| National Foods Ltd - 2005 |
======================================================================================== BALANCE SHEET AS AT JUNE 30, 2005 ======================================================================================== June30, June30, 2005 2004 (Rupees in thousand) Notes (Restated) ======================================================================================== ASSETS NON-CURRENT ASSETS: Property, plant and equipment 3 226,575 177,867 Intangibles 4 4,290 5,069 Long term deposits 2,139 1,941 233,004 184,877 CURRENT ASSETS: Stores, spare parts and loose tools 3,299 1,921 Stock in trade 5 356,655 273,930 Trade debts 6 75,877 54,169 Advances 7 14,029 18,065 Trade deposits and prepayments 8 1,822 2,126 Other receivables 9 913 1,331 Tax refunds due from / adjustable with the government 10 17,553 25,477 Cash and bank balances 11 5,579 2,871 475,727 379,890 708,731 564,767 SHARE CAPITAL AND RESERVES: Issued, subscribed and paid-up capital 12 42,505 42,505 Capital Reserve - Share premium 6,102 6,102 Unappropriated profit 134,494 120,843 183,101 169,450 NON-CURRENT LIABILITIES: Long term financing 13 76,000 21,000 Liabilities against assets subject to finance leases 14 2,331 - Deferred tax 15 11,808 12,500 90,139 33,500 CURRENT LIABILITIES: Trade and other payables 16 140,458 127,072 Accrued interest / mark up 17 4,688 1,715 Short term borrowings 18 270,718 207,894 CURRENT MATURITY OF: Long term financing 13 6,000 6,000 Liabilities against assets subject to finance lease 14 1,627 636 Provision for income tax 12,000 18,500 435,491 361,817 Commitments 19 708,731 564,767 ======================================================================================== ======================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2005 ======================================================================================== Notes 2005 2004 (Rupees in thousand) ======================================================================================== Sales 20 1,533,879 1,273,032 Cost of sales 21 (1,136,727) (919,282) Gross profit 397,152 353,750 Distribution cost 21 (289,857) (229,323) Administrative expenses 21 (51,842) (41,467) Other operating expenses 22 (3,242) (4,924) Other operating income 23 4,498 1,958 Profit from operations 56,709 79,994 Finance costs 24 (14,438) (11,640) Profit before taxation 42,271 68,354 Taxation 25 (11,618) (22,055) Profit after taxation 30,653 46,299 Earnings per share - basic and diluted - Rupees 26 7.21 10.89 ======================================================================================== ======================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2005 ======================================================================================== 2005 2004 Notes (Rupees in thousand) ======================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 31 (8,008) 46,523 Finance cost paid (10,907) (10,153) Income tax paid (10,886) (10,976) Net increase in long term deposits (198) 18 Net cash (used in) / from operating activities (29,999) 25,412 CASH FLOWS FROM INVESTING ACTIVITIES: Fixed capital expenditure (69,943) (24,273) Sale proceeds of property, plant and equipment on disposal 4,126 4,991 Net cash used in investing activities (65,817) (19,282) CASH FLOWS FROM FINANCING ACTIVITIES: Long term financing - net 55,000 (23,000) Liabilities against assets subject to finance leases - net (2,450) (1 ,885) Dividend paid (16,850) (12,692) Net cash from / (used in) financing activities 35,700 (37,577) Net decrease in cash and cash equivalents (60,116) (31,447) Cash and cash equivalents at the beginning of the year (205,023) (1 73,576) Cash and cash equivalents at the end of the year 32 (265,139) (205,023) ======================================================================================== ============================================================================================================ STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2005 ============================================================================================================ Issued Capital subscribed reserve and paid up Share Unappropriated capital premium profit Total (Restated) Notes (Rupees in thousand) ============================================================================================================ Balance as at June 30, 2003 as previously reported 42,505 6,102 74,544 123,151 Change in accounting policy for recognition of declared dividend 2.21 - - 12,752 12,752 Balance as at June 30, 2003 as restated 42,505 6,102 87,296 135,903 Final dividend for the year ended June 30, 2003 (Rs 3 per share) - - (12,752) (12,752) Profit for the year ended June 30, 2004 - - 46,299 46,299 Balance as at June 30, 2004 as restated 2.21 42,505 6,102 120,843 169,450 Final dividend for the year ended June 30, 2004 (Rs 4 per share) - - (17,002) (17,002) Profit for the year ended June 30, 2005 - - 30,653 30,653 Balance as at June 30, 2005 42,505 6,102 134,494 183,101 ===========================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2005 1. THE COMPANY AND ITS OPERATIONS The company was incorporated in Pakistan on February 19, 1970 as a private limited company under the Companies Act, 1913 and subsequently converted into a public limited company under the Companies Ordinance, 1984 by special resolution passed in the extra ordinary general meeting held on March 30, 1988. The company is principally engaged in the manufacture and sale of spices, pickles, ketchup, jams, jellies, sauces, cooking pastes and salt. It is listed on Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the company is situated at 12 / CL - 6, Claremont Road, Civil Lines, Karachi. 2. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of these financial statements are set out below: 2.1. BASIS OF PREPARATION These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives have been followed. 2.2. OVERALL VALUATION POLICY These financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. 2.3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at cost less accumulated depreciation and impairment, if any, except capital work in progress, which is stated at cost. Depreciation is charged to income applying the reducing balance method over the estimated useful lives of related assets, at the rates specified in note 3.1 to the financial statements. During the year, the Company, in view of the recommendation of Institute of Chartered Accountants of Pakistan, reviewed the pattern in which the assets' economic benefits are consumed. Until last year, full year's depreciationmortisation was charged in the year of acquisition, whereas no depreciationmortisation was charged in the year of disposal. Effective from current year, depreciationmortisation on additions is charged from the month in which the assets is put to use and on disposals upto the month of disposal. This has resulted in reduced depreciationmortisation charge for the year by Rs 2,692,492. Maintenance and normal repairs are charged to income as and when incurred; also individual assets costing up to Rs 5,000 are charged to income. Major renewals and improvements are capitalised and assets so replaced, if any, are retired. Profit and loss on sale or retirement of property, plant and equipment is included in income currently. 2.4. INTANGIBLES These are stated at cost less accumulated amortisation and impairment, if any. Generally, cost associated with developing or maintaining computer software programmes are recognised as an expense as incurred. However, cost that are directly associated with identifiable software and have probable economic benefit exceeding the cost beyond one year, are recognised as intangible asset. Direct cost includes the purchase cost of software and related overhead cost. Amortisation charge is based on the reducing balance method whereby the cost of an asset is written-off over its estimated useful life using rate specified in note 4.1. 2.5. TAXATION (i) Current The provision for current taxation is based on taxable income at the current rates of taxation. (ii) Deferred Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. 2.6. EMPLOYEE BENEFITS Retirement benefits - defined contribution plan The company operates an approved provident fund for all permanent employees. The Company and the employees make equal contributions to the fund. Others - compensated absences The company accounts for these benefits in the period in which the absences are earned. 2.7. STORES, SPARES AND LOOSE TOOLS These are valued at weighted average cost less provision for slow moving and obsolete stores, spares and loose tools, if any. Items in transit are valued at cost comprising invoice values plus other charges incurred thereon. 2.8. STOCK IN TRADE All stocks are stated at the lower of cost and estimated net realisable value. Cost is determined by average method except for those in transit where if represents invoice value and other charges paid thereon. Cost of work in process and finished goods includes direct cost of materials, direct cost of labour and production overheads. Net realisable value signifies the estimated selling price in the ordinary course of business less cost necessarily to be incurred in order to make the sale. 2.9. TRADE AND OTHER DEBTS Trade and other debts are stated at original invoice amount. Debts considered irrecoverable are written off and provision is made against those considered doubtful of recovery. 2.10. CASH AND CASH EQUIVALENTS Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, with banks on current accounts and short term borrowings. 2.11. IMPAIRMENT LOSSES The carrying amount of the Company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. If such indication exist, the assets recoverable amount is estimated in order to determine the extent of impairment loss, if any. Impairment losses are recognised as expense in the profit and loss account. 2.12. LEASES Finance leases are capitalised at the inception of the lease at the lower of fair value of the asset and the present value of minimum lease payments. The outstanding obligation under the lease less finance charges allocated to future periods is shown as a liability. Financial charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of charge on the outstanding liability. 2.13. TRADE AND OTHER PAYABLES Trade and other payables are carried at the fair value of the consideration to be paid for goods and services. 2.14. BORROWING COSTS Borrowing costs are recognised as an expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying assets, if any, are capitalised as part of the cost of that asset. 2.15. 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 will be required to settle the obligation, and a reliable estimate of the amount can be made. 2.16. FINANCIAL INSTRUMENTS Financial instruments include trade and other debts, cash and bank balances, long term finance, liabilities against assets subject to finance leases, trade and other payables, accrued interest I mark up and short term borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. 2.17. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION Foreign currency transactions are translated into Pak Rupees using the exchange rates approximating those prevailing at the dates of the transactions. All monetary assets and liabilities in foreign currencies are translated into Pak rupees at the rates of exchange approximating those prevailing at the balance sheet date. Exchange gain / loss on translation are included in income currently. 2.18. REVENUE'RECOGNITION Sales are recognised on despatch of goods to customers. 2.19. RESEARCH AND DEVELOPMENT Research and development expenditure is charged to profit and loss account in the period in which it is incurred. 2.20. OFFSETTING Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to set-off the recognised amounts and the company intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously. 2.21. DIVIDENDS During the year, the Company changed its accounting policy with respect to the treatment of recognising dividends declared after the balance sheet date, consequential to amendment in the Fourth Schedule to the Companies Ordinance, 1984. In order to conform with the Fourth Schedule to the Companies Ordinance, 1984 and the treatment in lAS 10, "Events after the balance sheet date", the company now recognises such dividends as a liability at the time of their declaration rather than at the balance sheet date. This change in accounting policy has been accounted for retrospectively. The comparative statement for 2004 has been restated to conform to the changed policy as reflected in the statement of changes in equity. The effect of change, which is the amount of final dividend proposed for 2003, has been increased in opening unappropriated profit for 2004 as shown below: Statement of unappropriated profit ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Opening unappropriated profit as previously reported 103,841 74,544
Effect of change in accounting policy with respect to
dividend - proposed final dividend for 2004 and 2003 17,002 12,752
Opening unappropriated profit, restated 120,843 87,296
Net profit / (loss) for the year 30,653 46,299
Dividend paid (17,002) (12,752)
134,494 120,843
========================================================================================3. PROPERTY, PLANT AND EQUIPMENT========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
Operating assets 3.1 182,688 173,307
Capital work in progress - at cost 3.2 43,887 4,560
226,575 177,867
========================================================================================3.1. OPERATING ASSETS=================================================================================================================================
Cost as at Additions/ Cost as at Accumulated Depreciation Accumulated Net Book Annual
July 1, (disposals) /June 30, depreciation) charge for depreciation value as at rate of
2004 transfers* 2005 as at the year/ as at June 30, depreciation
July 1, (on disposal June 30, 2005 %
2004 transfer* 2005
(Rupees in thousand)
=================================================================================================================================
Leasehold Land 13,014 2,000 15,014 - 384 384 14,630 1.16- 2.70
Building-on
leasehold land 56,219 2,412 58,631 26,429 3,056 29,485 29,146 10
Plant and machinery
including generators 135,142 12,447 147,321 50,817 9,343 60,240 87,081 10
(1,686) (780)
1,418* 860
Furniture and fitting 13,149 1,090 14,239 6,342 737 7,079 7,160 10
Vehicles 43,930 9,964 46,784 20,733 5,819 21,862 24,922 20
(7,110) (4,690)
Office and other
equipments 20,446 844 19,872 13,481 1,019 13,640 6,232 15
(1,418)* (860)*
Computers 14,307 2,658 16,811 7,737 2,271 9,905 6,906 30
(154) (103)
Laboratory equipments 3,122 67 3,189 1,327 184 1,511 1,678 10
299,329 31,482 321,861 126,866 22,813 144,106 177,755
(8,950) (5,573)
ASSETS SUBJECT TO
FINANCE LEASES:
-Vehicles 1,648 4,400 6,048 804 311 1,115 4,933 20
2005 300,977 35,882 327,909 127,670 23,124 145,221 182,688
(8,950) (5,573)
2004 281,733 26,996 300,977 107,963 23,690 127,670 173,307
(7,752) (3,983)
=================================================================================================================================3.2. CAPITAL WORK IN PROGRESS========================================================================================
2005 2004
Note (Rupees in thousand)
========================================================================================
Civil works 37,842 947
Plant and machinery 4,223 3,613
Vehicles pending delivery 1,372 -
Borrowing costs 3.2.1 450 -
43,887 4,560
========================================================================================3.2.1. Borrowing costs of Rs 450,193 (2004: Rs Nil) arising on financing specifically entered into for the construction of Bin Qasim project were capitalised during the year and are included in the cost.A capitalisation rate of 7.73% (2004: Nil) was used, representing the borrowing cost of the loan used to finance the project. 3.3. Details of property, plant and equipment disposed are given in note 33. 4. INTANGIBLES ========================================================================================
2005 2004
Note (Rupees in thousand)
========================================================================================
Computer software and ERP system 4.1 4,290 3,363
Computer software under development - 1,706
4,290 5,069
========================================================================================4.1. COMPUTER SOFTWARE AND ERP SYSTEM===============================================================================================================================================
Cost as at Additions Cost as at Accumulated Amortisation Accumulated Net Book Annual
July 1, June 30, amortisation for the year amortisation value as at rate of
2004 2005 as at as at June 30, amortisafion
July 1, June 30, 2005 %
2004 2005
(Rupees in thousand)
===============================================================================================================================================
Computer software
and ERP system - 2005 5,653 2,212 7,865 2,290 1 ,285 3,575 4,290 30
2004 5,653 - 5,653 848 1,442 2,290 3,363
===============================================================================================================================================5. STOCK IN TRADE========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Raw materials at cost (including in transit
Rs 8.08 million; 2004: Rs 5.8 million) 32,871 118,134
Provision for obsolescence (10,030) -
22,841 118,134
Packing materials 70,921 51,051
Provision for obsolescence (7,971) (11,896)
62,950 39,155
Work in process 194,098 55,678
Finished goods 76,766 60,963
356,655 273,930
========================================================================================5.1. CARRYING AMOUNT OF STOCKS CARRIED AT NET REALISABLE VALUE========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Raw materials 4,449 -
Packing material - -
========================================================================================6. TRADE DEBTS========================================================================================
2005 2004
Note (Rupees in thousand)
========================================================================================
CONSIDERED GOOD:
Related parties 6.1 4,577 7,024
Others 71,300 47,145
75,877 54,169
========================================================================================6.1. DUE FROM RELATED PARTIES========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Premier Distributor 3,389 6,628
Premier Agency 1,188 396
4,577 7,024
========================================================================================7. ADVANCES========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
CONSIDERED GOOD:
Employees - against expenses 81 255
Suppliers 13,502 17,528
Others 446 282
14,029 18,065
========================================================================================8. TRADE DEPOSITS AND PREPAYMENTS========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Margin deposits 114 114
Other deposits 80 -
Prepayments 1,628 2,012
1,822 2,126
========================================================================================9. OTHER RECEIVABLES========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Employees' Provident Fund - 350
Export rebate 775 825
Insurance claim - 95
Others 138 61
913 1,331
========================================================================================10. TAX REFUNDS DUE FROM / ADJUSTABLE WITH THE GOVERNMENT========================================================================================
2005 2004
Note (Rupees in thousand)
========================================================================================
Taxation - payments 16,553 24,477
Sales tax refundable - paid under protest 10.1 1,000 1,000
17,553 25,477
========================================================================================10.1. This represents sales tax paid under protest against arbitrary levy on table salt and other spices amounting to Rs 87.8 million.As a result of the appeal the matter has been set aside by the Tribunal by accepting the appeal. However, the department has preferred an appeal against the order of the Tribunal and for the stay of refund claimed by the company before the High Court of Sindh. 11. CASH AND BANK BALANCES ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Cash in hand 482 469
CASH AT BANK - ON CURRENT ACCOUNT:
Local currency 3,034 517
Foreign currency 2,063 1,8851
5,097 2,402
5,579 2,871
========================================================================================12. SHARE CAPITALAuthorised share capital ========================================================================================
2005 2004
Number of shares (Rupees in thousand)
========================================================================================
10,000,Ordinary shares of Rs 10 each 100,000 100,000
======================================================================================== Issued, subscribed and paid up capital========================================================================================
2005 2004
Number of shares (Rupees in thousand)
========================================================================================
Shares allotted:
1,255,99 for consideration paid in cash 12,560 12,560
2,994,54 as bonus shares 29,945 29,945
4,250,538 42,505 42,505
========================================================================================As at June 30, 2005 and 2004 number of ordinary shares held by associates were 2,511,270.13. LONG TERM FINANCING ========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
Bank Al-Habib Limited 13.1 21,000 27,000
Muslim Commercial Bank Limited 13.2 61,000 -
82,000 27,000
Less: Current maturity shown
under current liabilities (6,000) (6,000)
76,000 21,000
========================================================================================13.1. The facility is secured by way of equitable mortgage over factory building.Mark-up is charged at the rate ranging from 6.5% to 8% per annum (2004: 6.5% to 10% per annum). The last instalment of the facility is payable on December 24, 2008. 13.2. This represents a term finance facility of Rs 200 million of which Rs 139 million was undisbursed at the year end. The facility is secured by way of equitable mortgage over land, buildings, plant and machinery installed or to be installed at factory buildings. Mark-up is charged at the rate of 7.73% per annum. 14. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASES
========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Present value of minimum lease payments 3,958 636
Current maturity shown under current liabilities (1,627) (636)
2,331 -
MINIMUM LEASE PAYMENTS:
Not later than one year 1,870 700
Later than one year but not later than five years 2,547 -
4,417 700
Future finance charges on finance leases (459) (64)
Present value of finance lease liabilities 3,958 636
Present value of finance lease liabilities
Not later than one year 1,627 636
Later than one year but not later than five years 2,331 -
3,958 636
========================================================================================14.1. The above represents finance leases entered into with leasing companies for motor vehicles.The balance of liability is payable by January 2009 in monthly instalments. Monthly lease payments include finance charge ranging from 6.26% to 11 .5% (2004: 14% to 19%) per annum which are used as discounting factor. 15. DEFERRED TAX
========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
(DEBIT) / CREDIT BALANCE ARISING IN RESPECT OF:
Accelerated tax depreciation 17,040 15,888
Provision for slow moving stock (5,531) (3,627)
Liabilities against assets subject to finance lease 299 63
Other adjustments - 176
11,808 12,500
========================================================================================16. TRADE AND OTHER PAYABLES========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
Creditors 75,588 48,042
Accrued liabilities 29,976 35,781
Workers' profits participation fund 16.1 2,263 3,385
Workers' welfare fund 550 1,100
Advances from customers 18,370 22,594
Payable to provident fund 591 -
Security deposits from customers 79 71
Tax deducted at source 956 819
Due to related parties - directors 46 7
- others 16.2 221 92
Advances from employees 16.3 8,835 8,548
Sales tax payable 1,121 5,204
Unclaimed dividend 953 801
Other liabilities 909 628
140,458 127,072
========================================================================================16.1. WORKERS' PROFITS PARTICIPATION FUND========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Balance as at July 1 3,655 1,600
Allocation for the year 2,263 3,656
Interest on fund utilised in the company's business 721 270
6,639 5,526
Amount paid during the year (4,376) (1,871)
2,263 3,655
Interest accrued as at June 30 - (270)
Balance as at June 30 2,263 3,385
========================================================================================16.2. DUE TO RELATED PARTIES - OTHERS========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Associated Textile Consultants (Private) Limited 128 85
Pakistan Card Clothing (Private) Limited 93 7
221 92
========================================================================================16.3. This represents advances received from employees under motor vehicle buy-out policy of the company.Previously, this advance was included in 'Accrued Liabilities'. 17. ACCRUED INTEREST / MARKUP ON ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
- short term borrowings 4,001 1,411
- balance payable to workers' profit participation fund - 270
- long term financing 687 34
4,688 1,715
========================================================================================18. SHORT TERM BORROWINGS========================================================================================
2005 2004 2005 2004
Mark up rates (Rupees in thousand)
========================================================================================
Running finance under
mark up arrangements 5% to 6.78% 5% to 7.5% 126,318 8,894
Export re-finance 3.25% to 5.25% 2.25% to 2.75% 79,400 69,000
Short term loans 3.15% to 8.30% 3% to 4% 65,000 130,000
270,718 207,894
========================================================================================18.1. The above facilities available from various banks amounts to Rs 305 million (2004: Rs 240 million).The arrangements are secured by way of pari-passu charge against hypothecation of Company's stock in trade and trade debts. The facilities are payable by January 2006 and are renewable. 18.2. The facilities for opening letters of credit as at June 30, 2005 amounted to Rs 40 million (2004: Rs 40 million) of which the amount remaining unutilised at year end was Rs 16.195 million (2004: Rs 25.986 million). 19. COMMITMENTS 19.1. The Company has commitment against contract for import of goods amounting to Rs Nil (2004: Rs 3.27 million) 19.2. Aggregate commitments for capital expenditure as at June 30, 2005 amounted to Rs 122.98 million (2004: Rs Nil). 20. SALES ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Local sales 1,850,363 1,554,886
Less: Sales tax 203,693 183,826
1,646,670 1,371,060
Export sales 220,417 187,498
1,867,087 1,558,558
Less: Discount / Commission 205,059 174,493
Rebates and allowances * 92,694 83,455
Sales returns 35,455 27,578
333,208 285,526
1,533,879 1,273,032
======================================================================================== * 'Trade offers' for the current and prior year has been classified as rebates and allowances and netted with sales for more appropriate presentation.Previously, the aforesaid allowance was being included in selling and distribution expenses. 21. OPERATING COSTS =====================================================================================================================================
Cost of Sales Distribution Cost Administrative Total
Expenses
2005 2004 2005 2004 2005 2004 2005 2004
Note (Rupees in thousand)
=====================================================================================================================================
Raw materials consumed 798,216 512,192 - - - - 798,216 512,192
Packing materials consumed 307,208 259,734 - - - - 307,208 259,734
Provision for slow moving stock 6,105 11,896 - - - - 6,105 11,896
Salaries, wages and other
benefits 94,614 88,056 51,302 40,677 26,877 24,058 172,793 152,791
Contribution of provident fund 2,227 2,850 1,217 1,193 761 957 4,205 5,000
Advertising and sales promotion - - 133,260 108,074 - - 133,260 108,074
Auditors' remuneration 21.2 - - - - 344 201 344 201
Depreciation/ Amortisation 16,350 17,428 4,105 4,091 3,954 3,613 24,409 25,132
Fuel and power 24,558 19,846 762 644 496 527 25,816 21,017
Outward freight * - - 64,901 47,803 - - 64,901 47,803
Forwarding charges* - - 6,333 5,169 - - 6,333 5,169
Insurance 2,776 2,428 1,491 1,289 673 775 4,940 4,492
Laboratory, research and development 1,027 1,039 354 662 44 10 1,425 1,711
Legal and professional charges - - - - 2,883 2,208 2,883 2,208
Postage and communications 437 628 4,586 4,674 2,324 1,831 7,347 7,133
Printing and stationery 2,044 1,303 1,289 751 1,149 1,380 4,482 3,434
Rent, rates and taxes 7,860 4,337 2,985 372 548 569 11,393 5,278
Repairs and maintenance 20,804 17,983 1,760 465 4,866 1,963 27,430 20,411
Travelling 7,871 7,265 15,202 13,193 6,270 2,808 29,343 23,266
Others 394 248 310 266 653 567 1,357 1,081
1,292,491 947,233 289,857 229,323 51,842 41,467 1,634,190 1,218,023
Opening work in process 55,678 53,188
Closing work in process (194,098) (55,678)
Cost of goods manufactured 1,154,071 944,743
Opening stock of
finished goods 60,963 36,486
Closing stock of finished goods (76,766) (60,963)
Export rebate (1,541) (984)
1,136,727 919,282
=====================================================================================================================================21.1.Number of employees as at June 30, 2005 were 411) 2004: 382). * 'Freight' and 'Forwarding charges' for the current and prior year have been classified as distribution cost for more appropriate presentation. Previously, the aforesaid expenses were being deducted from gross sales. 21.2. AUDITORS' REMUNERATION ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Audit fee 150 135
Limited review, audit of staff funds and other certifications 160 25
Out of pocket expenses 34 41
344 201
========================================================================================22. OTHER OPERATING EXPENSES========================================================================================
2005 2004
Note (Rupees in thousand)
========================================================================================
Bad debts 245 -
Donations 22.1 184 168
Workers' profits participation fund 2,263 3,656
Workers' welfare fund 550 1,100
3,242 4,924
========================================================================================22.1.The directors or their spouses do not have any interest in the donee's fund. 23. OTHER INCOME ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Profit on disposal of property, plant and equipment 749 1,222
Sales tax refunded 580 -
Insurance claim 2,517 545
Miscellaneous 652 191
4,498 1,958
========================================================================================24. FINANCE COSTS========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Interest on workers' profits participation fund 721 270
Mark up on running finance under mark up arrangements 10,771 6,788
Mark up on finance lease 256 285
Mark up on long term finance 2,132 3,829
Bank charges 558 468
14,438 11,640
========================================================================================25. TAXATION========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Current - for the year 12,000 18,500
Deferred (692) 3,741
11,308 22,241
Prior 310 (186)
11,618 22,055
========================================================================================25.1. RECONCILIATION BETWEEN TAX EXPENSE AND ACCOUNTING PROFIT========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Profit before taxation 42,271 68,354
Tax at applicable tax rate of 35% (2004: 35%) 14,795 23,924
Expense not deductible for tax purposes 134 -
Effect of lower tax rate on export sales (3,702) (7,203)
Others 81 5,520
11,308 22,241
========================================================================================26. EARNINGS PER SHAREThere is no dilutive effect on the basic earnings per share of the company, which is based on: ========================================================================================
2005 2004
========================================================================================
Profit after taxation attributable
to ordinary shareholders (Rupees) 30,653 46,299
Weighted average number of shares
in issue during the year (in thousand) 4,251 4,251
Earnings per share - basic (Rupees) 7.21 10.89
========================================================================================27. RELATED PARTY DISCLOSURESA Related parties with whom the Company had transactions. (i) Associated Companies /
Undertakings: Associated Textile Consultants (Private) Limited
Pakistan Card Clothing Company (Private) Limited
Precision Rubber Products (Private) Limited
Premier Agency
Premier Distributor
Raj Masala Pty Limited, Australia
ii) Employee Benefit Plan: National Foods Limited Provident Fund B Disclosure of transactions between the Company and related parties.=====================================================================================
Relationship with the company 2005 2004
Nature of transaction (Rupees in thousand)
=====================================================================================
(i) Associated Companies /
Undertakings: Sale of goods 327,039 295,726
Compensation for use of
trademark 626 -
Reciprocal arrangements for
sharing of services 5,433 4,294
=====================================================================================Transactions with related parties are carried out on negotiated terms and at market prices.There are no transactions with key management personnel other than under their terms of employment. The related party status of outstanding balances as at June 30, 2005 are included in trade debts, other receivables and trade and other payables respectively. 28. REMUNERATION OF DIRECTORS, CHIEF EXECUTIVE AND EXECUTIVES 28.1. The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to directors, chief executive and executives of the company are as follows: ========================================================================================
Directors Chief Executive Executives
2005 2004 2005 2004 2005 2004
(Rupees in thousand)
========================================================================================
Managerial remuneration
and allowances 3,962 4,322 2,330 2,214 7,730 6,579
Utilities 396 432 233 221 773 658
Bonus 660 1,482 388 661 1,242 2,126
Housing 1,783 25 1,049 - 3,479 74
Other expenses 101 - 264 - 2,611 1,431
6,902 6,261 4264 3,096 15,835 10,868
Number of persons 3 4 1 1 13 10
========================================================================================28.2. Aggregate amount charged in these financial statements for the year for fee to 3 non-executive directors was Rs 11,000 (2004:16,000).28.3. The Chief Executive, executive directors and certain executives of the company are also provided with Company maintained cars and residential telephones. 29. PLANT CAPACITY AND PRODUCTION ========================================================================================
2005 2004
Installed Utilised Installed Utilised
Metric Tons
========================================================================================
Spices 4,532 3,614 4,532 3,968
Pickles 5,256 5,020 5,256 4,383
Pastes 6,920 4,362 6,920 3,542
Salt 21,078 17,031 21,078 18,620
========================================================================================29.1.The actual production is based on consumer demand. 30. FINANCIAL INSTRUMENTS 30.1. FINANCIAL ASSETS AND LIABILITIES ===================================================================================================================
Interest/ Mark up bearing Non-interest / Non-mark up bearing
Maturity Maturity after Sub-total Maturity Maturity after Sub-total Total
upto one year upto one year
one year one year
(Rupees in thousand)
===================================================================================================================
FINANCIAL ASSETS:
Trade debts - - - 75,877 - 75,877 75,877
Deposits - - - 194 2,139 2,333 2,333
Cash and bank balances - - - 5,579 - 5,579 5,579
- - - 81,650 2,139 83,789 83,789
June 30, 2004 - - - 57,599 1,941 59,540 59,540
FINANCIAL LIABILITIES:
Long term financing 6,000 76,000 82,000 - - - 82,000
Liabilities against assets
subject to finance leases 1,627 2,331 3,958 - - - 3,958
Trade and other payables 591 - 591 107,720 - 107,720 108,311
Accrued interest! mark up 4,688 - 4,688 - - - 4,688
Short term borrowings 270,718 - 270,718 - - - 270,718
283,624 78,331 361,955 107,720 - 107,720 469,675
June 30, 2004 215,975 21,000 236,975 85,351 - 85,351 322,326
OFF BALANCE SHEET ITEMS
Open letters of credit - - - 23,805 - 23,805 23,805
- - - 23,805 - 23,805 23,805
June30, 2004 - - - 14,014 - 14,014 14,014
===================================================================================================================The effective interest / mark up rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.30.2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Company finances its operations through equity, borrowings and management of working capital with a view to maintain an appropriate mix between various sources of finance to minimise risk. Taken as a whole, risk arising from the Company's financial instruments is limited as there is no significant exposure to price and cash flow risk in respect of such instruments. (i) Concentration of credit risk Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties failed completely to perform as contracted. Out of total financial assets of Rs 83.79 million (2004: Rs 59.54 million), the financial assets which are subject to credit risk amounted to Rs 75.88 million (2004: Rs 54.17 million). Concentrations of credit risk may arise from exposure to a single debtor or to a group of debtors having similar characteristics such that their ability to meet their obligations is effected similarly by changes in economic or other conditions. Although the Company operates mainly in the consumer industry but the management believes that it is not exposed to significant concentrations of credit risk. The management limits its credit risk by an aggressive policy for approval of credit limits and by ensuring that sales are made to customers with an appropriate credit history. (ii) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities. Company treasury aims at maintaining flexibility in funding by keeping committed credit lines available. (iii) Foreign exchange risk management Foreign exchange risk arises mainly where receivables and payables exist in foreign currency. The company exports its products to various countries and is exposed to movement in foreign exchange rates. Financial assets of equivalent Rs 57.84 million (2004: Rs 36.21 million) were in foreign currency which were exposed to foreign currency risk. 30.3. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values. 31. CASH GENERATED FROM OPERATIONS ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Profit before taxation 42,271 68,354
Adjustments for non-cash charges and other items
Depreciation on property, plant and equipment 23,124 23,690
Amortisation of intangibles 1,285 1,442
Gain on disposal of property, plant and equipment (749) (1,222)
Provision for slow moving stock 6,105 11,896
Finance cost 13,880 11,172
43,645 46,978
Profit before working capital changes 85,916 115,332
EFFECT ON CASH FLOWS DUE TO WORKING CAPITAL CHANGES:
DECREASE / (INCREASE) IN CURRENT ASSETS:
Stores, spare parts and loose tools (1,378) (226)
Stock in trade (88,830) (78,543)
Trade debts (21,708) (7,273)
Advances 4,036 (12,805)
Deposits and prepayments 304 (866)
Other receivables 418 294
(107,158) (99,419)
(DECREASE) / INCREASE IN CURRENT LIABILITIES:
Trade and other payables 13,234 30,610
(8,008) 46,523
========================================================================================32. CASH AND CASH EQUIVALENTS========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Cash and bank balances 5,579 2,871
Short term borrowings (270,718) (207,894)
(265,139) (205,023)
========================================================================================33. DETAILS OF PROPERTY, PLANT AND EQUIPMENT DISPOSEDThe details of property, plant and equipment sold are as follows: ====================================================================================================================
Cost Accumulated Book Sale Mode of Particulars of purchaser
depreciation value proceed disposal
(Rupees in thousand)
====================================================================================================================
PLANT AND MACHINERY
AND GENERATORS:
Generator 65 45 20 6 Company Mr. Habib A. Khairani
Ribbon RGX Policy Ex-Executive
2400
Pappadum 1,621 735 886 400 Tender Mr. Muhammad lqbal
Plant Plot No. 3-A-i/li,
Adjacent Decent Hospital,
Nazimabad No. 3, Karachi.
MOTOR VEHICLES:
Honda Civic VTI 997 815 182 555 Tender Mr. Muhammad Ashraf
ABG-102 House No. 1726/671,
Moallah Kokan Colony,
Baldia Town, Karachi.
Honda City Exi 822 375 447 245 Company Mr. Habib A. Khairani
AEK-325 Policy Ex-Executive
Honda City Ext-5 735 464 271 380 Company Mr. Shahid Aziz Khan
ACX-265 Policy Employee
Mazda E-2200 650 444 206 400 Tender Mirza Abdul Naeem Baig
JE-9347 D -55 - A - 1, Estate Avenue,
SITE Karachi.
Suzuki Baleno 595 420 175 301 Company Mr. Javaid lqbal
ACK-189 Policy Employee
Suzuki Cultus 555 299 256 295 Company Mr. Riazuddin
LR-621 Policy Employee
Suzuki Cultus 499 315 184 292 Company Mr. Saadat Hussain
LXR-6983 Policy Employee
Suzuki Mehran 354 200 154 221 Company Mrs. Zeeba Hafeez
ADQ-1 50 Policy Ex-Employee
Suzuki Mehran 337 208 129 197 Company Mr. M. Safwan Hashmi
LXR-7013 Policy Employee
Suzuki Mehran 264 213 51 80 Company Syed MansoorAhmed
LXH-31 79 Policy Employee
Honda CD7O 67 41 26 39 Company Mr. Sameeullah
LXR-8471 Policy Employee
MOTOR VEHICLES:
Honda CD-70 67 43 24 32 Company Mr. Muhammad Akram
IDK-5031 Policy Employee
Honda CD-70 67 43 24 33 Company Mr. Noman Ali
LXR-707l Policy Employee
Honda CD-70 67 43 24 32 Company Mr. Muhammad Nadeem
LXR-8470 Policy Employee
Yamaha Yb-100 66 40 26 30 Insurance EFU General Insurance Ltd.
KCT-283 Claim 2nd floor, KDLB Building,
58 West Wharf Road,
Karachi.
Suzuki Shogun 66 26 40 56 Insurance EFU General Insurance Ltd.
KAV-9702 Claim 2nd floor, KDLB Building,
58 West Wharf Road,
Karachi.
Honda CD-70 65 47 18 23 Company Mr. Rehan Afsar
LXO-7249 Policy Employee
Honda CD 70 65 45 20 24 Company Mr. lmran Ali
LXO-7248 Policy Employee
Honda 70 63 44 19 24 Company Mr. Abdul Rafiq Khan
RIX-5022 Policy Employee
Suzuki Shogun 63 45 18 25 Company Mr. Abdul Hafeez
SKG-3738 Policy Employee
Suzuki Shogun 62 44 18 38 Company Mr. S.G. Yazdani
KAP-3658 Policy Employee
Suzuki Shougun 62 45 17 42 Company Syed Tariq Ali
KAP-7748 Policy Employee
Honda CD 70 61 47 14 33 Company Mr. Khawaja Arifuddin
KAR-5402 Policy Ahmed
Employee
Honda CD 70 61 51 10 39 Company Mr. Faheem Ahmed
KCC-2491 Policy Employee
MOTOR VEHICLES:
Honda CD-70 59 48 11 31 Company Mr. Mir Ahmed
KAR-233 Policy Employee
Honda CD 59 49 10 38 Company Pir Muhammad
KAR-234 Policy Employee
Yamaha 100 58 50 8 27 Company Mr. Kaleem GuI
STH-3563 Policy Employee
Suzuki Shogun 57 47 10 17 Company Mr. Aijaz Mirza
NHB-4005 Policy Employee
Suzuki Shogun 57 46 11 21 Company Mr. Mohammad Saleem
KAR-1 771 Policy Employee
Suzuki Shogun 56 45 11 18 Company Mr. Majeed Khan
KCC-1010 Policy Employee
Honda CD 70 54 48 6 26 Company Mr. Jamaluddin
KCV-4125 Policy Employee
COMPUTERS:
Laptop 73 43 30 41 Insurance EFU General Insurance Ltd.
Claim 2nd floor, KDLB Building,
58 West Wharf Road, Karachi.
Laptop 81 60 21 65 Insurance EFU General Insurance Ltd.
Claim 2nd floor, KDLB Building
58 West Wharf Road, Karachi.
====================================================================================================================34. CORRESPONDING FIGURESDue to revision of the Fourth Schedule to the Companies Ordinance, 1984, there have been certain rearrangements and reclassifications of prior year's figures which apart from change in treatment of proposed dividend, mainly include: change in the definition of executives; break-up of administration and selling expenses between distribution costs, administrative expenses and other operating expenses, etc. The entire reclassifications and rearrangements are impracticable to list and disclose. Other re-classifications are explained in their respective notes. 35. PROPOSED DIVIDEND At the Board Meeting on September 1, 2005, a final dividend in respect of 2005 of Rs 1.5 per share amounting to a total dividend of Rs 6.376 million is proposed (2004: Rs. 17.002 million). These financial statements do not reflect the proposed final dividend as payable, which will be accounted for in the statement of changes in equity as an appropriation from the unappropriated profit in the year ending June 30, 2006. 36. DATE OF AUTHORISATION These financial statements were authorised for issue on September 1, 2005 by the Board of Directors of the company. |