 15 ‘REVENUE FROM CONTRACTS WITH CUSTOMERS’ IFRS 15 did not have a significant impact on the accounting policies of the Group.

IFRS 15 replaced IAS 18 'Revenue', IAS 11 'Construction Contracts' and related interpretations. The Group has 4.1.2 IFRS 9 'Financial Instruments'
applied the modified retrospective method upon adoption of IFRS 15 as allowed under the Standard. This method
requires the recognition of the cumulative effect (without practical expedients) of initially applying IFRS 15 to IFRS 9 replaces the provisions of IAS 39 ‘Financial Instruments: Recognition and Measurement’ that relate to the
retained earnings. Accordingly, the information presented for comparative period in these financial statements recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial
have not been restated i.e. it is presented, as previously reported under IAS 18 and related interpretations. instruments, impairment of financial assets and hedge accounting. The IFRS 9 has been adopted without restating
comparative information as allowed under the standard.
The timing of revenue recognition of the Group under IFRS 15 is generally consistent with the previous standard,
IAS 18 and related interpretations. Therefore, the adoption of IFRS 15 did not have an impact on the timing of The details of new significant accounting policies and the nature and effect of the changes to previous accounting
revenue recognition of the Group. However, the amount of revenue to be recognized was affected as it changed policies are set out below:
the way Group accounts for consideration payable to customers, cost of fulfilling the service (performance
obligation) to customer and certain payments to customers or consumers, all of which were previously shown as (i) Classification and measurement of financial assets and financial liabilities
distribution expenses, to be shown as deductions from revenue or included in cost of sales.
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial
Prior to adoption of IFRS 15, a provision for sales discounts and advance consideration received from customers liabilities. However, it eliminates the previous IAS 39 categories for financial assets of held to maturity, loans and
was included in ‘Trade and other payables’ which now is reclassified in 'Contract liabilities' presented separately receivables and available for sale.
on statement of financial position. In addition, reclassification has been made from 'Trade and other payables' to
'Contract liabilities' for outstanding balance of advance from customers and sales discounts payable for prior The Group reclassifies debt investments when and only when its business model for managing those assets
year to provide comparison. Advances from customers amounting to Rs. 61.79 million represents advance changes.
consideration received from customers at the beginning of the period have been recognised as revenue for year
ended 30 June 2019. At present the Group has financial assets measured at amortized cost. Trade debts, deposits, advances, other
receivables and cash and cash equivalents that were classified as loans and receivables under IAS 39 are now
The impact of adoption of IFRS 15 on the consolidated statement of profit or loss and other comprehensive classified at amortised cost. The classification and measurement under IFRS 9 does not have any impact on
income for the year ended 30 June 2019 is as follows: Group’s accounting policy.

Trade receivable is initially measured at transaction price and are subsequently measured at amortised cost using
the effective interest method, net of impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

The following explains the original and new classification and measurement categories under IAS 39 and under
IFRS 9 respectively of the Group’s significant financial assets:
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction cost are
expensed as incurred, except if related to the issue of debt or equity securities. When the initial accounting for a
"Original "New "Original "New business combination is incomplete at the end of a reporting period, provisional amounts are used. During the
classification classification carrying carrying measurement period, the provisional amounts are retrospectively adjusted and additional assets and liabilities
under IAS 39" under IFRS 9" amount amount may be recognized, to reflect new information obtained about the facts and circumstances that existed at the
under IAS 39" under IFRS 9" acquisition date which would have affected the measurement of the amounts recognized at that date, had they
been known the measurement period does not exceed twelve months from the date of acquisition.
Financial Assets ----------------- (Rupees in thousand) -------------------
Subsidiaries

Long-term deposits "Loans and Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to or has rights
Receivables" Amortised Cost 40,846 40,846 to variable returns from its involvement with the entity and has the ability to affect those returns through its power
Trade debts "Loans and over the entity generally accompanying a shareholding of more than fifty percent of the voting rights. Subsidiaries
Receivables" Amortised Cost 1,091,974 1,091,974 are fully consolidated from the date on which control is transferred to the Group and up to the date when the
Advances to employees "Loans and control ceases.
Receivables" Amortised Cost 1,011 1,011 Non-controlling interest is that portion of equity in a subsidiary that is not attributable, directly or indirectly, to the
Trade deposits "Loans and Parent Company. Non-controlling interests are measured at their proportionate share of the acquiree's identifiable
Receivables" Amortised Cost 38,835 38,835 net assets at the date of acquisition. Non-controlling interests are presented as a separate item in the consolidated
Other receivables "Loans and financial statements.
Receivables" Amortised Cost 20,166 20,166
Cash and bank balances "Loans and The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For
Receivables" Amortised Cost 876,244 876,244 purchases from non-controlling interests, the difference between any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary is recorded in the equity. Gains or losses on disposals
(ii) Impairment to non-controlling interests are also recorded in equity.

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model. The new impairment Changes in the Group interest in a subsidiary that do not result in a loss of control are accounted for as equity as
model applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, transactions.
but not to investments in equity instruments. ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling
is then discounted at an approximation to the asset’s original effective interest rate. interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss
of control is recognised in consolidated profit and loss account. If the Group retains any interest in the previous
The financial assets at amortised cost consist of trade receivables, cash and cash equivalents, and subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted
other receivables. for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence
retained.
For trade receivables, the Group applies the IFRS 9 simplified approach to measuring expected credit losses Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, transactions are eliminated.
trade receivables have been grouped based on shared credit risk characteristics and the days past due. Majority
of debtors are regular customers of the Group and management uses actual historical credit loss experience, 4.3 Property, plant and equipment
based on payment profile of credit sales over past year, adjusted for forward-looking factors specific to the debtors
and the economic environment to determine lifetime expected loss allowance. There is no significant impact from Initial recognition
the new expected credit loss (ECL) impairment model under IFRS 9 on allowances and provisions for trade
receivables and retained earnings of the Group as at 1 July 2018. Trade receivables are written off when there is The cost of an item of property, plant and equipment is recognised as an asset if it is probable that future economic
no reasonable expectation of recovery. benefits associated with the item will flow to the entity and the cost of such item can be measured reliably.

Impairment losses related to trade and other receivables are presented separately in the statement of profit or Recognition of the cost in the carrying amount of an item of property, plant and equipment ceases when the items
loss and other comprehensive income. As a result, the Group reclassified impairment losses amounting to Rs is in the location and condition necessary for it to be capable of operating in the manner intended by the
107.7 million recognised under IAS 39 for comparative period, from ‘distribution costs’ to ‘impairment loss on management.
trade and other receivables in the statement of profit or loss and other comprehensive income. During the year
the Group regognised an impairment loss of trade debts under IFRS 9 expected credit loss model amounting to Measurement
Rs. 33.40 million.
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
4.2. Basis of consolidation The cost of property, plant and equipment includes:

The consolidated financial statements consists of financial statements of the Parent Company and its subsidiary (a) its purchase price including import duties, non refundable purchase taxes after deducting trade discounts and
companies as disclosed in note 1.1 to these consolidated financial statements (here in after referred as Group). rebates;

The financial statements of the Parent Company and its subsidiary companies are prepared up to the same (b) any other costs directly attributable to bringing the asset to the location and condition necessary for it to be
reporting date and are combined on a line-by-line basis. capable of operating in the manner intended by the management; and;

Business Combination (c) Borrowing costs, if any.

The Group accounts for business combination using the acquisition method when control is transferred to the When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
Group. The consideration transferred (including contingent consideration) in the acquisition is measured at fair separate items (major components) of property, plant and equipment.
value, as are the identifiable net assets acquired. Any goodwill that acquire is not amortized but tested annually
Subsequent expenditure (including normal repairs and maintenance)
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

Expenditures incurred to replace a significant component of an item of property, plant and equipment is capitalised The classification depends on the entity’s business model for managing the financial assets and the contractual
and the asset so replaced is retired. Other subsequent expenditure is capitalised only when it is probable that terms of the cash flows.
future economic benefits associated with the item will flow to the entity and the cost of the items can be measured
reliably. All other expenditures (including normal repairs and maintenance) is recognised in the profit or loss account A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
as an expense when it is incurred. as at fair value through profit or loss:

Depreciation - it is held within business model whose objective is to hold assets to collect contractual cash flows; and

Depreciation is charged on straight line method at the rates specified in respective notes in these consolidated - its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest
financial statements. on principal amount outstanding.

Depreciation on additions to property, plant and equipment is charged from the month the asset is available for A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at
use upto the month of disposal. FVTPL:

Depreciation methods, useful lives and residual values of each part of property, plant and equipment that is
significant in relation to the total cost of the asset are reviewed, and adjusted if appropriate, at each balance sheet - it is held within a business model whose objective is achieved by both collecting contractual cash flows and
date. selling financial assets; and

Gains and losses on disposal - its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds
from disposal with the carrying amount of the property, plant and equipment, and is recognized in the profit or A financial asset shall be measured at fair value through profit or loss unless it is measured at amortised cost or
loss account. at FVOCI. However the Group may make an irrevocable election at initial recognition for particular investments
in equity instruments that would otherwise be measured at FVTPL to present subsequent changes in fair value in
Capital work in progress other comprehensive.

Capital work in progress is stated at cost less impairment loss, if any and consists of expenditures incurred On initial recognition, the Group may, irrevocably designate a financial asset as measured at FVTPL if doing so
(including any borrowing cost, if applicable) and advances made in the course of their construction and installation. eliminates or significantly reduces a measurement or recognition inconsistency ('accounting mismatch') that would
Transfers are made to relevant asset category as and when assets are available for intended use. otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on
different bases.
4.4 Intangible assets and Goodwill
Initial measurement - Financial Assets
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. Other
intangible assets, including customer relationships that are acquired by the Group and have finite useful lives are A financial asset is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly
measured at cost less accumulated amortisation and any accumulated impairment losses. Trademark and other attributable to its acquisition. However, at initial recognition, the Group measures trade receivables at their
intangible assets have indefinite useful life and is not amortised, therefore, measured at cost less any accumulated transaction price if the trade receivables do not contain a significant financing component.
impairment losses.
Subsequent measurement
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, Debt Investments at FVOCI These assets are subsequently measured at fair value. Interest / markup
is recognised in profit or loss as incurred. income calculated using the effective interest method, foreign exchange
gains and losses and impairment are recognised in the statement of profit or
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the loss. Other net gains and losses are recognised in other comprehensive
straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Goodwill is not income. On de-recognition, gains and losses accumulated in other
amortised. comprehensive income are reclassified to the statement of profit or loss.

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if Equity Investments at FVOCI These assets are subsequently measured at fair value. Dividends are
appropriate. recognised as income in the statement of profit or loss unless the dividend
clearly represents a recovery of part of the cost of the investment. Other net
4.5 Financial Instruments gains and losses are recognised in other comprehensive income and are
never reclassified to the statement of profit or loss.
4.5.1 Classification, recognition and measurement - Financial Assets

Classification Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and
losses, including any interest / markup or dividend income, are recognised
The Group classifies its financial assets in the following measurement categories: in profit or loss.

- fair value through other comprehensive income (FVOCI); Financial assets measured at These assets are subsequently measured at amortised cost using the
amortised cost effective interest method. The amortised cost is reduced by impairment
- fair value through profit or loss (FVTPL); and losses. Interest / markup income, foreign exchange gains and losses and
impairment are recognised in the statement of profit or loss.
- measured at amortised cost.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

4.5.2 Non-derivative Financial assets tax rates enacted or substantively enacted by the end of the reporting period. The calculation of current tax takes
into account tax credit and tax rebates, if any, and is inclusive of any adjustments to income tax payable or
All non-derivative financial assets are initially recognised on trade date i.e. date on which the Group becomes recoverable in respect of previous years.
party to the respective contractual provisions. Non-derivative financial assets comprise loans and receivables
that are financial assets with fixed or determinable payments that are not quoted in active markets and includes ii) Deferred
trade debts, advances, other receivables and cash and cash equivalent. The Group derecognises the financial
assets when the contractual rights to the cash flows from the asset expires or it transfers the rights to receive the Deferred tax is accounted for using the balance sheet liability method on all temporary differences arising between
contractual cash flows in a transaction in which substantially all of the risk and rewards of ownership of the financial tax base of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax
assets are transferred or it neither transfers nor retain substantially all of the risks and rewards of ownership and liability is generally recognised for all taxable temporary differences and deferred tax asset is recognised to the
does not retain control over the transferred asset. extent that it is probable that future taxable profits will be available against which the deductible temporary
differences, unused tax losses and tax credits can be utilised. Deferred tax is charged or credited in the profit and
4.5.2.1 Trade debts, deposits, advances and other receivables loss account. Deferred tax liability of the Parent Group is restricted to 92.99% (2018: 90.3%) of the total deferred
tax liability based on the assumptions that export sales will continue under Final Tax Regime and historical trend
These are classified at amortized cost and are initially recognised when they are originated and measured at fair of export and local sales ratio will continue to be approximately the same in foreseeable future.
value of consideration receivable. These assets are written off when there is no reasonable expectation of recovery.
Further, these assets are adjusted for loss allowances that are measured at amount equal to lifetime expected 4.7 Employee retirement benefits
credit loss that result from all possible default events over expected life of the financial asset.
Defined benefit plans
4.5.2.2 Cash and cash equivalents
The Parent Group operates a funded pension scheme and post retirement medical benefit for chief executive,
For the purpose of presentation in statement of cash flow, cash and cash equivalents includes cash in hand, one non-executive director and one former director. The liability recognised in the consolidated balance sheet in
balances with banks and short term borrowings availed by the Group, which are repayable on demand and form respect of the defined benefit plans is the present value of the defined benefit obligation at the end of the reporting
an integral part of the Group’s cash management. period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent
actuary using the projected unit credit method. Remeasurements which comprise actuarial gains and losses and
4.5.3 Financial Liabilities the return on plan assets (excluding interest) are recognised immediately in other comprehensive income. The
latest actuarial valuation of the defined benefit plans was conducted at 30 June 2019.
Financial liabilities are initially recognised on trade date i.e. date on which the Group becomes party to the
respective contractual provisions. Financial liabilities include mark-up bearing borrowings and trade and other Past service cost and the amount arising as a result of remeasurements are recognised in the balance sheet
payables. The Group derecognises the financial liabilities when contractual obligations are discharged or cancelled immediately, with a charge or credit to other comprehensive income in the periods in which they occur.
or expire. Financial liability other than at fair value through profit or loss are initially measured at fair value less
any directly attributable transaction cost. Subsequent to initial recognition, these liabilities are measured at Defined contribution plan
amortised cost using effective interest rate method.
The Group operates an approved contributory provident fund for all employees. Equal monthly contributions are
4.5.3.1 Mark-up bearing borrowings and borrowing costs made, both by the Group and the employees, to the fund at the rate of 10% per annum of the basic salary.

Mark-up bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent Other long-term employee benefits
to initial recognition, mark-up bearing borrowings are stated at amortized cost, while the difference between the
cost (reduced for periodic payments) and redemption value is recognized in the profit and loss account over the "The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that"
period of the borrowings using the effective interest method. employees have earned in return for their service in the current and prior periods. That benefit is discounted to
determine its present value. Remeasurements are recognised in profit or loss in the period in which they arise.
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the 4.8 Stores, spare parts and loose tools
relevant asset.
These are valued at weighted average cost less provision for slow moving and obsolete stores, spare parts and
4.5.3.2 Trade and other payables loose tools, if any. Items in transit are valued at cost comprising invoice value plus other charges incurred
thereon.
Trade and other payables are recognised initially at fair value plus directly attributable costs, if any, and subsequently
measured at amortised costs. 4.9 Stock in trade

4.5.4 Offsetting of financial assets and financial liabilities All stocks are stated at the lower of cost and estimated net realisable value. Cost is determined by weighted
average method except for those in transit where it represents invoice value and other charges incurred thereon.
Financial assets and financial liabilities are offset and the net amount is reported in the financial statements only Net realisable value signifies the estimated selling price in the ordinary course of business less cost necessarily
when the Group has currently legally enforceable right to set-off the recognised amounts and the Group intends to be incurred in order to make the sale. Cost of work in process and finished goods includes direct cost of
either to settle on a net basis or to realize the assets and to settle the liabilities simultaneously. The legally materials, direct cost of labour and production overheads.
enforceable right must not be contingent on future events and must be enforceable in normal course of business
and in the event of default, insolvency or winding up of the Group or the counter parties. 4.10 Impairment losses

4.6 Taxation 4.10.1 Financial assets

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that The Group recognises loss allowances for Expected Credit Losses (ECLs) in respect of financial assets measured
it relates to, or items recognised directly in equity or in other comprehensive income, in which case the tax amounts at amortised cost.
are recognized directly in other comprehensive income or equity, as the case may be.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are
i) Current measured at 12-month ECLs:

Current tax is the expected tax payable or receivable on the taxable income or loss for the year; calculated using
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

- debt securities that are determined to have low credit risk at the reporting date; and The results and financial position of foreign operation are translated into the presentation currency as follows:

- other debt securities and bank balance for which credit risk (i.e. the risk of default occuring over the expected - assets and liabilities including goodwill and fair value adjustment arising on acquisition are translated into Pak
life of the financial instrument) has not increased significantly since initial recognition. Rupees at the exchange rate at the reporting date;

Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs. When determining - income and expenses for income statement are translated at average exchange rate (unless this average is
whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in
ECLs, the Group considers reasonable and supportable information that is relevant and available without undue which case income and expenses are translated at the rate on the dates of the transactions); and
cost or effort. This includes both quantitative and quanlitative information and analysis, based on the Group's
historical experience and informed credit assessment and including forward-looking information. - all resulting exchange differences are recognised in other comprehensive income and accumulated in these
translation reserve, except to the extent that the translation difference is allocated to NCI.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than past due
for a reasonable period of time. Lifetime ECLs are the ECLs that result from all possible default events over the 4.15 Revenue recognition
expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events
that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the Revenue is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by
instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum transferring control over the promised goods and services to the customer. It also specifies the accounting for
contractual period over which the Group is exposed to credit risk. carrying amount of the assets. the costs directly related to fulfilling a contract. Revenue from sale of goods is recognised at the point in time
when control of the product has transferred, being when the products are delivered to the customer. Invoices are
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of generated and revenue is recognised on delivery of goods. Delivery occurs when the products have been shipped
recovering of a financial asset in its entirety or a portion thereof. The Group individually makes an assessment to / or and delivered to the customer’s destination / specific location, the risks of loss have been transferred to
with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. the customer and the customer has accepted the product.
The Group expects no significant recovery from the amount written off. However, financial assets that are written
off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of The consideration which the Group receives in exchange for its goods or services may be fixed or variable. Variable
amounts due. consideration is only recognized when it is highly probable that a significant reversal will not occur. Revenue is
measured based on the consideration specified in a contract with a customer, net of returns, amounts collected
The adoption of the expected loss approach has not resulted in any material change in impairment provision for on behalf of third parties (sales taxes etc), pricing allowances, other trade discounts, volume rebates and couponing,
any financial asset. price promotions to consumers / customers and any other consideration payable to customers. The level of
discounts, allowances and promotional rebates are recognized, on estimated basis using historical experience
4.10.2 Non-financial assets and the specific terms of the arrangement, as a deduction from revenue at the time that the related sales are
recognized or when such incentives are offered to the customer or consumer. Sales return provisions are recognized
The carrying amount of the Group's non-financial assets are reviewed at each balance sheet date to determine as deduction from revenue based on terms of the arrangements with the customer and are included in trade and
whether there is any indication of impairment loss. If such indications exist, the assets' recoverable amount is other payables. No asset is recognized for returns as they are not anticipated to be resold. A receivable is recognised
estimated in order to determine the extent of impairment loss, if any. Impairment losses are recognised as expense when the goods are delivered as this is the point in time that the consideration is unconditional because only the
in the profit and loss account. An impairment loss is reversed if there is a change in the estimates used to determine passage of time is required before the payment is due.
the recoverable amount.
The Group provides retrospective discounts to its customers on all products purchased by the customer once
An impairment loss is reversed only to the extent that the assets' carrying amount does not exceed the carrying the quantity of products purchased during the period exceeds a threshold specified in the contract. A contract
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been liability is recognised for expected discount payable to customers in relation to sales made until the end of the
recognised. reporting period. Further, a contract liablity is also recognised for short term advances that the Group receives
from its customers.
4.11 Ijarah
4.16 Interest / Mark up income / late payment by trade debtors
In ijarah transactions' significant portion of the risks and rewards of ownership are retained by the lessor. Islamic
Financial Accounting Standard 2 – 'Ijarah' requires the recognition of ‘ujrah payments’ (lease rentals) against ijarah Income on late payment by trade debtors is recognised on accrual basis.
financing as an expense in the consolidated profit or loss account on a straight-line basis over the ijarah term.
4.17 Dividend income
4.12 Leases
Dividend income is recognised when the Group's right to receive payment is established.
Leases of assets under which the lessor effectively retains all the risks and rewards of ownership are classified
as operating leases. Payments made under operating lease are recognized in profit or loss on a straight-line basis 4.18 Rental income
over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense,
over the term of the lease. Rental income from properties on operating lease is recognized in profit or loss on a straight-line basis over the
term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the
4.13 Provisions term of the lease.

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past event, 4.19 Income from debt securities
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
and a reliable estimate of the amount can be made. Income on bank deposit and debt securities is recognised on a time proportion basis using effective interest rate
method.
4.14 Foreign currency transactions and translation
4.20 Miscellaneous income
Foreign currency transactions are translated into Pak Rupee using the exchange rates approximating those
prevailing at the dates of the transactions. All monetary assets and liabilities in foreign currencies are translated Miscellaneous income including export rebate is recoginised on receipt basis.
into Pak Rupee at the rates of exchange approximating those prevailing at the balance sheet date. Exchange
gains / losses on translation are included in income currently.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

4.21 Research and development 2018

Research and development expenditure is charged to profit or loss in the period in which it is incurred. Leasehold Leasehold Buildings on Plant and Furniture Office and Laboratory
Land improve- leasehold machinery other
and fittings equipments
Computers
equipments
Vehicles Total
ments land
4.22 Dividends
(Rupees in thousand)
Dividend distribution to the Group's shareholders and appropriations to / from reserves are recognised in the At 1 July 2017
Cost 232,549 33,933 909,103 1,780,054 172,352 186,736 176,503 34,617 105,640 3,631,487
period in which these are approved.
Accumulated depreciation (28,469) (6,521) (237,505 ) (698,256) (103,329 ) (81,894 ) (140,707) (16,105) (71,795 ) (1,384,581)
Net exchange difference - - 322 - - - - 693 473 33 - - 196 1,717
Net book value 204,080 27,734 671,598 1,081,798 69,716 105,315 35,829 18,512 34,041 2,248,623

Additions / transfer - note - 5.4.1 - - 32,631 1,048,729 283,452 208,633 117,525 43,399 6,720 80,374 1,821,463

2019 2018 Disposals

Cost - - - - - - (8,700) (2,806 ) (121 ) (385) - - (12,406 ) (24,418)
(Rupees in thousand) Accumulated depreciation - - - - - - 4,800 2,806 97 313 - - 7,596 15,612
5. PROPERTY, PLANT AND EQUIPMENT - - - - - - (3,900) - - (24 ) (72) - - (4,810 ) (8,806)

Effect of movement in exchange rate - - 8,725 - - - - 23,530 9,946 2,420 - - 7,941 52,562
Operating fixed assets 5.1 4,538,908 3,736,772
Capital work-in-progress 5.4 498,543 794,866 Depreciation charge for the year (4,195) (7,062) (47,739 ) (190,668) (37,353 ) (33,512 ) (25,859) (3,082) (14,039 ) (363,509)
5,037,451 4,531,638
Assets written off - - - - - - (4,462) (163 ) (687 ) (491) (369) (7,389 ) (13,561)

Closing net book value 199,885 62,028 1,672,588 1,166,220 264,363 198,563 55,226 21,781 96,118 3,736,772
5.1 Operating fixed assets
At 30 June 2018
2019 Cost 232,549 66,564 1,957,832 2,050,344 378,016 303,453 219,026 40,968 166,219 5,414,971
Leasehold Buildings on Plant and
Accumulated depreciation (32,664) (13,583) (285,244 ) (884,124) (137,876 ) (115,309 ) (166,253) (19,187) (78,238 ) (1,732,478)
Leasehold Furniture Office and Laboratory Net exchange difference - - 9,047 - - - - 24,223 10,419 2,453 - - 8,137 54,279
Land improve- leasehold machinery other
and fittings equipments Computers equipments Vehicles Total
ments land Net book value 199,885 62,028 1,672,588 1,166,220 264,363 198,563 55,226 21,781 96,118 3,736,772

(Rupees in thousand) Useful life (years) 38 - 99 Lease term 5 -60 5 - 10 5 5 - 10 3 5 - 10 5

At 1 July 2018
Cost 232,549 66,564 1,957,832 2,050,344 378,016 303,453 219,026 40,968 166,219 5,414,971
Accumulated depreciation (32,664) (13,583) (285,244) (884,124) (137,876) (115,309) (166,253) (19,187) (78,238 ) (1,732,478)
Net exchange difference - - 9,047 - - - - 24,223 10,419 2,453 - - 8,137 54,279
Net book value 199,885 62,028 1,672,588 1,166,220 264,363 198,563 55,226 21,781 96,118 3,736,772

Additions / transfer - note - 5.4.1 - - 6,622 432,233 619,090 39,289 18,753 62,901 5,435 31,960 1,216,283 5.2 The depreciation charge for the year has been allocated as follows:

Disposals
Cost - - - - (8,454) (74,734) (21,698) (26,593) (45,961) (5,985) (54,455 ) (237,880) 2019 2018
Accumulated depreciation - - - - 6,189 72,623 21,511 23,677 45,420 5,682 32,394 207,496
- - - - (2,265) (2,111) (187) (2,916) (541) (303) (22,061 ) (30,384) (Rupees in thousand)

Effect of movement in exchange rate - - 17,324 - - - - 52,569 13,883 9,756 - - 13,940 107,472
Cost of sales 25 305,912 238,447
Depreciation charge for the year (4,195) (12,458) (59,611) (246,372) (64,805) (44,539) (28,523) (3,569) (27,163 ) (491,235)
Distribution costs 26 99,511 61,316
Closing net book value 195,690 73,516 2,042,945 1,536,827 291,229 183,744 98,819 23,344 92,794 4,538,908 Administrative expenses 27 85,812 63,746
491,235 363,509
At 30 June 2019
Cost 232,549 73,186 2,381,611 2,594,700 395,607 295,613 235,966 40,418 143,724 6,393,374
Accumulated depreciation (36,859) (26,041) (338,666) (1,057,873) (181,170) (136,171) (149,356) (17,074) (73,007 ) (2,016,217)
Net exchange difference - - 26,371 - - - - 76,792 24,302 12,209 - - 22,077 161,751
Net book value 195,690 73,516 2,042,945 1,536,827 291,229 183,744 98,819 23,344 92,794 4,538,908

Useful life (years) 38 - 99 Lease term 5 -60 5 - 10 5 5 - 10 3 5 - 10 5

Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

5.3 The details of property, plant and equipment having net book value of Rs. 500,000 and above sold / disposed 5.5 Particulars of immovable property (i.e. land and building) in the name of the Parent Company are as follows:
of during the year by the Parent Company are as follows:
Total Area Covered Area
Accumulated Gain / (loss) on Particulars of purchaser Location Usage of immovable property
Description Cost depreciation Net book value Sale proceeds disposal Mode of disposal and relationship (In Sq. Ft.) (In Sq. Ft.)
(Rupees in thousand) Corporate office Office Building 45,099 40,589
Vehicles 897 30 867 897 30 Company Policy Khwaja Omer
Company's Executive S.I.T.E. Manufacturing plant 76,491 62,029
Vehicles 1,204 60 1,144 1,177 33 Company Policy Muhammad Farooq
Company's Executive Port Qasim Manufacturing plant 435,600 265,556
Vehicles 799 40 759 948 189 Company Policy Syed Waqar Ahmed
Company's Executive Nooriabad Manufacturing plant 602,951 120,112

Total 2,900 130 2,770 3,022 252 Muridke Manufacturing plant 137,196 22,500

Gujranwala Manufacturing plant 130,000 36,000

Multan Warehouse 43,560 43,560

2019 2018
(Rupees in thousand)
5.4 Capital work-in-progress (CWIP)
2019 2018
6. INTANGIBLES AND GOODWILL (Rupees in thousand)
Civil works 173,484 252,008
Plant and machinery 107,473 323,112
Office equipment 7,092 8,972
Advance against acquisition of land 210,494 210,194
Advance against furniture - - 580 Goodwill and intangibles 6.1 806,999 644,099
498,543 794,866 System under development 6.3 3,135 15,456
810,134 659,555

5.4.1 During the year the additions to CWIP and transfer of respective assets amounted to Rs. 548.296 million (2018:
Rs. 951.8 million) and Rs. 850.59 million (2018: Rs. 1,102.4 million) respectively.
6.1 Goodwill and intangibles
2019
Computer Customer Trademark Total
Goodwill
softwares relationships and other
and ERP System
(Rupees in thousand)
Cost
Balance as at 1 July 2018 259,116 269,523 98,706 216,411 843,756
Addition 54,691 - - - - - - 54,691
Effect of movement in exchange rates - - 79,368 33,893 64,060 177,321
Balance as at 30 June 2019 313,807 348,891 132,599 280,471 1,075,768

Accumulated amortisation
Balance as at 1 July 2018 188,920 - - 10,737 - - 199,657
Amortisation for the year 47,804 - - 11,268 - - 59,072
Effect of movement in exchange rates - - 10,040 10,040
Balance as at 30 June 2019 236,724 - - 32,045 - - 268,769

Carrying amounts
As at 30 June 2019 77,083 348,891 100,554 280,471 806,999

Useful life (years) 3 - - 10 Indefinite

 Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2018 Management has determined the values assigned to each of the above key assumptions as follows:
Computer Customer Trademark Total Assumptions Approached used to determine values
Goodwill
softwares relationships and other
and ERP System Sales Growth Average annual growth rate over the forecast period based on recent performance
(Rupees in thousand) and management’s expectations of market development. Management does not
anticipate material impact owing to change in the assumptions used for growth
Cost in sales volume.
Balance as at 1 July 2017 200,054 229,765 87,323 184,707 701,849
Addition 59,062 - - - - - - 59,062 Sales Price Average annual growth rate over the forecast period based on current industry
Effect of movement in exchange rates - - 39,758 11,383 31,704 82,845 trend and including long term inflation forecast. Management does not anticipate
Balance as at 30 June 2018 259,116 269,523 98,706 216,411 843,756 material impact owing to change in the assumptions used for growth in
sales price.
Accumulated amortisation
Balance as at 1 July 2017 146,967 - - 3,634 - - 150,601 Budgeted gross margin Based on recent performance and management’s expectation for the future.
Amortisation for the year 41,953 - - 9,451 - - 51,404
Effect of movement in exchange rates - - - - (2,348) - - (2,348) Other operating cost Fixed cost of the CGU, which do not vary significantly with sales volume or
price. Management forecast these costs based on the current structure of the
Balance as at 30 June 2018 188,920 - - 10,737 - - 199,657
business, adjusting for inflationary increases but not reflecting any future
restructuring or cost saving measures. The amounts disclosed above are the
Carrying amounts average operating costs for the forecast period. Management does not anticipate
As at 30 June 2018 70,196 269,523 87,969 216,411 644,099 material impact owing to change in the assumptions used for growth in other
operating cost.
Useful life (years) 3 - - 10 Indefinite
Long term growth rate This is the weighted average growth rate used to extrapolate cash flows beyond
the budget period. Management does not anticipate material impact owing to
6.2 The amortization charge for the year has been allocated as follows: change in the assumptions used for growth in the long term rate.

2019 2018 Pre-tax discount rates Reflect specific risks relating to the business segment, and the country in which
it operates.
(Rupees in thousand)
Sensitivity to changes in Management have considered and assessed reasonably possible changes for
Distribution costs 26 11,859 10,337 other assumptions other key assumptions and have not identified any instances that could cause
Administrative expenses 27 47,213 41,067 the carrying amount to exceed its recoverable amount.
59,072 51,404
2019 2018
6.3 This represent amount given to vendor for the development of software which is expected to be capitalised next year. (Rupees in thousand)
7 STOCK IN TRADE
6.4 Impairment testing of goodwill, trademark and other indefinite useful life
Raw materials including goods in transit
For the purpose of the impairment testing, goodwill acquired through business combination and trademarks with indefinite of Rs. Nil (2018: Rs. Nil) 924,038 847,256
useful life are allocated to the A-1 Bags and Supplies. Provision for obsolescence (19,652) (72,358)
904,386 774,898
The recoverable amount of business operations of Al Bags & Suppliers Inc. (acquired entity) have been determined based
on its value in use, determined by discounting the future cash flows to be generated from its continuing use. The cash flow Packing materials 463,356 361,458
projections prepared covering period from 2020 to 2023 till terminal period. The calculations used for cash flow projections Provision for obsolescence (42,867) (68,306)
are based on financial budgets prepared by management. 420,489 293,152

The value in use determined for underlying cash generating unit is higher than its carrying amount. Work in process 1,671,610 1,372,107
Provision for obsolescence (31,133) (4,086)
The key assumptions used in the estimation of value in use were as follow: 1,640,477 1,368,021
"Percentage Finished goods including in transit
(%)" of Rs. Nil (2018: Rs. 17.79 million) 7.2 2,038,543 1,304,519
Provision for obsolescence (69,202) (58,526)
Sales (% annual growth rate) 14 1,969,341 1,245,993

Budgeted gross margin (%) 20 4,934,693 3,682,064

Other operating cost 14

7.1 Stock in trade includes Rs. 2.04 billion (2018: Rs. 2.29 billion) held with third parties for the purpose of further distribution
Long term growth rate 5 to end customers and packaging purposes.

Pre-tax discount rate (%) 5.3

206
 Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

7.2 The above balances include items costing Rs. 65.17 million (2018: Rs. 43.69 million) valued at net realisable value of As at 30 June 2019, the gross amount of trade debts due from related parties is Rs. Nil (2018: Rs. 83.51 million) out of
Rs. 47.29 million (2018: Rs. 32.1 million). which Rs. Nil (2018: Rs. 49.08 million) were past due. The age analysis of these trade debts is as follows:

7.3 During the year, the Company has made a provision of Rs. 40.8 million for obsolescence (2018: Rs. 107.64 million) and
has written off stocks against the provision amounting to Rs. 78.2 million (2018: Rs. 25.39 million). 2019 2018
(Rupees in thousand)
Up to 3 months - - 37,763
2019 2018 3 to 6 months - - 10,981
More than 6 months - - 333
(Rupees in thousand) - - 49,077
8. TRADE DEBTS

Considered good - unsecured

Related parties 8.2 - - 83,513
Others
- Local 303,977 263,914
- Foreign 787,997 817,504
1,091,974 1,164,931
2019 2018
Considered doubtful 86,191 114,282
1,178,165 1,279,213 (Rupees in thousand)
Provision for doubtful trade debts (86,191 ) (114,282 ) 9. ADVANCES
1,091,974 1,164,931
Considered good
8.1 The movement in the allowance for impairment for trade debts is as follows: Employees - against expenses 9.1 1,011 - -
Suppliers 9.1 116,452 176,735
117,463 176,735
Opening provision 114,282 8,133 Considered doubtful
Charge for the year - net* 33,402 106,149 Suppliers 27,684 3,413
Writeoffs (61,493 ) - - 145,147 180,148
Closing provision 86,191 114,282 Provision for doubtful advances to suppliers (27,684 ) (3,413 )
117,463 176,735

*During the year the Company has recovered Rs. 7 million which had been written off in the prior period.
9.1 These advances do not carry any mark up arrangement.

2019 2018 2019 2018

(Rupees in thousand) (Rupees in thousand)
8.2 Receivable from related parties 10. TRADE DEPOSITS AND PREPAYMENTS

Premier Distributor* - - 32,806 Considered good

Premier Agency* - - 50,707 Deposits 10.1 38,835 9,000
- - 83,513 Prepayments 10.1 95,127 103,347
133,962 112,347
Considered doubtful
Deposits - - 1,553
8.2.1 The maximum aggregate amount due from the related party at the end of any month during the year are as follows: 133,962 113,900
Provision for doubtful deposits - - (1,553)
2019 2018 133,962 112,347
(Rupees in thousand)

10.1 These trade deposits and prepayments are mainly against rent, insurance and utilities. These do not carry any mark up
Premier Distributor* - - 193,237
arrangement.
Premier Agency* - - 120,496
- - 313,733

* These parties were no more related to the Company during the current period.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2019 2018 2019 2018

(Rupees in thousand) (Rupees in thousand)
11. OTHER RECEIVABLES Summarised balance sheet

Due from related parties Non-current assets 483,038 394,396

- ATC Holdings (Private) Limited (formerly Associated Current assets 1,649,572 959,493
Textile Consultants (Private) Limited) 11.1 1,511 861 Non-current liabilities (196,999) (206,679)
- Director 11.1 - - 197 Current liabilities (1,277,768) (820,528)
1,511 1,058 657,843 326,682
Others 18,655 22,257
20,166 23,315
Accumulated NCI 271,598 196,293
11.1 The balances due from related parties are past due by more than six months but not considered impaired.
2019 2018
2019 2018 (Rupees in thousand)
Summarised statement of profit or loss and other comprehensive income
(Rupees in thousand)
12. CASH AND BANK BALANCES
Sales 7,427,332 5,110,353
Cash in hand 1,753 1,295 Profit for the period 199,530 54,201
Total comprehensive income 199,530 54,201
Cash at bank - current account
- local currency 12.1 149,872 94,649
- foreign currency 12.1 724,619 280,850 Profit allocated to NCI 75,305 17,900
874,491 375,499
Eligible dividend to NCI 15,875 13,315
876,244 376,794

12.1 The current accounts are placed with banks under conventional banking arrangements. Summarised cash flows

Cash flow from operating activities 410,724 85,635

13. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
Cash flow from investing activities (54,836) (249,520 )
Cash flow from financing activities (235,953) 158,525
2013
2019 201
2018 2019 2018 Net increase in cash and cash equivalents 119,935 (5,360 )
Number of Shares (Rupees in thousand)
15. LONG TERM FINANCE
2,511,980 2,511,980 Ordinary shares of Rs. 5 (2018:
Rs. 5) each issued 12,560 12,560 Long term finance
for consideration paid in cash - MCB Bank Limited - Pakistan 15.1 487,116 193,152
- MCB Bank Dubai 15.2 570,658 310,013
121,816,247 101,094,876 Ordinary shares of Rs. 5 (2018:
- TD Commercial Bank - Canada 15.3 186,249 222,996
Rs. 5) each as fully 609,081 505,474
paid bonus shares
1,244,023 726,161
124,328,227 103,606,856 621,641 518,034 Less: Current maturity of long term finance (315,881) (333,750 )
Less: Classified under current liability 15.1 - - (193,152 )
928,142 199,259
13.1 The Parent Company in its annual general meeting held on 18 October 2018 passed special resolution for the increase
in authorized capital from 1,000 million to 5,000 million with power to increase or reduce as the Parent Company may
think fit. The Parent Company may subdivide or consolidate its share in accordance with the provisions of the Companies 15.1 This represents long term finance facility of Rs. 250 million for ten years and long term loan of Rs. 300 million for six
Act, 2017. years obtained from commercial bank having mark-up at the rate of State Bank of Pakistan base rate + 0.3% (effective
rate: 3.3%) and 3 months Kibor + 0.1% respectively. The loan is secured by way of hypothecation of Company's present
13.2 As at 30 June 2019, ATC Holdings (Private) Limited (formerly Associated Textile Consultants (Private) Limited) (ultimate and future fixed assets. The unavailed portion of the facility at the reporting date is Rs. 62.88 million.
parent company) held 41,229,269 (2018: 34,357,724) ordinary shares of the Parent Company.
15.2 NF DMCC, subsidiary company, has entered into a long term loan agreement with MCB Bank Dubai. It carries profit at
14. NON-CONTROLLING INTEREST (NCI)
the rate of 3 month LIBOR + 3% per annum. The tenor of facility is 5 years with grace period of 1 year from initial
Below is summarised financial information of A-1 Bags & Supplies Inc. that has a non-controlling interest (40% stake) disbursement (for each tranche). During the year group has received third tranche amounting to AED 5.67 million. The
that is material to the Group. The amounts disclosed are before inter-group eliminations. principal is payable in equal quarterly installments. This facility is secured against 60% shares of A1 Bags & Suppliers
Inc., undated security cheque, promissory note and assignment of receivables of the Group.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

16.3 A-1 Bags & Supplies Inc., obtained loan from TD commercial bank details are as follows: 16. DEFERRED CONSIDERATION
2019 2018 The Group has agreed to pay the acquisition price of A1 Bags & Supplies Inc. in tranches. The movement is as follows:
(Rupees in thousand)
2019 2018
TD bank loan, secured by book debts, bears interest at a rate of - - 306 (Rupees in thousand)
4.85% per annum and is repayable in 60 equal monthly payments of
$1,081 plus interest, maturing in September 2018. Opening balance - - 154,222
Unwinding of deferred consideration - - 7,299
TD bank loan, secured by book debts, bears interest at a rate of - - 731 Impact of exchange rate translation - - 26,607
4.85% per annum and is repayable in 60 equal monthly payments
Less: current portion of deferred consideration - - (188,128)
of $1,106 plus interest, maturing in January 2019.
- - - -
TD bank loan, secured by book debts, bears interest at a rate of - - 893
16.1 The unwinding of deferred consideration is included in finance cost.
4.85% per annum and is repayable in 60 equal monthly payments
of $1,163 plus interest, maturing in March 2019.

Business Development Bank of Canada (BDC) loan, secured by 3,050 4,711 2019 2018
accounts recievable, bears interest at rate of BDC's Floating Base 17. DEFERRED LIABILITIES (Rupees in thousand)
Rate plus 0.5% per annum and is payable in 60 equal monthly
payments of $2,080 maturing in June 2020. Pension Plan 34,276 11,715
Pensioners' Medical Plan 36,070 30,651
BDC loan, secured by book debts, bears interest at rate of 48,865 56,602 Staff terminal benefits 17.18 5,414 2,699
4.7%per annum and is repayable in 60 equal monthly payments 75,760 45,065
of $16,660, maturing in June 2021.

BDC loan, secured by book debts, bears interest at rate of 14,665 16,987 17.1 The Parent Company operates a funded pension scheme and post retirement medical benefit for chief executive and
3.05%per annum and is repayable in 60 equal monthly payments two non-executive directors. Actuarial valuation of these plans is carried out every year and the latest actuarial valuation
of $5,000, maturing in June 2021. was carried out as at 30 June 2019.

Vehicle loan payable to Scotiabank - loan is secured by a charge 6,605 6,901 17.2 Plan assets held in trust are governed by local regulations which mainly include the Trust Act, 1882, the Companies Act,
of the vehicle, bears interest at a rate of 2.5% with monthly payments 2017, the Income Tax Rules, 2002 and Rules under the Trust Deed of the Plans. Responsibility for governance of the
of $1,590, maturing in April 2022. Plans, including investment decisions and contribution schedules, lies with the Board of Trustees. The Parent Company
appoints the Trustees and all Trustees are employees of the Parent Company.
Vehicle loan payable to Scotiabank – loan is secured by a charge 2,378 2,653
of the vehicle, it is non-interest bearing with monthly payments of 17.3 The latest actuarial valuation of the Fund as at 30 June 2019 was carried out using the Projected Unit Credit Method.
$721, maturing in September 2021. Details of the Fund as per the actuarial valuation are as follows:

TD bank loan, secured by book debts, bears interest at a rate of 73,438 71,300
4.64% per annum and is repayable in 60 equal monthly payments of
$15,530 including interest, maturing in December 2022.

TD bank loan, secured by book debts, bears interest at a rate of 37,248 35,723
5.06% per annum and is repayable in 60 equal monthly payments of
$7,603 including interest, maturing in February 2023.

186,249 196,807
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

Pension Plan Pensioners’ Medical Plan Pension Plan Pensioners’ Medical Plan
2019 2018 2019 2018 2019 2018 2019 2018
(Rupees in thousand) (Rupees in thousand) (Rupees in thousand)
17.4 Balance sheet reconciliation 17.8 Movement in the present value
Present value of defined benefit of defined benefit obligations
obligations 156,293 126,254 81,984 49,965 Obligation as at July 1 126,254 113,813 49,965 20,175
Fair value of plan assets (122,017) (114,539) (45,914 ) (19,314) Current service cost 4,185 3,691 1,076 426
34,276 11,715 36,070 30,651 Interest cost 12,615 9,929 4,909 1,710
17.5 Movement in the net liability Benefits paid (4,709) (4,709) (4,131) (5,785 )
recognised in the balance sheet Actuarial loss / (gain) 17,948 3,530 30,165 33,439
Obligation as at June 30 156,293 126,254 81,984 49,965
Opening balance 11,715 3,685 30,651 2,338
Remeasurements recognised in 17.9 Movement in the fair value
of plan assets
other comprehensive income 28,914 4,015 32,071 33,476
As at July 1 114,539 110,128 19,314 17,837
Charge / (income) for the year 5,362 4,015 3,999 622
Expected return on plan assets 11,438 9,605 1,986 1,514
Contribution made (11,715) - - (30,651 ) (5,785)
Contribution made 11,715 - - 30,651 5,785
Payments made to members Benefits paid (4,709) (4,709) (4,131) (5,785 )
(beneficiaries) - - - - Actuarial (loss) / gain (10,966) (485) (1,906) (37 )
Closing balance 34,276 11,715 36,070 30,651 As at June 30 122,017 114,539 45,914 19,314

17.6 Remeasurements recognised in 17.10 Plan assets comprise of the following:

other comprehensive income National Savings Schemes 5,880 83,753 2,412 14,123
Cash at bank 105,808 16,024 4,237 2,702
Re-measurements: Actuarial Investment in mutual fund 10,330 14,762 43,396 2,489
(gain) / loss on obligation 122,018 114,539 50,045 19,314
- Loss due to change in
financial assumptions 1,904 452 (852 ) (141)
- Loss due to change in
experience adjustments 16,044 3,078 31,017 33,580
Actuarial (gain) / loss on defined 2019 2018
benefit obligation 17,948 3,530 30,165 33,439 (Percent Per Annum)
17.11 Principal actuarial assumptions
Re-measurements: Actuarial
(gain) / loss on plan assets Expected rate of increase in salaries 10.00% 10.00%
- Actual return on plan assets (472) (9,120) (80 ) (1,477) Expected rate of increase in pension 5.00% 5.00%
- Interest income on plan assets 11,438 9,605 1,986 1,514 Expected rate of increase in medical benefits 10.00% 10.00%
Net re-measurement recognised in Discount factor used 10.00% 10.00%
other comprehensive income 10,966 485 1,906 37 Mortality rate SLIC 2001 - 2005 SLIC 2001 - 2005
Rates of employee turnover Moderate Moderate
Total defined benefit cost
recognised in profit and 2020
loss account and other Pensioners'
comprehensive income 28,914 4,015 32,071 33,476 17.12 Components of defined benefit cost for the next year Pension Plan Medical Plan
17.7 Expense recognised in (Rupees in thousand)
profit and loss account
Component of defined benefit costs Current service cost 5,551 1,840
recognized in profit and loss account Interest cost on defined benefit obligation 22,733 11,666
Current service cost 4,185 3,691 1,076 426 Interest income on plan assets (17,734) (7,338)
Net interest cost Net interest cost 4,999 4,328
- Interest cost on defined Cost for the next year to be recognized in statement of profit and loss 10,550 6,168
benefit obligation 12,615 9,929 4,909 1,710
- Return on plan assets (11,438) (9,605) (1,986 ) (1,514)
1,177 324 2,923 196
5,362 4,015 3,999 622
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

17.13 In case of the funded plans, the Parent Company ensures that the investment positions are managed within an 17.18 Staff terminal benefits obligation relating to NF DMCC (Subsidiary Company):
Asset-Liability Matching (ALM) framework that has been developed to achieve long-term investments that are in line
with the obligations under the retirement benefit plan. Within this framework, the Parent Company's ALM objective is 2019 2018
to match assets to the retirement benefit obligations by investing in long-term fixed interest securities with maturities (Rupees in thousand)
that match the benefit payments as they fall due and in the appropriate currency. The Parent Company actively monitors
how the duration and the expected yield of the investments are matching the expected cash outflows arising from the
Opening liability 2,699 1,954
retirement benefit plan obligations. The Parent Company has not changed the processes used to manage its risks from
previous periods. The Parent Company does not use derivatives to manage its risk. Investments are well diversified, Provision for the year 2,716 745
such that the failure of any single investment would not have a material impact on the overall level of assets. A large Closing liability 5,414 2,699
portion of assets in 2019 consists of special savings certificates ("SSC") majority of which has matured near the end of
the year. The Company believes that SSC offer the best returns over the long term with an acceptable level of risk.
This represent staff terminal benefits calculated in accordance with UAE labour laws.
The expected return on plan assets was determined by considering the expected returns available on the assets
underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption
yields as at the balance sheet date. 18. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

17.14 Sensitivity analysis for actuarial assumptions Minimum lease Present value of minimum
Future finance cost
payments lease payments
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
2019 2018 2019 2018 2019 2018
Impact on defined benefit obligation (Rupees in thousand)
Not later than one year 11,623 8,606 2,025 2,002 9,598 6,604
Change in Increase in Decrease in
Later than one year and
assumption assumption assumption
not later than five years 41,854 40,314 3,235 5,844 38,619 34,470
(Rupees in thousand) 53,477 48,920 5,260 7,846 48,217 41,074
2019
Discount rate at June 30 1.00% 210,078 272,585 Less: Current portion shown under current liabilities (9,598) (6,604)
Future salary increases 1.00% 164,462 148,562 38,619 34,470
Future pension increases 1.00% 170,879 143,602
Medical cost increases 1.00% 92,648 73,114 Balance owing on vehicles with a carrying value of $29,952. Due in blended monthly
2018 installments of $502 including interest of 4.75% per annum, maturing in September 2022. 4,532 2,442

Discount rate at June 30 1.00% 154,368 203,098

Future salary increases 1.00% 133,575 119,402
Balance owing on vehicles with a carrying value of $8,320. Due in blended monthly
Future pension increases 1.00% 138,098 115,973
installments of $327 including interest of 4.76% per annum, maturing in September 2021. 1,103 2,442
Medical cost increases 1.00% 56,931 44,241

The sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In Balance owing on vehicle with a carrying value of $114,662. Due in blended monthly
practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating installments of $2,783 including interest of 4.59% per annum, maturing in March 2023. 17,674 14,972
the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present
value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting
period) has been applied when calculating the pension liability recognised within these consolidated financial Balance owing on vehicle with a carrying value of $165,230. Due in blended monthly
statements. installments of $3,810 including interest of 4.59% per annum, maturing in May 2023. 24,908 21,218

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to
the previous period. 48,217 41,074

17.15 The expected return on plan assets is based on the market expectations and depends upon the asset portfolio
of the plan, at the beginning of the period, for returns over the entire life of the related obligation.

17.16 The weighted average duration of defined benefit obligation of pension plan and pensioners' medical plan is 12.74
years and 11.55 years respectively.

17.17 During the year, the Parent Company contributed Rs. 80.98 million (2018: Rs. 86.72 million) to the provident fund.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

19. DEFERRED TAXATION - net

2019 2018
20.1 Workers' Profits Participation Fund
(Rupees in thousand) 2019 2018
Credit / (debit) balance arising in respect of:
(Rupees in thousand)
Accelerated tax depreciation / amortisation 371,347 256,437
Payable / (receivables) as at July 1 58,111 68,713
Provision for stock obsolescence (41,865) (53,232 ) Allocation for the year 64,887 57,736
Provision for doubtful trade debts (18,760) (29,794 ) 122,998 126,449
Finance costs (967) (450 ) Amount paid during the year (55,375) (68,338)
Deferred rent liability (9,183) (6,626 ) Payable as at June 30 67,623 58,111
Provision for retirement benefits obligations and other provisions (95,514) (54,422 )
215,508 111,913 20.2 All investments out of provident fund maintained by the Parent Company have been made in accordance with the
provisions of Section 218 of the Companies Act 2017 and the conditions specified thereunder.
2019 2018 20.3 This relates to consideration received from the customers for goods sold which the Group expects to fully or partially
(Rupees in thousand) refund to the customers in accordance with the requirements of IFRS 15 for goods to be returned.

20.4 This relates to remuneration payable to director.

20. TRADE AND OTHER PAYABLES
20.5 This relates to the amount provided by the Non Controlling Shareholders of the Group to meet the working capital
Creditors 1,393,660 1,027,268 requirements.
Accrued liabilities 2,226,774 1,760,018
Workers' Profits Participation Fund 20.1 67,623 58,111
Workers' Welfare Fund 99,364 79,903 2019 2018
Advances from customers - unsecured - - 75,981
(Rupees in thousand)
Payable to provident fund 20.2 4,218 11,799 21. CONTRACT LIABILITIES - unsecured
Refund Liabilities 20.3 38,752 - -
Tax deducted at source 137,668 92,192 Sales discount payable 4.1.1 63,320 - -
Advances from employees against sale of vehicles 85,426 78,387 Advances from customers 4.1.1 83,330 - -
Other liabilities 16,562 19,319 146,650 - -
Due to related parties
- Directors 20.4 58 29,700
- Shareholder 20.5 22,609 - - 2019 2018
4,092,714 3,232,678
(Rupees in thousand)
22. SHORT-TERM BORROWINGS

Conventional
Running finance under mark up arrangements 22.1 805,047 991,820
Export re-finance 22.2 500,000 400,000
Money market loan 22.3 300,000 450,000

Islamic
Running finance under Musharakah 22.4 296,585 363,049
1,901,632 2,204,869

22.1 The facilities for running finance available from various commercial banks are for the purpose of meeting working
capital requirements. The effective rates of mark-up on these finances range from 7.00% to 13.9% (2018: 6.30%
to 7.02%) per annum.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

22.2 The Company has short term running finance facility under Export Refinance Scheme of the State Bank of Pakistan 2019 2018
from a commercial bank. The effective rates of mark-up on this facility is 3.0% (2018: 3.5%) per annum.
(Rupees in thousand)
24. SALES
22.3 The loan is availed from various commercial banks for the purpose of meeting working capital requirements. The
effective rates of mark-up on these finances range from 7.01% to 13.3% (2018: 6.26% to 7.06%) per annum. - Local sales 23,915,210 21,785,441
- Export sales 24.1 9,419,554 6,967,024
22.4 The Company has obtained facilities for short term finance under Running Musharakah. The effective rate of Gross sales 33,334,764 28,752,465
profit is 7.00% to 13.9% (2018: 6.18% to 6.97%) per annum. This facility matures within twelve months Less: Sales tax (3,717,992) (3,173,731 )
and is renewable. 29,616,772 25,578,734
Less:
22.5 The facilities available from various banks amount to Rs. 2.74 billion (2018: Rs. 3.19 billion). The arrangements - Discount, rebates and allowances (4,901,460) (3,740,719 )
are secured by way of pari-passu charge against hypothecation of Company's current and future movable assets - Sales return (461,515) (246,456 )
of the Company having aggregate charge amounting to Rs. 3.99 billion. (5,362,975) (3,987,175 )
24,253,797 21,591,559
22.6 As at 30 June 2019, the unavailed facilities from the above borrowings amounted to Rs. 0.84 billion (2018:
Rs. 1.88 billion).
2019 2018
(Rupees in thousand)
24.1 Export sales comprise of sales made in the following regions:
23. COMMITMENTS

USA / Canada 8,431,079 5,979,633

23.1 The facilities for opening letters of credit amount to Rs. 1.79 billion (2018: Rs. 1.59 billion) and for letters of
Africa 2,878 5,077
guarantee amount to Rs. 141 million (2018: Rs. 141 million) as at 30 June 2019 of which the amount remaining
Middle East Asia 873,870 819,037
unutilised at year end were Rs. 1.34 billion (2018: Rs. 1.34 billion) and Rs. 104.26 million (2018: Rs. 104.26 million)
Europe / UK 111,727 163,277
respectively.
9,419,554 6,967,024

23.2 Aggregate commitments for capital expenditure as at 30 June 2019 amount to Rs. 411.96 million (2018: Rs. 527.18
24.2 As required for the condensed financial statements, the Company disaggregated revenue recognised from contracts
million).
with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows
are affected by economic factors.
23.3 Aggregate commitments in respect of ujrah payments for ijarah financing of motor vehicles bearing a mark up
ranging from six months KIBOR + 0.6% to six months KIBOR + 0.9% (2018: six months KIBOR + 0.6% to six
In the following table, revenue is disaggregated by primary geographical markets and major product lines:
months KIBOR + 0.9%) per annum for rentals payable monthly as at 30 June 2019 amount to:

2019 2018
2019 2018
(Rupees in thousand)
(Rupees in thousand)
Primary geographical markets:
Not later than one year 86,338 73,447
Local 23,915,210 21,785,441
Later than one year but not later than five years 140,617 114,997
226,955 188,444 USA/Canada 8,421,219 5,979,633
Africa 2,878 5,077
23.4 A-1 Bags & Supplies Inc. (Subsidiary Company), has commitments under three operating leases and a sublease Middle East 883,730 819,037
agreement. It has subleased one location to a third party tenant on similar terms and conditions. There are two years Europe / UK 111,727 163,277
and five months remaining on the sublease for which the Group could be responsible should the tenant default on 33,334,764 28,752,465
rent. Estimated minimum annual payments are as follows: Major Product Lines:
2019 2018 Food Products 9,865,608 9,706,594
Kitchen Products 15,666,820 13,708,450
(Rupees in thousand)
Cash and Carry 7,802,336 5,337,421
Not later than one year 227,157 151,914 33,334,764 28,752,465
Later than one year but not later than five years 867,519 725,174
1,094,676 877,088
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2019 2018 2019 2018

(Rupees in thousand) 26. DISTRIBUTION COSTS (Rupees in thousand)
25. COST OF SALES
Salaries, wages and other benefits 1,286,899 1,117,016
Raw material consumed 12,273,818 10,303,484 Advertising and sales promotion 915,434 1,464,816
Packing material consumed 3,025,852 2,636,651 Commission expense - - 45,283
Stock written off - - 1,091 Outward freight and handling charges 709,108 615,955
Stores and spares consumed 242,001 174,744 Contribution to provident fund 20,987 18,373
Brine and cutting charges 39,829 85,794 Depreciation 5.2 99,511 61,316
Salaries, wages and other benefits 1,098,637 1,008,075 Amortisation 6.2 11,859 10,337
Contribution to provident fund 17,949 14,789 Ujrah payments 37,187 30,070
Depreciation 5.2 305,912 238,447 Fuel and power 4,293 34,356
Ujrah payments 24,944 19,334 Forwarding charges 96,934 75,065
Fuel and power 344,333 290,241 Insurance 28,075 29,708
Insurance 20,391 21,721 Laboratory, research and development 868 663
Laboratory, research and development 12,296 9,525 Legal and professional charges 79,380 47,516
Postage and communications 5,276 3,455 Postage and communications 1,202 10,747
Printing and stationery 32,658 24,647
Printing and stationery 870 807
Rent, rates and taxes 334,794 298,411
Rent, rates and taxes 186,017 149,012
Travelling 185,361 162,887
Travelling 154,423 110,512
Repairs and maintenance 58,713 11,387
Repairs and maintenance 71,714 73,351
Security charges 3 - -
Security charges 23,090 14,908
Others 17,646 79,950
Inventory destruction charges 23,303 37,578
3,920,912 4,138,503
Legal and professional charges - - - -
Others 25,403 12,460
17,896,058 15,205,979
Opening work in process 1,368,021 1,056,507
Closing work in process (1,640,477) (1,368,021 ) 27. ADMINISTRATIVE EXPENSES
Cost of goods manufactured 17,623,602 14,894,465
Opening stock of finished goods 636,220 629,575 Salaries, wages and other benefits 27.1 408,550 301,628
Closing stock of finished goods (990,346) (636,220 ) Contribution to provident fund 14,311 11,472
17,269,476 14,887,820 Depreciation 5.2 85,812 63,746
Amortisation 6.2 47,213 41,067
Ujrah payments 27,501 22,082
Fuel and power 30,781 68,483
Insurance 11,639 5,058
Legal and professional charges 70,031 82,574
Postage and communications 29,668 47,980
Printing and stationery 5,520 5,411
Rent, rates and taxes 43,751 47,535
Travelling 65,339 47,225
Repairs and maintenance 203,944 128,337
Security charges 10,692 18,517
Others 83,345 22,105
Advertising and sales promotion 2,677 - -
1,140,774 913,220

27.1 Salaries, wages and other benefits include Rs. 9.36 million (2018: Rs. 4.64 million) in respect of charge for retirement
benefit plans.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

29.2 This includes rental income earned by the subsidiary company on sub lease of one of the property. The Future
2019 2018
minimum lease payments receivable under an agreement at reporting date were as follows.
(Rupees in thousand)
28. OTHER EXPENSES 2019 2018
(Rupees in thousand)
Workers' Profits Participation Fund 64,887 57,736
Less than one year 14,526 31,395
Workers' Welfare Fund 22,317 13,217
More than one year 6,052 44,477
Auditors' remuneration 28.1 9,946 9,407
20,578 75,872
Donations 28.2 18,087 11,233
30. FINANCE COSTS
Others - - 125,290
Compensation package dividend 15,875 13,315
Mark-up on:
131,112 230,198
- Short-term running finances 30.1 69,002 78,569
28.1 Auditors' remuneration
- Export refinance facility 9,521 12,721
- Short-term loans 30.2 19,269 35,011
Audit fee 8,334 8,350
- Long-term loans 30.3 60,138 4,709
Limited review, special reports and other certifications 1,332 837
Bank charges and other costs 125,576 57,419
Out of pocket expenses 280 220
283,506 188,429
9,946 9,407
Unwinding of deferred consideration - - 7,299
283,506 195,728
28.2 Donations to following Organizations and
Trusts exceed 10% of the Goup's total amount
30.1 This represents markup on running finance balance obtained from commercial banks.
of donation or Rs. 1 million, whichever is higher:
30.2 This represents markup on short term loans obtained from Islamic banks.
The Citizens Foundation 10,400 6,500
Saylani Welfare Trust - - 4,019
30.3 This represents markup on long term loan obtained from conventional banks.
10,400 10,519

2019 2018
31 . TAXATION - net
Donations did not include any amount paid to any person or organization or institution in which a Director or his (Rupees in thousand)
/ her spouse had any interest. Current
- for the year 31.1 321,682 331,525
2019 2018 - prior year (92,800) (209,784)
Deferred 123,499 24,633
(Rupees in thousand)
352,381 146,374
29. OTHER INCOME

Exchange gain 29.1 198,568 24,337

Return on savings account and term deposits - conventional 520 2,190
Return on late payments by trade debtors - - 2,386 31.1 Income tax assessment of the Parent Company has been deemed to be finalised upto and including tax year
Profit on disposal of property, plant and equipment 32,324 14,370 2018 on the basis of tax return filed under section 120 of Income Tax Ordinance 2001. However, the return may
Export rebate 6,171 - - be selected for detailed audit within five years from the date of filing of return and the Income Tax Commissioner
Rental income 29.2 8,687 6,741 may amend the assessment if any objection is raised in audit.
Others 2,011 3,443
248,281 53,467 31.2 Deferred tax assets have not been recognised for carried forward tax losses amounting to Rs. 213.57 million as
at 30 June 2019 (2018: Rs. 38.38) in the books of NF DMCC (Subsidiary Company), since it is not probable that
future taxable amounts will be available to utilise those losses. NF DMCC is subject to tax in respect of its operations
29.1 Income earned from exchange gain is actual currency and not from derivative financial instrument. in the UK and Canada. Except for A1 Bags & Suppliers Inc. (Canada based subsidiary), no current tax expense
has been incurred during the year ended 30 June 2019 and 30 June 2018 as the subsidiary company's operations
in these jurisdictions have not generated any taxable profits.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2019 2018
2019 2018
(Rupees in thousand)
31.3 Relationship between income tax expense and accounting profit 33. CASH GENERATED FROM OPERATIONS (Rupees in thousand)

Profit before taxation 1,722,896 1,173,408 Profit before taxation 1,722,896 1,173,408

Tax at applicable rate of 29% (2018: 30%) 499,640 352,022 Adjustments for non-cash charges and other items
Tax effect of permanent differences 445 2,164 Depreciation 491,235 363,509
Tax effect of final tax regime (12,233) (10,153) Amortisation 59,072 51,404
Effect of tax in foreign jurisdictions (24,208) (4,705) Profit on disposal of property, plant and equipment (32,324) (14,370)
Effect of prior year tax (92,800) (209,784) Impairment loss on trade debts 33,402 106,149
Effect of change in tax rate (3,900) (4,228) Provision for slow moving stock (52,964) 83,342
Super Tax - - 33,570 Unwinding of discount - - 7,299
Effect of tax credits (32,158) (58,031) Finance costs 283,506 188,429
Others 17,595 (247,229) Retirement benefits expense 12,075 5,382
352,381 (146,374) 794,002 791,144
Profit before working capital changes 2,516,898 1,964,552

31.4 Under section 5A of Income Tax Ordinance, 2001, a tax shall be imposed at the rate specified therein on the Working capital changes
accounting profit before tax on the every public company, other than schedule bank or modaraba, that drives (Increase) / decrease in current assets
profit for a tax year but does not distribute dividend upto a prescribed amount (requisite dividend) within six Stores, spare parts and loose tools (44,845) (31,000)
months of the end of the tax year. Stock in trade (1,199,665) (347,092)
Trade debts 39,555 93,491
The Board of Directors in their meeting held on August 29, 2019 have recommended sufficient dividend for the Advances 59,272 52,378
year ended 30 June 2019 for the consideration and approval of the shareholders of the Parent Company in the Trade deposits and prepayments (21,615) (50,330)
forthcoming annual general meeting which complies with the above stated requirements. Accordingly, no provision Sales tax refundable (12,365) (80,791)
for tax on undistributed profit has been recognised in these consolidated financial statements for the year ended Other receivables 3,149 79,788
30 June 2019. (1,176,514) (283,556)
2019 2018 Increase / (decrease) in current liabilities
Trade and other payables 860,035 195,643
(Rupees in thousand)
32. EARNINGS PER SHARE - basic and diluted Contract liability 146,650 - -
1,006,685 195,643
32.1 Basic 2,347,069 1,876,639
34. CASH AND CASH EQUALIVENTS
Profit after taxation attributable to owners of the Parent Company 1,295,210 1,009,134
Cash and bank balances 876,244 376,794
(Number of shares) Short term borrowings (1,101,632) (1,354,869)
Weighted average number of ordinary shares (225,388) (978,075)
outstanding during the year 124,328,227 124,328,227

(Rupees)

Earnings per share 10.42 8.12

32.2 A diluted earnings per share has not been presented as the Group did not have any convertible instruments in
issue as at balance sheet date which would have any effect on the earnings per share if the option to convert
is exercised.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

35. REMUNERATION TO CHIEF EXECUTIVE OFFICER, DIRECTORS AND EXECUTIVES Disclosure of transactions between the Group and related parties:

35.1 The aggregate amounts charged in these financial statements in respect of remuneration including all benefits to
chief executive, directors and executives of the Company are as follows: 2019 2018
(Rupees in thousand)
Chief Executive Officer Directors Executives Relationship with the Nature of transaction
2019 2018 2019 2018 2019 2018 Group
Parent Company Rental income 8,687 6,741
(Rupees in thousand)
Dividend paid 128,841 146,020
Rent charges paid / payable - - 2,262
Managerial
remuneration
Associates Sale of goods - - 1,558,144
and allowances 23,135 20,637 - - - - 653,498 457,794
Commission expense - - 45,283
Utilities 2,314 2,064 4 168 26,736 22,196
Purchases of good or services 2,016 - -
Bonus / variable pay 3,856 3,192 - - - - 71,907 38,838
Advance given 305 - -
Housing 10,411 9,287 - - - - 120,313 99,881
Dividend paid 78,665 96,635
Retirement benefits 2,314 2,099 - - - - 24,264 19,328
Other expenses 1,267 2,476 5,194 9,021 120,397 81,602
43,297 39,755 5,198 9,189 1,017,115 719,639
Bonus Shares issued (No. of Shares) 4,195,466 - -
Number of persons 1 1 2 2 194 184
Staff retirement funds Expense charged for the year 53,247 45,029
Payments to retirement contribution plan 80,983 93,677
35.2 In addition to the above, fee paid to 6 (2018: 6) non-executive directors for attending Board of Directors meetings Contribution to defined benefit plans 42,366 5,785
during the year amounted to Rs. 1.45 million (2018: Rs. 2 million).
Directors Technical advisory services - - - -
35.3 The Chief Executive, two non-executive directors and certain executives of the Company are also provided with
Company maintained cars, residence and mobile telephones. The approximate value of this benefit is Rs. 49.89 Key management personnel compensation:
million (2018: 46.63 million). Salaries and other short-term employee benefits 653,498 1,030,521
Contribution to Provident Fund 25,306 37,853
36. RELATED PARTY DISCLOSURES Retirement benefits 9,361 38,248
Eligible dividend 15,875 13,315
Repayment of shareholder loan 13,448 26,132
Related parties comprise the Holding Company, entities with common directors, key management personnel,
staff retirement funds, directors, major shareholders and key management personnel. The Group continues to
have a policy whereby transactions with related parties are entered into at commercial terms, approved policy
36.1 Outstanding balances related parties as at year end have been included in trade debts, other receivables and
and at rates agreed under a contract/arrangement/agreement.
trade and other payables respectively. These are settled in ordinary course of business.
Key management personnel are those persons having authority and responsibility for planning, directing and
36.2 The following are the related parties with whom the Group had entered into transaction or have arrangement /
controlling the activities of the Group. The Group considers its Chief Executive Officer, Chief Financial Officer,
agreement in place:
Company Secretary, Non-Executive Directors and departmental heads to be its key management personnel. There
are no transactions with key management personnel other than their terms of employment / entitlement.
Name of the Related Party Basis of association Aggregate % of
Shareholding
ATC Holdings (Private) Limited
(formerly Associated Textile
Consultants (Private) Limited) Holding Company* 33%

Pakistan Business Council Associated Company due to common directorship N/A

Premier Distributors Associated Company due to common directorship N/A

Premier Agencies Associated Company due to common directorship N/A

*It is the ultimate parent company based on control model as provided under IFRS 10.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

2019 2018 39.2 Financial assets and liabilities by category and their respective maturities

(Metric tons) Interest / Mark up bearing Non-interest / Non-mark up bearing

37. PLANT CAPACITY AND PRODUCTION Maturity Maturity Maturity Maturity
up to one after one Sub-total up to one after one Sub-total Total
Actual production of plants 94,743 100,616 year year year year
(Rupees in thousand)
37.1 The capacity and production of the Parent Company plants are indeterminable as these are multi-product Financial Assets
and involve varying processes of manufacture. Trade debts - - - - - - 1,091,974 - - 1,091,974 1,091,974
Advances to employees - - - - - - 1,011 - - 1,011 1,011
Trade deposits - - - - - - 38,835 40,846 79,681 79,681
2019 2018 Other receivables - - - - - - 20,166 - - 20,166 20,166
38. NUMBER OF EMPLOYEES Cash and bank balances - - - - - - 876,244 - - 876,244 876,244
30 June 2019 - - - - - - 2,028,230 40,846 2,069,076 2,069,076
Total employees of the Parent Company at the year end 753 694
Average employees of the Parent Company during the year 744 680 30 June 2018 - - - - - - 1,574,040 41,409 1,615,449 1,615,449

Financial liabilities
Long term finance 315,881 928,142 1,244,023 - - - - - - 1,244,023
Liabilities Against Assets
39. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Subject To Finance Lease 9,598 38,619 48,217 - - - - - - 48,217
39.1 Financial risk factors Trade and other payables - - - - - - 3,698,415 - - 3,698,415 3,698,415
Accrued interest / mark up - - - - - - 32,832 - - 32,832 32,832
The Board of Directors of the Group has overall responsibility for the establishment and oversight of the Group's risk
Short term borrowings 1,901,632 - - 1,901,632 - - - - - - 1,901,632
management framework. The Group's activities expose it to variety of financial risks namely credit risk, liquidity risk and
market risk (including foreign exchange risk and interest rate risk). The Group's overall risk management programme 30 June 2019 2,227,111 966,761 3,193,872 3,731,247 - - 3,731,247 6,925,119
focuses on having cost effective funding as well as manage financial risk to minimise earnings volatility and provide 30 June 2018 2,919,899 199,259 3,119,158 2,853,910 - - 2,853,910 5,973,068
maximum return to shareholders.
On balance sheet items
30 June 2019 (2,227,111) (966,761) (3,193,872) (1,703,017) 40,846 (1,662,171) (4,856,043)
30 June 2018 (2,919,899) (199,259) (3,119,158) (1,279,870) 41,409 (1,238,461) (4,357,619)

Off balance sheet items

Letters of credit
30 June 2019 450,000
30 June 2018 250,000

Letters of guarantees
30 June 2019 36,740
30 June 2018 36,740

All the financial instruments of the Group are designated as loans and receivables and hence measured at amortised cost. The effective interest /
mark up rates for the monetary financial assets and liabilities are mentioned in respective notes to the consolidated financial statements.

39.2.1 Credit risk

Credit risk represents the financial loss that would be recognised at the reporting date if counterparties failed to perform
as contracted. Out of the total financial assets of Rs. 1.71 billion (2018: Rs. 1.61 billion) the financial assets exposed to
the credit risk amounted to Rs. 1.71 billion (2018: Rs. 1.61 billion).

For trade debts, internal risk assessment process determines the credit quality of the customers, taking into account
their financial positions, past experiences and other factors.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

For trade debts, internal risk assessment process determines the credit quality of the customers, taking into account Loss rates are based on historical credit loss experience and are adjusted to reflect differences between economic
their financial positions, past experiences and other factors. conditions during the period over which the historical data has been collected, current conditions and the Group’s view
of economic conditions over the expected lives of the receivables.
Individual risk limits are set based on internal or external credit worthiness ratings in accordance with limits set by the
management. As of 30 June 2019 trade debts of Rs. 643.70 million (2018: Rs. 1,023.63 million) were past due but not The cash and bank balances represent low credit risk as major balances are placed with banks having credit ratings of
impaired. The carrying amount of trade debts relates to number of individual customers for whom there is no recent A1+ or above as assigned by PACRA or JCR-VIS.
history of default.
The other financial assets are neither material to the financial statements nor exposed to any significant credit risk. The
The Group's maximum exposure to credit risk as at the reporting date is as follows: management does not expect any losses from non-performance by these counterparties.

2019 2018 Concentration of credit risk

(Rupees in thousand) Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the
Financial assets: same geographical region, or have economic features that would cause their ability to meet contractual obligations to
Long-term deposits 40,846 41,409 be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity
Trade debts 1,091,974 1,164,931 of the Group’s performance to developments affecting a particular industry. In order to avoid excessive concentrations
Advances to employees 1,011 - - of risk, management focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are
Trade deposits 38,835 9,000 controlled and managed accordingly. Management does not consider that it has any concentration of credit risk at
Other receivables 20,166 23,315 reporting date.
Cash and bank balances 876,244 376,794
2,069,076 1,615,449 39.2.2 Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was: liabilities that are settled by delivering cash or another financial asset. Liquidity risk reflects the Group's inability in raising
funds to meet commitments. The Group manages liquidity risk by maintaining sufficient cash and bank balances and
2019 2018 the availability of financing through banking arrangements. Management monitors rolling forecasts of the Group’s liquidity
(Rupees in thousand) reserve which comprises of undrawn borrowing facility and cash and cash equivalents on the basis of expected cash
flows. The maturity of the Group's financial liabilities are provided in these consolidated financial statements.
Domestic 62,488 113,087
UAE 86,715 156,931 39.2.3 Market risks
Canada 494,499 894,913
Other region - - - Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and equity prices
643,702 1,164,931 – will affect the Group’s income or the value of its holdings of financial instruments.

The cash and bank balances represent low credit risk as major balances are placed with banks having credit ratings of Foreign exchange risk
A1+ or above as assigned by PACRA or JCR-VIS and other reputed credit agencies.
Foreign exchange risk arises mainly where receivables and payables exist in foreign currency. As at 30 June 2019 net
The other financial assets are neither material to the consolidated financial statements nor exposed to any significant financial assets / (liabilities) of Rs. (502.14) million (2018: Rs. (326.82) million) were denominated in foreign currency
credit risk. The management does not expect any losses from non-performance by these counterparties. which were exposed to foreign currency risk.

Trade debts are shown net of allowance for impairment for expected credit loss. The Group applies the IFRS 9 simplified As at 30 June 2019 if the Pak Rupee had weakened / strengthened by 4% (2018: 4%) against US Dollar with all other
approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. variables held constant, profit before tax for the year would have been higher / lower by Rs. 20.09 million (2018: Rs.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics 13.07 million), mainly as a result of foreign exchange losses / gains on translation of US Dollar denominated trade debts.
and the days past due. The historical loss rates are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to settle the receivables.
The sensitivity of foreign exchange rate looks at the outstanding foreign exchange balances of the Group only as at the
The following table provides information about the exposure to credit risk for trade receivables from individual customers balance sheet date and assumes this is the position for afull twelve-month period. The volatility percentages for movement
as at June 30, 2019: in foreign exchange rates have been used due to the fact that historically (five years) rates have moved on average basis
by the mentioned percentage per annum.
Gross Carrying Expected Credit Net Carrying
Amount Loss Amount Interest rate risk

(Rupees in thousand) The Group’s only interest rate risk arises from borrowings as the Group has no interest-bearing assets. Borrowings
issued at variable rates expose the Group to cash flow interest rate risk.
June 30. 2019
Current (not past due) 708,705 21,301 687,404 At 30 June 2019 the Group had variable interest bearing financial liabilities of Rs. 3,193.872 million (2018: Rs. 2,903.21
million), had the interest rates varied by 100 basis points (2018: 100 basis points) with all the other variables held constant,
1–30 days past due 271,500 8,358 263,142
profit before tax for the year would have been lower / higher by approximately Rs. 31.94 million (2018: Rs. 29.03 million),
31–60 days past due 55,256 1,759 53,497
mainly as a result of higher / lower interest expense on floating rate borrowings.
61–90 days past due 54,462 1,801 52,661
90-180 days past due 43,466 15,383 28,083 The sensitivity of 100 basis points (2018:100 basis points) movement in interest rates has been used as historically (five
More than 180 days past due 44,777 37,590 7,187 years) floating interest rates have moved by an average of 100 basis points (2018: 100 basis points) per annum.
1,178,166 86,192 1,091,974
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

39.2.4 Reconciliation of movements of liabilities to cash flows arising from financing activities 40. OPERATING SEGMENT

2019 The Group has the two operating segments namely core business and retail (cash and carry). The core business providing
Short term Long term borrowings wide range of food products to consumers. The retail (cash and carry) offer different products / supplies to restaurants,
Other short term including loan
borrowings used for retailers and industrial customers based in Canada.
borrowings including classified as current Retained
cash management Total
related accrued [including related earnings
purpose accrued markup]
markup
(refer note 15.1) The Group’s chief executive officer reviews the internal management reports of each segment separately.
(Rupees in thousand) 40.1 Segment revenue and results
Balance as at 1 July 2018 1,354,869 867,604 767,235 3,233,728 6,223,436 Core Segment - Retail -
Food & Food (cash and carry) Total
Changes from financing cash flows related products
Repayment of loan - - - - (177,354) - - (177,354 )
(Rupees in thousand)
Proceeds from long term loan - - - - 504,387 - - 504,387
Payments and repayments - - (50,000) - - - - (50,000 ) For the year ended 30 June 2019
Dividend paid - - - - - - (492,133) (492,133 ) Sales 16,825,419 7,428,378 24,253,797
Total changes from financing activities - - (50,000) 327,033 (492,132) (215,099 ) Cost of sales
(excluding depreciation and amortization) (10,978,716 ) (5,984,848) (16,963,564)
Other changes - interest cost Depreciation and amortization (305,912 ) - - (305,912)
Interest expense 69,002 28,790 60,138 - - 157,930 Gross profit 5,540,791 1,443,530 6,984,321
Interest paid (69,002) (13,562) (60,138) - - (142,702 )
Changes in running finance (253,237) - - - - - - (253,237 ) Distribution expenses (2,976,814 ) (944,098) (3,920,912)
Total loan related other changes (253,237) 15,228 - - - - (238,009 ) Impairment loss on trade debts (22,745 ) (10,657) (33,402)
Administrative expenses (1,019,091 ) (121,683) (1,140,774)
Total equity related other changes - - - - 149,755 1,251,910 1,401,665
Finance cost (201,187 ) (82,319) (283,506)
Balance as at 30 June 2019 1,101,632 832,832 1,244,023 3,993,506 7,171,993 Other expenses (115,237 ) (15,875) (131,112)

39.2.5 Capital risk management

Other income 248,281 - - 248,281

Profit before taxation 1,453,998 268,898 1,722,896

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to
Taxation (271,746 ) (80,635) (352,381)
provide returns for shareholders and benefit for other stake holders and to maintain an optimal capital structure to reduce the
Profit after taxation 1,182,252 188,263 1,370,515
cost of capital. During 2019, the Group's strategy was to maintain leveraged gearing. The gearing ratio as at 30 June 2019 was
as follows: For the year ended 30 June 2018
Sales 16,499,848 5,091,711 21,591,559
2019 2018 Cost of sales
(Rupees in thousand) (excluding depreciation and amortization) (10,437,201 ) (4,212,172) (14,649,373 )
Depreciation and amortization (238,447 ) - - (238,447 )
Total borrowings 3,193,873 2,931,030
Cash and bank balances (876,244 ) (376,794 )
Gross profit 5,824,200 879,539 6,703,739
Net debt 2,317,629 2,554,236
Total Equity 5,029,962 4,004,232 Selling and distribution expenses (3,602,008 ) (642,644) (4,244,652 )
Total capital 7,347,591 6,558,468 Administrative expenses (817,206 ) (96,014) (913,220 )

Gearing ratio 32% 39% Finance Cost (146,399 ) (49,329) (195,728 )

Other operating charges (216,883 ) (13,315) (230,198 )

The Group finances its operations through equity, borrowings and management of working capital with a view to maintain Other income 53,467 - - 53,467
an appropriate mix between various sources of finance to minimise risk. Profit before taxation 1,095,171 78,237 1,173,408
Taxation (116,164 ) (30,210) (146,374 )
39.3 Fair values of financial assets and liabilities
Profit after taxation 979,007 48,027 1,027,034
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Management considers fair value of financial assets approximate its fair
value owing to their short term maturities and credit quality of counter parties.
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

40.7 Non-current assets of the Group are located in Pakistan except non-current assets amounting to Rs. 1,160.129 million
Core Segment - Retail - (2018: 929.248 million) are located outside Pakistan.
Food & Food (cash and carry) Total
related products
41. EVENT OCCURRING AFTER BALANCE SHEET DATE
(Rupees in thousand)
40.2 Segment assets and liabilities The Board of Directors of the Parent Company in their meeting held on August 29, 2019 has proposed a final dividend
of Rs. 4 per share amounting to Rs. 497.3 million and bonus issue of 1 share for each 5 shares held amounting to book
As at 30 June 2019
value of Rs. 124.3 million for the year ended 30 June 2019. The approval of the shareholders of the Parent Company
Segment assets 11,495,635 1,787,812 13,283,447
Segment liabilities 7,020,112 1,233,373 8,253,486 for the dividend and bonus issue shall be obtained at the upcoming Annual General Meeting for the year ended 30 June
2019. The consolidated financial statements for the year ended 30 June 2019, do not include the effect of the proposed
As at 30 June 2018 final cash dividend and bonus issue which will be accounted for in the year ending 30 June 2020.
Segment assets 9,566,151 1,365,941 10,932,092
Segment liabilities 5,900,654 1,027,206 6,927,860 42. DATE OF AUTHORISATION

These consolidated financial statements were authorised for issue by the Board of Directors of the Parent Company on
40.3 Segment assets reported above comprise of property, plant and equipment, stock in trade and trade debts. August 29, 2019.

40.4 Information about major customers

The Group's customer base is diverse with no single customer accounting for more than 10% of net sales. Sales
to domestic customers in Pakistan are 71.7% (2018: 94.8%) and to customer outside Pakistan are 28.3% (2018:
5.2%) of the revenue.

40.5 Geographical Location

The Group's gross revenue from external customers by geographical location is detailed below:

2019 2018
(Rupees in thousand)
Domestic sales 23,915,210 21,785,441
Export sales 9,419,554 6,967,024
33,334,764 28,752,465

40.5.1 Region wise export sales are as under:

USA / Canada 8,431,079 5,979,633

Africa 2,878 5,077
Middle East Asia 873,870 819,037
Europe / UK 111,727 163,277
9,419,554 6,967,024

40.6 Management considers that revenue from its ordinary activities are shariah compliant.

Chief Executive Officer Chief Financial Officer Director

Notice of Annual General Meeting Notice of Annual General Meeting

Notice is hereby given that the 48th Annual General Meeting of National Foods Limited will be held on Friday, transactions carried out and to be carried out with the above named related parties, on case to case basis, for the
October 18, 2019 at 11:00 A.M. at Beach Luxury Hotel, Karachi to transact the following business: financial year ending June 30, 2020 and till next Annual General Meeting of the Company.

c) RESOLVED FURTHER THAT the approval of transactions by the Board, as aforesaid, shall be deemed to have been
Ordinary Business: approved by the shareholders and the transactions for the year ending June 30, 2020 shall be placed before the
shareholders in the next Annual General Meeting for their formal ratification/approval.
1. To confirm the minutes of the Extra-Ordinary General Meeting held on April 29, 2019.
7. To transact any other business with the permission of the Chair.
2. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended June 30,
2019 together with the Directors’ and Auditors’ Reports thereon, together with Audited consolidated financial Statements under Section 134(3) of the Companies Act, 2017 in respect of special business contained in
statements of the Company and the Auditors’ reports thereon for the year ended June 30, 2019. Agenda Item Number 5 is annexed to the notice being sent to the members.

3. To approve and declare the dividend on the Ordinary Shares of the Company. The Directors have recommended
final dividend of 80% (Rs.4.00/- per Ordinary Share of Rs. 5/- each), for the year ended June 30, 2019.

4. To appoint External Auditors of the Company for the ensuing year, and to fix their remuneration. The Board of
Directors, on the recommendation of Audit Committee of the Company, has proposed re-appointment of M/s
KPMG Taseer Hadi & Co. Chartered Accountants as external auditors, for the year ending June 30, 2020. By Order of the Board

Special Business: Karachi Fazal ur Rehman Hajano

Date: September 25, 2019 Company Secretary
5. To consider and, if thought fit, to pass with or without modification(s), the resolutions appearing below as ordinary
resolutions for the capitalization of free reserves to issue bonus shares as recommended by the Directors.

“RESOLVED THAT a sum of Rs.124,328,000/- be capitalized out of the free reserves of the Company and applied
towards issue of 24,865,600 ordinary shares of Rs. 5 each, as 20% fully paid bonus shares i.e. in the proportion
of one (1) ordinary share for every five (5) ordinary shares held by the members of the Company whose names
appear in the Members’ Register as at the close of the business on October 9, 2019.”

“FURTHER RESOLVED THAT the bonus shares shall rank pari passu in all respects with the existing shares of
the Company as regards the future entitlements, however, these shares shall not be eligible for any final dividend
declared by the Company for the year ended June 30, 2019.”

“FURTHER RESOLVED THAT members fractional entitlement, as a result of their entitlement to a fraction of a
bonus share due to their respective shareholdings, shall be consolidated into whole shares and sold on the Pakistan
Stock Exchange and the proceeds so realized shall be deposited into a charity account to be proposed and
approved by the Shareholders in Annual General Meeting on October 18, 2019.”

“FURTHER RESOLVED THAT the Chief Executive and Company Secretary be and are hereby jointly and/or
severally authorized to give effect to these resolutions and to do and cause to be done all acts, deeds and things
that may be necessary or required for issue, allotment and distribution of the said bonus shares and the deposit
of sale proceeds of the fractions into aforementioned account.”

6. To consider, and if thought fit, to pass the following resolutions as ordinary resolutions, (a) to ratify and approve
the transactions carried out with related parties during the financial year ended June 30, 2019 and (b) & (c) to
authorize the Board of Directors to approve all related party transactions carried out and to be carried out during
the year ending June 30, 2020.

a) “RESOLVED THAT the transactions carried out by the company with the following related parties for the financial year
ended June 30, 2019 be and are hereby ratified and approved.”

i) National Foods DMCC;

ii)ATC Holdings (Private) Limited;

b) RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized to approve all
Notice of Annual General Meeting Notice of Annual General Meeting

Notes: In this regard all shareholders who hold shares jointly are requested to provide shareholding proportions of Principal
shareholder and Joint-holder(s) in respect of shares held by them to our Share Registrar, in writing as follows:
1. Book Closure Notice

The share transfer books of the Company will remain closed from October 10, 2019 to October 18, 2019 (both Principal Shareholders Joint Holder(s)
days inclusive). Transfers received, in order, at the office of our Share Registrar M/s. CDC Share Registrar Services Folio/CDC Total
number of Shareholding Shareholding
Limited, Head Office, Block B, SMCHS, Main Shahrah-e-Faisal, Karachi-74400, by the close of business on October A/c No. shares Name and Proportion Name and
CNIC No. CNIC No. Proportion
9, 2019, will be considered in time for the determination of the entitlement of the shareholders to final cash dividend, (No. of Shares) (No. of Shares)
bonus shares and to attend and vote at the meeting.

2. Appointment of Proxy and Participation in the AGM

The required information must reach our Share Registrar by the close of business (5:00 p.m.) on October 9, 2019;
a) A member entitled to attend, speak and vote at the Annual General Meeting is entitled to appoint another otherwise it will be assumed that the shares are equally held by Principal shareholder and Joint Holder(s).
member as his/her proxy to attend, speak and vote for his/her behalf. A proxy must be a member of the
Company. A proxy shall also have the right to demand and join in demanding a poll and vote on a poll. The corporate shareholders having CDC accounts are required to have their National Tax Number (NTN) updated
with their respective participants, whereas corporate physical shareholders should send a copy of their NTN
b) The instrument appointing proxy, together with the power of attorney or other authority under which it is signed, certificate to the company or Share Registrar. The shareholders while sending NTN or NTN certificates, as the case
as the case may be, or a notarial certified copy of the power or authority, must be deposited at the Registered may be, must quote company name and their respective folio numbers.
Office of the Company situated at 12/CL-6, Claremont Road, Civil Lines, Karachi-75530, at least 48 hours
before the time of the meeting. Form of Proxy is enclosed. Attested copies of valid CNIC or the passport of the The information received within the above specified time would enable the Company to deduct income tax at the
member and the Proxy shall be furnished with the Proxy Form. applicable rates from the payment of dividend if announced by the Company on October 18, 2019.

c) Owners of the physical shares and of the shares registered in the name of CDC Share Registrar Services Limited, Members seeking exemption from deduction of income tax or deduction at a reduced rate under the relevant
and / or their proxies are required to produce their original valid Computerized National provisions of the Income Tax Ordinance, 2001, are requested to submit a valid tax certificate or necessary
Identity Card (CNIC) or Passport, for identification purposes, at the time of attending the meeting. documentary evidence, as the case may be, latest by October 9, 2019.

3. Submission of Copies of Valid CNICs For any query/problem/information, the investors may contact the company and/or the Share Registrar at the
following phone Numbers, email addresses:
Members, who have not yet submitted attested photocopy of their valid CNIC along with folio number, are requested
to send the same, at the earliest, directly to the Company’s Share Registrar. Company: [email protected]
Share Registrar: [email protected]
4. Changes in Members Addresses
7. Unclaimed Dividend/Shares
Members are requested to notify any change in their addresses immediately to the Company’s Share Registrar.
Shareholders, who by any reason, could not claim their dividend/shares, if any, are advised to contact our Share
5. E-Dividend Registrar, CDC Share Registrar Services Limited, Head Office, House-99B, Block ‘B’, S.M.C.H.S., main
Shahrah–e-Faisal, Karachi-74000 to collect / enquire about their unclaimed dividend/shares, if any.
The provisions of Section 242 of the Companies Act, 2017 require the listed companies that any dividend payable
in cash shall only be paid through electronic mode directly into the bank account designated by the entitled In compliance with Section 244 of the Companies Act, 2017, after having completed the stipulated procedure, all
shareholders. Accordingly, the shareholders holding physical shares are requested to provide the Company’s Share such dividend outstanding for a period of 3 years or more from the date due and payable shall be deposited to
Registrar, at the address given herein above, electronic dividend mandate on E-Dividend Form provided in the the Federal Government in case of unclaimed dividend and in case of shares, shall be delivered to the SECP.
annual report and also available on website of the Company. In the case of shares held in CDC, the same information
should be provided to the CDS participants for updating and forwarding to the Company. 8. Postal Ballot/E-Voting

6. Deduction of Income Tax under Section 150 of the Income Tax Ordinance, 2001 In accordance with the Companies (Postal Ballot) Regulations, 2018, for the purpose of election of directors and
for any other agenda item subject to the requirements of section 143 and 144 of the Companies Act, 2017, members
Pursuant to the Finance Act, 2019, effective July 01, 2019, the rate of deduction of income tax under Section 150 will be allowed to exercise their right of vote through postal ballot i.e. by post or e-voting, in the manner and subject
of the Income Tax Ordinance, 2001, from payment of dividend to a NON-FILER of income tax return is prescribed to conditions contained in aforesaid regulations.
as 30% and for FILER of Tax Returns as 15%. List of Filers is available at Federal Board of Revenue’s (FBR) website:
http://www.fbr.gov.pk. Members are therefore advised to update their tax FILER status latest by October 9, 2019.

Further, according to clarification received from Federal Board of Revenue (FBR), with-holding tax will be determined
separately on ‘Filer/Non-Filer’ status of Principal shareholder as well as joint-holder(s) based on their shareholding
proportions, in case of joint accounts.
Notice of Annual General Meeting Notice of Annual General Meeting

9. Video-link Facility AGENDA ITEM NO. 6

ORDINARY RESOLUTIONS – TRANSACTIONS WITH RELATED PARTIES
If the members holding ten percent of the total paid up capital or such other percentage of the paid up capital as
may be specified by the Commission, are resident in any other city, the company shall provide the facility of (a) Ratification and approval of transactions with related parties carried out during the financial year ended
video-link to such members for attending annual general meeting of the company, if so required by such members June 30, 2019
in writing to the company at least seven days (7) before the date of the meeting.
The company carries out transactions with its related parties on an arm’s length basis, as per the approved policy
with respect to ‘transactions with related parties’, in the normal course of business. All transactions entered into
Consent for Video-link Facility with related parties require the approval of the Board Audit Committee of the Company, which is chaired by an
independent director of the Company. Upon the recommendation of the Board Audit Committee, such transactions
I/We, of being a member of National Foods Limited holder of Ordinary Share(s) as per Register Folio No. are placed before the Board of Directors for their approval. However, in terms of Regulation 15(1) of the Listed
_____________ hereby opt for participation in the Annual General Meeting to be held on October 18, 2019 or Companies (Code of Corporate Governance) Regulations, 2017 (the Code) approval of shareholders is required
any adjourned meeting through video-link facility at __________________(Please insert name of the City) for such transactions with related parties in which majority of directors of the company are interested. The Companies
Act, 2017 (the Act) also requires approval of shareholders on the maters where majority of directors are interested.
________________________
Signature of member
In view of the above, following transactions carried out in normal course of business on an arms’ length basis with
related parties during the financial year ended June 30, 2019, are being placed before the shareholders for their
ratification and approval.
10. Availability of Financial Statements and Reports on the Website:

The Annual Report of the Company for the year ended June 30, 2019 has been placed on the Company’s website Name Relationship Nature of Transaction Amount in Rupees
at the given link: http://nfoods.com/contents/our-company/financials/
National Foods
11. Electronic Transmission of Financial Statements and Notice of Meeting Subsidiary Net sales 1,170,480,000
DMCC
ATC Holdings
Members who desire to receive annual financial statements and notice of meeting for the financial year ending Parent Company Rent Income 8,687,000
(Private) Limited
June 30, 2020 or onward through e-mail, instead of registered post/courier, may submit their consent on the FORM
available for the purpose on Company’s website.
(b) and (c) Authorization for the Board of Directors to approve the related party transactions during the
Share Registrar Registered Office financial year ending June 30, 2020 and till next Annual General Meeting
CDC Share Registrar Services Limited National Foods Limited
Share Registrar Department 12/CL-6, Claremont Road, The Company is and shall be conducting transactions with its related parties during the financial year ending June
CDC House, Block B, SMCHS, Civil Lines, Karachi. 30, 2020 and subsequently, on arm’s length basis as per the approved policy with respect to ‘transactions with
Main Shahrah-e-Faisal, Karachi-74400 related parties’ in the normal course of business.

The related parties’ transactions in which majority of Directors are interested due to their common directorship
STATEMENT UNDER SECTION 134(3) OF THE COMPANIES ACT, 2017 and/or shareholding, therefore necessitate approval of shareholders. Accordingly, approval of shareholders is being
sought to authorize the Board of Directors of the Company to approve all transactions carried out and to be carried
This statement set out all the material facts concerning Special Business under Agenda Item No. 5 and 6 to be out with such related parties during the financial year ending June 30, 2020 and till next Annual General Meeting,
transacted at the 48th Annual General Meeting. which transactions shall be deemed to be approved by the Shareholders.

AGENDA ITEM NO. 5 The nature and scope of such related party transactions is explained above in the statement of Agenda Item No.
ISSUE OF BONUS SHARES BY CAPITALIATION OF FREE RESERVES 6(a). The related party transactions conducted during financial year ending June 30, 2020, shall then be placed
before the shareholders in the next AGM for their formal approval/ratification.
The Board of Directors in their meeting held on August 29, 2019, have recommended capitalization of a sum of
Rs. 124,328,000/- out of free reserves of the Company for issue of 24,865,000 ordinary shares of Rs. 5 each, as Disclosure of Interest of Directors
20% fully paid bonus shares. The directors are of the view that the Company’s financial position and its reserves Mr. Abdul Majeed, Mr. Abrar Hasan and Mr. Zahid Majeed are interested in the agenda to the extent of their common
justify the capitalization of free reserves. directorships and/or their shareholding in respective related parties and Mrs. Noreen Hasan due to interest of his
spouse.
The Directors of the Company have not, direct or indirect interest in this special business, except to the extent of
their entitlements of bonus shares and their relatives who are also shareholders of the Company.
Dividend Mandate Dividend Mandate
CDC/RTA/NATF/Letter/17 Letter format for CDS Shareholders
Date_____________________

Folio No._________________ CDC/RTA/NATF/Letter/17

Name of Shareholder Date_____________________
F/H Name
Address CDS Account No._________________
Bank Account Details for Payment of Cash Dividend Name of Shareholder
(Mandatory Requirement as per the Companies Act, 2017) F/H Name
Dear Shareholder, Address

This is to inform you that in accordance with the Section 242 of the Companies Act, 2017, any dividend payable
in cash shall only be paid through electronic mode directly into the bank account designated by the entitled Bank Account Details for Payment of Cash Dividend
shareholder. Please note that giving bank mandate for dividend payments is mandatory and in order to comply (Mandatory Requirement as per the Companies Act, 2017)
with this regulatory requirement and to avail the facility of direct credit of dividend amount in your bank account,
you are requested to please provide the following information: Dear Shareholder,
Details of Shareholder
Name of shareholder This is to inform you that in accordance with the Section 242 of the Companies Act, 2017, any dividend payable
Folio / CDS Account No. in cash shall only be paid through electronic mode directly into the bank accounts of entitled shareholder as
CNIC No. designated by them. In pursuance of the direction given by Securities and Exchange Commission of Pakistan
(SECP), kindly immediately contact your relevant CDC Participant/CDC Investor Account Services Department
Cell number of shareholder
and provide them your bank mandate information including International Bank Account Number (IBAN) which is
Landline number of shareholder, if any
now mandatory for all cash dividend payments.
Details of Bank Account
Title of Bank Account In order to comply with regulatory requirement and to avail the facility of direct credit of dividend amount in your
bank account, you are requested to please provide requisite bank mandate information to your respective
International Bank Account Number (IBAN) PK _________________________________________ (24 digits) Participant/CDC Investor Account Services Department immediately.
“Mandatory” (Kindly provide your accurate IBAN number after consulting with your
respective bank branch since in case of any error or omission in given IBAN,
the company will not be held responsible in any manner for any loss or delay
in your cash dividend payment).
Bank’s name Regards,
Branch name and address

It is stated that the above-mentioned information is correct and in case of any change therein, I / we will immediately intimate
Participant / Share Registrar accordingly.

_____________________ Share Registrar Department

Signature of shareholder
M/s. Central Depository Company of Pakistan Limited,
Share Registrar: National Foods Limited

You are requested to kindly send us photocopy of this letter immediately duly filled in and signed by you along Note: This letter is being computer generated and does not require any signature.
with legible photocopy of your valid CNIC at our address, Share Registrar Services, Central Depository Company
of Pakistan Limited, CDC House, 99-B, Block B, Main Shahrah-e-Faisal, Mian Shahrah-e-Faisal, Karachi. 74400,
Pakistan.

Regards,

Share Registrar Department

Central Depository Company of Pakistan Limited
Share Registrar: National Foods Limited

Note: This letter is being computer generated and does not require any signature.
Glossary Jama Punji Information

ATL: Above the Line

APLAC: Asian Pacific Laboratory Accreditation Cooperation

BTL: Below the Line

CEO: Chief Executive Officer

CSR: Corporate Social Responsibility

DDS: Door to Door Service

DMCC: Dubai Multi Commodities Centre

FSSC: Food Safety System Certification

HACCP: Hazard Analysis and Critical Control Points

HMA: Halal Monitoring Authority

HR: Human Resource

ID: International Division

ISO: International Standard Organisation

NFL: National Foods Limited

PNAC: Pakistan National Accredation Council

PR: Purchase Requisition

RDP: Rural Development Programs

SAP: System, Applications and Products in data processing

SIP: Sales Incentive Plan

SKU: Stock Keeping Units

SnOP: Sales and Operations Planning

TVC: Television Commercial

UNICEF: United Nations International Children's Emergency Fund

5 1 4
57%
 FY18 FY19 FY18 FY19 FY18 FY19
5,092 7,429 8% 16,500 17,763 17% 21,592 25,191
880 1,444 12% 5,825 6,536 19% 6,704 7,980
17.3% 19.4% 1.4% 35.3% 36.8% 0.6% 31.1% 31.7%

FY18** FY19 FY18 FY19 FY18 FY19

5,092 7,429 2% 16,500 16,825 12% 21,592 24,254
880 1,444 -5% 5,825 5,540 4% 6,704 6,984
17.28% 19.43% -2.37% 35.30% 32.93% -2.25% 31.05% 28.80%
128 352 33% 1,242 1,655 47% 1,369 2,007
2.51% 4.73% 2.31% 7.53% 9.84% 1.93% 6.34% 8.28%
48 188 21% 979 1,183 34% 1,027 1,371
0.94% 2.53% 1.10% 5.93% 7.03% 0.90% 4.76% 5.65%
7.7 8.9 8.1 10.4

Amortisation Intangibles
Form of Proxy

I/We_________________________________________________________________________________________________________ of

_______________________________________________________________________________________________being a member of

National Foods Limited holding _______________________________________________________ordinary

PROPOSED ARTICLES OF shares as per Registered
ASSOCIATION
Folio No./CDC A/C No. (for members who have shares in CDS) _____________________________________________________________

hereby appoint Mr./Mrs./Miss______________________________________________________________________________________of

(full address)_______________________________________________________________________________________ or failing him/her

Mr./Mrs./Miss____________________________________________________________________________________________________of

(full address)______________________________________________________________________________________________________
(being member of the Company) as my/our Proxy to attend, act and vote for me/us and behalf at the 48th Annual General
Meeting of the Company to be held on October 18, 2019 and/or any adjournment thereof.
As witness my/our hands seal this__________________________________day of_________________________2019.

Signed by___________________________________________________________________________________in the

1. Witness 2. Witness

Signature Signature

Name: Name:

Address: Address:

CNIC No. - - CNIC No. - -

Important:
Signature on
1. This form of proxy, duly completed and signed, must be deposited at the office of the
Rs. 5/-
Company's Shares Registrar, not later than 48 hours before the meeting.
Revenue Stamp
2. This form should be signed by the Member or by his/her attorney duly authorized in
writing. If the member is a Corporation, its common seal should be affixed to (Signature must agree with the specimen
the instrument. signature registered with the company)

3. A Member entitled to attend and vote at the meeting may appoint any other Member as his/her proxy to attend and vote on
his/her behalf except that a corporation may appoint a person who is a Member.

For CDC Account Holders/Corporate Entitles:

In addition to the above following requirements have to be met:

i. The Proxy form shall be witnessed by two persons whose names, address and CNIC Numbers shall be mentioned on the form.

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

iii. The proxy shall produce his/her original CNIC or original Passport at the time of the meeting.

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