Half Year 2011 Accounts

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company information directors’ report auditors’ report to the members on review of consolidated condensed interim financial information consolidated condensed interim balance sheet consolidated condensed interim profit and loss account consolidated condensed interim statement of comprehensive income consolidated condensed interim statement of cash flows consolidated condensed interim statement of changes in equity notes to the consolidated condensed interim financial information auditors’ report to the members on review of condensed interim financial information condensed interim balance sheet condensed interim profit and loss account condensed interim statement of comprehensive income condensed interim statement of cash flows condensed interim statement of changes in equity notes to the condensed interim financial information 2 4 6 7 8 9 10 11 12 22 23 24 25 26 27 28

Half Year 2011 Accounts

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company information
Asad Umar Sarfaraz A. Rehman Ruhail Mohammed Isar Ahmed Shahzada Dawood

Board of Directors

Chairman Chief Executive Officer Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director

A. F. Ferguson & Co. Chartered Accountants

Auditors

Mujahid Hamid Muhammed Amin Ms. Spenta Kandawalla Abdul Samad Khan Zafar Ahmed Siddiqui

M/s. FAMCO Associates (Private) Limited First Floor, State Life Building 1-A I.I. Chundrigar, Road, Karachi - 74000

Share Registrar

Imran Anwer

Chief Financial Officer & Company Secretary

Bankers
Al-Baraka Islamic Bank Limited Allied Bank Limited Askari Bank Limited Bank Al-Falah Limited Bank Al-Habib Limited Bank of Punjab Burj Bank Limited Citibank N. A. Deutsche Bank A.G. Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited HSBC Bank Middle East Limited MCB Bank Limited Meezan Bank Limited National Bank of Pakistan NIB Bank Limited Standard Chartered Bank (Pakistan) Limited United Bank Limited

Shahzada Dawood Ruhail Mohammed Abdul Samad Khan Zafar Ahmed Siddiqui

Members of Audit Committee

Chairman Member Member Member

The secretary of the committee is Mazhar Hasnani, GM Corporate Audit Department

6th Floor, The Harbour Front Building HC-3, Marine Drive, Block - 4, Clifton Karachi, Pakistan.

Registered Office

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Half Year 2011 Accounts

CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) FOR THE HALF YEAR ENDED JUNE 30. 2011 Half Year 2011 Accounts 3 .

2011.030 cows being raised to produce milk (December 2010: 457).directors’ report Half Year 2011 review for the Shareholders of Engro Foods Limited We are pleased to present the consolidated condensed interim financial information of the Company for the half year ended June 30. 1. 277 million during the same period last year. DAIRY FARM SEGMENT During the first half of 2011. Ice Cream segment incurred a loss during the first six months primarily due to continued investment in its brands and the cold chain infrastructure. 12.3 million of prior period primarily due to lower yield than international benchmark and less utilization of farm housing capacity. 52. 8. With 51% volumetric growth over the corresponding period last year. Market share is progressively improving with a volume growth of 145% vs.3 billion vs.9 billion during the same period in 2010.4 billion during the first half of 2011. Juices and Nectars: Olfrute was re-launched during first half of 2011 and is showing consistent growth. Company continues to remain the market leader in Ambient UHT milk segment. As per plan. revenue grew by 69% to Rs. Dairy Omung was introduced to promote its offering in the budget conscious segment of the society as well as Olper’s introduced Badam Zafran and Rose flavors to expand its portfolio. Profit after tax increased by 197% to Rs. Profit after tax to sales ratio improved to 4% in the first half of 2011 from 2% in the same period last year. 205 million during the first half of 2011 as compared to Rs. At June 30.000 tons for paddy processing and 56. The following projects are in progress: ICE CREAM AND FROZEN DESSERTS SEGMENT Ambient UHT volume grew by 20% over the corresponding period last year which translates into a revenue growth of 37%. Rs. 491 million from profit of Rs 165 million in the same period last year.600 liters of milk per day. Rs. Ambient UHT: Omorè was launched in Karachi in the first quarter of 2011 in order to expand geographically and increase market share. The loss after tax was Rs. 2011.5 million vs.363 milk-producing cows (December 2010: 1. During the first half.) Limited has set up a rice processing facility with initial operational capacity of 60. growth of 38%. Loss after tax stood at Rs. 4 Half Year 2011 Accounts . 48. same period last year. new flavors were added to the portfolio such as Apricot and Green Cocktail which were new to Pakistani market.502) and 1. RICE SEGMENT Engro Foods L i m i t e d ’s 7 0 % owned subsidiary Engro Foods Supply Chain (Pvt. Branded Powder: Engro Foods is present in this segment through Tarang Tea Whitening Powder. BUSINESS REVIEW DAIRY AND JUICES SEGMENT Total sales of Dairy and Juice segment in first half of 2011 was Rs. Dairy Farm produced 17. Dairy Farm had 1. The drying phase is fully complete and milling is partially complete.000 tons of finished rice which manufactures rice for Engro Eximp (Private) Limited.

Engro Corporation acquired operations of one of the oldest North American Halal meat brand ‘Al-Safa’ at a total cost of US $ 6. GLOBAL BUSINESS UNIT (GBU) As a first venture of GBU. 15 per share). Engro Foods raised Rs. Half year ended June 30 Variation (%) 2011 2010 13.33) 192% 221% 43% ? in capacity of drying to 120. 1. CERTIFICATIONS AND AWARDS Engro Foods received Global Foods Safety Award 2011 by Global Media Links in recognition of the stringent safety standards adopted by the Company. 2011. Engro Foods Limited’s shareholding structure is as follows: Share Holder Engro Corporation Private Investors (cannot sell their shares till January 7. 25 per shares (inclusive of a premium # of Shares (in million) 673 48 27 748 % Holding 90.6% 100% Sarfaraz A. 25 per share (inclusive of a premium of Rs.0% 6. Cost of this team during the first half of 2011 was Rs.530 30 0. SHAREHOLDING STRUCTURE On the date of this report.2 billion by issuing 48 million shares to the institutional investors – mainly US & UK mutual funds and local investors. 16 million after tax. BUSINESS DEVELOPMENT As a broader mandate of being a food company. Public Offering From July 5 to 7.330 tons of finished rice for Eximp and earned revenue of Rs. Engro Foods has a dedicated team which evaluates prospective business areas for expansion. in million) Net Sales Operating Profit % of sales Profit after tax % of sales Earnings per share (Rs. Rehman Chief Executive Karachi August 3. 2012.000 tons is also Increase underway and is expected to be complete by fourth quarter of 2011. of Rs.? Husk Power Plant is in construction phase and due for completion in third quarter of 2011. marketing campaign of Olfrute won Best International Campaign at the Outdoor Advertising Convention Awards 2011. The shares were issued at a price of Rs. FINANCIAL PERFORMANCE The consolidated financial performance of the company for the half year is summarized below: (Rs.3% (180) -2% (0.3 million. enough to cover its cost and achieve break even.652 857 6% 217 2% 0. 2011 Ruhail Mohammed Director Half Year 2011 Accounts 5 . Engro Foods Supply Chain processed 1. The Company will run the operations of Engro Foods Canada and has agreed to acquire it later from Engro Corporation at actual cost once Regulator approves the transfer. 208 million. 2012) Public Private Investors During May 2011. 15 per share). Public offering was 94% subscribed and balance 6% will be taken up by the under writers.30 9. Engro Corporation Limited offered 27 million shares from its holding in the Company to the general public at a price of Rs. During the first half of 2011.) FUTURE OUTLOOK We continue to strive for growth in all our business segments and expect to deliver performance in 2011 as indicated at the time of the Company’s public offering. In addition. Private investors cannot sell their holding till January 7.4% 3.

and applying analytical and other review procedures. Sheikh 6 Half Year 2011 Accounts . we do not express an audit opinion. consolidated condensed interim statement of comprehensive income. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410. 2011 and 2010 have not been reviewed. 2011 Chartered Accountants Engagement Partner: Waqas A. for the half year then ended. Engro Foods Supply Chain (Private) Limited as at June 30. as we are required to review only the cumulative figures for the half year ended June 30. The figures of the consolidated condensed interim profit and loss account and consolidated condensed interim statement of comprehensive income for the quarters ended June 30. 2011. “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. consolidated condensed interim statement of changes in equity and consolidated condensed interim statement of cash flows together with the notes forming part thereof (here-in-after referred to as the “consolidated condensed interim financial information”). 2011 is not prepared. 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. nothing has come to our attention that causes us to believe that the accompanying consolidated condensed interim financial information as of and for the half year ended June 30. in all material respects. 2011 and the related consolidated condensed interim profit and loss account. A review of interim financial information consists of making inquiries. primarily of persons responsible for financial and accounting matters. Management is responsible for the preparation and presentation of this consolidated condensed interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Karachi Date: August 3. in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting.auditors’ report to the members on review of consolidated condensed interim financial information Introduction We have reviewed the accompanying consolidated condensed interim balance sheet of Engro Foods Limited and its subsidiary company. Conclusion Based on our review. Our responsibility is to express a conclusion on this consolidated condensed interim financial information based on our review. Accordingly.

325 3.230 441.000.488.749 570.221 51.394.long term finances . unsecured Advances.036 437.959 42.411 561.short term finances Short term finances Contingencies and Commitments TOTAL EQUITY AND LIABILITIES 8 8.047 18.104.082 3.544.084.208.797 428.005 6.546 457. net Hedging reserve Accumulated loss Non-controlling interest Non-current liabilities Long term finances Obligations under finance lease Deferred taxation Deferred liabilities Current liabilities Current portion of: . December 31.716.716.879 247.030.979 5.946.841 2.247.716 14.186 9.030.480.099 1.946.093 3.2 4 5 6 7 7.000 331 (1.231 (1.707 10.184 87.190 2. deposits and prepayments Other receivables Taxes recoverable Derivative financial instruments Cash and bank balances TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Share premium.long term finances .107 23.540.consolidated condensed interim balance sheet (unaudited) as at june 30.092 4.000 7. spares and loose tools Stock-in-trade Trade debts.904 12.523 157. deposits and prepayments Current assets Stores. Chief Executive Director Half Year 2011 Accounts 7 .749 7.548 3.051 4.675 2.obligations under finance lease Trade and other payables Accrued interest / mark-up on: .986 124.844 306.659.714 181.951 200.280 510 369.580 860.553 723.046.482) 6.549 7.946 9 10 11 The annexed notes 1 to 19 form an integral part of this consolidated condensed interim financial information.186 7.403.000 714.656 14.803 1.761 405.390 408.775 18.485 22.124.293 142.170 2.957 302. plant and equipment Biological assets Intangible assets Long term advances.971) 5. 2011 (Amounts in thousand) Note Unaudited Audited June 30. 2011 2010 Rupees 11.834 2.729.736.589 156.595.756.089.360 419.339 5.333 4.000 3.638 5.946 ASSETS Non-current assets Property.964.534.875.433 24.321.

209 (881.738) (8.664 (317.510 216.211) 99.724 (521.529.427) 2.077) (277.429) (164.069) (179. 2010 Rupees Net sales Cost of sales Gross profit Distribution and marketing expenses Administrative expenses Other operating expenses Other operating income Operating profit Finance costs Profit/(Loss) before taxation Taxation Profit/(Loss) for the period Profit/(Loss) attributable to: .001.319) 97.293) 43.242) (827) (180.14 (0.657) 1. 2011 June 30.220.400 (165.729) (54.693) 2.651.539 29.813) 334.184 470.729. Chief Executive Director 8 Half Year 2011 Accounts .529) 14.989) 960.999) (30.705.602) (827) (165.889) (202.250 (180.428 (3.338 (7.250 99.519 856.401) 216.069) The annexed notes 1 to 19 form an integral par t of this consolidated condensed interim financial infor mation.510 9.30) 0.30 (0.758 (307.866 (5.429) 13.33) 4.724) (352.515.527.Owners of the Holding Company .921.951 (1.consolidated condensed interim profit and loss account (unaudited) for the half year ended june 30.461 (54.439 (914.250 Earnings/(Loss) per share attributable to the owners of the Holding Company .829) 91.103) (173.911 (1.489 21 216.263) (256.basic and diluted 12 0. 2011 (Amounts in thousand except for earnings/(loss) per share) Note Quarter ended Half year ended June 30.274) (46.Non-controlling interest 7.701.827.566) (169.911 (118.888) 19.644 (10.203) 153. 2010 June 30.737.825 (87.788.685) 3.229 21 99. 2011 June 30.146) (106.

898 21 98.250 (331) 98.179 (180.704) The annexed notes 1 to 19 form an integral part of this consolidated condensed interim financial information. 2010 June 30.consolidated condensed interim statement of comprehensive income (unaudited) for the half year ended june 30.510 (331) 216. Chief Executive Director Half Year 2011 Accounts 9 .Unrealized gain on available for sale investment . 2011 (Amounts in thousand) Quarter ended Half year ended June 30.179 (178.064) 216.069) 365 (179.Realized gain on settlement of Forward Foreign Exchange Contract Total comprehensive income/(loss) for the period Total comprehensive income/(loss) attributable to: .064) 216.Owners of the Holding Company . 2011 June 30.158 21 216.237) (827) (165. 2011 June 30.877) (827) (179.429) 365 (165. 2010 Rupees Profit/(Loss) for the period Other comprehensive income for the period .704) 99.Non controlling interest Total comprehensive income/(loss) for the period 98.919 (164.919 (165.

operating assets .352) (558.803 (2.966) CASH FLOWS FROM FINANCING ACTIVITIES Advance against issue of share capital received from Engro Corporation Limited (ECL).640) (1.772.087) 793.956) 12.024.780 (792.474) 41.418) (4.580 (1.054.000 67.151) (254.370.consolidated condensed interim statement of cash flows (unaudited) for the half year ended june 30.875) 1. the Holding Company Proceeds from issue of share capital Share issuance costs.562) 1.779) (275.325 (1. deposits and prepayments .176) (6.net Net cash utilized in operating activities 13 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of . 2011 2010 Rupees (1.819.953) (3.obligations under finance lease Net cash generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 14 1.438 9. Chief Executive Director 10 Half Year 2011 Accounts .333) (997) 3.200 941.658.000 (58.800 1. net Proceeds from issuance of shares by non controlling interest Proceeds from long term finance Advance against issue of share capital from non controlling interest Repayments of .intangible assets Proceeds from disposal of .long term finance .biological assets Interest received on bank deposits/savings account Net cash utilized in investing activities (2.552 (1.688.288) CASH FLOWS FROM OPERATING ACTIVITIES Cash utilized in operations Finance costs paid Taxes paid Retirement benefits paid Long term advances.762.operating assets .138 (2. 2011 (Amounts in thousand) Note Half year ended June 30.926 7.189) 6.056 47.412) 369.800 (2.708. June 30.864 (750.785 150.000 (8.598) (919.289.363) (100.200.886) 1.889.146) (1.668) (378.610) The annexed notes 1 to 19 form an integral part of this consolidated condensed interim financial information.666 90.

231 793. 2011 (Amounts in thousand) Share capital Share premium Advance against issue of share capital Unrealized gain on Hedging Accumulated available for reserve loss sale investment Rupees 365 365 (365) 331 331 (331) (2.581 330.971) 216.749 90.875.148 90.000 1.198 419.863 783.979 150. net Total comprehensive income/(loss) for the half year ended June 30.697 5.000 3.423.000 720.124.984.200.000 (179. 2011 Balance as at June 30.659.800 (1.534.000 (5.370.000 5.000 (5.242) (2.000) - 3.179 7.200 793. 2010 (Unaudited) Capital of subsidiary company Advance received during the period.423. 2010 Balance as at June 30. 2010 (Audited) Capital of subsidiary company Share capital issued during the period Share issuance cost.000 1.360 1.000 7.749 The annexed notes 1 to 19 form an integral part of this consolidated condensed interim financial information.000.489 (1.000 21 570.148 392 793.000 480.consolidated condensed interim statement of changes in equity (unaudited) for the half year ended june 30. 2010 (Audited) Capital of subsidiary company Share in the opening reserve of the subsidiary company Advance received during the period.800) 1.769) 216. 2010 Balance as at December 31.769) 216.339 150.158 6.141.444 330.702) 355.104.482) Subtotal Non Controlling Interest Total Balance as at January 1.000 (392) 67.000 7.800 (827) 156.800 355.000 861.877) 3. net Total comprehensive income/(loss) for the half year ended June 30.852) 392 (179.704) 4. 2011 (Unaudited) 5.200.577.000 (5.231.370.200 783. Chief Executive Director Half Year 2011 Accounts 11 .731 (1.000 716.544.000 356. net Share capital issued during the period Total comprehensive income/(loss) for the half year ended December 31.000 (67.895 5.480.200 (178.769) 714.052.577.

The Company has also made an application to the Karachi and Lahore Stock Exchanges for permission to deal in and for listing of its shares vide applications dated May 3. dairy and farming products. while the commissioning of remaining units on line 1 and the commissioning of line 2 is expected to be completed in the third quarter of 2011. 1. The entire shares of Al-Safa are proposed to be acquired by the Company from ECL at cost subject to requisite approvals from the regulators. The Company is a subsidiary of Engro Corporation Limited (ECL) and it’s registered office is situated at 6th Floor. incorporated on November 3.1 BASIS OF PREPARATION This consolidated condensed interim financial information is unaudited and has been prepared in accordance with the requirements of the International Accounting Standard 34 – ‘Interim Financial Reporting’ and provisions of and directives issued under the Companies Ordinance. the provisions of or directives issued under the Ordinance have been followed. including expectation of future events that are believed to be reasonable under the circumstances. ECL.4 The principal activity of Engro Foods Supply Chain (Private) Limited (the subsidiary). the Company issued 48 million ordinary shares to certain private investors at Rs. under the Companies Ordinance. Block-4. is to produce. Estimates and judgments are continually evaluated and are based on historical experience and other factors. 5. Further. process and sell dairy. Plot No. 2. incorporated in Pakistan on April 26. 25 per share.3 1. 1984 (the Ordinance). 2011 and June 17. Further. Karachi. manufacture and trade all kinds of raw. 2005. The Company. ice-cream. 2. processed and prepared food products including agriculture. as required by the Code of Corporate Governance. the significant judgments made by the management in applying the Company's accounting policies and the key sources of estimation and uncertainty are the same as those that apply to financial statements for the year ended December 31. 2011. Al Safa Halal.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30. which has been recently acquired by ECL. The subsidiary is currently involved in the construction and set-up of its rice processing plant in District Sheikhupura. 2010. however. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. Scheme No. respectively. Inc. During the period. During the period. Clifton. HC-3. 2011 (Amounts in thousand) 1. during the period. the Holding Company has offered 27 million of its ordinary shares for sale to the general public through offer for sale document dated June 24. 2010. 2. after waiver by ECL of its pre-emptive rights to these shares. The principal activity of the Company is to manufacture. (Al-Safa) in North America. The Company also owns and operates a dairy farm.2 LEGAL STATUS AND OPERATIONS The Group consists of Engro Foods Limited (the Company) and its 70% owned subsidiary company. 2009.1 1. In case where requirements differ. Actual results may differ from these estimates. and should be read in conjunction with the annual consolidated financial statements of the Company for the year ended December 31. the commercial production of milling unit on line 1 commenced on June 1. 2011. juices and other food products. The subsidiary commissioned and started commercial production from drying unit of the rice processing plant from November 7. been subjected to limited scope review by the auditors. Engro Foods Supply Chain (Private) Limited. 1984. Harbour Front Building. The preparation of this consolidated condensed interim financial information in conformity with the approved accounting standards requires the use of certain critical accounting estimates.2 12 Half Year 2011 Accounts . 1. is an unlisted public company. During preparation of this consolidated condensed interim financial information. 2011 for processing from paddy/unprocessed rice to finished brown rice. 2010. the Company has also entered into international market and its first venture is to manage a halal food business. This consolidated condensed interim financial information has.

2010. PLANT AND EQUIPMENT Operating assets.201 41. December 31.797 4.836 1.538 9.137.299 4.278 25.849 5.289 1. including transfers from capital work-in-progress.452 5.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30.358 100 646 15.461 31.005 227 154.owned 2. 4.537 2.808 604. machinery and related equipment Office equipment Computers Furniture and fittings Vehicles . 3.575) 4.642 11.985 2.456. machinery and related equipment 14.227.2) Capital work-in-progress (note 4.074.894) (39.owned Computers Plant.832.1 Following additions.249.1 and 4. 2011 (Amounts in thousand) 3.806 15. at net book value (notes 4.508.2 The details of operating assets disposed/ written-off during the period are as follows: Cost Accumulated depreciation Rupees Net book value Sales proceeds Mode of disposal Insurance claims / Employee buyback Insurance claims Insurance claims Vehicles .036 7.530 December 31. 2010 55.104 (9.256 Half Year 2011 Accounts 13 .456 617.656.926 19.807 3.394 2.210 15.736. were made during the period/year: Leasehold land Buildings on freehold land Plant.3) Unaudited Audited June 30.488.681 6.548 74 304 6. 2011 2010 Rupees 9.428) (50) (416) (9.259 1. PROPERTY.1 ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of this condensed interim financial information are consistent with those applied in the preparation of the annual financial statements for the year ended December 31.930 50 230 5.

2010: Nil) due from Engro Eximp (Private) Limited.184 1. 2011 2010 Rupees 469.329.439 5. 33.1 7.221 178. 7. 14 Half Year 2011 Accounts . OTHER RECEIVABLES Sales tax refundable (note 7. Includes market support subsidy receivable under an agreement dated April 7. 65.121 (December 31.137. 2011 (Amounts in thousand) 4.2) Others 680. a related party.102) held by third parties.1) Work in process Finished goods (note 5.385 73.owned Unaudited Audited June 30.844 5. 6.486 3.3 Following additions were made to capital work-in-progress during the period/year: Buildings on freehold land Plant.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30.898 2. furniture.1) 3.341 83. December 31. 2010: Rs.550 192.955 2. net of amount due on account of packaging material purchased.614 2.1) Receivable from bank against guarantee Receivable from Tetra Pak Pakistan Limited (note 7. 2010: Rs.065.564 556.524 (December 31.712.017 164.534.906 15.221 5.1 These include raw and packaging materials amounting to Rs. machinery and related equipment SAP project and milk automation Office equipment.2 Sales tax has been zero rated on the Company’s supplies (output) and raw materials. fittings and computers Vehicles .000 165. 2011.964.142 1.307 2.484.888 4.600 860.089.672 27. components and assemblies imported or purchased locally by the Company for manufacturing in respect of its dairy products. unsecured Include Rs. 35.350 48.792 723.148 706.439 82.523 518.876 33.450. TRADE DEBTS. STOCK-IN-TRADE Raw and packaging materials (note 5.573 3.107 7. 76. as quantity size discount and investment support allowance.206) and finished goods amounting to Nil (December 31.

which represents the aggregate sale price of all mark-up arrangements amount to Rs.1 8.305. 2.000 ordinary shares of Rs. 3. 1. The facilities for opening letters of credit and guarantees as at June 30. 2010: Rs. December 31.000 (December 31. 9.400.387 1.000 ordinary shares of Rs. The corresponding purchase prices are payable on various dates by February 15. 2010: Rs. 2011 2010 Rupees 8. 9. SHARE CAPITAL Authorized capital 850. 1. December 31. 2011 2010 Rupees 2. however.000.204 880 2. 2014.115. 804. 2010: Rs.000. 15 per share.000.10 each paid in cash (note 8. 2011 (Amounts in thousand) 8.2) Unaudited Audited June 30.000 7. During the period.600.500. 2011 amount to Rs. 10.425.000 (December 31. 1. 2010: Rs. to certain private investors.305 6.000. 2010: 700.600. 10 each (note 8. These shares were first offered to existing shareholder Engro Corporation Limited (ECL). 2010: 800.000.000 8.000. 2.480.000) ordinary shares of Rs.000 (December 31.1 SHORT TERM FINANCES – secured The facilities for short term running finance available from various banks.681 Engro Corporation Limited Engro Fertilizers Limited Engro Polymer and Chemicals Limited Engro Eximp (Private) Limited Avanceon Limited 10.2 During the period.597 7.082 4.506. ranking pari passu in all respects with the existing shares of the Company. the Company has issued and allotted. ECL waived its pre-emptive rights over these shares. the Company has increased its authorized share capital by 50.000. 10. subscribed and paid-up capital 748.000.1) Issued.908 (December 31. 1. the amount remaining unutilized at period end was Rs.000 (December 31.000).000).000) ordinary shares of Rs. 10 each at a premium of Rs.000 7.2 Half Year 2011 Accounts 15 .481 (December 31. 10 each. 48.000 11. The facilities are secured by way of hypothecation upon all present and future current assets of the Company.600).1 TRADE AND OTHER PAYABLES Includes following amounts due to related parties: Unaudited Audited June 30. The unutilized balance against these facilities as at period end was Rs.000) of which.000 8.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30.

100 (December 31. 258. - 11.498 for the years ended December 31.1. the subsidiary.1 CONTINGENCIES AND COMMITMENTS Contingencies 11. Such designation was mandatory for availing Group tax relief under section 59 B(2)(g) of the Ordinance and a requirement under the Group Companies Registration Regulations. 2006 and 2007.3 Following is the position of the Company’s open tax assessments/matters as at June 30. Large Tax Payers Unit (LTU). Sheikhupura claiming preemptive right over a portion of the land. acquired by the subsidiary for construction of rice processing plant. Government of Sindh amounting to Rs. against refund claim of input sales tax. 2010: Rs. The Company has been designated as part of the Group of Engro Corporation Limited by the Securities and Exchange Commission of Pakistan (SECP) through its letter dated February 26. 1.800 (December 31. it will only culminate into recognition of deferred income tax asset thereon with a corresponding liability to the Holding Company for refund of the consideration received. The subsidiary has filed its written statement thereagainst and the case will now come up for hearing. 2008 and 2009) for cash consideration aggregating Rs. 2010: contracts for supply of gas. 2006. if any. its tax losses amounting to Rs. 2010: Rs. 16 Half Year 2011 Accounts . being equivalent to tax benefit/effect thereof. in respect of surrender of aforementioned tax losses by the Company to the Holding Company for the years ended December 31. 2008. 4. allowing the surrender of tax losses by the Company to the Holding Company. 2010: Rs. has not been considered in the preparation of this consolidated condensed interim financial information. 34. Sui Northern Gas Company Limited amounting to Rs. Further.500.350 (December 31. 33.134 out of the total tax losses of Rs.217). Karachi amounting to Rs. 2010: contracts for supply of gas.288. which is pending for hearing.1. the Appellate Tribunal. 2011: a) The Company in accordance with section 59 B (Group Relief) of the Income Tax Ordinance.2 Last year.800) under Sales Tax Rules 2006. 172.000) have been received to-date. 3. 2007 and 2008 (Tax years 2007. Against these guarantees. 11. Rs. 172. 3. 100) under an agreement for disposal of treated waste water. decided the appeals in favour of the Holding Company. whereby.485.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30. Rawalpindi amounting to Rs. sales tax refunds amounting to Rs. as collateral against supplies.1. 34.1 The Company has provided bank guarantees to: Sui Southern Gas Company Limited amounting to Rs. The tax department has filed reference application thereagainst before the Sindh High Court.217 (December 31.847. 2010. However. However. 2010: Rs. and Controller Military Accounts. a lawsuit was filed against the subsidiary by certain previous co-owners in the Civil Court. Collector of Sales tax. 39. 2011 (Amounts in thousand) 11.993) in accordance with Rs.350) in accordance with Irrigation and Power Department. should the reference application be upheld and the losses are returned to the Company. 2001 has surrendered to ECL. 258. 11. based on the opinion of its legal advisor is confident that the matter will be decided in its favour and accordingly the financial effect.000 (December 31. As such there will be no effect on the results of the Company. (the Regulations) notified by SECP on December 31.037 (December 31. 4. the Holding Company. in any event. 2008.

The Sindh High Court considering the legal issues involved has instructed the tax department not to take any coercive action till the hearing of the appeal. EARNINGS / (LOSS) PER SHARE .300 Half Year 2011 Accounts 17 . 2010 12. which is based on: Profit/(Loss) for the period attributable to the owners of the Holding Company Weighted average number of ordinary shares (in thousand) 99. 2011 (Amounts in thousand) b) The Company’s appeal against the order of Commissioner of Income Tax (CIT) for reduction of tax loss from Rs. 810. c) 11. the Holding Company. 2011 June 30. However. 1. The Company has filed an appeal before the Commissioner Appeals against such order. in the aforementioned order the consideration receivable from ECL.106.2 Commitments Commitments in respect of capital expenditure contracted for but not incurred as at June 30.224. 2010: Rs. 2011 Rupees June 30.141). is confident of a favourable outcome of the appeal. whereby the jurisdiction of the Commissioner Inland Revenue has been challenged for passing such an order.602) 216. the Commissioner Inland Revenue raised a demand of Rs. Quarter ended June 30.Basic and diluted There is no dilutive effect on the basic earnings per share of the Company. repair and maintenance.489 (179.229 (164. Further. sales promotion and advertisement expenses. the Company. is currently in the process of being heard. 1. advances and stock written-off.300 711. The Company has also filed a petition thereagainst before the Sindh High Court. provision for bonus.386 for tax year 2008 by disallowing the provision for gratuity.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30. 2011 amounted to Rs. and hence the deferred tax asset recognized on taxable losses has not been reduced by the effect of the aforementioned disallowance. based on the opinion of its tax consultant.669 542. 700. which is yet to be heard.964 to Rs.209 542.242) Number of shares 723. on surrender of tax loss has been added to income for the year.421 (December 31. Last year. 2010 Half year ended June 30.493 for the tax year 2007. 337.

610) 18 Half Year 2011 Accounts .185) 35.005 (1. CASH GENERATED FROM OPERATIONS Profit/(Loss) before taxation Adjustment for non-cash charges and other items: .621) 2.678.027) (137. 2011 (Amounts in thousand) Half year ended June 30.761) 48.252) (1.325) (301.813 (2.580) (28.Interest on bank deposits/saving accounts .377.085 (973.874.177) 14. 2011 June 30. deposits and prepayments Short term investments Other receivables .157 56 423 (1.Depreciation .925) 1. CASH AND CASH EQUIVALENTS Cash and bank balances Short term finances 306.177) (558.239) (750.Finance costs Working capital changes (note 13. 2010 Rupees (119.370. 2011 June 30.Amortization of intangible assets .137 (30) (206) (1.Operating assets written-off .390) (964.584 (925.911 (277.319) 456.Provision for retirement and other service benefits .151) Half year ended 13.503 (9.629 (905.716) (16.196) (2. 2010 13.1) Rupees 334.504 21.011 (3.(Gain)/Loss on death/disposal of biological assets .net June 30.052 (925.Amortization of deferred income .595.289.331 5.1 Working capital changes (Increase)/Decrease in current assets Stores.521) (1.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30.Gain on disposal of operating assets .752) 84.138) 521.538 (50) 7.416) (2.667) (210.963) (35. spares and loose tools Stock-in-trade Trade debts Advances.net Increase/(Decrease) in current liabilities Trade and other payables .087) 154.552) 307.(Gain)/Loss arising from changes in fair value less estimated point-of-sale costs of biological assets .092) (1.521) (93.061 (6.678.668) 327.

507 26.638 208. 16. are as follows: Half year ended Nature of relationship Holding company Nature of transactions Arrangment for sharing of personnel.1 TRANSACTIONS WITH RELATED PARTIES Transactions with related parties. other receivables. Liabilities are not reported segment-wise to the Board of Directors. short term investments and cash and bank balances.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30.306 32.674 1. premises.320 3. deposits and prepayments.114 7.032 1.274 410 926 18. taxes recoverable.371 26.032 25.526 15. 2011 (Amounts in thousand) 15. Half Year 2011 Accounts 19 .016 11.1 SEGMENT INFORMATION The basis of segmentation and reportable segments presented in this consolidated condensed interim financial information are the same which were disclosed in annual consolidated financial statements for the year ended December 31.854 72.682 72. 16. 2010 70.000 3. Unallocated assets include long and short term advances. Inter-segment sales of powder and cream by Dairy to Ice cream and of unprocessed milk by Dairy farm to Dairy are made at prevailing market price.101 2.141 603 743 153 6.777 53.607 Associated companies Contribution to staff retirement funds Key management personnel 15.702 17. 2010.723 6.2 There are no transactions with key management personnel other than under the terms of the employment.Rice processing Purchase of plant and machinery Sale of goods Arrangment for sharing of premises. Further. 2011 Rupees June 30. utilities and services Claimable expenses Use of assets Purchase of goods and services Revenue for services provided . all the unallocated assets are reported to the Board of Directors at entity level.154 15.430 1.485 5.377 95.106 4. 15. utilities and services Provident fund contribution Pension fund contribution Gratuity fund contribution Donations Use of assets Claimable expenses Provident fund Gratuity fund Managerial remuneration Retirement benefits Other benefits June 30. other than those which have been disclosed elsewhere in this consolidated condensed interim financial information.

the consolidated condensed interim balance sheet has been compared with the balances of annual audited financial statements of preceding financial year.533.370.605) 216. Juices & Ice cream Dairy farm Others Results for the year Net sales Inter-segment sales 12.543) 68 (16.157) 8.018 (205.341 1.846. SEASONALITY The Company’s ‘Ice cream’ and ‘Juice’ business is subject to seasonal fluctuation.172 870.769 924. 2011 by the Board of Directors of the Company.239) 13.648 3.617 13.776 16.562 9.675) (48.144.186 6.322 2. Chief Executive Director 20 Half Year 2011 Accounts .500 6.322 3.338) 208.461) 9.671 808. the consolidated condensed interim statement of changes in equity and the consolidated condensed interim statement of cash flows have been compared with the balances of comparable period of immediately preceding financial year.704.654 Segment profit/(loss) 491.266 (416.293 17. 19. 2010 Dairy.901) 12.405.510 165. 2011 (Amounts in thousand) 16.958 1. the consolidated condensed interim statement of comprehensive income.304 (130.014 18.326) (2. the consolidated condensed interim profit and loss account.516 1. whereas.032 208.293 2.032 208. 2010 (Audited) 2.032 14.776.2 Information regarding the Company’s operating segments is as follows: Half year ended June 30. revenues and profits are not necessarily indicative of result to be expected for the full year.338 Rice Business Development Total 12.667 808.738 713.890.171 3.097 2.667 808.720.651.785) (180.notes to the consolidated condensed interim financial information (unaudited) for the half year ended june 30.065. DATE OF AUTHORIZATION FOR ISSUE This consolidated condensed interim financial information was authorized for issue on August 3.150 - 12.644.304) 9. Juices & Ice cream Others Dairy farm Rupees 130.030.097 924.237 (316.554. 18.428) (52.533.144.Segment assets .529.370.‘Interim Financial Reporting’.757) (17.829.171 713.562 8.069) As at June 30.580.266 (186. 2011 (Unaudited) Assets .027 7.242.769 2.512. with demand of ice cream and juice products increasing in summer.338 (150.554.242 1. 2011 Dairy.788.617 Rupees 150.946 10.667 Rice Business Development Total Half year ended June 30.648 3.405.109 16. CORRESPONDING FIGURES In order to comply with the requirements of International Accounting Standard 34 .654 Raw milk sales 7.738 17. The Company’s dairy business is also subject to seasonal fluctuation due to lean and flush cycles of milk collection.060.644 8.500 As at December 31.Un-allocated assets 10.370.072. Therefore.474 (276.580.776.654 (265.150 2.716.430 14.331.

CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) FOR THE HALF YEAR ENDED JUNE 30. 2011 Half Year 2011 Accounts 21 .

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. in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. condensed interim statement of comprehensive income. Our responsibility is to express a conclusion on this condensed interim financial information based on our review. and applying analytical and other review procedures. Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. for the half year then ended. 2011 Chartered Accountants Engagement Partner: Waqas A. 2011. we do not express an audit opinion.auditors’ report to the members on review of condensed interim financial information Introduction We have reviewed the accompanying condensed interim balance sheet of Engro Foods Limited as at June 30. Conclusion Based on our review. Accordingly. in all material respects. 2011 and 2010 have not been reviewed. Sheikh 22 Half Year 2011 Accounts . nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information as of and for the half year ended June 30. 2011 is not prepared. The figures of the condensed interim profit and loss account and condensed interim statement of comprehensive income for the quarters ended June 30. 2011 and the related condensed interim profit and loss account. as we are required to review only the cumulative figures for the half year ended June 30. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410. condensed interim statement of changes in equity and condensed interim statement of cash flows together with the notes forming part thereof (here-in-after referred to as the “condensed interim financial information”). Karachi Date: August 3. A review of interim financial information consists of making inquiries. primarily of persons responsible for financial and accounting matters.

064 Non-current liabilities Long term finances Obligations under finance lease Deferred taxation Deferred liabilities Current liabilities Current portion of: .683.675 2.875.873 540.short term finances Short term finances Contingencies and Commitments 9 10 11 TOTAL EQUITY AND LIABILITIES The annexed notes 1 to 19 form an integral part of this condensed interim financial information.330.842.735 9.521.598 1.000 4.482) 6.575 275.000 714.040.544.000 437.485 21.181 3. deposits and prepayments Current assets Stores.625.924) 5.089.458.long term finances .000 331 (1.737.221 51.714 180.219 980.077 2.064 Non-current assets Property.475 1.126 8.814.964.condensed interim balance sheet (unaudited) as at june 30.841 2.754 860.080 4.794 11.462 4. December 31.814.993 1.465.107 6.006.595.804 10.864 7.2 7. 2011 (Amounts in thousand) Note ASSETS Unaudited Audited June 30.952 3. deposits and prepayments Other receivables Taxes recoverable Derivative financial instruments Cash and bank balances 4 5 6 7 TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Share premium. plant and equipment Long term investment Biological assets Intangible assets Long term advances.847 16.148.870 5.000 3.088.407 4.140 200.480.986 124.749 5.071 441.517 12. 2011 2010 Rupees 8.534.231 (1.obligations under finance lease Trade and other payables Accrued interest / mark-up on: .991 16.659.964 3.268 283.465.417 510 180.722.803 1.293 142.334 2.022 444.490 40.long term finances .178 131. - Chief Executive Director Half Year 2011 Accounts 23 .333 4.460.433 23.460.124.190 2. net Hedging reserve Accumulated loss 8 8.148 350.993 12. spares and loose tools Stock-in-trade Trade debts.879 244.209 720.000 428. unsecured Advances.000.864 7.184 54.589 154.

889) (202.basic and diluted 12 7.442 0.210) 16.182 0.821) (8.989) 960.595 822.788.345 (490. 2011 Half year ended June 30.001.750 (115.428 (3. Chief Executive Director 24 Half Year 2011 Accounts .312) (0.195 (881.678 (307.condensed interim profit and loss account (unaudited) for the half year ended june 30.827.062 (177.427) 2.737.146) (110.350 (52.465 446.308) 216.526 (295.33) June 30.612 (10.621.439 (914.911 (1.821. 2011 Rupees 4.527.31) 13.14 The annexed notes 1 to 19 form an integral part of this condensed interim financial information.529.443.052) (272.660) 89.161 34.168) 99.338 (7.212 (166. 2010 9.896 (1.716) 2.176) 151.30 Net sales Cost of sales Gross profit Distribution and marketing expenses Administrative expenses Other operating expenses Other operating income Operating profit/(loss) Finance costs Profit/(Loss) before taxation Taxation Profit/(Loss) for the period Earnings/(Loss) per share .238) (255.701.274) (41.081.422) (169.595) 331.636. 2011 (Amounts in thousand except for earnings/(loss) per share) Note Quarter ended June 30.884) (53.447 (86.374) 95.444.448) (0.387) 3.103) (124. 2010 June 30.231) 14.775) (25.893) 1.724) (279.538) 35.088 (5.

2011 June 30.083) 216.111 (177.Realized gain on settlement of Forward Foreign Exchange contracts Total comprehensive income/(loss) for the period 99. 2010 June 30.947) The annexed notes 1 to 19 form an integral part of this condensed interim financial information. 2011 June 30. 2011 (Amounts in thousand) Quarter ended Half year ended June 30.182 (331) 98.312) 365 (176. 2010 Rupees Profit/(Loss) for the period Other comprehensive income for the period .442 (331) 216.condensed interim statement of comprehensive income (unaudited) for the half year ended june 30. Chief Executive Director Half Year 2011 Accounts 25 .448) 365 (166.851 (166.Unrealized gain on available for sale investment .

long term borrowings . Chief Executive Director 26 Half Year 2011 Accounts .938.biological assets Long term investment Interest received on bank deposits/savings account Net cash utilized in investing activities (1.384) CASH FLOWS FROM FINANCING ACTIVITIES Advance against issue of share capital received from Engro Corporation Limited (ECL). 2011 2010 Rupees (1.583.333) (997) 2.662.438 (350.000) 1.intangible assets Proceeds from disposal of .886) 1.operating assets .331.800 (365.493) 40.300.827) The annexed notes 1 to 19 form an integral part of this condensed interim financial information.636) (4.926 7.net Net cash utilized in operating activities 13 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of . June 30.379) (260.666 (2.731) (3.956) 12.973) 793.859) (6.089) CASH FLOWS FROM OPERATING ACTIVITIES Cash utilized in operations Finance costs paid Taxes paid Retirement benefits paid . the Holding Company Proceeds from issue of share capital Share issuance costs.200) 1.200 941.889) (1.181 (1.363) (95.154) 180.obligations under finance lease Net cash generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 14 1.operating assets .200.net Long term advances. 2011 (Amounts in thousand) Note Half year ended June 30. deposits and prepayments .795 (1.269) (254. net Proceeds from long term finances Repayments of .964 (2.157.000 (8.200.353.592) (1.322 (1.condensed interim statement of cash flows (unaudited) for the half year ended june 30.849) (376.875) 1.562) 1.820.000 (58.980 (803.357) (516.731.056 47.598) (873.764.189) 6.552 (1.666 (762.

371. net Total comprehensive income/(loss) for the half year ended June 30.423.000 720.200 (176.000.condensed interim statement of changes in equity (unaudited) for the half year ended june 30.947) 3.000 5.312) (2.124.858) 352.875.800 (1.000 480. 2011 Balance as at June 30.000 (5.228.924) 216. 2010 Balance as at June 30.769) 216.482) 3.800 352.442 (1. 2011 (Amounts in thousand) Share capital Share premium Advance against issue of share capital Unrealized gain on available for sale investment Rupees 365 365 (365) - Hedging reserve Accumulated loss Total Balance as at January 1.900 5.577. 2010 (Audited) Advance received during the period Total comprehensive income/(loss) for the half year ended June 30. 2010 (Audited) Share capital issued during the period Share issuance cost.000) - 331 331 (331) - (2. 2010 Balance as at December 31.707 783.200.000 7.051. Chief Executive Director Half Year 2011 Accounts 27 .769) 714.546) (177.987.480.749 The annexed notes 1 to 19 form an integral part of this condensed interim financial information.231 793.407 1.000 (5.111 6.200 793.423. 2010 (Unaudited) Advance received during the period Share capital issued during the period Total comprehensive income/(loss) for the half year ended December 31.934 (1.577.000 1.000 7. 2011 (Unaudited) 5.200 783.659.534.454 793.

Scheme No. which has been recently acquired by ECL. however. 2011 (Amounts in thousand) 1.2 3. Karachi. Actual results may differ from these estimates. ice-cream. LEGAL STATUS AND OPERATIONS Engro Foods Limited (the Company). Plot No. During the period. The entire shares of Al-Safa are proposed to be acquired by the Company from ECL at cost subject to requisite approvals from the regulators. 2010. 1984. after waiver by ECL of its pre-emptive rights to these shares. 5. Al Safa Halal. The Company is a subsidiary of Engro Corporation Limited (ECL) and its registered office is situated at 6th Floor. 2. Further. Inc. ECL. 2. the Holding Company has offered 27 million of its ordinary shares for sale to the general public through offer for sale document dated June 24. and should be read in conjunction with the financial statements of the Company for the year ended December 31. Estimates and judgments are continually evaluated and are based on historical experience and other factors. In case where requirements differ. process and sell dairy. 28 Half Year 2011 Accounts . Clifton. (Al-Safa) in North America. Further. 25 per share. 2011. the provisions of or directives issued under the Ordinance have been followed. 2010. been subjected to limited scope review by the auditors.notes to the condensed interim financial information (unaudited) for the half year ended june 30.1 BASIS OF PREPARATION This condensed interim financial information is unaudited and has been prepared in accordance with the requirements of the International Accounting Standard 34 – ‘Interim Financial Reporting’ and provisions of and directives issued under the Companies Ordinance. is an unlisted public company. This condensed interim financial information has. The Company also owns and operates a dairy farm. under the Companies Ordinance. as required by the Code of Corporate Governance. The Company has also made an application to the Karachi and Lahore Stock Exchanges for permission to deal in and for listing of its shares vide applications dated May 3. 2. including expectation of future events that are believed to be reasonable under the circumstances. During preparation of this condensed interim financial information. The preparation of this condensed interim financial information in conformity with the approved accounting standards requires the use of certain critical accounting estimates. the Company issued 48 million ordinary shares to certain private investors at Rs. HC-3. incorporated in Pakistan on April 26. 2010. the Company has also entered into international market and its first venture is to manage a halal food business. 2011. 1984 (the Ordinance). respectively. The Harbour Front Building. the significant judgments made by the management in applying the Company's accounting policies and the key sources of estimation and uncertainty are the same as those that apply to the financial statements for the year ended December 31. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. during the period. Block-4. The principal activity of the Company is to manufacture. ACCOUNTING POLICIES The accounting policies and the methods of computation adopted in the preparation of this condensed interim financial information are consistent with those applied in the preparation of the annual financial statements for the year ended December 31. 2011 and June 17. juices and other food products. 2005.

429 7.615. PROPERTY. machinery and related equipment Office equipment Computers Furniture and fittings Vehicles . machinery and related equipment 14.246 153.219 4.472 249.3) 7.224.1 Following additions.452 5.894) (39.201 41.530 Insurance claims / Employee buyback Insurance claims Insurance claims Net book value Sales proceeds Mode of disposal Half Year 2011 Accounts 29 .148.661.910 779. 2011 2010 Rupees 4.104 December 31.2 The details of operating assets disposed/written-off during the period are as follows: Cost Accumulated depreciation Rupees Vehicles .719 4.428) (50) (416) (9.335 13. were made during the period/year: Buildings on freehold land Plant.owned Computers Plant. 2011 (Amounts in thousand) Unaudited Audited June 30.owned 228.097 2.121 1.985 1.256 (9.764.417 25.548 74 304 6.688 8.681 6.210 15.527. including transfers from capital work-in-progress.598 6.544.1 and 4. PLANT AND EQUIPMENT Operating assets.581 1.061.790 486.358 100 646 15. at net book value (notes 4. 2010 55.836 1.926 19.2) Capital work-in-progress (note 4. December 31.930 50 230 5.notes to the condensed interim financial information (unaudited) for the half year ended june 30.920 30.575) 4.

855 1. 2011 (Amounts in thousand) Unaudited Audited June 30.1) 3.184. STOCK-IN-TRADE Raw and packaging materials (note 6.384 40. December 31. December 31.484. 2011 2010 Rupees 4. 65.000.notes to the condensed interim financial information (unaudited) for the half year ended june 30. 2010: Rs.546. 76.065.184 1.148 706.390 3.102) held by third parties.1) Receivable from Tetra Pak Pakistan Limited (note 7. machinery and related equipment SAP project and milk automation Office equipment. LONG-TERM INVESTMENT Subsidiary .888 2.437.178 3.Advance against issue of share capital 980.a subsidiary company Sales tax refundable (note 7.876 33.2) Others Unaudited Audited June 30. 2010: 70%)] .707 165.at cost Engro Foods Supply Chain (Private) Limited [equity held: 70% (December 31.98. 2011 2010 Rupees 680.089.439 521. 2010: Rs.221 6.245 5. 35.376 1.735 30 Half Year 2011 Accounts . 7.486 3.614 1. fittings and computers Vehicles .000.564 556.677 27.964. 2010: 98.255 860.906 15.206) and finished goods amounting to Nil (December 31.000 (December 31.268 518.561 69.000) ordinary shares of Rs.832 122.017 680. 10 each .017 164.3 Following additions were made to capital work-in-progress during the period/year: Buildings on freehold land Plant. furniture.550 192.920 266.000 6.1) Work in process Finished goods (note 6. OTHER RECEIVABLES Receivable from Engro Foods Supply Chain (Private) Limited .000 980.000 1.307 2.350 48.121 (December 31.330.152 720.1 These include raw and packaging materials amounting to Rs.owned 314.000 350.000 980.823.588 178.

ranking pari passu in all respects with the existing shares of the Company. 2010: Rs. which represents the aggregate sale price of all mark-up arrangements amount to Rs.2 Sales tax has been zero rated on the Company’s supplies (output) and raw materials. The unutilized balance against these facilities as at period end was Rs.000).600.000 ordinary shares of Rs.000 (December 31.000.000 (December 31.000 ordinary shares of Rs. 2011 2010 Rupees 8. 10 each.200. however. 604.500.000). as quantity size discount and investment support allowance.084 Engro Corporation Limited Engro Fertilizers Limited Engro Polymer and Chemicals Limited Avanceon Limited 10. 2011 (Amounts in thousand) 7. 2010: 700.notes to the condensed interim financial information (unaudited) for the half year ended june 30. 1. December 31. Half Year 2011 Accounts 31 .2) Unaudited Audited June 30.000) ordinary shares of Rs.000. 1. 2010: Rs. components and assemblies imported or purchased locally by the Company for manufacturing in respect of its dairy products. ECL waived its pre-emptive rights over these shares. 2.000. the Company has increased its authorized share capital by 50. 9.1 SHORT TERM FINANCES – secured The facilities for short term running finance available from various banks.000. 2011.920 (December 31. 15 per share.000 7.000.000 8.000.305 6. 10 each at a premium of Rs.000) ordinary shares of Rs.1 7.387 1. 48.1 8. 2014.000 (December 31. TRADE AND OTHER PAYABLES Includes following amounts due to related parties: Unaudited Audited June 30.082 4. Includes market support subsidy receivable under an agreement dated April 7. 10 each (note 8.480. The facilities are secured by way of hypothecation upon all present and future current assets of the Company. 2011 2010 Rupees 2. December 31. During the period. 2010: 800. 10. SHARE CAPITAL Authorized capital 850.600.2 During the period. net of amount due on account of packaging material purchased. 8. The corresponding purchase prices are payable on various dates by February 15.000. These shares were first offered to existing shareholder Engro Corporation Limited (ECL).1) Issued.000 7. to certain private investors. subscribed and paid-up capital 748.000.10 each paid in cash (note 8.204 880 2.000 8. the Company has issued and allotted.

2010: contracts for supply of gas. 2010: Rs.288.1 The Company has provided bank guarantees to: Sui Southern Gas Company Limited amounting to Rs. 1. 2010: Rs.964 to Rs.1 CONTINGENCIES AND COMMITMENTS Contingencies 11. should the reference application be upheld and the losses are returned to the Company. Further.1.2 The facilities for opening letters of credit and guarantees as at June 30. and Controller Military Accounts. 3. as collateral against supplies. allowing the surrender of tax losses by the Company to the Holding Company.800) under Sales Tax Rules 2006. whereby. Such designation was mandatory for availing Group tax relief under section 59 B(2)(g) of the Ordinance and a requirement under the Group Companies Registration Regulations. 100 (December 31.000 (December 31. - 11.000) of which. 33.217). in respect of surrender of aforementioned tax losses by the Company to the Holding Company for the years ended December 31. and hence the deferred tax asset recognized on taxable losses has not been reduced by the effect of the aforementioned disallowance.217 (December 31. 2008. However.600).2 Following is the position of the Company’s open tax assessments/matters as at June 30. Sui Northern Gas Company Limited amounting to Rs.000) have been received to-date. 2010: contracts for supply of gas.305. 32 Half Year 2011 Accounts .134 out of the total tax losses of Rs. against refund claim of input sales tax. is confident of a favourable outcome of the appeal. its tax losses amounting to Rs.485. 4. However. 1. Rawalpindi amounting to Rs. 172. 2010: Rs.847.498 for the years ended December 31. is currently in the process of being heard. 2006. 2008 and 2009) for cash consideration aggregating Rs. 2007 and 2008 (Tax years 2007.493 for the tax year 2007. 2. Government of Sindh amounting to Rs. which is pending for hearing.431. 11. decided the appeals in favour of the Holding Company.993) in accordance with Rs. 2011: a) The Company in accordance with section 59 B (Group Relief) of the Income Tax Ordinance. As such there will be no effect on the results of the Company. 2006 and 2007. 2010.481 (December 31 2010: Rs. The Company has been designated as part of the Group of Engro Corporation Limited by the Securities and Exchange Commission of Pakistan (SECP) through its letter dated February 26. 2011 (Amounts in thousand) 10. the Holding Company. 258. being equivalent to tax benefit/effect thereof.800 (December 31.1. 2010: Rs. 3.000 (December 31. sales tax refunds amounting to Rs.350. 2011 amount to Rs. 2010: Rs. it will only culminate into recognition of deferred income tax asset thereon with a corresponding liability to the Holding Company for refund of the consideration received. Rs.notes to the condensed interim financial information (unaudited) for the half year ended june 30. 4. Karachi amounting to Rs. 39.115. the Company. based on the opinion of its tax consultant. 1. 1. Against these guarantees.350 (December 31. in any event. 172. The tax department has filed reference application thereagainst before the Sindh High Court. 258.350) in accordance with Irrigation and Power Department. b) The Company’s appeal against the order of Commissioner of Income Tax (CIT) for reduction of tax loss from Rs. 3.037 (December 31. Collector of Sales tax. (the Regulations) notified by SECP on December 31. Large Tax Payers Unit (LTU).500. 11. the Appellate Tribunal. the amount remaining unutilized at period end was Rs. 2001 has surrendered to ECL. 2008. 1. 100) under an agreement for disposal of treated waste water. 34.224. 34.106.

repair and maintenance.312) Number of shares Weighted average number of ordinary shares (in thousand) 723.209 542. 2011 (Amounts in thousand) c) Last year.300 711. June 30. The Sindh High Court considering the legal issues involved has instructed the tax department not to take any coercive action till the hearing of the appeal. advances and stock written-off. sales promotion and advertisement expenses. Further.669 542. which is yet to be heard. 2010: Rs.182 (166. on surrender of tax loss has been added to income for the year.170). 2011 amounted to Rs. EARNINGS/(LOSS) PER SHARE . 2011 2010 2011 2010 Rupees 12. 337. whereby the jurisdiction of the Commissioner Inland Revenue has been challenged for passing such an order. June 30.notes to the condensed interim financial information (unaudited) for the half year ended june 30.2 Commitments Commitments in respect of capital expenditure contracted for but not incurred as at June 30. in the aforementioned order the consideration receivable from ECL. the Holding Company.089 (December 31.300 Half Year 2011 Accounts 33 . provision for bonus. 357.386 for tax year 2008 by disallowing the provision for gratuity. 11.448) 216. 696.Basic and diluted There is no dilutive effect on the basic earnings per share of the Company.442 (177. Quarter ended Half year ended June 30. The Company has also filed a petition thereagainst before the Sindh High Court. June 30. The Company has filed an appeal before the Commissioner Appeals against such order. which is based on: Profit/(Loss) for the period 99. the Commissioner Inland Revenue raised a demand of Rs.

427) (2.239) (762.240) (516.580) (28.107 (1.331 5.583.365 (928.849) 327.net Half year ended June 30. CASH UTILIZED IN OPERATIONS Profit/(Loss) before taxation Adjustment for non-cash charges and other items: .Gain on disposal of operating assets .(Gain)/Loss arising from changes in fair value less estimated point-of-sale costs of biological assets .notes to the condensed interim financial information (unaudited) for the half year ended june 30. June 30.net Increase/(Decrease) in current liabilities Trade and other payables .269) 13.1 Working capital changes (Increase)/Decrease in current assets Stores.595 (2.716) (16.973) 142.542.435 (6.1) Half year ended June 30.239) 14. CASH AND CASH EQUIVALENTS Cash and bank balances Short term finances 11.964) 490. 2011 2010 Rupees (99.412 (905.300.374) 419.107) 39.Operating assets written-off .185) 43.632) (1. 2011 (Amounts in thousand) 13.868 (888.111) (1.142 21.595.205) (226.Amortization of deferred income .542.827) 34 Half Year 2011 Accounts .011 (3.143) (200.552) 307.925) (1.080) (1.750 (272.545) (139. June 30.632) (93.963) (2.443) (2.Finance costs Working capital changes (note 13.621) 2.Interest on bank deposits/saving accounts .052 (888.Amortization of intangible assets . spares and loose tools Stock-in-trade Trade debts Advances. deposits and prepayments Short term investments Other receivables .(Gain)/Loss on death/disposal of biological assets .Provision for retirement and other service benefits .390) (964.137 (30) (206) (1.874. 2011 2010 Rupees 331.157 56 423 (1.Depreciation .538 (50) 7.316.752) 121.

16. 15.116 26.482 25. long and short term advances.702 15. utilities and services Claimable expenses Use of assets Claimable expenses Purchase of goods and services Sale of goods Arrangment for sharing of premises.032 1. Unallocated assets include long term investment. 2011 2010 Rupees Nature of relationship Holding company Nature of transactions Arrangment for sharing of personnel.602 7.141 603 743 153 6. are as follows: Half year ended June 30.938 15.274 410 926 35. deposits and prepayments.1 SEGMENT INFORMATION The basis of segmentation and reportable segments presented in this condensed interim financial information are the same which were disclosed in annual financial statements for the year ended December 31. short term investments and cash and bank balances.430 1. other receivables.106 4.2 There are no transactions with key management personnel other than under the terms of the employment.854 72. utilities and services Provident fund contribution Pension fund contribution Gratuity fund contribution Donations Use of assets Claimable expenses Provident fund Gratuity fund Managerial remuneration Retirement benefits Other benefits 70.377 91.654 18.856 32.674 1. June 30. other than those which have been disclosed elsewhere in this condensed interim financial information. all the unallocated assets are reported to the Board of Directors at entity level.320 2. 16.000 3. Half Year 2011 Accounts 35 . Further. premises.016 11.notes to the condensed interim financial information (unaudited) for the half year ended june 30.031 5. Liabilities are not reported segment-wise to the Board of Directors.682 72.262 2.607 Subsidiary Associated companies Contribution to staff retirement funds Key management personnel 15.723 3. 2011 (Amounts in thousand) 15. Inter-segment sales of powder and cream by Dairy to Ice cream and of unprocessed milk by Dairy farm to Dairy are made at prevailing market price.777 49.371 52. 2010.1 TRANSACTIONS WITH RELATED PARTIES Transactions with related parties. taxes recoverable.602 15.

366 2.331.442 165. 18.533.852. the condensed interim statement of comprehensive income. whereas.648 10. The Company’s dairy business is also subject to seasonal fluctuation due to lean and flush cycles of milk collection.612 8.769 - 10.995 7. CORRESPONDING FIGURES In order to comply with the requirements of International Accounting Standard 34 .654 150.237 (316. 2010 (Audited) 2.769 924. 2011 by the Board of Directors of the Company.776 16.671 808.‘Interim Financial Reporting’.776.312) As at June 30. revenues and profits are not necessarily indicative of result to be expected for the full year. 2010 Dairy.014 16.958 1.Segment assets .465.304) 9.338 (150.648 3.738 713.890. SEASONALITY The Company’s ‘Ice cream’ and ‘Juice’ business is subject to seasonal fluctuation. the condensed interim profit and loss account.304 (130. with demand of ice cream and juice products increasing in summer.2 Information regarding the Company’s operating segments is as follows: Half year ended June 30. 19.171 713.293 14.543) (16.667 130.667 808.461) 9.428) (52.562 8.018 (205.265.109 16.097 924.785) (177.338) 13.338 Dairy farm Rupees Business Development Total Half year ended June 30.474 (276.500 6.617 13.144.850 2.171 2. 2011 (Unaudited) Assets . Juices & Ice cream Others Dairy farm Rupees Business Development Total Segment profit/(loss) 491.072.435.225.704.776.notes to the condensed interim financial information (unaudited) for the half year ended june 30.460.200.405.533.064 17.242 (265.829. the condensed interim balance sheet has been compared with the balances of annual audited financial statements of preceding financial year.529.370.097 2.675) (48.654 1.326) (17.266 (186. the condensed interim statement of changes in equity and the condensed interim statement of cash flows have been compared with the balances of comparable period of immediately preceding financial year.500 As at December 31.901) 12.654 1.293 2.Un-allocated assets 10.864 6.341 Raw milk sales 7.605) 216.562 9.144. Juices & Ice cream Others Results for the year Net sales Inter-segment sales 12. DATE OF AUTHORIZATION FOR ISSUE This condensed interim financial information was authorized for issue on August 3. 2011 (Amounts in thousand) 16.617 12.443. Therefore.234. Chief Executive Director 36 Half Year 2011 Accounts .239) 13.698 12.065.370.512.234 (416.738 3.720.157) 8.370. 2011 Dairy.405.667 808.

Half Year 2011 Accounts .