| Lakson Tobacco Compny Ltd - 2005 |
========================================================================================= BALANCE SHEET AS AT JUNE 30, 2005 ========================================================================================= 2005 2004 Notes (Rupees '000) (Restated) ========================================================================================= ASSETS NON CURRENT ASSETS Fixed assets - Property,plant and equipment 3 2,014,013 1,466,889 - Intangible assets 4 125,073 70,549 2,139,086 1,537,438 Investment in a subsidiary company 5 1 1 Long term loans 6 1,407 2,202 Long term deposits and prepayments 7 14,070 8,628 2,154,564 1,548,269 CURRENT ASSETS Stores and spares 8 102,868 99,126 Stock-in-trade 9 1,104,197 1,466,210 Trade debts 10 769,861 20,657 Loans and advances 11 79,140 32,794 Prepayments 13,368 103,291 Profit accrued 8,813 1,130 Other receivables 12 58,389 75,322 Short term investments 13 - 88,367 Cash and bank balances 14 1,401,661 1,584,244 3,538,297 3,474,141 Total assets 5,692,861 5,022,410 EQUITY AND LIABILITIES Share capital and reserves Share capital 15 513,169 513,169 Reserves 2,041,000 1,403,000 Unappropriated profit 1,591,322 1,177,465 4,145,491 3,093,634 Surplus on revaluation of fixed assets - net of tax 16 8,273 13,656 NON CURRENT LIABILITIES Deferred taxation 17 174,078 157,500 CURRENT LIABILITIES Trade and other payables 18 544,739 639,684 Provision for taxation 384,970 214,843 Sales tax payable 98,304 100,085 Provisions 19 337,006 803,008 1,365,019 1,757,620 Contingencies and commitments 20 - - Total equity and liabilities 5,692,861 5,022,410 ========================================================================================= ========================================================================================= PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2005 ========================================================================================= 2005 2004 Notes (Rupees '000) ========================================================================================= Turnover (including sales tax of Rs 2,736 million (2004: Rs 2.317 million) 20,584,637 17,307,599 Cost of sales 21 16,504,350 14,158,084 Gross profit 4,080,287 3,149,515 Distribution and marketing expenses 22 1,066,809 884,051 Administrative expenses 23 274,986 190,311 1,341,795 1,074,362 2,738,492 2,075,153 Other operating expenses 24 213,117 158,872 2,525,375 1,916,281 Other operating income 25 55,654 31,992 Operating profit 2,581,029 1,948,273 Financial charges 26 9,079 19,166 Profit before taxation 2,571,950 1,929,107 Taxation 27 886,913 651,363 Profit after taxation 1,685,037 1,277,744 Rupees Earnings per share - Basic and diluted 28 32.84 24.90 ========================================================================================= ========================================================================================= CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2005 ========================================================================================= Notes 2005 2004 (Rupees '000) ========================================================================================= CASH FLOW FROM OPERATING ACTIVITIES Cash generated from operations 32 2,155,986 2,759,738 Financial charges paid (9,079) (21,955) Taxes paid (700,454) (452,788) Long-term loans 795 403 Long-term deposits and prepayments (net) (445) 29,870 Net cash inflow from operating activities 1,446,803 2,315,268 CASH FLOW FROM INVESTING ACTIVITIES Fixed capital expenditure (1,128,533) (683,737) Proceeds from sale of fixed assets 18,810 10,143 Purchase of short-term investments - (114,608) Proceeds from sale of investments 88,367 25,044 Income received from short-term deposits 30,252 22,329 Net cash outflow on investing activities (991,104) (740,829) CASH FLOW FROM FINANCING ACTIVITIES Repayment of liabilities against assets subject to finance lease - (161,925) Dividends paid (638,282) (464,057) Net cash outflow on financing activities (638,282) (625,982) Net (decrease) / increase in cash and cash equivalents (182,583) 948,457 Cash and cash equivalents at the beginning of the year 1,584,244 635,787 Cash and cash equivalents at the end of the year 14 1,401,661 1,584,244 =========================================================================================STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2005 ============================================================================================================================================================
Issued,
subscribed Capital Total
and paid-up reserves General Unappro- Sub
capital reserves priated profit Total
Notes (Rupees in '000)
============================================================================================================================================================
Balance as at-July 01, 2003 (as previously reported) 427,641 85,528 1,403,000 2,013 1,490,541 1,918,182
Effect of change in accounting policy 2.3
Final dividend for the year ended June 30, 2003 - - - 363,495 363,495 363,495
Bonus declared for the year ended June 30, 2003 - (85,528) - 85,528 - -
Appropriation for general reserve for the year ended
June 30, 2003 - - (355,000) 355,000 - -
Balance as at July 1, 2003 (restated) 427,641 - 1,048,000 806,036 1,854,036 2,281,677
Final dividend for the year ended June 30, 2003 - - - (363,495) (363,495) (363,495)
Bonus share issue for the year ended June 30, 2003 85,528 (85,528) (85,528) -
Appropriation for general reserve for the year ended
June 30, 2003 - - 355,000 (355,000) - -
Interim dividend for the year ended June 30, 2004 - - (102,634) (102,634) (102,634)
Profit after taxation for the year ended June 30, 2004 - - - 1,277,744 1,277,744 1,277,744
Transfer from surplus on revaluation of fixed assets
to unappropriated profit current period. - - - 342 342 342
Balance as at June 30, 2004 (restated) 513,169 - 1,403,000 1,177,465 2,580,465 3,093,634
Balance as at July 1, 2004 (as previously reported) 513,169 - 2.041,000 637 2,041,637 2,554,806
Effect of change in accounting policy 2.3
Final dividend for the year ended June 30, 2004 - - - 538,828 538,828 538,828
Appropriation of general reserve for the year ended
June 30, 2004 - - (638,000) 638,000 - -
Balance as at July 1, 2004 (restated) 513,169 - 1,403,000 1,177,465 2,580,465 3,093,634
Final dividend for the year ended June 30, 2004 - - - (538,828) (538,828) (538,828)
Appropriation of general reserve for the year ended
June 30, 2004 - - 638,000 (638,000) - -
Interim dividend for the year ended June 30, 2005 - - - (102,634) (102,634) (102,634)
Profit after taxation for the year ended June 30, 2005 - - - 1,685,037 1,685,037 1,685,037
Transfer from surplus on revaluation of fixed assets
to unappropriated profit current period. - - - 8,282 8,282 8,282
Balance as at June 30, 2005 513,169 - 2,041,000 1,591,322 3,632,322 4,145,491
============================================================================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 20051. THE COMPANY AND ITS OPERATIONS The company was incorporated in Pakistan on February 10, 1969 as a public limited company and its shares are quoted on the Karachi and Lahore Stock Exchanges. The address of its registered office is Lakson Square Building No 2, Sarwar Shaheed Road, Karachi, Pakistan. The company is engaged in the manufacture and sale of cigarettes and tobacco. 2. SIGNIFICANT ACCOUNTING POLICIES 2.1. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards (IASs) as notified under the provisions of the Companies Ordinance, 1984. Wherever the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence. 2.2. BASIS OF PREPARATION These financial statements have been prepared under the historical cost convention except that certain fixed assets and certain investments have been included at fair values in accordance with the recognition criteria mentioned in the relevant International Accounting Standards applicable to these assets. 2.3. CHANGE IN ACCOUNTING POLICY During the year, the Securities and Exchange Commission of Pakistan (SECP) substituted the Fourth Schedule to the Companies Ordinance 1984, which is effective from the financial year ending on or after July 5, 2004. This has resulted in the change in accounting policy pertaining to recognition of dividends and other appropriations declared subsequent to the year's end. Dividends and other appropriations of profit are now recognized in the period in which these are declared. Till the previous year, dividends declared and appropriations made after the balance sheet date but before the authorisation of financial statements for issue, were recognised as of the balance sheet date. The change in accounting policy has been accounted for retrospectively and comparative information has been restated in accordance with the benchmark treatment specified in IAS-8 (Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies). Had there been no change in the accounting policy, the unappropriated profit would have been lower by Rs 1,583.096 million (2004: Rs 1,176.828 million) and reserves would have been higher by Rs 839 million (2004: Rs 638 million) and current liabilities would have been higher by Rs 744.096 million (2004: Rs 538.828 million). The effect of change in accounting policy has been reflected in the statement of changes in equity. This change in accounting policy has not resulted in any change in the profit after tax for the current year and prior years. 2.4. FIXED ASSETS AND DEPRECIATION 2.4.1. PROPERTY, PLANT AND EQUIPMENT Tangible fixed assets are stated at cost or revalued amounts less accumulated depreciation or impairment, if any, except freehold land and capital work-in-progress which are stated at revalued amount and historical cost respectively. The cost of leasehold land acquired in April, 1983 on lease of twenty five years is being amortised over the lease period in equal installments. Full year's depreciation is charged on additions during the year, whereas no depreciation is charged on the assets disposed-off or retired during the year. Depreciation is charged to profit and loss account using the straight-line method at following annual rates: Leasehold land: 4% Building on freehold land: 5% to 10% Building on leasehold land: 5% to 10% Plant and machinery: 10% Furniture and fixture: 20% Office equipment: 20% Vehicles: 20% Power and other installations: 20% Data processing equipment: 10% 33.33% Surplus arising on revaluation is credited to surplus on revaluation of fixed assets account. The surplus on revaluation of fixed assets to the extent of incremental depreciation charged on the related assets is transferred by the company to its unappropriated profit. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash generating units are written down to their recoverable amount. The recoverable amount of property, plant and equipment is the greater of net selling price and value in use. Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements, if any, are capitalised. Gains and losses on disposals are determined by comparing proceeds with the carrying amount of the relevant assets. These are included in the profit and loss account. When revalued assets are sold, the relevant undepreciated surplus is transferred directly by the company to its unappropriated profit. Change in accounting estimate Effective current year, the Company has changed the method of charging depreciation from reducing balance to straight-line. The company has reassessed pattern of flow of economic benefits to the enterprise associated with the fixed assets and the remaining useful lives of its operating assets and considers that the net book values of its operating fixed assets as at June 30, 2004 will be more appropriately written-off over the remaining useful lives of the assets under the straight-line method. The depreciation rates have also been revised to reflect the useful lives of the assets after the change in the depreciation method. The above change would result in more accurate allocation of depreciation expenses to the accounting period in which depreciable assets are utilised by the Company. This change has been accounted for as a change in accounting estimate. Had this estimate not been revised, the profit for the year and the carrying vaue of fixed assets would have been higher by Rs. 189.303 million. 2.4.2. CAPITAL WORK-IN-PROGRESS All expenditure connected with specific assets incurred during installation and construction period are carried under this head. These are transferred to specific assets as and when these assets are available for use. 2.4.3. INTANGIBLE ASSETS An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and that the cost of such asset can also be measured reliably. Computer software Generally, costs associated with developing or maintaining computer software programs are recognised as an expense as incurred. However, cost that are directly associated with identifiable software and have probable economic benefit exceeding the cost beyond one year, are recognized as intangible assets. Direct costs include the purchase cost of software and directly attributable cost of preparing the asset for its intended use. Expenditure, which enhances or extends the performance of computer software beyond its original specification and useful life is recognized as a capital improvement and added to the original cost of the software. Intangible asset is amortized on straight-line basis over its estimated useful life. Full year's amortization is charged on additions during the year. The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. 2.5. INVESTMENTS 2.5.1. INVESTMENT IN SUBSIDIARY COMPANY Investment in subsidiary company is stated at cost less provision for diminution in value of investment. In arriving at the provision in respect of any diminution in value, consideration is given only if there is an impairment in the value of the investment. 2.5.2. OTHER INVESTMENTS The management determines the appropriate classification of its other investments in accordance with the requirements of International Accounting Standard 39; Financial Instruments: Recognition and Measurement (IAS 39) at the time of purchase and re-evaluates this classification on a regular basis. The existing investment portfolio of the company has been categorised as held for trading and held to maturity. Held for trading investments are those that were acquired principally for the purpose of generating a profit from short term fluctuations in price or dealer's margin. Held to maturity investments are financial assets with fixed or determinable payments and fixed maturity that the company has the positive intent and ability to hold to maturity. Investments are initially recognised at cost inclusive of transaction costs. Investments categorised as held for trading are subsequently remeasured at their fair value and surplus / deficit arising due to fluctuation in fair value is taken to profit and loss account. Investments classified as held to maturity are carried at amortised cost. Investments are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the company has transferred substantially all risks and rewards of ownership. Impairment of investments is recognised when there is a diminution in their value. 2.6. STORES AND SPARES These are valued at lower of moving average cost and net realisable value except for items in transit which are stated at invoice values plus other charges incurred thereon. 2.7. STOCK IN TRADE These are stated at the lower of average cost and net realisable value. Average cost of raw material includes procurement expenses except raw material in bonded warehouse and in transit which are stated at invoice values plus other charges incurred thereon. Average cost of redried tobacco includes procurement and overheads incurred on redrying of tobacco leaf. Average cost in relation to finished goods and work-in-progress includes proportionate production overheads. Net realisable value signifies the estimated selling price in the ordinary course of business less the estimated cost of completion and costs necessarily to be incurred to make the sale. 2.8. TRADE DEBTS AND OTHER RECEIVABLES Trade debts and other receivables are carried at original invoice amount less an estimate made for doubtful receivables based on review of outstanding amounts at the year's end. Balances considered bad and irrecoverable are written off when identified. 2.9. TRADE AND OTHER PAYABLES Short term liabilities for trade and other amounts payable are carried at amortized cost. 2.10. PROVISIONS Provisions are recognised when the company has a present, legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 2.11. TAXATION 2.11.1. CURRENT Provision for current taxation is the higher of the amount computed on taxable income at the current rates of taxation after taking into account tax credits and rebates available, if any, and minimum tax computed at the prescribed rate on sales net of sales tax and excise duty. 2.11.2. DEFERRED Deferred tax is recognised using the balance sheet liability method on all temporary differences between the amounts used for financial reporting purpose and amounts used for taxation purposes. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets may be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefits will be realised. 2.12. CASH AND CASH EQUIVALENTS Cash and cash equivalents are carried in the balance sheet at cost. Cash and cash equivalents include cash in hand, cheques in hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less. 2.13. BORROWING COSTS Borrowing costs are recognised as an expense in the period in which these are incurred. 2.14. REVENUE RECOGNITION Sales are recorded on despatch of goods to customers. Royalty income is accounted for as and when earned. Income on investments and return on deposits are accounted for on accrual basis. 2.15. STAFF RETIREMENT BENEFITS The company operates: (a) an approved contributory provident fund for all permanent employees for which contributions are charged to income for the year; and (b) an approved funded gratuity scheme covering all permanent employees. Contribution is made to this scheme on the basis of actuarial recommendations. The actuarial valuation is carried out using the Project Unit Credit Method. Staff retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. Actuarial gains and losses are recognized as income or expense when the cumulative unrecognized actuarial gains or losses for each individual plan exceed 10% of the higher of defined benefit obligation and the fair value of plan assets. These gains or losses are recognized as income or expense immediately. 2.16. COMPENSATED ABSENCES The company provides for its estimated liability towards leaves accumulated by employees on an accrual basis using current salary levels. 2.17. FOREIGN CURRENCY TRANSLATION Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at the year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account. 2.18. FINANCIAL INSTRUMENTS Financial instruments carried on the balance sheet include investments, receivables, cash and bank balances and trade creditors. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are offset when the Company has a legally enforceable right to offset and it intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. 2.19. RELATED PARTY TRANSACTIONS All transactions with related parties are carried out by the Company at arm's length prices using the methods prescribed under the Companies Ordinance, 1984. 3. PROPERTY, PLANT AND EQUIPMENT =========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
Operating property, plant and equipment 3.1 1,838,149 1,382,780
Capital work-in-progress 3.2 175,864 84,109
2,014,013 1,466,889
=========================================================================================3.1. OPERATING PROPERTY, PLANT AND EQUIPMENT====================================================================================================================================================================================
COST/REVALUATION DEPRECIATION
At July 01, Additions/ Transfers At June 30, At July For the Impairment At June Book
2004 (disposals)/ 2005 01, 2004 year / (on charge for 30, 2005 value at
(write offs) disposals) / the year June 30,
(write offs) 2005
(Rupees '000)
====================================================================================================================================================================================
PROPERTY, PLANT AND EQUIPMENT
Freehold land 27,690 27,572 55,262 . - 55,262
Leasehold land 157 - - 157 130 6 - 136 21
Buildings on freehold land 320,250 13,795 - 334,045 155,135 46,515 - 201,650 32,395
Buildings on leasehold land 549 - - 549 294 15 - 309 240
Plant and machinery 1,556,231 742,582 (240) 2,295,056 631,008 276,142 16,588 921,017 1,374,039
(3,517) (2,721)
Furniture and fixtures 26,200 2,584 - 28,784 13,535 7,609 - 21,144 7,640
Office equipment 37,709 3,846 7,710 49,265 25,170 18,580 - 43,750 5,515
Vehicles 164,660 98,927 . 257,435 50,902 52,986 - 101,248 156,190
(6,149) (2,640)
Power and other
installations 178,416 1,442 (7,460) 172,398 81,686 28,704 - 110,390 62,008
Data processing equipment 95,887 46,945 (10) 142,822 67,109 70,874 - 97,983 44,839
2005 2,407,749 937,693 - 3,335,776 1,024,969 461,431 16,588 1,497,627 1,838,149
(9,666) (5,361)
2004 1,548,651 598,361 279,123 2,407,749 770,288 181,578 9,036 1,024,969 1,382,780
(12,340) 75,782
(6,046) (9,090)
(2,625)
==================================================================================================================================================================================== * Transfer includes both inter-category adjustments and transfer from leased assets to owned assets on completion. Details of property, plant and equipment sold are given in note 37.3.1.1. THE DEPRECIATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS =========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
Purchases, redrying and related expenses 21.1 74,798 36,606
Manufacturing expenses 21.2 298,538 103,731
Distribution and marketing expenses 22 24,064 19,522
Administrative expenses 23 64,031 21,719
461,431 181,578
=========================================================================================3.1.2. The company had its land, buildings and certain items of plant and machinery including certain power and other installations revalued in 1978, 1980 and 1984 by D.H. Daruvala and Co, Architects.These revaluations resulted in net surplus of Rs 17.0 million, Rs 16.0 million and Rs 30.0 million respectively. Revalued assets having revaluation surplus of Rs 11.9 million have been sold todate. The remaining balance of revaluation surplus amounting to Rs 51.1 million has been included in the carrying value of the respective assets. Out of the revaluation surplus, an amount of Rs 8.3 million remains undepreciated as at June 30, 2005 (2004: Rs 16.6 million). 3.1.3. Had there been no revaluation, the net book value of the specific classes of property, plant and equipment would have been as follows: =========================================================================================
Net Book Value
2005 2004
(Rupees '000)
=========================================================================================
Freehold land 46,989 19,417
Buildings on freehold land 132,395 157,398
Plant and machinery 1,374,039 924,817
Power and other installations 62,008 92,822
1,615,431 1,194,454
=========================================================================================3.2. CAPITAL WORK-IN-PROGRESS=========================================================================================
2005 2004
Note (Rupees '000)
=========================================================================================
Civil works 8,705 4,322
Plant and machinery 3.2.1 135,503 70,955
Power and other installations 10,811 2,004
Furniture and fittings 2,212 6,058
Data processing equipment pending installation 530 770
Advance against purchase of land 7,750 -
Advance against vehicles 10,353 -
175,864 84,109
=========================================================================================3.2.1. This includes plant and machinery in transit amounting to Rs 108.9 million (2004: Rs 27.7 million).4. INTANGIBLE ASSETS =========================================================================================
2005 2004
Note (Rupees '000)
=========================================================================================
4.1 125,073 -
Assets under development - 70,549
125,073 70,549
=========================================================================================4.1. COMPUTER SOFTWARE========================================================================================================================================
COST AMORTIZATION
At July 01, Additions At June 30, At July 01, For the At June Bouk Annual
2004 2005 2004 year 30, 2005 value at rate of
June 30, amorti -
2005 zation
(Rupees '000)
========================================================================================================================================
Computer software
- 187,609 187,609 - 62,536 62,536 125,073 33.33%
2004 - - - - - - -
========================================================================================================================================4.1.1. Represents software purchase cost of "System, Application and Products in Data Processing" (SAP) paid to Siemens Pakistan Engineering Company Limited for use of beneficial rights in respect of software and implementation and consultation charges paid to consultants.4.1.2. THE AMORTISATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS =========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
Purchases, redrying and related expenses 21.1 3,128 -
Manufacturing expenses 21.2 8,323 -
Distribution and marketing expenses 22 31,218 -
Administrative expenses 23 19,867 -
62,536 -
=========================================================================================5. INVESTMENT IN A SUBSIDIARY COMPANYThis represents the cost of 103 (2004: 103) fully paid ordinary shares of Rs 10 each in Premier Tobacco Company (Private) Limited, a wholly owned subsidiary of the company. The value of the company's investment on the basis of net assets of the subsidiary as disclosed in its audited financial statements for the year ended June 30, 2005 amounted to Rs 10 (2004: Rs 10) per share. 6. LONG TERM LOANS =========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
CONSIDERED GOOD
SECURED
Loans to employees other than executives 6.1 2,208 3,100
Less: Due within one year, shown under current
loans and advances 11 (801) (898)
1,407 2,202
=========================================================================================6.1. RECONCILIATION OF CARRYING AMOUNT OF LOANS TO EMPLOYEES OTHER THAN EXECUTIVES===========================================================
Opening Closing balance
balance as at Disbursement Repayment as at June 30,
July 1, 2004 2005
Rupees '000
===========================================================
3,100 315 1,207 2,208
===========================================================6.2. These represent interest free loans given to staff members for the purchase of vehicles and are repayable in five years in equal monthly installments.The loans are secured by pledge of original registration documents of the vehicles and demand promissory notes. 6.3. The maximum aggregate amount of loans due from employees at the end of any month during the year was Rs 3.0 million (2004: Rs 3.8 million). 7. LONG TERM DEPOSITS AND PREPAYMENTS =========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
Deposits 13,829 8,346
Prepayments 241 282
14,070 8,628
=========================================================================================8. STORES AND SPARES=========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
Stores 4,196 4,947
Spares (including spares in transit Rs 1.1 million
2004: Rs 2.8 million) 98,672 94,179
102,868 99,126
=========================================================================================9. STOCK-IN-TRADE=========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
Raw and packing materials (including in transit
Rs 48.2 million; 2004: Rs 172.8 million) 1,061,023 1,215,607
Work-in-process 14,977 13,496
Finished goods 28,197 237,107
1,104,197 1,466,210
=========================================================================================10. TRADE DEBTS=========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
CONSIDERED GOOD
- Unsecured 756,302 12,422
- Secured 13,559 8,235
769,861 20,657
=========================================================================================11. LOANS AND ADVANCES=========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
CONSIDERED GOOD
SECURED
LOANS DUE FROM:
- Employees 6 801 898
UNSECURED
ADVANCES TO:
- Executives 11.1 2,212 1,177
- Employees 12,553 7,889
14,765 9,066
Suppliers and contractors 63,574 22,830
78,339 31,896
79,140 32,794
=========================================================================================11.1. The maximum aggregate balance of advances due from executives at the end of any month during the year was Rs 2.8 million (2004: Rs 10.0 million).12. OTHER RECEIVABLES =========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
Current account balances with statutory authorities 50,774 65,903
Sales tax refundable 12.1 89
Export rebate receivable - net 162 69
Central Excise Duty
refundable - imported tobacco 718 -
51,654 66,061
DUE FROM ASSOCIATED UNDERTAKINGS
- Insurance claim 675 345
- Others 939 171
12.2 1,614 516
12.4 5,121 11,745
- Others 58,389 78,322
=========================================================================================12.1. This amount is net of provision for doubtful receivable amounting to Rs 23.6 million (2004:Rs 23.6 million).12.2. THE AMOUNT DUE FROM ASSOCIATED COMPANIES COMPRISES =========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
Century Insurance Company Limited 675 345
Century Paper and Board Mills Limited 19 -
Princeton Travels (Private) Limited 7 -
Tritex Cotton Mills Limited 912 171
Cyber Rapid Integrated 1 -
Software Solutions (Pvt) Ltd
1,614 516
=========================================================================================12.3. The maximum aggregate amount due from associated undertakings at the end of any month during the year was Rs 1.9 million (2004: Rs 2.4 million).12.4. This includes amounts receivable from transporters amounting to Rs 5.121 million (2004: Rs l1.745 million) in respect of goods damaged in transit during transportation. 13. SHORT TERM INVESTMENTS Held for trading =========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
- 1,711 Unit Trust of Pakistan - 14,582
- 500,000 Faysal Balanced Growth Fund - 49,297
- 395,910 Meezan Islamic Fund - 24,488
- 88,367
=========================================================================================14. CASH AND BANK BALANCES=========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
WITH BANKS
- on deposit account 14.1 1,350,000 1,210,808
- on saving accounts 14.2 22,229 306,819
- on current accounts 14.3 28,056 63,065
1,400,285 1,580,692
Cash in hand
Cheques in hand 1,376 1,802
- 1,750
1,401,661 1,584,244
=========================================================================================14.1. These represent short term deposits of fixed maturities maintained with banks and non-banking finance companies.The rate of profit on these deposits ranging from 1% per annum to 9% per annum (2004: 1.75% per annum to 3.25% per annum). 14.2. The mark-up rates on PLS Savings accounts range from 0.5% to 3% (2004: 1 % to 1.5%). 14.3. This includes foreign currency account balances amounting to Rs Nil (2004: Rs 0.2 million). 15. SHARE CAPITAL 15.1. AUTHORISED CAPITAL =========================================================================================
2005 2004 2005 2004
(Rupees '000)
=========================================================================================
100,000,000 100,000,000 Ordinary shares of Rs 10 each 1,000,000 1,000,000
=========================================================================================15.2. ISSUED, SUBSCRIBED AND PAID-UP CAPITALFully paid ordinary shares of Rs 10 each =========================================================================================
2005 2004 Issued for / as
=========================================================================================
5,541,429 5,541,429 cash 55,414 55,414
37,459,522 37,459,522 bonus shares 374,595 374,595
8,316,000 8,316,000 consideration other than cash 83,160 83,160
51,316,951 51,316,951 513,169 513,169
=========================================================================================Out of the total share capital of the company, associated companies held 35,235,654 (2004:35,233,710) ordinary shares of Rs 10 as at June 30, 2005.16. SURPLUS ON REVALUATION OF FIXED ASSETS - NET OF TAX =========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
GROSS SURPLUS
Surplus on revaluation of fixed assets as at July 1 16,555 17,081
Transfer to unappropriated profit in respect of incremental
depreciation charged during the year (8,282) (342)
Related deferred tax liability - (184)
(8,282) (526)
Surplus on revaluation of fixed assets as at June 30 8,273 l6,656
Less: Related Deferred Taxation
Related deferred tax liability on revaluation as July 1 2,899 3,083
Deferred tax in respect of incremental depreciation
charged during the year (2,899) (1 84)
2,899
8,273 13,656
=========================================================================================17. DEFERRED TAXATIONThis comprises the following: =========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
DEFERRED TAX LIABILITY ON TAXABLE TEMPORARY DIFFERENCES:
Surplus on revaluation of fixed assets 2,899
Tax depreciation allowance 178,196 158,770
178,196 161,669
DEFERRED TAX ASSET ON DEDUCTIBLE TEMPORARY DIFFERENCES:
Provision for employee compensated absences 4,118 4,169
174,078 157,500
=========================================================================================18. TRADE AND OTHER PAYABLES=========================================================================================
2005 2004
Note (Rupees '000)
=========================================================================================
Creditors 18.1 210,218 267,903
Bills payable 135,093 97,294
Royalty payable to related party 3,261 1,630
Accrued expenses 95,282 83,965
Provident fund trust 1,321 3,721
Contractors' retention money 809 2,062
Advance from customers 13,278 23,634
Tobacco cess 2,123 2,581
Workers' profit participation fund 13,089 103,451
Workers' welfare fund 50,757 36,680
Unpaid and unclaimed dividends 13,223 10,043
Security Deposits 2,113 2,188
Others 4,172 4,532
544,739 639,684
=========================================================================================18.1. This includes due to related parties amounting to Rs 39.179 million (2004: Rs 38.25 million).18.2. WORKERS' PROFIT PARTICIPATION FUND =========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
Balance as at July 1 103,451 69,896
Interest on funds utilised in the company business 26 1,644 562
105,095 70,458
PAID TO THE FUND
- for prior year 105,095 70,458
- for current year in advance 125,000 -
230,095 70,458
(125,000) -
- Allocation for the year 24 138,089 103,451
13,089 103,451
=========================================================================================18.3. Represents local distributors' security deposits repayable on cessation of distributorship and carries interest at the rate of 2 percent per annum.18.4. STAFF RETIREMENT BENEFITS 18.4.1. DEFINED BENEFIT PLAN As mentioned in note 2.15(b), the company operates an approved funded gratuity scheme for all its permanent employees. Actuarial valuation of the scheme is carried out every year and the latest actuarial valuation was carried out as at June 30, 2005. The fair value of scheme's assets and the present value of obligation under the scheme at the balance sheet date were as follows: =========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
Present value of defined benefit obligation 159,930 143,752
Fair value of plan assets (159,930) (143,752)
Liability recognised in the balance sheet - -
The following amounts have been charged to profit and loss account during the current
year in respect of the scheme:
Current service cost 10,445 8,769
Interest cost 8,625 7,953
Expected return on plan assets (8,625) (5,202)
Past service cost - 1,192
Actuarial loss recognised 21,786 -
32,231 12,712
MOVEMENT IN THE LIABILITY RECOGNISED IN THE BALANCE SHEET:
Balance as at July 1 - 44,648
Net charge for the year 32,231 12,712
Contribution to the fund (32,231) (57,360)
Balance as at June 30 - -
=========================================================================================Projected unit credit method using the following significant assumptions was used for valuation of the scheme:-- Expected rate of increase in salary level: 10% per annum (2004: 6% per annum) -- Valuation discount rate: 10% per annum (2004: 6% per annum) -- Rate of return on plan assets: 10% per annum (2004: 6% per annum) Actual return on plan assets during the year was Rs. 15.053 million (2004: Rs. 5.2 million). 18.4.2. DEFINED CONTRIBUTION PLAN An amount of Rs 18.2 million (2004: Rs 16.5 million) has been charged during the year in respect of contributory provident fund plan maintained by the company. 19. PROVISIONS =========================================================================================
2005 2004
Notes (Rupees '000)
=========================================================================================
Tobacco Development Cess 19.1 & 13 129,706 193,261
Tobacco Excise duty 402,447
Sales tax 19.2 & 13 207,300 207,300
337,006 803,008
=========================================================================================19.1. With effect from July 1, 1999, Tobacco Development Cess had been levied on the purchases of tobacco leaf.The company has filed a constitutional petition in the Supreme Court against the levy, which is currently pending for adjudication. Meanwhile, the company is making a monthly payment of Rs. 4 million under protest. Pending outcome of the matter, the company has made the above provision in its books of accounts. 19.2. The Collectorate of Sales Tax and Central Excise (Adjudication) has issued a demand notice for an aggregate amount of Rs 204.5 million on account of short payment of sales tax on cigarettes manufactured by toll manufacturers. In addition, certain other demand notices have also been issued aggregating to Rs 2.8 million. The company has filed appeals before the Customs, Excise & Sales Tax Appellate Tribunal against the above demands raised by the authorities, which are currently pending for adjudication. Pending outcome of the matter, the company has made a provision of Rs 207.3 million (2004: Rs 207.3 million) in respect of these demands. 19.3. THE MOVEMENT OF PROVISION IS AS FOLLOWS =========================================================================================
Tobacco Tobacco
Development excise
Cess duty
Sales tax (Rupees '000)
=========================================================================================
Balance as at July 1, 2004 207,300 193,261 402,447
Provision for the year - 55,429 -
207,300 248,690 402,447
Less: Payments made during the year - 118,984 232,454
Reversal of provision - - 169,993
- 118,984 402,447
Balance as at June 30, 2005 207,300 129,706 -
=========================================================================================20. CONTINGENCIES AND COMMITMENTS20.1. CONTINGENCIES Guarantees Contingent liability in respect of indemnities given to banks and insurance companies for guarantees issued by them in the normal curse of business aggregated to Rs 33.2 million (2004: Rs 54.5 million). 20.2. COMMITMENTS =========================================================================================
2004 2005
(Rupees '000)
=========================================================================================
Capital expenditure contracted for but not incurred 120,895 500,765
Acceptances and letters of credit 195,273 178,687
=========================================================================================21. COST OF SALES=========================================================================================
2004 2005
Notes (Rupees '000)
=========================================================================================
RAW MATERIAL CONSUMED
Opening stock 1,215,607 1,226,265
Purchase, redrying and related expenses 21.1 4,458,209 3,932,236
5,673,816 5,158,501
Closing stock (1,061,023) (1,215,607)
4,612,793 3,942,894
Excise duty, sales tax and other levies- net of
Reversal of provision for Tobacco Excise Duty of
Rs 169.993 million 10,909,757 9,509,689
Manufacturing expenses 21.2 795,974 545,726
16,318,524 13,998,309
WORK IN PROCESS
Opening stock 13,496 17,881
Closing stock (14,977) (13,496)
Sale of waste (21,603) (11,388)
(36,580) (24,884)
(23,084) (7,003)
Cost of goods manufactured 16,295,440 13,991,306
FINISHED GOODS
Opening stock 237,107 406,645
Less: Adjustment (claim) - (2,760)
237,107 403,885
Closing stock (28,197) (237,107)
208,910 166,778
16,504,350 14,158,084
=========================================================================================21.1. PURCHASES, REDRYING AND RELATED EXPENSES=========================================================================================
2004 2005
Notes (Rupees '000)
=========================================================================================
Raw and packing material 4,125,050 3,678,093
Salaries, wages and other benefits 21.1.1 100,377 93,096
Stores and spares consumed 26,624 16,890
Fuel and power 52,230 41,421
Rent, rates and taxes 12,616 11,962
Freight and stacking 34,988 26,991
Printing and stationery 1,918 1,766
Depreciation 3.1.1 74,798 36,606
- Amortisation 4.1.2 3,128 -
Other expenses 26,480 25,411
333,159 254,143
4,458,209 3,932,236
=========================================================================================21.1.1. This includes defined benefits amounting to Rs 4.548 million (2004: Rs 1.626 million) and defined contribution amounting to Rs 1.961 million (2004: Rs 1.980 million).21.2. MANUFACTURING EXPENSES =========================================================================================
2004 2005
Notes (Rupees '000)
=========================================================================================
Salaries, wages and other benefits 21.2.1 258,693 221,453
Cigarette manufacturing charges to third parties 4,055 14,726
Stores and spares consumed 58,602 54,627
Fuel and power 97,195 88,678
Insurance 2,848 4,073
Cartage 42,243 36,993
Depreciation 3.1.1 298,538 103,731
Amortisation 4.1.2 8,323 -
Rent, rates and taxes 2,130 1,668
Rental of leased asset - 2,301
Traveling and conveyance 5,808 3,506
Repair and maintenance 1,129 496
Legal and professional 149 315
Vehicle running 9,583 8,624
Telecommunication 1,703 1,196
Printing and stationary 527 955
Fees and subscription 1,821 166
Entertainment 741 639
Security and service charges 1,505 1,301
Miscellaneous 381 278
795,974 545,726
=========================================================================================21.2.1. This includes defined benefits amounting to Rs 14.166 million (2004: Rs 5.597 million) and defined contribution amounting to Rs 8.246 million (2004: Rs 7.178 million).22. DISTRIBUTION AND MARKETING EXPENSES =========================================================================================
2004 2005
Notes (Rupees '000)
=========================================================================================
Salaries, allowances and other benefits 22.1 142,582 118,021
Travelling expenses 37,680 28,445
Marketing expenses 652,063 568,524
Vehicle running expenses 64,239 52,858
Freight on sales 73,838 60,901
Rent, rates and taxes 11,833 8,696
Rental of leased assets - 9,118
Insurance 926 820
- Postage, telegram and telephone 13,041 9,319
Depreciation 3.1.1 24,064 19,522
Amortisation 4.1.2 31,218 -
Royalty 4,205 1,630
Other expenses 11,120 6,197
1,066,809 884,051
=========================================================================================22.1. This includes defined benefits amounting to Rs 6.639 million (2004: Rs 2.618 million) and defined contribution amounting to Rs 3.321 million (2004: Rs 3.648 million).23. ADMINISTRATIVE EXPENSES =========================================================================================
2004 2005
Notes (Rupees '000)
=========================================================================================
Salaries, allowances and other benefits 23.1 99,672 92,670
Rent, rates and taxes 12,629 12,171
Rentals of leased assets - 4,613
Travelling, conveyance and cartage 24,417 11,058
Repairs and maintenance 1,652 1,030
Legal and professional charges 13,463 10,621
Vehicle running expenses 8,865 9,683
Postage, telephone and telegram 9,532 8,130
Printing and stationery 3,190 2,463
Utilities 6,399 6,289
Fee and subscription 4,112 4,355
Entertainment 2,455 1,499
Insurance 107 122
Depreciation 3.1.1 64,031 21,719
Amortisation 4.1.2 19,867 -
Security service charges 1,534 1,282
Other expenses 3,061 2,606
274,986 190,311
=========================================================================================23.1. This includes defined benefits amounting to Rs 7.302 million (2004: Rs 2.880 million) and defined contribution amounting to Rs 4.710 million (2004: Rs 3.701 million).24. OTHER OPERATING EXPENSES =========================================================================================
2004 2005
Notes (Rupees '000)
=========================================================================================
Fixed assets written off - 3,421
Impairment loss on fixed assets 16,588 9,036
Loss on disposal of investment 2,020 -
Unrealised loss on revaluation of investments
held for trading - l,484
Workers' profit participation fund 18.2 138,089 103.451
Workers' welfare fund 50,046 35,874
Auditors' remuneration 24.1 641 648
Donations 24.2 5,733 4.958
213,117 158,872
=========================================================================================24.1. AUDITORS' REMUNERATION=========================================================================================
2004 2005
(Rupees '000)
=========================================================================================
Audit fee 500 500
Review of half yearly financial statements 125 125
Out of pocket expenses 16 23
641 648
=========================================================================================24.2. This includes donations of Rs 2.5 million, Rs 0.5 million and Rs 0.01 million (2004: Rs 1 million, Rs 0.2 million and Rs 0.1 million) to the Lakson Medical Trust, Special Olympics Pakistan and Rotary Club of Karachi Universal, respectively in which the Chief Executive, Mr Iqbal Ali Lakhani or his spouse is interested.Besides this none of the Directors and their spouses had any interest in any donee fund to which donations have been made. 25. OTHER OPERATING INCOME =========================================================================================
2004 2005
(Rupees '000)
=========================================================================================
Profit on disposal of fixed assets 14,498 6.893
Profit on disposal of investments - 287
Profit on short-term deposits 39,955 23,459
Royalty income 175 268
Others 1,026 1,085
55,654 31,992
=========================================================================================26. FINANCIAL CHARGES=========================================================================================
2004 2005
Note (Rupees '000)
=========================================================================================
MARK-UP / INTEREST ON:
Liabilities against assets subject to finance lease - 5,440
Short-term running finances - 264
Workers' profit participation fund 18.2 1,644 562
Security deposits 34 36
Bank commission and other charges 7,401 12,864
9,079 19,166
=========================================================================================27. TAXATION=========================================================================================
2004 2005
Note (Rupees '000)
=========================================================================================
Current - for the year 862,000 613,400
- for prior years (net) 5,436 (26,037)
867,436 587,363
Deferred (net of deferred tax on
incremental depreciation) 19,477 64,000
27.1 886,913 651,363
=========================================================================================27.1. RELATIONSHIP BETWEEN TAX EXPENSE AND ACCOUNTING PROFIT=========================================================================================
2005 2004
(Rupees '000)
=========================================================================================
Relationship between tax expense and accounting profit
Accounting profit before tax 2,571,950 1,929,107
Tax rate 35% 35%
Tax on accounting profit 900,183 675,187
Tax effect of - expenses that are inadmissible in
determining taxable profit 3,924 25,938
- income exempt from tax (61) (94)
- lower tax rates on certain income (22,347) (16,262)
- accelerated depreciation (222) 5221
- others - (12,590)
881,477 677,400
- adjustments in respect of income
tax of prior years 5,436 (26,037)
Tax expense for the current year 886,913 651,363
=========================================================================================28. EARNINGS PER SHARE=========================================================================================
2004 2005
=========================================================================================
Profit for the year after taxation 1,685,037 1,277,744
Number of Shares
Average issued ordinary shares 51,316,951 51,316,951
Rupees
Earnings per share (basic and diluted) 32.84 24.90
=========================================================================================29. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES29.1. The aggregate amount, charged in the financial statements for the year are as follows: ===============================================================================================================
Chief Executive Directors Executives Total
2005 2004 2005 2004 2005 2004 2005 2004
Rupees '000
===============================================================================================================
Remuneration 4,800 4,637 2,379 2,010 31,361 23,501 38,540 30,148
House rent 1,200 - 674 703 9,974 6,605 11,848 7,308
Bonus - - 265,336 - 3,656 2,982 3,921 3,318
Motor vehicle expenses 624 511 125 101 2,246 1,527 2,995 2,139
Retirement benefits - - 728 931 6,696 5,102 7,424 6,033
Utilities 547 1,043 238 201 2,999 2,671 3,784 3,915
Others - - 412 121 3,668 1,338 4,080 1,459
7,171 6,191 4,821 4,403 60,600 43,726 72,592 54,320
Number of persons 1 1 2 2 34 25 37 28
===============================================================================================================In addition, the Chief Executive, Directors and some Executives are provided with free use of company maintained cars.29.1.1. Due to revision in Fourth Schedule, the definition of executive has been changed. As per new definition, executive means employee, other than the chief executive and director, whose basic salary exceeds five hundred thousand rupees in the financial year. Previously, the threshold of basic salary was one hundred thousand rupees. 30. RELATED PARTIES DISCLOSURES The related parties comprise subsidiary (Premier Tobacco Company (Pvt) Limited), local associated companies, related group companies, staff retirement funds, companies where directors also held directorship, directors and key management personnel. Transactions with associated companies and other related parties other than remuneration and benefits to key management personnel under the terms of their employment as disclosed in note 29, are as follows: ==================================================================================
2004 2005
Relationship Nature of transactions (Rupees '000)
==================================================================================
Associated companies Sale of goods and services 13,295 7,189
Purchase of goods and services 677,224 463,123
Royalty charges 4,205 1,630
Rent and allied expenses 1,385 1,418
Other related parties Sale of goods and services 6 5
Purchase of goods and services 14,136 18,715
Contributions to staff retirement
benefit plan 50,893 29,229
Donation 2,500 1,000
Rent and allied expenses 13,413 10,012
==================================================================================The company enters into transactions with related parties for the sale of its products and purchase of raw materials.Services, royalty charges and rent and allied expenses are charged between associated undertakings on the basis of mutually agreed terms. 31. CAPACITY AND PRODUCTION =========================================================================================
2005 2004
Number of cigarettes in millions
=========================================================================================
Installed capacity 42,473 37,872
Actual production
Company 30,577 27,785
Contracted 177 648
30,754 28,433
========================================================================================= NUMBER OF SHIFTS PER DAY=========================================================================================
2004 2005
=========================================================================================
Two and a half shifts Two and a half shifs
=========================================================================================Actual production was sufficient to meet the demand.32. CASH GENERATED FROM OPERATIONS =========================================================================================
2004 2005
Note (Rupees '000)
=========================================================================================
Profit before taxation 2,571,950 1,929,107
ADJUSTMENTS FOR:
Depreciation 461,431 181,578
Amortisation 62,536
Profit on disposal of fixed assets (14,498) (6,893)
Profit on disposal of investments 2,020 (287)
Profit on short-term deposits (39,955) (23,459)
Write-off of fixed assets - 3,421
Impairment of fixed assets 16,588 9,036
Loss on revaluation of investments - 1,484
Financial charges 9,079 19,166
Working capital changes 32.1 (913,165) 646,585
2,155,986 2,759,738
=========================================================================================32.1. WORKING CAPITAL CHANGES=========================================================================================
2004 2005
(Rupees '000)
=========================================================================================
DECREASE / (INCREASE) IN CURRENT ASSETS
Stores and spares (3,742) (10,469)
Stock-in- trade 362,013 184,581
Trade debts (749,204) 28,712
Loans and advances (69,327) (12,520)
Prepayments 89,923 198,841
Other receivables 19,933 (2,585)
(350,404) 386,560
INCREASE / (DECREASE) IN CURRENT LIABILITIES
Trade and other liabilities (100,112) 107,587
Sales tax payable (1,696) 22,586
Provisions (460,953) 129,852
(913,165) 646,585
=========================================================================================33. FINANCIAL ASSETS AND LIABILITIES33.1. INTEREST RATE RISK Interest rate risk is the risk that the value of financial instruments will fluctuate due to change in the interest rates. The company manages this risk through risk management strategies. Interest rate risk of the company's financial assets and financial liabilities can be evaluated from the following schedule: ==================================================================================================================================================
INTEREST/MARK-UP HEARING NON-INTEREST BEARING TOTAL
MATURITY MATURITY SUB-TOTAL MATURITY MATURITY SUB-TOTAL
UPTO ONE AFTER ONE UPTO ONE AFTER ONE
YEAR YEAR YEAR YEAR
(RUPEES '000)
==================================================================================================================================================
FINANCIAL ASSETS
LONG TERM LOANS - - - 801 1,407 2,208 2,208
LONG-TERM DEPOSITS - - - - 14,070 14,070 14,070
TRADE DEBTS - - - 769,861 - 769,861 769,861
LOANS AND ADVANCES - - - 79,140 - 79,140 79,140
PREPAYMENTS - - - 13.368 - 13,368 13,368
OTHER RECEIVABLES - - - 1,614 - 1,614 1,614
CASH AND BANK BALANCES 1,372,229 - 1,372,229 29,432 - 29,432 1,401,661
2005 1,372,229 - 1,372,229 894,216 15,477 909,693 2,281,922
2004 1,517,627 - 1,517,627 189,999 10,548 200,547 1,718,174
FINANCIAL LIABILITIES
TRADE AND OTHER PAYABLES 2,113 - 2,113 542,626 - 542,626 544,739
2005 2,113 - 2,113 542,626 - 542,626 544,739
2004 2,188 - 2,188 1,009,978 - 1,009,978 1,012,166
==================================================================================================================================================As at June 30, 2005, interest / mark-up rates per annum applicable on financial assets and financial liabilities were as follows:-- Deposits and saving accounts included in bank balances: 0.5%-3.00% -- Security deposit payable: 2% 33.2. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES The carrying value of financial assets and liabilities are estimated to approximate their fair values. 33.3. CONCENTRATION OF CREDIT RISK Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail completely to perform as contracted. Out of the total financial assets of Rs 2,282 million, the financial assets which are subject to credit risk are Rs 2,281 million. The company believes that it is not exposed to major concentration of credit risk. 33.4. LIQUIDITY RISK Liquidity risk is the risk that an enterprise will encounter difficulties in raising funds to meet commitments associated with financial instruments. The company believes that it is not exposed to any significant level of liquidity risk. 33.5. CURRENCY RISK AND FOREIGN EXCHANGE RISK MANAGEMENT Foreign currency risk arises mainly where receivables and payables exist due to transactions entered into in foreign currencies. The company is exposed to foreign currency risk in respect of financial liabilities is Rs 135.093 million respectively on sales, purchases and borrowings that are entered in a currency other than Pak rupees. 34. NUMBER OF EMPLOYEES Total number of employees as at June 30, 2005 was 2,463 (2004: 2,388). 35. DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on August 15, 2005 by the Board of Directors of the company. 36. DIVIDEND Subsequent to the year ended June 30, 2005, the Board of Directors have proposed a final dividend of Rs 14.50 per share, amounting to a total dividend of Rs 744.096 million (2004: Rs 10.50 per share amounting to a total dividend of Rs 538.828 million) in their meeting held on August 15, 2005 for approval of the members at the Annual General Meeting. These financial statements do not reflect this dividend payable as explain in note 2.3. The interim dividend declared and already paid in respect of year ended June 30, 2005 was Rs 2 per share amounting to a total dividend of Rs 102.634 million (2004: Rs 2 per share amounting to a total dividend of Rs 102.634 million). 37. DETAILS OF PROPERTY, PLANT AND EQUIPMENT SOLD The following assets were disposed-off during the year: ======================================================================================================================
Original Accumulated Book Disposal Mode of Particulars of buyers
cost depreciation value Proceeds disposal
(Rupees '000)
Plant and machinery 317 177 140 296 Tender Pacific Pearl General Trading - Dubai
1,000 344 656 889 Tender Pacific Pearl General Trading - Dubai
1,317 521 796 1,185
======================================================================================================================
Vehicles 163 59 104 635 Tender Mr. Khalid Sami Chaudhari
111 22 89 89 Co.'s Policy Syed Viqar Ali-Employee
87 17 70 70 Co.'s Policy Khan Muhammad -Employee
139 28 111 366 Tender Laique Ahmed
337 67 270 601 Tender Century Insurance Company Limited*
263 53 210 300 Ins. Claim Century Insurance Company Limited*
367 73 294 305 Ins. Claim Mr. Sohaib Alvi
367 73 294 300 Ins. Claim Century Insurance Company Limited*
325 192 133 340 Tender Babar Rauf
275 55 220 220 Co.'s Policy Shahzad Hussain - Employee
177 35 142 142 Co.'s Policy Ala Ur Rehman - Employee
189 38 151 151 Co.'s Policy Syed Omar Rizwan - Employee
268 54 214 214 Co.'s Policy S.M.Barinuddin - Employee
268 54 214 214 Co.'s Policy Asmer Naim - Employee
189 38 151 151 Co.'s Policy M uhammad Rashid - Employee
115 23 92 92 Co.'s Policy Irshad Khan - Employee
3,640 881 2,759 4,190
Aggregate of assets
disposed-off having book
value below Rs 50,000
each
Plant and machinery 2,200 2,200 - 1,778
Motor Cars 1,558 1,060 498 11,154
Motor Cycles 951 699 252 503
Total Disposals 9,666 5,361 4,305 18,810 * Associated companies
======================================================================================================================38. CORRESPONDING FIGURESDue to revision of the Fourth Schedule of the Companies Ordinance 1984, previous year's figures have been rearranged and reclassified wherever necessary for the purposes of comparison. Consequently, following significant corresponding figures have been changed: -- Office equipment is shown separately in note 3. -- Capital Work-in-progress has been reclassified and shown as part of property, plant and equipment in Fixed assets. -- Profit accrued is shown as separate item on balance sheet. -- Prepayment has been classified from Deposits, Prepayments and Other Receivable and shown as separately on the balance sheet. -- Figures in note 6, 11 and 29 have been restated due to change in definition of "Executive". -- Trade and other payables have been classified in note 18 on Balance Sheet. -- Administrative expenses and selling and distribution expenses are shown separately as distribution and marketing expenses and administrative expenses respectively. -- Administrative expenses of Rs 51.5 million has been reclassified to manufacturing expenses and Rs 28.87 million to purchase, redrying and related expenses in comparative figures. -- In addition to the above figures, comparative information has also been restated in order to comply with changes in accounting policy as explained in note 2.3. 39. GENERAL 39.1. The financial statements of Premier Tobacco Company (Private) Limited, a wholly owned subsidiary of the company, have not been consolidated as its balances are considered immaterial. 39.2. Figures have been rounded off to the nearest thousand of rupees unless otherwise stated. |