| Maple Leaf Cement Factory Ltd - 2005 |
======================================================================================== BALANCE SHEET AS AT JUNE 30, 2005 ======================================================================================== 2005 2004 Notes (Rupees in thousand) ======================================================================================== SHARE CAPITAL AND RESERVES Authorised capital 5.1 5,000,000 2,377,647 Issued, subscribed and paid up capital 5.2 3,248,844 1,804,913 Reserves 6 2,704,922 1,560,423 Reserve for issue of bonus shares 270,737 - Unappropriated profit 56,393 332,208 6,280,896 3,697,544 NON-CURRENT LIABILITIES Redeemable Capital 7 41,650 124,950 Long Term Loans 8 2,157,706 2,061,737 Deferred Liability for Vacation Benefits 9 8,513 7,760 Deferred Taxation 10 328,571 - Long Term Deposits 6,572 7,182 2,543,012 2,201,629 CURRENT LIABILITIES Current portion of : - redeemable capital 7 83,300 83,300 - long term loans 8 434,030 434,030 Short term finances 12 589,843 274,611 Trade and other payables 13 432,048 307,511 Accrued profit and interest/ mark-up 14 38,646 23,154 Taxation 15 4,005 65,829 Dividends 16 13,627 - 1,595,499 1,188,435 Contingencies and Commitments 17 10,419,407 7,087,608 NON-CURRENT ASSETS Property, plant and equipment 18 8,462,382 5,562,682 Investment 19 5,000 5,000 Deferred taxation 10 - 10,237 Long term loans to employees 20 5,824 6,349 Long term deposits and prepayments 21 6,142 4,074 8,479,348 5,588,342 CURRENT ASSETS Stores, spares and loose tools 22 1,100,967 941,544 Stock-in-trade 23 183,217 100,145 Trade debts - unsecured considered good 92,597 87,104 Loans, advances, deposits, prepayments and other receivables 24 193,476 147,202 Cash and bank balances 25 369,802 1,940,059 1,499,266 10,419,407 7,087,608 ======================================================================================== ======================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2005 ======================================================================================== 2005 2004 Notes (Rupees in thousand) ======================================================================================== Sales 26 4,290,734 Cost of Sales 27 2,962,802 2,227,571 Gross Profit 1,327,932 1,148,228 Selling, Administrative and General Expenses 28 58,902 57,462 Operating Profit 1,269,030 1,090,766 Other Income 29 18,097 11,133 1,287,127 1,101,899 Finance Cost 30 205,677 310,839 Workers' (Profit) Participation Fund 13.3 54,072 39,553 259,749 350,392 Profit Before Taxation 1,027,378 751,507 TAXATION Current 15 (38,880) 17,325 Deferred 10 338,808 246,710 299,928 264,035 Profit After Taxation 727,450 487,472 Rupees Basic Earnings Per Share 34.1 3.26 2.40 Diluted Earnings Per Share 34.2 3.22 Not Applicable ========================================================================================-- The annexed notes form an integral part of these financial statements. -- Appropriations have been reflected in the statement of changes in equity. ========================================================================================
CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2005
========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year - before taxation 1,027,378 751,507
ADJUSTMENTS FOR:
Depreciation 341,094 334,383
Gain on disposal of operating fixed assets (2,070) (1,617)
Deferred liability for vacation benefits 3,028 2,871
Financial charges 205,677 310,839
Profit on bank deposits (1,915) (3,124)
Dividend income (738) -
Exchange fluctuation gain - (804)
Provision for obsolete stores and spares - 3,400
Cash inflow from operating activities 1,572,454 1,397,455
before working capital changes
(INCREASE) / DECREASE IN CURRENT ASSETS
Stores, spares and loose tools (159,423) (379,583)
Stock-in-trade (83,072) (1,922)
Trade debts (5,493) 6,123
Advances, deposits, prepayments and
other receivables (excluding accrued profit) (46,147) 516,744
Increase in trade and other payables 124,537 79,200
(1 69,598) 220,652
Cash inflow from operating activities before taxation 1,402,856 1,618,107
Taxes paid (22,945) (8,308)
Vacation benefits paid (2,275) (1,795)
Net cash inflow from operating activities after taxation 1,377,636 1,608,004
CASH FLOW FROM INVESTING ACTIVITIES
Fixed capital expenditure (3,240,856) (357,062)
Sale proceeds of fixed assets 2,132 2,175
Long term loans, deposits and prepayments (1,543) 1,012
Profit on bank deposits received 1,789 2,183
Dividend income 738 -
Net Cash Outflow From Investing Activities (3,237,740) (351,692)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares 1,624,423 -
Proceeds from issue of preference shares 541,474 -
Write-off of expenses incurred on (27,499) -
ISSUE OF ORDINARY AND PREFERENCE SHARES
Term finance certificates redeemed (83,300) (41,700)
Long term loans less repayments 95,969 (504,722)
Long term deposits from stockists - net (610) 67
Short term finances - net 315,232 (225,494)
Financial charges paid (190,185) (392,137)
Dividend paid (268,869) -
Net Cash Inflow/ (Outflow) From Financing Activities 2,006,635 (1,163,986)
Net Increase in Cash and Cash Equivalents 146,531 92,326
Cash and Cash Equivalents at the begging of the year 223,271 130,945
Cash and Cash Equivalents at the end of the year 369,802 223,271
========================================================================================
========================================================================================================================================= STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2005 ========================================================================================================================================= Reserve (Accumulated Capital for Issue Loss)/ Share Share Redemption Revenue of Bonus Unappropriated Notes Capital Premium Reserve Reserve Shares Profit Total ========================================================================================================================================= Balance as at June 30, 2003 1,804,913 1,460,423 - - - (55,264) 3,210,072 Profit for the year ended June 30, 2004 - - - - - 487,472 487,472 Transfer to revenue reserve - - - 100,000 - (100,000) - Proposed final dividend @ Rs 1.50 per share (2003: Rs Nil) - - - . - (270,737) (270,737) Balance as at June 30, 2004 as reported 1,804,913 1,460,423 - 100,000 - 61,471 3,426,807 Effect of change in accounting policy 16.1 Final dividend for the year ended June 30, 2004 declared subsequent to the year-end - - - - - 270,737 270,737 Balance as at June 30, 2004 as restated 1,804,913 1,460,423 - 100,000 - 332,208 3,697,544 Final dividend for the year ended June 30, 2004 - - - - - (270,737) (270,737) Nominal value of ordinary shares issued 902,457 - - - - - 902,457 Premium received on issue of ordinary shares - 721,966 - - - - 721,966 Write-off of expenses incurred on issue of ordinary and preference shares - (27,499) - - - - (27,499) Nominal value of preference shares issued 541,474 - - - - - 541,474 Profit for the year ended June 30, 2005 - - - - - 727,450 727,450 Transfer to capital redemption reserve - - 20,769 - - (20,769) - Transfer to reserve for issue of bonus shares - (270,737) - - 270,737 - - Transfer to revenue reserve - - - 700,000 - (700,000) - Dividend on preference shares for the year ended June 30, 2005 - - - - - (11,759) (11,759) Balance as at June 30, 2005 3,248,844 1,884,153 20,769 800,000 270,737 56,393 6,280,896 =========================================================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2005 1. CORPORATE INFORMATION Maple Leaf Cement Factory Limited was incorporated in Pakistan on 13 April, 1960 under the Companies Act, 1913 (now the Companies Ordinance, 1984) as a public company limited by shares and was listed on stock exchanges in Pakistan on August 17, 1994. The registered office of the Company is situated at 42 - Lawrence Road, Lahore, Pakistan. The company is a subsidiary of Kohinoor Textile Mills Limited and is engaged in production and sale of cement. 2. 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 (IASs) 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 take precedence. 2.1. Substitution of Fourth Schedule to the Companies Ordinance, 1984. The SECP, during the current year, substituted the Fourth Schedule to the Companies Ordinance, 1984 which is effective from financial year ending on or after July 5, 2004. This substitution has resulted in the change in accounting policy pertaining to capitalisation of exchange differences (note 4.7) and recognition of ordinary dividend proposed subsequent to the year-end (note 16.1). 3. BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention, except for: -- modification of foreign currency translation adjustments as stated in note 4.7 and -- recognition of employee retirement benefits at present value. 4. SIGNIFICANT ACCOUNTING POLICIES 4.1. STAFF RETIREMENT BENEFITS (a) Defined contribution plan The company operates a defined contributory approved provident fund for all its employees. Equal monthly contributions are made both by the company and employees at the rate of 10% of the basic salary to the fund. (b) Defined benefit plan The company also maintains an approved gratuity fund under which the gratuity is payable on cessation of employment, subject to a minimum qualifying period of service. The contributions are made to the fund in accordance with the actuary's recommendations based on the actuarial valuation of the fund as on June 30, 2005, using projected unit credit method. Actuarial gains / losses are recognised in accordance within the limits set-out by IAS 19 [(Employee Benefits-revised 2000); refer contents of note 31. (c) Liability for employees' compensated absences The company accounts for the liability in respect of employees' compensated absences in the year in which these are earned. Provision to cover the obligations is made using the current salary level of employees. 4.2. TAXATION (a) Current Provision for current taxation is based on taxable income at the current rates of taxation after taking into account tax credits and tax rebates available, if any, or minimum tax at the rate of 0.5% of turnover, whichever is higher. (b) Deferred Deferred tax is recognised using the balance sheet liability method in respect of all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilised. The carrying amount of all deferred tax assets is reviewed at each balance sheet date and adjusted to the appropriate extent, if it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax assets to be utilised. Deferred tax liability is based on the expected tax rates applicable at the time of reversal. 4.3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, except freehold land and capital work-in-progress, are stated at cost less accumulated depreciation and impairment losses. Freehold land and capital work-in-progress are stated at cost. Cost in relation to certain plant & machinery represents historical cost, exchange differences referred to in note 4.7 and the cost of borrowings during the construction period in respect of loans taken for the specific projects. Transactions relating to jointly owned assets with Pak American Fertilizers Limited (PAFL), as stated in note 18.5, are recorded on the basis of advices received from the housing colony. Depreciation is calculated at the rates specified in note 18.1 on reducing balancing method except that straight-line method is used for the plant & machinery and buildings relating to dry process plant after deducting residual value. The carrying values of property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written-down to their recoverable amount. Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements are capitalised. Gains / losses on disposal of property, plant and equipment, if any, are taken to profit & loss account. 4.4. INVESTMENTS IN EQUITY INSTRUMENTS OF ASSOCIATED COMPANIES Investments in associates are carried at cost. Impairment losses are recognised whenever the carrying amount of investments exceeds its recoverable amount. An impairment loss is recognised in income currently. Gain / loss on sale of investments is included in income currently. 4.5. STORES, SPARES AND LOOSE TOOLS These are valued at moving average cost while items considered obsolete are carried at nil value. Items-in-transit are valued at cost comprising invoice value plus other charges incurred thereon. 4.6. STOCK-IN-TRADE Stock of raw materials, work-in-process and finished goods are valued at lower of average cost and net realisable value. Cost of work-in-process and finished goods represents direct cost of materials, labour and appropriate portion of production overheads. Net realisable value signifies the ex-factory sale price less expenses and taxes necessary to be incurred to make the sale. 4.7. FOREIGN CURRENCY TRANSLATIONS Transactions in foreign currencies are accounted for in Pak Rupees at the exchange rates prevailing on the date of transactions. Assets and liabilities in foreign currencies are translated into Pak Rupees at the exchange rates prevailing on the balance sheet date except where forward exchange rates are booked, which are translated at the contracted rates. The company, during the current year, in pursuance of the substituted Fourth Schedule to the Companies Ordinance, 1984 has changed its accounting policy with respect to capitalisation of exchange differences. Previously, exchange differences on loans / borrowings utilised for the acquisition of fixed assets were capitalised and all other exchange differences were charged to income. The company now charges all exchange differences to profit & loss account. The change in accounting policy has no effect on the amounts reported for the current year. 4.8. BORROWING COSTS Borrowing costs incurred on finances obtained for acquisition of fixed assets are capitalised upto the date of commissioning of the respective assets. All other borrowing costs are taken to profit and loss account. 4.9. REVENUE RECOGNITION -- Sales are recognised on dispatch of goods to customers. -- Return on bank deposits is accounted for on 'accrual basis'. -- Dividend income is accounted for when the right of receipt is established. 4.10. TRADE DEBTS Trade debts originated by the company are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the amount is no longer probable. Bad debts are written-off when identified. 4.11. LOANS AND ADVANCES These are stated at cost. 4.12. CASH AND CASH EQUIVALENTS Cash-in-hand and at banks and short term deposits which are held to maturity are carried at cost. For the purposes of cash flow statement, cash equivalents are short-term highly liquid instruments which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in values. 4.13. PROVISIONS Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 4.14. FINANCIAL ASSETS AND LIABILITIES Financial assets and liabilities are recognised when the company becomes a party to the contractual provisions of the instrument. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. 4.15. OFF SETTING OF FINANCIAL INSTRUMENTS Financial assets and liabilities are off-set and the net amount reported in the balance sheet when there is a legally enforceable right to set-off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. 4.16. UN-ALLOCATED CAPITAL EXPENDITURE All cost or expenditure attributable to work-in-progress are capitalised and apportioned to buildings and plant & machinery at the time of commencement of commercial operations. 4.17. RELATED PARTY TRANSACTIONS Transactions in relation to sales, purchases and technical services with related parties are made at arm's length prices determined in accordance with the comparable uncontrolled price method except for the allocation of expenses such as electricity, gas, water, repair and maintenance relating to the head office, shared with the holding company and associated companies, which are on the actual basis. 4.18. BORROWINGS Loans and borrowings are initially recognised at the proceeds received; subsequent to initial recognition, these are stated at amortised cost. 4.19. TRADE AND OTHER PAYABLES Creditors relating to trade and other payables are carried at cost, which is the fair value of consideration to be paid in the future for goods and services received, whether or not billed to the company. 5. SHARE CAPITAL 5.1. AUTHORISED ===============================================================================
2005 2004
(Rupees in thousand)
===============================================================================
400,000,000 (2004: 237,764,675) ordinary shares
of Rs 10 each 4,000,000 2,377,647
100,000,000 9.75% redeemable cumulative
preference shares of Rs 10 each 1,000,000 -
500,000,000 5,000,000 2,377,647
===============================================================================5.2. ISSUED, SUBSCRIBED AND PAID-UP===============================================================================
2005 2004
(Rupees in thousand)
===============================================================================
ORDINARY:
215,907,185 (2004: 125,661,523) ordinary shares
of Rs 10 each fully paid in cash 2,159,072 1,256,615
35,834,100 (2004: 35,834,100) ordinary shares
of Rs 10 each issued as fully paid for
consideration other than cash 358,341 358,341
18,995,701 (2004: 18,995,701) ordinary shares
of Rs 10 each issued as fully
paid bonus shares 189,957 189,957
270,736,986 2,707,370 1,804,913
PREFERENCE:
54,147,398 9.75% redeemable cumulative preference
right shares (non-voting) of Rs 10 each
fully paid in cash 541,474 -
324,884,384 3,248,844 1,804,913
===============================================================================5.2.1. The company, during the current financial year, offered to the existing shareholders of the company 54,147,398 preference shares - Series "A" of Rs 10 each at par value.This preference shares right issue has been made in the ratio of 30 preference shares (non-voting) for every 100 ordinary shares held by the Company's shareholders on December 15, 2004. These shares are listed on all Stock Exchanges of Pakistan. The salient terms of this issue are as follows: (a) The preference shareholders shall not be entitled to: -- receive notice, attend general meetings of the Company and vote at meetings of the shareholders of the Company, except as otherwise provided by the Companies Ordinance, 1984 (the Ordinance), whereby the holders of such shares would be entitled to vote separately as a class i.e. with respect to voting entitlement of preference shareholders on matters/issues affecting substantive rights or liabilities of preference shareholders. -- bonus or right shares, in case the Company / Directors decide to increase the capital of the Company by issue of further ordinary shares. -- participate in any further profit or assets of the Company, except the right of dividend being attached to the preference shares - Series "A". (b) Preference shares - Series "A" will be convertible at the option of the preference shareholders into ordinary shares of the company at the expiry of the period of six years and thereafter of the date falling on the end of each semi annual period commencing thereafter. Conversion ratio is to be determined by dividing the aggregate face value of the preference shares - Series "A" plus any accumulated dividends and/or accrued dividend by the conversion price, which is higher of face value of ordinary share or 80% of the average price of the ordinary share quoted in the daily quotation of the Karachi Stock Exchange (Guarantee) Limited during the three months immediately prior to the relevant conversion date. (c) The company may at its option call the issue in whole or in minimum tranches of 20% of the outstanding face value at the redemption price within 90 days of the end of each semi annual period commencing from the expiry of a period of three years of the issue. (d) Preference shareholders - Series "A" shall be paid preferred dividend @ 9.75% per annum on cumulative basis. If the company does not pay dividend in any year, the unpaid dividend for the relevant year will be paid in the immediately following year along with the dividend payment for such year. However, dividend for the first year will be calculated on pro-rata basis in line with the accounting period of the company. (e) The company has created a redemption reserve and appropriates the required amount each month from the profit and loss appropriation account to ensure that reserve balance at the redemption date is equal to the principal amount of preference shares. 5.2.2. The company, during the current financial year, has also issued 90,245,662 right ordinary shares of Rs 10 each issued at Rs 18 per share i.e. inclusive of premium of Rs 8 per share. These right shares have been offered in the ratio of 50 ordinary shares for every 100 ordinary shares registered in the name of the shareholders as on 03 December, 2004. These right shares rank pari passu with the existing ordinary shares of the Company in all respects. 5.2.3. Kohinoor Textile Mills Limited (the holding company) holds 135,715,498 (2004: 90,476,999) ordinary shares, which represents 50.13% (2004: 50.13%) of the total ordinary issued, subscribed and paid-up capital. Ordinary shares held by the associated companies at year-end are as follows: ========================================================================================
2005 2004
(No of shares)
========================================================================================
Kohinoor Weaving Mills Ltd. 8,250,000 5,500,000
Zimpex (Pvt) Ltd. 850 -
8,250,850 5,500,000
========================================================================================6. RESERVES========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
CAPITAL:
- share premium reserve 6.1 1,884,153 1,460,423
- capital redemption reserve 5.2.1(b) 20,769 -
1,904,922 1,460,423
Revenue reserve - general 800,000 100,000
2,704,922 1,560,423
========================================================================================6.1. SHARE PREMIUM RESERVE========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Opening balance 1,460,423 1,460,423
Add: Premium received during the year on issue of
90,245,662 right ordinary shares @ Rs 8 per share 721,966 -
Less: Write-off of expenses incurred during the year
on issue of ordinary and preference shares (27,499) -
Less: Proposed issue of bonus shares @ 10% (270,737) -
1,884,153 1,460,423
========================================================================================7. REDEEMABLE CAPITAL - SECURED========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Non participatory Term Finance Certificates 124,950 208,250
(TFCs)-balance as at June 30,
Less: Current portion grouped under current liabilities 83,300 83,300
41,650 124,950
========================================================================================The company had raised Rs 250 million by issuing 50,000 TFCs as fully paid scrips of Rs 5,000 denomination.These TFCs are listed on the Karachi Stock Exchange and the market value of one TFC was Rs 5,400 as at June 30, 2005 (2004: Rs 5,450). Redemption of capital The year-end outstanding balance of these TFCs is redeemable in three equal half-yearly instalments. Rate of return The return on TFCs is payable half-yearly and is calculated at the 5 years' Pakistan Investment Bonds rate plus 2.50% with the floor and cap rate of 15.25% and 17.75% per annum respectively. Security The TFCs are secured by way of first charge ranking pari passu on the present and future fixed assets of the company, excluding freehold land and buildings, and personal guarantee of the Company's Chief Executive. Trustee To protect the TFC holders, Faysal Bank Ltd. has been appointed as trustee under the Trust Deed dated June 27, 2002. The bank is paid fees at the rate of 0.05% per annum of the outstanding balance of TFCs. Default In case the company defaults on any of its obligations, the trustee may enforce the company's obligations in accordance with the terms of the trust deed. The proceeds of any such enforcements shall be distributed to the TFC holders at the time on a pari passu basis in proportion to the amounts owed to them pursuant to the TFCs. 8. LONG TERM LOANS - SECURED ========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
Muslim Commercial Bank Limited (MCB) 8.1 71,300 107,700
MCB 8.2 444,730 533,676
Habib Bank Limited (HBL) 8.2 444,730 533,676
MCB 8.3 157,143 185,715
Faysal Bank Limited (FBL) 8.3 275,000 325,000
The Bank of Punjab (BOP) 8.3 80,000 100,000
Askari Commercial Bank Limited (ACBL) 8.3 40,000 50,000
First Women Bank Limited (FWB) 8.3 28,000 35,000
National Bank of Pakistan (NBP) 8.4 520,833 625,000
Union Bank Limited (UNB) 8.5 250,000 -
NBP 8.5 150,000 -
PICIC Commercial Bank Limited (PCBL) 8.5 130,000 -
2,591,736 2,495,767
Less: Current portion 434,030 434,030
grouped under current liabilities
2,157,706 2,061,737
========================================================================================8.1. Year-end balance of this loan is repayable in four half-yearly instalments by January, 2007 and carries mark-up at the rate of 6-months Karachi Inter Bank Offered Rate (KIBOR) + 2.29% with no floor or cap.8.2. These loans have been obtained from a consortium comprising of MCB and HBL and are repayable in 14 half-yearly equal instalments commenced from December, 2003. These loans carry mark-up at the rate of 6-months KIBOR + 2.29%. 8.3. These loans have been obtained from a consortium comprising of MCB, FBL, BoP, ACBL and FWB in two tranches. First tranche of Rs 550 million was disbursed in December, 2003 by FBL and MCB, which carries mark-up at the rate of 6-months treasury bills rate + 2.75% per annum, with no floor or cap. These loans are repayable in fourteen half-yearly equal instalments commenced from June, 2004. Second and final tranche was disbursed by BoP, ACBL and FWB in April, 2004 at a mark-up rate of 6-months KIBOR + 2.21% per annum. These loans are repayable in ten half-yearly equal instalments commenced from October, 2004. Mark-up on these loans is payable on quarterly basis. 8.4. This loan carries mark-up at the rate of 6-months KIBOR + 2.25% per annum with no floor or cap and is repayable in twelve equal half-yearly instalments commenced from October, 2004. 8.5. These long term loans aggregating Rs. 530 million have been obtained from a Syndicate of commercial banks (i.e. UNB, NBP and PCBL) to fund the conversion of one of the existing wet process lines for grey cement to 500 tons per day dry process line of white cement. Under the terms of syndication financing agreement dated August 16, 2004, this loan facility is available for a period of seven years, which includes a grace period of two years; repayment of these loans will be effected in 20 unequal quarterly instalments. These loans carry mark-up at the rate of 6-months KIBOR + 2.25% per annum with no floor or cap. 8.6. The loans, as detailed in notes 8.1 to 8.5 above, are secured by first pari passu charge over present and future fixed assets of the company, demand promissory notes and personal guarantees of some of the directors. 8.7. Long term finance facility of Rs 4.800 billion is available from a Syndicate of commercial banks and development finance institution [i.e. NBP, HBL, Allied Bank of Pakistan Ltd. (ABL), FBL, PCBL, BOP and Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Ltd. (SAPICO)] for financing the ongoing expansion project of 6,700 tpd clinker capacity. This finance facility is available up to June 30, 2007 and will be secured against first pari passu charge on all present and future fixed assets of the Company and personal guarantees of some of the directors of the Company. Out of the available finance facility of Rs 4.800 billion, the Company has established an irrevocable letter of credit of Rs 3.701 billion during October, 2004. 8.8. The company, during the year in addition to above loans, has also utilised a syndicated bridge finance facility of Rs 925 million from a Consortium of commercial banks comprising of NBP, HBL, ABL, FBL and PCBL for the expansion project. The entire outstanding balance of this finance facility was fully repaid through the receipt of right issue of shares. 9. DEFERRED LIABILITY FOR VACATION BENEFITS This represents amounts payable against un-availed leaves of employees. 10. DETERRED TAXATION ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Deferred taxation liability (2004: asset) comprises
of temporary differences arising due to:
Credit balance arising in respect of accelerated tax
depreciation allowances 946,888 968,611
DEBIT BALANCES ARISING IN RESPECT OF:
- recognised tax losses (588,821) (978,848)
- provision for obsolete stores and spares (4,690) -
- deferred liability for vacation benefits (2,980) -
- minimum tax recoverable against tax charge in (21 ,826) -
in future years
(618,317) (978,848)
328,571 (10,237)
========================================================================================11. LONG TERM DEPOSITSThese represent interest-free security deposits from stockists and are repayable on cancellation or withdrawal of the dealerships. These are being utilised by the Company in accordance with the terms of dealership agreements. 12. SHORT TERM FINANCES - SECURED Short term finance facilities available from various commercial banks under mark-up arrangements aggregate Rs 1.290 billion (2004: Rs 0.425 billion). These facilities, during the year, carried mark-up at the rates ranging from 2.60% to 9.98% per annum; payable on quarterly basis. Facilities available for opening letters of credit / guarantee aggregate Rs 1.199 billion (2004: Rs 1.155 billion) of which the amount aggregating Rs 0.175 billion (2004: Rs 0.025 billion) remained unutilised at the year-end. The aggregate facilities are secured against charge on all present and future current assets of the company, lien on import documents and personal guarantees of some of the directors. These facilities are expiring on various dates by June 30, 2006. 13. TRADE AND OTHER PAYABLES ========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
Creditors 13.1 211,639 174,352
Accrued liabilities 100,934 50,788
Advances from customers 8,800 6,730
Security deposits - interest free,
repayable on demand 13.2 22,159 19,159
Contractors' retention money 21,020 8,756
Royalty payable 2,832 1,521
Workers' (profit) participation fund 13.3 56,084 39,553
Provident fund payable 1,425 1,583
Other taxes payable 1,846 1,158
Other payables 5,309 3,911
432,048 307,511
========================================================================================13.1. No amount was due to associated companies at June 30, 2005; (2004: creditors included an amount of Rs 387 thousand due to associated companies).13.2. The distributors and contractors give the company a right to utilise these deposits in the normal course of business. 13.3. WORKERS' (PROFIT) PARTICIPATION FUND (THE FUND) ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Balance at July 1, 39,553 -
Add: Allocation for the year 54,072 39,553
93,625 39,553
Less: Deposited with the Government Treasury 37,541 -
Balance as at June 30, 56,084 39,553
========================================================================================The un-paid allocation of the preceding year amounting Rs 2.012 million has been deposited with the Government Treasury subsequent to the balance sheet date.14. ACCRUED PROFIT AND INTEREST / MARK-UP ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Profit payable on redeemable capital 8,457 14,308
Mark-up / interest accrued on secured loans and finances 30,189 8,846
38,646 23,154
========================================================================================15. TAXATION - NET========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
ACCRUED PROFIT AND INTEREST / MARK-UP
Opening balance 65,829 56,812
ADD: PROVISION / (WRITE-BACK) MADE FOR:
- current year 15.2 21,826 17,250
- prior years' - net 15.3 (60,706) 75
(38,880) 17,325
26,949 74,137
Less: Advance tax/ tax deducted at source 22,944 8,308
4,005 65,829
========================================================================================15.1. Income tax assessments of the Company, except for Tax Year 2003 which was selected for tax audit, are complete up to the Tax Year 2004.15.2. In view of available tax losses, the current tax provision represents the minimum tax on turnover for the year due under section 113 of the Income Tax Ordinance, 2001. 15.3. Income tax assessment of the company for the Assessment Year 1993-94 was finalised during the current year after the case was set aside by the Income Tax Appellate Tribunal for denovo assessment. Consequently, excess provision for taxation amounting Rs. 59.970 million has been written-back. This reversal has been grouped under prior years' taxation. 15.4. No numeric tax rate reconciliation is given as the Company is liable for minimum tax. 15.5. Tax losses available for carry forward at June 30, 2005 aggregated Rs 2.771 billion (2004: Rs 3.393 billion), of which Rs 2.724 billion (2004: Rs 3.357 billion) are assessed losses. 16. DIVIDENDS ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Unclaimed ordinary dividend 1,868 -
Preference dividend 11,759 -
13,627 -
========================================================================================16.1. The company, effective from the current year, has not recognised the final ordinary dividend proposed subsequent to the year-end as a liability to comply with IAS-10 (Events After the Balance Sheet Date).The Fourth Schedule to the Companies Ordinance, 1984, as referred to in note 2.2, has been substituted which has resulted in a change in accounting policy relating to ordinary dividend proposed subsequent to year-end. This change in policy has been accounted for retrospectively in accordance with the recommended benchmark treatment of IAS-8 (Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies). Had there been no change, the unappropriated profit and current liabilities as at 30 June, 2004 would have been lower and higher respectively by Rs 270.737 million. The effect of change in accounting policy has been reflected in the statement of changes in equity. 17. CONTINGENCIES AND COMMITMENTS CONTINGENCIES 17.1. The company has filed writ petitions before the Lahore High Court (LHC) against the legality of judgment passed by the Customs, Excise & Sales Tax Appellate Tribunal whereby the company was held liable on account of wrongful adjustment of input sales tax on raw materials and electricity bills; the amount involved pending adjudication before the LHC aggregate Rs 13.252 million (2004: Rs 13.252 million). 17.2. The company has filed an appeal before the Customs, Central Excise and Sales Tax Appellate Tribunal, Karachi against the order of the Deputy Collector Customs whereby the refund claim of the company amounting to Rs 12.350 million has been rejected and the company has been held liable to pay an amount of Rs 37.051 million by way of 10% customs duty allegedly leviable in terms of SRO 584 (I) / 95 and 585 (I) / 95 dated July 1, 1995. The impugned demand has been raised by the Department on the alleged ground that the Company is not entitled to exemption from payment of customs duty and sales tax in terms of SRO 279 (I) / 94 dated 02 April, 1994. 17.3. The Collector of Customs, Faisalabad has preferred a petition before the Supreme Court of Pakistan against the judgment delivered by the LHC in favour of the Company in a writ petition. The Department alleged that the Company had assessed sales tax at a lesser rate as compared to the survey and market price. Accordingly, a demand for payment of Rs 11.588 million was raised against the Company. The matter is pending before the Supreme Court of Pakistan. 17.4. The Additional Collector of Sales Tax, Faisalabad has preferred a petition before the Supreme Court of Pakistan against the judgment dated December 7, 1,999 delivered by the LHC in favour of the Company in a Customs Appeal. The company, through the said appeal, had challenged the finding given by the Tribunal that the Company had wrongly adjusted input tax amounting Rs 88.490 million for the period from July, 1996 to June, 1997 involved in import of cement plant for the purpose of Phase-II of the Company against the supply of cement manufactured by Phase-I of the company. Levy of penalty of Rs 10 million along with additional tax as well as rejection of the refund claim of Rs 2.245 million were also challenged. The Supreme Court of Pakistan, vide its order dated January 7, 2000, has directed that status quo be maintained. The matter has now been referred to the Alternate Dispute Resolution Committee, Faisalabad for resolution and a decision in this regard is awaited. 17.5. The Central Board of Revenue (CBR) has filed an appeal before the Supreme Court of Pakistan against the judgment delivered by the LHC in favour of the company in a writ petition. The company, through the said writ petition, had challenged the demand raised by the CBR for payment of duties and taxes on the plant & machinery imported by the Company pursuant to the exemption granted in terms of SRO 484 (I) / 92 dated May 14, 1992. The CBR, however, alleged that the said plant & machinery could be locally manufactured and duties and taxes were therefore not exempt. A total demand of Rs 1 .387 billion was raised by the CBR out of which an amount of Rs 269.328 million was deposited by the Company as undisputed liability. As regards the balance disputed amount, the matter was decided in favour of the company as per the judgment of the LHC. The matter is pending adjudication before the Supreme Court of Pakistan. No provision has been made in these financial statements in respect of the aforementioned disputed demands aggregating Rs 1.118 billion as the management is confident that the ultimate outcome of this case will be in favour of the Company. 17.6. CLAIMS Claims against the Company not acknowledged as debt aggregated Rs 3.750 million at June 30, 2005 (2004: Rs 3.750 million). 17.7. COMMITMENTS (i) Guarantees issued by various commercial banks, in respect of financial and operational obligations of the company, to various institutions and corporate bodies aggregate Rs 130.978 million (2004: Rs 49.431 million). (ii) Commitments against capital expenditure as at June 30, 2005 were for Rs 2,051 million (2004: Rs 162 million). (iii) Commitments against irrevocable letters of credit outstanding as at June 30, 2005 were for Rs 4,594 million including the letter of credit of Rs 3,701 million as detailed in note 8.7 (2004: Rs 1,105 million). 18. PROPERTY, PLANT AND EQUIPMENT ========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
Operating fixed assets 18.1 5,099,297 5,356,082
Capital work-in-progress - at cost 18.7 3,342,032 206,600
Stores and spares held for capital expenditure 21,053 -
8,462,382 5,562,682
========================================================================================18.1. OPERATING FIXED ASSETS=======================================================================================================================
COST DEPRECIATION Book
As at As at Upto For the As at value as
30 June, Additions/ 30 June, Rate 30 June. year / (on 30 June, at 30
PARTICUL.ARS Note 2004 (disposals) 2005 % 2004 disposals) 2005 June, 2005
=======================================================================================================================
Land -freehold 42,144 11,544 53,688 - - - - 53,688
Buildings on freehold l 810,370 2,776 813,146 5-10 350,748 27,108 377,856 435,290
Roads, bridges and
railway sidings 72,716 - 72,716 5-10 38,201 3,388 41,589 31,127
Plant and machinery 8,020,714 42,882 8,063,596 5-20 3,257,131 297,444 3,554,575 4,509,021
Furniture, fixtures
and equipment 57,987 9,284 67,271 10-30 35,144 5,668 40,812 26,459
Quarry equipment 138,110 - 130,860 20 115,937 4,432 113,181 17,679
(7,250) (7,188)
Vehicles 40,828 17,885 58,713 20 30,375 2,979 33,354 25,359
Share of joint assets
18.5 3,608 - 3,608 10 2,859 75 2,934 674
2005: 9,186,477 84,371 9,263,598 3,830,395 341,094 4,164,301 5,099,297
(7,250) (7,188)
2004: 8,681,423 509,020 9,186,477 3,499,419 334,383 3,830,395 5,356,082
(3,966) (3,407)
=======================================================================================================================18.2. No exchange fluctuation loss was capitalised during the current year (2004: additions to plant & machinery included exchange fluctuation loss amounting Rs 43.277 million).18.3. The Company has given on lease, land measuring 6 Kanals and 18 Marlas to Sui Northern Gas Pipelines Ltd in the year 1991 at an annual rent of Rupees two thousand. 18.4. DEPRECIATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
- cost of goods sold 338,223 332,233
- administrative and general expenses 2,126 2,009
- other manufacturing expenses 75 83
- unallocated expenditure 670 58
341,094 334,383
========================================================================================18.5. Ownership of the housing colony assets included in the fixed assets is shared by the company jointly with Pak American Fertilisers Limited in the ratio of 101:245 since the time when both the companies were managed by Pakistan Industrial Development Corporation (PIDC).These assets are in possession of the housing colony establishment for mutual benefits. The cost of these assets are as follows: ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
- buildings 2,138 2,138
- roads and bridge 202 202
- airstrip 16 16
- plant and machinery 257 257
- furniture, fixtures and equipment 833 833
- vehicles 162 162
3,608 3,608
========================================================================================18.6. DISPOSAL OF OPERATING FIXED ASSETS======================================================================================
Accum--
ulated
depreciBook Sale Mode of
Particulars Cost ation Value proceeds Gain disposal Sold to
======================================================================================
Two telex dumpers 2,878 2,837 41 573 532 Tender Mr. Mohammad Amir Bhatti,
Mohallah Bhattianwala,
Sargodha Road, Mianwali.
Mechanical showel 3,008 2,995 13 1,259 1,246- do - Rana Afzal-ul-Haq,
Godown #45, Balouch
Market, Samundri Road,
Faisalabad.
Terex dumper 1,364 1,356 8 300 292 - do - Khan Construction Co.,
Ward # 8, Mohallah
Sharif Khel, Daudkhel.
7,250 7,188 62 2,132 2,070
======================================================================================18.7. CAPITAL WORK-IN-PROGRESS========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Civil works 45,768 908
Plant & machinery 1,792,727 190,104
Mechanical works 139,891 9,068
Electrical works 50,168 992
Un-allocated capital expenditure (a) 111,205 5,528
ADVANCES TO SUPPLIERS AGAINST:
- plant and machinery 1,187,778 -
- civil works 10,511 -
- vehicles 3,984 -
3,342,032 206,600
(a) Un-allocated capital expenditure - net
- salaries and wages 16,068 1,973
- travelling 5,746 1,506
- vehicles' running and maintenance 2,012 131
- training 126 3
- financial expenses 80,946 -
- printing & stationery 797 79
- telephone 82 4
- consultancy 3,852 1,752
- depreciation 728 58
- insurance 2,250 -
- rent, rates and taxes 424 -
- repair and maintenance 112 -
- others 2,102 22
115,245 5,528
Less: Mark-up on deposits 4,040 -
111,205 5,528
========================================================================================19. INVESTMENT - AT COST========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Unquoted - associated company
Security General Insurance Company Ltd. (SGIC)
812,514 (2004: 738,649) fully paid ordinary
shares of Rs 10 each 5,000 5,000
======================================================================================== -- The share of the company in the net assets of SGIC, based on its audited financial statements for the year ended December 31, 2004, amounted Rs 14.566 million (2004: Rs 11.666 million).-- Name of Chief Executive: Mr. Manzar Mushtaq -- % of equity held: 6.71% (2004: 7.39%) 20. LONG TERM LOANS TO EMPLOYEES - SECURED ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
House building 6,940 7,094
Vehicles 1,790 1,953
Others 388 409
9,118 9,456
Less: Recoverable within one year grouped
under current assets 3,294 3,107
5,824 6,349
========================================================================================20.1. These loans are secured against charge/lien on employees' retirement benefits and carry interest at the rates ranging from 6% to 12% per annum.These loans are recoverable in monthly instalments ranging from 12 to 120. 20.2. No amount was due from directors, chief executive and executives at the year-end. 21. LONG TERM DEPOSITS AND PREPAYMENTS ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Security deposits 3,309 1,241
Prepayments 2,833 2,833
6,142 4,074
========================================================================================22. STORES, SPARES AND LOOSE TOOLS========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Stores [including in transit valuing Rs 20.065
million (2004: Rs 114.496 million)] 562,140 503,426
Spares [including in transit valuing Rs 50.434 million
(2004: Rs 20.997 million)] 542,562 443,213
Loose tools 9,665 8,305
1,114,367 954,944
Less: Provision for obsolescence 13,400 13,400
1,100,967 941,544
========================================================================================23. STOCK-IN-TRADE========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Raw materials 2,448 3,713
Packing materials 26,611 36,837
Work-in-process 128,288 43,840
Finished goods 25,870 15,755
183,217 100,145
========================================================================================24. LOANS, ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
Current portion of long term loans to employees 20 3,294 3,107
ADVANCES - CONSIDERED GOOD
- employees 3,667 1,447
- suppliers 21,326 13,735
Due from gratuity fund trust 69,670 60,437
Prepayments 11,948 10,069
Excise duty 15,619 8,843
Sales tax 24.1 49,265 42,169
Letters of credit 6,278 -
Margin against letters of credit 6,203 -
Interest receivable 3,878 3,752
Others receivables 2,328 3,643
193,476 147,202
========================================================================================24.1. This balance includes sales tax paid aggregating Rs 35.797 million (2004: Rs 38.785 million) against various cases as detailed in the contingencies note.25. CASH AND BANK BALANCES ========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
CASH-IN:
- hand 127 205
- transit 2,748 1,470
CASH AT COMMERCIAL BANKS ON:
- deposit accounts 25.1 201,000 8,000
- PLS accounts 25.2 132,838 198,780
- current accounts 25.3 33,089 14,816
366,927 221,596
369,802 223,271
========================================================================================25.1. These deposits, bearing mark-up at the rate of 6% (2004: rates ranging from 1% to 1.3%) per annum, are maturing within following twelve months.25.2. Profit and loss sharing accounts bear mark-up at the rates ranging from 1% to 3% (2004: 1% to 3%) per annum. 25.3. Current accounts include a sum of Rs 8.024 million (2004: Rs 7.903 million) held by various banks as margin against guarantees issued by them. 26. SALES - NET ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Gross sales 6,193,443 4,967,465
Less: Excise duty 1,020,618 872,608
Sales tax 807,589 656,019
Commission 74,502 63,039
1,962,709 1,591,666
4,290,734 3,375,799
========================================================================================27. COST OF SALES========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
Raw materials consumed 27.1 130,228 95,518
Packing materials consumed 244,149 243,311
Fuel and power 1,840,927 1,142,479
Stores and spares consumed 225,830 132,486
Salaries, wages and amenities 27.2 & 27.3 163,759 144,676
Rent, rates and taxes 7,815 6,980
Insurance 13,950 20,920
Repair and maintenance 19,758 21,081
Depreciation 338,223 332,233
Other expenses 27.4 72,726 70,967
3,057,365 2,210,651
WORK-IN-PROCESS
Opening 43,840 51,741
Closing (128,288) (43,840)
(84,448) 7,901
Cost of goods manufactured 2,972,917 2,218,552
FINISHED GOODS STOCK
Opening 15,755 24,774
Closing (25,870) (15,755)
(10,115) 9,019
2,962,802 2,227,571
========================================================================================27.1. RAW MATERIALS CONSUMED========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Opening 3,713 4,057
Purchases 128,963 95,174
132,676 99,231
Less: Closing stock 2,448 3,713
130,228 95,518
========================================================================================27.2. Salaries, wages and amenities include contribution to provident fund aggregating Rs 5.340 million (2004: Rs 4.024 million).27.3. Salaries, wages and amenities expense has been reduced by Rs 6.940 million (2004: Rs 6.330 million) as a result of actuarial valuation of gratuity scheme. 27.4. Other expenses include housing colony expenses aggregating Rs 41.342 million (2004: Rs 36.240 million) and vehicles' running expenses aggregating Rs 14.899 million (2004: Rs 10.235 million). 28. SELLING, ADMINISTRATIVE AND GENERAL EXPENSES ========================================================================================
2005 2004
Notes (Rupees in thousand)
========================================================================================
SELLING AND DISTRIBUTION EXPENSES
Salaries and amenities 28.1 9,860 8,552
Travelling 225 256
Vehicles' running and maintenance 1,141 861
Postage, telephone and fax 427 463
Printing and stationery 238 149
Entertainment 184 87
Repair and maintenance 69 113
Advertisement and sampling 261 5
Rent, rates and taxes 7 8
Other expenses 561 164
12,973 10,658
ADMINISTRATIVE AND GENERAL EXPENSES
Salaries and amenities 28.1 19,012 16,857
Travelling 2,002 1,513
Vehicles' running and maintenance 3,170 2,249
Postage, telephone and fax 2,885 2,438
Printing and stationery 2,774 2,054
Entertainment 711 527
Repair and maintenance 539 502
Legal and professional 28.2 3,004 5,672
Provision for obsolete stores and spares - 3,400
Depreciation 2,126 2,009
Rent, rates and taxes 26 33
Donations 28.3 5,642 550
Other expenses 4,038 9,000
45,929 46,804
58,902 57,462
========================================================================================28.1. Salaries and amenities include contribution to provident fund aggregating Rs 0.171 million (2004: Rs 0.153 million) and Rs 0.558 million (2004: Rs 0.465 million) in respect of selling and administrative expenses respectively.Salaries and amenities have been reduced by Rs 0.413 million (2004: Rs 0.409 million) and Rs 0.801 million (2004: Rs 0.768 million) in respect of staff retirement benefits relating to selling and administrative expenses respectively upon actuarial valuation of the gratuity scheme. 28.2. Legal and professional charges include the following in respect of Auditors services for: ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Hameed Chaudhri & Co -
- statutory audit 275 -
- half yearly review 80 -
- certification charges 90 -
445 -
Ford Rhodes Sidat Hyder & Co.
- statutory audit - 275
- certification and review - 125
- out-of-pocket expenses 48 60
48 460
493 460
========================================================================================28.3. None of the directors or their spouses had any interest in any of the donees.29. OTHER INCOME ========================================================================================
2005 2004
Note (Rupees in thousand)
========================================================================================
Profit on bank deposits 1,915 3,124
Sale of scrap 8,980 2,821
Gain on sale of operating fixed assets 2,070 1,617
Dividend from an associated company
(Security General Insurance Co Ltd) 738 -
Unclaimed balances written-back 29.1 1,259 204
Miscellaneous 3,135 3,367
18,097 11,133
========================================================================================29.1. These balances pertain to the year prior to 2000 (2004: prior to the year 1999)30. FINANCE COST ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
MARK-UP / INTEREST / PROFIT ON:
- long term loans 154,046 285,595
- redeemable capital 22,731 8,044
- short term finances 23,002 11,521
Commitment charges - 1,130
Restructuring / arrangement fee - 2,720
Bank guarantees' commission 1,314 137
Exchange fluctuation loss 1,887 -
Bank charges 2,697 1,692
205,677 310,839
========================================================================================31. STAFF RETIREMENT BENEFITSThe future contribution rates of these schemes include allowance for deficit and surplus. Projected unit credit method, based on the following significant assumptions, is used for valuation of these plans: ========================================================================================
2005 2004
========================================================================================
- discount rate 9% 8%
- expected return on plan assets 14% 14%
- expected rate of growth per annum in future salaries 8% 7%
- average expected remaining working life time employees 11 years 11 years
(a) Movement in the net asset
recognised in the balance sheet is as follows:
Net asset at the beginning of the year (60,437) (50,150)
Income recognised (8,155) (7,506)
Contribution paid (1,078) (2,781)
Net asset at the end of the year (69,670) (60,437)
(b) The amount recognised in the
balance sheet is as follows:
Present value of obligation 74,066 64,803
Fair value of plan assets (147,812) (125,713)
Unrecognised actuarial gain 4,076 473
Asset recognised in the balance sheet (69,670) (60,437)
(c) The amount recognised in the
profit and loss account is as follows:
Current service cost 4,261 3,557
Interest cost 5,184 4,243
Expected return on plan assets (17,600) (15,306)
Income recognised in the profit and loss account (8,155) (7,506)
========================================================================================The company's policy with regard to actuarial gains / losses is to follow the minimum recommended approach under IAS-19 (Employee Benefits - Revised 2000).32. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES The aggregate amounts charged in the financial statements for the year for remuneration, including certain benefits to the Chief Executive, Working Directors and other Executives of the Company are as follows: ====================================================================================================
Particulars Chief Executive Directors Executives
2005 2004 2005 2004 2005 2004
====================================================================================================
Managerial remuneration 2,130 1,548 1,644 1,243 12,675 7,560
Contribution to provident fund trust - - 111 170 497 344
PERQUISITES AND BENEFITS:
- house rent 957 697 277 416 3,332 2,257
- medical - - 4 7 140 60
- conveyance/petrol - - 195 162 1,548 865
- leave passage - - 98 87 593 450
- utilities 213 155 111 92 866 502
1,170 852 685 764 6,479 4,134
3,300 2,400 2,440 2,177 19,651 12,038
No of persons 1 1 2 2 11 7
====================================================================================================32.1. The Chief Executive, Directors and some of the Executives are also provided with Company maintained cars in accordance with their terms of employment.Aggregate amount charged in these financial statements in respect of Directors' fee aggregated Rs 11.6 thousand (2004: Rs 29 thousand). 32.2. Corresponding figures of Executives have been restated due to the revision in definition of Executive as contained in the Fourth Schedule to the Companies Ordinance, 1984, which was substituted by the Securities and Exchange Commission of Pakistan vide S.R.O. 589(I)/2004 dated July 5, 2004. 33. FINANCIAL INSTRUMENTS ======================================================================================================================================================
Interest/ mark-up bearing Non-interest / mark-up bearing
Maturity Maturity Maturity Maturity
upto one after one Sub- upto one after one Sub-
Particulars year year total year year total Total
2005
======================================================================================================================================================
FINANCIAL ASSETS:
Long term loans to employees 3,294 5,824 9,118 - - - 9,118
Long term deposits - - - - 3,309 3,309 3,309
Trade debtors - - - 92,597 - 92,597 92,597
Loans, advances, deposits
and other receivables - - - 79,531 - 79,531 79,531
Cash and bank balances 333,838 - 333,838 35,964 - 35,964 369,802
337,132 5,824 342,956 208,092 3,309 211,401 554,357
FINANCIAL LIABILITIES:
Redeemable capital 83,300 41,650 124,950 - - - 124,950
Long term loans 434,030 2,157,706 2,591,736 - - - 2,591,736
Long term deposits - - - - 6,572 6,572 6,572
Short term finances 589,843 - 589,843 - - - 589,843
Trade and other payables - - - 361,061 - 361,061 361,061
Accrued profit and interest/mark-up - - - 38,646 - 38,646 38,646
Preference dividend - - - 11,759 - 11,759 11,759
unclaimed ordinary dividend - - - 1,868 - 1,868 1,868
1,107,173 2,199,356 3,306,529 413,334 6,572 419,906 3,726,435
OFF BALANCE SHEET ITEMS:
Letters of credit - - - 4,594,000 - 4,594,000 4,594,000
Contracts for capital expenditure - - - 2,051,000 - 2,051,000 2,051,000
- - - 6,645,000 - 6,645,000 6,645,000
2004
FINANCIAL ASSETS:
Long term loans to employees 3,107 6,349 9,456 - - - 9,456
Long term deposits - - - - 1,241 1,241 1,241
Trade debtors - - - 87,104 - 87,104 87,104
Loans, advances, deposits
and other receivables - - - 69,279 - 69,279 69,279
Cash and bank balances 206,780 - 206,780 16,491 - 16,491 223,271
209,887 6,349 216,236 172,874 1,241 174,115 390,351
FINANCIAL LIABILITIES:
Redeemable capital 83,300 124,950 208,250 - - - 208,250
Long term loans 434,030 2,061,737 2,495,767 - - - 2,495,767
Long term deposits - - - - 7,182 7,182 7,182
Short term finances 274,611 - 274,611 - - - 274,611
Trade and other payables - - - 256,966 - 256,966 256,966
Accrued profit and
interest/mark-up - - - 23,154 - 23,154 23,154
791,941 2,186,687 2,978,628 280,120 7,182 287,302 3,265,930
OFF BALANCE SHEET ITEMS:
Letters of credit - - - 1,105,000 - 1,105,000 1,105,000
Contracts for capital expenditure - - - 162,000 - 162,000 162,000
- - - 1,267,000 - 1,267,000 1,267,000
======================================================================================================================================================33.1. The effective interest / mark-up rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.33.2. CONCENTRATION OF CREDIT RISK Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail completely to perform as contracted. The company believes that it is not exposed to any major credit risk as a major portion of its financial assets represents balances with major commercial banks having reasonably high credit ratings. Further, in the case of trade debtors, exposure is spread over a large number of counter-parties. To manage exposure to credit risk, the Company applies credit limits to its customers and also obtains advances from them. 33.3. FOREIGN EXCHANGE RISK Foreign currency risk arises where receivables and payables exist due to transactions with foreign undertakings. Payables exposed to foreign currency risks are monitored by the management and, if necessary, are covered through forward foreign exchange contracts. 33.4. INTEREST RATE RISK Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in the market interest rates. The company usually borrows funds at fixed and market based rates and as such the risk is minimised. 33.5. LIQUIDITY RISK Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The company follows an effective cash management and planning policy to ensure availability of funds and to take appropriate measures for new requirements. 33.6. 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. 34. EARNINGS PER SHARE 34.1. BASIC ===============================================================================================
2005 2004
===============================================================================================
Profit after taxation attributable to ordinary shareholders 715,691 487,472
Weighted average number of shares outstanding during the year 219,742,006 203,052,740
Earnings per share 3.26 2.40
===============================================================================================34.2. DILUTED========================================================================================
2004 2005
Rupees in
No of shares thousand
========================================================================================
Profit attributable to ordinary shareholders 715,691
Weighted average number of ordinary shares
outstanding during the year 219,742,003
OPTION
- Increase in net profit 11,759
- Incremental shares 5,924,031
225,666,034 727,450
Earnings per share - Rs 3.22
========================================================================================There was no dilution effect on basic earnings per share for the corresponding year as the Company had no such commitments outstanding as at June 30, 2004.35. NUMBER OF EMPLOYEES Total number of employees at the end of year are 723 (2004: 680). 36. CAPACITY AND PRODUCTION ======================================================================
Capacity Actual Production
2005 2004 2005 2004
Clinker Metric Tons
======================================================================
Grey 1,470,000 1,470,000 1,321,289 1,051,917
White 30,000 30,000 33,447 35,490
======================================================================Shortfall in production of grey cement was mainly due to market constraints. The capacity of the plants has been determined on the basis of 300 days.37. TRANSACTIONS WITH RELATED PARTIES Related parties comprise the holding company, related group companies, associated companies, directors of the Company, key employees and staff retirement funds. Details of transactions with related parties are as follows: ========================================================================================
2005 2004
(Rupees in thousand)
========================================================================================
Purchase of goods and services - 6,303
Sale of good and services 29,273 3,730
Dividend received 738 -
========================================================================================Transactions between the related parties were made at arm's length prices determined in accordance with the comparable uncontrolled price method except electricity, gas, water and repair & maintenance related to head office shared with the holding company and associated companies, which are based on the advices received.38. DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on September 17, 2005 by the board of directors of the company. 39. GENERAL -- Figures in the financial statements have been rounded-off to the nearest thousand Rupees; and -- Corresponding figures, consequent to the substitution of Fourth Schedule to the Companies Ordinance, 1984, have been re-arranged and re-classified, wherever necessary, for the purposes of comparison. |