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									      Report for the Quarter and
Nine Months ended September 30, 2008
CONTENTS



Company Information                                                2

Directors’ Report                                                  3

Unaudited Condensed Interim Financial Statements                   4

Unaudited Condensed Consolidated Interim Financial Statements     18




                                                   Nine Months Report – September 2008
COMPANY INFORMATION

Chairman                      Asad Umar

President & Chief Executive   Asif Qadir

Directors                     Isar Ahmad
                              Khalid Mansoor
                              Khalid S. Subhani
                              Masaharu Domichi
                              Shabbir Hashmi
                              Shahzada Dawood
                              Takeshi Hagiwara
                              Waqar A. Malik

Company Secretary             Arshaduddin Ahmed

Board Audit Committee         Isar Ahmad
                              Khalid S. Subhani
                              Shabbir Hashmi
                              Masaharu Domichi

Bankers                       Allied Bank Ltd.
                              Askari Commercial Bank Ltd.
                              Bank Al Falah Ltd.
                              Bank Al Habib Ltd.
                              Citibank N.A.
                              Samba Bank Ltd. (Formerly Crescent Commercial Bank Ltd.)
                              Faysal Bank Ltd.
                              Habib Bank Ltd.
                              Hongkong Shanghai Banking Corporation
                              MCB Bank Ltd.
                              Meezan Bank Ltd.
                              National Bank of Pakistan
                              NIB Bank Ltd.
                              Standard Chartered Bank (Pakistan) Ltd.
                              United Bank Ltd.

Auditors                      A. F. Fergusons & Co., Chartered Accountants
                              State Life Building No. 1-C, I.I. Chundrigar Road, Karachi.

Registered Office             First Floor, Bahria Complex I
                              24 M.T. Khan Road, Karachi - 74000

Manufacturing Facility        EZ/1/P-II-1, Eastern Zone, Bin Qasim, Karachi.

Share Registration Office     FAMCO Associates (Private) Limited [Formerly Ferguson Associates (Private) Limited]
                              4th Floor, State Life Building 2-A, I.I. Chundrigar Road, Karachi - 74000

Website                       www.engropolymer.com




                                                    2

                                                                        Nine Months Report – September 2008
DIRECTORS                REPORT


The Board of Directors of Engro Polymer & Chemicals Ltd. is pleased to present the unaudited accounts of the
Company for the third quarter ended September 30, 2008.



Business Review

Domestic sales volume during 3Q 2008 was 22 thousand tons down from 25 thousand tons in 3Q 2007. This was
primarily due to Eid and declining price trend which put the customers on a wait and see mode. Year to date
domestic sales were 78 thousand tons showing a growth of 5% over the corresponding period last year. Production
for the nine months was a record 75 thousand tons, an increase of 12% over the same period last year.

Poly Vinyl Chloride (PVC) and Vinyl Chloride Monomer (VCM) prices remained high initially but began to decline
in mid-August due to the beginning of a recessionary trend affecting majority of the world economies. International
PVC prices fell from a peak of US$1270 per ton in July to US $995 in September. The PVC-VCM margin also
declined due to sharply dropping PVC prices.

The Profit after tax for 3Q 2008 was Rs.159 million as compared to Rs.126 million for 3Q 2007 and that for the
nine months ended September 2008 was Rs. 586 million as against Rs. 308 million for corresponding period last
year. The increase in profit was attributable to strong PVC-VCM margin.

Company’s expansion project for increasing PVC capacity by 50 thousand tons is as per schedule and is under
commissioning phase. The overall back integration project is also as per schedule and will come online by end of
second quarter 2009.



Near Future Outlook

Due to ongoing turmoil in global economies, international prices of PVC and VCM have significantly declined having
a negative impact on margins. The profitability in 4Q 2008 will be substantially under pressure due to compression
of PVC-VCM margin and high value inventory. In addition the ongoing power crisis and tight cash liquidity may also
aggravate and result in lower domestic consumption of PVC resin.




Asif Qadir                                                                                 Masaharu Domichi
President & Chief Executive                                                                Director



Karachi
October 21, 2008




                                                        3

                                                                          Nine Months Report – September 2008
UNAUDITED CONDENSED
INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008




                   4
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)                                                  (Amounts in thousand)
CONDENSED INTERIM BALANCE SHEET (UNAUDITED)
AS AT SEPTEMBER 30, 2008
                                                                                                              (Audited)
                                                                                              September 30, December 31,
                                                                                 Note             2008          2007
ASSETS                                                                                                        Rupees
Non-Current Assets

Property, plant and equipment                                                       4               12,406,829         4,708,761
Intangible assets                                                                   5                    7,419             6,914
Long term investment                                                                                    50,000            50,000
Long term loans and advances                                                                           119,632            96,971
                                                                                                    12,583,880         4,862,646
Current Assets

Stores and spares                                                                                      106,279            95,719
Stock-in-trade                                                                      6                1,294,137           919,455
Trade debts - considered good, secured                                                                 250,962           178,472
Loans, advances, deposits, prepayments and other receivables                        7                  163,202           253,361
Tax recoverable                                                                                         36,262            38,012
Derivative financial instrument                                                                         39,750             –
Short term investments                                                                               1,208,642         2,914,504
Cash and bank balances                                                              8                  249,904           200,844
                                                                                                     3,349,138         4,600,367

TOTAL ASSETS                                                                                        15,933,018         9,463,013

EQUITY AND LIABILITIES

Share capital                                                                       9                5,203,677         4,436,000
Share premium                                                                                          974,003           425,216
Hedging reserve                                                                    10                   38,512             –
Compensation reserve                                                               11                    9,625             –
Unappropriated profit                                                                                  648,773          315,603
                                                                                                     6,874,590         5,176,819

Advance Against Issue of Share Capital                                                                   –             1,054,353
                                                                                                     6,874,590         6,231,172

Non-Current Liabilities

Long term finances and morabahas                                                   12                5,306,877         1,370,000
Retention money against project payments                                                               428,268             –
Deferred liabilities                                                                                   485,935           357,198
                                                                                                     6,221,080         1,727,198
Current Liabilities

Current portion of
  - long term finances and morabahas                                                                    60,000            60,000
  - long term loan                                                                                       –                35,429
Short term borrowing                                                                                   354,022             –
Trade and other payables                                                                             2,349,876         1,409,214
Provisions                                                                         13                   73,450             –
                                                                                                     2,837,348         1,504,643
Contingencies and Commitments                                                      14

TOTAL EQUITY AND LIABILITIES                                                                        15,933,018         9,463,013
The annexed notes 1 to 21 form an integral part of these condensed interim financial information.




Asif Qadir                                                                                              Masaharu Domichi
President & Chief Executive                                                                             Director
                                                               5

                                                                                  Nine Months Report – September 2008
                                                   (Amounts in thousand except for earnings per share)
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)
CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008




                                                         Nine Months       Nine Months         Quarter               Quarter
                                                            ended             ended             ended                 ended
                                                Note     Sep. 30, 2008     Sep. 30, 2007     Sep. 30, 2008         Sep. 30, 2007


                                                                                       Rupees

Net sales                                                   6,536,068          4,684,630            2,167,314        1,668,869

Cost of sales                                     15        (5,190,710)       (3,992,226)        (1,733,610)         (1,404,711)


Gross profit                                                1,345,358           692,404              433,704           264,158

Distribution and marketing expenses               16          (229,771)         (179,480)             (80,480)          (63,475)

Administrative expenses                           17          (120,794)          (62,330)             (51,155)          (20,508)

Other operating expenses                                      (269,867)          (36,081)            (137,776)          (14,921)

Other operating income                                        133,027             74,356              44,607            38,117


Operating profit                                              857,953           488,869              208,900           203,371

Finance costs                                                  (21,624)          (31,412)              (6,064)           (9,189)


Profit before taxation                                        836,329           457,457              202,836           194,182

Taxation                                                      (250,263)         (149,899)             (43,865)          (67,966)


Profit for the period                                         586,066           307,558              158,971           126,216


                                                                                        Rupees

Earnings per share - basic and diluted                             1.13             1.46                0.31              0.46


The annexed notes 1 to 21 form an integral part of these condensed interim financial information.




Asif Qadir                                                                                              Masaharu Domichi
President & Chief Executive                                                                             Director




                                                               6

                                                                                  Nine Months Report – September 2008
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)                                                            (Amounts in thousand)
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008



                                                                Issued,      Share     Hedging      Employee Unappropriated      Total
                                                              subscribed    premium    reserve        share      profit
                                                              and paid-up                         Compensation
                                                                 capital                             Reserve
                                                                                              Rupees

Balance as at December 31, 2006 / January 1, 2007             1,780,000        –          –            –          267,827     2,047,827

Issue of Share Capital                                        1,894,000        –          –            –              –       1,894,000

Profit for the nine months ended Sep. 30, 2007                    –            –          –            –          307,558      307,558

Dividends

   - 1st interim - Re. 0.33 per share                              –           –          –            –          (58,740)     (58,740)
   - 2nd interim - Re. 1.00 per share                              –           –          –            –         (178,000)    (178,000)
   - 3rd interim - Re. 0.77 per share                              –           –          –            –         (137,060)    (137,060)

                                                                   –           –          –            –         (373,800)    (373,800)

Balance as at Sep. 30, 2007 / Oct. 1, 2007                    3,674,000        –          –            –          201,585     3,875,585

Profit for the three months ended December 31, 2007                –           –          –            –          114,018      114,018

Issue of Share Capital                                          762,000     457,200       –            –              –       1,219,200

Share issuance cost, net                                           –        (31,984)      –            –              –         (31,984)

Balance as at December 31, 2007 / January 1, 2008 (audited)   4,436,000     425,216       –            –          315,603     5,176,819


Final dividend for the year ended December 31, 2007 -
   Re. 0.54 per share                                             –            –          –            –         (252,896)    (252,896)

Profit for the nine months ended Sep. 30, 2008                     –           –          –            –          586,066      586,066

Issue of Share Capital                                          767,677     614,141       –            –              –       1,381,818

Share issuance cost, net                                           –        (65,354)      –            –              –         (65,354)

Effective portion of changes in
   fair value of cash flow hedge - net                             –           –         38,512        –              –         38,512

ESOS Compensation Reserve                                         –            –          –            9,625          –          9,625

Balance as at September 30, 2008                              5,203,677     974,003      38,512        9,625      648,773     6,874,590


The annexed notes 1 to 21 form an integral part of these condensed interim financial information.




Asif Qadir                                                                                                 Masaharu Domichi
President & Chief Executive                                                                                Director
                                                                  7

                                                                                       Nine Months Report – September 2008
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)                                                  (Amounts in thousand)
CONDENSED INTERIM CASH FLOW STATEMENT (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008




                                                                                       Nine months                 Nine months
                                                                                          ended                       ended
                                                                   Note                Sep. 30, 2008               Sep. 30, 2007
                                                                                                         Rupees
CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations                                     18                     1,405,248)                 1,031,498)
Finance costs paid                                                                          (54,270)                   (47,718)
Long term loans and advances                                                                (22,661)                  (145,638)
Retention money against project payments                                                    428,268)                     –)
Provisions                                                                                   73,450)                     –)
Income tax paid                                                                            (129,862)                   (21,282)

Net cash inflow from operating activities                                                 1,700,173)                  816,860)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment                                               (7,665,156)                (1,748,516)
Purchases of intangible assets                                                                 (993)                    (3,926)
Proceeds on disposal of operating assets                                                      1,236)                     1,540)
Short term investments - net                                                              1,705,862                      –
Return on balances with banks / TFC / US Dollar Bonds                                        43,253)                    46,468)
                                                                                                    )                         )
Net cash outflow from investing activities                                              (5,915,798))                (1,704,434)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term finance                                                           5,306,877)                 1,160,000)
Repayment of long term finance                                                           (1,340,000)                   (50,000)
Proceeds from issue of Share Capital                                                        327,465)                 1,894,000)
Share issuance cost - net                                                                   (65,354)                     –
Repayments of:
  - long term finances and morabahas                                                         (30,000)                    –
  - long term loan                                                                           (35,429)                  (69,737)
Short term borrowings                                                                       354,022                   (376,570)
Dividend paid                                                                              (252,896)                  (422,038)

Net cash inflow from financing activities                                                 4,264,685                 2,135,655

Net increase in cash and cash equivalents                                                    49,060)                 1,248,081)
Cash and cash equivalents at beginning of the period                                        200,844)                   432,315)

Cash and cash equivalents at end of the period                                              249,904)                 1,680,396)


The annexed notes 1 to 21 form an integral part of these condensed interim financial information.




Asif Qadir                                                                                              Masaharu Domichi
President & Chief Executive                                                                             Director
                                                               8

                                                                                  Nine Months Report – September 2008
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)                                                       (Amounts in thousand)
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008




1.    LEGAL STATUS AND OPERATIONS

1.1   The Company was incorporated in Pakistan in 1997 under the Companies Ordinance 1984. In July 2008, the Company
      was listed on Karachi Stock Exchange.

1.2   The Company is a subsidiary of Engro Chemical Pakistan Limited. The address of its registered office is 1st Floor, Bahria
      Complex I, M. T. Khan Road, Karachi. The Company’s principal activity is to manufacture, market and sell Poly Vinyl
      Chloride (PVC), PVC compounds and other related chemicals.

1.3   In 2006, the Company commenced work on its expansion plan in respect of its existing capacity and backward integration
      project (the Project). The project’s total cost is estimated at US $ 240,000, which includes construction of Ethylene Di
      Chloride, Vinyl Chloride Monomer (VCM), Chlor Alkali and Power Utilities plants. The new plants are being setup adjacent
      to the Company’s existing PVC facilities in the Port Qasim Industrial Area.

2.    STATEMENT OF COMPLIANCE

      These condensed interim financial statements are unaudited and are being submitted to the shareholders in accordance
      with section 245 of the Companies Ordinance, 1984 and have been presented in condensed form in accordance with the
      requirements of International Accounting Standard 34 – ‘Interim Financial Reporting’.

3.    ACCOUNTING POLICIES

      The accounting policies adopted in the preparation of these condensed interim financial statements are the same as those
      applied in the preparation of the audited annual financial statements of the Company for the year ended December 31,
      2007, except for the following accounting policy in respect of derivative financial instruments and hedging as well as
      employee share option scheme adopted during the period ended September 30, 2008.

      Derivatives financial instruments and hedging activities

      Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
      remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is
      designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain
      derivatives as either:

      (a)    hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or

      (b)    hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction
             (cash flow hedge).

      The overall risk management strategy includes reasons for undertaking hedge transactions and entering into derivatives.
      The objectives of this strategy are to:

      –      minimize foreign currency exposure’s impact on the Company’s financial performance; and

      –      protect the Company’s cash flow from adverse movements in foreign currency exchange rates.

      (a)    Fair value hedge

                 Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in
                 the profit and loss account, together with any changes in the fair value of the hedged asset or liability that are
                 attributable to the hedged risk.




                                                                9

                                                                                     Nine Months Report – September 2008
     (b)    Cash flow hedge                                                                                (Amounts in thousand)

                On an ongoing basis, the Company assesses whether each derivative continues to be highly effective in offsetting
                changes in the cash flows of hedged items. If and when a derivative is no longer expected to be highly effective,
                hedge accounting is discontinued.

                The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
                is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the profit
                and loss account or the cost of the related non-financial asset (for e.g. inventory or fixed assets), as applicable.

                Amounts accumulated in equity are reclassified to the profit and loss account in the periods when the hedged
                item affects profit or loss account i.e. when the transaction occurs. The gain or loss relating to the effective
                portion of interest rate swaps hedging variable rate borrowings is recognised in the profit and loss account or
                the cost of the related asset for which the borrowing is being utilised. However, when the forecast transaction
                that is hedged results in the recognition of a non-financial asset (for e.g. inventory or fixed assets) the gains
                and losses previously deferred in equity are transferred from equity and included in the initial measurement of
                the cost of the asset. The deferred amounts are ultimately recognised in cost of goods sold in case of inventory
                or in depreciation in case of fixed assets.

     When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
     cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction
     is ultimately recognised in the profit and loss account or the cost of the related non-financial asset (for e.g. inventory or
     fixed assets) as applicable. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that
     was reported in equity is immediately transferred to the profit and loss account.

     The fair values of various derivative instruments used for hedging purposes are disclosed in note 10. Movements on the
     hedging reserve are shown in statement of changes in equity. The full fair value of a hedging derivative is classified as a
     non-current asset or liability when the remaining maturity of hedged item is more than 12 months, and as a current asset
     or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a
     current asset or liability.

     Employees’ Share Option Scheme

     The grant date fair value of equity settled share based payments to employees is initially recognised in the balance sheet
     as deferred employee compensation expense with a consequent credit to equity as deferred employee compensation reserve.

     The fair value determined at the grant date of the equity settled share based payments is recognised as an employee
     compensation expense on a straight line basis over the vesting period.

     When an unvested option lapses by virtue of an employee not conforming to the vesting conditions after recognition of an
     employee compensation expense in profit or loss, employee compensation expense in profit or loss will be reversed equal
     to the amortised portion with a corresponding effect to deferred employee compensation reserve in the balance sheet.

     When a vested option lapses on expiry of the exercise period, employee compensation expense already recognised in the
     profit or loss is reversed with a corresponding reduction to deferred employee compensation reserve in the balance sheet.

     When the options are exercised, deferred employee compensation reserve relating to these options is transferred to share
     capital and share premium account. An amount equivalent to the face value of related shares is transferred to share capital.
     Any amount over and above the share capital is transferred to share premium account.

4.   PROPERTY, PLANT AND EQUIPMENT
                                                                                            Unaudited          Audited
                                                                                          September 30,      December 31,
                                                                                              2008               2007
                                                                                                      Rupees

     Operating fixed assets - note 4.1 and 4.2                                                 2,018,951               2,133,053
     Capital work-in-progress
       - the project - note 4.3`                                                             10,363,144                2,565,400
       - others                                                                                  24,734                   10,308
                                                                                             10,387,878                2,575,708
                                                                                             12,406,829                4,708,761


                                                               10

                                                                                     Nine Months Report – September 2008
                                                                                                         (Amounts in thousand)
4.1.   Capitalisation of operating assets during
       the period / year were as follows:
                                                                                               Unaudited          Audited
                                                                                             September 30,      December 31,
                                                                                                 2008               2007
                                                                                                         Rupees

       Leasehold land                                                                                3,346              8,550
       Furniture, fittings and office equipment                                                     13,728             12,660
       Vehicles                                                                                     11,349             18,770
                                                                                                    28,423             39,980

4.2    During the period:

       – assets costing Rs.1,725, having a net book value of Rs. 1,351, were disposed off for Rs. 1,236; and

       – assets costing Rs. 3,298 having a net book value of Rs. 243, were written off, resulting due to an independent physical
       verification exercise carried out during the period.

4.3    Cost capitalised todate relating to the Project:


                                                                                               Unaudited           Audited
                                                                                             September 30,       December 31,
                                                                                                 2008                2007
                                                                                                          Rupees

       Plant and machinery                                                                      9,171,235            1,923,749
       Building on leasehold land                                                                 140,084             100,650
       Other ancillary costs - note 4.3.1                                                         778,954              341,736
       Ethylene pipeline and power cables                                                          56,615               30,250
       Water and gas pipelines                                                                    216,256              169,015
                                                                                               10,363,144            2,565,400


4.3.1 Other ancillary costs, directly attributable to the Project, capitalised todate, are as follows:
                                                                                              Unaudited            Audited
                                                                                             September 30,       December 31,
                                                                                                 2008                2007
                                                                                                          Rupees

       Salaries, wages and benefits                                                                245,376             92,989
       Legal and professional charges                                                               46,371             21,945
       Training and travelling expense                                                              70,166             45,590
       Borrowing costs, including mark-up on finances
          capitalised                                                                              301,320             134,431
       Bank Charges                                                                                 31,825               1,766
       Depreciation                                                                                 11,259               5,269
       Others                                                                                       72,637              39,746
                                                                                                   778,954             341,736


                                                                  11

                                                                                        Nine Months Report – September 2008
                                                                                                        (Amounts in thousand)
5.    INTANGIBLE ASSETS

      Additions made during the period amounted to Rs. 1,055 (December 31, 2007: Rs. 2,785).

                                                                                          Unaudited                Audited
                                                                                        September 30,            December 31,
                                                                                            2008                     2007
                                                                                                        Rupees
6.    STOCK-IN-TRADE

      Raw and packing materials                                                              691,486                 256,277
      Work-in-progress                                                                        18,178                  22,861
      Finished goods
         - own manufactured product                                                          584,473                 640,170
         - purchased product                                                                  –                          147
                                                                                             584,473                 640,317
                                                                                           1,294,137                 919,455

7.    LOANS, ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES

      Included in other receivables is an amount representing custom duty refundable of Rs. 18,043. During the period, the
      Collector of Customs issued an order dated April 11, 2008, disposing off the refund applications filed by the Company for
      the refund of this duty paid at import stage. The Company based on the advice of its tax consultant, has filed an appeal
      before the Collector of Customs (Appeals), Karachi dated May 31, 2008 against the aforementioned order. However, the
      Company on basis of prudence has made provision against the aforementioned refundable amount in these financial
      statements.
                                                                                         Unaudited                 Audited
                                                                                       September 30,             December 31,
                                                                                           2008                      2007
                                                                                                        Rupees
8.    CASH AND BANK BALANCES

      Cash in hand                                                                                935                     834
      Cash at bank on
        - current accounts                                                                     8,598                  97,072
        - saving accounts                                                                    240,371                 102,938
                                                                                             248,969                 200,010
                                                                                             249,904                 200,844



9.    SHARE CAPITAL

      During the period the Company issued 76,767,677 ordinary shares of Rs. 10 each at a subscription price of Rs.18 per
      share to various investors. Of this JS Global Capital Limited (JS Global), one of the investors, made available 50 million
      ordinary shares out of its total shareholding in the Company to the general public through listing at the Karachi Stock
      Exchange under an Offer for Sale dated May 31, 2008. The Company was listed on Karachi Stock Exchange in July 2008.

10.   HEDGING RESERVE

      Hedging reserve mainly represents the effective portion of changes in the fair values of designated cash flow hedges.

      During the period, the Company purchased forward exchange contracts having various maturity dates to hedge its Dollar
      currency exposure of US $ 71,152 representing the anticipated cash outflows for the Project payments and financing.



                                                              12

                                                                                   Nine Months Report – September 2008
                                                                                                         (Amounts in thousand)
       At period end, the Company owned forward exchange contracts to purchase US $ 30,000 at various maturity
       dates. The fair values of these contracts amounted to Rs. 81,000 at period end.

11.    EMPLOYEES’ SHARE COMPENSATION RESERVE

       The employees' share option scheme (the Scheme) was originally approved by the shareholders in their Extraordinary
       General Meeting (EGM) held on October 8, 2007. According to the scheme, senior employees who are critical to the
       business operations, shall be granted options to purchase five million three hundred thousand newly issued ordinary shares
       at an exercise price of Rs. 22 per ordinary share. The number of options granted is calculated in accordance with the ability
       and criticality of employee to the business, subject to approval by the Compensation Committee. The options carry neither
       right to dividends nor voting rights. Vesting period shall start from the date of grant and shall end on December 31, 2009,
       where after the options can be exercised within a period of two years. Future employees who join by October 31, 2008
       and those who are promoted by the same date, may also be granted options, however, the length of vesting period shall
       be the same as enjoyed by first recipients of options.

       During the period, the Company proposed certain changes relating to "date of grant" in the originally approved scheme.
       In September 2008, Securities and Exchange Commission of Pakistan approved the amendment as approved by shareholders
       in their EGM held on June 27, 2008.

       The effect of grant of share options has been incorporated in these condensed interim financial statements. The amounts
       recognised in profit and loss account and balance sheet are as follows:
                                                                                                                (Rupees)
       Employees’ share option compensation reserve and deferred employee
       compensation expense recognised on grant date                                                            9,625

       Less: Amortisation for the period October 8, 2007 to
       September 30, 2008                                                                                           4,278

       Closing balance as on September 30, 2008                                                                     5,347

       The Company used Black Scholes pricing model to calculate the fair value of share options at the grant date.
       The fair value of the share options as per the model and underlying assumptions are as follows:

       Total number of share options issued                                                                         5,175
       Fair value of the share options at grant date                                                                Rs. 1.86
       Share price at grant date                                                                                    Rs. 18
       Exercise price                                                                                               Rs. 22
       Annual Volatility                                                                                            15.13%
       Risk free rate used                                                                                          10.12%


12.    LONG TERM FINANCES AND MORABAHAS

12.1   The Company entered into a Syndicated Term Finance Agreement on October 12, 2007 for Rs. 5,700,000.
       The facility is repayable in seventeen semi-annual installments commencing 30 months after May 9, 2008, the
       effective date. The facility carries mark-up at the rate of 2.25% over six months Karachi Inter Bank Offered Rate
       (KIBOR) and monitoring fee of Rs. 700 per annum. Commitment fee at the rate of 0.15% per annum is
       also payable on that part of the finance that has not been drawn. During the period, Company has drawn down
       Rs. 3,200,000 against the facility.

       Transaction costs amounting to Rs. 108,311 have been netted-off against the drawn amount of finance, as per policy.



12.2   During the period, on February 15, 2008, the Company repaid the bridge finance facility amounting to Rs. 1,240,000.
       This facility was arranged to meet the intermediate funding requirements of the Project.

12.3   The Company, effective June 21, 2007, entered into a loan agreement with the International Finance Corporation
       (IFC) consisting of:

       i) Loan A, amounting to US $ 30,000; and

       ii) Loan B, amounting to US $ 30,000.

       The loans, obtained to finance the Project referred to in note 1.3, carry an interest at the rate 2.6% to 3% above 6 months
       LIBOR with a commitment fee at the rate of 0.50% per annum on that part of the loan that has not been disbursed. The
       loans are to be repaid in fifteen half yearly installments commencing from June 15, 2010.
                                                                13

                                                                                      Nine Months Report – September 2008
                                                                                                   (Amounts in thousand)
13.    PROVISIONS

       The Company has paid Rs. 73,450 on account of Special Excise Duty (SED) on import of plant and machinery for the
       Project. The Company has adjusted this SED in the monthly sales tax returns against SED on goods produced and sold
       by the Company. The Company has approached Federal Board of Revenue (FBR) to obtain clarification in respect of the
       adjustment of SED made by the Company in monthly sales tax return. Pending such clarification, the Company,
       based on prudence, has made provision of the aforementioned SED in these financial statements.

14.    CONTINGENCIES AND COMMITMENTS

14.1   Commitments

       –      Performance guarantees issued by banks on behalf of the Company as at September 30, 2008 amounted
              to Rs. 264,281 (December 31, 2007: Rs. 301,431).

       –      Contracts signed in respect of capital expenditure for the Project, but not executed as at September 30, 2008
              amounted to Rs. 3,706,784 (December 31, 2007 Rs. 7,897,193).

                                                        Nine Months       Nine Months      Quarter            Quarter
                                                           ended             ended           ended             ended
                                                        Sep. 30, 2008     Sep. 30, 2007 Sep. 30, 2008       Sep. 30, 2007
15.    COST OF SALES                                                                  Rupees

       Opening stock of work-in-progress                         22,861          16,051           14,018          13,553


       Raw and packing materials consumed                   4,656,691         3,171,583        1,844,959       1,180,594
       Salaries, wages and staff welfare                       75,752            78,587           28,301          28,470
       Fuel, power and gas                                    113,566           100,072           46,388          33,103
       Repairs and maintenance                                  9,663            12,505            4,932           1,630
       Depreciation                                           125,879           126,508           41,932          42,303
       Consumable stores                                       14,191            22,131            5,351           3,938
       Purchased services                                      14,730            16,558            5,022           8,476
       Storage and handling                                   100,570            94,344           36,332          34,413
       Training and travelling expenses                         6,469             6,879            3,973           2,750
       Communication, stationery and other
          office expenses                                       1,890             1,183            1,157             299
       Insurance                                                7,306            11,637            2,443           3,328
       Other expenses                                           2,386             4,180              190             –
                                                                                                                     291
                                                            5,129,093         3,646,167        2,020,980       1,339,595

       Closing stock of work-in-progress                      (18,178)          (16,175)         (18,178)        (16,175)

       Cost of goods manufactured                           5,133,776         3,646,043        2,016,820       1,336,973

       Opening stock of finished goods                        640,170           588,065          300,173        310,125
       Closing stock of finished goods                       (584,473)         (242,387)        (584,473)      (242,387)

                                                                 55,697         345,678        (284,300)          67,738


       Cost of goods sold - own manufactured product        5,189,473         3,991,721        1,732,520       1,404,711
                          - purchased product                   1,237               505            1,089            –

                                                            5,190,710         3,992,226        1,733,609       1,404,711




                                                            14

                                                                                Nine Months Report – September 2008
                                                                                                          (Amounts in thousand)

                                                            Nine Months         Nine Months       Quarter            Quarter
                                                               ended               ended           ended              ended
                                                            Sep. 30, 2008       Sep. 30, 2007 Sep. 30, 2008        Sep. 30, 2007
                                                                                            Rupees

16.    DISTRIBUTION AND
       MARKETING EXPENSES

       Salaries, wages and staff welfare                             31,537           28,796              12,457        10,896
       Advertising, sales promotion and
          entertainment                                            21,652             16,784               5,940         6,332
       Product transportation and handling                        152,665            112,692              54,134        38,889
       Rent, rates and taxes                                        3,569              3,454               1,818           851
       Purchased services                                           6,649              4,875               2,302         1,393
       Insurance                                                      646                219                 292            89
       Depreciation                                                 3,090              3,014               1,098           972
       Training and travelling expenses                             6,126              5,574               2,112         1,937
       Communication, stationery and other
          office expenses                                             1,817             2,181                (9)         1,196
       Other expenses                                                 2,020             1,891               336            920

                                                                  229,771            179,480              80,480        63,475

17.    ADMINISTRATIVE EXPENSES

       Salaries, wages and staff welfare                             68,170           35,060              28,520        11,802
       Rent, rates and taxes                                          9,414            6,115               3,930         2,307
       Purchased services                                             8,731            5,284               4,474         1,926
       Insurance                                                        152               36                 108            12
       Depreciation - note 17.1                                       4,374            2,813               1,349         1,013
       Amortisation                                                     –                –                   –             –
       Training and travelling expenses                              13,506            7,606               5,100         2,117
       Communication, stationery and
          other office expenses                                       7,264             3,476              3,983         1,156
       Other expenses                                                 9,183             1,940              3,691           175

                                                                  120,794             62,330              51,155       20,508

17.1   Expenses directly attributable to the Project have been capitalised, as referred to in note 4.3.




                                                                15

                                                                                      Nine Months Report – September 2008
                                                                                         (Amounts in thousand)

                                                                           Nine Months              Nine Months
                                                                              ended                    ended
                                                                           Sep, 30, 2008            Sep, 30, 2007
                                                                                           Rupees

18.   CASH GENERATED FROM OPERATIONS



      Profit before taxation                                                 836,329                   457,457

      Adjustments for non cash charges
      and other items:

      Provision for staff retirement and other service benefits                 8,336                    3,591
      Depreciation                                                            132,856                  132,176
      Employee share compensation expenses                                      9,625                      –
      Amortisation                                                                488                        49
      Income on deposits / TFC / US Dollar Bonds                              (42,434)                 (49,033)
      Finance costs                                                            21,624                   31,412
      Loss on disposal/ write off of operating assets                            (358)                    (176)
      Operating assets written off                                                243                      –
      Working capital changes - note 18.1                                     438,539                  456,022
                                                                            1,405,248                1,031,498

18.1 Working capital changes

      Decrease / (Increase) in current assets

      Stores and spares                                                      (10,560)                   (2,815)
      Stock-in-trade                                                        (374,682)                  485,122
      Trade debts                                                            (72,490)                  (67,573)

      Loans, advances, deposits, prepayments and
       other receivables (net)                                                89,852                    13,254
                                                                            (367,880)                  427,988

      Increase in current liabilities

      Trade and other payables                                               806,419                    28,034
                                                                             438,539                   456,022




                                                                  16

                                                                       Nine Months Report – September 2008
                                                                                                    (Amounts in thousand)
19.   TRANSACTIONS WITH RELATED PARTIES

      Sales, purchases and other transactions with related parties are carried out on commercial terms and conditions.
      Following transactions were carried out with related parties during the period:

                                                                                       Nine Months              Nine Months
                                                                                          ended                    ended
                                                                                       Sep. 30, 2008            Sep. 30, 2007

                                                                                                       Rupees

      Holding Company
      Purchase of services                                                             9,971                     3,688
      Sale of services                                                                 1,831                     2,277
      Sale of steam and electricity                                                   25,397                    26,816
      Use of operating assets                                                            765                     1,639
      Pension fund contribution                                                        2,208                     1,620
      Provident fund contribution                                                      3,322                     2,430

      Associated Companies
      Purchase of goods                                                            4,707,808                3,240,723
      Sale of goods                                                                   78,648                      111

      Subsidiary Company
      Purchase of goods                                                                1,089                       –
      Reimbursements                                                                      23                       –

      Related parties by virtue of
      common directorship
      Purchase of goods                                                                1,577                        –
      Purchase of services                                                           110,152                    94,816
      Sale of services                                                                 1,256                       –
      Insurance                                                                          458                     1,443
      Directors fee                                                                       10                       –
      Reimbursements                                                                      71                       –

      Key management personnel
      Managerial remuneration                                                         85,824                    63,605
      Retirement benefits                                                              5,737                     4,201
      Other benefits                                                                  45,598                    29,588

      Number of employees                                                                 45                        37
20.   DATE OF AUTHORISATION FOR ISSUE

      These condensed interim financial statements were authorised for issue on October 21, 2008 by the Board of Directors
      of the Company.

21.   CORRESPONDING FIGURES

      Corresponding figures in the balance sheet and statement of changes in equity comprise of balances as per the annual
      audited financial statements for the year ended December 31, 2007, whereas corresponding figures in the profit and loss
      account and cash flow statement comprise of balances of comparable period as per the condensed interim financial
      statements for the nine months ended September 30, 2007.




      Asif Qadir                                                                                 Masaharu Domichi
      President & Chief Executive                                                                Director
                                                             17

                                                                                 Nine Months Report – September 2008
and its subsidiary company

UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008




                     18
                                                                                                       (Amounts in thousand)
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)
AND ITS SUBSIDIARY COMPANY
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)
AS AT SEPTEMBER 30, 2008                                                                                      (Audited)
                                                                                              September 30, December 31,
                                                                                 Note             2008          2007
ASSETS                                                                                                       Rupees
Non-Current Assets

Property, plant and equipment                                                       4               12,406,829        4,708,761
Intangible assets                                                                   5                    7,419            6,914
Long term loans and advances                                                                           119,633           96,971
                                                                                                    12,533,881        4,812,646
Current Assets

Stores and spares                                                                                      106,279           95,719
Stock-in-trade                                                                      6                1,294,292          920,139
Trade debts - considered good, secured                                                                 250,962          178,472
Loans, advances, deposits, prepayments and other receivables                        7                  166,576          256,944
Tax recoverable                                                                                         36,230           37,911
Derivative financial instrument                                                                         39,750            –
Short term investments                                                                               1,208,642        2,914,504
Cash and bank balances                                                              8                  300,876          247,856
                                                                                                     3,403,607        4,651,545

TOTAL ASSETS                                                                                        15,937,488        9,464,191

EQUITY AND LIABILITIES

Share capital                                                                       9                5,203,677        4,436,000
Share premium                                                                                          974,003          425,216
Hedging reserve                                                                    10                   38,512            –
Compensation reserve                                                               11                    9,625            –
Unappropriated profit                                                                                  652,892         316,412
                                                                                                     6,878,709        5,177,628

Advance Against Issue of Share Capital                                                                  –             1,054,353
                                                                                                    6,878,709         6,231,981

Non-Current Liabilities

Long term finances and morabahas                                                   12                5,306,877        1,370,000
Retention money against project payments                                                               428,268            –
Deferred liabilities                                                                                   485,934          357,198
                                                                                                     6,221,079        1,727,198
Current Liabilities

Current portion of
  - long term finances and morabahas                                                                    60,000           60,000
  - long term loan                                                                                       –               35,429
Short term borrowing                                                                                   354,022            –
Trade and other payables                                                                             2,350,228        1,409,583
Provisions                                                                         13                   73,450            –
                                                                                                     2,837,700        1,505,012
Contingencies and Commitments                                                      14

TOTAL EQUITY AND LIABILITIES                                                                        15,937,488        9,464,191

The annexed notes 1 to 21 form an integral part of these condensed interim financial information.




Asif Qadir                                                                                             Masaharu Domichi
President & Chief Executive                                                                            Director
                                                              19

                                                                                  Nine Months Report – September 2008
                                                   (Amounts in thousand except for earnings per share)
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)
AND ITS SUBSIDIARY COMPANY
CONDENSED CONSOLIDATED INTERIM PROFIT AND LOSS ACCOUNT (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008



                                                         Nine Months       Nine Months         Quarter              Quarter
                                                            ended             ended             ended                ended
                                                Note     Sep. 30, 2008     Sep. 30, 2007     Sep. 30, 2008        Sep. 30, 2007


                                                                                       Rupees

Net sales                                                   6,536,068         4,691,457          2,167,314          1,668,869

Cost of sales                                     15        (5,189,061)       (3,999,392)        (1,732,521)        (1,404,710)


Gross profit                                                1,347,007           692,065             434,793           264,159

Distribution and marketing expenses               16         (229,771)          (179,664)            (80,480)         (63,475)

Administrative expenses                           17         (120,892)           (62,508)            (51,155)         (20,508)

Other operating expenses                                     (271,078)           (36,081)           (137,776)         (14,921)

Other operating income                                        135,999            74,356              45,466            38,117


Operating profit                                              861,265           488,168             210,848           203,372

Finance costs                                                  (21,626)          (31,419)             (6,065)           (9,190)


Profit before taxation                                        839,639           456,749             204,783           194,182

Taxation                                                     (250,263)          (149,933)            (43,865)         (67,996)


Profit for the period                                         589,376           306,816             160,918           126,186


                                                                                        Rupees

Earnings per share - basic and diluted                             1.14             1.45               0.31              0.46


The annexed notes 1 to 21 form an integral part of these condensed interim financial information.




Asif Qadir                                                                                             Masaharu Domichi
President & Chief Executive                                                                            Director




                                                              20

                                                                                  Nine Months Report – September 2008
                                                                                                              (Amounts in thousand)
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)
AND ITS SUBSIDIARY COMPANY
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008


                                                                Issued,      Share     Hedging       ESOS      Unappropriated      Total
                                                              subscribed    premium    reserve    Compensation     profit
                                                              and paid-up                           Reserve
                                                                 capital
                                                                                              Rupees

Balance as at December 31, 2006 / January 1, 2007             1,780,000        –          –            –          268,530       2,048,530

Rights Issue                                                  1,894,000        –          –            –              –         1,894,000

Profit for the nine months ended Sep. 30, 2007                    –            –          –            –          306,816        306,816

Dividends

   - 1st interim - Re. 0.33 per share                              –           –          –            –          (58,740)       (58,740)
   - 2nd interim - Re. 1.00 per share                              –           –          –            –         (178,000)      (178,000)
   - 3rd interim - Re. 0.77 per share                              –           –          –            –         (137,060)      (137,060)

                                                                   –           –          –            –         (373,800)      (373,800)

Balance as at Sep. 30, 2007 / Oct. 1, 2007                    3,674,000        –          –            –          201,546       3,875,546

Profit for the three months ended December 31, 2007                –           –          –            –          114,866        114,866

Issue of Share Capital                                          762,000     457,200       –            –              –         1,219,200

Share issuance cost, net                                           –        (31,984)      –            –              –           (31,984)

Balance as at December 31, 2007 / January 1, 2008 (audited)   4,436,000     425,216       –            –          316,412       5,177,628


Final dividend for the year ended December 31, 2007 -
   Re. 0.54 per share                                             –            –          –            –         (252,896)      (252,896)

Profit for the nine months ended Sep. 30, 2008                     –           –          –            –          589,376        589,376

Issue of Share Capital                                          767,677     614,141       –            –              –         1,381,818

Share issuance cost, net                                           –        (65,354)      –            –              –           (65,354)

Effective portion of changes in
   fair value of cash flow hedge - net                             –           –         38,512        –              –           38,512

ESOS Compensation Reserve                                         –            –          –            9,625          –            9,625

Balance as at September 30, 2008                              5,203,677     974,003      38,512        9,625      652,892       6,878,709


The annexed notes 1 to 21 form an integral part of these condensed interim financial information.




Asif Qadir                                                                                                 Masaharu Domichi
President & Chief Executive                                                                                Director
                                                                 21

                                                                                       Nine Months Report – September 2008
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)                                                  (Amounts in thousand)
AND ITS SUBSIDIARY COMPANY
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008




                                                                                       Nine Months                 Nine Months
                                                                                          ended                       ended
                                                                   Note                Sep. 30, 2008               Sep. 30, 2007
                                                                                                         Rupees
CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations                                     18                     1,406,237)                 1,038,214)
Finance costs paid                                                                          (54,270)                   (47,725)
Long term loans and advances                                                                (22,661)                  (145,641)
Retention money against project payments                                                    428,268)                     –)
Provisions                                                                                   73,450)                     –)
Income tax paid                                                                            (129,862)                   (21,278)

Net cash inflow from operating activities                                                 1,701,162)                  823,570)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment                                               (7,665,156)                (1,748,519)
Purchases of intangible assets                                                                 (993)                    (3,926)
Proceeds on disposal of operating assets                                                      1,236)                     1,540)
Short term investments - net                                                              1,705,861                      –
Return on balances with banks / TFC / US Dollar Bonds                                        46,225)                    46,468)
                                                                                                    )                         )
Net cash outflow from investing activities                                              (5,912,827))                (1,704,437)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term finance                                                           5,306,877)                 1,160,000)
Repayment of long term finance                                                           (1,340,000)                   (50,000)
Proceeds from issue of Share Capital                                                        327,465)                 1,894,000)
Share issuance cost - net                                                                   (65,354)                     –
Repayments of:
  - long term finances and morabahas                                                         (30,000)                    –
  - long term loan                                                                           (35,429)                  (69,737)
Short term borrowings                                                                       354,022                   (376,570)
Dividend paid                                                                              (252,896)                  (422,038)

Net cash inflow from financing activities                                                 4,264,685                 2,135,655

Net increase in cash and cash equivalents                                                    53,020)                 1,254,788)
Cash and cash equivalents at beginning of the period                                        247,856)                   471,897)

Cash and cash equivalents at end of the period                                              300,876)                 1,726,685)


The annexed notes 1 to 21 form an integral part of these condensed interim financial information.




Asif Qadir                                                                                              Masaharu Domichi
President & Chief Executive                                                                             Director
                                                              22

                                                                                  Nine Months Report – September 2008
ENGRO POLYMER & CHEMICALS LIMITED
(Formerly ENGRO ASAHI POLYMER & CHEMICALS LIMITED)                        (Amounts in thousand)
AND ITS SUBSIDIARY COMPANY
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008



1.    LEGAL STATUS AND OPERATIONS

1.1   The Group consists of Engro Polymer and Chemicals Limited (Formerly Engro Asahi Polymer and Chemicals Limited) (the
      Company) and its wholly owned subsidiary company, Engro Polymer Trading (Private) Limited [Formerly Engro Asahi
      Trading (Private) Limited].

1.2   The Company is a subsidiary of Engro Chemical Pakistan Limited. The address of its registered office is 1st Floor, Bahria
      Complex I, M. T. Khan Road, Karachi. The Company’s principal activity is to manufacture, market and sell Poly Vinyl
      Chloride (PVC), PVC compounds and other related chemicals.

1.3   In 2006, the Company commenced work on its expansion plan in respect of its existing capacity and backward integration
      project (the Project). The project’s total cost is estimated at US $ 240,000, which includes construction of Ethylene Di
      Chloride, Vinyl Chloride Monomer (VCM), Chlor Alkali and Power Utilities plants. The new plants are being setup adjacent
      to the Company’s existing PVC facilities in the Port Qasim Industrial Area.

2.    STATEMENT OF COMPLIANCE

      These condensed interim financial statements are unaudited and are being submitted to the shareholders in accordance
      with section 245 of the Companies Ordinance, 1984 and have been presented in condensed form in accordance with the
      requirements of International Accounting Standard 34 – ‘Interim Financial Reporting’.

3.    ACCOUNTING POLICIES

      The accounting policies adopted in the preparation of these condensed interim financial statements are the same as those
      applied in the preparation of the audited annual financial statements of the Company for the year ended December 31,
      2007, except for the following accounting policy in respect of derivative financial instruments and hedging as well as
      employees share option scheme adopted during the period ended September 30, 2008.

      Derivatives financial instruments and hedging activities

      Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
      remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is
      designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain
      derivatives as either:

      (a)    hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or

      (b)    hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction
             (cash flow hedge).

      The overall risk management strategy includes reasons for undertaking hedge transactions and entering into derivatives.
      The objectives of this strategy are to:

      –      minimize foreign currency exposure’s impact on the Company’s financial performance; and

      –      protect the Company’s cash flow from adverse movements in foreign currency exchange rates.

      (a)    Fair value hedge

                 Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in
                 the profit and loss account, together with any changes in the fair value of the hedged asset or liability that are
                 attributable to the hedged risk.




                                                               23

                                                                                     Nine Months Report – September 2008
                                                                                                           (Amounts in thousand)
     (b)    Cash flow hedge

                On an ongoing basis, the Company assesses whether each derivative continues to be highly effective in offsetting
                changes in the cash flows of hedged items. If and when a derivative is no longer expected to be highly effective,
                hedge accounting is discontinued.

                The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
                is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the profit
                and loss account or the cost of the related non-financial asset (for e.g. inventory or fixed assets), as applicable.

                Amounts accumulated in equity are reclassified to the profit and loss account in the periods when the hedged
                item affects profit or loss account i.e. when the transaction occurs. The gain or loss relating to the effective
                portion of interest rate swaps hedging variable rate borrowings is recognised in the profit and loss account or
                the cost of the related asset for which the borrowing is being utilised. However, when the forecast transaction
                that is hedged results in the recognition of a non-financial asset (for e.g. inventory or fixed assets) the gains
                and losses previously deferred in equity are transferred from equity and included in the initial measurement of
                the cost of the asset. The deferred amounts are ultimately recognised in cost of goods sold in case of inventory
                or in depreciation in case of fixed assets.

     When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
     cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction
     is ultimately recognised in the profit and loss account or the cost of the related non-financial asset (for e.g. inventory or
     fixed assets) as applicable. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that
     was reported in equity is immediately transferred to the profit and loss account.

     The fair values of various derivative instruments used for hedging purposes are disclosed in note 10. Movements on the
     hedging reserve are shown in statement of changes in equity. The full fair value of a hedging derivative is classified as a
     non-current asset or liability when the remaining maturity of hedged item is more than 12 months, and as a current asset
     or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a
     current asset or liability.

     Employees’ Share Option Scheme

     The grant date fair value of equity settled share based payments to employees is initially recognised in the balance sheet
     as deferred employee compensation expense with a consequent credit to equity as deferred employee compensation reserve.

     The fair value determined at the grant date of the equity settled share based payments is recognised as an employee
     compensation expense on a straight line basis over the vesting period.

     When an unvested option lapses by virtue of an employee not conforming to the vesting conditions after recognition of an
     employee compensation expense in profit or loss, employee compensation expense in profit or loss will be reversed equal
     to the amortised portion with a corresponding effect to deferred employee compensation reserve in the balance sheet.

     When a vested option lapses on expiry of the exercise period, employee compensation expense already recognised in the
     profit or loss is reversed with a corresponding reduction to deferred employee compensation reserve in the balance sheet.

     When the options are exercised, deferred employee compensation reserve relating to these options is transferred to share
     capital and share premium account. An amount equivalent to the face value of related shares is transferred to share capital.
     Any amount over and above the share capital is transferred to share premium account.

4.   PROPERTY, PLANT AND EQUIPMENT
                                                                                            Unaudited          Audited
                                                                                          September 30,      December 31,
                                                                                              2008               2007
                                                                                                      Rupees

     Operating fixed assets - note 4.1 and 4.2                                                 2,018,951               2,133,053
     Capital work-in-progress
       - the project - note 4.3`                                                             10,363,144                2,565,400
       - others                                                                                  24,734                   10,308
                                                                                             10,387,878                2,575,708
                                                                                             12,406,829                4,708,761


                                                               24

                                                                                     Nine Months Report – September 2008
                                                                                                         (Amounts in thousand)
4.1.   Capitalisation of operating assets during
       the period / year were as follows:
                                                                                               Unaudited          Audited
                                                                                             September 30,      December 31,
                                                                                                 2008               2007
                                                                                                         Rupees

       Leasehold land                                                                                3,346              8,550
       Furniture, fittings and office equipment                                                     13,728             12,660
       Vehicles                                                                                     11,349             18,770
                                                                                                    28,423             39,980

4.2    During the period:
       – assets costing Rs.1,725, having a net book value of Rs. 1,351, were disposed of for Rs. 1,236; and

       – assets costing Rs. 3,298 having a net book value of Rs. 243, were written off, resulting due to an independent physical
       verification exercise carried out during the period.

4.3    Cost capitalised todate relating to the Project:



                                                                                               Unaudited           Audited
                                                                                             September 30,       December 31,
                                                                                                 2008                2007
                                                                                                          Rupees

       Plant and machinery                                                                      9,171,235           1,923,749
       Building on leasehold land                                                                 140,084            100,650
       Other ancillary costs - note 4.3.1                                                         778,954             341,736
       Ethylene pipeline and power cables                                                          56,615              30,250
       Water and gas pipelines                                                                    216,256             169,015
                                                                                               10,363,144           2,565,400


4.3.1 Other ancillary costs, directly attributable to the Project, capitalised todate, are as follows:
                                                                                              Unaudited            Audited
                                                                                             September 30,       December 31,
                                                                                                 2008                2007
                                                                                                          Rupees

       Salaries, wages and benefits                                                                245,376             92,989
       Legal and professional charges                                                               46,371             21,945
       Training and travelling expense                                                              70,166             45,590
       Borrowing costs, including mark-up on finances
          capitalised                                                                              301,320             134,431
       Bank Charges                                                                                 31,825               1,766
       Depreciation                                                                                 11,259               5,269
       Others                                                                                       72,637              39,746
                                                                                                   778,954             341,736


                                                                  25

                                                                                        Nine Months Report – September 2008
                                                                                                        (Amounts in thousand)
5.    INTANGIBLE ASSETS

      Additions made during the period amounted to Rs. 1,055 (December 31, 2007: Rs. 2,785).

                                                                                          Unaudited              Audited
                                                                                        September 30,          December 31,
                                                                                            2008                   2007
                                                                                                         Rupees
6.    STOCK-IN-TRADE

      Raw and packing materials                                                              691,486                 256,277
      Work-in-progress                                                                        18,178                  22,861
      Finished goods
         - own manufactured product                                                          584,473                 640,170
         - purchased product                                                                     155                     831
                                                                                             584,628                 641,001
                                                                                           1,294,292                 920,139

7.    LOANS, ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES

      Included in other receivables is an amount representing custom duty refundable of Rs. 18,043. During the period, the
      Collector of Customs issued an order dated April 11, 2008, disposing off the refund applications filed by the Company for
      the refund of this duty paid at import stage. The Company based on the advice of its tax consultant, has filed an appeal
      before the Collector of Customs (Appeals), Karachi dated May 31, 2008 against the aforementioned order. However, the
      Company on basis of prudence has made provision against the aforementioned refundable amount in these financial
      statements.
                                                                                         Unaudited                 Audited
                                                                                       September 30,             December 31,
                                                                                           2008                      2007
                                                                                                        Rupees
8.    CASH AND BANK BALANCES

      Cash in hand                                                                                935                     834
      Cash at bank on
        - current accounts                                                                     9,433                  97,252
        - saving accounts                                                                    290,508                 149,770

                                                                                             299,941                 247,022
                                                                                             300,876                 247,856

9.    SHARE CAPITAL

      During the period the Company issued 76,767,677 ordinary shares of Rs. 10 each at a subscription price of Rs.18 per
      share to various investors. Of this JS Global Capital Limited (JS Global), one of the investors, made available 50 million
      ordinary shares out of its total shareholding in the Company to the general public through listing at the Karachi Stock
      Exchange under an Offer for Sale dated May 31, 2008. The Company was listed on Karachi Stock Exchange in July 2008.

10.   HEDGING RESERVE

      Hedging reserve mainly represents the effective portion of changes in the fair values of designated cash flow hedges.

      During the period, the Company purchased forward exchange contracts having various maturity dates to hedge its Dollar
      currency exposure of US $ 71,152 representing the anticipated cash outflows for the Project.



                                                              26

                                                                                   Nine Months Report – September 2008
                                                                                                          (Amounts in thousand)
       At period end, the Company owned forward exchange contracts to purchase US $ 30,000 at various maturity dates matching
       the anticipated payment dates for commitments with respect to the Project. The fair values of these contracts amounted
       to Rs. 81,000 as at period end.

11.    EMPLOYEES’ SHARE COMPENSATION RESERVE

       The employees' share option scheme (the Scheme) was originally approved by the shareholders in their Extraordinary
       General Meeting (EGM) held on October 8, 2007. According to the scheme, senior employees who are critical to the
       business operations, shall be granted options to purchase five million three hundred thousand newly issued ordinary shares
       at an exercise price of Rs. 22 per ordinary share. The number of options granted is calculated in accordance with the ability
       and criticality of employee to the business, subject to approval by the Compensation Committee. The options carry neither
       right to dividends nor voting rights. Vesting period shall start from the date of grant and shall end on December 31, 2009,
       where after the options can be exercised within a period of two years. Future employees who join by October 31, 2008
       and those who are promoted by the same date, may also be granted options, however, the length of vesting period shall
       be the same as enjoyed by first recipients of options.

       During the period, the Company proposed certain changes relating to "date of grant" in the originally approved scheme.
       In September 2008, Securities and Exchange Commission of Pakistan approved the amendment as approved by shareholders
       in their EGM held on June 27, 2008.

       The effect of grant of share options has been incorporated in these condensed interim financial statements. The amounts
       recognised in profit and loss account and balance sheet are as follows:
                                                                                                                (Rupees)
       Employees’ share option compensation reserve and deferred employee
       compensation expense recognised on grant date                                                            9,625

       Less: Amortization for the period October 8, 2007 to
       September 30, 2008                                                                                           4,278

       Closing balance as on September 30, 2008                                                                     5,347

       The Company used Black Scholes pricing model to calculate the fair value of share options at the grant date. The fair
       value of the share options as per the model and underlying assumptions are as follows:

       Total number of share options issued                                                                         5,175
       Fair value of the share options at grant date                                                                Rs. 1.86
       Share price at grant date                                                                                    Rs. 18
       Exercise price                                                                                               Rs. 22
       Annual Volatility                                                                                            15.13%
       Risk free rate used                                                                                          10.12%


12.    LONG TERM FINANCES AND MORABAHAS

12.1   The Company entered into a Syndicated Term Finance Agreement on October 12, 2007 for Rs. 5,700,000.
       The facility is repayable in seventeen semi-annual installments commencing 30 months after May 9, 2008, the
       effective date. The facility carries mark-up at the rate of 2.25% over six months Karachi Inter Bank Offered Rate
       (KIBOR) and monitoring fee of Rs. 700 per annum. Commitment fee at the rate of 0.15% per annum is
       also payable on that part of the finance that has not been drawn. During the period, Company has drawn down
       Rs. 3,200,000 against the facility.

       Transaction costs amounting to Rs. 108,311 have been netted-off against the drawn amount of finance, as per policy.


12.2   During the period, on February 15, 2008, the Company repaid the bridge finance facility amounting to Rs. 1,240,000.
       This facility was arranged to meet the intermediate funding requirements of the Project.

12.3   The Company, effective June 21, 2007, entered into a loan agreement with the International Finance Corporation
       (IFC) consisting of:

       i) Loan A, amounting to US $ 30,000; and

       ii) Loan B, amounting to US $ 30,000.

       The loans, obtained to finance the Project referred to in note 1.3, carry an interest at the rate 2.6% to 3% above 6 months
       LIBOR with a commitment fee at the rate of 0.50% per annum on that part of the loan that has not been disbursed. The
       loans are to be repaid in fifteen half yearly installments commencing from June 15, 2010.
                                                                27

                                                                                      Nine Months Report – September 2008
                                                                                                  (Amounts in thousand)
13.    PROVISIONS

       The Company has paid Rs. 73,450 on account of Special Excise Duty (SED) on import of plant and machinery for the
       Project. The Company has adjusted this SED in the monthly sales tax returns against SED on goods produced and sold
       by the Company. The Company has approached Federal Board of Revenue (FBR) to obtain clarification in respect of the
       adjustment of SED made by the Company in monthly sales tax return. Pending such clarification, the Company,
       based on prudence, has made provision of the aforementioned SED in these financial statements.

14.    CONTINGENCIES AND COMMITMENTS

14.1   Commitments

       –      Performance guarantees issued by banks on behalf of the Company as at September 30, 2008 amounted
              to Rs. 264,281 (December 31, 2007: Rs. 301,431).

       –      Contracts signed in respect of capital expenditure for the Project, but not executed as at September 30, 2008
              amounted to Rs. 3,706,784 (December 31, 2007 Rs. 7,897,193).


                                                        Nine Months       Nine Months       Quarter           Quarter
                                                           ended             ended           ended             ended
                                                        Sep. 30, 2008     Sep. 30, 2007 Sep. 30, 2008       Sep. 30, 2007
 15.    COST OF SALES                                                                 Rupees

       Opening stock of work-in-progress                         22,861          16,051           14,018          13,553


       Raw and packing materials consumed                   4,655,758         3,171,583        1,844,026       1,180,594
       Salaries, wages and staff welfare                       75,752            78,587           28,301          28,470
       Fuel, power and gas                                    113,566           100,072           46,388          33,103
       Repairs and maintenance                                  9,663            12,505            4,932           1,630
       Depreciation                                           125,879           126,508           41,932          42,303
       Consumable stores                                       14,191            22,131            5,351           3,938
       Purchased services                                      14,730            16,558            5,022           8,476
       Storage and handling                                   100,570            94,344           36,332          34,413
       Training and travelling expenses                         6,469             6,879            3,973           2,750
       Communication, stationery and other
          office expenses                                       1,890             1,183            1,157             299
       Insurance                                                7,306            11,637            2,443           3,328
       Provision against special excise duty                      399              –                 –               –
       Other expenses                                           1,987             4,180            1,279             290
                                                            5,128,160         3,646,167        2,021,136       1,339,594

       Closing stock of work-in-progress                      (18,178)          (16,175)         (18,178)         (16,175)

       Cost of goods manufactured                           5,132,843         3,646,043        2,016,976       1,336,972

       Opening stock of finished goods                        640,170           588,065         300,173         310,125
       Closing stock of finished goods                       (584,628)         (242,387)        (584,628)       (242,387)

                                                                 55,542         345,678        (284,455)          67,738


       Cost of goods sold - own manufactured product        5,188,385         3,991,721        1,732,521       1,404,710
                          - purchased product                     676             7,671              –               –

                                                            5,189,061         3,999,392        1,732,521       1,404,710




                                                            28

                                                                                Nine Months Report – September 2008
                                                                                                          (Amounts in thousand)
                                                            Nine Months         Nine Months       Quarter            Quarter
                                                               ended               ended           ended              ended
                                                            Sep. 30, 2008       Sep. 30, 2007 Sep. 30, 2008        Sep. 30, 2007
                                                                                            Rupees

16.    DISTRIBUTION AND
       MARKETING EXPENSES

       Salaries, wages and staff welfare                             31,537           28,796              12,457        10,896
       Advertising, sales promotion and
          entertainment                                            21,652             16,784               5,940         6,332
       Product transportation and handling                        152,665            112,876              54,134        38,889
       Rent, rates and taxes                                        3,569              3,454               1,818           851
       Purchased services                                           6,649              4,875               2,302         1,393
       Insurance                                                      646                219                 292            89
       Depreciation                                                 3,090              3,014               1,098           972
       Training and travelling expenses                             6,126              5,574               2,112         1,937
       Communication, stationery and other
          office expenses                                             1,817             2,181               –            1,196
       Other expenses                                                 2,020             1,891               327            920

                                                                  229,771            179,664              80,480        63,475

17.    ADMINISTRATIVE EXPENSES

       Salaries, wages and staff welfare                             68,170           35,060              28,520        11,802
       Rent, rates and taxes                                          9,414            6,115               3,929         2,307
       Purchased services                                             8,731            5,284               4,474         1,926
       Insurance                                                        250              214                 108            12
       Depreciation - note 17.1                                       4,374            2,813               1,350         1,013
       Amortization                                                     –                –                   –             –
       Training and travelling expenses                              13,506            7,606               5,100         2,117
       Communication, stationery and
          other office expenses                                       7,264             3,476              3,983         1,156
       Other expenses                                                 9,183             1,940              3,691           175

                                                                  120,892             62,508              51,155       20,508

17.1   Expenses directly attributable to the Project have been capitalised, as referred to in note 4.3.




                                                                29

                                                                                      Nine Months Report – September 2008
                                                                                        (Amounts in thousand)

                                                                           Nine Months              Nine Months
                                                                              ended                    ended
                                                                           Sep, 30, 2008            Sep, 30, 2007
                                                                                           Rupees

18.   CASH GENERATED FROM OPERATIONS



      Profit before taxation                                                 839,639                   456,749

      Adjustments for non cash charges
      and other items:

      Provision for staff retirement and other service benefits                8,336                     3,591
      Depreciation                                                           132,856                   132,176
      Employee share compensation expenses                                     9,625                       –
      Amortization                                                               488                         49
      Income on deposits / TFC / US Dollar Bonds                             (45,406)                  (49,033)
      Finance costs                                                           21,624                    31,419
      Loss on disposal of operting assets                                       (358)                     (176)
      Operating assets written off                                               243                       –
      Working capital changes - note 18.1                                    439,189                   463,439

                                                                            1,406,237                1,038,214

18.1 Working capital changes

      Decrease / (Increase) in current assets

      Stores and spares                                                      (10,560)                   (2,816)
      Stock-in-trade                                                        (374,153)                  492,111
      Trade debts                                                            (72,490)                  (67,570)

      Loans, advances, deposits, prepayments and
         other receivables (net)                                              89,990                    16,316

                                                                            (367,213)                  438,041

      Increase in current liabilities

      Trade and other payables                                               806,402                    25,398

                                                                             439,189                  463,439




                                                                  30

                                                                       Nine Months Report – September 2008
                                                                                                    (Amounts in thousand)
19.   TRANSACTIONS WITH RELATED PARTIES

      Sales, purchases and other transactions with related parties are carried out on commercial terms and conditions.
      Following transactions were carried out with related parties during the period:

                                                                                       Nine Months              Nine Months
                                                                                          ended                    ended
                                                                                       Sep. 30, 2008            Sep. 30, 2007

                                                                                                       Rupees

      Holding Company
      Purchase of services                                                             9,971                     3,688
      Sale of services                                                                 1,831                     2,277
      Sale of steam and electricity                                                   25,397                    26,816
      Use of operating assets                                                            765                     1,639
      Pension fund contribution                                                        2,208                     1,620
      Provident fund contribution                                                      3,322                     2,430

      Associated Companies
      Purchase of goods                                                            4,707,808                3,240,723
      Sale of goods                                                                   78,648                      111

      Related parties by virtue of
      common directorship
      Purchase of goods                                                                1,577                        –
      Purchase of services                                                           110,152                    94,816
      Sale of services                                                                 1,256                        –
      Insurance                                                                          458                     1,443
      Directors fee                                                                       10                       –
      Reimbursements                                                                      71                       –

      Key management personnel
      Managerial remuneration                                                         85,824                    63,605
      Retirement benefits                                                              5,737                     4,201
      Other benefits                                                                  45,598                    29,588

      Number of employees                                                                 45                        37

20.   DATE OF AUTHORISATION FOR ISSUE

      These condensed interim financial statements were authorised for issue on October 21, 2008 by the Board of Directors
      of the Company.

21.   CORRESPONDING FIGURES

      Corresponding figures in the balance sheet and statement of changes in equity comprise of balances as per the annual
      audited financial statements for the year ended December 31, 2007, whereas corresponding figures in the profit and loss
      account and cash flow statement comprise of balances of comparable period as per the condensed interim financial
      statements for the nine months ended September 30, 2007.




      Asif Qadir                                                                                 Masaharu Domichi
      President & Chief Executive                                                                Director



                                                             31

                                                                                 Nine Months Report – September 2008

								
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