Cipla Quality Chemical Industries : CiplaQCIL Financial Results Publication FY 2023

Cipla Quality Chemical Industries Limited summary audited financial statements for the year ended 31 March 2023.

The Directors of Cipla Quality Chemical Industries

SUMMARY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

SUMMARY STATEMENT OF FINANCIAL POSITION

Limited ("the Company" or "CiplaQCIL") are pleased to present the summary audited financial statements for the year ended 31 March 2023.

Independent auditor's report on summary financial statements to the members of Cipla Quality Chemical Industries Limited

Opinion

The summary financial statements, which comprise the summary statement of financial position as at 31 March 2023, the summary statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended and related notes, are derived from the audited financial statements of Cipla Quality Chemical Industries Limited for the year ended 31 March 2023.

In our opinion, the accompanying summary financial statements are consistent, in all material respects, with the audited financial statements of

	2023
	UShs '000
Revenue	221,466,376
Cost of sales	(154,457,788)
Gross profit	67,008,588
Other income	333,096
General and administrative expenses	(53,995,292)
Reversal of impairment allowance on
trade receivable	15,661,237
Operating profit	29,007,629
Finance income	3,843,980
Finance costs	(1,068,230)

2022 UShs '000

267,432,354

(196,723,381)

70,708,973

127,990

(51,726,786)

20,207,101

39,317,278

-

(1,543,062)

ASSETS

NON-CURRENT ASSETS

Property, plant, equipment and right-of-use assets

Capital work-in-progress Intangible assets Deferred tax asset

CURRENT ASSETS

Inventories

Trade and other receivables Income tax recoverable Cash and cash equivalents

TOTAL ASSETS

EQUITY AND LIABILITIES

2023	2022
UShs '000		UShs '000
67,339,505	65,055,052
3,022,079	3,715,964
901,412	1,332,567
-	5,139,094
71,262,996		75,242,677
66,335,779	80,391,616
62,951,599	82,503,740
2,104,114	58,595
10,812,571	8,486,203
142,204,063		171,440,154
213,467,059		246,682,831

the Company for the year ended 31 March 2023 on the basis described in the Basis of preparation section of the summary financial statements.

Summary financial statements

The summary financial statements do not contain all the disclosures as required by International Financial Reporting Standards (IFRS) and the Companies Act, 2012. Reading the summary financial statements and the auditor's report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor's report thereon.

The audited financial statements and our report thereon

We expressed an unmodifiied audit opinion on the audited fiinancial statements in our report dated 19 May 2023. That report also includes the communication of Key Audit Matters. Key Audit Matters are those matters that, in our professional judgement, were of most signifiicance in our audit of the fiinancial statements for the year ended 31 March 2023.

Profit before tax	31,783,379	37,774,216
Taxation	(12,796,661)		(13,723,615)
Profit for the year	18,986,718		24,050,601
Other comprehensive income	-	-
Total comprehensive profit for the year
18,986,718	24,050,601
Basic and diluted earnings per share
(UShs)	5.20	6.59

SUMMARY STATEMENT OF CHANGES IN EQUITY

EQUITY

Share capital

Capital grant

Proposed dividend

Retained earnings

LIABILITIES NON-CURRENT LIABILITIES

Deferred tax liability

Term loan

Lease liabilities

CURRENT LIABILITIES

Term loan Lease liabilities

Trade and other payables

TOTAL LIABILITIES

TOTAL EQUITY AND LIABILITIES

45,648,865	45,648,865
2,275,000	2,275,000
9,129,773	7,303,818
114,358,827	104,501,882
171,412,465		159,729,565
1,074,232	-
-	18,888,375
67,462	137,536
1,141,694		19,025,911
5,400,750	6,868,500
49,816	109,850
35,462,334		60,949,005
40,912,900		67,927,355
42,054,594	86953,266
213,467,059		246,682,831

Directors' responsibility for the summary financial statements

The Directors are responsible for the preparation of the summary financial statements as described in the basis of preparation section of the summary financial statements.

Auditor's responsibilities for the summary financial statements

Our responsibility is to express an opinion on whether the summary financial statements are consistent, in all material aspects, with the audited financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810 (Revised), Engagements to Report on Summary Financial Statements.

Grant Thornton

Certified Public Accountants 3rd Floor, Lugogo one

Plot 23, Lugogo Bypass,

P.O. Box 7158

Kampala, Uganda

19 May 2023

	Share capital	Capital grant	Proposed	Retained	"Total
	UShs '000	UShs '000	dividend	earnings	equity"
	UShs '000	UShs '000	UShs '000
Balance as at 1 April 2021
45,648,865	2,275,000	-	87,755,099	135,678,964
Total comprehensive income for the year	-	-	-	24,050,601	24,050,601
Profit for the year
Other comprehensive income	-	-	-	-	-
Total comprehensive income for the year
45,648,865	2,275,000	-	111,805,700	159,729,565
Transaction with owners of the Company	-	-	7,303,818	(7,303,818)	-
Proposed dividend
Total distributions	-	-	7,303,818	(7,303,818)	-
Balance as at 31 March 2022
45,648,865	2,275,000	7,303,818	104,501,882	159,729,565
Balance as at 1 April 2022	45,648,865	2,275,000	7,303,818	104,501,882	159,729,565
Total comprehensive profit for the year	-	-	-	18,986,718	18,986,718
Profit for the year
Other comprehensive income	-	-	-	-	-
Total comprehensive income for the year
45,648,865	2,275,000	7,303,818	123,488,600	178,716,283
Transaction with owners of the Company	-	-	9,129,773	(9,129,773)	-
Proposed dividend
Dividend paid	-	-	(7,303,818)	-	(7,303,818)
Total distributions	-	-	1,825,955	(9,129,773)	(7,303,818)
Balance as at 31 March 2023	45,648,865	2,275,000	9,129,773	114,358,827	171,412,465

SUMMARY STATEMENT OF CASH FLOWS
	2023	2022
	UShs '000	UShs '000
Operating activities
Profi t before tax	31,783,379	37,774,216
Adjustment for:	(15,661,237)	(20,207,101)
- Impairment allowance on fi nancial assets
- Depreciation	9,268,639	8,621,402
- Amortisation	474,448	449,770
- Movement in provision for obsolete stock	(1,209,486)	2,856,625
- Gain on sale of property, plant and equipment	(265,812)	(33,898)
- Interest expense	1,068,230	1,399,016
Changes in:	25,458,161	30,860,030
15,265,323	(14,440,157)
- Inventories
- Trade and other receivables	34,503,378	2,900,454
- Trade and other payables	(23,690,439)	4,280,112

Cash generated from operating activities	51,536,423	23,600,439
Interest paid on bank overdraft	(293,227)	(296,257)
Interest paid on term loan	(744,359)	(1,058,854)
Payment of interest on lease liabilities	(30,644)	(43,905)
Tax paid	(8,628,854)	(6,301,922)
Net cash generated from operating activities	41,839,339	15,899,501
Cash fl ows from investing activities
Proceeds from sale of property, plant and
equipment	303,434	33,898
Purchase of property, plant and equipment	(7,884,021)	(3,850,490)
Additions to capital work-in-progress	(3,012,808)	(3,652,294)
Purchase of intangible assets	(43,293)	(555,967)
Net cash used in investing activities	(10,636,688)	(8,024,853)
Cash fl ows from fi nancing activities	(7,303,818)	-
Dividends paid
Repayment of term loan	(21,424,375)	(6,811,500)
Repayment of lease liability	(148,090)	(213,478)
Net cash used in fi nancing activities	(28,876,283)	(7,024,978)
Net change in cash and cash equivalents	2,326,368	849,670
Cash and cash equivalents at start of year	8,486,203	7,636,533
Cash and cash equivalents at the end of year	10,812,571	8,486,203

Basis of preparation

The summary fi nancial statements of the Company for the year ended 31 March 2023 were prepared in accordance with the criteria established by management under which the Company discloses the summary statements of financial position, profi t or loss and other comprehensive income, cash flows and changes in equity. The summary fi nancial statements are derived from the audited fi nancial statements of the Company which are prepared in accordance with International Finance Reporting Standards (IFRS) and in a manner required by the Companies Act, 2012.

Financial Performance

Revenue

Revenue decreased compared to FY 2021- 22 under diffi cult trading conditions, which include ongoing cost pressure and supply chain disruptions. Export sales were hit hardest, declining by 38%, mainly because of the reduction in the contract manufacturing business.

Sales for FY 2022-23 were UShs 221.5 billion compared to UShs 267.4 billion in FY 2021-22.

Gross profi t

Gross profi t margin improved by 4% compared to FY 2021-22 due to continued focus on operational excellence and product mix.

Operating profi t

Operating profi t reduced by 26% to UShs 29.0 billion compared to FY 2021-22.

A benefi t of reversal of impairment allowance on trade receivables was recorded after recovery of some overdue amounts resulting from earlier sales to Government of Zambia (GoZ). The Company collected UShs 14.7 billion from GoZ. GoZ continues to acknowledge

the unpaid balance, and the Company's collection initiatives are continuing. The Company has applied collections from GoZ to reducing its related term loan, which now stands at UShs 5.4 billion compared to UShs 23.2 billion in FY 2021-22.

This benefi t was, however, reduced by increased general and administrative expenses resulting from infl ationary headwinds.

Finance income and costs

Interest income was earned from short term cash placements with banks.

Early term loan repayments were effected in FY 2022-23 following receipt of long overdue amounts from GoZ. Consequently, loan interest expense reduced by 30% to UShs 744 million compared FY 2021-22.

Foreign exchange gain

Foreign exchange gains in FY 2022-23 amounted to UShs 3.2 billion compared to foreign exchange loss of UShs 0.1 billion in FY 2021-22 mainly due to the depreciation of the Uganda Shilling against the foreign currencies.

Profi t for the year

Profi t before tax reduced by 16% to UShs 31.8 billion compared to FY 2021-22 largely because of reduction in revenue and increased general and administrative expenses. Continued success in part collection of overdue amounts from GoZ improved the performance and supported the reduction in the loan balance and interest expense.

Profi t after tax was UShs 19.0 billion compared to UShs 24.1 billion in FY 2021-22 representing a net profi t margin of 8.6% (FY 2021-22: 9.0%).

Excluding the impact of Zambia collection, profi t for the year would have been UShs 10.3 billion (FY 2021-22: UShs 13.3 billion) resulting in

a net profi t margin of 5% (FY 2021-22: 5%)

Cash fl ow

Net cash generated from operating activities increased from UShs 15.9 billion in FY 2021-22 to UShs 41.9 billion in FY 2022-23 mainly due to profi table operations and part collection of the GoZ debt. Net cash used in investing activities of UShs 10.6 billion (FY2021-22: UShs 8.0 billion) was to equip the new store to boost the company's storage capacity of raw materials and fi nished goods. Other capital expenditure was mainly to maintain factory capacity. Net cash used in fi nancing activities of UShs

28.9 billion (FY 2021-22: UShs 7.0 billion) was mainly for term loan and shareholder dividend payments.

Dividend

Subject to approval by shareholders, the Directors recommend payment of a dividend of UShs. 2.5 (FY 2021-22: UShs. 2.0) per share for the fi nancial year ended 31 March 2023. The dividend shall be paid to shareholders registered in the books of the Company at close of business on 7 September 2023 and will be paid on 28 September 2023.

Message from the Directors

The above summary fi nancial statements are derived from the Company's fi nancial statements which were audited by Grant Thornton Certifi ed Public Accountants, who issued an unqualifi ed opinion. A copy of the audited fi nancial statements can be obtained from CQCIL's Registrar; M/s Uganda Securities Exchange Nominees Ltd located at 4th Floor, Block A, UAP Nakawa Business Park, Plot 3-4 New Port Bell Road, Kampala, Uganda.

The fi nancial statements can also be viewed on our website: www.ciplaqcil.co.ug

The fi nancial statements were approved by the Board of Directors on 19 May 2023.

		Emmanuel Katongole	Ajay Kumar Pal
		Chairman	Chief Executive Offi cer