Jubilee Spinning & Weaving Mills : Transmission of Quarterly Report for the Period Ended December 31, 2022

Jubilee Spinning & Weaving Mills Limited

Condensed Interim Financial Statements

Half Yearly December 31, 2022 (Un-Audited)

Company Information

Board of Directors
Mr. Shaukat Shafi	(Chairman)
Mr. Shams Rafi	(Chief Executive Officer)
Mr. Salman Rafi
Mr. Usman Shafi
Mr. Aurangzeb Shafi
Mr. Adnan Amjad
Mr. Umer Shafi
Mrs. Sana Salman
Audit Committee
Mr. Adnan Amjad	(Chairman)
Mr. Usman Shafi	(Member)
Mr. Shaukat Shafi	(Member)
Company Secretary
Mr. Muhammad Zeeshan Saleem
Auditors
Riaz Ahmed & Company
Chartered Accountants
Legal Advisor
Arain Law Associates
Bankers

Habib Bank Limited

National Bank of Pakistan

Soneri Bank Limited

Standard Chartered Bank (Pakistan) Limited

Habib Metropolitan Bank Limited

Faysal Bank Limited

Allied Bank Limited

Registered Office

503-E. Johar Town

Lahore, Pakistan

Mills

B-28, Manghopir Road, S.I.T.E.

Directors' Report To The Shareholders

Dear Shareholders,

The Directors of the Company are pleased to present the results for the Half Year ended December 31, 2022 along with the Auditors' Review Report.

Net Profit/(Loss)

During the period, the company made a net loss of Rs. (1,392,721) after charging costs, expenses and provisions for the year, as compared to previous period's net loss of Rs. (2,518,220).

Financial Results

The financial results of the company are summarized below:

		Rupees	Rupees
	Period Ended On	Dec. 31, 2022	Dec. 31, 2021
	Revenue	3,649,986	1,506,265
	Cost of Revenue	(2,435,589)	(2,028,216)
	Gross Profit/(Loss)	1,214,397	(521,951)
	Gross Profit/(Loss)%	33.3%	(35)%
	Administration and Other Operating Costs	(24,532,827)	(26,613,727)
	Other Income	28,267,378	27,091,521
	Finance Charges	(7,486)	(16,044)
	Provision for Tax	(6,364,183)	(2,458,019)
	Profit/(Loss) after Tax	(1,392,721)	(2,518,220)
	Basic Profit/(Loss) Per Share	(0.04)	(0.08)

Compared to the same period of the previous year, the results have improved substantially. The management is confident that results for the remaining half of the current financial year will continue to improve.

During the review, observations raised by the auditors are addressed below:

Quote

Trade debts, loans and advances and other receivables as at 31 December 2022 include Rupees 19.298 million, Rupees 22.574 million and Rupees 14.755 million respectively receivable from an associated company outstanding since long. Furthermore, one of the financial institution, on default by the associated company in preceding years, realized the Company's investments in equity securities pledged against lending to associated company. The Company treated the market price of such securities at the date of realization by the financial institution as disposal value amounting to Rupees 40.963 million and accounted for it as other receivables. The Company is uncertain about the party from whom it is to be recovered. In addition, loan and advances and other receivables as at 31 December 2022 include aggregate balance of Rupees 12.837 million receivable from other than related parties outstanding for more than one year. The management has not provided us with its assessment of expected credit losses in respect of trade and other receivables nor did account for any allowance for expected credit losses in the financial statements in respect of such balances;

Unquote

The decision of the legal petition filed against the said company for the recovery is still pending. Our legal counsel has confirmed that no financial loss due to this case is expected. Management believes a favorable outcome and will recover the outstanding amount including the amount pertaining to the investment transferred/disposed of by the financial institution. Receivable from other than related parties include 5.33 million from government institutions in respect of sales tax and custom rebate.

Quote

During the prior years, the Company's petition in Honorable Lahore High Court praying restraining Sui Southern Gas Company Limited (SSGCL) from recovering the amount of general sales tax (GST) arrears and disconnecting the gas connection was dismissed for being not maintainable. Accordingly, SSGCL raised bill for outstanding arrears amounting to Rupees 17.868 million and encashed the bank guarantee of Rupees 2 million and forfeited gas security deposit of Rupees 10.823 million against its demand and disconnected the gas connection. The Company has not accounted for the demand of SSGCL and treated the balance of encashed bank guarantee and forfeited gas security deposit aggregately amounting to Rupees 12.823 million as receivable from SSGCL accounted for as other receivable. The management has not adopted any legal recourse against the act of SSGCL till the reporting date despite the lapse of significant period since dismissal purporting recovery of this balance as doubtful. Accordingly, we remained unable to satisfy ourselves in respect of this receivable and non-recognition of demand of SSGCL.

Unquote

The company filed an application in Lahore High Court regarding the recovery of the amount adjusted from the bank guarantee and the security deposit by SSGCL. Lahore High Court, after listening the arguments in multiple hearing, directed the Federal Board of Revenue to present the factual position to the company (Jubilee Spinning & Weaving Mills Limited). After verification, FBR has issued a letter stating that during the period (2009 - 2014), the company had a status of zero- rating.

Now the company is in a process of recovery/refund of the sales tax from FBR wrongly adjusted by the SSGCL and is expected to receive it in the current financial year.

Quote

Revenue amounting Rupees 3.650 million accounted for in the condensed interim financial statements represents billing to tenants in respect of use of Company's power house equipment / electric connection and transmission lines thereof. The Company has disposed of its power house equipment in October 2016 and placed alternate power generators. Previously, these alternate power generators, generating the aforesaid revenue were neither recognized in the books of account of the Company nor any rent was charged in the financial statements. During the prior years, the Company recorded purchase of two generators replacing the previously unrecorded generators. However, the arrangement of such replacement could not be substantiated due to the lack of information as to the disposal of the previously unrecorded generators where suit have been filed by ex-director for the repossession of these generators more fully disclosed in Note 8.5 to the condensed interim financial statements. Moreover, in the absence of legal opinion to this effect, we remained unable to satisfy ourselves as to whether the aforesaid arrangement with the tenants is in compliance with all the applicable regulatory provisions including income tax, sales tax and electricity duty on such revenue;

Unquote

The company purchased three generators in previous years that were incorporated in books and charged depreciation thereon. In the current scenario the company has taken electricity connection from K-Electric to accommodate its tenants. Further we did not have any evidence that such generators belong to one of the ex-directors.

Quote

We noted an outstanding under litigation demand of Rupees 6.239 million on account of Gas Infrastructure Development Cess (GIDC) by SSGCL. Furthermore, the last bill of gas connection before disconnection as reported in paragraph (b) above reflected outstanding demand of GIDC along with GST on GIDC amounting to Rupees 68.400 million. However, the Company has neither accounted for this liability nor disclosed the contingent liability, if any, in respect of such demand. In the absence of underlying information for non-recording of this demand and the Company's actions there against, we remained unable to satisfy ourselves in respect of recognition of expenses and respective liability in the condensed interim financial statements;

Unquote

The company did not account for amount of GIDC charged by SSGC in these financial statements. The company has filed a suit for the stay against the recovery of the GIDC. The Honorable High Court of Sind at Karachi through suit no. 1208 of 2020 restrained defendant to take any coercive action against the company in this matter.