NOTES case requirements differ, the provisions of or

NOTES TO THE
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2017

 1 LEGAL STATUS AND OPERATIONS:

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                                                                                              The
Company was incorporated in Pakistan on December 29, 1960 as a Public Limited
Company; its shares are quoted on Pakistan Stock Exchange. It is principally
engaged in production and sale of cement. The registered office of the Company
is situated at 28-B/III, Gulberg III, Lahore. Factory of the Company is
situated at Ismailwal, Tehsil Pind Dadan Khan, District Chakwal.

2 BASIS OF
PREPARATION:

2.1                                         Statement of compliance These
financial statements have been prepared in accordance with approved accounting
standards as applicable in Pakistan. As per the requirements of circular No.
CLD/CCD/PR(11)/2017 dated July 20, 2017 issued by the Securities & Exchange
Commission of Pakistan (SECP), companies the financial year of which close on
or before June 30, 2017 shall prepare their financial statements in accordance
with the provisions of the repealed Companies Ordinance, 1984. Accordingly,
approved accounting standards comprise of such International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards
Board as are notified under the Companies Ordinance, 1984, provisions of and
directives issued under the Companies Ordinance, 1984. In case requirements
differ, the provisions of or directives under the Companies Ordinance, 1984
prevail.

2.2 Changes
in accounting standards, interpretations and pronouncements and its impact on
these financial statements a a. Amendments to approved accounting standards
effective during the year ended June 30, 2017

There were certain new amendments to the approved accounting
standards which became effective during the year ended June 30, 2017 but are
considered not to be relevant or have any significant effect on the Company’s
financial reporting and are, therefore, not disclosed in these financial
statements.

 

b Standards
and amendments to approved accounting standards that are effective for the
Company’s accounting periods beginning on or after July 1, 2017

 There are certain new
standards and amendments to the approved accounting standards that will become
effective for the Company’s annual accounting periods beginning on or after
July 1, 2017. However, these amendments will not have a significant impact on
the financial reporting of the Company and, therefore, have not been disclosed
in these financial statements. Further, the new standards are yet to be adopted
by the SECP. In addition to the foregoing, the Companies Act 2017 which is not
effective on these financial statements, has added certain disclosure requirements
which will be applicable in future.

2.3 Basis of
measurement

 These financial
statements have been prepared under the historical cost convention except for
the followings:

–   Certain financial
instruments at fair value;

And –   certain
property, plant and equipment at fair value.

Summary of significant accounting
policies:

Isa 16:

Property, plant and equipment

Use of
estimate and judgment:

Useful life
and residual value of property, plant and equipment:

The company
reviews the useful life and residual value of property, plant and equipment on
regular basis to determine that the there is no significant change in the
estimates as compared to previous year. Estimations are made for recoverable
amounts of assets for possible impairment on regular basis. While making these
estimates technical resources are used which are available with the company.
Change in estimates may affect the carrying amounts of property, plant and
equipment and it also effect the depreciation, amortization and impairment.

Accounting
policies regarding ppe:

·       
Owned
operating fixed assets except for freehold land, building and foundation,
building on leasehold land, heavy earth moving machinery, plant and machinery
and capital work in progress are stated at cost less accumulated depreciation /
amortization and impairment in value, if any.

·       
Building
and foundation, building on leasehold land, heavy earth moving machinery, and
plant and machinery are stated at revalued amount being the fair value at the
date of revaluation, less accumulated depreciation / amortization and
impairment in value, if any.

·       
Freehold
land is stated at revalued amount being the fair value at the date of
revaluation, less any subsequent impairment losses, if any. The accumulated
depreciation at the date of revaluation is eliminated against the gross
carrying amount of these assets; and thereafter the carrying amount of these
assets is adjusted to the revalued amount.

·       
If
there is increase on the revaluation of asset it will be credited to the
surplus on revaluation of such property, plant and equipment and if there is
decrease in the carrying amounts at the time of revaluation it will charge to
p to the extent that it exceed the balance.

·       
Depreciation
is charged on operating fixed assets except freehold land by applying reducing
balance method. No depreciation is charged in the month of disposal, depreciation
is charged to profit and loss account from the month when an asset becomes
available for its indented use. At each balance sheet date useful lives and
residual values of major components of operating fixed assets are reviewed and
adjusted.

·       
Normal
repair and maintenance costs are charged to profit and loss account when these
are incurred. Expenditures on major improvements and modifications to the
operating fixed assets are capitalized. Gain/loss on disposal of a property,
plant and equipment is charged to profit and loss account.

Surplus on revaluation of property, plant and equipment

·       
The
surplus arising on revaluation of property, plant and equipment is credited to
the “Surplus on revaluation of property, plant and equipment” as company
follows the requirement of section 235 of companies ordinance 1984, account
shown below equity in the balance sheet.

Ias 2

Inventory

Use of estimate and judgment:

Stock in trade:

 The company reviews the net realizable
value of items stock–in–trade to assess any possible impairment on annual
basis. Net realizable value is estimated with reference to the estimated
selling price in the ordinary course of business less the estimated cost
necessary to make the sale. Any change in the estimates in the future might
affect the carrying amount of respective item of store, spare parts and loose
tools and stock in trade, with corresponding effects on the provision for
impairment, if any.

Summary of significant accounting policies:

3.5 Stock in trade

 These are stated at the lower of
cost and net realizable value. Cost is determined as follows:

Raw materials : Annual average cost

 Work in process and finished goods
: Annual average manufacturing cost Packing materials : Moving average cost

Annual average cost of raw material consists of quarrying cost,
transportation, government levies, direct cost of raw material, labour,
crushing cost and a proportion of appropriate overheads. Whereas average
manufacturing cost in relation to work in process and finished goods consists
of direct material, labour and a proportion of appropriate manufacturing overheads.

Net realizable value signifies the estimated selling price in the
ordinary course of business less estimated costs of completion and estimated
costs necessary to make the sale necessarily to be incurred in order to make a
sale.

 

Ias 23

Borrowing cost

Summary of significant accounting policy:

 All borrowings are recorded at the
proceeds received. Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended
use are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use. All other borrowing costs are
charged to income in the period in which these are incurred.

Ias 38

Intangible asset

Summary of significant accounting policy:

Expenditure incurred to acquire
computer software is capitalized as intangible asset and stated at cost less
accumulated amortization and any identified impairment loss. The estimated
useful life and amortization method are reviewed at the end of each annual
reporting period, with effect of any changes in estimate being accounted for on
a prospective basis.

Intangible assets are amortized using
straight-line method over a period of five years. Amortization on additions to
intangible assets is charged from the month in which an asset is put to use and
on disposal up to the month of disposal.

Ifrs 15

Revenue from Contract with customer

Summary of significant accounting policies:

Revenue recognition Revenue is recognized to the extent that it is
probable that the economic benefits will flow to the Company and the revenue
can be measured reliably. Revenue is measured at the fair value of consideration
received or receivable on the following basis:

– Sales are recorded when significant risks and rewards of ownership of
the goods have passed to the customers which coincides with dispatch of goods
to customers.

– Dividend income is recognized when the Company’s right to receive the
dividend is established.

 – Interest income is recognised as
and when accrued on effective interest rate method.

Ias 1

Summary of significant accounting policy:

Offsetting:

            Financial assets and financial liabilities are
set off and the net amount is reported in the financial statements when there
is a legally enforceable right to set off and the company intends either to
settle on a net basis, or to realize the assets and to settle the liabilities
simultaneously.

Related party transactions

 All transactions with related
parties are executed at arm’s length prices, determined in accordance with the
pricing method as approved by the Board of Directors.

Provisions

 Provisions are recognized in the
balance sheet when the Company has a present legal or constructive obligation
as a result of past events; and it is probable that an outflow of resources
will be required to settle the obligation and a reliable estimate of the amount
can be made.

Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate. If it is no longer probable that an outflow
of economic resources embodying economic benefits will be required to settle
the obligation, the provisions are reversed