| Colgate Palmolive (Pakistan) Ltd - 2009 |
|
Balance Sheet As At June 30, 2009
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Note 2009 2008
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(Rupees in '000)
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ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 5 1,193,518 963,240
Intangible assets 6 16,812 14,715
Long term loans 7 18,504 18,551
Long term security deposits 8 6,431 2,962
1,235,265 999,468
CURRENT ASSETS
Stores and spares 9 15,138 14,085
Stock in trade 10 1,128,432 1,006,364
Trade debts 11 339,490 177,983
Loans and advances 12 158,728 95,412
Trade deposits and short term prepayments 13 25,724 18,988
Other receivables 14 12,140 38,753
Profit receivable from banks 15 837 2,291
Taxation - 11,842
Short term investments
-available for sale 16 - 180,201
Cash and bank balances 17 1,024,666 592,937
2,705,155 2,138,856
TOTAL ASSETS 3,940,420 3,138,324
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorised share capital 18 400,000 200,000
Issued, subscribed and paid-up share capital 18 238,873 191,098
Reserves 19 2,461,338 1,950,245
Surplus on revaluation of investments 16 - 201
2,700,211 2,141,544
LIABILITIES
NON-CURRENT LIABILITIES
Long term loan 20 625 3,125
Deferred taxation 21 161,000 154,900
Long term deposits 22 5,658 4,465
167,283 162,490
CURRENT LIABILITIES
Trade and other payables 23 975,381 786,145
Accrued mark-up 24 167 700
Current maturity of long term loan 20 2,500 2,500
Short term borrowings 25 - 44,945
Taxation 94,878 -
1,072,926 834,290
TOTAL LIABILITIES 1,240,209 996,780
CONTINGENCIES AND COMMITMENTS 26
TOTAL EQUITY AND LIABILITIES 3,940,420 3,138,324
========================================================================================Profit And Loss Account For The Year Ended June 30, 2009========================================================================================
Note 2009 2008
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(Rupees in '000)
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Turnover 13,994,706 8,976,538
Sales tax (2,035,988) (1,249,907)
Special excise duty (112,249) (73,495)
Trade discounts (661,539) (521,208)
Net turnover 11,184,930 7,131,928
Cost of sales 27 (8,482,756) (5,035,128)
Gross profit 2,702,174 2,096,800
Selling and distribution costs 28 (1,345,967) (981,933)
Administrative expenses 29 (102,024) (73,053)
Other operating expenses 30 (112,508) (119,189)
Other operating income 31 53,297 118,259
Profit from operations 1,194,972 1,040,884
Finance costs 32 (48,867) (19,875)
Profit before taxation 1,146,105 1,021,009
Taxation 33 (396,139) (341,716)
Profit after taxation 749,966 679,293
Earnings per share (Rupees)-restated 34 31.40 28.44
========================================================================================Statement Of Changes In Equity For The Year Ended June 30, 2009============================================================================================================================
Issued, Capital Revenue reserves
subscribed reserve- Surplus on
and paid up share General Unappropriated revaluation of Total
share capital premium reserve profit investments
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(Rupees in '000)
============================================================================================================================
Balance as at July 1, 2007 152,879 13,456 930,000 610,320 455 1,707,110
Profit for the period ended June 30, 2008 - - - 679,293 - 679,293
Final dividend for the year ended June 30, 2007
(Rs. 16.00 per share) - - - (244,605) - (244,605)
Bonus shares issued at the rate of one share
for every four shares held 38,219 - - (38,219) - -
Transfer to general reserve - - 320,000 (320,000) - -
Gain realised during the year ended June 30, 2008
on disposal of investments - - - - (254) (254)
Balance as at June 30, 2008 191,098 13,456 1,250,000 686,789 201 2,141,544
Balance as at July 1, 2008 191,098 13,456 1,250,000 686,789 201 2,141,544
Profit for the year ended June 30, 2009 - - - 749,966 - 749,966
Final dividend for the year ended June 30, 2008 - - - (191,098) - (191,098)
(Rs. 10.00 per share)
Bonus shares issued at the rate of one share
for every four shares held 47,775 - - (47,775) - -
Transfer to general reserve - - 440,000 (440,000) - -
Gain realised during the year ended June 30, 2009
on disposal of investments - - - - (201) (201)
Balance as at June 30, 2009 238,873 13,456 1,690,000 757,882 - 2,700,211
============================================================================================================================Cash Flow Statement For The Year Ended June 30, 2009========================================================================================
Note 2009 2008
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(Rupees in '000)
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CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 35 1,154,675 919,796
Finance costs paid (49,400) (22,681)
Taxes paid (283,319) (286,877)
Long term loans (391) (5,966)
Long term security deposits (3,469) 559
Long term deposits 1,193 367
Net cash inflow from operating activities 819,289 605,198
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed capital expenditure (369,153) (247,949)
Purchase of intangible assets (11,769) (3,500)
Sale proceeds on disposal of property, plant and equipment 9,708 44,233
Profit received on savings accounts 33,626 29,295
Profit received on a term deposit account 3,175 85
Sale proceeds on disposal of short term investments 185,166 465,654
Purchase of short term investments - (330,000)
Net cash outflow due to investing activities (149,247) (42,182)
CASH FLOWS FROM FINANCING ACTIVITIES
Long term loan (2,500) (2,500)
Repayments of short term borrowings (44,945) (188,981)
Short term borrowings - 44,945
Dividends paid (190,868) (244,239)
Net cash outflow due to financing activities (238,313) (390,775)
Net increase in cash and cash equivalents 431,729 172,241
Cash and cash equivalents at the beginning of the year 592,937 420,696
Cash and cash equivalents at the end of the year 17 1,024,666 592,937
========================================================================================Notes To And Forming Part Of The Financial Statements For The Year Ended June 30, 20091. 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, Pakistan. The company is mainly engaged in the manufacture and sale of detergents, personal care and other related products. 2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984 (the Ordinance) and the directives issued by the Securities and Exchange Commission of Pakistan (SECP). The approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) as are notified under the provisions of the Ordinance. However, the requirements of the Ordinance or directives issued by the SECP have been followed in case where their requirements are not consistent with the requirements of the approve accounting standards. Standards, amendments to published approved accounting standards and interpretations becoming effective in the year ended June 30, 2009:. The following standards, interpretations and amendments to existing standards have been published that are mandatory and relevant for the company's accounting period beginning on July 1, 2008. IFRS 7, 'Financial instruments: Disclosures' introduces new disclosures relating to financial instruments and does not have any impact on the classification and valuation of the financial instruments. IFRIC Interpretation 14, 'IAS 19-The limit on a defined benefit asset, minimum funding requirements and their interaction'. IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirements. The amendment does not have significant effect on the company's financial statements. Standards, amendments to published approved accounting standards and interpretations becoming effective in the year ended June 30, 2009 but not relevant: There are certain new standards, amendments and interpretations that are mandatory for accounting periods beginning on or after July 1, 2008 but are considered not to be relevant or have any significant effect on the company's operations and are, therefore, not disclosed in these financial statements. Standards, amendments to published approved accounting standards and interpretations as adopted in Pakistan, that are not yet effective: The following standards, amendments and International Financial Reporting Interpretations Committee (IFRIC) interpretations to existing standards have been published and are mandatory for accounting periods beginning on or after January 1, 2009: IAS 1 (Revised), 'Presentation of financial statements' (effective from January 1, 2009), was issued in September 2007. The revised standard prohibits the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Further, where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The adoption of the above standard will only impact the presentation of the financial statements. IAS 19 (Amendment), 'Employee benefits' (effective from January 1, 2009). - The amendment clarifies that a plan amendment that results in a change in the extent to which benefit promises are affected by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service gives rise to a negative past service cost if it results in a reduction in the present value of the defined benefit obligation. Adoption of the amendment is not expected to have any effect on the company's financial statements. - .The definition of return on plan assets has been amended to state that plan administration costs are deducted in the calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the defined benefit obligation. Adoption of the amendment is not expected to have any effect on the company's financial statements. - The distinction between short term and long term employee benefits will be based on whether benefits are due to be settled within or after 12 months of employee service being rendered. The adoption of this amendment will only impact the presentation of the financial statements. - IAS 37, 'Provisions, contingent liabilities and contingent assets', requires contingent liabilities to be disclosed, not recognised. IAS 19 has been amended to be consistent with IAS 37. IAS 36 (Amendment), 'Impairment of assets' (effective from January 1, 2009). As per the new requirements, disclosures equivalent to those for value-in-use calculation should be made where fair value less costs to sell is calculated on the basis of discounted cash flows. Adoption of the amendment is not expected to have significant effect on the company's financial statements. IAS 23 (Amendment) 'Borrowing costs' (effective from January 1, 2009). It requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes substantial period of time to get ready for use or sale) as part of the cost of that asset. On adoption of the above amendment, the option of immediately expensing those borrowing costs will be withdrawn. This amendment is not expected to have a significant effect on the company's financial statements. IAS 38 (Amendment) 'Intangible assets' (effective from January 1, 2009). It states that a prepayment may only be recognised in the event that prepayment has been made in advance of obtaining right of access to goods or receipt of services. This amendment is not expected to have a significant effect on the company's financial statements. There are other amendments to the approved accounting standards and interpretations that are mandatory for accounting periods beginning on or after January 1, 2009 but are considered not to be relevant or do not have any significant effect to the company's operations and are therefore not mentioned in these financial statements. 3. SIGNIFICANT ACCOUNTING POLICIES 3.1. 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 3.12 and certain financial instruments that have been accounted for on the basis of their fair values as referred to in note 3.16. 3.2. Property, plant and equipment These assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any, except for leasehold land and capital work in progress which are stated at cost. Assets having cost exceeding the minimum threshold as determined by the management are capitalised. All other assets are charged to income in the year when acquired. Depreciation is charged to income applying the reducing balance method and by applying rates (as stated in note 5.1.1) on the opening book value of the assets. Depreciation on additions is charged from the month in which the asset is put to use and on disposal upto the month of disposal at the rates stated in note 5.1.1. No depreciation is charged if the asset's residual value exceeds its carrying amount. Residual values and the useful lives are reviewed at each balance sheet date and adjusted if expectations differ significantly from previous estimates. The management estimates that the financial impact of changes in the residual values and the useful lives during the year ended June 30, 2009 is immaterial. Residual values are determined by the management as the amount it expects it would receive currently for an item of property, plant and equipment if it was already of the age and in the condition expected at the end of its useful life based on the prevailing market prices of similar assets already at the end of their useful lives. Useful lives are determined by the management based on the expected usage of assets, physical wear and tear, technical and commercial obsolescence, legal and similar limits on the use of the assets and other similar factors. Normal repairs and maintenance are charged to income as and when incurred. Major renewals and improvements are capitalised. Profit or loss on disposal of assets is recognised in income currently. 3.2.1. Capital work in progress All expenditure connected with specific assets incurred during installation and construction period are carried under capital work in progress. These are transferred to specific assets as and when assets are available for use. 3.3. Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance. Intangible assets are recognised when it is probable that the expected future economic benefits will flow to the entity and the cost of the asset can be measured reliably. Cost of the intangible asset (i.e. computer software) includes purchase cost and directly attributable expenses incidental to bring the asset for its intended use. Costs associated with maintaining computer software are recognised as an expense as and when incurred. Intangible assets 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 6.3 on a systematic basis applying the straight line method. Useful lives of intangible operating assets are reviewed, at each balance sheet date and adjusted if the impact of amortisation is significant. 3.4. 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 amounts. Where carrying values exceed recoverable amounts, assets are written down to their recoverable amounts and the differences are recognised in income currently. 3.5. Stores and spares Stores and spares are valued at lower of cost using the moving average method and estimated net realisable value. Items in transit are valued at cost as accumulated upto the balance sheet date. Provision for obsolete items, if any, is based on their condition as at the balance sheet date depending upon the management's judgement. Loose tools are charged to income as and when purchased as their inventory is generally not significant. 3.6. 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 Cost accumulated upto the balance sheet
warehouse and in transit date
Work in process and finished goods Cost of direct materials and appropriate
portion of production overheads
Trading goods First in first out basis
=================================================================================Net realisable value is determined on the basis of estimated selling price of the product in the ordinary course of business less estimated costs of completion and the estimated costs necessary to be incurred for its sale.3.7. Trade debts and other receivables Trade debts and other receivables are carried at invoice value, which approximates fair value less provision for impairment. A provision for impairment of trade debts and other receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. Debts, considered irrecoverable, are written off, as and when identified. 3.8. Taxation Current Provision for current taxation is based on taxable income for the year at the current rates of taxation after taking into account tax credits and tax rebates available, if any, and tax paid on presumptive basis. Deferred Deferred tax is recognised using the balance sheet liability method on all temporary differences between the carrying amount of the assets and liabilities and their tax bases. Deferred tax liabilities are recognised for all major taxable temporary differences. Deferred tax assets are recognised for all major deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The carrying amount of the deferred tax asset is reviewed at each balance sheet date and is recognised only to the extent that it is probable that future taxable profits will be available against which the assets may be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it becomes probable that future taxable profits will allow deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rate that are expected to apply to the year when the asset is utilised or the liabiltiy is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date. 3.9. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. 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 markup arrangement. 3.10. Borrowing costs Borrowing costs are recognised as an expense in the period in which these are incurred. 3.11. 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. Provisions are reviewed periodically and adjusted to reflect the current best estimates. 3.12. 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 the projected unit credit method. Actuarial gains / losses exceeding 10 percent of the higher of the present value of the defined 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. Equal monthly contributions are made, both by the company and its employees, to the fund at the rate of 9 per cent of the 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. 3.13. Revenue recognition Sales are recognised on despatch of goods to customers. Profit on bank balances are recognised on a time proportion basis on the principal amount outstanding and at the applicable rate. Cumulative gain or loss previously recognised in equity on revaluation of fair values of 'available for sale' financial assets are recognised in income at the time of their derecognition. Insurance commission income is recognised as and when received. 3.14. Foreign currency translation Transactions in foreign currencies are translated in Pakistan rupees (functional and presentation currency) at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pakistan rupees at the rates of exchange approximating those prevalent at the balance sheet date. Exchange differences are charged to income currently. 3.15. Dividend and other appropriations Dividend is recognised as a liability in the period in which it is declared. Appropriations of profit are reflected in the statement of changes in equity in the period in which such appropriations are approved. 3.16. Financial instruments 3.16.1. Financial assets The company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available-for-sale and held to maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at the time of initial recognition. a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit and loss. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets. b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities for greater than twelve months after the balance sheet date, which are classified as non-current assets. Loans and receivables are classified as trade debts, loans and advances, deposits, other receivables and profit receivable from banks in the balance sheet. c) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose off the investments within twelve months from the balance sheet date. Available-for-sale financial assets are classified as short term investments in the balance sheet. Changes in fair value of securities classified as available-for-sale are recognised in equity. When securities are classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised directly in equity are included in the profit and loss account as gains and losses from investment securities. Interest on available-for-sale securities calculated using effective interest method is recognised in the profit and loss account. Dividends on available-for-sale equity intruments are recognised in the profit and loss account when the company's right to receive payments is established. d) Held to maturity Financial assets with fixed or determinable payments and fixed maturity, where management has the intention and ability to hold till maturity and are carried at amortised cost. All financial assets are recognised at the time when the company becomes a party to the contractual provisions of the instrument. Regular purchases and sales of investments are recognised at trade-date i.e, the date on which the company commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit and loss. Financial assets carried at fair value through profit and loss are initially recognised at fair value and transaction costs are expensed in the profit and loss account. The fair values of quoted investments are based on current prices. If the market for a financial asset is not active (and for unlisted securities), the company measures the investments at cost less impairment in value, if any. Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held to maturity investments are carried at amortised cost using effective interest rate method. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the company has transferred substantially all risks and rewards of ownership. The company assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. If any such evidence exists for availablefor sale financial assets, the cumulative loss is removed from equity and recognised in the profit and loss account. Impairment losses recognised in the profit and loss account on equity instruments are not reversed through the profit and loss account. Impairment testing of trade debts is described in note 3.7. 3.16.2. Financial liabilities All financial liabilities are recognised at the time when the company becomes a party to the contractual provisions of the instrument. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange and modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in respective carrying amounts is recognised in the profit and loss account. 3.16.3. Off-setting of financial assets and financial liabilities A financial asset and a financial liability is offset and the net amount is reported in the financial statements if the company has a legally enforceable right to set-off the transaction and also intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. 3.17. Impairment of non-financial assets The carrying amounts of the company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. If any such indication exists, the asset's recoverable amount is estimated in order to determine the extent of impairment loss, if any. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. Impairment losses are charged to profit and loss account. 3.18. Transactions with related parties The company enters into transactions with related parties for sale or purchase of goods and services on an arm's length basis. 3.19. Contingent liabilities Contingent liability is disclosed when: - there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company; or - there is present obligation that arises from past events but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS 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 judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are as follows: a) Assumptions and estimates used in determining the residual values and useful lives of property, plant and equipment (note 5); b) Assumptions and estimates used in writing down items of stock in trade to their net realisable value (note 10); c) Assumptions and estimates used in calculating the provision for impairment for tradedebts (note 11); d) Assumptions and estimates used in the classification of investments (note 16); e) Assumptions and estimates used in the recognition of deferred taxation (note 21); and f) Assumptions and estimates used in accounting for defined benefit plan (note 41). Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. 5. PROPERTY, PLANT AND EQUIPMENT ========================================================================================
Note 2009 2008
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(Rupees in '000)
========================================================================================
Operating fixed assets 5.1 1,024,478 957,983
Capital work in progress 5.2 169,040 5,257
1,193,518 963,240
========================================================================================5.1. Operating fixed assets5.1.1. The following is a statement of operating fixed assets: ==================================================================================================================================================================
Factory Electric
Leasehold building on Plant and fittings and Gas Furniture Tools and Computers Office
land leasehold machinery installation installation and fixtures equipment Vehicles accessories equipment Total
land
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(Rupee'000)
==================================================================================================================================================================
At July 1, 2007
Cost 10,355 199,707 719,354 59,049 225 16,157 58,271 111,660 27,654 16,357 1,218,789
Accumulated depreciation - (67,785) (276,417) (18,801) (134) (10,016) (30,153) (45,472) (19,439) (10,944) (479,161)
Net book value 10,355 131,922 442,937 40,248 91 6,141 28,118 66,188 8,215 5,413 739,628
Year ended June 30, 2008
Opening net book value 10,355 131,922 442,937 40,248 91 6,141 28,118 66,188 8,215 5,413 739,628
Additions - 11,041 113,578 5,517 - 1,119 25,493 58,504 7,643 3,498 226,393
Transfers from capital work in
progress during the year - 12,921 124,172 3,371 - 7 568 - - 469 141,508
Disposals
Cost - - (36,350) (9,516) - (2,410) (9,002) (8,581) (2,788) (972) (69,619)
Depreciation - - 10,083 2,751 - 726 4,348 4,413 1,892 546 24,759
Net book value - - (26,267) (6,765) - (1,684) (4,654) (4,168) (896) (426) (44,860)
Write offs
Cost - - (7) - - (15) (400) - (1,324) (395) (2,141)
Depreciation - - 2 - - 9 241 - 1,186 298 1,736
Net book value - - (5) - - (6) (159) - (138) (97) (405)
Depreciation charge for the year (14,816) (52,201) (3,846) (9) (835) (5,590) (22,433) (3,573) (978) (140,281)
Closing net book value 10,355 141,068 602,214 38,525 82 4,742 43,776 98,091 11,251 7,879 957,983
At June 30, 2008
Cost 10,355 223,669 920,747 58,421 225 14,858 74,930 161,583 31,185 18,957 1,514,930
Accumulated depreciation - (82,601) (318,533) (19,896) (143) (10,116) (31,154) (63,492) (19,934) (11,078) (556,947)
Net book value 10,355 141,068 602,214 38,525 82 4,742 43,776 98,091 11,251 7,879 957,983
At July 1, 2008
Cost 10,355 223,669 920,747 58,421 225 14,858 74,930 161,583 31,185 18,957 1,514,930
Accumulated depreciation - (82,601) (318,533) (19,896) (143) (10,116) (31,154) (63,492) (19,934) (11,078) (556,947)
Net book value 10,355 141,068 602,214 38,525 82 4,742 43,776 98,091 11,251 7,879 957,983
Year ended June 30, 2009
Opening net book value 10,355 141,068 602,214 38,525 82 4,742 43,776 98,091 11,251 7,879 957,983
Additions 30,618 5,891 67,018 1,714 - 399 4,974 36,671 25,839 12,305 185,429
Transfers from capital work in
progress during the year - 2,227 13,646 796 - - 24 2,620 - 628 19,941
Disposals
Cost - - - - - - - (9,804) (1,010) (36) (10,850)
Depreciation - - - - - - - 5,695 327 28 6,050
Net book value - - - - - - - (4,109) (683) (8) (4,800)
Write offs
Cost - (3,143) (5,146) (3,782) (71) (7,963) (3,150) - (12,255) (5,246) (40,756)
Depreciation - 2,027 5,146 3,782 71 7,959 3,054 - 12,115 5,240 39,394
Net book value - (1,116) - - - (4) (96) - (140) (6) (1,362)
Depreciation charge for the year - (14,449) (64,585) (4,669) (14) (2,120) (7,488) (28,701) (7,820) (2,867) (132,713)
Closing net book value 40,973 133,621 618,293 36,366 68 3,017 41,190 104,572 28,447 17,931 1,024,478
At June 30, 2009
Cost 40,973 228,644 996,265 57,149 154 7,294 76,778 191,070 43,759 26,608 1,668,694
Accumulated depreciation - (95,023) (377,972) (20,783) (86) (4,277) (35,588) (86,498) (15,312) (8,677) (644,216)
Net book value 40,973 133,621 618,293 36,366 68 3,017 41,190 104,572 28,447 17,931 1,024,478
Annual rate of depreciation
(%) 10 10 10 10 10 15 15 20 & 25 33 15
==================================================================================================================================================================5.1.2. Included in fixed assets are few items having cost of Rs 29.432 million (2008: Rs 29.907 million) held by related parties and of Rs 26.024 million (2008: Rs 26.878 million) held by third parties for manufacturing certain products of the company. These fixed assets are free of lien and the company has full rights of repossession of these assets.5.1.3. 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 40.756 million (2008: Rs 2.141 million) and net book value of Rs 1.362 million (2008: Rs 1.737 million) have been retired from active use and have been written off in these financial statements. This include assets costing Rs 35.471 million which have been fully depreciated in prior years. 5.1.4. No impairment relating to operating fixed assets has been recognised in the current year. 5.1.5. The following operating fixed assets with a net book value exceeding Rs 50,000 were disposed of during the year: ==========================================================================================================================================
Particulars Mode of disposal Cost Accumulated Net book Sale Proceeds / Gain / Particulars of purchasers
depreciation value Receivable from (loss)
Insurance Company*
==========================================================================================================================================
(Rupees in '000)
==========================================================================================================================================
Vehicles Bid 560 413 147 325 176 Muhammad Taimur Dar House # 282,
D'Cruze Road, Garden East, Karachi.
Maturity of Co. Car scheme 326 225 101 104 3 Naseem-ur-Rehman
Employee of the company
Maturity of Co. Car scheme 302 206 96 99 3 Syed Mahmood Athar
Employee of the company
Maturity of Co. Car scheme 560 378 182 184 2 Junaid Imam
Employee of the company
Maturity of Co. Car scheme 774 518 256 377 121 Moazzam Hussain
Employee of the company
Insurance claim 408 114 294 385 91 Century Insurance Company Limited,
Lakson Square, Building No. 3,
Sarwar Shaheed Road, Karachi.
Insurance claim 679 368 311 500 189 Century Insurance Company Limited,
Lakson Square, Building No. 3,
Sarwar Shaheed Road, Karachi.
Insurance claim 409 42 367 399 32 Century Insurance Company Limited,
Lakson Square, Building No. 3,
Sarwar Shaheed Road, Karachi.
Insurance claim 1,900 303 1,597 1,890 293 Century Insurance Company Limited,
Lakson Square, Building No. 3,
Sarwar Shaheed Road, Karachi.
Insurance claim 352 37 315 342 27 Century Insurance Company Limited,
Lakson Square, Building No. 3,
Sarwar Shaheed Road, Karachi.
6,270 2,604 3,666 4,605 939
Computers and Negotiation 608 48 560 608 48 Mighty Distribution 4F, 12/8,
accessories Nazimabad # 4, Karachi.
Others
Items having Various 3,972 3,398 574 4,495 3,921 Various
netbook value of
less than
Rs. 50,000 each
==========================================================================================================================================
2009 10,850 6,050 4,800 9,708 4,908
2008 69,619 24,759 44,860 44,233 4,341
* 4,968
==========================================================================================================================================5.1.6. Depreciation charge for the year has been allocated as follows:========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Cost of sales 27.1 99,229 80,921
Selling and distribution costs 28 26,856 20,112
Administrative expenses 29 6,628 3,248
132,713 104,281
========================================================================================5.2. Capital work in progressThe following is a statement of capital work in progress: ====================================================================================================
Factory Plant Electric So Other Total
building on and fitting s im assets
leasehold machinery and cost
land installation
====================================================================================================
(Rupees in '000)
====================================================================================================
Balance as at July 1, 2007 12,000 108,980 3,161 - 1, 068 125,209
Capital expenditure incurred
during the year 1,995 15,371 210 - 3,980 21,556
Transfer to operating fixed assets (12,921) (124,172) (3,371) - (1,044) (141,508)
Balance as at June 30, 2008 1,074 179 - - 4,004 5,257
Balance as at July 1, 2008 1,074 179 - - 4,004 5,257
Capital expenditure incurred
during the period 26,277 127,573 2,375 25 2,237 183,724
Transfer to operating fixed assets (2,227) (13,646) (796) - (3,272) (19,941)
Balance as at June 30, 2009 25,124 114,106 1,579 25 2,969 169,040
====================================================================================================6. INTANGIBLE ASSETS====================================================================
Note Goodwill Computer Total
Software
====================================================================
At July 1, 2007 (Rupees in '000)
====================================================================
Cost 43,500 - 43,500
Accumulated amortisation (26,100) - (26,100)
Net book value 17,400 - 17,400
Year ended June 30, 2008
Opening net book value 17,400 - 17,400
Additions - 3,500 3,500
17,400 3,500 20,900
Amortisation for the year 6.3 & 28 (5,800) (385) (6,185)
Closing net book value 11,600 3,115 14,715
At June 30, 2008
Cost 43,500 3,500 47,000
Accumulated amortisation (31,900) (385) (32,285)
Net book value 11,600 3,115 14,715
At July 1, 2008
Cost 43,500 3,500 47,000
Accumulated amortisation (31,900) (385) (32,285)
Net book value 11,600 3,115 14,715
Year ended June 30, 2009
Opening net book value 11,600 3,115 14,715
Additions 6.2 - 11,769 11,769
11,600 1 4,884 26,484
Amortisation for the year 6.3 & 28 (5,800) (3,872) (9,672)
Closing net book value 5,800 11,012 16,812
At June 30, 2009
Cost 43,500 15,269 58,769
Accumulated amortisation (37,700) (4,257) (41,957)
Net book value 5,800 11,012 16,812
====================================================================6.1. Goodwill represents amount paid on acquisition of the brand "Sparkle" from Transpak Corporation Limited.6.2. This represents cost of a software "Sales and Distribution System" (S&D). 6.3. Goodwill and computer software are being amortised over the useful life of 10 and 3 years respectively. 6.4. The intangible assets include a trade mark costing Rs 1.500 million in respect of the brand "Sparkle" purchased on January 4, 2001. The trade mark was fully amortised during the year ended June 30, 2005. However, it is still in active use. 7. LONG TERM LOANS ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Considered good
due from executives 7.1, 7.2 & 7.3 1,340 972
due from other employees 7.2 25,810 25,787
27,150 26,759
Recoverable within one year 12 (8,646) (8,208)
18,504 18,551
========================================================================================7.1. Reconciliation of carrying amount of loans to executives:========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Opening balance as at July 1 972 1,573
Disbursements 1,300 352
Repayments (932) (953)
Closing balance as at June 30 1,340 972
========================================================================================7.2. These loans are interest free and have been given to executives and other employees of the company for purchase of house and vehicles and for personal use in accordance with their terms of employment. These loans are to be repaid over a period of five years in equal monthly installments. Vehicles purchased under this scheme are registered in the name of the company and the title is transferred when the loan is fully repaid. The remaining loans are adjustable against final settlement of staff provident fund.7.3. The maximum aggregate amount of loans due from executives at the end of any month during the year was Rs 1.340 million (2008: Rs 1.741 million). 7.4. Long term loans have been carried at cost as the affect of carrying these balances at amortised cost would not be material. 8. LONG TERM SECURITY DEPOSITS ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Long term security deposits 8.1 & 8.2 6,431 2,962
========================================================================================8.1. This includes amount of Rs 2.964 million representing amount deposited with Water and Power Development Authority (WAPDA) for enhancement in electricity load for detergent unit at Kotri.8.2. This includes Term Deposit Receipt (TDR) amounting to Rs 1.7 million (2008: Rs 1.7 million) issued by a banking company. The TDR has been issued to provide security to a banking company for issue of guarantee against a lien on the TDR. The TDR carries profit at the rate of 4% (2008: 5%) per annum and shall mature on August 30, 2010 at which time the management intends to rollover the TDR. The TDR has been carried at cost as the affect of amortised cost is not material. 9. STORES AND SPARES ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Stores 10,283 8,068
Spares 4,855 6,017
27.1.3 15,138 14,085
========================================================================================10. STOCK IN TRADE========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Raw materials
in hand 321,556 414,218
in bonded warehouse 54,602 60,558
in transit 208,299 240,374
27.1.1 584,457 715,150
Packing materials
in hand 88,309 68,674
in transit 978 12,240
with third parties 2,069 1,023
27.1.2 91,356 81,937
Work in process 27.1 8,801 9,588
Finished goods
in hand 10.1 354,616 135,524
in transit 10,641 19,357
365,257 154,881
Trading goods
in hand 74,296 44,808
in transit 4,265 -
78,561 44,808
1,128,432 1,006,364
========================================================================================10.1. This includes stocks carried at fair value less cost to sell amounting to Rs 10.383 million (2008: Rs 5.605 million).11. TRADE DEBTS ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Considered good
due from related parties 11.1 & 11.2 41,310 5,583
others 298,180 172,400
339,490 177,983
Considered doubtful
others 7,057 6,568
346,547 184,551
Less: Provision for impairment 11.3 7,057 6,568
339,490 177,983
========================================================================================11.1. Trade debts include the following amounts due from related parties:========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Merit Packaging Limited 14 11
Clover Pakistan Limited 5 -
Century Paper and Board Mills Limited 167 33
Rollins Industries (Private) Limited 41,100 5,539
Tetley Clover (Private) Limited 24 -
41,310 5,583
========================================================================================11.2. The maximum aggregate amount of receivable due from related parties at the end of any month during the year was Rs 112.678 million (2008: Rs 44.324 million).11.3. Provision for impairment ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Balance at the beginning of the year 6,568 5,955
Provision made during the year 30 489 1,338
Amounts written off - (725)
Balance at the end of the year 7,057 6,568
========================================================================================11.4. As at June 30, 2009, trade receivables of Rs 114.231 million (2008: Rs 49.406 million) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Upto 1 month 59,763 33,049
1 to 6 months 51,741 13,689
More than 6 months 2,727 2,668
114,231 49,406
========================================================================================11.5. As at June 30, 2009, trade receivables of Rs 7.057 million (2008: Rs 6.568 million) were impaired and provided for. The ageing of these receivables is as follows:========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
one year to five years 31 -
five years and over 7,026 6,568
7,057 6,568
========================================================================================12. LOANS AND ADVANCES========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Considered good
Current portion of long term loans
due from executives 300 964
due from other employees 8,346 7,244
7 8,646 8,208
Advances
to employees 12.1 9,555 7,682
to contractors and suppliers 12.2 46,564 40,909
against letters of credit 93,963 38,613
158,728 95,412
========================================================================================12.1. Advances to employees are provided to meet business expenses and are settled as and when the expenses are incurred.12.2. Advances include the following amounts due from related parties: ========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Rollins Industries (Private) Limited - 2,417
Colgate-Palmolive (Pakistan) Limited Employees
Contributory Provident Fund Trust 154 861
Century Insurance Company Limited - 356
154 3,634
========================================================================================13. TRADE DEPOSITS AND SHORT TERM PREPAYMENTS========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Security deposits 12,758 4,976
Prepayments 12,966 14,012
25,724 18,988
========================================================================================14. OTHER RECEIVABLES========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Receivable from related parties 14.1 & 14.2 10,242 38,224
Custom duty refundable - 245
Claims receivable from an insurance company 285 284
Others 1,613 -
12,140 38,753
========================================================================================14.1. Other receivables include the following amounts due from related parties:========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Century Insurance Company Limited 1,861 34,683
Clover Pakistan Limited 1,706 1,090
Colgate-Palmolive Philippine 6 6
Tetley Clover (Private) Limited 6,669 2,445
10,242 38,224
========================================================================================14.2. The maximum aggregate amount receivable from related parties at the end of any month during the year was Rs 35.883 million (2008: Rs 161.395 million).15. PROFIT RECEIVABLE FROM BANKS ========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Profit on savings accounts 34 1,869
Profit on a term deposit account 803 422
837 2,291
========================================================================================16. SHORT TERM INVESTMENTS-available for sale========================================================================
2009 2008 2009 2008
========================================================================
Number of units (Rupees in '000)
========================================================================
NAFA Cash Fund - 7,431,077 - 80,000
MCB Dynamic Cash Fund - 141,070 - 15,000
IGI Income Fund - 97,466 - 10,000
JS Income Fund - 240,616 - 25,000
Atlas Income Fund - 38,224 - 20,000
KASB Liquid Fund - 96,974 - 10,000
AKD Income Fund - 194,455 - 10,000
BMA Chundrigar Road Savings Fund - 927,592 - 10,000
- 180,000
Surplus on revaluation of investments - 201
- 180,201
========================================================================17. CASH AND BANK BALANCES========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
With banks on:
Current accounts 89,697 55,092
Savings accounts 17.1 786,257 359,427
Term deposit account 17.1 100,000 100,000
975,954 514,519
Cheques in hand 48,116 77,730
Cash in hand 596 688
1,024,666 592,937
========================================================================================17.1. The rates of profit on these savings and term deposit account range between 4.00% to 11.50% and 12.75% respectively (2008: 0.75% to 13.60% and 14.00%) per annum. The maturity period of term deposit account is one month from the date of original issue.18. SHARE CAPITAL 18.1. Authorised Capital ============================================================================================
2009 2008 Note 2009 2008
============================================================================================
Number of shares (Rupees in '000)
============================================================================================
40,000,000 20,000,000 Ordinary shares of Rs 10 each 18.3 400,000 200,000
============================================================================================18.2. Issued, subscribed and paid-up capital============================================================================================
2009 2008 2009 2008
============================================================================================
Number of shares (Rupees in '000)
============================================================================================
5,882,353 5,882,353 Ordinary shares of Rs 10 each 58,824 58,824
fully paid in cash
18,004,880 13,227,433 Ordinary shares of Rs 10 each 180,049 132,274
issued as fully paid bonus
23,887,233 19,109,786 238,873 191,098
============================================================================================18.3. During the year, the company has increased its authorised share capital by increasing its number of ordinary shares from 20,000,000 to 40,000,000 at the rate of Rs 10 each.18.4. These shares include 4,777,447 bonus shares of Rs 10 each (2008: 3,821,957 bonus shares of Rs 10 each) issued by the company during the current year. 19. RESERVES ========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Capital reserve
Share premium reserve 13,456 13,456
Revenue reserve
General reserve 1,690,000 1,250,000
Unappropriated profit 757,882 686,789
2,461,338 1,950,245
========================================================================================20. LONG TERM LOAN========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Secured-From The Royal Bank of Scotland 20.1 3,125 5,625
Less: Current maturity shown under current liabilities 2,500 2,500
625 3,125
========================================================================================20.1. The company has obtained a loan from The Royal Bank of Scotland (RBS), formerly ABN Amro Bank N.V of Rs 10 million to finance the expansion of existing plant and machinery. This facility is secured against pari passu charge over fixed assets including immovable property of the company. Markup is charged at the rate of three month's KIBOR plus 110 bps per annum. The loan is repayable in sixteen equal quarterly installments of Rs 0.625 million each, which commenced from October 2006.21. DEFERRED TAXATION Credit / (debit) balances arising in respect of timing differences relating to: ========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Accelerated tax depreciation allowance 167,063 159,998
Provision for compensated absences (3,593) (2,799)
Provision for impairment of trade debts (2,470) (2,299)
161,000 154,900
========================================================================================22. LONG TERM DEPOSITS========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Security deposits obtained from:
Distributors 5,153 3,960
Transporters 500 500
Others 5 5
5,658 4,465
========================================================================================22.1. These deposits are interest free and are not refundable during the subsistence of relationship with the company.23. TRADE AND OTHER PAYABLES ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Trade creditors 23.1 466,433 404,324
Accrued liabilities 78,033 77,973
Bills payable 194,515 117,779
Amounts due to distributors 11,448 19,174
Special excise duty payable 5,102 4,574
Sales tax payable 85,235 51,250
Royalty payable to an associated undertaking 35,436 30,316
Workers' profits participation fund 23.3 61,528 54,648
Workers' welfare fund 22,922 17,265
Retention money payable 261 42
Unclaimed dividend 1,877 1,647
Others 23.2 12,591 7,153
975,381 786,145
========================================================================================23.1. These balances include the following amounts due to related parties:========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Hasanali Karabhai Foundation 570 339
Princeton Travels (Private) Limited 204 39
Merit Packaging Limited 3,930 -
Clover Pakistan Limited 294 1,483
Century Insurance Company Limited 5,629 3,357
Rollins Industries (Private) Limited 34,823 -
Century Publication (Private) Limited 1,500 2,250
SIZA (Private) Limited 80 18
Cyber Internet Services (Private) Limited 763 353
Century Paper & Board Mills Limited 14,560 16,318
Lakson Business Solution Limited 179 -
Television Media Network (Private) Limited 14,472 13,337
77,004 37,494
========================================================================================23.2. These balances include the following amounts due to related parties:========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Colgate-Palmolive Pakistan Limited Employees Contributory
Provident Fund Trust 2,860 -
Reliance Chemicals (Private) Limited 753 19
Colgate-Palmolive (Thailand) Limited 1,072 1,029
Colgate-Palmolive (H.K.) Limited 278 -
4,963 1,048
========================================================================================23.3. Workers' profits participation fund========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Balance at the beginning of the year 54,648 47,737
Allocation for the year 30 61,528 54,648
116,176 102,385
Less: Payments during the year 54,648 47,737
Balance at the end of the year 61,528 54,648
========================================================================================24. ACCRUED MARK-UP========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Accrued markup on:
Long term loan 84 110
Short term borrowings 83 590
167 700
========================================================================================25. SHORT TERM BORROWINGS========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Short term running finances-Secured
Running finance facilities 25.1 & 25.2 - -
Import credit facilities 25.1 & 25.3 - 44,945
- 44,945
Short term running finances
========================================================================================25.1. The company has arranged short-term borrowing facilities from various banks on mark-up basis to the extent of Rs 912 million (2008: Rs 837 million), which can be interchangeably utilised as running finance facilities or import credit facilities. These facilities had expired during the year and were renewed subsequently. The renewed facilities are available for various periods expiring between July 30, 2009 to May 30, 2010. The arrangements are secured by a joint hypothecation of stocks, stores and spares, trade debts, other current assets and second charge on moveable assets of the company.25.2. The mark-up on short-term running finance facilities ranges between 13.99% to 17.00% (2008: 10.92% to 13.81%) per annum. 25.3. The import credit facility was priced at LIBOR plus 2% per annum (2008: LIBOR plus 2% per annum). This facility expired on October 2, 2008 and was not renewed by the company. 25.4. The facilities for opening letters of credit and guarantee as at June 30, 2009 aggregated Rs 2,713.220 million and Rs 30 million (2008: Rs 2,468.700 million and Rs 30 million) respectively of which the amounts remaining unutilised at the year end were Rs 2,482.761 million and Rs 11.700 million (2008: Rs 2,092.745 million and Rs 15.400 million) respectively. Short term loans 25.5. Short term loans were obtained during the year by the company from Pak Oman Investment Company Limited, Mrs Ronak Iqbal Ali Lakhani (spouse of Mr Iqbal Ali Lakhani, director) and Mr Amin M. Lakhani (director) for funding working capital requirements, amounting to Rs 400 million, Rs 200 million and Rs 50 million respectively. 25.6. These loans carried mark-up at rates of 14.70% per annum, 3-month KIBOR plus 1.50% per annum and 3-month KIBOR plus 1.00% per annum respectively. The loans were fully repaid during the year. 26. CONTINGENCIES AND COMMITMENTS 26.1. Contingencies 26.1.1. 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 favor 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. The District Judge allowed the appeal in favour of KATI and remanded the case to Senior Civil Judge Kotri for adjudication which is still awaited. 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. 26.1.2. The company has received a notice from the Honourable High Court of Sindh concerning an appeal filed by the Commissioner of Income Tax against a decision made in favour of the company by the Income Tax Appellate Tribunal (ITAT) for the assessment year 1991-92. The case is pending for regular hearing in the Honourable High Court of Sindh and the legal counsel of the company is of the opinion that the company has a good arguable case. 26.1.3. Cases have been filed against the company by some employees claiming approximately Rs 0.991 million (2008: Rs 0.629 million) in aggregate. Provision has not been made in these financial statements for the abovementioned amounts as the management of the company, based on the advice of its legal counsel handling the subject cases, is of the opinion that matters shall be decided in the company's favour. 26.1.4. Post dated cheques have been issued to custom authorities as a security in respect of duties and taxes amounting Rs 23.014 million (2008: Rs 59.595 million) payable at the time of exbonding of imported goods. In the event the goods are not cleared from custom warehouse within the prescribed time period, cheques issued as security shall be encashable. 26.1.5. Contingent liabilities in respect of indemnities given to financial institutions for guarantees issued by them in the normal course of business aggregate Rs 18.300 million (2008: Rs 14.600 million). 26.2. Commitments 26.2.1. Commitments in respect of capital expenditure amount to Rs 315.230 million (2008: Rs 12.175 million). 26.2.2. Outstanding letters of credit and acceptances amount to Rs 443.054 million (2008: Rs 276.878 million). 26.2.3. Outstanding duties leviable on clearing of stocks amount to Rs 7.981 million (2008: Rs 18.864 million). 27. COST OF SALES ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Opening stock of finished goods (including trading goods
and by-products) 199,689 258,504
Cost of goods manufactured 27.1 7,255,051 4,118,167
Purchases of trading goods 1,471,834 882,330
8,926,574 5,259,001
Less: Cost of finished goods (including trading goods and
by-products) and work in
process damaged due to fire 27.1.4 - 24,184
Less: Closing stock of finished goods
(including trading goods and by-products) 10 443,818 199,689
8,482,756 5,035,128
========================================================================================27.1. Cost of goods manufactured========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Opening stock of work in process 9,588 5,756
Raw materials consumed 27.1.1 & 27.2 5,400,267 2,895,709
Packing materials consumed 27.1.2 & 27.2 1,237,287 798,764
Stores and spares consumed 27.1.3 & 27.2 27,128 19,359
Salaries, wages and other benefits 222,828 156,045
Gratuity 41.8 6,514 5,048
Provident fund 4,900 3,968
Power and fuel 154,447 101,777
Repairs and maintenance 17,664 15,373
Rent, rates and taxes 2,215 1,340
Insurance 15,831 10,010
Laboratory expenses 3,170 2,461
Cartage 28,331 10,782
Depreciation 5.1.6 99,229 80,921
Other manufacturing expenses 35,173 21,162
7,264,572 4,128,475
Less: Recovery from related parties 720 720
7,263,852 4,127,755
Less: Closing stock of work in process 10 8,801 9,588
7,255,051 4,118,167
========================================================================================27.1.1. Raw materials consumed========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Opening stock 715,150 463,447
Purchases 5,269,574 3,153,224
5,984,724 3,616,671
Less: Cost of raw materials damaged due to fire 27.1.4 - 5,812
Less: Closing stock 10 584,457 715,150
5,400,267 2,895,709
========================================================================================27.1.2. Packing materials consumed========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Opening stock 81,937 50,144
Purchases 1,246,706 847,939
1,328,643 898,083
Less: Cost of packing materials damaged due to fire 27.1.4 - 17,382
Less: Closing stock 10 91,356 81,937
1,237,287 798,764
========================================================================================27.1.3. Stores and spares consumed========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Opening stock 14,085 16,742
Purchases 28,181 16,702
42,266 33,444
Less: Closing stock 9 15,138 14,085
27,128 19,359
========================================================================================27.1.4. This represents insurance claim received from Century Insurance Company Limited against loss of stock due to fire at factory premises on December 28, 2007.27.2. Cost of sales includes amounts written off during the year in respect of the following: ========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Raw materials 3,710 810
Packing materials 214 2,898
Finished goods - 1,752
Stores and spares 571 18
========================================================================================28. SELLING AND DISTRIBUTION COSTS========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Salaries, wages and other benefits 122,961 98,399
Staff retirement gratuity 41.8 2,291 1,885
Provident fund 4,229 3,336
Travelling and conveyance 28,266 20,577
Repairs and maintenance 6,592 3,228
Vehicle running expenses 62,127 46,195
Advertising and sales promotion 653,295 483,611
Royalty on sale of licensed products 42,186 31,912
Postage, telephone and internet charges 6,965 6,237
Rent, rates and taxes 11,790 9,889
Printing and stationery 2,364 1,992
Subscription and membership 1,295 342
Legal and professional 942 731
Freight 356,657 243,709
Electricity 3,589 2,312
Insurance 8,828 6,004
Security service charges 4,207 1,779
Depreciation 5.1.6 26,856 20,112
Amortisation 6 9,672 6,185
Other expenses 211 190
1,355,323 988,625
Less: Recovery from related parties 9,356 6,692
1,345,967 981,933
========================================================================================29. ADMINISTRATIVE EXPENSES========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Salaries, wages and other benefits 59,323 45,609
Staff retirement gratuity 41.8 2,354 1,938
Provident fund 2,550 1,962
Travelling and conveyance 3,004 2,125
Repairs and maintenance 2,307 410
Vehicle running expenses 4,173 3,209
Postage, telephone and internet charges 2,204 1,830
Rent, rates and taxes 5,797 4,040
Printing and stationery 2,117 1,749
Subscription and membership 2,690 1,666
Legal and professional 2,137 2,671
Electricity 2,186 1,421
Insurance 4,803 1,728
Security service charges 201 63
Depreciation 5.1.6 6,628 3,248
Others 282 126
102,756 73,795
Less: Recovery from related parties 732 742
102,024 73,053
========================================================================================30. OTHER OPERATING EXPENSES========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Workers' profits participation fund 23.3 61,528 54,648
Workers' welfare fund current year 22,922 17,265
prior year - 41
22,922 17,306
Auditors' remuneration 30.1 806 721
Property, plant and equipment-written off 1,362 405
Donations 30.2 11,498 391
Advances to employees written off - 30
Provision for impairment-trade debts 11.3 489 1,338
Net exchange loss 13,903 44,350
112,508 119,189
========================================================================================30.1. Auditors' remuneration========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Audit fee 300 240
Fee for half yearly review and other certifications 387 295
Out of pocket expenses 119 186
806 721
========================================================================================30.2. Donations include the following in which a director is interested:========================================================================================================================
Name of director Interest Name and address of donee
in donee
========================================================================================================================
Mr Iqbal Ali Lakhani (See note Special Olympics Pakistan, 205, 200 240
below) Sunset Tower, Sunset Boulevard,
DHA, Phase-II, Karachi.
Note: Spouse of Mr Iqbal Ali Lakhani is the Program
Chief Executive of the donee organisation.
Mr Zulfiqar Ali Lakhani (See note Zulfiqar & Fatima Foundation, 9- 9,336 -
below) Khayaban-e-Ghazi, DHA, Phase-
V, Karachi.
Note: Mr Zulfiqar Ali Lakhani, his spouse and children
are trustees of the donee organisation
Mr Zulfiqar Ali Lakhani, Mr Amin (See note Donation made to Swat IDPs 1,002 -
and Mr Iqbal Ali below) through Hasanali Karabahi
Lakhani Foundation.
======================================================================================================================== Note: The above mentioned directors are trustees of the Hasanali Karabahi Foundation.31. OTHER OPERATING INCOME ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Income from financial assets / liabilities
Profit on savings accounts 31,791 31,045
Profit on a term deposit account 3,556 507
Profit on disposal of short term investments 5,166 20,654
Liabilities no longer payable - 805
Income from non-financial assets
Insurance commission 6,647 3,455
Gain on disposal of property, plant and equipment 5.1.5 4,908 4,341
Sale of scrap 911 639
Insurance claim against consequential loss of profit - 55,737
Sales tax refund - 524
Profit on sale of material 318 247
Others - 305
53,297 118,259
========================================================================================32. FINANCE COSTS========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Markup on:
Long term loan 639 751
Short term borrowings 41,155 14,408
Guarantee commission 267 258
Bank commission and other charges 6,806 4,458
48,867 19,875
========================================================================================33. TAXATION========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Current
for the year 388,313 300,600
for prior years 1,726 1,458
Deferred 6,100 39,658
396,139 341,716
========================================================================================33.1. Reconciliation between the average effective tax rate and the applicable tax rate.========================================================================================
2009 2008
========================================================================================
Percentage
========================================================================================
Applicable tax rate 35.00 35.00
Tax effect of expenses that are not allowable
in determining taxable income (0.16) (0.71)
Effect of income assessed under presumptive tax regime (0.39) (0.28)
Tax effect of income tax provision relating to prior year 0.15 0.14
Tax impact arising due to origination of temporary differences (0.04) (0.68)
34.56 33.47
========================================================================================34. EARNINGS PER SHARE========================================================================================
2009 2008
========================================================================================
Profit after taxation 749,966 679,293
========================================================================================
(Number of shares)
========================================================================================
Weighted average number of ordinary shares outstanding
during the year-restated 23,887,233 23,887,233
========================================================================================
(Rupees)
========================================================================================
Earnings per share-restated 31.40 28.44
========================================================================================34.1. There are no dilutive potential ordinary shares outstanding as at June 30, 2009 and 2008.35. CASH GENERATED FROM OPERATIONS ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Profit before taxation 1,146,105 1,021,009
Adjustment for non-cash charges and other items:
Depreciation and amortisation expense 142,385 110,466
Gain on sale of property, plant and equipment (4,908) (4,341)
Provision for impairment-trade debts 489 1,338
Advances to employees written off - 30
Profit on savings accounts (31,791) (31,045)
Profit on a term deposit account (3,556) (507)
Profit on disposal of short term investments (5,166) (20,654)
Finance costs 48,867 19,875
Net exchange loss 13,903 44,350
Stores and spares written off 571 18
Stocks written off 3,924 5,460
Property, plant and equipment written off 1,362 405
Working capital changes 35.1 (157,510) (226,608)
1,154,675 919,796
========================================================================================35.1. Working capital changes========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
(Increase) / decrease in current assets:
Stores and spares (1,624) 2,639
Stock in trade (125,992) (233,973)
Trade debts (161,996) (35,058)
Loans and advances (62,878) (56,079)
Trade deposits and short term prepayments (6,736) 11,682
Other receivables 26,613 (33,785)
(332,613) (344,574)
Increase in current liabilities:
Trade and other payables 175,103 117,966
(157,510) (226,608)
========================================================================================36. PROPOSED DIVIDENDThe Board of Directors at their meeting held on July 31, 2009 have proposed for the year ended June 30, 2009 cash dividend of Rs 11.5 per share (2008: Rs 10 per share), amounting to Rs 274.704 million (2008: Rs 191.098 million), bonus issue of 3.583 million shares (2008: 4.777 million shares) at the rate of three shares for every twenty shares held (2008: one share for every four shares held) and transfer to general reserve of Rs 440 million (2008: Rs 440 million) subject to the approval of members at the annual general meeting to be held on September 7, 2009. 37. RELATED PARTY DISCLOSURES 37.1. Disclosure of transactions between the company and related parties. The related parties comprise 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. Significant balances and transactions with related parties are as follows: =====================================================================================================
Nature of transaction Note Relationship with 2009 2008
the company (Rupees in '000)
=====================================================================================================
Sale of goods, services provided and
reimbursement of expenses
Century Paper & Board Mills Limited Associate 430 266
Clover Pakistan Limited Associate 14,534 10,436
Merit Packaging Limited Associate 75 51
Rollins Industries (Private) Limited 37.3 Related party 624,932 294,127
Tetley Clover (Private) Limited Associate 4,861 2,048
Cyber Internet Services (Private) Limited Associate 7 -
644,839 306,928
Purchase of goods, services received and
reimbursement of expenses
Century Insurance Company Limited Associate 59,180 34,270
Century Paper & Board Mills Limited Associate 172,332 118,278
Century Publication (Private) Limited Associate 10,665 8,661
Clover Pakistan Limited Associate 1,776 1,532
Colgate-Palmolive China Subsidiary of CP-USA 98,655 87,937
Colgate-Palmolive (Vietnam) Limited Subsidiary of CP-USA 31,861 10,651
Colgate-Palmolive Company USA Joint venture company 60,055 41,936
Colgate-Palmolive (H.K.) Limited Subsidiary of CP-USA - 791
Colgate-Palmolive (Thailand) Limited Subsidiary of CP-USA 12,070 6,886
Colgate-Palmolive Turkey Subsidiary of CP-USA - 160
Colgate-Palmolive Malaysia Subsidiary of CP-USA 34 -
Cyber Internet Services (Private) Limited Associate 5,902 4,792
Lakson Business Solution Limited Associate 2,430 119
Merit Packaging Limited Associate 22,568 7,752
Princeton Travels (Private) Limited Associate 6,969 6,092
Rollins Industries (Private) Limited 37.3 Related party 1,658,196 1,054,975
SIZA (Private) Limited Associate 460 19
SIZA Foods (Private) Limited Associate - 100
Accuray Surgicals (Private) Limited Associate 25 -
Sybird (Private) Limited Associate 165 -
Tetley Clover (Private) Limited Associate 722 -
Television Media Network (Private) Limited Associate 34,391 13,337
2,178,456 1,398,288
Rent, allied and other charges
Century Paper & Board Mills Limited Associate - 181
Hasanali Karabhai Foundation Associate 13,906 8,219
SIZA Services (Private) Limited Associate 1,101 402
Reliance Chemicals (Private) Limited Associate 1,704 1,723
16,711 10,525
Royalty charges
Colgate-Palmolive Company USA Joint venture company 42,186 31,912
Sale of property, plant and equipment
Clover Pakistan Limited Associate - 83
Tetley Clover (Private) Limited Associate 290 35
290 118
Contribution to staff retirement benefits
Colgate-Palmolive (Pakistan) Limited Employees fund 11,723 9,271
Employees Contributory Provident Fund
Colgate-Palmolive (Pakistan) Limited Employees fund 11,159 8,871
Employees Gratuity Fund
22,882 18,142
Donations
Special Olympics Pakistan 30.2 200 240
Hasanali Karabhai Foundation 1,002 -
Zulfiqar & Fatima Foundation 9,336 -
10,538 240
Compensation paid to key management personnel
Short-term employee benefits including Key management
compensated absences personnel 23,053 26,662
Post employment benefits --do-- 2,696 2,946
25,749 29,608
Insurance claims received
Century Insurance Company Limited Associate 43,941 146,625
Insurance commission income
Century Insurance Company Limited Associate 6,647 3,455
Purchase of property, plant and equipment
Lakson Business Solution Limited Associate - 133
Clover Pakistan Limited Associate - 1,055
SIZA (Private) Limited Associate - 1,080
SIZA Foods (Private) Limited Associate - 567
- 2,835
Dividend paid
Colgate-Palmolive Company USA Joint venture company 57,329 73,382
Century Insurance Company Limited Associate 70 90
Premier Fashions (Private) Limited Associate 30,921 18,751
SIZA (Private) Limited Associate 14,992 19,190
SIZA Services (Private) Limited Associate 53,968 50,839
SIZA Commodities (Private) Limited Associate 17,656 11,938
174,936 174,190
Interest on short term loan
Mrs Ronak Iqbal Ali Lakhani See note 25.5 & 25.6 3,526 -
Mr Amin M. Lakhani 10,895 -
14,421 -
=====================================================================================================37.2. The related party status of outstanding balances as at June 30, 2009 are included in trade debts (note 11), other receivables (note 14), and trade and other payables (note 23) respectively. 37.3. Rollins Industries (Private) Limited is a third party whose manufacturing process is dependent on the company. 38. REMUNERATION OF CHIEF EXECUTIVE, DIRECTOR AND EXECUTIVES 38.1. 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 Directors Executives
================================================================================
2009 2008 2009 2008 2009 2008
================================================================================
(Rupees in '000)
================================================================================
Managerial remuneration 5,382 5,382 1,892 1,708 50,241 33,526
Bonus / commission - 1,827 318 287 8,621 6,063
Staff retirement gratuity - - 503 414 2,343 1,868
Provident fund - - 171 154 4,267 2,686
Housing 1,614 1,614 852 768 22,693 15,114
Utilities 720 355 - - - -
Motor vehicles 580 533 193 179 5,560 3,380
Others - - - 231 7,745 5,405
8,296 9,711 3,929 3,741 101,470 68,042
Number of persons 1 1 1 1 53 34
================================================================================38.2. Chief executive, a working director and the executives of the company are also provided with company maintained cars.39. FINANCIAL INSTRUMENTS BY CATEGORY ========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
FINANCIAL ASSETS
Available-for-sale financial assets
Short term investments - 180,201
Loans and receivables
Long term loans 27,150 26,759
Long term security deposits 6,431 2,962
Trade debts 346,547 184,551
Trade deposits 12,758 4,976
Other receivables 12,140 38,508
Profit receivable from banks 837 2,291
Cash and bank balances 1,024,666 592,937
1,430,529 852,984
FINANCIAL LIABILITIES
Financial liabilities at amortised cost
Long term loan 3,125 5,625
Long term deposits 5,658 4,465
Trade and other payables 789,146 639,234
Accrued mark-up 167 700
Short term borrowings - 44,945
798,096 694,969
========================================================================================40. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES40.1. The company's exposure to interest rate risk on its financial assets and liabilities at the balance sheet date based on contractual re-pricing or maturity dates, whichever is earlier are summarised as follows: ==========================================================================================================================
June 30, 2009
==========================================================================================================================
Interest/mark-up bearing Non-interest/mark-up bearing
Maturity Maturity Sub-total Maturity Maturity Sub-total Total
within one after one within one after one
year year year year
==========================================================================================================================
(Rupees in '000)
==========================================================================================================================
Financial assets
Long term loans - - - 8,646 18,504 27,150 27,150
Long term security deposits - 1,700 1,700 - 4,731 4,731 6,431
Trade debts - - - 346,547 - 346,547 346,547
Trade deposits - - - 12,758 - 12,758 12,758
Other receivables - - - 12,140 - 12,140 12,140
Profit receivable from banks - - - 837 - 837 837
Short term investments - - - - - - -
Cash and cash balances 886,257 - 886,257 138,409 - 138,409 1,024,666
886,257 1,700 887,957 519,337 23,235 542,572 1,430,529
Financial liabilities
Long term loan 2,500 625 3,125 - - - 3,125
Long term deposits - - - - 5,658 5,658 5,658
Trade and other payables - - - 789,146 - 789,146 789,146
Accrued mark-up - - - 167 - 167 167
Short term borrowings - - - - - - -
2,500 625 3,125 789,313 5,658 794,971 798,096
On balance sheet gap (a) 883,757 1,075 884,832 (269,976) 17,577 (252,399) 632,433
==========================================================================================================================
June 30, 2008
==========================================================================================================================
Financial assets
Long term loans - - - 8,208 18,551 26,759 26,759
Long term security deposits - 1,700 1,700 - 1,262 1,262 2,962
Trade debts - - - 184,551 - 184,551 184,551
Trade deposits - - - 4,976 - 4,976 4,976
Other receivables - - - 38,508 - 38,508 38,508
Profit receivable from banks - - - 2,291 - 2,291 2,291
Short term investments - - - 180,201 - 182,201 180,201
Cash and cash balances 459,427 - 459,427 133,510 - 133,510 592,937
459,427 1,700 461,127 552,245 19,813 572,058 1,033,185
Financial liabilities
Long term loan 2,500 3,125 5,625 - - - 5,625
Long term deposits - - - - 4,465 4,465 4,465
Trade and other payables - - - 639,234 - 639,234 639,234
Accrued mark-up - - - 700 - 700 700
Short term borrowings 44,945 - 44,945 - - - 44,945
47,445 3,125 50,570 639,934 4,465 644,399 694,969
On balance sheet gap (a) 411,982 (1,425) 410,557 (87,689) 15,348 (72,341) 338,216
========================================================================================================================== a) The on balance sheet gap represents the net amount of on-balance sheet items.========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Off-balance sheet items
Letters of credit 443,054 383,768
Indemnity bonds and guarantees 18,300 14,600
The effective interest / mark-up rates as at June 30 for financial
instruments are as follows:
========================================================================================
Percentage
========================================================================================
Long term security deposits 4.00 5.00
Balances with banks in:
savings accounts 4.00 to 11.50 0.75 to 13.60
term deposit account 12.75 14
Long term loan 14.34 11.36
Short term borrowings
running finance facilities 13.99 to 17 10.92 to 13.81
import credit facilities 5.29 4.70
========================================================================================40.2. Financial risk management objectives and policiesThe company finances its operations through equity, borrowings and management of working capital with a view to maintaining an appropriate mix between various sources of finance to minimise risk. Taken as a whole, the company's risk arising from financial instruments is limited as there is no significant exposure to price and cash flow risk in respect of such instruments. 40.2.1. Credit risk and concentration of credit risk Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail completely to perform as contracted. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including trade receivables and committed transactions. Out of the total financial assets of Rs 1,430.529 million (2008: Rs 1,033.185 million), the financial assets that are subject to credit risk amounted to Rs 1,429.933 million (2008: Rs 1,032.497 million). Out of the total bank balance of Rs 975.954 million placed with banks, amounts aggregating Rs 974.092 million have been placed with banks having short term credit rating of A1+. Due to the company's long standing business relationships with these counterparties and after giving due consideration to their strong financial standing, management does not expect non-performance by these counter parties on their obligations to the company. For trade receivables, internal risk assessments process determines the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the management. The utilisation of credit limits is regularly monitored. Accordingly the credit risk is minimal and the company also believes that it is not exposed to major concentration of credit risk. The breakup of amount due from customers other than related parties as stated in note 11 is presented. ========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Due from customers other than related parties
Institutional customers 164,374 -
Distributors 140,863 70,173
305,237 70,173
========================================================================================Out of Rs 305.237 million (2008: 178.968 million), the company has provided Rs 7.057 million (2008: 6.568 million) as the amounts being doubtful to be recovered from them.40.2.2. Liquidity risk Liquidity risk is the risk that an enterprise will encounter difficulties in raising funds to meet commitments associated with financial instruments. The management believes that it is not exposed to any significant level of liquidity risk. The management forecasts the liquidity of the company on basis of expected cash flow considering the level of liquid assets necessary to meet such risk. This involves monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans. Significant balances of financial assets and liabilities shall mature within twelve months as evident from the information presented in the note 40.1. 40.2.3. Market Risk Currency Risk Foreign currency risk arises mainly where receivables and payables exist due to transactions entered into foreign currencies. The company primarily has foreign currency exposures in US Dollars (USD). At June 30, 2009, if the currency had weakened / strengthened by 5% against the US dollar with all other variables held constant, pre-tax profit for the year would have been Rs 7.258 million higher / lower, mainly as a result of foreign exchange gains / losses on translation of US dollar-denominated bank balances and bills payables. 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. The company is not materially exposed to interest rate changes. 40.2.4. 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 value and the fair value estimates. As at June 30, 2009 the net fair value of all financial assets and financial liabilities are estimated to approximate their carrying values. 40.2.5. Capital risk management The company's objectives when managing capital are to safeguard the company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares or sell assets to reduce debt. Consistent with others in the industry, the company manages its capital risk by monitoring its debt levels and liquid assets and keeping in view future investment requirements and expectation of the shareholders. Debt is calculated as total borrowings ('long term loan' and 'short term borrowings' as shown in the balance sheet). Total capital comprises shareholders' equity as shown in the balance sheet under 'share capital and reserves'. The salient information relating to capital risk management of the company as of June 30, 2009 and 2008 were as follows: ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Total borrowings 20 & 25 3,125 50,570
Less: Cash and cash equivalents 17 1,024,666 592,937
Net Debt 1,021,541 542,367
Total Equity 2,700,211 2,141,544
Total Capital 3,721,752 2,683,911
Gearing Ratio 27.45% 20.21%
========================================================================================As at June 30, 2009 and 2008, the company had an excess of liquid assets over total borrowings, hence, its exposure to capital risk is minimal.41. DEFINED BENEFIT PLAN (Staff Retirement Gratuity) 41.1. The disclosures made in notes 41.2 to 41.13 are based on the information included in the actuarial valuation report as of June 30, 2009. 41.2. The actuarial valuation of gratuity plan was carried out as at June 30, 2009. The projected unit credit method using the following significant assumptions was used for this valuation: ========================================================================================
2009 2008
========================================================================================
Percentage
========================================================================================
Discount rate-per annum compound 12.00 12.00
Expected rate of increase in salaries-per annum 11.00 11.00
Expected rate of return on plan assets-per annum 12.00 10.00
========================================================================================41.3. Mortality rateThe rates assumed were based on the EFU 61-66 mortality table. 41.4. The amounts recognised in the balance sheet are as follows: ========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Present value of defined benefit obligation 41.5 90,954 72,505
Fair value of plan assets 41.6 57,899 49,149
Deficit 33,055 23,356
Unrecognised net actuarial gains (23,871) (12,335)
Unrecognised past service cost (9,184) (11,021)
Payable to the gratuity fund - -
========================================================================================41.5. Movement in defined benefit obligation========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Present value of defined benefit
obligation as at July 1, 2008 / 2007 72,505 62,378
Current service cost 6,129 5,039
Interest cost 8,700 6,238
Actuarial losses 6,382 3,442
Benefits paid (2,762) (4,592)
Fair value as at June 30 90,954 72,505
========================================================================================41.6. Movement in fair value of plan assets========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Fair value as at July 1, 2008 / 2007 49,149 42,781
Expected return on plan assets 5,898 4,278
Actuarial losses (5,545) (2,189)
Company contributions 11,159 8,871
Benefits paid (2,762) (4,592)
Fair value as at June 30 57,899 49,149
========================================================================================41.7. Movement in net liability in the balance sheet is as follows:========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Opening balance of net liability - -
Charge for the year 41.8 11,159 8,871
Contributions made during the year to the fund (11,159) (8,871)
Closing balance of net liability - -
========================================================================================41.8. Charge for the year has been allocated as under:========================================================================================
Note 2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Cost of sales 27.1 6,514 5,048
Selling and distribution costs 28 2,291 1,885
Administrative expenses 29 2,354 1,938
11,159 8,871
========================================================================================41.9. The following amounts have been charged to income in respect of the gratuity plan:========================================================================================
2009 2008
========================================================================================
(Rupees in '000)
========================================================================================
Current service cost 6,129 5,039
Interest cost 8,700 6,238
Past service cost-non vested 1,837 1,836
Actuarial loss charge 391 36
Expected return on plan assets (5,898) (4,278)
11,159 8,871
Actual return on plan assets 353 2,089
========================================================================================41.10. Amounts for the current period and previous four annual periods of the fair value of plan assets, present value of the defined benefit obligation and the deficit arising thereon are as follows:==================================================================================
2009 2008 2007 2006 2005
==================================================================================
(Rupees in '000)
==================================================================================
As at June 30
Present value of defined
benefit obligation 90,954 72,505 62,378 50,312 41,978
Fair value of plan assets (57,899) (49,149) (42,781) (28,910) (17,685)
Deficit 33,055 23,356 19,597 21,402 24,293
Experience adjustment:
(Loss) / gain on plan assets
(as percentage of plan assets) (9.58) (4.46) 8.28 4.51 (3.64)
Loss / (gain) on obligations
(as a percentage of obligation) 7.02 4.75 5.94 1.04 12.26
==================================================================================41.11. Plan assets comprise of the following:================================================================
2009 2008
================================================================
(Rupees in '000) Percentage (Rupees in '000) Percentage
================================================================
Shares 2,584 4.46 4,937 10.04
Debt 13,287 22.95 34,956 71.12
Cash 42,020 72.58 7,134 14.52
Others 8 0.01 2,122 4.32
57,899 100.00 49,149 100.00
================================================================41.12. The expected return on plan assets is based on the market expectations and depends upon the asset portfolio of the company, at the beginning of the period, for returns over the entire life of related obligation.41.13. Expected contribution to post employment benefit plan for the year ending June 30, 2010 is Rs 16.371 million. 42. PLANT CAPACITY AND ACTUAL PRODUCTION ========================================================================================
2009 2008
========================================================================================
(Quantities in tons)
========================================================================================
Capacity 123,500 105,500
Production 117,005 96,796
========================================================================================The underutilisation of capacity was due to market constraints.43. CORRESPONDING FIGURES 43.1. Corresponding figures have been reclassified, for better presentation, in respect of the following: =============================================================================== Note From Note To (Rupees in '000) =============================================================================== 5.1 Property, plant and equipment 6 Intangible assets 3,500 31 Other operating income 30 Other operating expenses (44,350) 5.1.6 Depreciation 6 Amortisation 385 13 Trade deposits, 14 Other receivables 38,753 short term prepayments and other receivables ===============================================================================43.2. Corresponding figures given in cash flow statement have been reclassified, for better presentation, as follows: ================================================================================= From To (Rupees in '000) ================================================================================= Stores and spares Stores and spares written off 18 Stock in trade Stocks 5,460 Finance costs Net exchange loss (44,350) Trade deposits, short term prepayments Other receivables (33,785) and other receivables =================================================================================44. DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on July 31, 2009 by the Board of Directors of the company. |