| Colgate Palmolive (Pakistan) Ltd - 2005 |
=================================================================================== BALANCE SHEET AS AT JUNE 30, 2005 =================================================================================== Restated 2005 2004 Notes Rupees in '000 =================================================================================== ASSETS NON-CURRENT ASSETS: Property, plant and equipment 4 622,419 558,156 Intangible assets 5 29,000 35,100 Long term loans 6 6,001 4,211 Long term deposits 7 2,323 2,732 659,743 600,199 CURRENT ASSETS: Stores and spares 8 11,058 10,852 Stock in trade 9 536,707 432,808 Trade debts 10 83,738 96,008 Loans and advances 11 16,620 10,017 Trade deposits, short term prepayments and other receivables 12 13,321 9,937 Cash and bank balances 13 216,537 249,203 877,981 808,825 Total assets 1,537,724 1,409,024 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES AUTHORISED SHARE CAPITAL: 20,000,000 ordinary shares of Rs 10 each 200,000 200,000 Issued, subscribed and paid-up share capital 14 122,303 122,303 Reserves 15 829,310 648,639 951,613 770,942 LIABILITIES NON-CURRENT LIABILITIES: Long term loans 16 52,189 113,756 Liabilities against assets subject to finance leases 17 1,658 1,078 Deferred taxation 18 92,000 56,000 Long term deposits 19 4,063 4,030 149,910 174,864 CURRENT LIABILITIES: Trade and other payables 20 331,461 364,799 CURRENT MATURITY OF: - Long term loans 16 61,567 64,692 - Liabilities against assets 17 3,356 9,367 subject to finance leases Short term borrowings 21 5,481 2,264 Taxation 34,336 22,096 436,201 463,218 Total liabilities 586,111 638,082 Contingencies and commitments 22 Total equity and liabilities 1,537,724 1,409,024 =================================================================================== =================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2005 =================================================================================== 2005 2004 Notes Rupees in '000 =================================================================================== Turnover 4,883,261 4,195,162 Sales tax (636,929) (576,991) Trade discounts (326,109) (269,856) Net turnover 3,920,223 3,348,315 Cost of sales 23 (2,861,841) (2,386,323) Gross profit 1,058,382 961,992 Selling and distribution costs 24 (505,505) (449,221) Administrative expenses 25 (42,727) (38,926) Other operating expenses 26 (36,718) (34,163) Other operating income 27 8,185 10,960 Profit from operations 481,617 450,642 Finance costs 28 (14,526) (14,082) Profit before taxation 467,091 436,560 Taxation 29 (164,117) (149,643) Profit after taxation 302,974 286,917 Earnings per share - basic and diluted 30 24.77 23.46 ===================================================================================The appropriations from profits are set out in the statement of changes in equity. ==================================================================================================================================== STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2005 ==================================================================================================================================== Issued, Revenue reserve subscribed Capital and paid-up reserve - General Unappro- Total share share reserve priated capital premium profit Notes Rupees in '000 ==================================================================================================================================== Balance as at July 1, 2003 - as reported earlier 122,303 13,456 345,000 3,266 484,025 Effect of change in accounting policy 3 Final dividend for the year ended June 30, 2003 declared subsequent to the year end 85,612 85,612 Balance as at July 1, 2003 - restated 122,303 13,456 345,000 88,878 569,637 Profit for the year 286,917 286,917 Final dividend for the year ended June 30, 2003 (85,612) (85,612) Transfer to general reserve 165,000 (165,000) - Balance as at June 30, 2004 - restated 122,303 13,456 510,000 125,183 770,942 Balance as at July 1, 2004 as reported earlier 122,303 13,456 510,000 2,880 648,639 Effect of change in accounting policy 3 Final dividend for the year ended June 30, 2004 declared subsequent to the year end 122,303 122,303 Balance as at July 1, 2004 - restated 122,303 13,456 510,000 125,183 770,942 Profit for the year 302,974 302,974 Final dividend for the year ended June 30, 2004 (122,303) (122,303) Transfer to general reserve Balance as at June 30, 2005 122,303 13,456 510,000 305,854 951,613 ==================================================================================================================================== =================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2005 =================================================================================== 2005 2004 Notes Rupees in '000 =================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 31 412,709 498,706 Finance costs paid (14,457) (20,136) Taxes paid (115,877) (96,091) Long term loans (2,649) (632) Long term deposits (net) 442 2,276 Net cash inflow from operating activities 280,168 384,123 CASH FLOWS FROM INVESTING ACTIVITIES: Fixed capital expenditure (129,283) (260,443) Intangible assets acquired - (222) Sale proceeds on disposal of property, plant and equipment 3,433 1,418 Profit on bank deposits received 1,974 4,840 Short term investment - 10,000 Net cash outflow from investing activities (123,876) (244,407) CASH FLOWS FROM FINANCING ACTIVITIES: Long term loans (net) (64,692) 12,834 Liabilities against assets subject to finance leases (net) (5431) (6,802) Dividend paid (122,052) (85,479) Net cash outflow from financing activities (192,175) (79,447) Net (decrease)/increase in cash and cash equivalents (35,883) 60,269 Cash and cash equivalents at the beginning of the year 246,939 186,670 Cash and cash equivalents at the end of the year 32 211,056 246,939 ===================================================================================NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2005 1. STATUS AND NATURE OF BUSINESS Colgate-Palmolive (Pakistan) Limited ("the company") was initially incorporated in Pakistan on December 5, 1977 as a public limited company with the name of National Detergents Limited. The name of the company was changed to Colgate-Palmolive (Pakistan) Limited on March 28, 1990 when the company entered into a Participation Agreement with Colgate-Palmolive Company, USA. The company is listed on the Karachi and Lahore Stock Exchanges. The registered office of the company is situated at Lakson Square, Building No 2, Sarwar Shaheed Road, Karachi. The company is mainly engaged in the manufacture and sale of detergents, personal and other related products. 2. SIGNIFICANT ACCOUNTING POLICIES 2.1. BASIS OF PREPARATION These financial statements have been prepared in accordance with the requirements of the Companies Ordinance, 1984 (the Ordinance), and the International Accounting Standards (IASs) issued by the International Accounting Standards Committee (IASC) and interpretations issued by the Standing Interpretations Committee of the IASC (the interpretations), as adopted in Pakistan. However, the requirements of the Ordinance have been followed in case where its requirements are not consistent with the requirements of the IASs and the interpretations. 2.2. ACCOUNTING CONVENTION These financial statements have been prepared under the historical cost convention except for recognition of certain staff retirement benefit at present value as referred to in note 2.10 to these financial statements. 2.3. PROPERTY, PLANT AND EQUIPMENT 2.3.1. OWNED These are stated at cost less accumulated depreciation and accumulated impairment losses except for leasehold land. Cost is depreciated under the reducing balance method whereby depreciation is charged by applying rates (as stated in note 4.1 to the financial statements) on the opening book value of assets, except for leasehold land and capital work-in-progress which are stated at cost. Depreciation on additions is charged from the month in which the asset is put to use and on disposal up to the month of disposal at the rates stated in note 4.1 to these financial statements. Normal repairs and maintenance are charged to income as and when incurred. Consistent with prior year, major renewal and improvements are capitalised and assets so replaced, if any, are retired. Profit or loss on disposal of assets is recognised in income currently. 2.3.2. ASSETS SUBJECT TO FINANCE LEASES The company accounts for property, plant and equipment held under finance leases by recording the asset and the related liability. These amounts are determined on the basis of discounted value of minimum lease payments or fair value whichever is lower. Financial charges are allocated to the accounting period in a manner so as to provide a constant periodic rate of charge on the outstanding liability. Depreciation is charged to income applying the reducing balance method at rates stated in note 4.1 below. 2.3.3. OPERATING ASSETS HELD UNDER OPERATING LEASES Lease rentals payable on assets held under operating leases are recognised in income currently. 2.4. INTANGIBLE ASSETS These are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is charged over the estimated useful life of the asset as specified in note 5 to these financial statements on a systematic basis applying the straight line method. Consistent with prior year, costs that are clearly associated with an identifiable asset, which has a probable benefit beyond one year are recognised as intangible assets. 2.5. IMPAIRMENT The company assesses at each balance sheet date whether there is any indication that property, plant and equipment and intangible assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed recoverable amount, assets are written down to the recoverable amount and the difference is recognised in income currently. 2.6. STORES AND SPARES Stores and spares are valued at moving average cost. Items-in-transit are valued at cost accumulated to the balance sheet date. 2.7. STOCK IN TRADE Stock in trade is valued at the lower of cost and estimated net realisable value. Cost is determined as follows: Stages of stock in trade Basis of valuation
Raw and packing material - Moving average cost
Raw and packing material in bonded - Moving average cost including other
warehouse and in transit expenses incurred thereon
Work in process - Cost of direct materials and appropriate
portion of production overheads
Finished goods - Cost of direct materials and appropriate
portion of production overheads
Trading goods - First in first out basis methodNet realisable value is determined on the basis of estimated selling price of the product in the ordinary course of business less estimated costs necessary to be incurred for its sale.2.8. TRADE DEBTS AND OTHER RECEIVABLES Trade debts and other receivables are carried at original invoice amount less an estimate for doubtful receivables based on review of outstanding debts and accordingly provision is made against those receivables having no movement during the current financial year and is also considered doubtful by the management. Debts considered irrecoverable are written off when identified. 2.9. TAXATION Current Provision for current taxation is based on taxable income at the current rates of taxation after taking into account tax credits and tax rebates available, if any, and tax paid on presumptive basis or minimum tax at the rate of 0.5 % of turnover, whichever is higher. Deferred The company accounts for the deferred taxation using the balance sheet liability method on all major temporary differences between the amounts attributed to assets and liabilities for financial reporting purposes and amounts used for taxation purposes. This is recognised on the basis of expected manner of settlement of carrying amount of assets and liabilities using the tax rate enacted or substantially enacted at the balance sheet dates. A deferred tax asset is recognised only to the extent that future taxable profits will be available against which the asset can be utilised. Consistent with prior year, deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefits will be realised. 2.10. STAFF RETIREMENT BENEFITS Defined benefit plan The company operates a defined benefit plan i.e. an approved funded gratuity scheme for all its permanent employees subject to attainment of retirement age and minimum service of prescribed period. Contributions are made to the fund on the basis of actuarial recommendations. Actuarial valuation is carried out using projected unit credit method. Consistent with prior year, actuarial gains / losses exceeding 10 percent of the higher of projected benefit obligation and fair value of plan assets, at the beginning of the year, are amortised over average future service of the employees. Defined contribution plan The company operates an approved funded provident fund scheme for all its permanent employees. Consistent with prior year, equal monthly contributions are made, both by the company and its employees, to the fund at the rate of 9 percent of basic salaries of employees. Compensated absences The liability in respect of compensated absences of employees is accounted for in the period in which the absences accrue. 2.11. PROVISIONS Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. 2.12. FOREIGN CURRENCY TRANSLATION Transactions in foreign currencies are recorded in Pakistan rupees at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are reported in Pakistan rupees at the rates of exchange approximating those prevalent at the balance sheet date except those covered by forward exchange contracts. Exchange differences are charged to income currently. 2.13. REVENUE RECOGNITION Sales are recognised on dispatch of goods to customers. Consistent with prior year, mark-up / return on bank balances / investments are recognised on a time proportion basis on the principal amount outstanding and at the rate applicable. Insurance commission income is recognised as and when received. 2.14. CASH AND CASH EQUIVALENTS Cash and cash equivalents are carried in the balance sheet at cost. Consistent with prior year, for the purpose of the cash flow statement, cash and cash equivalents comprise of cash in hand, deposits held with banks and running finances under mark-up arrangement. 2.15. DIVIDENDS Dividend is recognised as a liability in the period in which it is declared. Up to previous year, dividends that were proposed after the balance sheet date but before the financial statements were authorised for issue were recorded as a liability. The change was considered necessary due to the revision of Fourth Schedule to the Companies Ordinance, 1984 effective July 5, 2004. The effect of change in accounting policy is more fully explained in note 3 to these financial statements. 2.16. FINANCIAL INSTRUMENTS All financial assets and liabilities are recognised at the time when the company becomes a party to the contractual provisions of the instruments. Consistent with prior year, all financial assets and liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively. Any gain or loss on the recognition and de-recognition of the financial assets and liabilities is included in the net profit and loss for the period in which it arises. 2.17. OFF-SETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES A financial asset and a financial liability is setoff and the net amount is reported in the balance sheet if the company has a legal right to setoff the transaction and also intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. 2.18. TRANSACTIONS WITH RELATED PARTIES The company enters into transactions with related parties for purchase of goods and services on an arm's length basis. 3. CHANGE IN AN ACCOUNTING POLICY During the year, the Securities and Exchange Commission of Pakistan has substituted the Fourth Schedule to the Companies Ordinance, 1984 which is effective from the financial year ended on or after July 5, 2004. This has resulted in the change in accounting policy pertaining to the recognition of dividends declared subsequent to the year's end. Up to previous year, dividends that were proposed after the balance sheet date but before the financial statements were authorised for issue were recorded as a liability. After the change in the policy dividend is now recognised as a liability in the period in which it is declared. 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 and 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 and the 'trade and other payables' would have been higher for the years ended June 30, 2003 and June 30, 2004 by Rs 85.612 million and 122.303 million respectively. The effect of change in accounting policy has been reflected in the statement of changes in equity. 4. PROPERTY, PLANT AND EQUIPMENT ===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
Tangible fixed assets 4.1 618,025 444,917
Capital work-in-progress 4.2 4,394 113,239
622,419 558,156
===================================================================================4.1. TANGIBLE FIXED ASSETS==================================================================================================================================================================================
Cost as at Additions/ Disposals/ Cost as at Accumulated Depreciation Depreciation on Accumulated Written Rate
July 1, *transfer *write-off June 30, depreciation the year disposals/ depreciation down %
2004 from capital during the year 2005 as at July 1, *write-off as at value as at
work-in-progress 2004 during the June 30, June 30,
during the year year 2005 2005
Rupees in '000
==================================================================================================================================================================================
OWNED:
Leasehold land 2,451 8,100 - 10,551 - - - - 10,551 -
Factory building
on leasehold land 116,974 5.956 - 139,659 39,121 8,605 - 47,726 91,933 10
*1 6,729
Plant and machinery 407,035 38,706 (264) 566,620 149,855 33,934 (246) 178,245 388,375 10
*127,348 *(6,205) *(5,298)
Electric fittings and 35,836 1,497 - 47,028 7,540 3,417 - 10,957 36,071 10
installation *9,695
Gas installation 137 *88 - 225 110 3 - 113 112 10
Furniture and fixtures 12,974 306 (23) 13,739 7,493 853 (14) 8,332 5,407 15
*482
Tools and equipment 42,390 3,758 *(186) 46,307 18,132 3,912 *(152) 21,892 24,415 15
*345
Vehicles 32,339 15,102 (2,972) 44,469 15,820 5,037 (1,896) 18,961 25,508 20&25
Computer and 19,062 5,669 *(1,287) 24,234 11,975 3,655 *(1,113) 14,517 9,717 33
accessories *790
Office equipment 13,980 575 (17) 14,940 9,064 812 (13) 9,857 5,083 15
*411 *(9) *(6)
ASSETS HELD UNDER
FINANCE LEASES:
Plant and machinery 28,600 - - 28,600 7,751 2,085 - 9,836 18,764 10
Vehicles - 2,571 - 2,571 - 482 - 482 2,089 25
2005 711,778 82,240 (3,276) 938,943 266,861 62,795 (2,169) 320,918 618,025
*155,888 *(7,687) *(6,569)
2004 443,780 59,697 (977) 711,778 228,857 38,562 (558) 266,861 444,917
*209,278
==================================================================================================================================================================================4.1.1. Included in fixed assets are few items having cost of Rs 2.702 million (2004: Rs 4.896 million) held by related parties and of Rs 41.673 million (2004: Rs 42.557 million) held by third parties for manufacturing certain products of the company.The fixed assets are free of lien and the company has full rights of repossession of these assets. 4.1.2. During the year, the company has identified certain items of property, plant and equipment from which further economic benefits are no longer being derived. Therefore, assets having cost of Rs 7.687 million and net book value of Rs 1.118 million have been retired from active use and have been written off in these financial statements. 4.1.3. DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT DURING THE YEAR ARE AS FOLLOWS ==============================================================================================================================
Particulars Mode of Cost Accumulated Written Sale Gain Particulars of purchasers
disposal depreciation down proceeds
value
Rupees in '000
==============================================================================================================================
Suzuki Margalla Bid 384 180 204 372 168 Anwar Hussain Qureshi
(Employee of the company)
Suzuki Alto Negotiation 496 127 369 485 116 Sadia Kazi
(Employee of the company)
Suzuki Alto do 491 144 347 485 138 Tetley Clover (Private) Limited
Toyota Hi Ace Van Bid 604 497 107 465 358 Abdul Khaliq - Quarter No. 58,
Qasba Colony, Karachi
Assets having book Negotiation 1,301 1,221 80 1,626 1,546 Various
value below Rs 50,000 & Bid
2005 3,276 2,169 1,107 3,433 2,326
2004 977 558 419 1,418 999
==============================================================================================================================4.1.4. DEPRECIATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS===================================================================================
2005 2004
Rupees in '000
===================================================================================
Cost of sales 55,017 34,146
Selling and distribution costs 5,652 2,772
Administrative expenses 2,126 1,644
62,795 38,562
===================================================================================4.2. CAPITAL WORK-IN-PROGRESSThe following is a statement of capital work-in-progress: ==========================================================================================
Cost as at Capital Transfer to Cost as at
July 1, expenditure tangible fixed June 30,
2004 incurred during assets 2005
the year
Rupees in '000
==========================================================================================
Factory building on leasehold land 8,862 12,084 16,729 4,217
Plant and machinery 102,992 24,533 127,348 177
Electric fittings and installation 585 9,110 9,695 -
Other assets 800 1,316 2,116 -
2005 113,239 47,043 155,888 4,394
2004 121,771 200,746 209,278 113,239
==========================================================================================5. INTANGIBLE ASSETS========================================================================================================================================================================
Cost as at Additions Disposals Cost as at Accumulated Amortis- Amortisation Accumu- Written Useful life
July 1, for the for the June 30, amortisation ation for on lated down (years)
2004 year year 2005 as at July 1 the year disposals amortisation value as at
2004 as at June 30,
Notes Rupees in '000 June 30, 2005
========================================================================================================================================================================
GOODWILL:
5.1 & 5.2 43,500 - - 43,500 8,700 5,800 - 14,500 29,000 10
Trade Mark 5.1 1,500 - - 1,500 1,200 300 - 1,500 - 5
2005 45,000 - - 45,000 9,900 6,100 - 16,000 29,000
2004 49,195 222 (4,417) 45,000 7,425 2,475 - 9,900 35,100
========================================================================================================================================================================5.1. These represent amounts paid on acquisition of the brand "Sparkle" from Transpak Corporation Limited.5.2. During the year, the company has reassessed its estimate relating to amortisation of goodwill and now it is being amortised over the period of ten years (upto June 30, 2004: 20 years) from the year of acquisition. Had there been no change in the accounting estimate, the profit before tax would have been higher by Rs 3.625 million. 6. LONG TERM LOANS ===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
CONSIDERED GOOD:
- due from executives 6.1 1,069 734
- due from other employees 7,714 5,400
8,783 6,134
Recoverable within one year 11 2,782 1,923
6,001 4,211
===================================================================================6.1. RECONCILIATION OF CARRYING AMOUNT OF LOANS TO EXECUTIVES===================================================================================
Executives
2005 2004
Rupees in '000
===================================================================================
Opening balance as at July 1 734 846
Disbursements 616 150
Repayments (281) (262)
Closing balance as at June 30 1,069 734
===================================================================================6.2. These loans are interest free and have been given to executives and other employees of the company for purchase of vehicles and personal use in accordance with their terms of employment.The original repayment of these loans is over a period of five years in equal monthly installments. 6.3. The maximum aggregate amount of advances due from executives at the end of any month during the year was Rs 1.069 million (2004: Rs 0.828 million). 7. LONG TERM DEPOSITS ===================================================================================
2005 2004
Rupees in '000
===================================================================================
Security deposits 2,323 2,732
===================================================================================8. STORES AND SPARES===================================================================================
2005 2004
Rupees in '000
===================================================================================
Stores 5,959 7,011
Spares 5,099 3,841
11,058 10,852
===================================================================================9. STOCK IN TRADE===================================================================================
2005 2004
Note Rupees in '000
===================================================================================
RAW MATERIALS:
- in hand 172,498 141,738
- in bonded warehouse 20,185 39,790
- in transit 81,005 95,111
- with third parties 77,565 10,146
351,253 286,785
PACKING MATERIALS:
- in hand 52,149 53,968
- in transit 1,369 3,656
- with third parties 218 589
53,736 58,213
Work-in-process 3,939 10,704
FINISHED GOODS:
- in hand 9.1 111,338 51,073
- in transit - 4,022
111,338 55,095
TRADING GOODS:
- in hand 11,427 19,607
- in transit 5,014 2,404
16,441 22,011
536,707 432,808
===================================================================================9.1. This includes stocks carried at net realisable value amounting to Rs 20.168 million (2004: Nil).10. TRADE DEBTS ===================================================================================
2005 2004
Rupees in '000
===================================================================================
CONSIDERED GOOD:
- due from related parties
- Century Paper & Board Mills Limited 17 14
- Lakson Tobacco Company Limited - 624
- others 83,721 95,370
83,738 96,008
CONSIDERED DOUBTFUL:
- others 4,118 1,515
87,856 97,523
Less: Provision against doubtful debts 4,118 1,515
83,738 96,008
===================================================================================11. LOANS AND ADVANCES===================================================================================
2005 2004
Note Rupees in '000
===================================================================================
CONSIDERED GOOD
LOANS:
- due from executives 410 225
- due from other employees 2,372 1,698
2,782 1,923
ADVANCES:
- to employees 11.1 4,368 2,073
- to contractors and suppliers 9,240 5,172
- against letter of credit 230 849
16,620 10,017
===================================================================================11.1. Advances to employees are provided to meet business expenses and are settled as and when the expenses are incurred.12. TRADE DEPOSITS, SHORT TERM PREPAYMENTS AND OTHER RECEIVABLES ===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
TRADE DEPOSITS AND SHORT TERM PREPAYMENTS:
Security deposits 12.1 3,789 2,812
BALANCES WITH STATUTORY AUTHORITIES:
- excise duty - 1,625
Prepayments 4,494 2,514
8,283 6,951
OTHER RECEIVABLES:
Receivable from related parties 12.2
- Century Insurance Company Limited 477 -
- Clover Pakistan Limited 750 1,917
- Colgate-Palmolive Phillipine 6 6
- Colgate-Palmolive Malaysia - 16
- Colgate-Palmolive Thailand - 6
- Tetley Clover (Private) Limited 2,010 219
3,243 2,164
Receivable from Colgate-Palmolive (Pakistan) Limited
Employee Contributory Provident Fund Trust - 119
Profit receivable on bank deposits 519 435
Sales tax claims - 268
Custom duties refundable 4 -
Claims receivable from suppliers 997 -
Others 275
5,038 2,986
13,321 9,937
===================================================================================12.1. This includes Term Deposit Receipt (TDR) amounting to Rs 1.700 million (2004: Rs 1.700 million) issued by a banking company.The TDR has been issued to provide security to a banking company for issue of guarantee against lien. The TDR carries profit at the rate of 2.25% (2004: 2.25%) per annum and shall mature on August 30, 2006. 12.2. The maximum aggregate amount receivable at the end of any month during the year was Rs 5.164 million (2004: Rs 2.164 million). 13. CASH AND BANK BALANCES ===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
WITH BANKS ON:
- Current accounts 6,365 5,772
- Saving accounts 13.1 127,776 209,956
- Term deposit accounts 13.1 55,000 -
189,141 215,728
Cheques in hand 27,049 33,240
Cash in hand 347 235
216,537 249,203
===================================================================================13.1. The rates of profit on these saving and deposit accounts range between 0.75% to 7.6% (2004: 0.25% to 3.5%) per annum.14. ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL ===================================================================================
2005 2004 2005 2004
Number of shares Rupees in '000
===================================================================================
5,882,353 5,882,353 Ordinary shares of Rs 10 each
fully paid in cash 58,824 58,824
6,347,910 6,347,910 Ordinary shares of Rs 10 each
issued as fully paid bonus share 63,479 63,479
12,230,263 12,230,263 122,303 122,303
===================================================================================15. RESERVES===================================================================================
2005 2004
Rupees in '000
===================================================================================
CAPITAL RESERVE:
- Share premium reserve 13,456 13,456
REVENUE RESERVE:
- General reserve 510,000 510,000
- Unappropriated profit 305,854 125,183
829,310 648,639
===================================================================================16. LONG TERM LOANS - SECURED===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
ABN Amro Bank N.V 16.1 104,381 156,573
Standard Chartered Bank 16.2 9,375 21,875
113,756 178,448
Less: Current maturity 61,567 64,692
52,189 113,756
===================================================================================16.1. This represents long term loan obtained for expansion of existing plant and machinery and factory building.The facility is secured against joint pari passu charge over fixed assets including immovable property of the company. Markup is charged at the rate of six month's treasury bill plus 3% per annum. The facility is repayable through an initial installment of Rs 17.331 and subsequently, seven semi annual equal installments of Rs 26.096 million, are to be paid commencing from October 2003. 16.2. This represents long term loan obtained for expansion of existing plant and machinery. The facility is secured against hypothecation charge over fixed assets including immovable property of the company. Markup is charged at the rate of average three months KIBOR plus 2.25% per annum. The facility is repayable in sixteen equal quarterly installments of Rs 3.125 million each commencing from June 2002. 17. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASES =========================================================================================================================
2005 2004
=========================================================================================================================
Not later Later than Total Not later Later than Total
than one one and than one one year
year less than year and
five years less than
five years
Rupees in '000
=========================================================================================================================
Minimum lease payments 3,491 1,797 5,288 10,169 1,088 11,257
Financial charges 135 139 274 802 10 812
Present value of minimum
lease payments 3,356 1,658 5,014 9,367 1,078 10,445
Less: Current maturity shown 3,356 9,367
under current liabilities 1,658 1,078
=========================================================================================================================17.1. This represents finance leases entered into with a leasing company and a modaraba company for purchase of plant and machinery and vehicles.The periodic lease payments include built-in rates of mark-up ranging between 6.95% to 11.42% (2004: 11.42%) per annum which are used as discounting factor. The company intends to exercise its option to purchase the leased assets upon expiry of the respective lease periods at 6% to 10% of the leased amounts. 18. DEFERRED TAXATION ===================================================================================
2005 2004
Rupees in '000
===================================================================================
CREDIT /(DEBIT) BALANCES ARISING IN RESPECT
OF TIMING DIFFERENCES RELATING TO:
Accelerated tax depreciation allowance 89,717 55,032
Finance lease arrangements 5,544 3,642
Provision for compensated absences (1,441) (1,746)
Provision for doubtful debts (1,820) (928)
92,000 56,000
===================================================================================19. LONG TERM DEPOSITS===================================================================================
2005 2004
Rupees in '000
===================================================================================
SECURITY DEPOSITS OBTAINED FROM:
- Distributors 2,958 2,925
- Transporters 1,100 1,100
- Others 5 5
4,063 4,030
===================================================================================19.1. These deposits are interest free and are not refundable during the subsistence of relationship with the company.20. TRADE AND OTHER PAYABLES ===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
Trade creditors 20.1 167,306 180,118
Accrued liabilities 30,106 34,456
Bills payable 60,108 88,016
Amounts due to distributors 5,991 10,192
Sales tax payable 18,014 2,779
ACCRUED MARKUP ON:
- long term loans 25 9
- running finance facilities 112 59
137 68
Royalty payable to an associated undertaking 15,122 13,065
Workers' profits participation fund 20.2 24,957 23,330
Workers' welfare fund 7,600 9,502
Retention money payable 399 2,104
Insurance claim payable to legal
heirs of an ex-employ - 100
Unclaimed dividend 789 538
Others 20.3 932 531
331,461 364,799
===================================================================================20.1. This includes Rs 11.356 million (2004: Rs 3.394 million) due to related parties.20.2. WORKERS' PROFITS PARTICIPATION FUND ===================================================================================
2005 2004
Rupees in '000
===================================================================================
Balance at the beginning of the year 23,330 14,504
Allocation for the year 24,957 23,330
48,287
Interest on funds utilised in the company's business - 150
48,287 37,984
Less: Payments during the year 23,330 14,654
Balance at the end of the year 24,957 23,330
===================================================================================20.3. This includes Rs Nil (2004: Rs 0.223 million) due to associated companies.21. SHORT TERM BORROWINGS ===================================================================================
2005 2004
Rupees in '000
===================================================================================
RUNNING FINANCE FACILITIES UNDER MARKUP ARRANGEMENTS
SECURED:
From banks 5,481 2,264
===================================================================================21.1. The company has arranged short-term running finance facilities from various banks on mark-up basis to the extent of Rs 470.000 million (2004: Rs 335.000 million).The mark-up on such arrangements range between 6.93% to 9.50% (2004: 3.45% to 5%) per annum. These arrangements had expired during the year and were renewed subsequently. The renewed facilities are available for various periods expiring between August 31, 2005 and January 30, 2008. The arrangements are secured by a joint hypothecation of stocks, trade debts and 2nd charge on moveable assets of the company. 21.2. The facilities for opening letters of credit and guarantee as at June 30, 2005 aggregate Rs 1,047.000 million and Rs 50.000 million respectively (2004: Rs 403.340 million and Rs 45.000 million respectively) of which the amounts remaining unutilised at the year end were Rs 927.326 million and Rs 42.300 million respectively (2004: Rs 315.324 million and Rs 38.869 million). 22. CONTINGENCIES AND COMMITMENTS 22.1. CONTINGENCIES 22.1.1. As a result of recovery suit of Rs 31 .455 million filed by the Octroi Contractor against the Government of Sindh, Union Council Bulari and Kotri Association of Trade and Industries (KATI) in the Civil Court, the Honorable Senior Judge issued a decree of Rs 7.336 million in favour of Octroi Contractor. KATI has filed an appeal in the High Court of Sindh whereas the Octroi Contractor has also filed an appeal requesting to enhance the amount of decree. Subsequently the case has been transferred to the Additional District Judge Kotri by the High Court of Sindh. If the appeal is dismissed then the company, being a member of KATI, would be required to pay its share as determined by the Court out of the total decree amount. The management of the company, based on the advice of its legal counsel handling the subject matter, is confident that the appeal will be decided in favour of KATI. Accordingly, no provision has been made in the financial statements on this account. 22.1.2. Post dated cheques have been issued to custom authorities in respect of duties amounting to Rs 0.051 million (2004: Rs 41.562 million) on account of concessional rates of duties on imported raw material availed on the basis of consumption plans. In the event the certificates of consumption are not provided on due dates, cheques issued as security shall be encashable. 22.1.3. Contingent liability in respect of indemnities given to the financial institutions for guarantees issued by them in the normal course of business aggregate Rs 7.700 million (2004: Rs 6.331 million). 22.2. COMMITMENTS 22.2.1. Commitments in respect of capital expenditure amounted to Rs 9.202 million (2004: Rs 9.101 million). 22.2.2. Outstanding letters of credit and acceptances amount to Rs 52.879 (2004: Rs 254.646 million). 22.2.3. Outstanding duties leviable on ex-bonding of stocks amount to Rs 2.849 (2004: Rs 7.233 million). 22.2.4. Commitments for rentals under operating lease agreements in respect of vehicles are as under: ===================================================================================
2005 2004
Rupees in '000
===================================================================================
Not later than one year 4,025 6,808
Later than one year and less than five years 2,577 6,602
Balance at the end of the year 6,602 13,410
===================================================================================23. COST OF SALES===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
Opening stock of finished goods
(including trading goods and by-products) 77,106 89,777
Cost of goods manufactured 23.1 2,406,142 1,914,387
Purchases of trading goods 506,372 459,265
2,989,620 2,463,429
Less: Closing stock of finished goods
(including trading goods and by-products) 127,779 77,106
2,861,841 2,386,323
===================================================================================23.1. COST OF GOODS MANUFACTURED===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
Opening stock of work-in-process 10,704 5,443
Raw material consumed 23.1.1 & 23.2 1,381,443 1,066,086
Packing material consumed 23.1.2 & 23.2 443,608 379,746
Stores and spares consumed 13,698 8,653
Salaries, wages and other benefits 99,318 87,429
Gratuity 37.1 4,749 3,364
Provident fund 2,763 2,703
Power and fuel 55,570 47,601
Repairs and maintenance 7,648 7,186
Rent, rates and taxes 1,188 1,348
Insurance 6,482 5,408
Laboratory expenses 743 1,285
Cartage 6,598 5,756
Excise duty 307,435 257,246
Depreciation 4.1.4 55,017 34,146
Other manufacturing expenses 13,117 11,691
2,410,081 1,925,091
Less: Closing stock of work-in-process 3,939 10,704
2,406,142 1,914,387
===================================================================================23.1.1. RAW MATERIAL CONSUMED===================================================================================
2005 2004
Rupees in '000
===================================================================================
Opening stock 286,785 192,943
Purchases 1,445,911 1,159,928
1,732,696 1,352,871
Closing stock (351,253) (286,785)
1,381,443 1,066,086
===================================================================================23.1.2. PACKING MATERIAL CONSUMED===================================================================================
2005 2004
Rupees in '000
===================================================================================
Opening stock 58,213 47,573
Purchases 439,131 390,386
497,344 437,959
Closing stock (53,736) (58,213)
443,608 379,746
===================================================================================23.2. Cost of sales includes amounts written off during the year in respect of the following:===================================================================================
2005 2004
Rupees in '000
===================================================================================
- Raw material 764 -
- Packing material 1,638 -
- Finished goods - 3,509
- Stores and spares - 516
===================================================================================24. SELLING AND DISTRIBUTION COSTS===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
Salaries, wages and other benefits 51,988 43,778
Gratuity 37.1 1,152 1,660
Provident fund 1,967 1,802
Travelling and conveyance 14,591 13,463
Repairs and maintenance 977 302
Vehicle running expenses 20,794 23,050
Advertising and sales promotion 264,264 251,339
Royalty on sale of licensed products 15,122 13,065
Postage, telephone and internet charges 4,290 4,260
Rent, rates and taxes 3,230 2,910
Printing and stationery 1,544 1,259
Subscription and membership 219 213
Legal and professional 151 33
Freight 109,498 82,896
Electricity 1,018 1,059
Insurance 2,373 2,416
Entertainment 39 1
Security service charges 536 449
Depreciation 4.1.4 5,652 2,772
Amortisation 5 6,100 2,475
Others - 19
505,505 449,221
===================================================================================25. ADMINISTRATIVE EXPENSES===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
Salaries, wages and other benefits 25,413 21,632
Gratuity 37.1 1,532 1,313
Provident fund 982 958
Travelling and conveyance 1,477 1,755
Repairs and maintenance 247 194
Vehicle running expenses 1,570 1,680
Postage, telephone and internet charges 1,850 1,342
Rent, rates and taxes 2,931 3,333
Printing and stationery 968 1,100
Subscription and membership 475 558
Legal and professional 330 590
Electricity 1,115 1,165
Insurance 1,228 1,005
Entertainment 18 3
Security service charges 395 513
Depreciation 4.1.4 2,126 1,644
Others 70 141
42,727 38,926
===================================================================================26. OTHER OPERATING EXPENSES===================================================================================
2005 2004
Notes Rupees in '000
===================================================================================
Workers' profits participation fund 20.2 24,957 23,330
Workers' welfare fund - current year 7,600 7,000
- prior year (509) (287)
7,091 6,713
Auditors' remuneration 26.1 421 188
Property, plant and equipment written off 1,118 -
Donations 26.2 410 1,000
Intangible asset written off - 2,917
Bad debts directly written off 66 15
Provision for doubtful debts 2,655 -
36,718 34,163
===================================================================================26.1. AUDITORS' REMUNERATION===================================================================================
2005 2004
Rupees in '000
===================================================================================
Audit fee 175 125
Half yearly review and other certifications 170 35
Out of pocket expenses 76 28
421 188
===================================================================================26.2. DONATIONS INCLUDE THE FOLLOWING IN WHOM A DIRECTOR IS INTERESTED======================================================================================
Name of director Interest in Name and address
donee of donee
======================================================================================
Mr. Iqbal Ali Lakhani Trustee Lakson Medical Trust
Pohan Colony, Malakand Road,
Mardan, N.W.F.P. 50 -
======================================================================================27. OTHER OPERATING INCOME===================================================================================
2005 2004
Rupees in '000
===================================================================================
Insurance commission 2,740 2,918
Profit on bank saving accounts 1,769 3,530
Profit on term deposit accounts 289 1,250
Profit on certificate of investment - 331
Gain on disposal of property, plant and equipment 2,326 999
Sale of scrap 823 435
Proceeds from sale of registered trade marks - 866
Liabilities no more payable written back - 580
Exchange gain 233 -
Others 5 51
8,185 10,960
===================================================================================28. FINANCE COSTS===================================================================================
2005 2004
Rupees in '000
===================================================================================
Interest on workers' profits participation fund - 150
MARKUP ON:
- long term loans 9,377 9,188
- running finance facilities 1,722 1,171
- liabilities against assets subject to finance leases 920 1,621
Guarantee commission 131 66
Bank commission and other charges 2,376 1,886
14,526 14,082
===================================================================================29. TAXATION===================================================================================
2005 2004
Rupees in '000
===================================================================================
CURRENT:
- for the year 132,500 117,000
- for prior years (4,383) (4,357)
Deferred 36,000 37,000
164,117 149,643
===================================================================================29.1. RELATIONSHIP BETWEEN TAX EXPENSE AND ACCOUNTING PROFIT===================================================================================
2005 2004
Rupees in '000
===================================================================================
Profit before taxation 467,091 436,560
Tax at the applicable rate of 35% (2004: 35%) 163,482 152,796
Tax effect of expenses that are not allowable in
determining taxable income 832 1,151
Effect of income assessed under presumptive tax regime (187) (183)
Tax effect of income tax provision relating to prior year (407) (3,724)
Tax impact arising due to origination of temporary different 397 (397)
164,117 149,643
===================================================================================30. EARNINGS PER SHARE - BASIC AND DILUTED===================================================================================
2005 2004
===================================================================================
Profit after taxation 302,974 286,917
Weighted average number of ordinary shares
outstanding during the year 12,230,263 12,230,263
Earnings per share - basic and diluted 24.77 23.46
===================================================================================31. CASH GENERATED FROM OPERATIONS===================================================================================
2005 2004
Note Rupees in '000
===================================================================================
Profit before taxation 467,091 436,560
ADJUSTMENT FOR NON-CASH CHARGES AND OTHER ITEMS:
Depreciation and amortisation expense 68,895 41,037
Gain on disposal of property, plant and equipment (2,326) (999)
Profit on bank deposits (2,058) (4,780)
Finance costs 14,526 14,082
Intangible asset written off - 2,917
Property, plant and equipment written off 1,118 -
Working capital changes 31.1 (134,537) 9,889
412,709 498,706
===================================================================================31.1. WORKING CAPITAL CHANGES===================================================================================
2005 2004
Rupees in '000
===================================================================================
DECREASE/(INCREASE) IN CURRENT ASSETS:
Stores and spares (206) (1,605)
Stock in trade (103,899) (97,072)
Trade debts 12,270 1,610
Loans and advances (5,744) 15,732
Trade deposits, short term prepayments and
other receivables (3,300) 1,101
(100,879) (80,234)
INCREASE/(DECREASE) IN CURRENT LIABILITIES:
Trade and other payables (33,658) 90,123
(134,537) 9,889
===================================================================================32. CASH AND CASH EQUIVALENTS===================================================================================
2005 2004
Rupees in '000
===================================================================================
CASH AND CASH EQUIVALENTS COMPRISE OF THE FOLLOWING ITEMS:
Cash and bank balances 216,537 249,203
Running finance facilities under mark-up arrangements (5,481) (2,264)
211,056 246,939
===================================================================================33. PROPOSED DIVIDENDThe Board of Directors of the company during the meeting held on August 19, 2005, proposed a final dividend at the rate of Rs 12.50 per share (2004: Rs 10 per share) in respect of the year ended June 30, 2005. Accordingly, a total dividend of Rs 152.879 million (2004: Rs 122.303 million) has been proposed on 12,230,263 fully paid up shares of Rs 10 each. Further, an amount of Rs 150.000 million has been proposed to be transferred to the general reserve. 34. RELATED PARTY DISCLOSURES Disclosure of transactions between the company and related parties. The company in the normal course of business carries out transactions with various related parties. Significant balances and transactions with related parties are as follows: ===========================================================================================================
Relationship 2005 2004
with the company Rupees in '000
===========================================================================================================
Sale of goods, services provided and
reimbursement of expenses
Century Paper & Boards Mills Limited Associate 209 159
Century Power Generation Limited Associate - 5
Clover Pakistan Limited Associate 4,958 4,605
Lakson Tobacco Company Limited Associate 8,634 1,616
Merit Packaging Limited Associate 35 -
Reliance Chemicals (Private) Limited Associate - 8
Rollins Industries (Private) Limited Related party* 143,729 147,732
Tetley Clover (Private) Limited Associate 1,837 275
159,402 154,400
*Third party whose manufacturing process is dependent
Sale of trademarks
Clover Pakistan Limited Associate - 5
Purchase of goods, services received
and reimbursement of expenses
Accuracy Surgicals Limited Associate - 29
C.R.I.S.S. (Private) Limited Associate 424 10
Century Insurance Company Limited Associate 21,390 18,493
Century Paper & Board Mills Limited Associate 8,208 14,435
Century Publication (Private) Limited Associate - 2,970
Clover Pakistan Limited Associate 255 781
Colgate-Palmolive Company USA (CP-USA) Joint venture company 2,767 2,702
Colgate-Palmolive China Subsidiary of CP-USA 43,392 33,978
Colgate-Palmolive Hong Kong Subsidiary of CP-USA 121 -
Colgate-Palmolive Malaysia Subsidiary of CP-USA 49 147
Balance carried forward 76,606 73,545
Purchase of goods, services received
and reimbursement of expenses
Balance brought forward 76,606 73,545
Colgate-Palmolive Phillipines Subsidiary of CP-USA - 577
Colgate-Palmolive Thailand Subsidiary of CP-USA 3,157 5,656
Colgate-Palmolive Vietnam Subsidiary of CP-USA - 214
Cyber Internet Services (Private) Limited Associate 3,944 2,613
Ford Rhodes Sidat Hyder & Co. Associate** - 22
GAM Corporation (Private) Limited Associate 12 -
Lakson Tobacco Company Limited Associate 3,395 203
Merit Packaging Limited Associate 924 66
Princeton Travels (Private) Limited Associate 3,180 3,694
Rollins Industries (Private) Limited Related party* 551,237 502,145
SIZA (Private) Limited Associate 2 132
SIZA Foods (Private) Limited Associate 4 288
Tetley Clover (Private) Limited Associate 360 -
642,821 589,155
* Third party whose manufacturing process is dependent
** The related party relationship has ended during the last year
Rent, allied and other charges
Century Paper & Board Mills Limited Associate 252 196
Hasanali Karabhai Foundation Associate 5,894 5,997
Lakson Tobacco Company Limited Associate 108 575
SIZA Services (Private) Limited Associate 333 284
6,587 7,052
ROYALTY CHARGES:
Colgate-Palmolive Company USA Joint venture company 15,122 13,065
INSURANCE CLAIMS RECEIVED:
Century Insurance Company Limited Associate 5,230 2,669
INSURANCE COMMISSION INCOME:
Century Insurance Company Limited Associate 2,739 2,918
Purchase of property, plant and equipment
Colgate-Palmolive Thailand Subsidiary of CP-USA 6,026 -
Cyber Internet Services (Private) Limited Associate - 862
Lakson Tobacco Company Limited Associate - 621
Reliance Chemicals (Private) Limited Associate - 300
Rollins Industries (Private) Limited Related party* 8,100 -
SIZA Foods (Private) Limited Associate - 8,589
Tetley Clover (Private) Limited Associate 1,363 -
15,489 10,372
*Third party whose manufacturing process is dependent.
Sale of property, plant and equipment
Clover Pakistan Limited Associate - 152
Tetley Clover (Private) Limited Associate 485 35
485 187
Contribution to staff retirement benefits
Colgate-Palmolive (Pakistan) Limited Employees
Contributory Provident Fund Trust Employees fund 5,711 5,462
Colgate-Palmolive (Pakistan) Limited Employees
Gratuity Fund Employees fund 7,433 6,337
13,144 11,799
DONATION:
Lakson Medical Trust Trust 50 -
===========================================================================================================35. REMUNERATION OF CHIEF EXECUTIVE, DIRECTOR AND EXECUTIVES35.1. The aggregate amount charged in these financial statements for remuneration, including certain benefits to the chief executive, the director and executives of the Company, are as follows: ================================================================================================
Chief Executive Director Executives
2005 2004 2005 2004 2005 2004
Rupees in '000
================================================================================================
Managerial remuneration 4,314 4,636 1,330 1,119 13,034 9,509
Bonus / commission 4,251 2,900 224 199 2,955 1,591
Gratuity - - 252 233 383 1,495
Provident fund - - 120 106 928 862
Housing 1,418 - 342 391 4,446 3,380
Utilities 373 831 133 111 1,304 951
Motor vehicle 469 418 121 106 1,421 1,024
Others - - 183 60 1,038 498
10,825 8,785 2,705 2,325 25,509 19,310
Number of persons 1 1 1 1 14 11
================================================================================================35.2. Chief executive, a working director and the executives of the company are also provided with company maintained cars.36. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 36.1. INTEREST RATE RISK Interest / mark-up rate risk arises from the possibility that changes in interest / mark-up rates will affect the value of financial instruments. In respect of income earning financial assets and interest / mark-up bearing financial liabilities, the following table provides information about the exposure of the company to interest / mark-up rate risk at the balance sheet date based on contractual re-pricing or maturity dates, whichever is earlier. ==================================================================================================================================
Interest / mark-up bearing Non-interest / mark-up bearing Total Total
==================================================================================================================================
Maturity Maturity Sub-total Maturity Maturity Sub-total 2005 2004
within one after one within one after one
year year year year
Rupees in '000
==================================================================================================================================
FINANCIAL ASSETS:
Long term loans - - - 2,782 6,001 8,783 8,783 6,134
Long term deposits - - - - 2,323 2,323 2,323 2,732
Trade debts - - - 83,738 - 83,738 83,738 96,008
Trade deposits, short term
prepayments and other
receivables 1,700 - 1,700 7,123 - 7,123 8,823 7,423
Cash and bank balances 182,776 - 182,776 33,761 - 33,761 216,537 249,203
2005 184,476 - 184,476 127,404 8,324 135,728 320,204 361,500
2004 211,648 - 211,648 141,016 6,943 147,959 359,607
FINANCIAL LIABILITIES:
Long term loans 61,567 52,189 113,756 - - - 113,756 178,448
Liabilities against assets
Subject to finance lease 3,356 1,658 5,014 - - - 5,014 10,445
Long term deposits - - - - 4,063 4,063 4,063 4,030
Trade and other payables - - - 299,613 - 299,613 299,613 318,887
Short term borrowings 5,481 - 5,481 - - - 5,481 2,264
2005 70,404 53,847 124,251 299,613 4,063 303,676 427,927 514,074
2004 76,323 114,834 191,157 441,190 4,030 445,220 636,377
Off-balance sheet items
Letters of credit 59,567 263,747
Indemnity bonds and guarantees 7,700 6,331
================================================================================================================================== The effective interest/mark-up rates as at June 30 for financial instruments are as follows:===================================================================================
2005 2004
(Percent)
===================================================================================
BALANCE WITH BANK ON:
- term deposit accounts 6.90 to 7.60 -
- saving accounts 0.75 to 5.00 0.25 to 3.50
Security deposits 2.25 2.25
Long term loans 8.18 to 8.69 4.19 to 4.84
Liabilities against assets
subject to finance leases 6.95 to 11.42 11.42
Running finance facilities
under markup arrangements 6.93 to 9.50 3.45 to 5.00
===================================================================================36.2. CREDIT RISK AND CONCENTRATION OF CREDIT RISKCredit risk represents the accounting loss that would be recognised at the reporting date if counter parties failed completely to perform as contracted. To manage exposure to credit risk, the company applies credit limits to its customers. 36.3. FOREIGN EXCHANGE RISK MANAGEMENT Foreign currency risk arises mainly where receivable and payables exist due to transactions entered into foreign currencies. The company is exposed to foreign currency risk on certain transactions with group companies that are entered in a currency other than Pakistan Rupees. The company uses forward foreign exchange contracts to hedge its foreign currency risk, when considered appropriate. 36.4. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is an amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm's length transaction. Consequently, differences may arise between the carrying and the fair value estimates. As at June 30, 2005 the net fair value of all financial assets and financial liabilities are estimated to approximate their carrying values. 37. GRATUITY The actuarial valuation of gratuity plan was carried out as of June 30, 2005. The projected unit credit method, using the following significant financial assumptions, has been used for the actuarial valuation: ===================================================================================
2005 2004
(Percent)
===================================================================================
- Discount rate - per annum compound 9.00 8.00
- Expected rate of increase in salaries -per annum 8.00 7.00
- Expected rate of return on plan assets - per annum 8.00 8.00
=================================================================================== The amounts recognised in the balance sheet are as follows:===================================================================================
2005 2004
Note Rupees in '000
===================================================================================
Present value of defined benefit obligation 41,978 37,209
Fair value of plan assets (17,685) (16,867)
Surplus 24,293 20,342
Unrecognised net actuarial gains (7,762) (1,974)
Unrecognised past service cost (16,531) (18,368)
Payable to the gratuity fund - -
MOVEMENT IN NET LIABILITY IN
THE BALANCE SHEET IS AS FOLLOWS:
Opening balance of net liability - -
Charge for the year 37.1 7,433 6,337
Contributions made during the year to the fund (7,433) (6,337)
Closing balance of net liability - -
===================================================================================37.1. CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS UNDER===================================================================================
2005 2004
Rupees in '000
===================================================================================
Cost of sales 4,749 3,364
Selling and distribution costs 1,152 1,660
Administrative expenses 1,532 1,313
7,433 6,337
=================================================================================== The following amounts have been charged to income in respect of the gratuity plan:===================================================================================
2005 2004
Rupees in '000
===================================================================================
Current service cost 3,968 2,771
Interest cost 2,977 2,604
Past service cost - non vested 1,837 1,837
Expected return on plan assets (1,349) (875)
7,433 6,337
Actual return on plan assets 707 69
===================================================================================38. PLANT CAPACITY AND ACTUAL PRODUCTION===================================================================================
2005 2004
Rupees in '000
===================================================================================
Capacity 74,200 56,328
Production 62,341 52,189
===================================================================================The underutilisation of capacity was due to market constraints.39. STAFF STRENGTH ===================================================================================
2005 2004
===================================================================================
Number of employees as at June 30 547 526
===================================================================================40. CORRESPONDING FIGURES40.1. During the year, the Securities and Exchange Commission of Pakistan has substituted the Fourth Schedule to the Companies Ordinance, 1984 which is effective from the financial year ending on or after July 5, 2004. Consequently, there have been rearrangements and reclassifications of prior year's figures including the change in treatment of proposed dividends as more fully explained in note 3 to these financial statements. Further, according to revised definition of 'executives' corresponding figures in notes 6, 11 and 35 have been restated. 40.2. In accordance with the requirements of revised Fourth Schedule to the Companies Ordinance, 1984 the selling and distribution and administrative expenses have been bifurcated in these financial statements and accordingly, the corresponding figures included in notes 24 and 25 to these financial statements have also been restated for the purpose of comparison. 40.3. Prior year's reversal of workers' welfare fund is now included in 'other operating expenses' whereas previously, this was adjusted in 'prior year current charge' in 'taxation'. Accordingly, the corresponding figures included in notes 26 and 29 to these financial statements have also been restated for the purpose of comparison. 40.4. Advance to suppliers as appearing in note 4 to the financial statements for the year ended June 30, 2004 have now been reclassified under respective account heads in these financial statements and accordingly, the corresponding figures included in note 4.2 to these financial statements have also been restated for the purpose of comparison. 40.5.'Raw material in bounded warehouse' under the head of 'stock in trade' has now been bifurcated in 'Raw material in bonded warehouse' and 'stocks held with third parties' in these financial statements. Accordingly, corresponding figure of raw-material in bonded warehouse, included in note 9 to these financial statements has also been restated for the purpose of comparison. 40.6. In note 29.1 to these financial statements, the relationship between tax expense and accounting profit has been explained in the form of numerical reconciliation under the permissible option of International Accounting Standard 12 'Income taxes'. Accordingly, the corresponding figures included in note 29.1 to these financial statements have also been restated for the purpose of comparison. 40.7. Short term running finances has now been shown as part of cash and cash equivalents for cash flow statement purposes and accordingly, the corresponding figures have also been reclassified for the purpose of comparison. 41. DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on August 19, 2005 by the Board of Directors of the company. |