| Colgate Palmolive (Pakistan) Ltd - 2006 |
======================================================================================== BALANCE SHEET AS AT JUNE 30, 2006 ======================================================================================== 2006 2005 Notes (Rupees in '000) ======================================================================================== ASSETS NON-CURRENT ASSETS: Property, plant and equipment 4 739,281 622,419 Intangible assets 5 23,200 29,000 Long term loans 6 9,551 6,001 Long term security deposits 1,983 2,323 774,015 659,743 CURRENT ASSETS: Stores and spares 7 16,140 11,058 Stock in trade 8 614,349 536,707 Trade debts 9 105,782 83,738 Loans and advances 10 35,728 16,620 Trade deposits, short term prepayments and other receivables 11 10,863 12,802 Accrued markup 12 2,609 519 Short term investments - available for sale 13 161,367 - Cash and bank balances 14 390,638 216,537 1,337,476 877,981 Total assets 2,111,491 1,537,724 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES AUTHORISED SHARE CAPITAL: 20,000,000 ordinary shares of Rs 10 each 200,000 200,000 Issued, subscribed and paid-up share capital 15 122,303 122,303 Reserves 16 1,175,286 829,310 Surplus on revaluation of investments 13 1,367 - 1,298,956 951,613 LIABILITIES NON-CURRENT LIABILITIES: Long term loans 17 8,125 52,189 Liabilities against assets subject to finance lease 18 1,085 1,658 Deferred taxation 19 99,532 92,000 Long term deposits 20 3,845 4,063 112,587 149,910 CURRENT LIABILITIES: Trade and other payables 21 516,706 331,324 Accrued interest 22 276 137 CURRENT MATURITIES OF: long term loans 17 54,064 61,567 liabilities against assets subject to finance lease 18 573 3,356 Short term borrowings 23 - 5,481 Taxation 128,329 34,336 699,948 436,201 Total liabilities 812,535 586,111 Contingencies and commitments 24 Total equity and liabilities 2,111,491 1,537,724 ======================================================================================== ======================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2006 ======================================================================================== 2006 2005 Notes (Rupees in '000) ======================================================================================== Turnover 6,286,355 4,883,261 Sales tax (878,335) (636,929) Trade discounts (402,325) (326,109) Net turnover 5,005,695 3,920,223 Cost of sales 25 (3,390,485) (2,861,841) Gross profit 1,615,210 1,058,382 Selling and distribution costs 26 (759,258) (505,505) Administrative expenses 27 (48,485) (42,727) Other operating expenses 28 (59,527) (36,718) Other operating income 29 34,702 8,185 Profit from operations 782,642 481,617 Finance costs 30 (13,309) (14,526) Profit before taxation 769,333 467,091 Taxation 31 (270,478) (164,117) Profit after taxation 498,855 302,974 Earnings per share - basic and diluted (Rupees) 32 40.79 24.77 ======================================================================================== ============================================================================================================================
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2006
============================================================================================================================
Issued, Capital Surplus on
subscribed reserve - Revenue reserves revaluation Total
and paid-up share of
share capital premium investments
General Unappro-
Reserve priated-
Profit
(Rupees in '000)
============================================================================================================================
Balance as at July 1, 2004 122303 13,456 510,000 125,183 - 770,942
Profit for the year ended June 30, 2005 - - - 302,974 - 302,974
Final dividend for the year ended
June 30, 2004 (Rs 10.00 per share) - - - (122,303) - (122,303)
Balance as at June 30, 2005 122,303 13,456 510,000 305,854 - 951,613
Balance as at July 1,2005 122,303 13,456 510,000 305,854 - 951,613
Profit for the year ended June 30, 2006 - - - 498,855 - 498,855
Final dividend for the year ended
June 30, 2005 (Rs 12.50 per share) - - - (152,879) - (152,879)
Transfer to general reserve - - 150,000 (150,000) - -
Unrealised gain during the year in the
market value of investments classified as
available for sale - - - - 1,367 1,367
Balance as at June 30, 2006 122,303 13,456 660000 501,830 1,367 1,298,956
============================================================================================================================
======================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2006 ======================================================================================== 2006 2005 Notes (Rupees in '000) ======================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 33 900,491 411,850 Finance costs paid (13,170) (14,457) Taxes paid (168,953) (115,877) Long term loans (3,550) (1,790) Long term deposits (net) 122 442 Net cash inflow from operating activities 714,940 280,168 CASH FLOWS FROM INVESTING ACTIVITIES: Fixed capital expenditure (195,904) (129,283) Sale proceeds on disposal of 4,259 3,433 property, plant and equipment Profit on bank deposits received 23,458 1,974 Profit on short term investments received 411 - Short term investments (165,000) - Sale proceeds on disposal of short term investments 5,036 - Net cash outflow due to investing activities (327,740) (123,876) CASH FLOWS FROM FINANCING ACTIVITIES: Long term loans (net) (51,567) (64,692) Liabilities against assets subject to finance leases (3,356) (5,431) Dividend paid (152,695) (122,052) Net cash outflow due to financing activities (207,618) (192,175) Net increase/(decrease) 179,582 (35,883) in cash and cash equivalents Cash and cash equivalents 211,056 246,939 at the beginning of the year Cash and cash equivalents at the end of the year 34 390,638 211,056 ========================================================================================NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2006 1. STATUS AND NATURE OF BUSINESS Colgate-Palmolive (Pakistan) Limited ("the company") was initially incorporated in Pakistan on December 5, 1977 as a public limited company with the name of National Detergents Limited. The name of the company was changed to Colgate-Palmolive (Pakistan) Limited on March 28, 1990 when the company entered into a Participation Agreement with Colgate-Palmolive Company, USA. The company is listed on the Karachi and Lahore Stock Exchanges. The registered office of the company is situated at Lakson Square, Building No 2, Sarwar Shaheed Road, Karachi. The Company is mainly engaged in the manufacture and sale of detergents, personal and other related products. 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES 2.1. BASIS OF PREPARATION These financial statements have been prepared in accordance with the requirements of the Companies Ordinance, 1984 (the Ordinance), and the International Accounting Standards (IASs) issued by the International Accounting Standards Committee (IASC) and interpretations issued by the Standing Interpretations Committee of the IASC (the interpretations), as adopted in Pakistan. However, the requirements of the Ordinance have been followed in case where its requirements are not consistent with the requirements of the IASs and the interpretations. Standards, interpretations and amendments to published accounting standards as adopted in Pakistan that are not yet effective: Following amendments to existing standards applicable to the company have been published that are mandatory for the company's accounting periods beginning on or after January 1, 2006: IAS 1 Presentation of Financial Statements - Capital disclosure Effective from January 1, 2007 IAS 19 (Amendments) - Employee Benefits Effective from January 1, 2006 IAS 39 Financial Instruments: Recognition and Measurements - Fair value option Effective from January 1, 2006Adoption of the above amendments may only impact the extent of disclosures presented in the financial statements. 2.2. ACCOUNTING CONVENTION These financial statements have been prepared under the historical cost convention except for recognition of certain staff retirement benefit at present value as referred to in note 2.11 and certain financial instruments that have been accounted for on the basis of their fair values as referred to in note 2.9. 2.3. PROPERTY, PLANT AND EQUIPMENT 2.3.1. OWNED These are stated at cost less accumulated depreciation and accumulated impairment losses, if any, except for leasehold land and capital work-in-progress which are stated at cost. Cost is depreciated as per the reducing balance method whereby depreciation is charged by applying rates (as stated in note 4.1) on the opening book value of the assets. Depreciation on additions is charged from the month in which the asset is put to use and on disposal up to the month of disposal at the rates stated in note 4.1 to these financial statements. No depreciation is charged if the asset's residual value exceeds its carrying amount. Effective July 1, 2005, residual values and the useful lives are reviewed at each balance sheet date and adjusted if expectations differ significantly from previous estimates. The management estimates that the financial impact of changes in the residual values and the useful lives during the year ended June 30, 2006 is immaterial. Residual values are determined by the management as the amount it expects it would receive currently for the item of property plant and equipment if it were already of the age and in the condition expected at the end of its useful life based on the prevailing market prices of similar assets already at the end of their useful life. Useful lives are determined by the management based on expected usage of the asset, expected physical wear and tear, technical and commercial obsolescence and other similar factors. Normal repairs and maintenance are charged to income as and when incurred. Major renewals and improvements, are capitalised and assets so replaced, if any, are retired. Profit or loss on disposal of assets is recognised in income currently. 2.3.2. ASSETS SUBJECT TO FINANCE LEASES The company accounts for property, plant and equipment held under finance leases by recording the asset and the related liability. These amounts are determined on the basis of discounted value of minimum lease payments or fair value whichever is lower. Financial charges are allocated to the accounting period in a manner so as to provide a constant periodic rate of charge on the outstanding liability. Depreciation is charged to income applying the reducing balance method at rates stated in note 4.1 below. 2.3.3. ASSETS HELD UNDER OPERATING LEASES Lease rentals payable on assets held under operating leases are recognised in income currently. 2.4. INTANGIBLE ASSETS Consistent with prior years, intangible assets are recognised when it is probable that the expected future economic benefits will flow to the entity and the cost of the asset can be measured reliably. An intangible asset is an identifiable non-monetary asset without physical substance. Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is charged over the estimated useful life of the asset as specified in note 5 to these financial statements on a systematic basis applying the straight line method. 2.5. IMPAIRMENT The company assesses at each balance sheet date whether there is any indication that property, plant and equipment and intangible assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed recoverable amount, assets are written down to the recoverable amount and the difference is recognised in income currently. 2.6. STORES AND SPARES Stores and spares are valued at moving average cost. Items-in-transit are valued at cost accumulated to the balance sheet date. 2.7. STOCK IN TRADE Stock in trade is valued at the lower of cost and estimated net realisable value. Consistent with prior years cost is determined as follows: Stages of stock in trade Basis of valuation
Raw and packing material - Moving average cost
Raw and packing material in bonded - Cost accumulated up to the balance
warehouse and in transit sheet date
Work in process - Cost of direct materials and
appropriate portion of
production overheads
Finished goods - Cost of direct materials
and appropriate portion of
production overheads
Trading goods - First in first out basisNet realisable value is determined on the basis of estimated selling price of the product in the ordinary course of business less estimated costs necessary to be incurred for its sale.2.8. TRADE DEBTS AND OTHER RECEIVABLES Trade debts and other receivables are carried at original invoice amount less an estimate for doubtful receivables based on review of outstanding debts and accordingly provision is made against those receivables having no movement during the current financial year and which are also considered doubtful by the management. Debts considered irrecoverable are written off when identified. 2.9. INVESTMENTS The management determines the appropriate classification of its investments in accordance with the requirements of International Accounting Standard 39; Financial Instruments: Recognition and Measurement (lAS 39) at the time of purchase of investment and re-evaluates this classification on a regular basis. The existing investment portfolio of the company has been categorised as available for sale. Available for sale financial assets are those financial assets that are not (a) loans and receivables originated by the company, (b) held-to-maturity investments, or (c) financial assets held for trading. Investments classified as available for sale investments are initially recognised at cost and are subsequently remeasured to fair value. Surplus / deficit arising due to movement in fair values of available for sale investments is transferred to equity. Investments are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the company has transferred substantially all risks and rewards of ownership. Impairment of investment is recognised when there is a permanent diminution in their value. 2.10. TAXATION 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, and tax paid on presumptive basis or minimum tax at the rate of 0.5 % of turnover, whichever is higher. Deferred The company accounts for deferred taxation on all major temporary differences using the liability method. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. 2.11. STAFF RETIREMENT BENEFITS Defined benefit plan The company operates a defined benefit plan i.e. an approved funded gratuity scheme for all its permanent employees subject to attainment of retirement age and minimum service of prescribed period. Contributions are made to the fund on the basis of actuarial recommendations. Actuarial valuation is carried out using the projected unit credit method. Actuarial gains / losses exceeding 10 percent of the higher of projected benefit obligation and fair value of plan assets, at the beginning of the year, are amortised over average future service of the employees. Defined contribution plan The company operates an approved funded provident fund scheme for all its permanent employees. Equal monthly contributions are made, both by the company and its employees, to the fund at the rate of 9 per cent of basic salaries of employees. Compensated absences The liability in respect of compensated absences of employees is accounted for in the period in which the absences accrue. 2.12. PROVISIONS Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. 2.13. FOREIGN CURRENCY TRANSLATION Transactions in foreign currencies are recorded in Pakistan rupees at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are reported in Pakistan rupees at the rates of exchange approximating those prevalent at the balance sheet date except those covered by forward exchange contracts. Exchange differences are charged to income currently. 2.14. REVENUE RECOGNITION Sales are recognised on dispatch of goods to customers. Mark-up / return on bank balances are recognised on a time proportion basis on the principal amount outstanding and at the rate applicable. Cumulative gain or loss previously recognised in equity on revaluation of fair values of available for sale financial assets are recognised in profit or loss at the time of their derecognition. Insurance commission income is recognised as and when received. 2.15. CASH AND CASH EQUIVALENTS Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of the cash flow statement, cash and cash equivalents comprise of cash in hand, deposits held with banks and running finances under mark-up arrangement. 2.16. DIVIDEND AND OTHER APPROPRIATIONS Dividend is recognised as a liability in the period in which it is declared. Consistent with prior years appropriations of profits are reflected in the statement of changes in equity in the period in which such appropriations are approved. 2.17. FINANCIAL INSTRUMENTS All financial assets and liabilities are recognised at the time when the company becomes a party to the contractual provisions of the instruments. All financial assets and liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively. Any gain or loss on the recognition and de-recognition of the financial assets and liabilities is included in the net profit and loss for the period in which it arises. 2.18. OFF-SETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES A financial asset and a financial liability is setoff and the net amount is reported in the balance sheet if the company has a legal right to setoff the transaction and also intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. 2.19. TRANSACTIONS WITH RELATED PARTIES The company enters into transactions with related parties for purchase of goods and services on an arm's length basis. 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are as follows: (a) Assumptions and estimations used in determining the residual values and useful lives of property, plant and equipment (note 4); (b) Assumptions and estimations used in writing down items of stock-in-trade to their net realisable value (note 8); (c) Assumptions and estimations used in calculating the provision for doubtful debts (note 9); (d) Assumptions and estimations used in recognition of deferred taxation (note 19); and (e) Assumptions and estimations used in accounting for defined benefit plan (note 39). Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. 4. PROPERTY, PLANT AND EQUIPMENT ========================================================================================
2006 2005
Notes (Rupees in '000)
========================================================================================
Operating fixed assets 4.1 653,116 618,025
Capital Work-in-progress 4.2 86,165 4,394
739,281 622,419
========================================================================================4.1. OPERATING FIXED ASSETS4.1.1. THE FOLLOWING IS A STATEMENT OF OPERATING FIXED ASSETS ============================================================================================================================================================================================================
Leasehold Factory Plant and machinery Electric Gas Furniture Tools Vehicles Computers Office Total
Land building Owned Held fittings installation and and Owned Held and equipment
on under and fixtures equipment under accessories
leasehold finance installation finance
land leases leases
(Rupees in 000)
============================================================================================================================================================================================================
AT JULY 1, 2004:
Cost 2,451 116,974 407,035 28,600 35,836 137 12,974 42,390 32,339 - 19,062 13,980 711,778
Accumulated depreciation - (39,121) (149,855) (7,751) (7,540) (110) (7,493) (18,132) (15,820) - (11,975) (9,064) (266,861)
Net book value 2,451 77,853 257,180 20,849 28,296 27 5,481 24,258 16,519 - 7,087 4,916 444,917
Year ended June 30, 2005
Opening net book value 2,451 77,853 257.180 20,849 28,296 27 5,481 24,258 16,519 - 7,087 4,916 444,917
Additions / *transfers from
capital work-in -progress
during the year 8,100 5,956 38,706 - 1,497 . 306 3,758 15,102 2,571 5,669 575 82,240
*16,729 *127,348 . *9,695 *88 *482 *345 - - *790 '411 *155888
DISPOSALS:
Cost - - (264) - . - (23) - (2,972) - - (17) (3,276)
Depreciation - - 246 - - - 14 - 1,896 - - 13 2,169
Net book value - - (18) - - - (9) - (1,076) - - (4) (1,107)
WRITE OFF:
Cost - - (6,205) - - - (186) - - (1,287) (9) (7,687)
Depreciation - - 5,298 - - 152 - - 1,113 6 6,569
Net book value - - (907) - - - - (34) - - (174) (3) (1,118)
Depreciation charge for the year - (8,605) (33,934) (2,085) (3,417) (3) (853) (3,912) (5,037) (482) (3,655) (812) (62,795)
Closing net book value 10,551 91,933 388,375 18,764 36,071 112 5,407 24,415 25,508 2,089 9,717 5,083 618,025
AT JUNE 30, 2005:
Cost 10,551 139,659 566,620 28,600 47,028 225 13,739 46,307 44,469 2,571 24,234 14,940 938,943
Accumulated depreciation - (47,726) (178,245) (9,836) (10,957) (113) (8,332) (21,892) (18,961) (482) (14,517) (9,857) (320,918)
Net book value 10,551 91,933 388,375 18,764 36,071 112 5,407 24,415 25,508 2,089 9,717 5,083 618,025
AT JULY 1, 2005:
Cost 10,551 139,659 566,620 28,600 47,028 225 13,739 46,307 44,469 2.571 24,234 14,940 938,943
Accumulated depreciation - (47,726) (178,245) (9,836) (10,957) (113) (8,332) (21.892) (18,961) (482) (14,517) (9,857) (320,918)
Net book value 10.551 91,933 388,375 18,764 36,071 112 5,407 24,415 25,508 2,089 9,717 5,083 618,025
Year ended June 30, 2006
Opening net book value 10,551 91,933 388,375 18,764 36,071 112 5,407 24.415 25,508 2,089 9,717 5,083 618,025
Additions / 'transfers from
capital work-in- progress
during the year - 1,269 41,968 - 3,332 - 900 4,060 47,084 - 3,171 1,173 102,957
'8,139 '2,195 - *195 *647 *11,176
Transfers from finance lease 28,600 (28,600) - -
Depreciation on transfers (9,836) 9,836 - -
DISPOSALS:
Cost (196) - . - - - - - (3,619) - (108) (207) (4,130)
Depreciation - - - - - - - - 2,235 - 43 132 2,410
Net book value (196) - - - - - - (1.384) - (65) (75) (1,720)
WRITE OFF:
Cost - - - - - - - - - - (1,422) (332) (1,754)
Depreciation - - - - - - - - - 1,304 264 1,568
Net book value - - - - - - . - - - (118) (68) (186)
Depreciation charge for the year - (9,328) (43,072) - (3,763) (11) (869) (3,929) (11,054) (522) (3,751) (837) (77,136)
Closing net book value 10,355 92,013 408.230 - 35,835 101 6,085 24,546 60,154 1,567 8,954 5,276 653,116
AT JUNE 30, 2006:
Cost 10,355 149,067 639,383 - 50,555 225 15,286 50,367 87,934 2,571 25,875 15.574 1,047,192
Accumulated depreciation - (57,054) (231 ,153) - (14,720) (124) (9,201) (25,821) (27,780) (1,004) (16,921) (10,298) (394,076)
Net book value 10,355 92,013 408,230 - 35,835 101 6,085 24,546 60,154 1,567 8.954 5,276 653,116
============================================================================================================================================================================================================4.1.2. DEPRECIATION ON OPERATING FIXED ASSETS IS CHARGED AT THE FOLLOWING RATES==================================================
Annual rate of
depreciation
(%)
==================================================
Factory building on leasehold land 10
Plant and machinery 10
Electric fittings and installation 10
Gas installation 10
Furniture and fixture 15
Tools and equipment 15
Vehicles 20 & 25
Computers and accessories 33
Office equipment 15
==================================================4.1.3. Included in fixed assets are few items having cost of Rs 30.116 million (2005: Rs 30.116 million) held by related parties and of Rs 14.334 million (2005: Rs 14.259 million) held by third parties for manufacturing certain products of the company.These fixed assets are free of lien and the company has full rights of repossession of these assets. 4.1.4. During the year, the company has identified certain items of property, plant and equipment from which further economic benefits are no longer being derived. Therefore, assets having cost of Rs 1.754 million (2005: Rs 7.687 million) and net book value of Rs 0.186 million (2005: Rs 1.118 million) have been retired from active use and have been written off in these financial statements. 4.1.5. Disposals of property, plant and equipment having a net book value exceeding Rs 50,000, either individually or in aggregate, during the year are as follows: =========================================================================================================================================
Particulars Mode of Cost Accumulated Net book Sale Gain/
disposal depreciation value proceeds (Loss) Particulars of purchasers
(Rupees in '000)
=========================================================================================================================================
Leasehold land Negotiation 196 - 196 300 104 Mr Rahatullah, Mohallah Qasim Khel,
District Swabi.
Vehicles -do- 177 99 78 470 392 A. Rauf Yaqoob, 504 Business Plaza,
Mumtaz Hasan Road, Karachi.
-do- 1,245 812 433 610 177 M. Aslam, M-4 Suleman Arcade,
Sharlabad Karachi.
Bid 449 123 326 360 34 Tetley Clover (Private) Limited,
Lakson Square Building #2,
Sarwar Shaheed Road, Karachi.
-do- 528 407 121 771 650 M. Salman Khan, House # G-23/2,
North Nazimabad, Karachi.
Insurance
claim 777 406 371 740 369
3,176 1,847 1,329 2,951 1,622
Office equipment 207 132 75 30 (45) United Business Systems (Private)
Limited, 46-E/4 Block "6" PECHS, Karachi.
Computers and accessories 108 43 65 65 - Clover Pakistan Limited, Lakson Square
Building # 2, Sarwar Shaheed Road,
Karachi.
OTHERS:
Items having Insurance
net book value claim /
of less than Bid /
Rs 50,000 each Negotiation 443 388 55 913 858 Various
2006 4,130 2,410 1,720 4,259 2,539
2005 3,276 2,169 1,107 3,433 2,326
=========================================================================================================================================4.1.6. DEPRECIATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Cost of sales 63,999 55,017
Selling and distribution costs 10,708 5,652
Administrative expenses 2,429 2,126
77,136 62,795
========================================================================================4.2. CAPITAL WORK-IN-PROGRESSThe following is a statement of capital work-in-progress: ==========================================================================================================
Factory Plant and Electric Other Total
building on machinery fittings and assets
leasehold installation
land
(Rupees in'000)
==========================================================================================================
Balance as at July 1, 2004 8,862 102,992 585 800 113,239
Capital expenditure incurred
during the year 12,084 24,533 9,110 1,316 47,043
Transfer to operating fixed assets (16,729) (127,348) (9,695) (2,116) (155,888)
Balance as at June 30, 2005 4,217 177 - - 4,394
Balance as at July 1, 2005 4,217 177 - - 4,394
Capital expenditure incurred
during the year 41,747 45,699 4,165 1,336 92,947
Transfer to operating fixed assets (8,139) (2,195) (195) (647) (11,176)
Balance as at June 30, 2006 37,825 43,681 3,970 689 86,165
==========================================================================================================5. INTANGIBLE ASSETS========================================================================================
Goodwill Trade mark
(notes 5.1) (note 5.1)
(Rupees in '000)
========================================================================================
AT JULY 1, 2004:
Cost 43,500 1,500
Accumulated amortisation (8,700) (1,200)
Net book value 34,800 300
Year ended June 30, 2005
Opening net book value 34,800 300
Additions - -
Disposals - -
Amortisation for the year (5,800) (300)
Closing net book value 29,000 -
AT JUNE 30, 2005:
Cost 43,500 1,500
Accumulated amortisation (14,500) (1,500)
Net book value 29,000 -
AT JULY 1, 2005:
Cost 43,500 1,500
Accumulated amortisation (14,500) (1,500)
Net book value 29,000 -
Year ended June 30, 2006
Opening net book value 29,000 -
Additions - -
Disposals - -
Amortisation for the year (5,800) -
Closing net book value 23,200 -
AT JUNE 30, 2006:
Cost 43,500 1,500
Accumulated amortisation (20,300) (1,500)
Net book value 23,200 -
========================================================================================5.1. These represent amounts paid on acquisition of the brand "Sparkle" from Transpak Corporation Limited.6. LONG TERM LOANS ========================================================================================
2006 2005
Notes (Rupees in '000)
========================================================================================
CONSIDERED GOOD:
- due from executives 6.1, 6.2 & 6.3 2,636 1,069
- due from other employees 6.2 11,277 7,714
13,913 8,783
Recoverable within one year 10 (4,362) (2,782)
9,551 6,001
========================================================================================6.1. RECONCILIATION OF CARRYING AMOUNT OF LOANS TO EXECUTIVES========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Opening balance as at July 1 1,069 734
Disbursements 2,249 616
Repayments (682) (281)
Closing balance as at June 30 2,636 1,069
========================================================================================6.2. These loans are interest free and have been given to executives and other employees of the company for purchase of vehicles and personal use in accordance with their terms of employment.These loans are to be repaid over a period of five years in equal monthly instalments. 6.3. The maximum aggregate amount of loans due from executives at the end of any month during the year was Rs 2.636 million (2005: Rs 1.069 million). 7. STORES AND SPARES ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Stores 6,328 5,959
Spares 9,812 5,099
16,140 11,058
========================================================================================8. STOCK IN TRADE========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
RAW MATERIALS:
- in hand 203,297 172,498
- in bonded warehouse 130,285 20,185
- in transit 45,123 81,005
- with third parties - 77,565
378,705 351,253
PACKING MATERIALS:
- in hand 56,780 52,149
- in transit 8,119 1,369
- with third parties 108 218
65,007 53,736
Work-in-process 3,428 3,939
FINISHED GOODS:
- in hand 8.1 118,058 111,338
- in transit 14,3611 -
Trading goods 132,419 111,338
- in hand 32,645 11,427
- in transit 2,145 5,014
34,790 16,441
614,349 536,707
========================================================================================8.1. This includes stocks carried at fair value less cost to sell amounting to Rs Nil (2005: Rs 20.168 million).9. TRADE DEBTS ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
CONSIDERED GOOD:
- due from a related party
Century Paper & Board Mills Limited - 17
- others 105,782 83,721
105,782 83,738
CONSIDERED DOUBTFUL:
- others 4,168 4,118
109,950 87,856
Less: Provision for doubtful debts 4,168 4,118
105,782 83,738
========================================================================================10. LOANS AND ADVANCES========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
CONSIDERED GOOD
CURRENT PORTION OF LONG TERM LOANS:
-due from executives 1,142 410
-due from other employees 3,220 2,372
4,362 2,782
ADVANCES:
- to employees 10.1 3,950 4,368
- to contractors and suppliers 10,577 9,240
- against letter of credit 16,839 230
35,728 16,620
========================================================================================10.1. Advances to employees are provided to meet business expenses and are settled as and when the expenses are incurred.11. TRADE DEPOSITS, SHORT TERM PREPAYMENTS AND OTHER RECEIVABLES ========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
TRADE DEPOSITS AND SHORT TERM PREPAYMENTS:
Security deposits 11.1 5,893 3,789
Prepayments 3,293 4,494
9,186 8,283
OTHER RECEIVABLES:
Receivable from related parties 11.2
- Century Insurance Company Limited 192 477
- Clover Pakistan Limited 771 750
- Colgate-Palmolive Philippine 6 6
- Cyber Rapid Integrated 34 -
SOFTWARE SOLUTIONS (PRIVATE) LIMITED:
- Tetley Clover (Private) Limited 570 2,010
1,573 3,243
Custom duties refundable - 4
Claims receivable from suppliers - 997
Claims receivable from insurance companies 104 -
Others - 275
1,677 4,519
10,863 12,802
========================================================================================11.1. This includes Term Deposit Receipt (TDR) amounting to Rs 1.7 million (2005: Rs 1.7 million) issued by a banking company.The TDR has been issued to provide security to a banking company for issue of guarantee against its lien. The TDR carries profit at the rate of 5% (2005: 2.25%) per annum and shall mature on August 30, 2006. 11.2. The maximum aggregate amount receivable at the end of any month during the year was Rs 2.659 million (2005: Rs 5.164 million). 12. ACCRUED MARKUP ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Profit receivable on bank deposits 2,211 519
Profit receivable on short term investments 398 -
2,609 519
========================================================================================13. SHORT TERM INVESTMENTS - AVAILABLE FOR SALE========================================================================================
2006 2005
Notes (Rupees in '000)
========================================================================================
First Habib Modaraba 13.1 100,000 -
United Money Market Fund 13.2 50,000 -
United Growth & Income Fund 13.3 5,000 -
NAFA Cash Fund 13.4 5,000 -
160,000 -
Surplus on revaluation of investments 1,367 -
161,367 -
========================================================================================13.1. The company has invested in musharika certificates issued by First Habib Modaraba having mark-up rate of 10% to 10.25% per annum.13.2. The company acquired 232,253 units of United Money Market Fund (UMMF) at Rs 107.64 each and 231,878 units of UMMF at Rs 107.82 each. 13.3. The company acquired 46,982 units of the United Growth & Income Fund at the rate of Rs 106.42 per unit. 13.4. The company acquired 500,000 units of the NAFA Cash Fund at the rate of Rs 10 each. 14. CASH AND BANK BALANCES ========================================================================================
2006 2005
Notes (Rupees in '000)
========================================================================================
WITH BANKS ON:
- Current accounts 5,276 6,365
- Saving accounts 14.1 243,933 127,776
- Term deposit accounts 14.1 100,000 55,000
349,209 189,141
Cheques in hand 40,855 27,049
Cash in hand 574 347
390,638 216,537
========================================================================================14.1. The rates of profit on these saving and term deposit accounts range between 0.75% to 10.25% (2005: 0.75% to 7.6%) per annum.15. ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL ========================================================================================
2006 2005 2006 2005
Number of shares (Rupees in '000)
========================================================================================
5,882,353 5,882,353 Ordinary shares of Rs 10 58,824 58,824
each fully paid in cash
6,347,910 6,347,910 Ordinary shares of Rs 10 63,479 63,479
each issued as fully
paid bonus shares
12,230,263 12,230,263 122,303 122,303
========================================================================================16. RESERVES========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
CAPITAL RESERVE:
- Share premium reserve 13,456 13,456
REVENUE RESERVE:
- General reserve 660,000 510,000
- Unappropriated profit 501,830 305,854
1,175,286 829,310
========================================================================================17. LONG TERM LOANS========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
SECURED - FROM BANKS:
- ABN Amro Bank N.V - 17.1 62,189 104,381
- Standard Chartered Bank - 9,375
62,189 113,756
Less: Current maturity shown under current liabilities 54,064 61,567
8,125 52,189
========================================================================================17.1. The company obtained a long term loan from ABN Amro Bank N.y for expansion of existing plant and machinery and factory building amounting to Rs 52.189 million (2005: Rs 104.381 million).This loan is secured against pari passu charge over fixed assets including immovable property of the company. Markup is charged at the rate of six month's treasury bills plus 3% per annum. This facility was repayable through an initial instalment of Rs 17.331 million and subsequently, seven semi annual equal instalments of Rs 26.096 million are to be paid which commenced from October 2003. During the year the company has obtained another long term loan from ABN Amro Bank N.V of Rs 10 million to finance expansion of existing plant and machinery. This facility is secured against pari passu charge over fixed assets including immovable property of the company. Markup is charged at the rate of three month's KIBOR plus 110 bps per annum. The loan is repayable in sixteen equal quarterly instalments of Rs 0.625 million, commencing from October 2006. 18. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASES ========================================================================================================
2006 2005
Not later Later Total Not later Later Total
than one than one than one than one
year and less year and less
than five than five
years years
(Rupees '000)
========================================================================================================
Minimum lease payments 660 1,137 1,797 3,491 1,797 5,288
Financial charges 86 53 139 135 139 274
Present value of minimum
lease payments 574 1,084 1,658 3,356 1,658 5,014
Less: Current maturity shown
under current liabilities 573 3,356
1,085 1,658
========================================================================================================18.1. This represents finance leases entered into with a leasing company and a modaraba company for purchase of plant and machinery and vehicles.The periodic lease payments include built-in rate of mark-up of 6.95% (2005: 6.95% to 11.42%) per annum which are used as discounting factor. The company intends to exercise its option to purchase the leased assets upon expiry of the respective lease periods at 6% to 10% of the leased amounts. 19. DEFERRED TAXATION ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
CREDIT /(DEBIT) BALANCES ARISING IN RESPECT OF
TIMING DIFFERENCES RELATING TO:
Accelerated tax depreciation allowance 103,029 89,717
Finance lease arrangements (32) 5,544
Provision for compensated absences (2,007) (1,820)
Provision for doubtful debts (1,458) (1,441)
99,532 92,000
========================================================================================20. LONG TERM DEPOSITS========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
SECURITY DEPOSITS OBTAINED FROM:
- Distributors 3,340 2,958
- Transporters 500 1,100
- Others 5 5
3,845 4,063
========================================================================================20.1. These deposits are interest free and are not refundable during the subsistence of relationship with the company.21. TRADE AND OTHER PAYABLES ========================================================================================
2006 2005
Notes (Rupees in '000)
========================================================================================
Trade creditors 21.1 299,018 167,306
Accrued liabilities 59,633 30,106
Bills payable 60,230 60,108
Amounts due to distributors 6,251 5,991
Sales tax payable 14,039 18,014
Royalty payable to an associated undertaking 17,442 15,122
Workers' profits participation fund 21.2 41,284 24,957
Workers' welfare fund 15,066 7,600
Retention money payable 938 399
Unclaimed dividend 973 789
Others 21.1 1,832 932
516,706 331,324
========================================================================================21.1. OTHERS INCLUDE THE FOLLOWING AMOUNTS DUE TO RELATED PARTIES==========================================================================
Related party relationship Trade creditors Others
(Rupees '000)
2006 2005 2006 2005
==========================================================================
UNSECURED:
Associated companies 9,656 1,288 5 -
Other related parties 51,429 10,068 - -
==========================================================================These balances are payable in cash and represents transactions with related parties carried out in the normal course of business on commercial terms and at market prices.21.2. WORKERS' PROFITS PARTICIPATION FUND ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Balance at the beginning of the year 24,957 23,330
Allocation for the year 41,284 24,957
66,241 48,287
Interest on funds utilised in the company's business - -
66,241 48,287
Less: Payments during the year 24,957 23,330
Balance at the end of the year 41,284 24,957
========================================================================================22. ACCRUED INTEREST========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
ACCRUED MARKUP ON:
- Long term loans 200 25
- Running finance facilities 76 112
276 137
========================================================================================23. SHORT TERM BORROWINGSRunning finance facilities under markup arrangements ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
SECURED:
From banks - 5,481
========================================================================================23.1. The company has arranged short-term running finance facilities from various banks on mark-up basis to the extent of Rs 630 million (2005: Rs 470 million).The mark-up on such arrangements range between 9.5% to 11.01% (2005: 6.93% to 9.5%) pen annum. These arrangements had expired during the year and were renewed subsequently. The renewed facilities are available for various periods expiring between October 10, 2006 to January 31, 2008. The arrangements are secured by a joint hypothecation of stocks, trade debts and 2nd charge on moveable assets of the company. 23.2. The facilities for opening letters of credit and guarantee as at June 30, 2006 aggregate Rs 1,352 million and Rs 52 million respectively (2005: Rs 1,047 million and Rs 50 million respectively) of which the amounts remaining unutilised at the year end were Rs 1,138.253 million and Rs 41 million respectively (2005: Rs 927.326 million and Rs 42.300 million). 24. CONTINGENCIES AND COMMITMENTS 24.1. CONTINGENCIES 24.1.1. As a result of recovery suit of Rs 31.455 million filed by the Octroi Contractor against the Government of Sindh, Union Council Bulari and Kotri Association of Trade and Industries (KATI) in the Civil Court, the Honourable Senior Judge issued a decree of Rs 7.336 million in favor of Octroi Contractor. KATI has filed an appeal in the High Court of Sindh whereas the Octroi Contractor has also filed an appeal requesting to enhance the amount of decree. Subsequently the case has been transferred to the Additional District Judge Kotri by the High Court of Sindh. The District Judge allowed the appeal in favour of KATI and remanded the case to Senior Civil Judge Kotri for adjudication which is still awaited. If the appeal is dismissed then the company, being a member of KATI, would be required to pay its share as determined by the Court out of the total decree amount. The management of the company, based on the advice of its legal counsel handling the subject matter, is confident that the appeal will be decided in favour of KATI. Accordingly, no provision has been made in the financial statements on this account. 24.1.2. Post dated cheques have been issued to custom authorities in respect of duties amounting to Rs Nil (2005: Rs 0.051 million) on account of concessional rates of duties on imported raw material availed on the basis of consumption plans. In the event the certificates of consumption are not provided on due dates, cheques issued as security shall be encashable. 24.1.3. Post dated cheques have been issued to custom authorities as a security in respect of duties and taxes amounting Rs 16.433 million (2005: Rs Nil) payable at the time of exbonding of imported goods. In the event the goods are not cleared from custom warehouse within the prescribed time period, cheques issued as security shall be encashable. 24.1.4. Contingent liabilities in respect of indemnities given to the financial institutions for guarantees issued by them in the normal course of business aggregate Rs 11.000 million (2005: Rs 7.700 million). 24.2. COMMITMENTS 24.2.1. Commitments in respect of capital expenditure amounted to Rs 77.828 million (2005: Rs 9.202 million). 24.2.2. Outstanding letters of credit and acceptances amount to Rs 99.518 million (2005: Rs 52.879 million). 24.2.3. Outstanding duties leviable on ex-bonding of stocks amount to Rs 6.870 million (2005: Rs 2.849 million). 24.2.4. Commitments for rentals under operating lease agreements in respect of vehicles are as under: ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Not later than one year 2,144 4,025
Later than one and less than five years 433 2,577
Balance at the end of the year 2,577 6,602
========================================================================================25. COST OF SALES========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
Opening stock of finished goods
(including trading goods and by-products) 127,779 77,106
Cost of goods manufactured 25.1 2,773,224 2,406,142
Purchases of trading goods 656,691 506,372
3,557,694 2,989,620
Less: Closing stock of finished goods
(including trading goods and by-products) 167,209 127,779
3,390,485 2,861,841
========================================================================================25.1. COST OF GOODS MANUFACTURED========================================================================================
2006 2005
Notes (Rupees in '000)
========================================================================================
Opening stock of work-in-process 3,939 10,704
Raw materials consumed 25.1.1 & 25.2 1,893,658 1,381,443
Packing materials consumed 25.1.2 & 25.2 541,047 443,608
Stores and spares consumed 14,393 13,698
Salaries, wages and other benefits 119,197 99,318
Gratuity 39.1 5,179 4,749
Provident fund 3,097 2,763
Power and fuel 77,758 55,570
Repairs and maintenance 6,624 7,648
Rent, rates and taxes 2,339 1,188
Insurance 7,400 6,482
Laboratory expenses 1,528 743
Cartage 5,518 6,598
Excise duty - 307,435
Depreciation 4.1.6 63,999 55,017
Other manufacturing expenses 30,976 13,117
2,776,652 2,410,081
Less: Closing stock of work-in-process 3,428 3,939
2,773,224 2,406,142
========================================================================================25.1.1. RAW MATERIALS CONSUMED========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Opening stock 351,253 286,785
Purchases 1,921,110 1,445,911
2,272,363 1,732,696
Closing stock (378,705) (351,253)
1,893,658 1,381,443
========================================================================================25.1.2. PACKING MATERIALS CONSUMED========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Opening stock 53,736 58,213
Purchases 552,318 439,131
606,054 497,344
Closing stock (65,007) (53,736)
541,047 443,608
========================================================================================25.2. COST OF SALES INCLUDES AMOUNTS WRITTEN OFF DURING THE YEAR IN RESPECT OF THE FOLLOWING========================================================================================
2006 2005
========================================================================================
- Raw materials (Rupees in million) 7.162 0.764
- Packing materials (Rupees in million) 4.657 1.638
- Stores and spares (Rupees in million) 1.109 -
========================================================================================26. SELLING AND DISTRIBUTION COSTS========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
Salaries, wages and other benefits 65,432 51,988
Gratuity 39.1 1,886 1,152
Provident fund 2,399 1,967
Travelling and conveyance 16,527 14,591
Repairs and maintenance 1,156 977
Vehicle running expenses 24,687 20,794
Advertising and sales promotion 398,281 264,264
Royalty on sale of licensed products 19,367 15,122
Postage, telephone and internet charges 4,730 4,290
Rent, rates and taxes 4,418 3,230
Printing and stationery 2,404 1,544
Subscription and membership 715 219
Legal and professional 36 151
Freight 196,838 109,498
Electricity 1,256 1,018
Insurance 3,845 2,373
Security service charges 1,492 536
Depreciation 4.1.6 10,708 5,652
Amortisation 5 5,800 6,100
Other expenses 42 39
762,019 505,505
less: Recovery from Clover Pakistan Limited 2,761 -
759,258 505,505
========================================================================================27. ADMINISTRATIVE EXPENSES========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
Salaries, wages and other benefits 29,311 25,413
Gratuity 39.1 1,816 1,532
Provident fund 1,288 982
Travelling and conveyance 1,429 1,477
Repairs and maintenance 214 247
Vehicle running expenses 2,298 1,570
Postage, telephone and internet charges 1,603 1,850
Rent, rates and taxes 3,433 2,931
Printing and stationery 1,047 968
Subscription and membership 485 475
Legal and professional 463 330
Electricity 1,108 1,115
Insurance 1,356 1,228
Security service charges 100 395
Depreciation 4.1.6 2,429 2,126
Others 105 88
48,485 42,727
========================================================================================28. OTHER OPERATING EXPENSES========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
Workers' profits participation fund 21.2 41,284 24,957
Workers' welfare fund - current year 15,066 7,600
- prior year 2 (509)
15,068 7,091
Auditors' remuneration 28.1 511 421
Property, plant and equipment written off 186 1,118
Donations 28.2 2,424 410
Bad debts directly written off 4 66
Provision for doubtful debts 50 2,655
59,527 36,718
========================================================================================28.1. AUDITORS' REMUNERATION========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Audit fee 175 175
Half yearly review and other certifications 180 170
Out of pocket expenses 156 76
511 421
========================================================================================28.2. DONATIONS INCLUDE THE FOLLOWING IN WHICH A DIRECTOR IS INTERESTED========================================================================================
Name of Interest in Name and 2006 2005
director donee address of donee (Rupees in '000)
========================================================================================
Mr Iqbal Ali Trustee Lakson Medical Trust
Lakhani Pohan Colony,
Malakand Road, N.W.F.P. 325 50
Mr lqbal Ali (See note Special Olympics Pakistan,
Lakhani below) 205, Sunset Tower,
Sunset Boulevard,
DHA, Phase-Il, Karachi 200 150
525 200
======================================================================================== Note: Spouse of Mr Iqbal Ali Lakhani is Program Chief Executive of donee organisation.29. OTHER OPERATING INCOME ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Insurance commission 2,687 2,740
Profit on saving accounts 10,013 1,769
Profit on term deposit accounts 15,137 289
Profit on short term investments 809 -
Profit on disposal of short term investments 36 -
Gain on disposal of property, plant and equipment 2,539 2,326
Sale of scrap 154 823
Exchange gain 13 233
Others 3,314 5
34,702 8,185
========================================================================================30. FINANCE COSTS========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
MARKUP ON:
- Long term loans 8,923 9,377
- Liabilities against assets subject to finance leases 136 920
- Short term borrowings 1,308 1,722
Guarantee commission 113 131
Bank commission and other charges 2,829 2,376
13,309 14,526
========================================================================================31. TAXATION========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
CURRENT:
- for the year 263,079 132,500
- for prior years (133) (4,383)
Deferred 7,532 36,000
270,478 164,117
========================================================================================31.1. RECONCILIATION BETWEEN THE AVERAGE EFFECTIVE TAX RATE AND THE APPLICABLE TAX RATE========================================================================================
2006 2005
Percentage
========================================================================================
Applicable tax rate 35 35
Tax effect of expenses that are not allowable in
determining taxable income 0.11 0.18
Effect of income assessed under presumptive tax regime (0.10) (0.04)
Tax effect of income tax provision relating to prior year 0.13 (0.09)
Tax impact arising due to origination of temporary difference 0.02 0.09
35.16 35.14
========================================================================================32. EARNINGS PER SHARE - BASIC AND DILUTED========================================================================================
2006 2005
========================================================================================
Profit after taxation 498,855 302,974
Weighted average number of ordinary shares
outstanding during the year 12,230,263 12,230,263
Earnings per share - basic and diluted 40.79 24.77
========================================================================================33. CASH GENERATED FROM OPERATIONS========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
Profit before taxation 769,333 467,091
ADJUSTMENT FOR NON-CASH CHARGES AND OTHER ITEMS:
Depreciation and amortisation expense 82,936 68,895
Gain on sale of property, plant and equipment (2,539) (2,326)
Provision for doubtful debts 50 2,655
Profit on bank deposits (25,150) (2,058)
Profit on short term investments (809) -
Profit on disposal of short term investments (36) -
Finance costs 13,309 14,526
Property, plant and equipment written off 186 1,118
Working capital changes 33.1 63,211 (138,051)
900,491 411,850
========================================================================================33.1. WORKING CAPITAL CHANGESDecrease / (increase) in current assets: ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Stores and spares (5,082) (206)
Stock in trade (77,642) (103,899)
Trade debts (22,094) 9,615
Loans and advances (19,108) (6,603)
Trade deposits, short term prepayments
and other receivables 1,939 (3,300)
(121,987) (104,393)
INCREASE / (DECREASE) IN CURRENT LIABILITIES:
Trade and other payables 185,198 (33,658)
63,211 (138,051)
========================================================================================34. CASH AND CASH EQUIVALENTSCash and cash equivalents comprise of the following items: ========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Cash and bank balances 390,638 216,537
Running finance facilities under mark-up arrangements - (5,481)
390,638 211,056
========================================================================================35. PROPOSED DIVIDEND AND BONUS SHAREThe Board of Directors at the meeting held on August 17, 2006 have proposed for the year ended June 30, 2006 cash dividend of Rs 16 per share (2005: Rs 12.5 per share), amounting to Rs195.685 million (2005: Rs 152.879 million), bonus issue of 3.058 million shares (2005: Nil) at the rate of one share for every four shares held (2005: Nil) and transfer to general reserve of Rs 270 million (2005: Rs 150 million) subject to the approval of members at the annual general meeting to be held on September 21, 2006. 36. RELATED PARTY DISCLOSURES Disclosure of transactions between the company and related parties. The company in the normal course of business carries out transactions with various related parties. Significant balances and transactions with related parties are as follows: ======================================================================================
Related party Relationship 2006 2005
with the company (Rupees in '000)
======================================================================================
Sale of goods, services provided
and reimbursement of expenses
Century Paper & Boards Mills Limited Associate 182 209
Clover Pakistan Limited Associate 9,445 4,958
Lakson Tobacco Company Limited Associate 8,429 8,634
Merit Packaging Limited Associate 28 35
Rollins Industries (Private) Limited Related party* 205,659 143,729
Tetley Clover (Private) Limited Associate 2,674 1,837
226,417 159,402
* Third party whose manufacturing
process is dependent
Purchase of goods, services received
and reimbursement of expenses
Century Insurance Company Limited Associate 21,306 21,390
Century Paper & Board Mills Limited Associate 35,824 8,208
Century Publication (Private) Limited Associate 5,275 856
Clover Pakistan Limited Associate 441 255
Colgate-Palmolive China Subsidiary of CP-USA 59,405 43,392
Colgate-Palmolive Vietnam Subsidiary of CP-USA 94 -
Colgate-Palmolive Company USA Joint venture company 4,699 2,767
Colgate-Palmolive Hong Kong Subsidiary of CP-USA 14 121
Colgate-Palmolive India Subsidiary of CP-USA 657 -
Colgate-Palmolive Malaysia Subsidiary of CF-USA 69 49
Colgate-Palmolive Thailand Associate 20,250 3,157
Cyber Internet Services
(Private) Limited Associate 4,077 3,944
Cyber Rapid Integrated Software Solutions
(Private) Limited Associate - 424
GAM Corporation (Private) Limited Associate - 12
Lakson Tobacco Company Limited Associate 351 3,395
Merit Packaging Limited Associate 5 924
Princeton Travels (Private) Limited Associate 5,736 3,180
Rollins Industries (Private) Limited Related party* 764,776 551,237
SIZA (Private) Limited Associate 10 2
SIZA Foods (Private) Limited Associate 7 4
Tetley Clover (Private) Limited Associate - 360
922,996 643,677
* Third party whose manufacturing
process is dependent
Rent, allied and other charges
Century Paper & Board Mills Limited Associate 272 252
Hasanali Karabhai Foundation Associate 6,350 5,894
Lakson Tobacco Company Limited Associate - 108
SIZA Services (Private) Limited Associate 368 333
Reliance Chemicals (Private)Limited Associate 1,449 -
8,439 6,587
ROYALTY CHARGES:
Colgate-Palmolive Joint venture
Company USA company 19,367 15,122
Sale of property, plant and equipment
Clover Pakistan Limited Associate 65 -
Tetley Clover (Private) Limited Associate 360 485
425 485
Related party Relationship 2006 2005
with the company (Rupees in '000)
Contribution to staff retirement benefits
Colgate-Palmolive (Pakistan) Limited Employees
Contributory Provident Fund Trust Employees fund 6,790 5,711
Colgate-Palmolive (Pakistan) Limited
Employees Gratuity Fund Employees fund 8,881 7,433
15,671 13,144
DONATIONS:
Lakson Medical Trust Trust 325 50
Special Olympics Pakistan 200 150
525 200
Compensation paid to key management personnel
Short-term employee
benefits including Key management
compensated absences personnel 27,541 20,983
Post employment benefits --do-- 1,501 1,018
29,042 22,001
Insurance claims received
Century Insurance Company Limited Associate 3,459 5,230
Insurance commission income
Century Insurance Company Limited Associate 2,687 2,740
Purchase of property, plant and equipment
Colgate-Palmolive Thailand Subsidiary of CP-USA - 6,026
Cyber Internet Services
(Private) Limited Associate 10 -
Lakson Tobacco Company Limited Associate 17 -
Rollins Industries (Private) Limited Related party* - 8,100
Tetley Clover (Private) Limited Associate - 1,363
27 15,489
======================================================================================* Third party whose manufacturing process is dependentThe related party status of outstanding balances as at June 30, 2006 are included in trade debts, other receivables and trade and other payables respectively. 37. REMUNERATION OF CHIEF EXECUTIVE, DIRECTOR AND EXECUTIVES 37.1. The aggregate amount charged in these financial statements for remuneration, including certain benefits to the chief executive, the director and executives of the Company, are as follows: ==================================================================================================
Chief Executive Director Executives
2006 2005 2006 2005 2006 2005
(Rupees in '000)
==================================================================================================
Managerial remuneration 5,382 4,314 1,448 1,330 19,669 13,034
Bonus / commission 8,707 4,251 243 224 4,395 2,955
Gratuity - - 835 252 255 383
Provident fund - - 131 120 1,530 928
Housing 1,614 1,418 362 342 6,414 4,446
Utilities 365 373 145 133 1,961 1,304
Motor vehicles 562 469 151 121 2,029 1,421
Others - - 272 183 2,822 1,038
16,630 10,825 3,587 2,705 39,075 25,509
Number of persons 1 1 1 1 23 14
==================================================================================================37.2. Chief executive, a working director and the executives of the company are also provided with company maintained cars.38. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 38.1. INTEREST RATE RISK Interest / mark-up rate risk arises from the possibility that changes in interest / mark-up rates will affect the value of financial instruments. In respect of income earning financial assets and interest / markup bearing financial liabilities, the following table provides information about the exposure of the company to interest / mark-up rate risk at the balance sheet date based on contractual re-pricing or maturity dates, whichever is earlier. =====================================================================================================================================================
Interest / mark-up bearing Non-interest / mark-up bearing Total Total
Maturity Maturity Sub-total Maturity Maturity Sub-total 2006 2005
within one after one within one after one
year year year year
(Rupeesin'000)
=====================================================================================================================================================
FINANCIAL ASSETS:
Long term loans - - - 4,362 9,551 13,913 13,913 8,783
Long term deposits - - - - 1,983 1,983 1,983 2,323
Trade debts - - - 105,782 - 105,782 105,782 83,738
Trade deposits, short term prepayments
and other receivables 1,700 - 1,700 5,870 - 5,870 7,570 8,304
Accrued markup - - - 2,609 - 2,609 2.609 519
Short term investments 161,367 - 161,367 - - - 161,367 -
Cash and bank balances 343,933 - 343,933 46,705 - 46,705 390,638 216,537
2006 507,000 - 507,000 165,328 11,534 176,862 683,862 320,204
2005 184,476 - 184,476 127,404 8,324 135,728 320,204
FINANCIAL LIABILITIES:
Long term loans 54,064 8,125 62,189 - - - 62,189 113,756
Liabilities against assets subject to
finance leases 573 1,085 1,658 - - - 1,658 5,014
Long term deposits - - - - 3,845 3,845 3,845 4,063
Trade and other payables - - - 446,317 - 446,317 446,317 299,476
Accrued interest - - - 276 - 276 276 137
Short term borrowings - - - - - - - 5,481
2006 54,637 9,210 63,847 446,593 3,845 450,438 514,285 427,927
2005 70,404 53,847 124,251 299,613 4,063 303,676 427,927
OFF-BALANCE SHEET ITEMS:
Letters of credit 166,016 59,567
Indemnity bonds and guarantees 11,000 7,700
===================================================================================================================================================== The effective interest/mark-up rates as at June 30, 2006 for financial instruments are as follows:========================================================================================
2006 2005
(Percent)
========================================================================================
BALANCES WITH BANK ON:
- term deposit accounts 10.00 to 10.25 6.90 to 7.60
- saving accounts 0.75 to 8.50 0.75 to 5.00
Security deposits 5.00 2.25
Long term loans 10.47 8.18 to 8.69
Liabilities against assets subject to finance leases 6.95 6.95 to 11.42
Running finance facilities under markup arrangements 9.50 to 11.01 6.93 to 9.50
========================================================================================38.2. CREDIT RISK 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 683.862 million (2005: Rs 320.204 million), the financial assets that are subject to credit risk amounted to Rs 105.782 million (2005: Rs 83.738 million). The company believes that it is not exposed to major concentration of credit risk. To manage exposure to credit risk, the company applies credit limits to its customers. 38.3. FOREIGN EXCHANGE RISK MANAGEMENT Foreign currency risk arises mainly where receivable and payables exist due to transactions entered into foreign currencies. The company is exposed to foreign currency risk on certain transactions with group companies that are entered in a currency other than Pakistan Rupees. The company uses forward foreign exchange contracts to hedge its foreign currency risk, when considered appropriate. 38.4. LIQUIDITY RISK Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities. Company treasury aims at maintaining flexibility in funding by keeping committed credit lines available. 38.5. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is an amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm's length transaction. Consequently, differences may arise between the carrying and the fair value estimates. As at June 30, 2006 the net fair value of all financial assets and financial liabilities are estimated to approximate their carrying values. 39. GRATUITY The actuarial valuation of gratuity plan was carried out as of June 30, 2006. The projected unit credit method, using the following significant financial assumptions, has been used for the actuarial valuation: ========================================================================================
2006 2005
(Percent)
========================================================================================
- Discount rate - per annum compound 9.00 9.00
- Expected rate of increase in salaries -per annum 8.00 8.00
- Expected rate of return on plan assets - per annum 9.00 8.00
======================================================================================== The amounts recognised in the balance sheet are as follows:========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Present value of defined benefit obligation 50,312 41,978
Fair value of plan assets (28,910) (17,685)
Surplus 21,402 24,293
Unrecognised net actuarial gains (6,707) (7,762)
Unrecognised past service cost (14,695) (16,531)
Payable to the gratuity fund - -
======================================================================================== Movement in net liability in the balance sheet is as follows:========================================================================================
2006 2005
Note (Rupees in '000)
========================================================================================
Opening balance of net liability - -
Change for the year 39.1 8,881 7,433
Contributions made during the year to the fund (8,881) (7,433)
Closing balance of net liability - -
========================================================================================39.1. CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS UNDER========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Cost of sales 5,179 4,749
Selling and distribution costs 1,886 1,152
Administrative expenses 1,816 1,532
8,881 7,433
========================================================================================The following amounts have been charged to income in respect of the gratuity plan:========================================================================================
2006 2005
(Rupees in '000)
========================================================================================
Current service cost 4,584 3,968
Interest cost 3,778 2,977
Past service cost - non vested 1,837 1,837
Actuarial loss change 274 -
Expected return on plan assets (1,592) (1,349)
8,881 7,433
Actual return on plan assets 2,894 707
========================================================================================40. PLANT CAPACITY AND ACTUAL PRODUCTION========================================================================================
2006 2005
(Quantities in tons)
========================================================================================
Capacity 87,200 74,200
Production 81,134 62,341
========================================================================================The underutilisation of capacity was due to market constraints.41. CORRESPONDING FIGURES 41.1. Profit receivable on bank deposits previously appearing under the head 'Trade deposits, short term prepayments and other receivables' has now been included as a separate line item on the balance sheet. The corresponding figure has also been reclassified accordingly. 41.2. Accrued markup previously appearing under the head 'Trade and other payables' has now been included as a separate line item on the balance sheet. The corresponding figure has also been reclassified accordingly. 41.3. Change in trade debts disclosed in note 33.1 has now been reflected at the gross amount and the amount of provision for doubtful debts is now separately added to the profit before taxation in that note. Accordingly, corresponding figures included in note 33.1 have also been reclassified. 42. DATE OF AUTHORISATION FOR ISSUE 42.1. These financial statements were authorised for issue on August 17, 2006 by the Board of Directors of the company. |