| Buxly Paints Ltd - 2008 |
|
BALANCE SHEET AS AT 30 JUNE 2008
======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
ASSETS
Non current assets
Property, plant and equipment 4 16,496 19,077
Long term loans and advances 5 660 702
Long term deposits 6 230 230
Deferred taxation 7 508 807
17,894 20,816
Current assets
Consumable stores 8 - 368
Stock-in-trade 19,267 27,201
Trade debts-unsecured 10 46,806 59,030
Current portion of long term loans and advance 5 280 410
Advances and deposits 11 6,020 4,676
Prepayments and other receivables 12 2,142 511
Taxation - net 5,197 1,964
Cash and bank balances 13 14,737 20,247
94,449 114,407
Total assets 112,343 135,223
EQUITY AND LIABILITIES
Share capital and reserves
Authorised capital
5,000,000 (2007: 5,000,000) 50,000 50,000
Ordinary shares of Rs.10 each
Issued, subscribed and paid-up capital 14 14,400 14,400
Reserves 5,993 5,993
Unappropriated profit/ (loss) 4,460 (1,807)
24,853 18,586
Surplus on revaluation of property, 15 4,823 5,578
plant and equipment
Non-current liabilities
Liabilities against assets 16 429 767
subject to finance lease
Current liabilities
Current portion of liabilities against asset 16 338 293
subject to finance lease
Short term running finance 17 29,814 8,932
Trade and other payables 18 51,395 100,685
Interest and mark-up accrued 691 382
82,238 110,292
Contingencies and commitments 19
Total equity and liabilities 112,343 135,223
======================================================================================PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2008======================================================================================
Note 2008 2007
Restated
(Rupees in '000')
======================================================================================
Continuing operations
Net sales 20 137,781 115,237
Cost of sales 21 111,930 82,038
Gross profit 25,851 33,199
Distribution and selling expenses 22 13,292 22,435
Administrative expenses 23 9,089 5,912
Other expenses 24 200 834
22,581 29,181
3,270 4,018
Other operating income 25 6,243 2,651
9,513 6,669
Finance cost 26 (2,834) (2,571)
Profit before taxation 6,679 4,098
Taxation 27 825 (56)
Profit from continuing operations after taxation 5,854 4,154
Discontinued operations
Loss from discontinued
operations - net of tax 28 - (12,033)
Profit / (loss) for the year 5,854 (7,879)
(Rupees)
Earnings / (loss) per share
- basic and diluted 29 4.07 (5.47)
======================================================================================STATEMENT OF CHANGES IN FINANCIAL POSITION (CASH FLOW STATEMENT) FOR THE YEAR ENDED 30 JUNE 2008======================================================================================
Note 2008 2007
Restated
(Rupees in '000')
======================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES
Continuing operations
Cash (used in) / generated from operations 30 (19,035) 1,678
Long term deposits - (50)
Income tax paid (3,575) (3,069)
Finance cost paid (1,988) (2,604)
Staff gratuity paid (139) (130)
Leave encashment paid (1,368) -
Long term loans and advances 172 -
(25,933) (4,175)
Discontinued operations
Net cash from operating activities 28 - 7,076
Net cash (used in) / from operating activities (25,933) 2,901
CASH FLOWS FROM IN VESTING ACTIVITIES
Continuing operations
Capital expenditure (166) (829)
Proceeds from sale of property,
plant and equipment
- 1,147
Net cash (used in) / from investing activities (166) 318
CASH FLOWS FROM FINANCING ACTIVITIES
Continuing operations
Payment of liabilities against assets (293) (260)
subject to finance leases
Dividend paid - (18)
(293) (278)
Discontinued operations
Net cash from financing activities 28 - -
Net cash (used in) / from financing activities (293) (278)
Net (decrease) / increase in (26,392) 2,941
cash and cash equivalents
Cash and cash equivalents 11,315 8,374
at beginning of the year
Cash and cash equivalents at end of the year 31 (15,077) 11,315
======================================================================================STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2008==================================================================================================
Issued,
Subscribed General
and Accumulated
paid-up capital reserve Profit Total
(Rupees in 000's)
==================================================================================================
Balance as at 30 June 2006 14,400 5,993 5,613 26,006
Changes in equity for 2007
Surplus on revaluation of property, plant and
equipment realised on account of incremental
depreciation charged thereon - - 459 459
Net loss for the year ended 30 June 2007 - - (7,879) (7,879)
Total recognised income - - (7,420) (7,420)
and expense for the year
Balance as at 30 June 2007 14,400 5,993 (1,807) 18,586
Changes in equity for 2008
Surplus on revaluation of property, plant and
equipment realised on account of incremental
depreciation charged thereon - - 413 413
Net Profit for the year ended 30 June 2008 - - 5,854 5,854
Total recognised income - - 6,267 6,267
and expense for the year
Balance as at 30 June 2008 14,400 5,993 4,460 24,853
==================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 20081. STATUS AND NATURE OF BUSINESS The Company was incorporated in Pakistan in April 1954 as a private limited company under the Companies Act, 1913 (now the Companies Ordinance, 1984) with registered office in Karachi, Sindh and subsequently converted into a public limited Company in May 1985. Its shares are listed on the Karachi and Lahore Stock Exchanges. The principal activity of the Company is manufacturing and sale of paints, pigments, protective surface coatings, varnishes and other related products. The registered office of the Company is situated at X-3, Manghopir Road, S.I.T.E. Karachi, Pakistan. 2. BASIS OF PREPARATION 2.1. Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 984. In case requirements differ, the provisions of, or directives issued under the Companies Ordinance, 1984 shall prevail. 2.2. Basis of measurement These financial statements have been prepared under the historical cost convention, except that certain property plant and equipment have been stated at revalued amount. 2.3. New accounting standards and IFRIC interpretations that are not yet effective The following standards, amendments and interpretations of approved accounting standards will be effective for accounting periods beginning on or after 01 July 2008: Revised IAS 1 - Presentation of financial statements (effective for annual periods beginning on or after 1 January 2009) introduces the term total comprehensive income, which represents changes in equity. During a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement), or in an income statement and a separate statement of comprehensive income. Revised IAS 23 - Borrowing costs (effective from 01 January 2009). Revised IAS 23 removes the Option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The application of the standard is not likely to have an effect on Company's financial statements. IAS 29 - Financial Reporting in Hyperinflationary Economies (effective for annual periods beginning on or after 28 April 2008). The application of the standard is not likely to have an effect on the Company's financial statements. Amendments to IAS 32 Financial instruments: Presentation and IAS 1 Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation requires puttable instruments, and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation, to be classified as equity if certain conditions are met. The amendments, which become mandatory for the Company's financial statements, with retrospective application required, are not expected to have any impact on the financial statements. Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations (effective for periods beginning on or after 1 January 2009) clarifies the definition of vesting conditions, introduces the concept of non-vesting conditions, requires non-vest conditions to be reflected in grant-date fair value and provides the accounting treatment for non-vesting conditions and cancellations. The application of this standard is not likely to have any effect on Company's financial statements. Revised IFRS 3 Business Combinations (applicable for annual periods beginning on or after 1 July 2009) broadens among other things the definition of business resulting in more acquisitions being treated as business combinations, contingent consideration to be measured at fair value and transaction costs other than share and debt issue costs to be expensed. The application of this standard is not likely to have an effect on Company's financial statements. Amended IAS 27 Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 2009) requires accounting for changes in ownership interest by the group in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the group looses control of subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in the profit or loss. The application of the standard is not likely to have an effect on the Company's financial statements. IFRS 7- Financial Instruments: Disclosures (effective for annual periods beginning on or after 28 April 2008). The application of the standard is not expected to have significant impact on the Company's financial statements other than increase in disclosures. IFRS 8 - Operating Segments (effective for annual periods beginning on or after 28 April 2008). The application of the standard is not likely to have an effect on the Company's financial statements. IFRIC 12 - Service Concession Arrangements (effective for annual periods beginning on or after 1 January 2008). IFRIC 12 provides guidance on certain recognition and measurement issues that arise in accounting for public-to-private concession arrangements. IFRIC 12 is not relevant to the Company's operations. IFRIC 13 - Customer Loyalty Programmes (effective for annual periods beginning on or after 01 July 2008). IFRIC 13 addresses the accounting by entities that operate, or otherwise participate in, customer Loyalty programmes for their customers. The application of IFRIC 1 3 is not likely to have an effect on the Company's financial statements. IFRIC 14 - The Limit on Defined Benefit Asset, Minimum Funding Requirements and their interaction (effective for annual periods beginning on or after 01 January 2008). IFRIC 14 clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on minimum funding requirements (MFR) for such asset. IFRIC 14 is not expected to have any material impact on the Company's financial statements. IFRIC 15- Agreement for the Construction of Real Estate (effective for annual periods beginning on or after 1 October 2009). The amendment clarifies the recognition of revenue by real estate developers for sale of units, such as apartments or houses, 'off-plan', that is, before construction is complete. The amendment is not relevant to the Company's financial statements. IFRIC 16- Hedge of Net Investment in a Foreign Operation (effective for annual periods beginning on or after 1 October 2008). IFRIC 16 clarifies what risks in foreign operations can be hedged and which entity in the group can hold hedge instrument. The amendment is not relevant to the Company's financial statements. The IASB's annual improvements project published in May 2008, contains a number of amendments which would generally be applicable for financial periods beginning on or after 1 January 2009. These amendments extend to 35 standards and include changes in terminology and accounting requirements. These amendments are unlikely to have an impact on the Company's financial statements. Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Eligible hedged Items. The amendments shall be applied for annual periods beginning on or after 1 July 2009. The amendment clarifies how the existing principles underlying hedge accounting should be applied in two particular situations, (a) a one-sided risk in a hedged item, and (b) inflation in a financial hedged item. IAS 27 'Consolidated and separate financial statements (effective from 1 January 2009). The amendment removes the definition of the cost method from IAS 27 and replaces it with a requirement to present dividends as income in the separate financial statements of the investor. 2.4. Functional and presentation currency These financial statements are presented in Pakistan Rupees which is the Company's functional currency. All financial information presented in Pakistani Rupees has been rounded to the nearest thousand. 2.5. Use of estimates and judgments The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires management to make judgements, estimates and assumptions that affect the application of policies and the 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 judgernents about the 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 recognised in the period in which the estimate is 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. Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on amounts recognised in financial statements are described in note 36. 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all years presented in these financial statements. 3.1. Property, plant and equipment Owned a) Items of property, plant equipment are measured at cost or revaluation less accumulated depreciation and impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. b) Depreciation on property, plant and equipment other than computers is charged on a reducing balance method at the rates specified in note 4. Depreciation on computers is charged on straight line method. c) Depreciation on additions during the year is charged from the month in which asset is available for use whereas no depreciation is charged from the month the asset is disposed off. d) Assets, which have been fully depreciated, are retained in the books at a nominal value of Re. 1. e) Gains or losses on disposal of property, plant and equipment, if any, are taken to profit and loss account currently. f) Normal repairs and maintenance are charged to income, as and when incurred. Subsequent expenditure is capitalised only when it increases the future economic benefit embodied in the item of property, plant and equipment. The residual values and useful lives of assets are reviewed and adjusted, if appropriate, at each reporting date. Leased a) Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are cIASsified as finance lease. These are stated at lower of present value of minimum lease payments under the lease agreements and the fair value of the assets less accumulated depreciation and impairment losses, if any. The related obligations, under the lease are accounted for as liabilities. b) Finance cost is allocated to accounting periods in a manner so as to provide a constant periodic rate of charge on outstanding liability. c) Depreciation is charged to income on the same basis as that of owned assets at the rates specified in note 4. 3.2. Capital work in progress Capital work-in-progress is stated at cost less impairment loss, if any and represents expenditure on property, plant and equipment in the course of construction and installation. Transfers are made to relevant property, plant and equipment category as and when assets are available for use. 3.3. Consumable stores These are valued at cost determined on weighted average method less impairment losses, if any. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon. The Company amortised the consumable stores @ of 25 percent per annum. 3.4. Stock-in-trade Stock-in-trade, except for those in transit, is valued at lower of cost determined on weighted average cost basis and net realisable value. Cost of work-in-process and finished goods comprises cost of direct material, labour and an appropriate portion of manufacturing overheads. Net realisable value signifies the estimated selling price in the ordinary course of business less costs necessarily incurred in order to make the sale. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon. 3.5. Trade debts and other receivables Trade debts and other receivables are recognised at fair value and subsequently measured at amortised cost less impairment loss, if any. Provision for impairment of trade and other receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. Debts considered as irrecoverable are written off. 3.6. Cash and cash equivalents Cash and cash equivalents comprise cash and bank balances and bank deposits. Bank overdraft that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents for the purpose of statement of cash flows. The cash and cash equivalents are subject to insignificant risk of changes in value. 3.7. Employee benefits 3.7.1. Defined contribution plan The Company operates an approved provident fund scheme for its employees. Equal monthly contributions are made, both by the Company and the employees to the fund at the rate of 8.33% of basic salary and cost of living allowance. 3.7.2. Defined benefit plan The Company was operating unfunded approved gratuity scheme for all its permanent employees till 31 December 1996. Thereafter, the scheme was discontinued and induction of new employees in the scheme was stopped. The benefit to the existing members of the scheme was restricted to the gratuity payable as at 31 December 1996. 3.7.3. Compensated absences The Company accounts for all accumulated compensated absences when employees render services that increase their entitlement to future compensated absences. Accrual is made for employees compensated absences on the basis of IAS drawn pay. 3.8. Trade and other payables. Liabilities for trade and other payable are recognised initially at fair value and subsequently measured at amortised cost. 3.9. Provisions A provision is recognised when the Company has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are reviewed at each reporting date and are adjusted to reflect current best estimate. 3.10. Taxation 3.10.1. Current The charge for current taxation is based on higher of liability at taxable income at the current rates of taxation after taking into account applicable tax credits and tax rebates available, if any, or minimum tax liability at the rate of one-half of one percent of turnover. 3.10.2. Deferred Deferred tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using the tax rate enacted or substantially enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the credits can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that related tax benefit will be realised. In accordance with the requirements of the International Accountants Standard (IAS) 12 on income Taxes, the Company recognises deferred tax assets / liability on deficit / surplus on revaluation of property, plant and equipment which is adjusted against the related surplus. 3.11. Revenue recognition Revenue from sale of goods is recognised when significant risks and rewards of ownership are transferred to the buyer i.e. when deliveries are made. Export sales are recorded on the basis of goods shipped to customers. Rebate on exports, if any, are recorded on receipt basis. Toll manufacturing income Revenue under the toll manufacturing agreement is recorded on accrual basis. Interest income Interest income on bank deposits is recognised at effective yield on time proportion basis. Royalty income Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreement. Rental income Rental income is recognised in profit and loss on straight line basis over the term of lease. Scrap sales Scrap sales are recognised on receipt basis. 3.12. Finance cost. All mark-up, interest and other, related charges are taken to the profit and loss account currently. 3.13. Earnings per share Earnings per share is calculated by dividing the profit after tax for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. 3.14. Impairment The carrying amount of the Company's assets other then deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment, if such indications exist, the assets recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in profit and loss account. However, impairment loss of a revalued asset is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of assets. 3.15. Foreign currency translations Transactions in foreign currencies are translated into Pak Rupees at the foreign exchange rates ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Rupees at the exchange rate ruling on that date. Exchange differences arising on translation are recognised in the profit and loss account. 3.16. Dividends Dividend distribution to holders of equity instruments are recognised as a liability in the period in which the dividends are declared. 3.17. Off setting of financial assets and financial liabilities A financial asset and a financial liability are offset and the net amount reported in the balance sheet, when the Company has a legally enforceable right to set off the transaction and it intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. 4. PROPERTY, PLANT AND EQUIPMENT ========================================================================================================================================================================
2008
========================================================================================================================================================================
Cost / Revaluation Accumulated Depreciation Written
As at Additions (Disposals) As at Rate As at For the (disposals) As at down value
1 July 2007 30 June 2008 1 July 2007 % 1 July 2007 year / 30 June as on 30
impairment * 2008 June 2008
========================================================================================================================================================================
(Rupees in '000) (Rupees in '000)
========================================================================================================================================================================
Leasehold land 1,536 - 1,536 - 23 16 - 39 1,497
Factory and office building 5,671 - 5,671 10 567 510 - 1,077 4,594
on Leasehold land
Plant and Machinery 7.416 - - 7,416 10 740 668 - 1,934 5,482
526 * *
Furniture and fixtures 2,264 16 - 2,280 10 1,176 111 - 1,287 993
Vehicles 2,315 - - 2,315 20 631 337 - 968 1,347
Office equipment 1,027 - - 1,027 10 619 41 - 660 367
Factory equipment 1,193 - - 1,193 10 620 57 677 516
Gas, electrical and telephone installa 586 - - 586 10 411 18 - 429 157
Loose tools 21 - 21 10 21 - - 21 -
Furnace 46 - 46 10 46 - - 46 -
Laboratory equipment 1,839 - 1,839 10 1,248 59 - 1,307 532
Computers 2,002 150 2,152 33 1,805 190 - 1,995 157
25,916 166 - 26,082 7,907 2,007 - 10,440 15,642
Leased
526
Vehicles 1,388 - - 1,388 20 320 214 - 534 854
1,388 - - 1,388 320 214 - 534 854
30 June 2008 27,304 166 - 27,470 8,227 2,221 - 10,974 16,496
526
========================================================================================================================================================================
2007
========================================================================================================================================================================
Cost / Revaluation Accumulated Depreciation Written
As at Additions (Disposals) As at Rate As at For the (disposals) As at down value
1 July 2007 30 June 2008 1 July 2007 % 1 July 2007 year / 30 June as on 30
impairment * 2008 June 2008
========================================================================================================================================================================
- (Rupees in '000) (Rupees in '000)
========================================================================================================================================================================
Leasehold land 1,536 - - 1,536 - 7 16 - 23 1,513
Factory and office building 5,671 - - 5,671 10 567 - 567 5,104
on Leasehold land
Plant and Machinery 7,371 45 - 7,416 10 - 740 - 740 6,676
Furniture and fixtures 2,248 16 - 2,264 10 1,057 119 - 1,176 1,088
Vehicles 3,820 - (1,505) 2,315 20 965 534 (868) 631 1,684
Office equipment 960 67 - 1,027 10 577 42 - 619 408
Factory equipment 737 456 - 1,193 10 603 17 - 620 573
Gas, electrical and telephone installa 586 - - 586 10 392 19 - 411 175
Loose tools 21 - - 21 10 19 2 - 21 -
Furnace 46 - - 46 10 43 3 - 46 -
Laboratory equipment 1,663 176 - 1,839 10 1,178 70 - 1,248 591
Computers 1,933 69 - 2,002 33 1,475 330 - 1,805 197
26,592 829 (1,505) 25,916 6,316 2,459 (868) 7,907 18,009
Leased
Vehicles 889 499 - 1,388 20 74 246 - 320 1,068
889 499 - 1,388 74 246 - 320 1,068
30 June 2007 27,481 1,328 (1,505) 27,304 6,390 2,705 (868) 8,227 19,077
========================================================================================================================================================================4.1. Depreciation for the year has been allocated as follows:======================================================================================
2008 2007
Note (Rupees in '000')
======================================================================================
Cost of sales 21 1,222 1,334
Distribution and Selling expenses 22 705 780
Administration expenses 23 294 591
2,22 1 2,705
======================================================================================4.2. Additional depreciation arising due to revaluation of assets amounted to Rs. 0.63 5 million (20.07: Rs. 0.706 million). Cost of revalued property, plant and equipments is as follows:======================================================================================
Surplus on Original
Revaluation Cost
======================================================================================
As at June 30, 2006
Factory and office building 3,497 1,970
Plant and machinery 1,486 1,529
4,983 3,499
======================================================================================5. LONG TERM LOANS AND ADVANCES======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
- Considered good
Non-executive employees 940 1,112
Receivable within one year (280) (410)
660 702
======================================================================================5.1. This represents interest free loan to employees for the purpose of purchase of motor vehicle. These loans are secured against these motor vehicles and are recoverable in equal monthly instalments.5.2. These loans have not been discounted to their present values as the financial impact is not material. Maximum aggregate balances due at the end of any month during the year were as follows: ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Non - executive employees 1,793 665
======================================================================================6. LONG TERM DEPOSITS======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Lease deposits 139 139
Utilities 91 91
230 230
======================================================================================7. DEFERRED TAXATIONDebit balances arising in respect of: ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
- Provision for doubtful debts 7,265 6,891
- Provision for director's retirement benefit - 105
- Provision for leave encashment 401 -
- Provision for obsolete stock 174 175
- Lease rentals 30 3
- Carry forward tax balance of minimum tax liability 488 1,514
-Others - 888
8,358 9,576
Credit balances arising in respect of:
- Revaluation surplus (3,656) (4,062)
- Accelerated tax depreciation (4,065) (4,578)
- Amortisation of consumable stores (129) (129)
(7,850) (8,769)
508 807
======================================================================================8. CONSUMABLE STORES======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Consumable stores 368 736
Amortised during the year (368) (368)
- 368
======================================================================================
Useful life 4 years 4 years
======================================================================================8.1. Consumable stores represent grinding balls used in the production process. Amortisation on it has been included in cost of sales.9. STOCK-IN-TRADE ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Raw material 1,005 5,644
Packing material 220 362
Work-in-process 9.1 4,968 1,378
Finished goods 13,571 20,317
19,764 27,701
Provision against slow moving stocks:
- Raw material - (360)
- Packing material (110) -
- Finished goods (387) (140)
(497) (500)
19,267 27,201
======================================================================================9.1. This includes work in process amounting to Rs. 4.968 million (2007: Rs. 1.335 million) held by Berger Paints Pakistan Limited, a related party, at the end of the year.10. TRADE DEBTS - unsecured ======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
Considered good 10.1 46,806 59,030
Considered doubtful 20,756 19,688
67,562 78,718
Provision against debts considered doubtful 10.2 (20,756) (19,688)
46,806 59,030
======================================================================================10.1. Included herein is a sum of Rs.1.094 (2007: Rs. 5.287) million due from Berger Paints Pakistan Limited, a related party.10.2. ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Opening balance 19,688 15,683
Charge for the year 1,068 4,005
Closing balance 20,756 19,688
======================================================================================11. ADVANCES AND DEPOSITS======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Advances - considered good
- Employees 208 348
-Others 10 32
218 380
Deposits
Margin against letters of guarantee 2,641 1,518
Earnest money 2,092 1,744
Tender deposits 1,008 970
Central Depository Company of Pakistan Limited 10 13
Suppliers 51 51
5,802 4,296
6,020 4,676
======================================================================================12. PREPAYMENTS AND OTHER RECEIVABLES======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
Prepayments
Insurance 412 232
Repairs and maintenance - 20
Rent - 20
Others 156 112
568 384
Other receivables
Sales tax receivable 1,153 127
Others 12.1 421 -
2,142 511
======================================================================================12.1. This represents amount receivable from a related party.13. CASH AND BANK BALANCES ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
In hand 53 84
At banks
- in current accounts 14,534 20,013
- in deposit accounts 150 150
14,737 20,247
======================================================================================14. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL=================================================================================
2008 2007
(Rupees in '000')
=================================================================================
Number of shares
2008 2007
=================================================================================
1,257,2881,257,288 Ordinary shares of Rs.10 each
fully paid in cash 12,573 12,573
82,712 82,712 Ordinary shares of Rs.10 each
fully paid for consideration other
than cash 827 827
100,000 100,000 Ordinary shares of Rs.10 each
issued as fully paid bonus shares 1,000 1,000
1,440,0001,440,000 14,400 14,400
=================================================================================Issued, subscribed and paid-up capital at the year end included 1,171,299 (2007: 1,171,299) ordinary shares of Rs. 10 each, held by associated undertakings.15. SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Balance as on 1 July 9,640 10,346
Surplus eliminated on account of impairment of
plant and machinery (342) -
Related deferred tax liability (184) -
9,114 10,346
Transferred to retained earnings in respect of
incremental depreciation charged during the year (413) (459)
Related deferred tax liability (222) (247)
8,479 9,640
Less:
Related deferred tax liability at beginning of the year 4,062 4,309
Related deferred tax liability on
account of impairment of property,
plant and equipment (184) -
On incremental depreciation for the year (222) (247)
3,656 4,062
Balance as on 30 June 4,823 5,578
======================================================================================15.1. Description of revaluationsa) Leasehold land, factory and office buildings and plant and machinery were first revalued by Salim Hyder & Co., Valuation Consultants, on 3 May 1976 resulting in an increase over book values of Rs. 0.683 million, Rs. 0.421 million and Rs.0.564 million, respectively, aggregating to Rs. 1.668 million, credited to the surplus on revaluation of property, plant and equipments. b) A second revaluation of leasehold land, factory and office buildings and plant and machinery was carried out by lqbal A. Nanjee & Co., Valuation Consultants, on 14 June 1989 resulting in an increase over book values of Rs. 16.432 million, Rs. 1.866 million and Rs.8.749 million, respectively, aggregating to Rs. 27.047 million, credited to the surplus on the revaluation of property, plant and equipments. Thereafter, surplus of Rs. 0.089 million was realised and transferred to general reserves as a result of disposal of plant and machinery during the year ended 30 June 1995. c) During the years ended 30 June 1996 and 30 June 2000, further surplus, amounting to Rs. 3.566 million and Rs. 0.721 million was realised and transferred to the general reserve as a result of disposal of leasehold land and machinery, respectively. d) A third revaluation of plant and machinery was carried out by lqbal A. Nanjee & Co., Valuation Consultants, on 3 July 2000, resulting in an increase of Rs. 3.370 million over the book value, credited to surplus on revaluation of property, plant and equipments. e) On 18 July 2000 and 31 July 2001, the Company sold and leased back plant and machinery, having a net book value of Rs 5.000 million after revaluation. In respect of these assets, Rs. 6.826 million of surplus on revaluation existed in the books which has been transferred to the general reserve. f) During the year ended 30 June 2003, a sum of Rs. 1.113 million was transferred to 'Deferred Taxation' as a result of the first time application of S.R.O. 45(1)/2003, dated 13 January 2003, issued by the Securities and Exchange Commission of Pakistan. g) Further, an aggregate sum of Rs. 5.955 million (2006: Rs. 5.496 million), net of deferred tax, has been realised and transferred to equity on account of incremental depreciation, whereas a sum of Rs. 11 .476 million, net of deferred tax, has been realised on the disposal of leasehold land, building and plant and machinery, since the IAS revaluation of property, plant and equipments. h) Factory, office buildings and plant & machinery were revalued on 30 June 2006 by Iqbal A. Nanjee & Co., Valuation and Engineering Consultants. The revaluation resulted in a surplus of Rs.4.983 million. The fair value of property, plant and equipment is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. 16. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE ==============================================================================================
2008 2007
==============================================================================================
Not later Later than Total Not later Later than Total
than one one year than one one year
year but not year but not
later than later than
five years five years
==============================================================================================
(Rupees in 000)
==============================================================================================
Minimum lease payments 401 459 860 401 860 1,261
Financial charges (63) (30) (93) (108) (93) (201)
Principal 338 429 767 293 767 1,060
==============================================================================================The Company has entered into an agreement with Faysal Bank Limited and Orix Leasing Company for the lease of cars. Lease rentals include financial charges at 12.5% to 16% (2007: 12.5% to 16%) per annum which has been used as a discounting factor and are payable on monthly basis. The Company has an option to purchase the assets upon completion of lease period, by adjusting the security deposit.17. SHORT TERM RUNNING FINANCE - secured This represents short term running finance facility of Rs. 45 million (2007: 15 million) obtained from Habib Metropolitan Bank to finance the working capital requirements. The facility carries mark up at the rate of 3 percent above three months average KIBOR (2007: 2.5 percent above three months KIBOR), payable quarterly with the floor of 12.5% (2007: 13%). This facility is secured against registered first ranking (pari passu) hypothecation charge over stocks and receivables of the Company, amounting to Rs. 70 million (2007: Rs 34 million). 18. TRADE AND OTHER PAYABLES ======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
Creditors 18.1 44,093 90,370
Accrued liabilities
Accrued expenses 2,192 2,351
Salaries payable 180 1,367
2,372 3,718
Unclaimed Dividend 253 253
46,718 94,341
Other liabilities
Advances from customers 1,468 1,474
Unfunded gratuity scheme 18.2 73 212
Directors' retirement benefits - 300
Deposit for car - 300
Workers' welfare fund 288 118
Workers' profit participation fund 18.3 367 -
Insurance claim payable 400 -
Employees' Provident Fund 72 96
Sales tax *421 278
Deposit from contractors 25 25
Commission payable 1,373 2,208
Income tax suppliers 42 762
Others 148 571
4,677 6,344
51,395 100,685
======================================================================================* This represents sales tax in respect of toll manufacturing income.18.1. Included herein is a sum of Rs. 40.747 (2007: Rs. 80.972) million due to Berger Paints Pakistan Limited, a related party. 18.2. With effect from 1 January 1997, the Company discontinued its unfunded staff gratuity scheme for all of its employees. The entitlement for gratuity, which was already earned by the employees at that date, was restricted to the date of discontinuance. Since the total liability payable by the Company has been provided for, actuarial valuation was not carried out. 18.3. Workers' profit participation fund ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Balance as at 1 July - -
Interest on funds utilised in the Company's business - -
Allocation for the year - -
26 367
Payments made during the year - -
Balance as at 30 June 367 -
======================================================================================19. CONTINGENCIES AND COMMITMENT======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
Contingencies
Letter of Guarantees 19.1 4,338 4,271
Commitment
Letter of Credits - 2,554
======================================================================================19.1. These represent guarantees given against supplies to Government departments against their orders and in favour of Collector of Central Excise Department and Customs.20. NET SALES =================================================================================================================
Continuing operation Discontinued operation Total operation
2008 2007 2008 2007 2008 2007
(Rupees in '000') (Rupees in '000') (Rupees in '000')
=================================================================================================================
Gross sales 164,089 137,661 - 224,606 164,089 362,267
Sales tax and special excise duty (22,292) (18,058) - (29,463) (22,292) (47,521)
141,797 119,603 - 195,143 141,797 314,746
Commission and discount (4,016) (4,366) - (7,123) (4,016) (11,489)
137,781 115,237 - 188,020 137,781 303,257
=================================================================================================================21. COST OF SALES=================================================================================================================
Continuing operation Discontinued operation Total operation
2008 2007 2008 2007 2008 2007
Note (Rupees in '000') (Rupees in '000') (Rupees in '000')
=================================================================================================================
Raw material 5,644 3,444 - 5,620 5,644 9,064
Packing material 362 631 - 1,030 362 1,661
6,006 4,075 - 6,650 6,006 10,725
Add: Purchases
Raw material 91,030 63,236 - 103,174 91,030 166,410
Packing material 6,607 9,916 - 186,180 6,607 26,096
97,637 73,152 - 119,354 97,637 192,506
103,643 77,227 - 126,004 103,643 203,231
Less: Closing stock
Raw material 1,005 2,155 - 3,489 1,005 5,644
Packing material 220 138 - 224 220 362
1,225 2,293 - 3,713 1,225 6,006
Raw and packing material consumed 102,418 74,934 - 122,291 102,418 197,225
Manufacturing expenses
Salaries, wages and
other benefits 21.1 2,006 1,667 - 2,720 2,006 4,387
Telephone, fax andpostage 72 45 - 74 72 119
Rent, rates and taxes 193 6 - 11 193 17
Fuel and power 895 320 - 521 895 841
Vehicle running expenses - 22 - 37 - 59
Repairs and maintenance 79 109 - 178 79 287
Insurance 18 18 - 29 18 47
Depreciation 4.1 1,222 507 - 827 1,222 1,334
Consumable stores 368 140 - 228 368 368
Printing and stationery 29 22 - 35 29 57
Toll manufacturing 1,435 1,867 - 3,046 1,435 4,913
Fees and subscription 19 - - - 19 -
Sundry expenses 20 146 - 239 20 385
6,356 4,869 - 7,945 6,356 12,814
Work in process
Opening stock 1,378 801 - 1,306 1,378 2,107
Closing stock (4,968) (524) - (854) (4,968) (1,378)
Cost of goods manufactured 105,184 80,080 - 130,688 105,184 210,768
Finished goods
Opening stock 20,317 9,678 - 15,790 20,317 25,468
Closing stock (13,571) (7,720) - (12,597) (13,571) (20,317)
111,930 82,038 - 133,881 111,930 215,919
=================================================================================================================21.1. Included herein is a sum of Rs.0.05l million (2007: Rs. 0.053 million) in respect of staff retirement benefits.22. DISTRIBUTION AND SELLING EXPENSES =================================================================================================================
Continuing operation Discontinued operation Total operation
2008 2007 2008 2007 2008 2007
Note (Rupees in '000') (Rupees in '000') (Rupees in '000')
=================================================================================================================
Salaries and other benefits 22.1 7,390 6,447 - 10,518 7,390 16,965
Insurance 175 165 - 268 175 433
Rent, rates and taxes 275 328 - 534 275 862
Carriage outward 2,219 4,085 - 6,664 2,219 10,749
Sample and packing 129 285 - 466 129 751
Advertising and
promotional expenses 399 7,710 - 30,231 399 37,941
Vehicle running expenses 258 314 - 512 258 826
Travelling and conveyance 974 1,669 - 2,722 974 4,391
Printing and stationery 140 146 - 237 140 383
Postage, telephone and fax 268 412 - 673 268 1,085
Electricity and gas 190 172 - 281 190 453
Repairs and maintenance 8 129 - 211 8 340
Depreciation 4.1 705 296 - 484 705 780
Entertainment and welfare 93 147 - 240 93 387
Fees and subscription 62 110 - 180 62 290
Sundry expenses 7 20 - 31 7 51
13,292 22,435 - 54.252 13,292 76,687
=================================================================================================================22.1. Included herein is a sum of Rs. 0.210 million (2007: Rs. 0.286 million) in respect of staff retirement benefits.23. ADMINISTRATIVE EXPENSES =================================================================================================================
Continuing operation Discontinued operation Total operation
2008 2007 2008 2007 2008 2007
Note (Rupees in '000') (Rupees in '000') (Rupees in '000')
=================================================================================================================
Salaries and other benefits 23.1 4,806 2,988 - 4,874 4,806 7,862
Directors' fee 69 27 - 45 69 72
Electricity, gas and water 208 101 - 164 208 265
Insurance 125 43 - 69 125 112
Printing and stationery 230 84 - 138 230 222
Postage, telephone and fax 252 108 - 177 252 285
Travelling and conveyance 270 167 - 272 270 439
Auditor's remuneration 23.2 229 80 - 130 229 210
Fees and subscription 342 82 - 135 342 217
Legal and Professional fees 516 263 - 428 516 691
Vehicle running expenses 232 106 - 172 232 278
Repairs and maintenance 50 30 - 48 50 78
Depreciation 4.1 294 225 - 366 294 591
Provision against debts
considered doubtful 1,068 1,522 - 2,483 1,068 4,005
(Reversal) of provision
against slow moving stocks (3) - - 111 (3) 111
Entertainment and welfare 93 33 - 55 93 88
Security expenses 290 23 - 38 290 61
Sundry expenses 18 30 - 49 18 79
9,089 5,912 - 9,754 9,089 15,666
=================================================================================================================23.1. Included herein is Rs. 0.213 million (2007: Rs. 0.248 million) in respect of staff retirement benefits.23.2. Auditors' remuneration ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Statutory audit 200 170
Other certifications and special reports 10 25
Out-of-pocket expenses 19 15
229 210
======================================================================================24. OTHER EXPENSES=================================================================================================================
Continuing operation Discontinued operation Total operation
2008 2007 2008 2007 2008 2007
(Rupees in '000') (Rupees in '000') (Rupees in '000')
=================================================================================================================
Sales tax written-off 200 - - 1,226 200 1,226
Other assets written-off - 834 - - - 834
200 834 - 1,226 200 2,060
=================================================================================================================25. OTHER OPERATING INCOME======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
Non Financial asset
Gain on Sale of property plant and equipment - 510
Sale of scrap 217 1,537
Rental income 25.1 480 170
Royalty income 25.2 1,837 380
Toll manufacturing income 25.3 2,630 54
Miscellaneous income 1,079 -
6,243 2,651
======================================================================================25.1. This represent income from letting of warehouse to Berger Paints Pakistan Limited, a related party.25.2. IAS year the Company has entered into a royalty agreement with Berger Paints Pakistan Limited, a related party, at a rate of 1 percent of net sales for the use of the Company's brand name. 25.3. This represent toll manufacturing income in respect of goods manufactured for a related party. 26. FINANCE COST ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Finance cost on leases 108 147
Markup on Short term running finance - secured 1,852 1,543
Workers' profit participation fund 367 -
Workers' welfare Fund 170 -
Bank charges 337 881
2,834 2,571
======================================================================================27. TAXATION======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
Continuing operations
Current - 576
Prior years 342 -
Deferred 483 (632)
825 (56)
Discontinued operations
Current - 940
27.1 825 884
======================================================================================27.1. Relationship between income tax expense and accounting profit======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Profit / (loss) before taxation 6,679 (7,012)
Tax at the applicable rate of 35% 2,338 (2,454)
Tax effect of expenses that are not allowable
in determining taxable income 1,590 3,674
Tax effect of expenses that are not allowed
for accounting purposes but deductible
in determining taxable income (972) (1,246)
Deferred tax asset recorded on
unused business losses previously
not recognised and minimum tax (2,417) 690
Others 286 220
825 884
======================================================================================27.2. Current status of tax assessmentsThe income tax assessments of the Company have been finalised upto and including the tax year 2007 (income year ended 30 June 2007). The return for tax years 2003 to 2007 have been filed under the Universal Self Assessment Scheme which provides that return filed is deemed to be an assessment order. However, these returns (i.e. return for tax years 2003 to 2007) may be selected for detail audit within five years and the Commissioner of Income Tax may amend the assessment in case of objection raised in audit. 28. DISCONTINUED OPERATIONS On 5 March 2007, the Company discontinued its retail decorative paints operations. The Company has entered into a royalty agreement with Berger Paints Pakistan Limited, a related party. Under the royalty agreement Berger Paints Pakistan Limited shall pay to the Company royalty @ 1% of sales net of discounts on all Buxly brand products manufactured and sold by Berger Paints Pakistan Limited. ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Net sales - 188,020
Cost of sales - 133,881
Gross profit - 54,139
Distribution and selling expenses - 54,252
Administrative expenses - 9,754
Other expenses - 1,226
- 65,232
Results from operating activities - (11,093)
Taxation - (940)
Loss from discontinued operations after taxation - (12,033)
Cash used in discontinued operations
Loss before taxation - (11,093)
Adjustment for:
Depreciation - 1,677
Provision against slow moving stocks - 111
Provision for doubtful debts - 2,483
Amortisation of consumable stores 228
Net cash used in operating activities - (6,594)
Working capital changes
(Increase) / decrease in current assets
Stock-in-trade - 8,880
Trade debtors - 20,390
Increase / (decrease) in current liabilities
Trade Creditors - (15,600)
Net cash flows from operating activities - 7,076
Net cash used in investing activities - -
Net cash used in financing activities - -
Net cash from discontinued operations - 7,076
======================================================================================29. EARNINGS PER SHAREBasic earnings per share has been computed by dividing net profit for the year after taxation by the weighted average number of shares outstanding during the year. There is no dilutive effect on the basic earnings per share. =================================================================================================================
Continuing operation Discontinued operation Total operation
2008 2007 2008 2007 2008 2007
(Rupees in '000') (Rupees in '000') (Rupees in '000')
=================================================================================================================
Profit for the year after taxation
5,854 4,154 - (12,033) 5,854 (7,879)
=================================================================================================================
Number of Shares in '000
=================================================================================================================
Weighted average number of shares
outstanding during the year 1,440 1,440
=================================================================================================================
=================================================================================================================
(Rupees) (Rupees)
=================================================================================================================
Earning / (loss) per share 4.07 2.88 4.07 (5.47)
=================================================================================================================30. CASH (USED IN) / GENERATED FROM OPERATIONS======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
Profit before taxation 6,679 4,098
Depreciation 2,221 1,028
Gain on sale of property, plant and equipments - (510)
Arnortisation of consumable stores 368 140
Financial charges 2,834 2,571
Provision for doubtful debts 1,068 1,522
Reversal of provision for stock (3) -
Working capital changes 30.1 (32,202) (7,171)
(19,035) 1,678
======================================================================================30.1. Working capital changes(Increase) / decrease in current assets ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Stock-in-trade 7,934 1,719
Trade debtors 12,224 (7,027)
Advances and deposits (1,844) (445)
Prepayments and other receivables (1,631) (152)
Increase / (decrease) in current liabilities
Creditors and accrued liabilities (48,885) (1,266)
Cash used in operations (32,202) (7,171)
======================================================================================31. CASH AND CASH EQUIVALENTSCash and cash equivalents comprise of: ======================================================================================
Note 2008 2007
(Rupees in '000')
======================================================================================
Cash and bank balances 13 14,737 20,247
Short term running finance 17 (29,814) (8,932)
(15,077) 11,315
======================================================================================32. REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES======================================================================
2008 2007
Chief Chief
Executive Executive Executive Executive Executive
======================================================================
(Rupees in '000')
======================================================================
Managerial remuneration 1,935 - 1,935 -
House rent allowance 871 - 871 -
Utilities 194 - 194 -
Medical expenses 86 - 93 -
Leave passage 242 - 242 -
Retirement benefits 161 - 161 -
3,489 - 3,496 -
Number of persons 1 - 1 -
======================================================================The Chief Executive Officer is provided free use of Company's car in accordance with the entitlement.33. PLANT CAPACITY AND PRODUCTION ======================================================================================
2008 2007
(In litres)
======================================================================================
Buxly's own production 168,880 1,334,978
Produced by a related party for Buxly 410,000 1,402,784
under toll manufacturing agreement
Produced by Buxly for a related party 751,602 -
under toll manufacturing agreement
1,330,482 2,737,762
======================================================================================The capacity of the Company's plant is indeterminable as it is a multi product plant involving varying processes of manufacturing.34. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 34.1. Interest / mark-up rate risk management Interest / mark-up rate risk arise from the possibility that changes in interest / mark-up rates will affect the value of financial instruments. In respect of income earning financial assets and interest / mark-up bearing financial liabilities, the following table indicates their effective interest / mark-up rates at the balance sheet date and the periods in which they will re-once or mature: ================================================================================================================================================
2008
Effective Interest / Mark-up bearing Non-Interest / Markup bearing Total
Yield/
mark-up Maturity Maturity Maturity Maturity
rate Upto one after one Sub-total Upto one after one Sub-total
year year year
================================================================================================================================================
Financial Assets Rs. in '000's)
================================================================================================================================================
Long term loans and - - - - 280 660 940 940
Long term deposits - - - - 91 139 230 230
Trade debts - - - - 46,806 - 46,806 46,806
Advances and deposits - - - - 6,020 - 6,020 6,020
Other Receivables - - - - 1,574 - 1,574 1 ,574
Cash and bank
balances 2-3 150 - 150 14,587 - 14,587 14,737
150 - 150 69,358 799 70,157 70,307
Financial Liabilities
Liabilities against assets
subject to
finance lease 12.5 - 16 338 429 767 - - - 767
Trade and other
payables - - - - 51,395 - 51,395 51,395
Short term running
finance 12.5- 14 29,814 - 29,814 - - - 29,814
Interest /
mark-up accrued - - - 691 - 691 691
30,152 429 30,581 52,086 - 52,086 82,667
2007
================================================================================================================================================
Effective Interest / Mark-up bearing Non-Interest / Markup bearing Total
Yield/
mark-up Maturity Maturity Maturity Maturity
rate Upto one after one Sub-total Upto one after one Sub-total
year year year year
================================================================================================================================================
(Rs. in '000's)
================================================================================================================================================
Financial Assets
Long term loans
and advances - - - - 702 410 1,112 1,112
Long term deposits - - - - 91 139 230 230
Trade debts - - - - 59,030 - 59,030 59,030
Advances and deposits - - - - 4,676 - 4,676 4,676
Other Receivables - - - - 127 - 127 127
Cash and bank balances 2 - 3 150 - 150 20,097 - 20,097 20,247
150 - 150 84,723 549 85,272 85,422
Financial Liabilities
Liabilities against assets
subject to
finance lease 12.5 - 16 293 767 1,060 - - - 1,060
Trade and
other payables - - - - 100,686 - 100,686 100,686
Short term running
finance 13 - 14 8,932 - 8,932 - - - 8,932
Interest /
mark-up accrued - - - - 382 - 382 382
9,225 767 9,992 101,068 - 101,068 111,060
================================================================================================================================================34.2. Credit risk exposure and concentration of credit riskCredit risk represents the accounting loss that would be recognised at the reporting date if counter parties failed completely to perform as contracted. Out of the total financial assets of Rs.70.307 million (2007: Rs. 85.422 million), the financial assets which are subject to credit risk amounted to Rs. 47.746 million (2007: Rs. 60.142 million). The Company manages credit risk in trade receivables by limiting significant exposure to any individual customers. The management also continuously monitors the credit exposure towards the customers and makes provision against those balances considered doubtful of recovery. Details of composition of deposits and trade debts portfolios and their concentrations are given below: ====================================================================================
2008 2007
Deposit Trade debts Deposit Trade debts
(gross) (gross)
====================================================================================
Government departments 3,100 9,846 2,714 9,905
Industries - 20,857 - 21,796
Dealers - 32,078 - 43,594
Others 2,702 4,781 1,582 3,423
5,802 67,562 4,296 78,718
====================================================================================34.3. Liquidity riskLiquidity risk reflects the Company's inability in raising funds to meet its commitments. The Company follows an effective cash flow management to ensure availability of funds and to take appropriate measures for expected requirements. 34.4. Fair value of financial instruments Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arms length transaction. The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair value. 35. CAPITAL RISK MANAGEMENT The objective of the Company when managing capital is to safeguard its ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and to maintain a strong capital base to support the sustained development of its businesses. The Company manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to the shareholders or issue new shares. 36. ACCOUNTING ESTIMATES AND JUDGEMENTS The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 36.1. Income taxes In making the estimates for income taxes currently payable by the Company the management considers the current income tax law and the decision of appellate authorities on certain issues in the past. 36.2. Stock in trade and stores and spares The Company reviews the net realisable value of stock in trade and stores and spares to assess any diminution in the respective carrying values. Any change in the estimates in future years might affect the carrying amounts of stock in trade and stores and spares with a corresponding affect on the amortisation charge and impairment. Net realisable value is determined with respect to estimated selling price less estimated expenditures to make the sales. 36.3. Property, plant and equipment The estimates for revalued amounts, if any, of different classes of property, plant and equipment, are based on valuation performed by external professional valuers and recommendation of technical teams of the Company. Further, the Company reviews the value of the assets for possible impairment on each reporting date 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 affect on the depreciation charge and impairment. 36.4. Trade debts The Company reviews it's debtors portfolio regularly to assess amount of any provision required against such trade debts. 37. NON - ADJUSTING EVENT AFTER BALANCE SHEET DATE The Board of Directors in its meeting held on 26 September 2008 has proposed a final cash dividend of Re 1.00 per share amounting to Rs. 1.440 M (2007: Nil) and transfer of an amount of Rs. Nil ( 2007: Nil) from unappropriated profit to General Reserves for approval of the members at the Annual General Meeting to be held on 22 October 2008. The financial statements for the year ended 30 June 2008 do not include the effect of the proposed cash dividends, which will be accounted for in the financial statements for the year ending 30 June 2009. 38. RELATED PARTY RELATIONSHIP AND TRANSACTIONS Related parties comprises of Berger Paints Pakistan Limited, directors of the Company, major share holders and their close family members and key management personnel. The Company continues to have a policy whereby all transactions with related parties undertakings are entered into at commercial terms and conditions. Further, contribution to defined contribution plan (provident fund) are made as per the terms of employment. Remuneration of key management personnel are in accordance with their terms of engagements. Details of transactions with related parties, other than those which have been specifically disclosed elsewhere in these financial statements are as follows ======================================================================================
2008 2007
(Rupees in '000')
======================================================================================
Sales during the year 4,860 2,907
Purchases during the year 92,315 154,867
Rental income earned during the year 480 170
Toll manufacturing income earned 2,630 54
Toll manufacturing expenses incurred 1,435 4,913
Due from Berger Paints Pakistan Limited 1,094 5,287
Due to Berger Paints Pakistan Limited 42,584 80,972
Due from Berger Paints - 108
Pakistan Limited - (rental income)
Due from Berger Paints Pakistan Limited 1,837 380
- (under royalty agreement)
Expences reimbursement 9,610 -
National Bank of Pakistan - bank deposit - 198
Paid to Director for consultancy 198 -
======================================================================================39. DATE OF AUTHORISATION FOR ISSUEThese financial statements were authorised for issue in the board of directors meeting held on September 26, 2008. |