| Atlas Honda Ltd - 2007 |
|
BALANCE SHEET AS AT JUNE 30, 2007
=================================================================================
Note 2007 2006
(Rupees in '000)
=================================================================================
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 6 3,566,931 3,598,732
Intangible assets 7 24,324 29,090
3,591,255 3,627,822
Investments - Available for sale 8 51,761 -
Long term loans and advances 9 12,943 17,097
Long term deposits and prepayments 10 15,900 11,027
CURRENT ASSETS
Stores, spares and loose tools 11 407,730 379,380
Stock in trade 12 1,580,925 1,937,675
Trade debts 13 282,249 280,448
Loans and advances 14 20,553 51,360
Trade deposits and prepayments 15 5,075 2,998
Investments at fair value
through profit and loss 16 864,989 327,317
Accrued mark-up / interest 17 90 543
Other receivables 18 283,552 312,410
Cash and bank balances 19 919,623 682,088
4,364,786 3,974,219
8,036,645 7,630,165
EQUITY AND LIABILITIES
Share capital & reserves
Share capital 20 411,291 357,644
Reserves 21 2,009,004 1,586,118
Unappropriated profit 555,526 665,168
2,975,821 2,608,930
NON CURRENT LIABILITIES
Long term liabilities 22 1,109,267 1,590,097
Deferred liabilities 23 559,487 419,689
CURRENT LIABILITIES
Trade and other payables 24 2,770,966 2,409,209
Accrued mark-up / interest 25 57,035 69,088
Short term borrowings 26 - 18,263
Current portion of long term liabilities 27 465,829 368,928
Provision for taxation 28 98,240 145,961
3,392,070 3,011,449
CONTINGENCIES & COMMITMENTS 29
8,036,645 7,630,165
=================================================================================PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2007=================================================================================
Note 2007 2006
(Rupees in '000)
=================================================================================
Net sales 30 16,608,413 17,420,263
Cost of sales 31 (15,044,640) (15,790,546)
Gross profit 1,563,773 1,629,717
Distribution cost 32 (371,569) (343,087)
Administrative expenses 33 (209,261) (185,232)
Other operating income 34 150,681 173,035
Other operating expenses 35 (60,772) (75,762)
Profit from operations 1,072,852 1,198,671
Finance cost 36 (269,337) (151,611)
Profit before tax 803,515 1,047,060
Taxation 37 (249,924) (370,228)
Profit after tax 553,591 676,832
Earnings per share - Basic & Diluted 38 13.46 16.46
=================================================================================CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2007=================================================================================
Note 2007 2006
(Rupees in '000)
=================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES 39 1,772,149 543,869
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure 454,124 (2,125,862)
Investments acquired (1,413,449) (415,441)
Sale proceeds of fixed assets 24,968 9,662
Sale proceeds of investments 915,540 545,908
Dividend received 12,507 95
Markup / interest received on deposits 8,415 43,955
Software development / acquisition cost (9,193) (20,923)
Cash used in investing activities (915,336) (1,962,606)
Net cash flow before financing activities 856,813 (1,418,737)
FINANCING ACTIVITIES
Repayment of long term loan (377,579) (231,981)
Long term loans received - 1,000,000
Payment of lease rentals (7,966) (5,310)
Assets sold under sale and lease back agreement - 40,000
(Repayment) / acquisition of short term borrowings (18,263) 18,263
Dividend paid (215,470) (152,510)
Net cash generated from financing activities (619,278) 668,462
Increase/(decrease) in cash & cash equivalent 237,535 (750,275)
Cash and cash equivalent as at July 1 682,088 1,432,363
Cash and cash equivalent as at June 30 919,623 682,088
=================================================================================STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2007============================================================================================================================================================
(Rupees in '000)
Capital Reserves Revenue Reserves Unrealized gain/(Ioss)
Gain on Unappro- on available on hedging Total
Share Share Sale of General priated for sale instruments
Capital Premium Land Reserve Profit investments cash flow hedge
============================================================================================================================================================
Balance as at June 30, 2005 255,460 39,953 165 1,171,000 618,796 - (7,141) 2,078,233
Profit for the year - - - - 676,832 - - 676,832
Final dividend (2005) @ Rs 6 per share - - - - (153,276) - - (153,276)
Issue of bonus shares 102,184 - - - (102,184) - - -
Transfer to general reserve - - - 375,000 (375,000) -
Net loss removed from equity and
reported in net profit for the period - - - - - 7,141 7,141
Balance as at June 30, 2006 357,644 39,953 165 1,546,000 665,168 - - 2,608,930
Profit for the year - - - - 553,591 - - 553,591
Final dividend (2006) @ Rs 6 per share - - - - (214,586) - - (214,586)
Issue of bonus shares 53,647 - - - (53,647) - - -
Transfer to general reserve - - - 395,000 (395,000) -
Unrealized gain on remeasurement of
hedging instruments - - - - - - 26,125 26,125
Unrealized gain on remeasurement of investment - - - - - 1,761 - 1,761
Balance as at June 30, 2007 411,291 39,953 165 1,941,000 555,526 1,761 26,125 2,975,821
============================================================================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 20071. CORPORATE INFORMATION Atlas Honda Limited (the Company) was incorporated as a public limited company on October 16, 1962 and its shares are listed on Karachi and Lahore Stock Exchanges in Pakistan. The registered office is located at 1-Mcleod Road, Lahore. The manufacturing / assembly facilities of the Company are located at Karachi and Sheikhupura, with branches / warranty and training centers at Karachi, Multan, Lahore and Rawalpindi. The Company is principally engaged in progressive manufacturing and marketing of motorcycles and auto parts. 2. STATEMENT OF COMPLIANCE 2.1. These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of Companies Ordinance, 1984. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) 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 Companies Ordinance, 1984 or the requirements of the said directives take the precedence. 2.2. Standards, interpretations and amendments to published approved accounting standards Amendments to published standards effective in 2006 IAS 19 (Amendment) - Employee Benefits, is mandatory for the company's accounting periods beginning on or after January 01, 2006. It introduces the option of an alternative recognition approach for actuarial gains and losses. It also adds new disclosure requirements. The company does not intend to adopt the alternative approach for recognition of actuarial gain and losses. Adoption of this amendment only impacts the format and extent of disclosures as presented in note 24.3 to the financial statements. New accounting standards and IFRIC interpretations that are not yet effective The following standards, amendments and interpretations of approved accounting standards are only effective for accounting periods beginning on or after July 1, 2007 and are either not relevant to the company's operations or are not expected to have a significant impact on the company's financial statements other than certain increased disclosures in the certain cases: � IAS 1 - Presentation of Financial Statements - Amendments relating to Capital Disclosures; � IAS 41- Agriculture; � IFRS 2 - Share Based Payments; � IFRS 3 - Business Combinations; � IFRS 5 - Non Current Assets Held for Sale and Discontinued Operations; � IFRS 6 - Exploration for and Evaluation of Mineral Resources; � IFRIC 8 - Scope of IFRS 2 Share Bases Payments; � IFRIC 9 - Reassessment of Embedded Derivatives; � IFRIC 10 - Interim Financial Reporting and Impairment; � IFRIC 11- Group and Treasury Shares Transactions; � IFRIC 12 - Service Concession Arrangements; � IFRIC 13 - Customer Loyalty Programmes. 3. BASIS OF PREPARATION 3.1. Measurement These financial statements have been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value and recognition of certain employee retirement benefits at present value. 3.2. Significant accounting judgements and estimates The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the companies accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates are significant to the financial statements are as follows: a) Retirement benefit obligations b) Provision for taxation c) Accrued liabilities d) Useful life of depreciable assets e) Provision for doubtful receivables and slow moving inventories 3.3. Functional and presentation currency These financial statements are presented in Pak Rupees which is the company's functional currency. All financial information presented in Pak Rupees has been rounded off to the nearest thousand. 4. APPROVAL OF FINANCIAL STATEMENTS These financial statements were approved by the Board of Directors and authorized for issue on August 29, 2007. 5. SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented unless otherwise stated. 5.1. Employee Benefits Defined Benefit Plan The Company has established funded gratuity scheme for its management and non management staff. Contributions under the schemes are made on the basis of actuarial valuation and are charged to Profit and Loss account. The valuation of both schemes was carried out on June 30, 2007 using the "Projected Unit Credit Method". The amount recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized transitional liability and as reduced by the fair value of the plan assets. Cumulative net unrecognized actuarial gain and loss at the end of the previous year which exceed 10% of the greater of present value of the Company's obligation and fair value of plan assets are amortized over the remaining service of employees expected to receive benefits. Defined Contribution Plan The Company operates defined contribution plan (i.e. recognized provident fund scheme) for its employees. Equal monthly contributions at the rate of 11 per cent of the basic salary are made to the fund both by the Company and employees. The assets of the fund are held separately under the control of trustees. Employee Compensated Absences Employee's entitlement to annual leave is recognized when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date. 5.2. Trade and other payables Trade and other payables are stated at their cost. 5.3. Taxation Current year Provision for current year's taxation is based! on taxable income at the current rates of taxation after taKing into account tax credits and tax rebates available, if any, or the minimum tax liability at the rate of 0.5% of turnover. Deferred tax Deferred tax is provided using the balance sheet liability method on all temporary differences arising from differences between tax bases of assets and liabilities and their carrying amount for financial statements reporting purpose. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply when the asset is realized or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except in the case of items credited or charged to equity in which case it is included in equity. 5.4. Property, plant & equipment Owned and leased assets The company has adopted the cost model for its Property, plant & equipment. Property, plant and equipment except freehold land are stated at cost less accumulated depreciation and any identified impairment loss. Freehold land is stated at cost less any identified impairment loss. Property, plant & equipment acquired by way of finance lease are stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at the inception of the lease less accumulated depreciation and impairment losses. Additions to plant & machinery includes total additions of Rs 595,187 thousands in respect of 500K plant. This comprises of Plant & machinery amounting to Es 385,073 thousands, jigs amounting to Rs 103,185 thousands, factory equipment amounting to Rs 33,402 thousands and electric & gas fittings amounting to Rs 73,527 thousands. Capital work in progress is stated at cost accumulated up to the balance sheet date. Items of fixed assets costing Rs 25,000 or less are not capitalized and charged off in the year of purchase. Depreciation Depreciation is charged to income on straight line method except plant & machinery, vehicles, building on leasehold land and building on freehold land, without considering extra shift workings. Depreciation on plant & machinery, vehicles, leasehold land, building on leasehold land and building on freehold land is charged to income on the basis of reducing balance method. Depreciation on additions is charged from the month the asset is available for use while no depreciation is charged in the month in which the asset is disposed off. The depreciation method and useful lives of items of property, plant & equipment are reviewed periodically and altered if circumstances or expectations have changed significantly. Any change is accounted for as a change in accounting estimate by changing the depreciation charge for the current and future periods. 500K plant is considered having a useful life of more than twenty years therefore depreciated at the rate applicable to Plant & Machinery. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Normal repairs and maintenance are charged to expenses as and when incurred. Major renewals and replacements are capitalized. Gains or losses on disposal or retirement of Property, plant & equipment are determined as the difference between the sales proceeds and the carrying amount of asset and are included in the profit and loss account. 5.5. Intangible Assets Intangible assets are stated at cost less accumulated amortization and identified impairment loss. Cost associated with developing or maintaining computer software programs are recognized as an expense. Costs that are directly associated with identifiable and unique software products controlled by the Company and will probably generate economic benefits exceeding costs beyond one year, are recognized as Intangible assets. Direct costs include staff cost, costs of the software development team and an appropriate portion of relevant overheads. Expenditure which enhances or extends the performance of computer software programs beyond their original specifications is recognized as a capital improvement and added to the original cost of the software. Software licenses are amortised using the straight line method over the period of two years from the month the license is acquired. Whereas, ERP (SAP) implementation cost is amortised using the straight line method over the period of five years from the month ERP is available for use or from the month the extended support cost is incurred. 5.6. Leases Assets held under finance leases are stated at cost less accumulated depreciation. The outstanding obligation under the finance lease less financial charges allocated to the future periods are shown as liability. Financial charge is calculated at the interest rate implicit in the lease and is charged directly against income. Payments made under operating lease are charged to profit on straight line basis over the lease term. 5.7. Investments Investments at fair value through profit or loss are initially measured at cost, being the fair value of consideration given. At subsequent reporting dates, these investments are remeasured at fair value (quoted market price), unless fair value cannot be reliably measured. The investments, for which a quoted market price is not available, are measured at cost as it is not possible to apply any other valuation methodology. Realised and unrealised gains and losses arising from changes in fair value are included in the net profit or loss for the period in which they arise. All purchases and sales of investments are recognized on the trade date which is the date that the company commits to purchase or sell the investment. Cost of purchase excludes transaction cost. At each reporting date, the company reviews the carrying amounts of the investments to assess whether there is any indication that such investments have suffered an impairment loss. If any such indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss, if any. Impairment losses are recognized as expense. Where an impairment loss subsequently reverses, the carrying amount of the investment is increased to the revised recoverable amount but limited to the extent of initial cost of the investment. A reversal of the impairment loss is recognized in income. Investments which are not classified as held to maturity investments, financial assets at fair value through profit and loss or loan and advances are classified as available for sale investments. All investments are initially recognized at cost, being the fair value of the consideration given. After initial recognition, investments which are classified as available for sale are remeasured at fair value. Unrealized gain and losses, on available for sale investments, are recognized in equity until the investment is sold or otherwise disposed off, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in income. 5.8. Stores, spares and loose tools Stores, spares and tools are stated at lower of cost and net realizable value. The cost of inventory is based on weighted average cost. Items in transit are stated at cost accumulated to balance sheet date. 5.9. Stock in trade These are valued at lower of weighted average cost and net realizable value. Cost of raw materials and components represent invoice values plus other charges paid thereon. Cost in relation to work in process and finished goods represent direct cost of raw materials, wages and appropriate manufacturing overheads. Goods in transit are valued at cost accumulated up to the balance sheet date. Net realizable value signifies the estimated selling price in the ordinary course of business less costs necessary to be incurred in order to make the sale. 5.10. Trade debts and other receivables These are originated by the company and are stated at cost less provisions for any uncollectible amount. An estimate is made for doubtful receivables when collection of the amount is no longer probable. Debts considered irrecoverable are written off. 5.11. Foreign currency transactions Transactions in foreign currencies are initially recorded at the rates of exchange ruling on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated into pak rupees at the exchange rates prevailing on the balance sheet date. In order to hedge its exposure to foreign exchange risks, the company enters into forward exchange contracts. Such transactions are translated at contracted rates. All exchange differences are charged to profit & loss account. /hjs25.12. Revenue Recognition Sales of motorcycles and spare parts are recognized as revenue when goods are despatched and invoiced to customers. Interest income is accrued on a time basis, by reference to the principal outstanding and the interest rate applicable. Dividend income is recognized when the Company's right to receive dividend has been established. 5.13. Borrowing Cost Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are charge to income in the period in which they are incurred. 5.14. Provisions Provisions are recognized when the company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of obligation. 5.15. Warranty The Company recognizes the estimated liability to repair or replace damaged part of products still under warranty at the balance sheet date. The provision is based on the ratio of warranty claims during the year to previous year's sales. 5.16. Dividend Dividend is recognized as liability in the period in which it is approved by the shareholders. 5.17. Financial assets and liabilities All financial assets and liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively. These financial assets and liabilities are subsequently measured at fair value, amortised cost or cost as the case may be. 5.18. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of cash flow statement, cash and cash equivalents comprise of notice deposits and cash & bank balances. 5.19. Interest / Mark-up bearing loans and borrowings Loans and borrowings are recorded at the proceeds received, net of direct issue costs, if any. Finance charges are accounted for on an accrual basis. 5.20. Impairment An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in the profit and loss account. 5.21. Related Party Transactions All transactions with related parties are carried out by the Company at arm's length prices. 5.22. Derivative Financial Instruments The company uses cross currency interest rate swaps to hedge its risks associated with interest rate fluctuations on its long term loans. Such derivative financial instruments are stated at fair value. The fair value of cross currency interest rate swap is the estimated amount that the company would receive or pay to sell the swap at the balance sheet date and taking into account the current interest rates. In relation to fair value hedges, which meet the conditions for special hedge accounting, any gain or loss from remeasuring the hedging instrument at fair value is recognised immediately in the profit and loss account. Any gain or loss on the hedged item attributable to the hedged risk is adjusted against the carrying amount of the hedged item and recognised in the profit and loss account. In relation to cash flow hedges, which meet the conditions for special hedge accounting, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity through the statement of changes in equity and the ineffective portion is recognised in the profit and loss account. Company also uses forward foreign exchange contracts and currency options to hedge its risk associated primarily with foreign currency fluctuations relating to purchases of raw materials and fixed assets from overseas suppliers. These contracts (except those having immaterial financial impact or which do not meet criteria for hedge accounting) are included in the balance sheet at fair value and any resultant gain or loss is recognized in the statement of changes in equity and subsequently adjusted against the value of raw materials and fixed assets. The fair values of forward foreign exchange contracts are included in "Other receivables" in case of favorable contracts and "Trade and other payables" in case of unfavorable contracts. The fair values of forward foreign exchange contracts are calculated by reference to current forward foreign exchange rates with similar maturity profiles. 6. PROPERTY, PLANT AND EQUIPMENT ========================================================================
Note 2007 2006
(Rupees in '000)
========================================================================
Operating fixed assets 6.1 3,550,937 2,833,873
Capital work in progress 6.6 15,994 764,859
3,566,931 3,598,732
========================================================================6.1. Operating Fixed Assets====================================================================================================================================================
(Rupees in '000)
Cost Depreciation
As at As at As at As at W.D.V.
July 01, June 30, July 01, For the June 30, June 30, Rate
Particulars 2006 Additions Disposals 2007 2006 Year Disposals 2007 2007 %
====================================================================================================================================================
Owned Assets
Freehold Land 5,112 - - 5,112 - - - - 5,112
Leasehold Land 34,132 - - 34,132 6,046 510 - 6,556 27,576 1.79
Building on freehold land 292,779 51,920 - 344,699 42,866 27,389 - 70,255 274,444 10
Building on lease hold land 66,467 12,394 - 78,861 30,209 3,897 - 34,106 44,755 10
Plant & machinery 3,011,815 880,328 5,190 3,886,953 804,520 286,503 4,767 1,086,256 2,800,697 10
Dies & jigs 630,816 112,788 - 743,604 573,036 63,640 - 636,676 106,928 50
Factory equipment 85,228 27,817 - 113,045 31,231 18,858 - 50,089 62,956 20
Office equipment 15,136 357 730 14,763 9,802 2,119 550 11,371 3,392 20
Computers & accessories 66,141 5,974 - 72,115 36,517 11,715 - 48,232 23,883 25
Furniture & fixtures 11,302 3,436 535 14,203 5,728 2,208 432 7,504 6,699 20
Fixture & equipment 1,300 - - 1,300 1,264 18 - 1,282 18 20
Electric & gas fittings 104,793 29,500 1,003 133,290 51,335 19,192 868 69,659 63,631 20
Vehicles 127,607 78,475 42779 163,303 52,255 23,078 22,849 52,484 110,819 20
Service equipment 389 - - 389 335 27 - 362 27 20
Total owned assets 4,453,017 1,202,989 50,237 5,605,769 1,645,144 459,154 29,466 2,074,832 3,530,937
Assets held under finance lease
Electric & gas fittings 30,000 - - 30,000 4,000 6,000 - 10,000 20,000 20
Total-2007 4,483,017 1,202,989 50,237 5,635,769 1,649,144 465,154 29,466 2,084,832 3,550,937
Total-2006 2,981,282 1,523,971 22,236 4,483,017 1,265,514 399,070 15,440 1,649,144 2,833,873
====================================================================================================================================================6.2. Allocation of depreciation============================================================================
Note 2007 2006
(Rupees in '000)
============================================================================
Depreciation has been allocated as follows:
Cost of goods manufactured 31.1 436,669 383,231
Administrative expenses 33 28,485 15,839
465,154 399,070
============================================================================6.3. Certain dies and moulds having book value of Rs. 36,164 thousand (2006: Rs. 65,937 thousand) are held with Electro Polymers (Private) Limited, Pak Polymer (Private) Limited, Sigma Industries (Private) Limited, Syed Bhais (Private) Limited, Zahoor Die Casting Company, Pakistan Machine Tool Factory (Private) Limited, Auvitronics Limited, Automotive plastics and Allwin Engineering Industries Limited (Associated company) for production of components to be supplied to the Company.6.4. Addition to plant and machinery includes Rs 16.8 million (2006: Rupees 32.9 million) borrowing cost capitalised during the year. 6.5. Disposal of Fixed Assets Particulars of operating fixed assets having written down value (WDV) exceeding Rs 50,000 each disposed off during the year are as follows: ===================================================================================================================================================================
(Rupees in '000)
Accumulated Sales Profit/ Mode of
Assets Cost Depreciation W.D.V. Proceeds (Loss) disposal Particulars of Buyers
===================================================================================================================================================================
Plant & machinery
single Purpose Machines 4,297 4,265 32 146 114 Negotiation Aliwin Engineering Ltd, 15th Mile National Highway,
Landhi, Karachi (Associated Co.)
Vehicles
Honda civic 1,223 479 744 756 12 Negotiation Shoaib Saleem, House No. 33, Hossaini Society,
Alaingir Road, Karachi
Honda civic 795 175 620 620 - Negotiation Atlas Asset Management flU, Ground Floor,
Federation House, shahra-e-Firdousi, Karachi
(Associated co.)
Honda civic 1,018 464 554 623 69 Company Policy col. Khalid Aziz, Employee
Honda civic 1,018 464 554 554 - Company Policy Maqsood Basra, Employee
Honda civic 1,022 488 534 634 100 Company Policy Talha Saad, Employee
Honda city 828 307 521 586 65 Company Policy jaffar Hussain Naqvi. Employee
Suzuki Alto 512 17 495 495 - Company Policy Muhammad Asif, Employee
Suzuki Alto 504 25 479 479 - Negotiation SM. Ather, House NC). 8-8-A, Block 4-E,
Nazimababd, Karachi
Honda city 832 379 453 471 18 Company Policy Waqar Matloob, Employee
Honda civic 1.243 801 i42 515 73 Company Policy Jawaid Iqbal Ahmed, Employee
Honda City 828 404 424 512 88 Company Policy zaheer UI Haq, Employee
Honda City 828 407 421 133 12 Company Policy Afaq Abmad, Employee
Suzuki Alto 504 131 373 391 18 Company Policy Manzoor Qadir, Employee
Honda City 832 413 419 471 52 Negotiation Wazir Ali, F-133/2. Sunehri Mosque. Martin Quarter
P.I.B. colony, Karachi
Honda City 832 420 412 498 86 Company Policy Khaled Nadeem, Employee
Honda Civic 991 585 406 406 - Company Policy NI. Amir Awan, Employee
Honda City 832 427 405 455 50 Negotiation shamim Habib Bharmal, House No. D-162,
Block-5, clifton Scheme No. 5, Karachi
Suzuki Cultus 615 221 394 410 16 Company Policy Riaz Ahmad Butt, Employee
Suzuki Alto 511 120 391 402 11 Company Policy zia 151 Hassan, Employee
Suzuki Cultus 610 220 390 407 17 Company Policy Jamil A. Khan, Employee
Suzuki Mehran 398 13 385 398 13 Company Policy M. Asif, Employee
Honda civic 975 596 379 403 24 Negotiation Syed Hasan Ahmed, House NC). 183/A, Model
Town B, Bahawalpur
Suzuki Mebran 395 20 375 375 - Insurance claim Atlas Insurance company, Federation House, Shahra-e
Firdousi, Main clifton, Karachi (Associated co.)
Honda Civic 975 602 373 404 31 Company Policy Amir Ali Bawa, Employee
Suzuki Mehran 398 27 371 371 - Company Policy Tahir Nazir, Employee
Suzuki Mehran 397 26 371 371 - Company Policy NI. Saeed Anwar, Employee
Suzuki Mehran 395 33 362 362 - Negotiation Mohammad Akram, House No. R-723, Block I,
Sharifabad, F.B. Area, Karachi
Suzuki Mehran 395 33 362 362 - Company Policy Syed Shabih Ahmed, Employee
Suzuki Mehran 403 47 356 356 - Company Policy Samina Naz, Employee
Honda City 808 477 331 331 - Company Policy Iqbal Ahmad, Employee
Honda City 808 477 331 331 - Company Policy Maqsoocl Ur Rehman Rehmani, Employee
Honda City 808 477 331 331 - Company Policy Razi Ur Rehman, Employee
Suzuki Mebran 395 66 329 329 - Negotiation Muhammad Imran Khan. House No. 7-C,
Sunset Lane No. 4, Phase-2, Extension DHA, Karachi
Honda City 812 485 327 347 20 Company Policy Shakil Ahmed, Employee
Honda City 812 490 322 335 13 Negotiation Syed Imran Hussain, House No. R-458, Block-8,
Azizabad, F.B. Area, Karachi
Suzuki Alto 502 181 321 348 27 Company Policy M. Rashid Rasheed, Employee
Suzuki Alto 502 231 271 289 18 Company Policy Sarfraz Mufti, Employee
Honda Civic 931 626 305 381 76 Company Policy Javaid Iqbal Afghani , Employee
Suzuki Alto 496 194 302 314 12 Negotiation First Prudential Modarba, Mehersons Estate
1st Floor, Block-i, Talpur Road, Karachi
Honda City 808 510 298 335 37 Company Policy H. zafar Iqbal, Employee
Daihatsu Coure 459 170 289 307 18 Company Policy Khawaja Shulauddin, Employee
Honda City 781 525 256 320 64 Company Policy Muhammad zaman, Employee
Suzuki Cultus 390 140 250 270 20 Company Policy Nisar zaman Khao, Employee
Daihatsu Coure 439 218 221 239 18 Company Policy Arshad Mi Ahid, Eniployee
Daihatsu Coure 439 218 221 225 4 Company Policy Salnian Khan, Employee
Daihatsu Coure 434 215 219 237 18 Negotiation Shafiq Ahmed, House No. 27. Rabia Garden,
co-operative Society, Block-3, Karachi
Daihatsu Coure 439 244 i95 276 81 Company Policy Zia UI Islam, Employee
Daihatsu Coure 439 244 195 276 81 Company Policy Inayatullah, Employee
Honda Civic 872 689 183 357 174 Company Policy Raffat Iqbal, Employee
Daihatsu Coure 428 253 175 175 - Company Policy Mubashar Hassan Rana, Employee
Daihatsu Coure 399 238 161 164 3 Negotiation Atif Ali, House No. F-47/1, Block-F, Hydri North
Nazimabad, Karachi
Daihatsu Coure 399 241 158 165 7 Negotiation Muhammad Hassan Salam, Ls-54, Block 16,
F.B. Area, Karachi
Honda Civic 835 704 131 420 289 Negotiation Ather Guizar Khichi, House No. 22/2. 32 Street
Phase-5, 0,1-L.A. Karachi
Honda Civic 901 807 94 390 296 Negotiation Qaiser Nawaz Janjoa, 25-Nagy Road, Westridge-1
Rawalpindi
Honda CO 125 DLX 73 5 68 68 - Insurance Claim Atlas Insurance Company. Federation 1-louse,
Shahra-e-Firdousi, Main Clifton. Karachi
Honda CG 125 68 2 66 63 (3) Insurance Claim Atlas Insurance Co. Ltd, The Mall Road
Lahore, (Associated Co.)
Honda CC 125 DLX 73 8 65 65 - Company Policy Syed Sabihuddin, Employee
Honda CG 125 I)LX 73 8 65 65 - Insurance Claim Atlas Insurance Company, Federation House,
Shahra-e Firdousi, Main Clifton,
Karachi (Associated Co.)
Honda CG 125 68 6 62 62 - Company Policy Waqas Masood , Employee
Honda CC 125 DLX 73 12 61 66 5 Company Policy Ghulam Mustafa Employee
Honda CG 125 68 10 58 58 - Company Policy Imran Icirees, Employee
Honda CG 125 67 13 54 54 - Company Policy Adeel Hanif Zaidi, Employee
Honda CG 125 67 16 51 51 - Company Policy Zeeshan Mehdi, Employee
Honda CG 125 68 17 51 51 - Company Policy M.Ahsan Mir , Employee
Office equipments
Photo Copier Cannon 695 518 177 45 (132) Negotiation Shirazi Trading Co.(Pvt) I.td., The Mall Road,
Lahore (Associated Co.)
Furniture & fixtures
Office Furniture 490 390 100 40 (60) Negotiation Al-Jannat Hospital, Kamra Road, Attoek
42,625 22,734 19,891 21,846 1,955
Aggregate values of
items where WDV is 7,612 6,732 3,268 3,122 (146)
less than us. 50,000
2007 50,237 29,466 23,159 24,969 1,809
2006 22,236 15,440 6,796 9,662 2,866
===================================================================================================================================================================6.6. Capital work in progress==============================================================================
2007 2006
(Rupees in '000)
==============================================================================
Plant and machinery 6,382 548,634
Building 286 9,590
Dies & jigs - 104,315
Factory equipment - 31,260
Electric & gas fittings 6,110 64,652
Vehicles 3,216 -
Advances to contractors / suppliers - 6,408
15,994 664,859
==============================================================================7. INTANGIBLE ASSETS===========================================================================================================
(Rupees in '000)
Cost Amortization W.D.V.
As at As at As at As at
July 01, June 30, July 01, For the June 30, June 30,
Particulars 2006 Additions 2007 2006 Year 2007 2007
===========================================================================================================
Software licenses 13,190 8,946 22,136 12,823 1,858 14,681 7,455
SAP implementation cost 35,5-44 247 35,791 6,821 12,101 18,922 16,869
2007 48,734 9,193 57,927 19,644 13,959 33,603 24,324
2006 27,811 20,923 48,734 9,086 10,558 19,644 29,090
===========================================================================================================8. INVESTMENTS - AVAILABLE FOR SALE=====================================================================================
Note 2007 2006
(Rupees in '000)
=====================================================================================
Unquoted
Arabian Sea Country Club Limited
200,000 (2006: 200,000) ordinary shares of Rs. 10 each. 2,000 2,000
Less: Impairment in the value of investment 2,000 2,000
Automotive Testing & Training Centre (Private) Limited
50,000 (2006: 50,000) ordinary shares of Rs. 10 each 500 500
Less: Impairment in the value of investment 500 500
Atlas Islamic Fund (Related party) - -
100,000 units (2006: NIL) of Rs. 500 each 8.1 51,761 -
=====================================================================================8.1. The company as a core invester has agreed to hold the investment for a minimum period of tWO years from the date of issue of such units. These units can he transferred subject to the condition that they will not be redeemed during the remaining period of two years.9. LONG TERM LOANS AND ADVANCES Considered Good =====================================================================================
2007 2006
(Rupees in '000)
=====================================================================================
Due from:
Executives 2,426 2,120
Non executives 20,699 25,385
23,125 27,505
Less: Installments recoverable within twelve months
Executives 2,371 1,614
Non executives 7,811 8,794
10,182 10,408
12,943 17,097
=====================================================================================9.1. Reconciliation of loans and advances to executives=====================================================================================
2007 2006
(Rupees in '000)
=====================================================================================
Balance at beginning of the year 2,120 885
Add: Disbursement 3,591 2,048
5,711 2,933
Less: Recovered during the year 3,285 813
2,426 2,120
=====================================================================================9.2. These loans have been provided to executives and employees for personal use and for purchase of motorcycles. Personal loans are repayable in eighteen monthly installments whereas motorcycles loans are repayable in equal monthly installments within a maximum period of four years. Motorcycles loans are secured against motorcycles which are registered in the name of the Company.9.3. Maximum amount due from executives at the end of any month was Rs. 2,426 thousand (2006: Rs. 2,120 thousand) and due from associated companies at the end of any month was NIL (2006: NIL). 10. LONG TERM DEPOSITS AND PREPAYMENTS =====================================================================================
2007 2006
(Rupees in '000)
=====================================================================================
Considered Good
Deposits 13,860 11,027
Prepayments 2,040 -
15,900 11,027
=====================================================================================11. STORES, SPARES & LOOSE TOOLS=====================================================================================
2007 2006
(Rupees in '000)
=====================================================================================
Consumables stores 70,558 67,416
Maintenance spares 104,640 106,621
Loose tools 242,379 215,190
417,577 389,227
Less: Provision for slow moving stores 9,847 9,847
407,730 379,380
=====================================================================================12. STOCK-IN-TRADE=====================================================================================
2007 2006
(Rupees in '000)
=====================================================================================
Raw materials & components
In hand 1,184.739 1246263
With third parties 90,437 77,956
1,275,176 1,324,219
Work in Process 6,378 233,800
Finished Goods
Motorcycles 44,802 42,301
Spare parts 69,411
100,889 111,712
Goods in transit 225,897 289,561
1,608,340 1,959,292
Less: Provision for slow moving stocks 27,415 21,617
1,580,925 1,937,675
=====================================================================================12.1.Stock in trade and trade debtors upto a maximum amount of Rs. 2,529 million (2006: Rs. 1,780.2 million) are under hypothecation as security for the Company's short term finances (Note 26). 13. TRADE DEBTS =====================================================================================
2007 2006
(Rupees in '000)
=====================================================================================
Considered Good
Export - secured 21,002 37,113
Local - unsecured 261,247 243,335
282,249 280,448
=====================================================================================13.1.The bank has lien on export bills / contracts upto a maximum of Rs. 100 million (2006: Rs. 30 million) against foreign currency financing (Note 12.1 & Note 26). 13.2. Amount due from related parties, directors, Chief Executive and executives were NIL (2006: NIL). 14. LOANS AND ADVANCES =====================================================================================
Note 2007 2006
(Rupees in '000)
=====================================================================================
Considered good
Loan and advances to other employees 3,646 2,831
Advances to employees for expenses
-- unsecured 14.1 314 1,784
Advances to suppliers, contractors and others
-- unsecured 6,411 36,337
Current portion of loans and advances 9 10,182 10,408
20,553 51,360
=====================================================================================14.1. Advances to employees for expenses include amount due from executives Rs. 62 thousand (2006: NIL).14.2. Amount due from related parties, directors and Chief Executive were NIL (2006: NIL). 15. TRADE DEPOSITS AND PREPAYMENTS =====================================================================================
2007 2006
(Rupees in '000)
=====================================================================================
Trade deposits 2,264 1,283
Prepayments 2,811 1,715
5,075 2,998
=====================================================================================16. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS============================================================================
No. of Units
2007 2006 Related Parties
============================================================================
7,007 323,327 Atlas Stock Market Fund 4,876 211,722
1,433,043 61,740 Atlas Income Fund 783,403 34,299
8,338,050 8,338,050 Atlas Fund of Funds 76,710 81,296
9,778,100 8,723,117 864,989 327,317
============================================================================17. ACCRUED INTEREST=================================================================================
Note 2007 2006
(Rupees in '000)
=================================================================================
Interest accrued on savings deposit accounts 90 543
18.OTHER RECEIVABLES
Receivable from Government:
-- Income tax deducted at source / paid in advance 236,419 234,853
-- Sales Tax 1,590 45,362
238,009 280,215
Unrealised gain on remeasurement of interest rate
swap to fair value 18.1 33,900 -
Other receivable 18.2 11,643 32,195
283,552 312,410
Other receivable- Considered doubtful 615 615
284,167 313,025
Provision for doubtful receivable 615 615
283,552 312,410
=================================================================================18.1. This represents the fair value of three separate Cross Currency Interest Rate Swap agreements, the company has entered into with United Bank Limited and Standard Chartered Bank (Pakistan) Limited at the aggregate notional amount of Rs. 850 million (equivalent to USD 14.9 million). Under the terms of the swap agreements, at each reset date, the company is entitled to receive 6 months KIBOR on notional amounts and is required to pay 6 months LIBOR plus spread ranging from 1.05% to 3.05% on USD notional amount. In addition to this the company is required to pay exchange difference arising due to fluctuation in USD/PKR rates between reset and the settlement dates. These transactions have been remeasured to fair value at the end of the year resulted in a gain of Rs. 26.125 million which has been classified under equity.18.2. Other receivables include Rs. 9,852 thousand (2006: Rs. 23,366 thousand) duty draw back receivable from Collector of Customs. 19. CASH AND BANK BALANCES =================================================================================
2007 2006
(Rupees in '000)
=================================================================================
In current account 393,056 320,048
In savings deposit accounts 442,115 357,153
Term deposits 60,000 -
Cheques in hand 24,452 4,887
919,623 682,088
=================================================================================20. SHARE CAPITAL===========================================================================================================
2007 2006 2007 2006
(No. of Shares) (Rupees in '000)
Authorised Capital
===========================================================================================================
100,000,000 100,000,000 Ordinary shares of Rs. 10 each 1,000,000 1,000,000
Issued, subscribed and paid up capital
6,352,748 6,352,748 Ordinary shares of Rs. 10 each fully paid-up in 63,528 63,528
Ordinary shares of Rs. 10 each issued as
34,517,044 29,152,380 fully paid bonus shares 345,170 291,523
Ordinary shares of Rs. 10 each issued
259,300 259,300 against consideration other than cash 2,593 2,593
41,129,092 35,764,428 411,291 357,644
===========================================================================================================20.1. Movement in share capital during the year===========================================================================================================
2007 2006 2007 2006
(No. of Shares) (Rupees in '000)
Authorised Capital
===========================================================================================================
35,764,428 25,546,020 As at June 30 357,644 255,460
Issued ordinary shares of Rs 10 each as
5,364,664 10,218,408 fully paid bonus shares 53,647 102,184
41,129,092 35,764,428 411,291 357,644
==============================================================================================20.2. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to company's residual assets.20.3. On September 29, 2006 issuance of three bonus shares for every twenty shares held resulted in an increase in issued capital by Rs. 53,647 thousands (2006: Rs 102,184 thousands). 20.4. 22,104,766 (2006: 19,221,537) ordinary shares of Rs. 10/- each were held by associated companies at the year end. 21. RESERVES ================================================================================
2007 2006
(Rupees in '000)
================================================================================
Capital Reserves 40,118 40,118
General Reserve 1,941,000 1,546,000
Unrealized gain on remeasurernent
of hedging instruments 26,125 -
Unrealized gain on remeasurement of investments 1,761 -
2,009,004 1,586,118
================================================================================22. LONG TERM LIABILITIES================================================================================
Note 2007 2006
(Rupees in '000)
================================================================================
Long term financing -Secured 22.1 1,096,419 1,570,441
Liabilities against assets
subject to finance lease 22.2 12,848 19,656
1,109,267 1,590,097
================================================================================22.1. LONG TERM FINANCING-SECURED==================================================================================================================================
No. of
installments
Sale Purchase and date of Rate of 2007 2006
Name of Banks price price commencement markup (Rupees in '000)
==================================================================================================================================
Bank of Tokyo-Mitsubishi UFJ Ltd 250,000 353,767 10 Half yearly 0.5% over 175,000 225,000
(Loan I) 05-04-06 6 months
Kibor
Bank of Tokyo-Mitsubishi UFJ Ltd 500,000 744,973 10 Half yearly 0.5% over 450,000 500,000
(Loan II) 05-01-07 6 months
Kibor
Habib Bank Limited 250,000 273,153 10 Half yearly 1.25% over 100,000 150,000
08-10-04 6 months
T-bill
MCB Bank Limited 250,000 360,896 10 Half yearly 0.5% over 170,440 213,019
27-09-05 6 months
KIBOR
National Bank of Pakistan (Loan I) 250,000 327,343 10 Half yearly 1.25% over 75,000 125,000
28-06-04 6 months
T-Bill
National Bank of Pakistan (Loan II) 250,000 387,123 10 Half yearly 0.5% over 150,000 200,000
30-09-05 6 months
KIBOR
National Bank of Pakistan (Loan III) 250,000 368,151 10 Half yearly 0.5% over 225,000 250,000
30-09-06 6 months
KIBOR
National Bank of Pakistan (Loan IV) 250,000 368,151 10 Half yearly 0.5% over 200,000 250,000
02-01-07 6 months
KIBOR
Standard Chartered Bank 100,000 133,333 10 Half yearly 0.75% over 10,000 20,000
(Pakistan) Limited 04-01-03 6 months
T-Bill
1,555,440 1,933,019
Less: Current maturity shown under current liabilities - (Note 27) 459,021 362,578
1,096,419 1,570,441
==================================================================================================================================These loans are secured against first equitable mortgage Charge ranking pari passu on immovable properties of the company, first pari passu Charge by way of hypothecation of fixed assets of the company and demand promissory note.22.2. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE ===========================================================================================================
2007 2006 2007 2006
(Rupees in '000)
Present value of
Minimum lease payments Minimum lease payments
===========================================================================================================
Year ended June 30, 2007 - 7,966 6,350
Year ended June 30, 2008 7,966 7,966 6,808 6,808
Year ended June 30, 2009 7,966 7,966 7,299 7,299
Year ended June 30, 2010 5,656 5,655 5,549 5,549
Total minimum lease payments 21,588 29,553 19,656 26,006
Less: Financial charges allocated to future period 1,932 3,547 - -
Present value of minimum lease payments 19,656 26,006 19,656 26,006
Current maturity shown under
current liabilities-Note 27 6,808 6,350 6,808 6,350
12,848 19,656 12,848 19,656
===========================================================================================================The above represents finance lease entered into with Atlas Bank Limited, an associated undertaking for generators. The balance of liability is payable by October 2009 in monthly installments. Monthly lease payments include finance charge of 7% per annum which is used as a discounting factor.23. DEFERRED LIABILITIES ===================================================================================
Note 2007 2006
(Rupees in '000)
===================================================================================
Compensated leave absences 23.1 12,493 35,224
Deferred taxation 23.2 516,994 384,465
559,487 419,689
===================================================================================23.1. Compensated leave absences===================================================================================
2007 2006
(Rupees in '000)
===================================================================================
Balance at beginning 35,224 27,988
Add: Provision for the year 10,166 9,504
45,390 37,492
Less: Payments during the year 2,897 2,268
42,493 35,224
===================================================================================23.2. Deferred taxation===================================================================================
2007 2006
(Rupees in '000)
===================================================================================
The liability for deferred taxation comprises of timing differences relating to:
Deferred credit arising in respect of accelerated tax
depreciation & amortisation 550,712 411,028
Deferred debit arising in respect of various provision (33,718) (26,563)
516,994 384,465
===================================================================================23.3. Movement of deferred tax liability===================================================================================
2007 2006
(Rupees in '000)
===================================================================================
Opening balance 384,465 163,800
Increase in deferred tax liabilities 139,684 229,448
Decrease in deferred tax assets (7,155) (8,783)
Charge for the year 132,529 220,665
516,994 384,465
===================================================================================24. TRADE AND OTHER PAYABLES===================================================================================
Note 2007 2006
(Rupees in '000)
===================================================================================
Trade creditors 900,262 1,062,597
Accrued liabilities 786,846 677,272
Provision for warranty 24.1 9,600 9,700
Customers advances & credit balances 802,216 505,266
Federal Excise Duty payable 25,685 -
Retention money 3,597 4,272
Withholding tax payable - 8,272
Sales tax payable 138,384 39,482
Workers Profit Participation Fund 24.2 43,153 56,086
Provision for gratuity 24.3 6,776 6,492
Workers/ Welfare Fund 24.8 37,711 21,313
Unclaimed dividend 24.9 8,277 9,161
Other liabilities 24.10 8,459 9,296
2,770,966 2,409,209
===================================================================================Accrued liabilities include Rs. 500,137 thousands (2006: Rs. 462,286 thousands) due to Honda Motor Co. Limited, Japan - an associated company.24.1. Provision for Warranty ===================================================================================
2007 2006
(Rupees in '000)
===================================================================================
Balance at beginning 9,700 9,500
Add: Provided during the year - 1,200
9,700 10,700
Less: Paid / reversed during the year 100 1,000
9,600 9,700
===================================================================================24.2. Workers' Profit Participation Fund===================================================================================
Note 2007 2006
(Rupees in '000)
===================================================================================
Balance as at beginning 56,086 50,433
Add: Return on funds utilised by the company 1,085 2,072
57,171 52,505
Less: Payment made during the year 57,171 52,505
Contributions for the year 35 43,153 56,086
43,153 56,086
===================================================================================24.3. Provision for gratuity===================================================================================
Note 2007 2006
(Rupees in '000)
===================================================================================
Balance at beginning 6,492 4,730
Add: Provision for the year 24.4 6,776 6,492
13,268 11,222
Less: Payments during the year 6,492 4,730
6,776 6,492
===================================================================================24.4. The amount included in the balance sheet arising from the Company's obligation in respect of its defined benefit retirement benefit plan is as follows:=======================================================================================================================================
Funded Funded (Rupees in '000)
Management Non-management Total
2007 2006 2007 2006 2007 2006
=======================================================================================================================================
Present value of defined benefit obligation
(actuarial liability) 95,225 81,193 24,758 22,069 119,983 103,262
Fair value of plan assets (70,384) (61,695) (26,704) (25,963) (97,088) (87,658)
Payable/(receivable) to associated
companies in respect of transferees 2,126 - 361 - 2,487 -
Unrecognized actuarial gain / (loss) (20,601) (13,323) 1,995 4,211 (18,606) (9,112)
Balance at end 6,366 6,175 410 317 6,776 6,492
Net Liability at the beginning of the year 6,175 4,381 317 350 6,492 4,731
Charge for the year 6,366 6,379 410 317 6,776 6,696
Contributions (6,175) (4,585) (317) (350) (6,492) (4,935)
Net Liability at the end of the year 6,366 6,175 410 317 6,776 6,492
Movement in the present value of defined
benefit obligation is as follows
Present value of defined benefit obligation 81,193 74,118 22,069 22.507 103,262 96,625
Current service cost 4,272 3,804 856 887 5,128 4,691
Interest cost 6,972 6,134 1,993 2,003 8,965 8,137
Benefit paid (4,128) (2,128) (605) (1,005) (4,733) (3,133)
Actuarial (gain) / loss 9,042 (681) 806 (2,323) 9,848 (3,004)
Receivable/ (payable) to associated
companies in respect of transferees (2,126) - (361) - (2,487) -
Present value of defined benefit obligation 95,225 81,247 24,758 22,069 119,983 103,316
Movement in the fair value of plan assets is as follows
Fair value of plan assets as at June 30, 2006 61,695 52,926 25,963 27,250 87,658 80,176
Expected return on plan assets 5,312 4,342 2,323 2,404 7,635 6,746
Contributions 6,175 4,585 317 350 6,492 4,935
Benefits paid (4,127) (2,182) (605) (1,005) (4,732) (3,187)
Actuarial gain/ (loss) 1,329 2,024 (1,294) (3,036) 35 (1,012)
Fair value of plan assets as at June 30, 2007 70,384 61,695 26,704 25,963 97,088 87,658
Plan assets comprises:
Debt 50,046 26,568 10,621 10,613 60,667 37,181
Equity 20,049 34,294 15,700 14,500 35,749 18,794
Cash 289 833 383 850 672 1,683
70,384 61,695 26,704 25,963 97,088 87,658
=======================================================================================================================================24.5. Comparison of present value of defined benefit obligation, the fair value of plan assets and the surplus or deficit of gratuity fund for five years is as follows:============================================================================================================
2007 2006 2005 2004 2003
============================================================================================================
Present value of defined benefit obligation 119,983 103,262 96,625 83,326 72,302
Fair value of plan assets 97,088 87,658 80,298 73.508 47,555
Surplus/ (deficit) (22,895) (15,604) (16,327) (9,818) (24,747)
Experience adjustment on obligation (gain)/loss 9,848 (3,004) 7,242 2,704 1,156
Experience adjustment on plan assets (gain)/loss (35) 1,012 (782) (763) 1,407
============================================================================================================24.6. The expense is recognized in the following line items in the income statement===============================================================================================================
Funded Funded (Rupees in '000)
Management Non-management Total
Note 2007 2006 2007 2006 2007 2006
===============================================================================================================
Cost of sales 31.4 2,364 2,424 410 317 2,774 2,741
Distribution cost 32.2 775 765 - - 775 765
Administrative expenses 33.2 3,227 3,190 - - 3,227 3,190
6,366 6,379 410 317 6,776 6,696
===============================================================================================================24.7. Principal actuarial assumptions at the balance sheet date for:========================================================================= Discount rate 10% 9% 10% 9% Future salary increases 9% 8% 9% 8% Return on investment 10% 9% 10% 9% =========================================================================24.8. Workers' Welfare Fund =======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Balance at beginning 21,313 19,026
Less: Paid during the year - 16,279
21,313 2,747
Add: Charge for the current year 35 16,398 21,313
(Adjustment)/ prior year - (2,747)
16,398 18,566
37,711 21,313
=======================================================================================24.9. Unclaimed dividend=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Dividends 8,267 9,151
Bonus fractions 10 10
8,277 9,161
=======================================================================================The board of directors have proposed a final dividend for the year ended June 30, 2007 of Rs. 6.0 (2006: Rs. 6.0) per share and bonus shares issue at 15 % i.e three bonus shares for every twenty shares held (2006: 15% i.e. three bonus shares for every twenty shares held), amounting to Rs. 308.469 million (2006: Rs.268.233 million) at their meeting held on August 29, 2007 for approval of the members at the Annual General Meeting to be held on September 29, 2007. These financial statements do not reflect this dividend payable as explained above.24.10. Other liabilities include vehicle deposits under company vehicle policy amounting to Rs. 3,192 thousands (2006: 3,598 thousands). 25. ACCRUED MARK-UP/INTEREST =======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Long term financing 49,809 56,149
Short term borrowing 7,226 12,939
57,035 69,088
=======================================================================================26. SHORT TERM FINANCES=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Balances with banks - 18,263
=======================================================================================The Company has facilities for short term running finance under mark-up arrangements amounting to Rs. 1,800 million (2006: Rs. 1,050 million). The facilities carry mark-up at the rate of Re 0.2764 to Re 0.3244 (2006: Re 0.2630 to Re 0.2945) per thousand per day on daily product basis. These facilities are secured against joint hypothecation charge on stocks in trade and trade debts amounting to Rs. 2,193.06 million (2006: Rs. 1,782.2 million). These facilities are expiring on various dates by March 31, 2008. The markup on running finance facilities is payable on quarterly basis.The facility for opening letters of credit and guarantees as at 30 June, 2007 amounted to Rs, 2,835 million (2006: Rs. 1,960 million) of which the amount remaining unutilized at the yearend was Rs. 2,225 million (2006: Rs. 1,040 million). This facility is secured against lien on export bills / contracts. The Company has facility for foreign currency finance amounting to Rs. 120 million (2006: Rs. 30 million) which is secured against lien on export bills / contracts. 27. CURRENT PORTION OF LONG TERM LIABILITIES =======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Current portion of long term loans 22.1 459,021 362,578
Current Portion of liability against assets
subject to finance lease 22.2 6,808 6,350
465,829 368,928
=======================================================================================28. PROVISION FOR TAXATION=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Balance at beginning 145,961 287,085
Add Provision made during the year
Current year 98,000 138,014
Prior year
117,395 149,563
Less: Payment during the year 165,116 290,687
98,240 145,961
=======================================================================================28.1. The charge for the year can be reconciled to the profit as per the income statement as follows:=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Profit before tax 803,515 1,047,060
Tax at the applicable income tax rate 35% 281,230 366,471
Tax effect of expenses that are not deductible in
determining taxable profit as under:
Gratuity 0.0% 99 (3,020)
Leave Encashment 0.1% (782) 1,071
Depreciation & amortisation -17.7% (141,896) (209,628)
Gain on disposal of fixed assets 0.0% 137 176
Other -0.1% (874) 361
Gain on sale of investments -2.1% (16,656) (12,078)
Gain on remeasurement of investments -1.9% (15,597) (3,947)
Unrealized gain on remeasurement of derivatives -0.3% (2,721) -
Effect of difference in tax rates under normal
assessment and presumptive tax regime -0.1% (1,188) (1,392)
Effect of difference in tax rates under normal
assessment and tax on dividend for companies -0.5% (3,752) -
12.2% 98,000 138,014
=======================================================================================Subsequent to the balance sheet date the Income Tax department has initiated proceeding under section 122(9) of the Income Tax Ordinance, 2001 for amendment of assessment under section 122 (5A) for the tax years 2005 and 2006. The issues involved relate to claim of certain expenses and allocation of profit & loss against exempt capital gains earned by the company. The proceedings are in progress.29. CONTINGENCIES & COMMITMENTS 29.1. Contingencies Cases have been filed against the Company by some former employees for reinstatement of service. These cases are pending in different courts. The management is confident that the outcome of these cases will be in the Company's favor. 29.2. Guarantees =======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Issued by bank 142,063 90,246
=======================================================================================Guarantees are issued to Collector of Customs and Government institutions and shall he released on delivery of motorcycles. These are issued under normal operations.29.3. Commitments =======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Confirmed letters of credit relating to raw materials 581,850 657,237
Plant and equipment 7,056 697,413
Forward foreign exchange contracts - 146,832
=======================================================================================The operating lease arrangement with associated undertaking is extendible after six months. Commitment of operating lease rentals in respect of electric and gas fittings is as follows:=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Due within six months 5,963 5,396
=======================================================================================30. NET SALES=======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Motorcycles & spare parts 19,601,115 20,547,248
Less: Trade discount & commission 30.1 52,535 44,898
Sales Tax 2,940,167 3,082,087
16,608,413 17,420,263
=======================================================================================30.1. Commission to associated company on export sales amounting to Rs. 4,777 thousand (2006: Rs. 10,506 thousand) is included in trade discount.31. COST OF SALES =======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Stock at beginning 111,712 115,836
Cost of goods manufactured 31.1 14,609,713 15,341,590
Purchases 424,104 444,832
15,033,817 15,786,422
15,145,529 15,902,258
Stocks at end 12 (100,889) (111,712)
15,044,640 15,790,546
=======================================================================================31.1. Cost of goods manufactured=======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Work in process at beginning 233,800 194,049
Raw materials & components consumed 31.2 11,673,687 12,688,141
Direct labour 31.3 328,637 332,626
Technical director's remuneration 42.1 1,055 647
Salaries, wages & benefits 31.3 & 31.4 233,992 217,042
Stores consumed 319,482 338,594
Light, heat & water 174,712 170,584
Insurance 54,024 36,552
Rent, rates & taxes 24,009 29,447
Operating lease rentals 11,361 -
Repair & maintenance 122,855 124,461
Royalty 834,148 894,716
Federal Excise Duty on royalty 45,995 -
Technical assistance 5,569 21,298
Traveling, conveyance and entertainment 25,312 34,872
Postage & telephone 3,489 7,257
Printing & Stationery 4,443 7,028
Vehicle running 12,232 7,899
Depreciation 6.2 436,669 383,231
Canteen 25,849 26,970
Newspapers, magazines & subscription 7,521 3,274
Staff training 1,136 4,678
Intangible assets amortized 13,959 10,558
Provision for slow moving stocks 5,798 24,171
Marking fee 16,019 16,938
Other manufacturing expenses 338 357
14,616,091 15,575,390
Work in process at end 12 (6,378) (233,800)
14,609,713 15,341,590
=======================================================================================31.2. Raw materials & components consumed=======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Stock at beginning 1,324,219 922,125
Purchases 31.5 11,624,644 13,090,235
12,948,863 14,012,360
Stock at end 12 (1,275,176) (1,324,219)
11,673,687 12,688,141
=======================================================================================31.3. Direct labour and salaries & benefits include Rs. 10,524 thousand (2006: Rs. 9,199 thousand) in respect of provident fund contributions.31.4. The following amounts have been charged to cost of sales during the year in respect of gratuity: =======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Current service cost 2,361 2,333
Interest costs 4,386 4,334
Expected return on plan assets (4,102) (4,054)
Amortization of loss 129 128
2,774 2,741
=======================================================================================31.5. Purchases include custom duty rebates netted-off aggregating Rs 16,720 thousand (2006: Rs.33,055 thousand).32. DISTRIBUTION COST =======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Directors remuneration 42.1 15,093 14,454
Salaries & benefits 32.1 & 32.2 67,423 62,724
Traveling, conveyance, entertainment
& vehicle running 33,046 24,454
Rent, rates & taxes 9,296 4,178
Advertisement & publicity 63,031 79,687
Repairs & maintenance 1,547 1,648
Gas & electricity 1,842 1,486
Freight & forwarding 110,228 100,331
Printing & stationery 2,762 2,903
Postage & telephone 6,089 5,873
Sales promotion 22,457 11,643
Service charges 33,504 30,254
Insurance 4,139 2,021
Newspapers, magazines & subscription 390 454
Others 422 977
371,569 343,087
=======================================================================================32.1. Salaries and benefits include Rs. 4,585 thousand (2006: Rs, 2,650 thousand) in respect of provident fund contributions.32.2. The following amounts have been charged! to distribution cost during the year in respect of gratuity: =======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Current service cost 462 456
Interest costs 745 736
Expected return on plan assets (527) (521)
Amortization of loss 95 94
775 765
=======================================================================================33. ADMINISTRATIVE EXPENSES=======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Directors' remuneration 42.1 6,694 6,611
Directors' meeting fee 42.2 80 71
Salaries & benefits 33.1 & 33.2 117,976 111,009
Traveling, conveyance & entertainment 13,843 11,940
Rent, rates & taxes 4,295 4,199
Insurance 3,187 1,889
Repairs & maintenance 6,905 5,520
Legal & professional charges 2,770 2,129
Gas & electricity 1,460 1,328
Fees & subscription 1,233 4,879
Postage & telephone 1,682 3,110
Printing & stationery 1,307 1,719
Vehicle running 7,505 4,765
Training expense 987 537
Depreciation 6.2 28,485 15,839
Donation 33.3 10,485 9,405
Others 367 282
209,261 185,232
=======================================================================================33.1. Salaries and benefits include Rs 4,585 thousand (2006: Rs. 5,224 thousand) in respect of provident fund contributions.33.2. The following amounts have been charged to administration expenses during the year in respect of gratuity: =======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Current service cost 1,924 1,902
Interest costs 3,104 3,067
Expected return on plan assets (2,197) (2,171)
Amortization of loss 396 392
3,227 3,190
=======================================================================================33.3. Donations include Rs. 10,470 thousand (2006: 9,400 thousand) paid to Atlas Foundation. Mr. Yusuf H. Shirazi, Chairman and Mr. Saquib H. Shirazi, Chief Executive Officer are on the Board of the Foundation.34. OTHER OPERATING INCOME Income from financial assets =======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Interest on Deposits:
Associated Company 1,917 32,302
Others 6,045 10,462
7,962 42,764
Dividend Income 12,507 95
Income from reverse repurchase transactions - 43,717
Gain on sale of investments 47,589 36,265
Gain on re-measurement of investments 44,564 11,278
Unrealised gain on remeasurement of derivative
financial instruments at fair value 7,773 -
Exchange gain 1,823 239
Income from non financial assets
Other income 164 31
Scrap Sales 26,490 35,780
Gain on sale of fixed assets 1,809 2,866
150,681 173,035
=======================================================================================35. OTHER OPERATING EXPENSES=======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Auditors' remuneration 35.1 1,221 1,110
Workers' Profit Participation Fund 43,153 56,086
Workers' Welfare Fund 16,398 18,566
60,772 75,762
=======================================================================================35.1. Auditor's Remuneration=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Audit fee 446 405
Provident Fund /Workers' Profit Participation
Fund audit and certifications 704 640
Out of pocket expenses 71 65
1,221 1,110
=======================================================================================36. FINANCE COST=======================================================================================
Note 2007 2006
(Rupees in '000)
=======================================================================================
Interest / mark-up / return on:
Short term loans 85,102 39,532
Long term loans 169,457 90,302
Workers' Profit Participation Fund 24.2 1,085 2,072
Finance charge on finance lease 1,616 1,316
Other financial charges 12,077 16,618
Exchange risk fee - 1,771
269,337 151,611
=======================================================================================37. TAXATION=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Current year 98,000 138,014
Prior years' 19,395 11,549
Deferred 132,529 220,665
249,924 370,228
=======================================================================================38. EARNINGS PER SHARE=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Basic and diluted earnings per share
Earnings for purposes of basic earnings per
share (net profit for the year) 553,591 676,832
Weighted average number of outstanding ordinary shares
for the purposes of basic earnings per share 41,129,092 41,129,092
Basic and diluted earnings per share - Rupees 13.46 16.46
5,364,664 (2006: 10,218,408) bonus shares of
Rs.10 each were issued on September 29, 2006.
Weighted average number of ordinary shares for the
previous periods have been restated accordingly.
=======================================================================================39. CASH FLOWS FROM OPERATING ACTIVITIES=======================================================================================
2007 2006
(Rupees in '000)
=======================================================================================
Net Profit before taxation 803,515 1,047,060
Adjustment for:
Depreciation 465,154 399,070
Unrealised (gain)/loss on
remeasurement of investments (44,564) (11,278)
Gain on sale of investments (47,589) (36,265)
Interest income (7,962) (42,764)
Interest expense 254,559 129,834
Dividend income (12,507) (95)
Amortization 13,959 10,558
Finance cost on finance leased assets 1,616 1,316
Provision for employee compensated absences 10,166 9,504
Gain on sale of fixed assets (1,809) (2,866)
Unrealised gain on remeasurement of derivative
financial instruments at fair value (7,773) -
Provision for slow moving stocks 5,798 24,171
Operating profit before
working capital changes 1,432,563 1,528,245
Working capital changes:
(Increase)/decrease in current assets:
Stores, spares & tools (28,350) (152,840)
Stock in trade 350,952 (394,316)
Trade debtors (1,801) (140,747)
Loans and advances 30,807 (14,064)
Trade deposits and prepayments (2,077) 3,804
Other receivables 64,324 83,125
413,855 (615,038)
Increase in current liabilities:
Trade and other payables 362,641 63,643
Cash generated from operations 2,209,059 976,850
Interest paid (266,612) (78,027)
Income taxes paid (including
tax deducted at source) (166,682) (342,518)
Compensated absences paid (2,897) (2,268)
Long term loans and advances 4,154 (4,925)
Long term deposits and prepayments (4,873) (5,243)
Cash flow from operating activities 1,772,149 543,869
=======================================================================================40. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES========================================================================================================================================
(Rupees in '000)
Interest bearing Non-Interest beari 2007 2006
Maturity Maturity Maturity Maturity
upto one after one Sub-total upto one after one Sub-total Total Total
year year year year
========================================================================================================================================
Financial assets
Long term loans and advance - - - 10,182 12,943 23,125 23,125 27,505
Long term deposits - - - - 13,860 13,860 13,860 11,027
Trade debtors - - 282,249 - 282,249 282,249 280,448
Loans and advances - - - 20,553 - 20,553 20,553 51,360
Trade deposits - - - 2,264 - 2,264 2,264 1,283
Other receivables - - - 45,543 - 45,543 45,543 32,195
Accrued mark-up/ interest - - - 90 - 90 90 543
Investments - - - 864,989 - 864,989 864,989 327,317
Bank balances 502,115 - 502,115 393,056 - 393,056 895,171 677,201
502,115 - 502,115 1,618,926 26,803 1,645,729 2,147,844 1,408,879
Financial liabilities
Long term loan 459,021 1,555,440 2,014,461 - - - 2,014,461 1,933,019
Liability under finance lea 6,808 12,848 19,656 - - - 19,656 26,006
Trade and other payables - - - 2,569,186 - 2,569,186 2,569,186 2,348,414
Accrued mark-up/ interest - - - 57,035 - 57,035 57,035 69,088
465,829 1,568,288 2,034,117 2,626,221 - 2,626,221 4,660,338 4,376,527
On-balance sheet gap 36,286 (1,568,288) (1,532,002) (1,007,295) 26,803 (980,492) (2,512,494) (2,967,648)
========================================================================================================================================40.1. Effective interest rate ================================================================================
2007 2006
(%) (%)
================================================================================
Assets
Short term investments 7 to 10 9.70 to 11
Cash at bank 2 to 5 2 to 5
Liabilities
Long term loan 10.11 to 11.10 9.04 to 10.16
Liability against assets subject to finance lease 7 7
================================================================================40.2. Concentration of credit risksCredit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform as contracted. The company's credit risk is primarily attributable to its receivables. Aggregate amount of financial assets subject to credit risk are Rs. 2,148 thousand (2006: Rs 1,409 thousand). Major part of the sales of the company is against advance payments. Significant receivable balances relate to the balances due from the Government of Pakistan and other government departments. The company believes that it is not exposed to any specific credit risk in respect of these balances. Credit risk for balances at banks is limited by dealing with various banks with reasonably high credit rating. 40.3. Foreign exchange risk management Foreign currency risk arises mainly where payables exist due to imports of goods. The company obtains forwards exchange cover, where necessary, to hedge its foreign currency exposure in various currencies primarily with respect to Japanese yen. 40.4. Fair value of the financial assets and liabilities The carrying values of all the financial assets and liabilities reflected in the financial statements approximates their fair values, except for long term loans, loans to employees, trade deposits and other receivables which are stated at cost/ amortised cost. 40.5. Interest / Markup rate risk The company has long term Rupee based loans at variable rates. Rates on short term finances are effectively fixed. The company has also entered into cross currency and interest rate swap agreements with commercial banks to mitigate against the adverse movement of interest rates. 40.6. Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash, marketable securities and the availability of funding to an adequate amount of committed credit facilities. The company treasury aims at maintaining flexibility in funding by keeping committed credit lines available. 41. RELATED PARTY TRANSACTIONS Related parties comprise of associated companies, staff retirement funds, directors and key management personnel. The company in the normal course of business carries out transactions with various related parties. All transactions with related parties have been carried out on commercial terms and conditions. Amount due from and to related parties, if any, shown under receivables and payables and remuneration of key management personnel is disclosed in the note no. 42. Other significant transactions with related parties are as follows: ================================================================================
2007 2006
(Rupees in '000)
================================================================================
Sales 14,286 17,111
Sale of fixed assets 949 -
Purchases 2,986,593 3,676,200
Fixed assets purchased 65,079 706,621
Sale and lease back of fixed assets - 40,000
Royalty 881,533 849,399
Export commission 4,777 10,506
Technical Fees 18,300 55,007
Interest on deposits 3,010 32,302
Lease rentals paid 19,326 5,611
Brokerage fees 2,936 5,143
Rent paid 21,339 19,023
Insurance premium 103,994 94,875
Insurance claim 9,372 7,174
Actual reimbursement of expenses - net 16,420 8,719
Dividend paid 179,119 131,821
Donation paid 10,470 9,400
Contribution to staff retirement funds 25,497 30,261
================================================================================42. DIRECTORS' AND EXECUTIVES REMUNERATION42.1. The aggregate amounts charged in the accounts for remuneration including certain benefits to the Chairman, Chief Executive Officer, working Directors and other Executives of the company were as follows: ===========================================================================================================================
(Rupees in '000)
Chairman Chief Executive Office Directors Executives
2007 2006 2007 2006 2007 2006 2007 2006
===========================================================================================================================
Remuneration 2,661 2,661 4,990 4,640 3,375 2,660 50,905 35,236
Rent and Utilities 1,197 1,197 2,387 2,189 1,624 1,411 36,578 23,505
Bonus 1,109 1,331 1,808 2,009 1,332 1,006 11,364 10,004
Provident Fund & gratuity 293 293 477 441 255 221 5,600 3,849
Medical and others 710 769 224 524 40 - 1,918 604
Reimbursement of expenses 360 360 - - - - - -
Total 6,330 6,611 9,886 9,803 6,626 5,298 106,365 73,198
Number of Persons 1 1 1 1 3 3 56 39
===========================================================================================================================The Chairman, the Chief Executive, three directors and two expatriate executives are provided with free use of company maintained cars and telephones at residences. Two directors and two expatriate executives are also provided with furnished accommodation.42.2. Remuneration to other directors Aggregate amount charged in the accounts for the year for fees to two directors was Rs. 80 thousand (2006: Rs 70.5 thousand). 43. PLANT CAPACITY The production capacity of the plant cannot be determined as this depends upon relative proportion of various types of motorcycles and motorcycle components produced. 44. CORRESPONDING FIGURES Previous figures have been rearranged and reclassified wherever necessary for better presentation in the financial statements. There were no major reclassifications or rearrangements for the year. |