| Bestway Cement Ltd - 2006 |
|
Balance Sheet as at June 30, 2006
========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Share capital and reserves
Authorised share capital
250,000,000 ordinary shares of Rs. 10 each 2,500,000,000 2,500,000,000
Issued, subscribed and paid up share capital
234,098,161 (2005:212,816,510) ordinary 4 2,340,981,610 2,128,165,100
shares of Rs.10 each
Surplus on remeasurement
of available for sale 240,343,820 -
investment to fair value
Unappropriated profit 2,268,637,348 1,468,417,191
4,849,962,778 3,596,582,291
Non-current liabilities
Long term financing 5 9,458,832,353 3,148,463,686
Deferred liabilities 6 1,075,913,123 594,653,794
Long term advance 44,458,500 -
10,579,203,976 3,743,117,480
Current liabilities
Trade and other payables 7 641,964,241 406,978,502
Markup payable 169,907,278 53,732,927
Short term borrowings 8 1,110,327,690 753,639,569
Current portion of long term financing 5 666,633,334 469,966,667
2,588,832,543 1,684,317,665
18,017,999,297 9,024,017,436
Contingencies and commitments 9
Non-current assets
Property, plant and equipment 10 9,752,139,389 3,147,107,940
Capital work in progress 11 936,567,384 1,922,261,302
Investment property 12 277,155,456 563,803,179
Long term investments 13 4,984,929,078 1,862,819,950
Long term advances and deposits 14 102,200,847 64,796,048
16,052,992,154 7,560,788,419
Current assets
Stores, spares and loose tools 15 795,246,779 578,150,212
Stock in trade 16 150,269,307 93,439,984
Trade debts - unsecured considered good 33,190,955 47,691,775
Available for sale investments 17 330,600,000 -
Advances, deposits, prepayments
and other receivables 18 236,138,276 138,310,607
Bank balances 19 419,561,826 605,636,439
1,965,007,143 1,463,229,017
18,017,999,297 9,024,017,436
========================================================================================Profit and Loss Account for the year ended June 30, 2006========================================================================================
2006 2005
Note Rupees Rupees
========================================================================================
Sales - net 20 4,543,808,323 3,535,841,713
Cost of sales 21 (2,250,304,518) (1,986,891,718)
Gross profit 2,293,503,805 1,548,949,995
Administration and general expenses 22 (124,952,073) (97,064,331)
Distribution cost 23 (24,563,397) (20,876,316)
(149,515,470) (117,940,647)
2,143,988,335 1,431,009,348
Finance cost 24 (468,727,103) (139,637,148)
Other operating income 25 139,240,672 71,733,025
Workers Profit Participation Fund (84,034,307) (65,183,235)
(413,520,738) (133,087,358)
Profit before taxation 1,730,467,597 1,297,921,990
Taxation 26 (504,614,420) (367,090,178)
Profit after taxation 1,225,853,177 930,831,812
Earnings per share (basic and diluted) 30 5.24 3.98
========================================================================================Cash Flow Statement for the year ended June 30, 2006========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Cash Flows from Operating Activities
Net profit before taxation 1,730,467,597 1,297,921,990
Adjustments for:
Gain on disposal of fixed assets (748,176) (375,366)
Depreciation 195,251,203 198,180,366
Profit on deposit accounts (4,144,860) (4,692,612)
Dividend income (99,067,500) (59,440,500)
Accrued interest on held
to maturity investment (22,035) -
Gain on revaluation of investment property (5,817,871) -
Finance cost 468,727,103 139,637,148
Provision for WPPF 84,034,307 65,183,235
Provision for staff retirement benefits 6,582,309 4,439,000
Exchange loss/ (gain) 2,049 (6,415,008)
644,796,529 336,516,263
Operating profit before
working capital changes 2,375,264,126 1,634,438,253
Increase in stores, spares and loose tools (216,661,792) (212,304,232)
(Increase)/decrease in stock in trade (56,829,323) 19,703,823
Decrease/ (increase) in trade debts 14,500,820 (6,061,320)
Increase in advances, deposits,
prepayments and other receivables (87,345,182) (47,784,878)
Increase in trade and other payables 216,129,935 58,006,818
(130,205,542) (188,439,789)
Cash generated from operations 2,245,058,584 1,445,998,464
Finance cost paid (352,552,755) (99,744,240)
WPPF paid (65,183,235) (44,242,509)
Staff retirement benefits paid (4,108,017) (1,334,107)
Income tax paid (35,914,870) (24,485,114)
(457,758,877) (169,805,970)
Net cash generated from operating activities 1,787,299,707 1,276,192,494
========================================================================================Cash Flow Statement For the year ended June 30, 2006========================================================================================
2006 2005
Rupees Rupees
========================================================================================
Cash Flows from Investing Activities
Additions in capital work in progress (5,101,450,766) (1,922,455,356)
Additions in property, plant and equipment (420,511,066) (144,322,068)
Proceeds from sale of
property, plant and equipment 2,034,835 620,300
Long term advances and deposits (37,404,799) (45,905,501)
Profit earned on deposit accounts 1,865,119 4,409,600
Dividend income 99,067,500 59,440,500
Long term advance 44,458,500 -
Purchase of investment property - (563,803,179)
Long term investments (3,212,343,273) -
Net cash used in investing activities (8,624,283,950) (2,612,015,704)
Cash Flows from Financing Activities
Increase in short term finances 356,688,121 541,802,578
Long term financing- disbursements 7,015,000,000 1,777,998,000
- repayments (507,964,666) (484,467,647)
Dividend paid (212,811,776) (193,469,555)
Net cash generated from
financing activities 6,650,911,679 1,641,863,376
Net cash (used in)/ generated
during the year (186,072,564) 306,040,166
Cash and cash equivalents at
beginning of the year 605,636,439 293,181,265
Exchange (loss)/gain (2,049) 6,415,008
Cash and cash equivalents at end of the year 419,561,826 605,636,439
========================================================================================Statement of Changes in Equity for the year ended June 30, 2006===============================================================================================================
Issued, subscribed Surplus on Unappropriated Total
and paid up share remeasurement profit
capital of available for
sale investment
to fair value
Rupees Rupees Rupees Rupees
===============================================================================================================
Balance as at July 01, 2004 1,934,695,550 - 924,524,484 2,859,220,034
Profit for the year ended June 30, 200 - - 930,831,812 930,831,812
Final dividend for the year ended
June 30, 2004 @ 10% (Re 1 per share) - - (193,469,555) (193,469,555)
Bonus shares issued for the year
ended June 30, 2004 @ 10% 193,469,550 - (193,469,550) -
Balance as at June 30, 2005
2,128,165,100 - 1,468,417,191 3,596,582,291
Surplus on remeasurement of
available for sale investment to fair - 240,343,820 - 240,343,820
Profit for the year ended June 30, 2006
Final dividend for the year ended - - 1,225,853,177 1,225,853,177
June 30, 2005 @ 10% (Re 1 per share) - - (212,816,510) (212,816,510)
Bonus shares issued for the year
ended June 30, 2005 @ 10% 212,816,510 - (212,816,510) -
Balance as at June 30, 2006
2,340,981,610 240,343,820 2,268,637,348 4,849,962,778
===============================================================================================================Notes to the Accounts for the year ended June 30, 20061. The Company and its operations Bestway Cement Limited ("the Company") is a public company incorporated in Pakistan on December 22, 1993 under the Companies Ordinance, 1984 and is listed on the Karachi Stock Exchange since April 9, 2001. The Company is engaged in production and sale of cement . The Company's registered office is situated at Bestway Building, 19-A, College Road, F-7 Markaz, Islamabad. 2. Statement of compliance and significant accounting 2.1. 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. 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 differ with the requirements of these Standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence. 2.2. Significant estimates The preparation of financial statements in conformity with the approved accounting standards requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which estimates are revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by management in the application of approved accounting standards that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year includes income taxes, staff retirement benefits, property, plant and equipment, stores, spares and loose tools, stock in trade, provision against doubtful debts which are discussed in their respective policy notes. 2.3. New accounting standards and IFRIC interpretations that are not yet effective The following standards, amendments and interpretations of approved accounting standards are only effective for accounting periods beginning on or after 1 July 2006 and are either not expected to have a significant effect on the Company's financial statements or are not relevant to the Company: ========================================================================================= -- IAS 1 (Amendments) Presentation of Financial Statements Capital Disclosures -- IAS 19 (Amendment) Employee Benefits contractual agreement between the multi employer plan and defined benefit plan disclosures -- IAS 39 (Amendment) Cash Flow Hedge Accounting of Forecast Intergroup Transactions -- IAS 39 (Amendment) The Fair Value Option -- IAS 21 (Amendment) The Effects of Changes in Foreign Exchange Rates: Net investment in foreign operation -- IFRIC 4 Determining whether an Arrangement contains a Lease -- IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Fund -- IFRIC 6 Liabilities arising from Participating in a specific market - Waste Electrical and Electronic Equipment -- IFRIC 9 Reassessment of Embedded Derivatives -- IFRIC 10 Interim Financial Reporting and Impairment =========================================================================================3. Accounting convention and summary of significant accounting policies These financial statements have been prepared under the historical cost convention except for investment property and available for sale investment which have been measured at fair market value and obligations under certain employee benefits have been measured at present value. 3.1. Staff retirement benefits Gratuity The Company maintains an unfunded gratuity scheme for all its eligible employees. Annual provision for gratuity is made on the basis of actuarial valuation carried out by using the Projected Unit Credit Method. Latest valuations were conducted as at June 30, 2006. The amount recognized in the balance sheet represents the present value of defined benefits as adjusted for unrecognized actuarial gains and losses. The Company uses the corridor approach as defined in IAS 19 "Employee Benefits" for recognising actuarial gains or losses. Certain actuarial assumptions have been adopted as disclosed in note 6.2 to the financial statements for valuation of present value of defined benefit obligations and fair value of plan assets. Any changes in these assumptions in future years might affect unrecognized gains and losses in those years. Compensated absences The Company recognizes provision for compensated absences payable to employees at the time of retirement / termination of service. The provision is determined on the basis of last drawn salary and accumulated leaves at reporting date. 3.2. Taxation The Company takes into account the current income tax law and decisions taken by appellate authorities. Instances where the Company's view differs from the view taken by the income tax authorities at the assessment stage and where the Company considers that its view on items of material nature is in accordance with the law, the amounts are shown as contingent liabilities. Current The Company accounts for current taxation on the basis of taxable income at the current rates of taxation after taking into account tax credits and rebates if any, or half a percent of turnover, whichever is higher in accordance with the provisions of the Income Tax Ordinance, 2001. Deferred Deferred tax is accounted for using the balance sheet liability method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for tax purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using the rates enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that the future taxable profits will be available and credits can be utilised. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefit will be realised. 3.3. Trade and other payables Liabilities for trade and other amounts payable are carried at cost, which is the fair value of the consideration to be paid in future for goods and services received, whether or not billed to the Company. 3.4. Provisions Provisions are recognised when the Company has a legal or constructive obligation as a result of a past event if it is probable that an outflow of sources embodying economic benefits will be required to settle the obligation and reliable estimate of the amount can be made. 3.5. Borrowing cost Mark up, borrowing cost and other charges on borrowed monies are capitalised upto the date of commissioning of the asset acquired or created out of the proceeds of such borrowings. All other borrowing costs are charged to profit and loss account. 3.6. Property, plant and equipment These are stated at cost, which includes purchase price, import duties, directly attributable costs and related borrowing costs less accumulated depreciation. Freehold land is stated at cost. Normal repairs and maintenance are charged to the profit and loss account as and when incurred whereas major improvements and modifications are capitalised. Capital work in progress is stated at cost including where appropriate, related borrowing costs. These costs are transferred to fixed assets as and when assets are available for use. Depreciation is charged to income applying the reducing balance method except leasehold land and plant and machinery. Plant and machinery is depreciated on straight line method. Leasehold land is amortised over the remaining period of the lease. Rates of depreciation are mentioned in note 10. Depreciation on property, plant and equipment is charged on prorated basis from the month in which an asset is acquired or capitalised, while no depreciation is charged for the month in which the asset is disposed off. Days in excess of fifteen days are considered as full month for the purpose of calculation of depreciation. Previously, full years depreciation was being charged on all assets capitalised during the year while no depreciation was charged on assets in the year of disposal. Such a change has been accounted for prospectively as a change in an accounting estimate in accordance with International Accounting Standard 8 "Accounting Policies, Changes in Accounting Estimates and Errors". Had there been no change in the accounting estimate, the depreciation for the year would have been higher by Rs. 355 million with corresponding decrease in carrying value of property, plant and equipment by the same amount. Consequently the earnings per share would have been lower by Rs. 1.45. Gains and losses on disposals of property, plant and equipment are taken to the profit and loss account. The Company reviews the useful life of property, plant and equipment on regular basis. Further, the Company reviews the value of the assets for possible impairment on an annual basis. Any change in the estimates in future years might affect the carrying amounts of the respective items of property, plant and equipment with a corresponding effect on the depreciation charge and impairment. 3.7. Investment property Investment property is stated at its fair value at the balance sheet date. Gains or losses, if any, arising from changes in the fair value of investment property are recognised as profit or loss for the period in which they arise. 3.8. Impairment 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 any such indication exists, the asset's recoverable amount is estimated in order to determine the extent of the impairment loss if any. Impairment losses are recognized as expense in the profit and loss account. 3.9. Foreign currency transactions Foreign currency transactions are recorded on exchange rates prevailing on the dates of transactions. Monetary assets and liabilities in foreign currencies are translated at the exchange rates prevailing at the balance sheet date. Exchange gains and losses are included in the profit and loss account. 3.10. Investments Investments in subsidiaries and associated companies Investments in subsidiaries and associates are stated at cost and the carrying amount is adjusted for impairment, if any, of permanent nature. Subsidiaries are those enterprises in which the Company directly or indirectly controls, beneficially owns or holds more than 50% of the voting securities or otherwise has power to elect and/or appoint more than 50% of its directors. Associates are those entities in which the Company has significant influence and which is neither a subsidiary nor a joint venture of the Company. Held to maturity investments Investments with fixed or determinable payments and fixed maturity and where the Company has positive intent and ability to hold to maturity are classified as held to maturity. These are initially recognized at cost and are subsequently carried at amortized cost using the effective interest rate method. Available for sale investments These are investments which do not fall under the "investments at fair value through profit or loss" or "held for maturity categories". These are stated at fair values with any resulting gains/losses recognized directly in the equity. The fair value of these investments representing listed equity securities are determined on the basis of closing price quoted on the stock exchange at the balance sheet date. 3.11. Stores, spares and loose tools These are valued at lower of moving average cost and net realisable value, while items considered obsolete are carried at nil value. Cost comprises purchase price and other costs incurred in bringing the stores and spares at their present location for intended use less recoverable government levies. Net realisable value signifies estimated selling price less costs necessary to be incurred to effect such sale. Items in transit are valued at costs accumulated up to the balance sheet date. The Company reviews the stores, spares, loose tools and stock in trade on regular basis. Further, the Company reviews the value of the inventory for possible impairment on an annual basis. Any change in the estimates in future years might affect the carrying amounts of the respective items of stores and spares and stock in trade with a corresponding affect on the provision. 3.12. Stock in trade Stocks of raw materials, work in process and finished goods are valued at the lower of weighted average cost and net realisable value. Cost of work in process and finished goods comprises of direct materials, labour and appropriate manufacturing overheads. Net realisable value signifies estimated selling price less costs necessary to be incurred to effect such sale. 3.13. Trade debts These are carried at invoice value as reduced by appropriate allowances for estimated irrecoverable amounts. The Company reviews its trade debts from customers to assess the amount of bad debts and provision required there against on annual basis. 3.14. Revenue recognition Revenue from sales is recorded on despatch of goods to the customers. Return on investments is accounted for on accrual basis. Dividend income is recognised when the right to receive such income is established. 3.15. Markup bearing borrowings Mark-up bearing borrowings are recognized initially at cost. Subsequent to initial recognition, mark-up bearing borrowings are stated at original cost less subsequent repayments. 3.16. Financial assets and liabilities Financial assets and liabilities are recognised in the balance sheet when the Company becomes a party to the contractual provisions of an instrument. Financial assets are derecognised when the Company looses control of the contractual rights that comprise the financial asset. Financial liabilities are removed when they are extinguished. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to profit and loss account. 3.17. Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if the company has a legally enforceable right to setoff the recognised amounts and intends either to settle on a net basis or to realized the asset and settle the liabilities simultaneously. 3.18. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of cash flow statement cash and cash equivalents comprise cash and bank balances, other short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change. 3.19. Dividend Dividend distribution to the share holders is recognised as liability in the period in which it is approved by the shareholders. 4. Issued, subscribed and paid up share capital ====================================================================================================
2006 2005 2006 2005
(No. of Shares) Rupees
====================================================================================================
Ordinary shares of Rs.10 each
193,469,555 193,469,555 issued for cash 1,934,695,550 1,934,695,550
Ordinary shares of Rs. 10 each
40,628,606 19,346,955 issued as fully paid bonus shares 406,286,060 193,469,550
234,098,161 212,816,510 Total 2,340,981,610 2,128,165,100
====================================================================================================Bestway (Holdings) Limited of U.K. is the ultimate parent company controlling 156,948,297 i.e. 67.04% shares (2005: 144,896,770 i.e. 68.09% shares) of the Company.5. Long term financing - secured =======================================================================================
2006 2005
Note Rupees Rupees
=======================================================================================
Loan from banking companies 5.1 1,625,000,000 1,172,998,000
Long term morabaha 5.2 575,000,000 322,500,000
Syndicate financing 5.3 7,925,465,687 2,122,932,353
10,125,465,687 3,618,430,353
Less: Current portion of long term financing (666,633,334) (469,966,667)
9,458,832,353 3,148,463,686
=======================================================================================5.1. Loan from banking companies=======================================================================================
2006 2005
Note Rupees Rupees
=======================================================================================
Demand Finance from Habib Bank Limited - 70,000,000
Demand Finance from Habib Bank Limited 5.1.1 225,000,000 225,000,000
Term Finances from Standard Chartered Bank 5.1.2 800,000,000 777,998,000
Term Finance from Standard Chartered Bank 5.1.3 100,000,000 100,000,000
Term Finance from Allied Bank Limited 5.1.4 500,000,000 -
1,625,000,000 1,172,998,000
=======================================================================================5.2. Long term morabaha=======================================================================================
2006 2005
Note Rupees Rupees
=======================================================================================
Faysal Bank Limited 5.2.1 150,000,000 -
Faysal Bank Limited 5.2.2 125,000,000 225,000,000
Faysal Bank Limited 5.2.3 300,000,000 97,500,000
575,000,000 322,500,000
=======================================================================================5.3. Syndicate financing=======================================================================================
2006 2005
Note Rupees Rupees
=======================================================================================
Term Finance from syndicate 5.3.1 303,044,118 505,073,529
Term Finance from syndicate 5.3.2 122,421,569 220,358,824
Term Finance from syndicate 5.3.3 4,300,000,000 1,397,500,000
Term Finance from syndicate 5.3.4 3,200,000,000 -
7,925,465,687 2,122,932,353
=======================================================================================5.1.1. This represents a Demand Finance facility of Rs. 225 million. Markup is payable at simple average of three months' KIBOR plus 0.75 % per annum. Facility is secured by way of a ranking charge of Rs. 75 million over the Company's movable assets including vehicles, furniture, fixtures, stocks, spares & stores and lien on US $ deposit account of the Company and a director of the ultimate parent company.5.1.2. This represents Term Finance facilities of Rs. 800 million. Markup is payable on quarterly basis and ranges between six months' KIBOR plus 0.6% to 1.0% per annum. The facilities are together secured by way of hypothecation charge over stocks and book debts for Rs.227 million and lien on Special US $ accounts of directors of the ultimate parent company. 5.1.3. This represents a Term Finance facility of Rs. 100 million. Mark up is payable at three months' KIBOR plus 1% per annum. The facility is secured by way of charge of Rs. 225.36 million over present and future fixed assets of the Company. 5.1.4. This represents a bridge finance facility of Rs. 500 million. Mark up is payable on quarterly basis at six months' KIBOR plus 2.05% per annum. The facility is secured by way of a ranking charge of Rs. 2.26 billion over the Company's present and future fixed assets excluding land and building. 5.2.1. This represents Morabaha Finance facility of Rs. 150 million. Mark up is payable at six months' KIBOR plus 2% per annum. The facility together with the unfunded facilities is secured by way charge of Rs. 600 million over present and future fixed and current assets of the Company. 5.2.2. This represents Morabaha Finance facility of Rs. 300 million repayable in 12 equal quarterly installments started from December 2004. Mark up is payable on quarterly basis at simple average of the cut-off yields of last three auctions of six months treasury bills plus 2 % per annum with a floor and cap of 4.5% and 15% respectively. The facility is secured by way of first pari passu charge of Rs. 400 million on all the present and future fixed assets of the Company. 5.2.3. This represents Morabaha Finance facility of Rs 300 million repayable in 10 equal biannual installments starting from August 2007. Mark up is payable on quarterly basis at six months' KIBOR plus 1.10 % per annum. The facility is secured by way of first pari passu charge on the Company's present and future assets and first pari passu equitable mortgage over the Company's immovable properties for an amount of Rs. 400 million. 5.3.1. This represents a Term Finance facility of Rs. 606.09 million from a syndicate of Habib Bank Limited, Union Bank Limited, Askari Commercial Bank Limited and Bank Al Habib Limited with the participation of Rs. 231.09 million, Rs. 150 million, Rs. 200 million and 25 million respectively. The facility is repayable in 12 equal quarterly installments started from January 2005. Mark up is payable on quarterly basis at simple average of the cut-off yields of last three auctions of six months treasury bills plus 2 % per annum with a floor and ceiling of 4.5 % and 15% respectively. The facility is secured by way of first pari passu charge of Rs. 808.12 million in favour of syndicate on all present and future fixed assets of the Company. 5.3.2. This represents a Term Finance facility of Rs. 293.81 million obtained from a syndicate of Habib Bank Limited and Union Bank Limited with the participation of Rs. 193.81 million and Rs. 100 million respectively. The facility is repayable in 12 equal quarterly installments started from December 2004. Mark up is payable on quarterly basis at simple average of the cut-off yields of last three auctions of six months' treasury bills plus 2 % per annum with a floor and ceiling of 4.5% and 15% respectively. The facility is secured by way of first pari passu charge of Rs. 391.75 million in favour of syndicate on all present and future fixed assets of the Company. 5.3.3. This represents a Term Finance facility of Rs. 4.3 billion from a syndicate of Habib Bank Limited, MCB Bank Limited, Bank of Punjab, Allied Bank Limited and Standard Chartered Bank with the participation of Rs. 1,500 million, Rs. 1,200 million, Rs. 600 million, Rs. 500 million and Rs. 500 million respectively. This facility is repayable in 10 equal biannual installments starting from August 2007. Mark up is payable on quarterly basis at six months' KIBOR plus 1.10 % per annum. The facility is secured by way of first pari passu charge on all the Company's present and future assets and first pari passu equitable mortgage over the Company's immovable properties for an amount of Rs. 5.733 billion in favour of syndicate. 5.3.4. This represents a Term Finance facility of Rs. 3.2 billion from a syndicate of Habib Bank Limited, MCB Bank Limited and Allied Bank Limited with the participation of Rs. 1 billion, Rs. 1 billion, and Rs. 1.2 billion respectively. This facility is repayable in 12 equal biannual installments starting from May 2007. Mark up is payable on quarterly basis at six months' KIBOR plus 1.7 % per annum. The facility is secured by way of first pari passu charge on all the Company's present and future assets and first pari passu equitable mortgage over the Company's immovable properties for an amount of Rs. 4.267 billion in favour of syndicate and additional charge over 85.29% shares of Mustehkam Cement Limited. 6. Deferred liabilities ==================================================================================
2006 2005
Note Rupees Rupees
==================================================================================
Deferred taxation 6.1 1,049,450,237 572,547,942
Provision for gratuity 6.2 19,789,808 17,125,978
Provision for compensated absences 6.3 6,673,078 4,979,874
1,075,913,123 594,653,794
==================================================================================6.1. Deferred tax liability is recognised on the following major temporary differences==================================================================================
2006 2005
Rupees Rupees
==================================================================================
Accelerated depreciation 1,859,265,206 579,801,637
Staff retirement benefit (9,262,010) (7,253,695)
Unabsorbed tax losses (800,552,959) -
(809,814,969) (7,253,695)
1,049,450,237 572,547,942
==================================================================================6.2. Reconciliation of defined benefit plan==================================================================================
2006 2005
Rupees Rupees
==================================================================================
Present value of defined benefit obligation 29,283,467 21,507,734
Net actuarial losses not recognized (9,493,659) (4,381,756)
19,789,808 17,125,978
Movement in net liability recognised
Opening net liability 17,125,978 14,674,259
Expense for the year 6,166,286 3,785,826
Benefits paid (3,502,456) (1,334,107)
Closing net liability 19,789,808 17,125,978
Charge for the defined benefit plan
Current service cost 3,767,626 2,398,294
Interest cost 2,150,773 1,387,532
Actuarial losses recognised 247,887 -
6,166,286 3,785,826
Actuarial Assumptions
Valuation discount rate 10% 10%
Salary increase rate 10% 10%
==================================================================================az/6.316.3. Actuarial valuation of compensated absences has not been carried out since the management believes that the affect of actuarial valuation would not be material.7. Trade and other payables ==================================================================================
Note Rupees Rupees
==================================================================================
Payable to contractors and suppliers 165,634,859 65,579,229
Accrued liabilities 241,373,979 115,208,772
Advances from customers 36,793,685 85,348,634
Security deposits 25,434,214 9,325,500
Retention money 32,953,526 15,513,879
Workers' Profit Participation Fund 7.1 84,034,306 65,183,235
Sales tax payable 28,647,360 23,400,541
Other payables 7.2 27,071,867 27,403,001
Unclaimed dividend 20,445 15,711
641,964,241 406,978,502
==================================================================================7.1. Workers Profit Participation Fund==================================================================================
2006 2005
Rupees Rupees
==================================================================================
Balance at beginning of the year 65,183,234 44,242,508
Allocation for the year 84,034,306 65,183,235
Payment during the year (65,183,234) (44,242,508)
84,034,306 65,183,235
==================================================================================7.2. This includes an amount of Rs 3.37 million (2005: Rs 2.23 million) payable to Bestway (Holdings) Limited (parent company) and Rs 6.40 million (2005: Rs 7.33 million) payable to Bestway Foundation (associated undertaking).==================================================================================
2006 2005
Note Rupees Rupees
==================================================================================
Running finance from banking companies
Habib Bank Limited 8.1 706,910,715 614,990,583
NIB Bank Limited 8.2 51,075,408 -
757,986,123 614,990,583
Short term loans from banking companies
Habib Bank Limited 8.3 190,000,000 -
Foreign Currency Finance from Habib
Bank Limited - 69,753,875
Foreign Currency Finance from NIB
Bank Limited 8.4 162,341,567 68,895,111
352,341,567 138,648,986
1,110,327,690 753,639,569
==================================================================================8.1. This represents the utilised amount of running finance facilities of Rs.750 million for a period of one year (2005: Rs.750 million). Mark up is payable on quarterly basis ranges between one month KIBOR plus 0.5% to 1.5% per annum. These facilities are secured by way of first pari passu hypothecation charge on present and future current assets of the Company for an amount of Rs. 100 million, ranking charge on book debts and movable property of the Company amounting to Rs.150 million and lien on Special US $ account of the Company and a director of the ultimate parent company.8.2. This represents the utilised amount of a facility of Rs. 60 million for a period of one year (2005: Rs. Nil) and carries mark up at the rate of six months' KIBOR plus 1 % payable quarterly. The facility along with the facility in note 8.4 are secured by way of first pari passu charge over present and future current assets of the Company upto Rs. 250 million. 8.3. This represents the utilised amount of the facility of Rs.300 million for a period of one year (2005: Rs. Nil). Mark up is payable on quarterly basis at one month KIBOR plus 1.5% per annum. The facility is secured by way of first hypothecation charge over present and future fixed assets (excluding land and building) of the Company and equitable mortgage charge over land and building ranking pari passu upto a limit of Rs. 762.5 million. 8.4. This represents utilised amount of US$ 2.696 million (2005: US $ 1.158 million) from a facility equivalent to Rs. 225 million extended for import of raw material. Mark up is payable on maturity of the utilised portion of the facility at the rate of six months' LIBOR plus 1.5 %. 9. Contingencies and commitments ==================================================================================
2006 2005
Rupees Rupees
==================================================================================
In respect of letters of credit and contracts for 2,950,117,166 2,262,342,904
Chakwal Plant
In respect of insurance guarantees against excise - 34,500,000
duty on exports
616,555,933 150,828,195
In respect of bank guarantees
==================================================================================9.1. All bank guarantees are secured by way of charge over fixed assets of the Company.10. Property, Plant and Equipment ====================================================================================================================================================================================
Plant and Other Furniture and Office
Free hold land lease hold land Buildings machinery Quarry Equipment Equipment Fixture Vehicles equipment Total
Rupees
====================================================================================================================================================================================
Cost
Balance as at July 01, 2004 78,844,518 30,694,261 1,090,588,529 3,156,012,535 295,596,912 30,252,908 11,108,830 35,606,884 14,353,905 4,743,059,282
Additions during the year 63,872,139 14,560 5,952,376 53,953,179 - 5,432,916 1,508,595 46,782,779 8,106,226 185,622,770
Disposals - - - - - - - 1,681,395 12,000 1,693,395
Balance as at June 30, 2005 142,716,657 30,708,821 1,096,540,905 3,209,965,714 295,596,912 35,685,824 12,617,425 80,708,268 22,448,131 4,926,988,657
Balance as at July 01, 2005 142,716,657 30,708,821 1,096,540,905 3,209,965,714 295,596,912 35,685,824 12,617,425 80,708,268 22,448,131 4,926,988,657
Additions during the year 271,380,831 6,182,751 2,187,855,777 3,997,878,259 249,294,477 10,789,887 31,091,131 38,040,385 15,703,324 6,808,216,822
Disposals - - - - - - - (3,852,767) (3,852,767)
Transfers - - - - - - - - (511,500) (511,500)
Balance as at June 30, 2006 414,097,488 36,891,572 3,284,396,682 7,207,843,973 544,891,389 46,475,711 43,708,556 114,895,886 37,639,955 11,730,841,212
Depreciation
Balance as at July 01, 2004 - 8,177,972 271,703,735 1,084,214,938 163,650,744 15,950,694 5,063,664 21,238,285 7,558,211 ( 577,558,243
Depreciation charge for the ye - 1,072,898 41,241,857 123,968,510 19,791,925 2,506,604 755.376 12,179,159 2,233,758 203,750,087
Disposals - - - - - - - (1,425,813) (1,800) (l,427,613)
Balance as at June 30 2005 - 9,250,870 312,945,592 1,208,183,448 183,442,669 18,457,298 5,819,040 31,991,631 9,790,169 1,779,880,717
Balance as at July 01, 2005 - 9,250,870 312,945,592 1,208,183,448 183,442,669 18,457,298 5,819,040 31,991,631 9,790,169 1,779,880,717
Depreciation charge for the year 1,129,366 41,380,383 124,143,033 17,461,918 2,786,750 1,109,619 11,054,974 2,397,896 201,463,939
Disposals - - - - - - - (2,566,108) (2,566,108)
Transfers - - - - - - - - (76,725) (76,725)
Balance as at June 30,2006 - 10,380,236 354,325,975 1,332,326,481 200,904,587 21,244,048 6,928,659 40,480,497 12,111,340 1,978,701,823
Carrying value -2005 142,716,657 21,457,951 783,595,313 2,001,782,266 112,154,243 17,228,526 6,798,385 48,716,637 12,657,962 3,147,107,940
Carrying value -2006 414,097,488 26,511,336 2,930,070,707 5,875,517,492 343,986,802 25,231,663 36,779,897 74,415,389 25,528,615 9,752,139,389
Rates of depreciation - 30 yrs 5% 5% 15% 10-15% 10% 20% 15%
====================================================================================================================================================================================10.1. Depreciation on property, plant and equipment has been allocated as follows:=========================================================================================
2006 2005
Rupees Rupees
=========================================================================================
Cost of sales 189,091,756 194,053,006
Administration and general expenses 4,127,639 2,063,680
Distribution cost 2,031,807 2,063,680
Depreciation on assets used at Chakwal project (Capitalised) 6,212,737 5,569,721
201,463,939 203,750,087
=========================================================================================10.2. Disposal of property, plant and equipment===================================================================================================================================
Cost Book Sale Gain Mode of
Description Rupees Value Proceeds Rupees Disposal Sold to
Rupees Rupees
===================================================================================================================================
Vehicles
Suzuki Khyber 403,591 105,798 375,000 269,202 Insurance Claim Int. General Insurance Co. Islamabad
Mazda Double Cabin 948,366 101,830 367,200 265,370 By Negotiation Ch. Mohammad Saleem, Islamabad
Honda Civic 1,117,160 714,982 714,982 - By Negotiation Mr. Mohammad Akram, Islamabad
Suzuki Mehran 383,210 196,203 196,203 - By Negotiation MAP Rice Mills (Pvt) Limited,
associated company
Suzuki Margalla 487,770 81,834 181,450 99,616 By Negotiation Mr. Imran Shah, Islamabad
Suzuki Margalla 512,670 86,012 200,000 113,988 By Negotiation Mr. Mohammad Zafar, Islamabad
2006 3,852,767 1,286,659 2,034,835 748,176
2005 1,647,795 242,434 620,300 377,866
===================================================================================================================================11. Capital work in progress===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Opening balance 1,922,261,302 34,654,972
Additions during the year 11.1 5,109,546,244 1,928,907,033
7,031,807,546 1,963,562,005
Transferred to property, plant and equipment:
Plant and machinery and other equipment (3,951,141,711) (41,300,703)
Buildings and civil works (2,137,915,700) -
Lease hold land (6,182,751) -
(6,095,240,162) (41,300,703)
936,567,384 1,922,261,302
===================================================================================11.1. This includes capitalised borrowing cost amounting to Rs 435.2 million at capitalisation rate of 9.31% p.a. (2005: Rs 32.7 million at 9% p.a.).11.2. Break up of Capital work in progress is as follows: ===================================================================================
2006 2005
Rupees Rupees
===================================================================================
Plant and machinery and other equipment 154,081,138 623,374,341
Building and civil works - 713,294,718
Advances for Chakwal project 782,486,246 384,011,510
Stores and spares held for Chakwal project - 195,397,982
Lease hold land - 6,182,751
936,567,384 1,922,261,302
===================================================================================12. Investment property===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Opening balance 563,803,179 -
Additions - 563,803,179
Transferred to owner occupied property (292,465,594) -
Gain on remeasurement of investment
property to fair value 5,817,871 -
12.1 277,155,456 563,803,179
===================================================================================12.1. This represents the proportionate share of the Company's building premises in Islamabad which has been rented out and accounted for as investment property. Fair value is determined by a qualified independent valuer using recent market value.13. Long term investments ===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Associated company-at cost (quoted) 13.1 1,772,546,770 1,862,802,950
Subsidiary company-at cost (quoted) 13.2 3,212,343,273 -
Held to maturity investment-at amortised cost 13.3 39,035 17,000
4,984,929,078 1,862,819,950
===================================================================================13.1. United Bank Limited (UBL)===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
49,533,750 shares (2005: 39,627,000 shares)
of Rs. 10 each (Market value Rs 137.75
per share). Equity held 7.65% (2005: 7.65%) 13.1.1 1,862,802,950 1,862,802,950
Less: Transferred to available for sale investment
2,400,000 shares (2005: Nil) of Rs 10 each (90,256,180) -
1,772,546,770 1,862,802,950
===================================================================================13.1.1. This represents 7.65% share in the equity of 647.5 million shares of Rs. 10 each in UBL, an associated company. Bestway Group as a whole controls 25.5 % equity in UBL. Increase in number of shares represent bonus shares received during the year. Pursuant to the change in the Company's intention, 2.4 million shares in UBL have been classified as available for sale investment and are carried at fair value.13.2. Mustehkam Cement Limited (MCL) ===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
10,548,298 shares (2005: Nil) of Rs. 10 each
Market value Rs 150.55 per share (2005: Rs 29.50) 13.2.1 3,212,343,273 -
Equity held 85.62% (2005: Nil)
===================================================================================13.2.1. This includes 10,507,934 shares (representing 85.29% of MCL) acquired by the Company at Rs. 305 per share through Privatisation Commission of Pakistan.13.3. Held to maturity investment-at amortised cost ===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Defence Saving Certificates (DSCs) 39,035 17,000
14.Long term advances and deposits
Advance for gas pipe line 14.1 40,030,000 40,030,000
Security deposits 14.2 62,170,847 24,766,048
102,200,847 64,796,048
===================================================================================14.1. This represents a long term advance paid to Sui Northern Gas Pipelines Limited to facilitate gas pipeline laying for the Company's plant located at Chakwal. The advance alongwith mark up at the rate of 1.5% per annum is recoverable in 10 equal yearly installments starting from June 2007. This amount was previously included in CWIP and now has been reclassified as long term advances for better presentation.14.2. This includes security deposits amounting to Rs. 56.145 million (2005: Rs 18.74 million) given for the electricity connections for the plants. 15. Stores, spares and loose tools ===================================================================================
2006 2005
Rupees Rupees
===================================================================================
Stores, spares and loose tools 763,242,300 505,638,046
Stores and spares in transit 32,004,479 72,512,166
795,246,779 578,150,212
===================================================================================16. Stock in trade===================================================================================
2006 2005
Rupees Rupees
===================================================================================
Raw and packing material 52,677,996 22,001,536
Work in process 86,458,156 52,563,860
Finished stock 11,133,155 18,874,588
150,269,307 93,439,984
===================================================================================17. Available for sale investment===================================================================================
2006 2005
Rupees Rupees
===================================================================================
2,400,000 shares (2005: Nil)
of UBL at Rs 10 each 90,256,180 -
Surplus on remeasurement of available
for sale investment to fair value 240,343,820 -
330,600,000 -
===================================================================================18. Advances, deposits, prepared and other receivables===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Due from Directors - secured - 338,564
Due from executives - unsecured,
considered good 1,005,665 1,340,452
Advances to suppliers and
contractors - considered good 149,344,184 77,372,510
Due from group company - unsecured 18.1 1,536,785 -
Short term security deposits 2,408,549 2,236,099
Prepayments 22,704,040 1,534,021
Accrued profits 2,586,525 306,784
Claims and tax refunds due from the Government:
Income tax claims 18.2 43,567,715 35,364,969
Excise duty 727,198 1,358,250
Insurance claims receivable - considered good 3,615,585 -
Other receivables-considered good 8,642,030 18,458,958
236,138,276 138,310,607
===================================================================================18.1. This represents amount due from MCL (a subsidiary company) and carries mark up at Company's weighted average borrowing rate of 9.31% p.a.18.2. This includes an amount of Rs 14.70 million pertaining to tax suffered by the Company on a sale and lease back transaction for which the claim of refund has been lodged with taxation authorities. 19. Bank balances ===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Current accounts 141,731,296 31,723,054
Deposit accounts 19.1 277,830,530 573,913,385
419,561,826 605,636,439
===================================================================================19.1. This includes Rs. 140.669 million (2005: Rs. 18.960 million) held in current account maintained with UBL - an associated company.19.2. This includes an amount of US$ 4.317 million (2005: US $ 4.483 million) in US Dollar Saving Account out of which US $ 4 million (2005: US $ 4.39 million) are under lien against financing arrangements as explained in notes 5.1.1 and 8.1. 20. Sales-net ===================================================================================
2006 2005
Rupees Rupees
===================================================================================
Gross sales 6,131,141,365 4,905,886,078
Less:
Sales tax (703,592,516) (534,639,159)
Excise duty (758,725,665) (690,878,850)
Net sales 4,668,823,184 3,680,368,069
Less: Rebates and discounts (125,014,861) (144,526,356)
4,543,808,323 3,535,841,713
===================================================================================21. Cost of sales===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Raw and packing materials consumed 321,622,880 280,103,827
Rent, rates and taxes 313,512 997,320
Fuel and power 1,531,411,245 1,323,138,883
Stores and spares consumed 80,449,940 51,336,853
Repairs and maintenance 12,125,613 5,237,277
Salaries, wages and benefits 21.1 86,995,240 63,314,852
Support services 27,806,239 18,796,098
Insurance 5,228,699 5,120,729
Equipment rental 6,884,283 5,880,789
Utilities 1,681,423 1,224,962
Traveling, conveyance and subsistence 8,675,810 5,329,141
Communication expenses 1,679,823 1,501,017
Printing and stationery 1,296,802 820,892
Entertainment 956,213 199,625
Depreciation 10.1 189,091,756 194,053,006
Miscellaneous expenses 1,666,193 653,464
2,277,885,671 1,957,708,735
Opening work in process 52,563,860 77,952,781
Closing work in process (86,458,156) (52,563,860)
Cost of goods manufactured 2,243,991,375 1,983,097,656
Opening finished stocks 18,874,588 22,668,650
Closing finished stocks (11,133,155) (18,874,588)
Cost of sales including trial run sales 2,251,732,808 1,986,891,718
Less: Cost of sales during trial run (1,428,290) -
Cost of sales 2,250,304,518 1,986,891,718
===================================================================================21.1. Salaries, wages and benefits include staff retirement benefits amounting to Rs. 2.77 million (2005: Rs. 3.278 million)22. Administration and general expense ===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Salaries, wages and benefits 22.1 58,208,720 50,932,881
Rent, rates and taxes 2,782,315 4,604,220
Repairs and maintenance 1,543,340 488,845
Insurance 432,258 45,631
Utilities 1,475,704 538,593
Traveling, conveyance and subsistence 7,656,248 5,776,683
Communication expenses 1,457,059 1,332,395
Printing and stationery 682,735 690,577
Entertainment 768,552 205,229
Advertisements 4,227,673 2,073,696
Charitable donations 22.2 30,946,329 22,703,215
Legal and professional charges 4,831,639 2,898,755
Fees and subscription 2,786,913 2,252,790
Management Charges 22.3 1,190,000 -
Equipment rental 480,000 -
Auditors' remuneration 22.4 870,500 390,353
Depreciation 10.1 4,127,639 2,063,680
Miscellaneous expenses 484,449 66,788
124,952,073 97,064,331
===================================================================================22.1. Salaries, wages and benefits include staff retirement benefits amounting to Rs. 3.34 million (2005: Rs. 0.878 million).22.2. A provision at 2.5% of the accounting profit after tax for an amount of Rs. 30.646 million has been made for donation to Bestway Foundation (2005: Rs.22.70 million). The chief executive and directors are among the trustees of the Foundation. None of the trustees or their spouses have a beneficial interest in the Foundation. 22.3. This represents management charges of parent company. 22.4. Auditors' remuneration ===================================================================================
2006 2005
Rupees Rupees
===================================================================================
KPMG Taseer Hadi & Co.
Audit fee 500,000 -
Taxation services 100,000 -
Khalid Majid Rahman Sarfaraz
Rahim Iqbal Rafiq
Audit fee - 160,000
Half yearly audit 55,000 55,000
Taxation services 215,500 173,938
Out of pocket expenses - 1,415
870,500 390,353
===================================================================================23. Distribution cost===================================================================================
2006 2005
Note Rupees Rupees
===================================================================================
Salaries, wages and benefits 8,871,300 6,824,872
Support services 23.1 481,486 319,181
Rent, rates and taxes 2,518,929 1,898,728
Repairs and maintenance 466,510 292,900
Utilities 636,796 601,836
Traveling, conveyance and subsistence 1,408,277 1,295,355
Communication expenses 1,245,025 1,374,191
Printing and stationery 800,872 1,036,502
Entertainment 308,851 434,706
Advertising and promotion 131,180 351,049
Depreciation 2,031,807 2,063,680
Fees and subscription 10.1 1,126,224 1,133,806
Freight and handling 4,138,550 3,079,757
Miscellaneous expenses 397,590 169,753
24,563,397 20,876,316
===================================================================================23.1. Salaries, wages and benefits include staff retirement benefits amounting to Rs. 0.472 million (2005: Rs. 0.283 million). 24. Finance cost ===================================================================================
2006 2005
Rupees Rupees
===================================================================================
Finance cost on long term finance 416,622,907 107,333,658
Finance cost on short term finance 46,398,419 27,411,919
Bank charges and commissions 5,705,777 4,891,571
468,727,103 139,637,148
===================================================================================25. Other operating income ===================================================================================
2006 2005
Rupees Rupees
===================================================================================
Income from financial assets
Profit on deposit accounts 4,144,860 4,692,612
Exchange (loss)/ gain (2,049) 6,415,008
4,142,811 11,107,620
Income from assets other than financial
Assets Gain on disposal of fixed assets 748,176 375,366
Dividend income from UBL (associated company) 99,067,500 59,440,500
Rental income from investment property 16,660,400 -
Surplus on remeasurement of investment
property to fair value 5,817,871 -
Management fee from related parties 12,270,000 670,000
Other 533,914 139,539
139,240,672 71,733,025
===================================================================================26. Taxation ===================================================================================
2006 2005
Rupees Rupees
===================================================================================
Current 27,712,124 26,927,192
Deferred 476,902,296 340,162,986
504,614,420 367,090,178
===================================================================================26.1. Major Components of Tax ExpenseNumerical reconciliation between tax expense and product of accounting profit multiplied by the applicable tax rate is as follows ===================================================================================
2006 2005
Rupees Rupees
===================================================================================
Accounting profit 1,730,467,597 1,297,921,990
Applicable tax rate 35% 35%
605,663,659 454,272,697
Tax effects of:
Accelerated tax depreciation (1,279,463,569) 4,964,627
Income taxable under presumptive tax (88,302,703) (92,899,575)
Tax effect of exempt income (8,730,096) (2,475,857)
Tax effect of low rates on certain income (29,720,250) (17,832,150)
Unabsorbed tax losses available
against future tax profits 800,552,959 (346,029,742)
Recognition of tax impact on
temporary differences 476,902,296 340,162,986
Minimum tax 27,712,124 26,927,192
504,614,420 367,090,178
===================================================================================Provision for minimum tax at half a percent of turnover has been made in accordance with section 113 of the Income Tax Ordinance, 2001 due to brought forward and assessed tax losses of the Company.27. Remuneration of the chief executive, directors and executives The aggregate amounts charged in the financial statements for the year with respect to remuneration, including benefits and perquisites, were as follows: ======================================================================================================================
Chief Executive Directors, including chairman Executives
Rupees
2006 2005 2006 2005 2006 2005
======================================================================================================================
Managerial remuneration
and allowances 18,000,000 18,000,000 31,674,979 28,403,218 15,258,745 6,965,634
Bonus - - 2,117,732 1,101,579 4,494,690 718,634
Company's contribution
to gratuity fund - - 630,097 1,061,800 947,142 1,702,548
Compensated absences - - 115,552 457,304 825,728 419,356
18,000,000 18,000,000 34,538,360 31,023,901 21,526,305 9,806,172
Number of persons 1 1 6 6 13 6
======================================================================================================================27.1. The Directors excluding chairman and the executives are also provided with medical insurance facility as per their entitled limits.28. Transactions with related parties The Company is a subsidiary of Bestway (Holdings) Limited, UK, therefore all subsidiaries and associated undertakings of parent company are related parties of the Company. Other related parties comprise of subsidiary, associate company, directors, key management personnel, entities with common directorships and entities over which the directors are able to exercise influence. Balances with related parties are shown elsewhere in the notes to the financial statements. The transactions with related parties are as follows: ==============================================================================
2006 2005
Rupees Rupees
==============================================================================
Transactions with parent company
Management charges (expense) 1,190,606 1,142,003
Dividend paid 144,896,770 131,733,419
Issuance of bonus shares 144,896,770 131,733,419
Transactions with subsidiary company
Purchase of cement 43,826,652 -
Sale of cement 1,812,550 -
Advances given 433,536,002 -
Management charges (income) 11,550,000 -
Markup on advances given 6,586,476 -
Recoveries made 450,135,693 -
Transactions with associates undertakings
under common directorship
Management charges (income) 720,000 670,000
Purchase of husk - 2,967,102
Office rent 2,689,309 4,610,244
Service/bank charges 2,465,863 1,782,735
Charitable donations 30,646,329 22,709,596
Dividend received 99,067,500 59,440,500
Sale of vehicle 196,203 -
============================================================================== Transactions with key personnelRemuneration to chief executive and directors (note: 27) 29. Financial Assets and Liabilities =========================================================================================================================================================================================================================
Particulars Interest / Markup bearing Non-interest/Markup bearing
Effecting Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Total
rate of upto after one year and after two years and after three years and after four years and up to
internal one year upto two years upto three years upto four years upto five years after five year Sub total one year after one year Sub total
Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees
=========================================================================================================================================================================================================================
Financial assets
Long term and investments - - - - 39,035 39,035 - - - 39,035
Long term, advances
end deposits 1.50% - 4,003,000 4,003,000 4,003,000 4,003,000 24,018,000 40,030,000 - 62,170,847 62,170,847 102,200,847
Trade debts - - - - - - - 33,190,955 - 33,190,955 33,190,955
Available for sale investments - - - - - - - 330,600,000 - 330,600,000 330,600,000
Advances, deposits and
other receivables
due from executives 5.00% - - - - - - - 1,005,665 - 1,005,665 1,005,665
due from group companies 9.30% 1,536,785 - - - - - 1,536,785 - - - 1,536,785
security deposits - - - - - - 2,408,549 - 2,408,549 2,408,549
- Accrued profit - - - - - - - 2,586,525 - 2,586,525 2,586,525
Insurance claim receivable - - - 3,615,585 3,615,585 3,615,585
Other receivables - - - - - - - 8,642,030 - 8,642,030 8,642,030
Bank balances 1-4.5% 277,830,530 - - - - - 277,830,530 141,731,296 - 141,731,296 419,561,826
June 30, 2006 279,547,315 4,003,000 4,003,000 4,003,000 4,042,035 24,018,000 319,436,350 523,780,605 62,170,847 585,951,452 905,387,802
Financial liabilities
Long term financing 8-11% 666,633,334 2,728,832,353 2,103,333,334 1,453,333,333 1,453,333,333 1,720,000,000 10,125,465,687 - - - 10,125,465,687
Short term borrowings 8-11% 1,110,327,690 - 1,110,327,690 - - - 1,110,327,690
Trade and other payables - - - - - - - 605,170,556 - 605,170,556 605,170,556
June 30, 2006 1,776,961,024 2,728,832,353 2,103,333,334 1,453,333,333 1,453,333,333 1,720,000,000 11,235,793,377 605,170,556 - 605,170,556 11,840,963,933
Financial assets
Investments - - - - 17,000 17,000 - - - 17,000
Long term advances
and deposits - - 4,003,000 4,003,000 4,003,000 28,021,000 40,030,000 - 24,766,048 24,766,048 64,796,048
Trade debts - - - - - - - 47,691,775 - 47,691,775 47,691,775
Advances, deposits end
other receivables -
- due from
employees/directors 5.00% 1,488,460 - - - - - 1,488,460 190,556 - 190,556 1,679,016
- security deposits - - - - - - - 2,236,099 - 2,236,099 2,236,099
- Accrued profit - - - - - - - 306,784 - 306,784 306,784
- Others - - - - - - - 18,458,958 - 18,458,958 18,458,958
Bank balances 1-4.5% 573,913,385 - - - - - 573,913,385 31,723,054 - 31,723,054 605,636,439
June 30, 2005 575,401,845 - 4,003,000 4,003,000 4,003,000 28,038,000 615,448,845 100,607,226 24,766,048 125,373,274 740,822,119
Financial Liabilities
Long term financing 7-10% 469,966,667 399,966,665 2,173,856,021 575,000,000 - - 3,618,789,353 - - - 3,618,789,353
Shoal term borrowings 7-10% 753,639,569 - - - - - 753,639,569 - - - 753,639,569
Trade and
other payables - - - - - - 321,629,867 - 321,629,867 321,629,867
Dividend - - - - - - - - - -
June 30, 2005 1,223,606,236 399,966,665 2,173,856,021 575,000,000 - - 4,372,428,922 321,629,867 - 321,629,867 4,694,058,789
=========================================================================================================================================================================================================================29.1. CREDIT RISKThe Company believes that it is not exposed to major concentration of credit risk. To manage exposure to the risk, the company applies credit limits and monitors debt on continuous basis. 29.2. FOREIGN EXCHANGE RISK MANAGEMENT Foreign currency risk arises mainly where payables exist due to transactions with foreign undertakings. The Company is partially hedged against foreign currency payables through investment in foreign currency saving accounts for an amount of US $4.3 million. 29.3. FAIR VALUE OF ASSETS The carrying value of assets and liabilities reflected in the financial statements approximates their fair value except for long term investment, which are stated at cost (Note 13). 29.4. INTEREST/MARKUP RATE RISK EXPOSURE The Company is exposed to interest/markup rate risk on some of the financial obligations for an amount of Rs 11.2 billion. The rates of interest/markup and their maturities are given in the respective notes. 29.5. LIQUIDITY RISK Liquidity risk represents an enterprise's inability in raising foods to meet commitments. The Company manages its liquidity position to ensure availability of funds and to take appropriate measures for new requirements. 30. Earnings per share (basic and diluted) ========================================================================================
2006 2005
========================================================================================
Profit after tax (Rs.) 1,225,853,177 930,831,812
Number of ordinary shares in issue
(including bonus shares) 234,098,161 234,098,161
Earnings per share - basic and diluted (Rupees) 5.24 3.98
========================================================================================The number of ordinary shares outstanding at June 30, 2005 have been adjusted to reflect the bonus shares issued during 2005-2006.31. Plant capacity and production of clinker ========================================================================================
Tonnes Tonnes
========================================================================================
Available capacity Hattar 1,170,000 1,170,000
Chakwal 1,710,000 -
Actual production Hattar 1,097,334 1,115,694
Chakwal 32,673 -
========================================================================================Decrease in production at Hattar plant was due to planned shut down of plant for modifications.Trial production at Chakwal plant was started on May 27, 2006 while the commercial production commenced on June 25, 2006. 32. General /hjs232.1. These financial statements were authorized for issue by the Board of Directors of the Company in their meeting held on September 30, 2006. 32.2. Figures have been rounded off to the nearest rupee. 32.3. The Board of Directors of company in meeting held on 30th September, 2006 proposed final cash dividend of Rs. 1 per share and stock dividend of 10% i.e. 1 bonus share for every 10 shares held. The final dividend shall be recorded in the financial statements for the next financial year as required by international accounting standard 10: 'Events after the balance sheet date. |