Descon Oxychem : Transmission of Quarterly Report for the Period Ended 2023-09-30

DESCON OXYCHEM LIMITED

Contents

03 Company Information

04 Directors' Report - English

05 Directors' Report - Urdu

06 Condensed Interim Unconsolidated Statement of Financial Position

08 Condensed Interim Unconsolidated Statement of Profit or Loss Account

1. Condensed Interim Unconsolidated Statement of Comprehensive Income
2. Condensed Interim Unconsolidated Statement of Changes in Equity
3. Condensed Interim Unconsolidated Statement of Cash Flows
4. Notes to the Condensed Interim Unconsolidated Financial Statements

1. Consolidated
2. Condensed Interim Consolidated Statement of Financial Position

1. Condensed Interim Consolidated Statement of Profit or Loss Account
2. Condensed Interim Consolidated Statement of Comprehensive Income
3. Condensed Interim Consolidated Statement of Changes in Equity
4. Condensed Interim Consolidated Statement of Cash Flows
5. Notes to the Condensed Interim Consolidated Financial Statements

02

	DESCON OXYCHEM LIMITED
Company Information
Board of Directors
Faisal Dawood	Chairman
Taimur Dawood	Non-Executive Director
Mehreen Dawood	Non-Executive Director
Farooq Nazir	Non-Executive Director
Asif Qadir	Non-Executive Director
Jehanzeb Khan	Independent Director
Muhammad Zahir	Independent Director
Muhammad Mohsin Zia	Chief Executive Officer
Muhammad Rizwan Qaiser
Chief Financial Officer
Abdul Sohail
Company Secretary
Auditors
M/s A. F. Ferguson & Co.
Chartered Accountants
Internal Auditors	Registered Office
M/s KPMG Taseer Hadi & Co.	Descon Headquarter
Chartered Accountants	18-KM Ferozpur Road
Legal Advisors	Lahore-53000 Pakistan.
Tel: [phone]
M/s Hassan & Hassan Advocates
Bankers	Plant Site
18-KM Lahore - Sheikhupura Road,
Allied Bank Limited	Lahore, Pakistan.
Bank Al Habib Limited	Tel: [phone]
Bank Alfalah Limited	Fax: [phone]
Habib Metropolitan Bank Limited
The Bank of Punjab	Web Presence
Updated Company's Information
Meezan Bank Limited
together with the latest Annual Report
Share Registrar	can be accessed at Descon's website,
M/s Corplink (Pvt) Limited	www.desconoxychem.com
Wings Arcade, 1-K Commercial Area,
Model Town, Lahore-53000
Tel: [phone]
Fax: [phone]
	03

DESCON OXYCHEM LIMITED

DIRECTORS REPORT TO THE SHAREHOLDERS

For the quarter ended September 30, 2023

The Board of Directors are pleased to present the financial statements of the Company for the quarter ended September 30, 2023. The financial highlights for the quarter are:

	Quarter ended
	September	September
	30, 2023	30, 2022
	Rupees	in '000
Local Sales (MT)	9,782	8,984
Export Sales (MT)	813	1,072
Sales value	1,498,401	1,700,225
Cost of sales	1,111,836	844,441
Gross profit	386,565	855,784
Profit from operations	321,714	745,853
Profit after tax	199,177	518,832
Earnings per share - Basic - Rupees	1.14	2.96

During the quarter the company faced challenges in implementing its product pricing strategy due to the increased supply of the product in the regional markets owing to reduced demand related to the global economic downturn. The cost of sales has also increased on the back of high raw material costs linked with the Ukraine crisis and global inflation. However, the slowdown of demand from the textile sector in Pakistan has shown improvement which argues well for the outlook.

Post capacity expansion in 2020 the company has taken advantage of increased volumes available for adding new segments and markets which has partially helped in hedging the drop in margins. In addition, the increased capacity has alsoled to reduced raw material consumption factors and helped in strengthening the company's position in the local as well as international H2O2 market. Going forward your company strives to enhance its presence in the regional markets and new segments.

Reduced profitability as compared to the last period has also impacted the cash flow from operations of the company however the company has not utilized any of its working capital lines due to efficient management of the cash conversion cycle. The management believes that its stringent controls over fixed costs will continue to contribute towards sustainability in margins.

Future Outlook

The challenge for your company is to maintain the margins in an environment of significant cost increases owing to increased raw material costs and high inflation. Your company is consistently working on strategies to ensure these challenges are mitigated effectively. Efforts to penetrate new segments and markets have been successfully implemented. Your company is also targeting improved consumption factors in line with the management target to maintain margins and achieve economies of scale. Our target is to become the lowest- cost producer in the region by implementing a well-thought-throughmanufacturing excellence program. Your company also aims to enhance its footprint in the international arena. The board has approved the request to initiate front-end engineering design (FEED) to firm up the cost for further expansion. In addition to this, the business also continues to invest in areas that reinforce its advantageous position in safety, manufacturing efficiency and building market leadership in key geographies.

We would like to thank all stakeholders for their contribution and support during the quarter.

For and on behalf of the Board

Lahore

October18, 2023

04

		DESCON OXYCHEM LIMITED
	2022	2023
	8,984	9,782
	1,072	813
	1,700,225	1,498,401
	844,441	1,111,836
	855,784	386,565
	745,853	321,714
	518,832	199,177
	2.96	1.14
2023	18
		05

DESCON OXYCHEM LIMITED

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF FINANCIAL POSITION (UN-AUDITED)

Note

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized capital

300,000,000 (June 30, 2023: 300,000,000) ordinary shares of Rs 10 each

Issued, subscribed and paid up capital 175,031,084 (2021: 175,031,084)

Ordinary shares of Rs 10 each

Share Premium

Accumulated Profit

NON-CURRENT LIABILITIES

Long term finance - unsecured

5

Deferred grant

Lease Liabilities

Deferred taxation

CURRENT LIABILITIES

Current Portion of Non Current Liabilities

Finances under mark up arrangements - secured 7 Trade and other payables

Income tax payable

Dividend payable

Accrued finance cost

Un-audited	Audited
September 30,	June 30,

20232023 (Rupees in thousand)

3,000,000 3,000,000

1,750,311	1,750,311
3,022	3,022
1,505,327	1,306,150
3,258,660		3,059,483
95,572	100,300
16,944	16,944
-	-
184,863	192,100
297,379		309,344

51,040

57,987

• 110,383
  802,249 912,436
  562,802 576,675
  9,1779,177
  2,238345

1,427,506 1,667,003

CONTINGENCIES AND COMMITMENTS

8

4,983,545 5,035,830

The annexed notes 1 to 23 form an integral part of these condensed interim unconsolidated financial statements.

06

DESCON OXYCHEM LIMITED

AS AT SEPTEMBER 30, 2023

		Un-audited		Audited
		September 30,		June 30,
		2023	2023
	Note	(Rupees in thousand)
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	9	2,242,453	2,293,287
Intangible assets		21,541	25,161
Long term investment		1,964	1,964
Long term loans - secured		6,152	6,152
Long term deposits and prepayments		24,471		24,471
		2,296,581	2,351,035

CURRENT ASSETS

Stores and spares
Stock-in-trade	10
Trade debts - unsecured
Advances, deposits, prepayments
and other receivables	11
Short Term Investments
Cash and bank balances	12

571,139

698,680

158,248

86,378

937,402

235,117

2,686,964

540,290

717,177

165,504

116,741

896,726

248,357

2,684,795

4,983,545 5,035,830

07

DESCON OXYCHEM LIMITED

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF PROFIT OR LOSS (UN-AUDITED) FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2023

		Three-month period ended
		September		September
		30, 2023	30, 2022
	Note	…(Rupees in thousand)…
Sales	13	1,498,401	1,700,225
Cost of goods sold	14	(1,111,836)		(844,441)
Gross profit		386,565	855,784
Administrative expenses		(47,470)	(30,293)
Distribution and selling costs		(45,876)	(37,719)
			`
Other income		53,525	12,841
Other operating expenses		(25,030)	(54,760)
Profit from operations
	321,714	745,853
Finance cost		(6,995)	(6,987)
Profit before taxation
	314,719	738,866
Taxation		(115,542)	(220,034)
Profit for the period
	199,177	518,832
Earnings per share
- Basic & Diluted - Rupees	15.1	1.14	2.96

The annexed notes 1 to 23 form an integral part of these condensed interim unconsolidated financial statements.

08

DESCON OXYCHEM LIMITED

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE THREE-MONTHPERIOD ENDED SEPTEMBER 30, 2023

			Three-month period ended
			September		September
	30, 2023	30, 2022
	……(Rupees in thousand)……
Profit for the period	199,177	518,832
Other comprehensive income
- Items that may be reclassified subsequently to profit or loss	-	-
- Items that will not be reclassified subsequently to profit or loss	-	-
Total comprehensive income for the period
199,177	518,832

The annexed notes 1 to 23 form an integral part of these condensed interim unconsolidated financial statements.

09

DESCON OXYCHEM LIMITED

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)

FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2023

			(Rupees in thousand)
Share Capital		Revenue Reserves
Ordinary	Preference		Accumulated	Total
share	share		loss / profit
capital	capital

……………………(Rupees in thousand)……………………

Balance as on July 1, 2022 (audited)

Profit for the period

Other comprehensive income for the period

Total comprehensive income for the period

Balance as on September 30, 2022 (un-audited)

Balance as on July 1, 2023 (audited)

Profit for the period

Other comprehensive income for the period

1,750,311

-

-

-

1,750,311

1,750,311

-

-

3,022

-

-

-

3,022

3,022

-

-

605,642

518,832

-

518,832

1,124,474

1,306,150

199,177

-

2,358,975

518,832

-

518,832

2,877,807

3,059,483

199,177

-

Total comprehensive income for the period	-	-	199,177	199,177
Balance as on September 30, 2023 (un-audited)
1,750,311	3,022	1,505,327	3,258,660

The annexed notes 1 to 23 form an integral part of these condensed interim unconsolidated financial statements.

10