Dandot Cement : Transmission of Quarterly Accounts for the Period Ended December 31, 2023

HALF YEARLY REPORT

December 31, 2023

DANDOT CEMENT COMPANY LIMITED

CONTENTS

Half Yearly Report

Company Information	3
December 31, 2022	4
Directors' Report to the Shareholders
Auditors' Reports to the Members on Review of Condensed Interim Financial Statements	6
Condensed Statement of Financial Position	8
Condensed Interim Statement of Profit or Loss	10
Condensed Interim Statement of Comprehensive Income	11
Condensed Interim Statement of Cash Flows	12
Condensed Interim Statement of Changes in Equity	13
Notes to the Condensed Interim Financial Statements	14
Directors' Report to the Shareholders (Urdu)	22

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		COMPANY INFORMATION
		As On February 29, 2024
Board of Directors (BOD)
Muhammad Farooq Naseem	Chairman
Taha Muhammad Naseem	Chief Executive
Mrs. Roohi Farooq Naseem
Zaka Muhammad Naseem
Jehanzeb Choudry
Murtaza Yousuf Mandviwala
Audit Committee
Muhammad Farooq Naseem	Member
Zaka Muhammad Naseem	Member
Human Resouces & Remuneration Committee
Murtaza Yousuf Mandviwala	Member / Chairman
Muhammad Farooq Naseem	Member
Taha Muhammad Naseem	Member

Chief Financial Officer

Muhammad Kamran

Statutory Auditors

Parker Russel -A.J.S.

Chartered Accountants, Faisalabad.

Company Secretary

Muhammad Kamran

Legal Advisor

International Legal Services

Bankers

The Bank of Punjab

Askari Bank Limited

Bank Alfalah Limited

Bank Al-Habib Limited

BankIslami Pakistan Limited

Habib Bank Limited

JS Bank Limited

National Bank of Pakistan

United Bank Limited

Meezan Bank Limited

Registered Office

5-Zafar Ali Road, Gulberg V, Lahore.

Telephone: [phone]

Factory

Dandot R.S., Distt. Jhelum.

Telephone: [phone]

Share Registrar

Corplink (Pvt.) Limited.

Wings Arcade 1-K-Commercial, Model Town, Lahore.

Telephone: [phone], Fax: [phone]

Website

www.dandotcement.com

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DIRECTORS' REPORT TO THE SHAREHOLDERS

The Board of Directors presents the un-audited condensed financial statements of the company for the period ended December 31, 2023.

Principal Activity and Operational Performance

Dandot Cement Company Limited (the Company) is a Public Listed Company. The principal activity of the Company is production and sale of cement. During the period under review, the company officially commenced operations by lighting up the Kiln during December 2023 and the operations are in testing phase. Net loss for the period is Rs. 124.81 million (Dec 2022: Rs. 126.28 million) and loss per share is Rs. 0.50 (Dec 2022: Rs. 0.51). Due to operational and financial losses, dividend has not been recommended by the board of directors for the current period.

Future Prospects

Industry:

This period brought upon new challenges for the industry as Pakistan experienced an economic downturn in its macro conditions. The onslaught on the Pakistani Rupee brought upon by the rising current account deficit led to severe implications for the economy and set out a chain reaction of fiscal control measures.

High inflation and severe devaluation led to a drastic increase in commodity prices, while rising interest rates added to the rising costs. The austerity measures implemented by the Government of Pakistan imposed focused heavily on reducing imports and readjusting fuel and electricity tariffs, lead to short term difficulties but eventually is resulting in stabilization. Moreover, the elections held on 8th of February, so there is a sentiment on revival of the economy and we foresee a robust cement industry.

Principal Risks and Uncertainties

• Devaluation of Pak Rupee against the dollar.
• Higher Interest rates.
• Increasing fuel and electricity prices.
• Lack of Government spending.

Company's Plan

After successful completion of the BMR activity, your company officially commenced operations by lighting up the Kiln during December 2023 and will achieve positive results through cost efficiency, streamlined processes, environmental compliance, and the production of high-quality cement. The company has also installed a 5 MW solar plant on a power purchase deal to mitigate the rising electricity costs. We are exploring options to increase the solar capacity to 10 MW. All plans for the company are designed at bringing your company to a financially healthy and sustainable corporate entity.

Auditor's Observations

The company successfully completed the process of Balancing, Modernization and Replacement (BMR) and the management is fully confident that the company will continue its operations as a going concern. Workers' compensation benefits in excess of statutory/legal requirements will be subject to recognition after final determination and verification by the Competent Authority. Due to suspension of operations during the period for BMR activity, depreciation relating to cost of sale and distribution has been directly charged to the statement of changes in equity. Letters for the balance confirmation circulated during the audit for the year ended June 30, 2023 but against that some replies have not been received. However, such balances have been verified by auditors' through alternative audit procedures.

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Subsequent Events

All subsequent events have been properly disclosed in the relevant notes of these un-audited condensed financial statements except the Board of Directors has accepted the resignation of Mr. Shafqaat Ahmed from the position of Independent Director. The casual vacancy shall be filled up by the board of directors within 90 days (w.e.f. February 22, 2024) as per the requirement of Companies Act, 2017.

Acknowledgement

The board of directors is thankful to all stakeholders including but not limited to bankers, employees, suppliers, distributors as well as regulators and shareholders for their continued support, cooperation and trust especially in crises tenure faced by the company in the current period.

TAHA MUHAMMAD NASEEM	MUHAMMAD FAROOQ NASEEM
Chief Executive	Director
Lahore: February 29, 2024.

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INDEPENDENT AUDITOR'S REVIEW REPORT

Report On Review of Condensed Interim Financial Statements

Introduction

We have reviewed the accompanying condensed interim statement of financial position of Dandot Cement Company Limited as at December 31, 2023 and the related condensed interim statement of profit or loss, condensed interim statement of comprehensive income, condensed interim statement of changes in equity, and condensed interim statement of cash flows, and notes to the condensed interim financial statements for the six- month period then ended (here-in-after referred to as the "condensed interim financial statements"). Management is responsible for the preparation and presentation of these condensed interim financial statements in accordance with accounting and reporting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on these condensed interim financial statements based on our review.

Scope of the review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of condensed interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

1. As explained in note 11 to the condensed interim financial statements, the company had written back outstanding liability in respect of some Past Dues Payable, Payable against Gratuity and Interest on Workers' Profit Participation Fund Payable retrospectively aggregating Rs. 317.12 million and not accounted for related expense and liability during the previous years and current period amounting Rs. 55.25 million and Rs. 0.48 million respectively. The company did not account for expense and liability of salaries and benefits pertaining to previous years aggregating amounting Rs. 118.63 million since September 01, 2019 for which petition was filed in Hon'ble Labour Court by the company for their retrenchment as referred to note 23 to the audited financial statements for the year ended June 30, 2023. However, basis of balances written back and non-provisioning of benefits remained un- substantiated in the absence of any agreement(s) or related approval(s). Had the company accounted for and not reversed the outstanding liability related to prior years, loss for the period would have been higher by Rs. 0.48 million, current liabilities and accumulated loss as at December 31, 2023 would have been higher by Rs. 491.48 million.
2. We could not confirm carrying value of the liability in respect of loan from Economic Affairs Division (EAD) and accrued interest there on amounting to Rs. 35.23 million and Rs. 79.61 million respectively by performing alternative analytical procedures. Consequently, we were unable to determine whether adjustments to these balances were necessary.
3. The company has not charged depreciation expense to statement of profit or loss amounting Rs. 59.33 million and the same has been charged directly to accumulated loss in statement of changes in equity. Had the company charged the depreciation through statement of profit or loss, the loss for the period would have been higher by the aforesaid amount.

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Qualified Conclusion

Based on our review, with the exception of the matters described in the preceding paragraphs, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial statements are not prepared, in all material respects, in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting.

Emphasis of matter

We draw attention to the following matter:

As referred to note no. 1.2 to the condensed interim financial statements, which indicates that the condensed interim financial statements have been prepared on going concern basis as the company has successfully completed the Balancing, Modernization and Replacement (BMR) related activities and commenced its operations/production. As stated in note no. 1.2 to the financial statements, the company has sustained loss amounting Rs. 124.81 million during the period ended December 31, 2023 excluding the effects of matters as described in Basis for Qualified Conclusion section and as of that date its accumulated loss was amounting Rs. 5,907.15 million. As of December 31, 2023, the company's current liabilities exceeded its current assets by Rs. 1,965.39 million. These events or conditions, along with other matters as set forth in note no. 1.2, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our conclusion is not modified in respect of this matter.

Other Matters

The figures of the condensed interim statement of profit or loss and condensed interim statement of comprehensive income for the quarters ended December 31, 2023 and December 31, 2022 have not been reviewed, as we are required to review only the cumulative figures for the half year ended December 31, 2023.

The engagement partner on the review resulting in this independent auditor's review report is Mr. Junaid

Subhani - FCA.

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CONDENSED STATEMENT OF FINANCIAL POSITION

	Note
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized capital
Issued, subscribed and paid up share capital	4
Share premium reserve
Accumulated loss
Revaluation surplus on property, plant and equipment
Long term loan from related parties	5
NON CURRENT LIABILITIES
Long term financing from banking companies	6
Long term financing from related parties	7
Government grant	8
Payable to Provident fund trust
Other loans and liabilities	9
Deferred liabilities
Long term advances and deposits
CURRENT LIABILITIES
Trade and other payables
Deposits, accrued liabilities and advances
Unclaimed dividend
Payable to provident fund trust
Mark up accrued	10
Current portion of non-current liabilities
Current portion of government grant
CONTINGENCIES AND COMMITMENTS	11

(Un-Audited)		(Audited)
Dec 31, 2023		June 30, 2023
(Rupees in thousand)
5,000,000		5,000,000
2,481,733	2,481,733
787,988	787,988
(5,907,150)	(5,755,932)
2,168,934	2,201,860
3,174,303		2,539,303
2,705,808	2,254,952
2,895,791		2,905,746
1,245,600		1,125,697
526,003		579,765
140,445		140,391
-		-
848,739		862,188
18,486		3,660
5,675,064	5,617,447
1,793,970		945,089
263,948		172,042
1,082		1,082
8,925		7,509
162,907		140,940
286,612		210,855
112,968		109,229
2,630,412	1,586,746
-		-
11,011,284		9,459,144

The annexed notes from 1 to 18 form an integral part of these condensed interim financial statements.

TAHA MUHAMMAD NASEEM	MUHAMMAD KAMRAN
Chief Executive	Chief Financial Officer
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AS AT DECEMBER 31, 2023

	Note
ASSETS
NON CURRENT ASSETS
Property, plant and equipment
Operating fixed assets	12
Capital work in progress	13

Intangible assets

Long term deposits & prepayments

CURRENT ASSETS

Stores, spares and loose tools Stock in trade

Loans and advances

Trade deposits, short term prepayments and current account balances with statutory authorities

Cash and bank balances

(Un-Audited)	(Audited)
Dec 31, 2023	June 30, 2023

(Rupees in thousand)

3,955,919	4,016,153
6,330,123	4,938,998
1,033	1,108
59,190		59,190
10,346,265	9,015,449
280,260		156,106
5,041		5,041
9,589		12,422
353,682		258,856
16,447		11,270
665,019	443,695

11,011,284 9,459,144

ZAKA MUHAMMAD NASEEM

Director

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