| ICI Pakistan Ltd - 2007 |
|
Balance sheet as at 31 December 2007
=========================================================================================
Amounts in Rs '000
Note 2007 2006
=========================================================================================
EQUITY AND LIABILITIES
Share Capital and Reserves
Authorised capital
1,500,000,000 ordinary shares
of Rs 10 each 15,000,000 15,000,000
Issued, subscribed and paid-up capital 3 1,388,023 1,388,023
Capital reserves 4 465,845 465,845
Unappropriated profit 9,544,582 8,411,142
Total equity 11,398,450 10,265,010
Surplus on Revaluation of Property, Plant and
Equipment 5 1,012,167 1,124,220
LIABILITIES
Non-current liability
Deferred liability 6 119,571 104,079
Current liabilities
Short-term financing 7 - 3,613
Trade and other payables 8 6,276,103 5,432,662
6,276,103 5,436,275
Contingencies and Commitments 9
Total equity and liabilities 18,806,291 16,929,584
ASSETS
Non-current assets
Property, plant and equipment 10 8,506,736 8,343,260
Intangible asset 11 39,737 71,774
8,546,473 8,415,034
Deferred tax asset - net 12 354,456 1,029,589
Long-term investments 13 582,500 212,500
Long-term loans 14 204,867 175,687
Long-term deposits and prepayments 15 59,888 72,919
1,201,711 1,490,695
9,748,184 9,905,729
Current assets
Stores and spares 16 605,480 705,639
Stock-in-trade 17 2,311,336 2,347,790
Trade debts 18 1,049,464 730,676
Loans and advances 19 137,680 174,039
Trade deposits and short-term prepayments 20 343,570 287,159
Other receivables 21 658,489 549,933
Taxation recoverable 337,032 437,468
Cash and bank balances 22 3,615,056 1,791,151
9,058,107 7,023,855
Total assets 18,806,291 16,929,584
=========================================================================================PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31, DECEMBER 2007=========================================================================================
Amounts in Rs '000
Note 2007 2006
=========================================================================================
Turnover 23 25,973,009 21,947,688
Sales tax, commission and discounts 23 (2,943,274) (2,373,570)
Net sales and commission income 23,029,735 19,574,118
Cost of sales 24 (18,223,615) (15,492,648)
Gross profit 4,806,120 4,081,470
Selling and distribution expenses 25 (1,074,549) (876,075)
Administration and general expenses 26 (760,201) (726,377)
2,971,370 2,479,018
Financial charges 27 (146,421) (319,301)
Other operating charges 28 (222,345) (171,127)
(368,766) (490,428)
Other operating income 29 165,919 129,207
Profit before taxation 2,768,523 2,117,797
Taxation 30 (983,723) (662,169)
Profit after taxation 1,784,800 1,455,628
(Rupees) (Rupees)
Earnings per share - Basic and diluted 31 12.86 10.49
=========================================================================================Cash Flow Statement for the year ended 31 December 2007=========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Cash Flows from Operating Activities
Profit before taxation 2,768,523 2,117,797
Adjustments for:
Depreciation and amortisation 874,389 779,713
Gain on disposal of property, plant and equipment (1,100) (6,701)
Provision for non-management staff gratuity
and eligible retired employees' medical scheme 26,207 27,807
Mark-up on bank deposits and loan to subsidiary (45,469) (34,834)
Interest / mark-up expense 119,905 253,355
3,742,455 3,137,137
Movement in:
Working capital 594,701 375,918
Long-term loans (29,180) 91,702
Long-term deposits and prepayments 13,031 (50,709)
Cash generated from operations 4,321,007 3,554,048
Payments for:
Non-management staff gratuity and eligible retired
employees' medical scheme (10,715) (14,332
Taxation (208,154) (62,623)
Net cash generated from operating activities 4,102,138 3,477,093
Cash Flows from Investing Activities
Payments for capital expenditure (1,069,615) (1,082,459)
Proceeds from disposal of property, plant and equipment 7,514 7,442
Profit/ mark-up received 34,665 34,834
Long term investment (370,000) -
Net cash used in investing activities (1,397,436) (1,040,183)
Cash Flows from Financing Activities
Repayment of liability under finance lease - (1,239,200)
Interest / mark-up paid (113,747) (334,385)
Dividend paid (763,437) (763,443)
Net cash used in financing activities (877,184) (2,337,028)
Net increase in cash and cash equivalents 1,827,518 99,882
Cash and cash equivalents at 1 January 1,787,538 1,687,656
Cash and cash equivalents at 31 December 3,615,056 1,787,538
Movement in Working Capital
(Increase) / decrease in current assets
Stores and spares 100,159 (16,320)
Stock-in-trade 36,454 163,691
Trade debts (318,788) (83,667)
Loans and advances 36,359 (62,346)
Trade deposits and short-term prepayments (56,411) (95,816)
Other receivables (97,752) (263,140)
(299,979) (357,598)
Increase in current liabilities
Trade and other payables 894,680 733,516
594,701 375,918
Cash and cash equivalents at 31 December comprise of:
Cash and bank balances - note 22 3,615,056 1,791,151
Running finances utilised under mark-up arrangements - not - (3,613)
3,615,056 1,787,538
=========================================================================================Statement of Changes in Equity for the year ended 31 December 2007============================================================================================================
Amounts in Rs '000
Issued, Capital Unappropriated Total
subscribed reserves profit
and paid-up
capital
============================================================================================================
Balance as on 1 January 2006 1,388,023 465,845 7,639,204 9,493,072
Changes in equity for 2006
Final dividend for the year ended
31 December 2005 @ As 3.00 per share - - (416,407) (416,407)
Profit for the year ended 31 December 2006 - - 1,455,628 1,455,628
Transfer from surplus on revaluation of property,
plant and equipment net of deferred tax - note 5 - - 79,723 79,723
Total recognised income and expense for the year - - 1,535,351 1,535,351
Interim dividend for the year 2006 @ As 2.50 per share - - (347,006) (347,006)
Balance as on 31 December 2006 1,388,023 465,845 8,411,142 10,265,010
Changes in equity for 2007
Final dividend for the year ended
31 December 2006 @ Rs 3.00 per share - - (416,407) (416,407)
Profit for the year ended 31 December 2007 - - 1,784,800 1,784,800
Transfer from surplus on revaluation of property,
plant and equipment net of deferred tax - note 5 - - 112,053 112,053
Total recognised income and expense for the year - - 1,896,853 1,896,853
Interim dividend for the year 2007 (c) As 2.50 per share - - (347,006) (347,006)
Balance as on 31 December 2007 1,388,023 465,845 9,544,582 11,398,450
============================================================================================================Notes to the Financial Statements For the year ended 31 December 20071. Status and Nature of Business ICI Pakistan Limited ("the Company") is incorporated in Pakistan and is listed on Karachi, Lahore and Islamabad Stock Exchanges. The Company is engaged in the manufacture of polyester staple fibre, POY chips, soda ash, paints, specialty chemicals, sodium bicarbonate and polyurethanes; marketing of seeds, toll manufactured and imported pharmaceuticals and animal health products; and merchanting of general chemicals. It also acts as an indenting agent. The Company's registered office is situated at 5 West Wharf, Karachi. 2. Summary of Significant Accounting Policies 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, 1984. In case requirements differ, the provisions of, or directives issued under the Companies Ordinance, 1984 shall prevail. 2.2. Basis of preparation These financial statements have been prepared under the historical cost convention, except that certain property, plant and equipment have been included at revalued amounts and certain exchange elements referred to in note 2.8 have been recognised in the cost of the relevant property, plant & equipment. The preparation of financial statements in conformity with approved accounting standards requires management to make estimates, assumptions and use judgments that affect the application of policies and reported amounts of assets and liabilities and income and expenses. Estimates, assumptions and judgments are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. Revisions to accounting estimates are recognised prospectively commencing from the period of revision. Judgments and estimates made by the management that may have a significant risk of material adjustments to the financial statements in subsequent years are discussed in note 40. 2.3. Staff retirement benefits The Company's retirement benefit plans comprise of provident funds, pensions, gratuity schemes and a medical scheme for eligible retired employees. Defined benefit plans The Company operates a funded pension scheme and a funded gratuity scheme for management staff. The pension and gratuity schemes are salary schemes providing pension and lump sums, respectively. Pension and gratuity schemes for management staff are invested through two approved trust funds. The Company also operates gratuity scheme for non-management staff and the pensioners' medical scheme which are unfunded. The pension and gratuity plans are final salary plans. The pensioner's medical plan reimburses actual medical expenses. The Company recognises expense in accordance with IAS 19 "Employee Benefits". An actuarial valuation of all defined benefit schemes is conducted every year. The valuation uses the Projected Unit Credit method. Actuarial gains and losses are amortised over the expected average remaining working lives of employees as allowed under the relevant provision of IAS 19 "Employee Benefits". Defined contribution plans The Company operates two registered contributory provident funds for its entire staff and a registered defined contribution superannuation fund for its management staff, who have either opted for this fund by 31 July 2004 or have joined the Company after 30 April 2004. 2.4. Provisions A provision is recognised in the balance sheet when the Company has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are measured at the present value of the expected expenditures, discounted at a tax rate that reflects current market assessment of the time value of money and the risk specific to the obligation. 2.5. Trade and other payables Trade and other payables are recognised initially at fair value plus directly attributable cost, if any, and subsequently measured at amortised cost using the effective interest method. 2.6. Dividend Dividend distribution to the Company's shareholders is recognised as a liability in the period in which the dividends are approved. 2.7. Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit and loss account, except to the extent that it relates to items recognised directly in equity or below equity, in which case it is recognised in equity or below equity respectively. Current Provision for current taxation is based on taxable income at the enacted or substantively enacted rates of taxation after taking into account available tax credits and rebates, if any. The charge for current tax includes adjustments to charge for prior years, if any. Deferred Deferred tax is recognised using 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 enacted or substantively enacted rates of taxation. The Company recognises a deferred tax asset to the extent that it is probable that taxable profits for the foreseeable future will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Further, the Company recognises deferred tax asset / liability on deficit / surplus on revaluation of property, plant and equipment which is adjusted against the related deficit / surplus. 2.8. Property, plant and equipment and depreciation Property, plant and equipment (except freehold land, leasehold land and plant & machinery) are stated at cost less accumulated depreciation and impairment losses, if any. Freehold land, leasehold land & plant machinery are stated at revalued amounts less accumulated depreciation. Capital work-in-progress is stated at cost. Cost of certain property, plant and equipment comprises historical cost, exchange differences recognised in accordance with the previous Fourth Schedule to the Ordinance, cost of exchange risk cover in respect of foreign currency loans obtained for the acquisition of property, plant and equipment upto the commencement of commercial production and the cost of borrowings during construction period in respect of loans taken for specific projects. Depreciation charge is based on the straight-line method whereby the cost or revalued amount of an asset is written off to profit and loss account over its estimated useful life after taking into account the residual value if material. The cost of leasehold land is amortised in equal installments over the lease period. Depreciation on additions is charged from the month in which the asset is available for use and on disposals up to the month of disposal. The residual value, depreciation method and the useful lives of each part of property, plant and equipment that is significant in relation to the total cost of the asset are reviewed, and adjusted if appropriate, at each balance sheet date. Surplus on revaluation of property, plant and equipment is credited to the surplus on revaluation account. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from the fair value. To the extent of the incremental depreciation charged on the revalued assets the related surplus on revaluation of property, plant and equipment (net of deferred taxation) is transferred directly to unappropriated profit. Maintenance and normal repairs are charged to income as and when incurred. Renewals and improvements are capitalised when it is probable that respective future economic benefits will flow to the Company and the cost of the item can be measured reliably, and the assets so replaced, if any, are retired. Gains and losses on disposal of assets are taken to the profit and loss account, and the related surplus on revaluation of property, plant and equipment is transferred directly to retained earnings (unappropriated profits). 2.9. Intangible assets Intangible assets are measured initially at cost and subsequently stated at cost less accumulated depreciation and impairment losses, if any. Computer software Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. These costs are amortised over their estimated useful lives. 2.10. Impairment Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect of the estimated future cash flows of that asset. Non-Financial assets The carrying amounts of non-financial assets other than inventories and deferred tax assets, are assessed at each reporting date to ascertain whether there is any indication of impairment. If any such indication exists then the assets's recoverable amount is estimated. An impairment loss is recognised, as an expense in the profit and loss account, for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 2.11. Investments Investments in subsidiary and non listed equity securities classified as available for sale are stated at cost less provision for impairment, if any. 2.12. Stores and spares Stores and spares are stated at lower of cost and net realizable value. Cost is determined using weighted average method. 2.13. Stock-in-trade Stock-in-trade is valued at lower of weighted average cost and estimated net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value signifies the estimated selling price in the ordinary course of business less net estimated costs of completion and selling expenses. 2.14. Trade debts and other receivables Trade debts and other receivables are recognised initially at fair value plus directly attributable cost, if any, and subsequently measured at amortised cost. A 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. 2.15. Foreign currency translation Transactions denominated in foreign currencies are translated to Pak Rupees, at the foreign exchange rate ruling at the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the foreign exchange rates at the balance sheet date. Exchange differences are taken to the profit and loss account. 2.16. Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates. The financial statements are presented in Pakistani Rupees, which is the company's functional and presentation currency. 2.17. Revenue recognition � Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the customer. For those products which are often sold with a right of return, accumulated experience is used to estimate and provide for such returns at the time of sale. � Commission income is recognised on date of shipment from suppliers. � Profit on short-term deposits and mark-up on loan to subsidiaries is accounted for on a time-apportioned basis using the effective interest method. � Dividend income is recognised when the right to receive payment is established. 2.18. Financial expense Financial expenses are recognised using the effective interest method and comprise foreign currency losses and interest expense on borrowings. 2.19. Segment reporting A segment is a distinguishable component within a company that is engaged in providing products under a common control environment (business segment), or in providing products within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments. 2.20. Finance lease Leases that transfer substantially all the risks and rewards incidental to ownership of an asset are classified as finance lease. Assets subject to finance lease are stated at amounts equal to the fair value or, if lower, the present value of the minimum lease payments. The minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. Assets acquired under finance leases are depreciated in accordance with the Company's depreciation policy on property, plant and equipment. The finance cost is charged to profit and loss account and is included under financial charges. 2.21. Operating lease Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit and loss account on a straight-line basis over the period of the lease. 2.22. Cash and cash equivalents. Cash and cash equivalents comprise of cash in hand and current and or deposit accounts held with banks. Running finance facilities availed by the Company, which are payable on demand and form an integral part of the Company's cash management are included as part of cash and cash equivalents for the purpose of statement of cash flows. 2.23. Borrowings and their cost Borrowings are recorded at the proceeds received. Borrowing costs are recognised as an expense in the period in which these are incurred except to the extent of borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs, if any, are capitalised as part of the cost of that asset. 2.24. Financial liabilities All financial liabilities are initially recognised at fair value plus directly attributable cost, if any, and subsequently measured at amortised cost. 2.25. Derivative financial instruments The Company uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. In accordance with its treasury policy, the Company does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. 2.26. Off-setting Financial assets and liabilities are offset and the net amount is reported in the financial statements only when there is legally enforceable right to set-off the recognised amount and the Company intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. 3. Issued, Subscribed and Paid-up Capital ======================================================================================================
Amounts in Rs '000
2007 2006 2007 2006
(Numbers)
======================================================================================================
125,840,190 125,840,190 Ordinary shares of Rs 10 each
fully paid in cash 1,258,402 1,258,402
318,492 318,492 Ordinary shares of Rs 10 each issued as
fully paid for consideration other than cash
under scheme of arrangement for amalgamat 3,185 3,185
25,227 25,227 Ordinary shares of Rs 10 each
issued as fully paid bonus shares 252 252
12,618,391 12,618,391 Ordinary shares issued pursuant to the
Scheme as fully paid for consideration
of investment in associate (note 3.1) 126,184 126,184
138,802,300 138,802,300 1,388,023 1,388,023
======================================================================================================3.1. With effect from 1 October 2000 the Pure Terephthalic Acid (PTA) Business of the Company was demerged under a Scheme of Arrangement ("the Scheme") dated 12 December 2000 approved by the shareholders and sanctioned by the High Court of Sindh.3.2. ICl Omicron B.V., which is a wholly owned subsidiary of Imperial Chemical Industries PLC, UK, held 105,229,125 (2006: 105,229,125) ordinary shares of Rs 10 each at 31 December 2007. Effective 2 January 2008 Akzo Nobel N.V. has completed its acquisition of lCl PLC, UK, the parent company of ICI Omicron B.V. Accordingly with effect from 2 January 2008 Akzo Nobel has become the ultimate holding company of ICI Pakistan Limited. ICI Pakistan Limited continues to be the direct subsidiary of ICI Omicron B.V. 4. Capital Reserves =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Share premium - note 4.1 465,259 465,259
Capital receipts - note 4.2 586 586
465,845 465,845
=========================================================================================4.1. Share premium includes the premium amounting to Rs 0.902 million received on shares issued for the Company's Polyester Plant installation in 1980 and share premium of Rs 464.357 million representing the difference between nominal value of Rs 10 per share of 12,618,391 ordinary shares issued by the Company and the market value of As 590.541 million of these shares corresponding to 25% holding acquired in Pakistan PTA Limited, an associate, at the date of acquisition i.e. 2 November 2001 and the number of shares that have been issued were determined in accordance with the Scheme in the ratio between market value of the shares of two companies based on the mean of the middle market quotation of the Karachi Stock Exchange over the ten trading days between 22 October 2001 to 2 November 2001.4.2. Capital receipts represent the amount received from various ICI PLC group companies overseas for the purchase of property, plant and equipment. The remitting companies have no claim to their repayments. 5. Surplus on Revaluation of Property, Plant and Equipment =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Balance as on 1 January 1,124,220 494,315
Revaluation surplus - 667,967
Reversal of net deferred tax liability on - 41,661
surplus earlierr
- 709,628
Less: Transfer to retained earnings (unappropriated profit) in respect of
incremental depreciation charged during the
year net of deferred tax (112,053) (79,723)
Balance as on 31 December 1,012,167 1,124,220
=========================================================================================6. Deferred Liability=========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Provisions for non-management staff gratuity and
eligible retired employees' medical scheme 119,571 104,079
=========================================================================================6.1. Staff Retirement Benefits 6.1.1. The amounts recognised in the profit and loss account against defined benefit schemes are as follows: ===================================================================================================================================================
2007 2006
Funded unfunded Funded Unfunded
Pension Gratuity Total Pension Gratuity Total
===================================================================================================================================================
Current service cost 21,658 20,464 42,122 5,175 23,048 19,297 42,345 4,943
Interest cost 81,443 30,945 112,388 17,438 80,165 27,451 107,616 15,719
Expected return on plan assets (93,010) (25,008) (118,018) - (89,043) (24,991) (114,034) -
Termination cost 1,896 - 1,896 - 17,233 - 17,233 479
Recognition of actuarial loss 14,116 4,316 18,432 3,678 18,859 1,826 20,685 6,758
Charge for the year 26,103 30,717 56,820 26,291 50,262 23,583 73,845 27,899
===================================================================================================================================================6.1.2. Movements in the net asset / (liability) recognised in the balance sheet are as follows: ===================================================================================================================================================
2007 2006
Funded unfunded Funded Unfunded
Pension Gratuity Total Pension Gratuity Total
===================================================================================================================================================
Opening balance 130,793 (6,469) 124,324 (104,444) 71,205 (8,417) 62,788 (90,971)
Charge for the year - note 6.1.1 (26,103) (30,717) (56,820) (26,291) (50,262) (23,583) (73,845) (27,899)
Contributions! payments during the year 85,501 55,957 141,458 10,926 109,850 25,531 135,381 14,426
Closing balance 190,191 18,771 208,962 (119,809) 130,793 (6,469) 124,324 (104,444)
===================================================================================================================================================6.1.3. The amounts recognised In the balance sheet are as follows: ===================================================================================================================================================
2007 2006
Funded unfunded Funded Unfunded
Pension Gratuity Total Pension Gratuity Total
===================================================================================================================================================
Fair value of plan assets - note 6.1.5 1,038,068 274,870 1,312,938 - 842,376 224,333 1,067,109 =
Present value of defined
benefit obligation - note 6.1.4 (977,855) (373,060) (1,350,915) (204,472) (778,855) (293,785) (1072,640) (163,843)
Surplus / (Deficit) 60,213 (98,190) (37,977) (204,472) 63,521 (69,052) (5,531) (163,843)
Unrecognised actuarial loss 129,978 116,961 246,939 84,663 67,72 62,583 129,855 59,399
Recognised asset! (liability) 190,191 18,771 208,962 (119,809) 130,793 (6,469) 124,324 (104,444)
===================================================================================================================================================6.1.4. Movement in the present value of defined benefit===================================================================================================================================================
2007 2006
Funded unfunded Funded Unfunded
Pension Gratuity Total Pension Gratuity Total
===================================================================================================================================================
Opening balance 778,855 293,785 1,072,640 163,844 780,301 266,191 1,046,492 152,859
Service cost 21,658 20,464 42,122 5,175 23,048 19,297 42,345 4,943
Interest cost 81,443 30,945 112,388 17,438 80,165 27,451 107,616 15,719
Benefits paid (78,983) (25,599) (104,582) (10,926) (75,245) (23,702) (98,947) (14,426)
Termination cost 1,896 - 1,896 - 17,233 - 17,233 479
Actuarial loss! (gain) 172,986 53,465 226,451 28,941 (46,647) 4,548 (42,099) 4,269
Present value of the defined benefit
obligation at the end of the year 977,855 373,060 1,350,915 204,472 778,855 293,785 1,072,640 163,843
===================================================================================================================================================6.1.5. Movement in the fair value of plan assets: ===================================================================================================================================================
2007 2006
Funded unfunded Funded Unfunded
Pension Gratuity Total Pension Gratuity Total
===================================================================================================================================================
Opening balance 842,376 224,733 1,067,109 - 783,507 230,935 1,014,442 -
Expected return 93,010 25,008 118,018 - 89,043 24,991 114,034 -
Contributions 85,501 55,957 141,458 - 109,850 25,531 135,381 -
Benefits paid (78,983) (25,599) (104,582) - (75,245) (23,702) (98,947) -
Actuarial gain !(loss) 96,164 (5,229) 90,935 - (64,779) (33,022) (97,801) -
Fair value of plan assets at the
end of the year 1,038,068 274,870 1,312,938 - 842,376 224,733 1,067,109 -
===================================================================================================================================================6.1.6. Historical information =================================================================================================================================================== As at 31 December 2007 2006 2005 2004 2003 =================================================================================================================================================== Present value of defined benefit obligation 1,555,387 1,236,483 1,199,351 1,220,952 1,289,235 Fair value of plan assets 1,312,938 1,067,109 1,014,442 910,995 910,381 Deficit 242,449 169,374 184,909 309,957 378,854 Experience adjustments on plan liabilities 16% 1% 8% (2%) 12% Experience adjustments on plan assets 7% (9%) 7% (2%) 1% ===================================================================================================================================================6.1.7. Major categories / composition of plan assets are as follows: =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Debt instruments 63% 62%
Equity 13% 10%
Mixed Funds 18% 16%
Cash 6% 12%
=========================================================================================The unfunded liability included in the above table includes Rs 0.238 million (2006: Rs 0.365 million) pertaining to ICI Pakistan PowerGen Limited. These figures are based on the latest actuarial valuation, as at 31 December 2007. The valuation uses the Projected Unit Credit method. Actuarial gains and losses are amortised over the expected future service of current members. The return on plan assets was assumed to equal the discount rate. Actual return on plan assets during 2007 was Rs 208.953 million (2006: Rs 16.233 million). 6.1.8. The principal actuarial assumptions at the reporting date were as follows: =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Discount rate 11.0% 11.0%
Expected return on plan assets 11.0% 11.0%
Future salary increases 8.9% 8.9%
Future pension increases 6.0% 6.0%
=========================================================================================6.1.9. Medical cost trend is assumed to follow inflation. The sensitivity to reflect the effect of a 1% movement in the assumed medical cost trend were as follows: =========================================================================================
2007 Increase Decrease
=========================================================================================
Effect on the aggregate of the current service cost
and interest cost 12,152 13,890 10,733
Effect on the defined benefit obligation 111,337 124,590 100,243
=========================================================================================6.1.10. The Company contributed As 40.978 million (2006: Rs 39.158 million) and Rs 18.204 million (2006: Rs 17.104 million) to the provident fund and the defined contribution superannuation fund respectively during the year. 7. Short-Term Financing =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Running finances utilised under mark-up arrangements - note 7.1 - 3,613
Term finances - note 7.2 - -
- 3,613
=========================================================================================7.1. The facilities for running finance available from various banks amounted to Rs 2,571 million (31 December 2006: Rs 2,571 million) and carry mark-up during the period ranging from 9.59 to 11.63 percent per annum (31 December 2006: 8.76 to 11.84 percent per annum). The purchase prices are payable on various dates by 30 September 2008. The facilities are secured by hypothecation charge over the present and future stock-in-trade and book debts of the Company and first pari passu charge over plant and machinery of Polyester Business of the Company. 7.2. The facilities for term finance available from various banks amount to Rs 550 million (2006: Rs 550 million). However no such facility was utilised as on 31 December 2007. 8. Trade and Other Payables =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Trade creditors - note 8.1 2,081,618 2,000,796
Bills payable 2,214,797 1,507,414
Sales tax, excise and custom duties 96,058 56,819
Mark-up accrued on short term financing 11,680 7,504
Accrued interest / return on unsecured loan - note 8.2 354,709 352,728
Accrued expenses 637,989 587,109
Technical service fee 40,269 19,755
Workers' profit participation fund - note 8.3 150,790 113,788
Workers' welfare fund 98,942 42,356
Distributors' security deposits - payable
on termination of distributorship - note 8.4 56,092 56,670
Contractors' earnest / retention money 8,599 9,217
Advances from customers 185,049 211,155
Unclaimed dividends 4,550 4,574
Payable for capital expenditure 107,123 164,495
Payable for staff retirement benefit schemes - 6,469
Provision for compensated absences 20,000 20,000
Others 207,838 271,813
6,276,103 5,432,662
=========================================================================================8.1. The above balances include amounts due to following associated undertakings: =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Pakistan PTA Limited 1,197,090 168,974
ICI Paints UK 3,770 917
lCl Paints Asia Pacific 11,600 5,168
ICI Paints Malaysia Limited 21 -
National Starch and Chemicals 657 830
ICI India Limited 937 -
1,214,075 175,889
=========================================================================================8.2. This represents amount payable to Mortar Investments International Limited. 8.3. Workers' profit participation fund =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Balance as on 1 January 113,788 89,163
Allocation for the year - note 28 145,964 111,571
259,752 200,734
Interest on funds utilised in the Company's
business at 41.25 percent (2006: 37.5 percent) per annum - note 27 4,774 2,058
264,526 202,792
Less:
- Amount paid to and on behalf of the Fund 10,192 10,829
- Deposited with the Government of Pakistan 103,544 78,175
113,736 89,004
Balance as on 31 December 150,790 113,788
=========================================================================================8.4. Interest on security deposits from certain distributors is payable at 7.5 percent (2006: 7.5 percent) per annum as specified in the respective agreements. 9. Contingencies and Commitments 9.1. Claims against the Company not acknowledged as debts are as follows: =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Local bodies 12,870 13,819
Sales Tax authorities 97,192 97,192
Others 92,130 85,474
202,192 196,485
=========================================================================================9.2. Guarantees issued by the Company in respect of financial and operational obligations of Pakistan PTA Limited pursuant to the Scheme amounting to Rs 2,460 million (2006: Rs 2,550 million) against which Pakistan PTA Limited has issued counter guarantees to the Company. 9.3. Guarantees issued by the Company in respect of financing obtained by Senior Executives amounted to Rs 18 million (2006: Rs 32 million), in accordance with the terms of employment. 9.4. Commitments in respect of capital expenditure - Rs 243.131 million (2006: Rs 32.884 million). 9.5. Commitments for rentals under operating lease agreements in respect of vehicles amounting to Rs 115.502 million (2006: Rs 108.389 million) are as follows: =========================================================================================
Year
=========================================================================================
2007 - 40,396
2008 45,450 32,852
2009 37,119 22,219
2010 28,768 12,922
2011 4,165 -
115,502 108,389
Payable not later than one year 45,450 40,396
Payable later than one year but not later than five years 70,052 67,993
115,502 108,389
=========================================================================================9.6. Outstanding foreign exchange contracts as at 31 December 2007 entered into by the Company to hedge the anticipated future transactions amounted to Rs 623.133 million (2006: Rs 1,321.424 million). 10. Property, Plant and Equipment 10.1. The following is a statement of property, plant and equipment: =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Operating property, plant and equipment - note 10.2 7,728,909 7,167,583
Capital work-in-progress - note 10.7 777,827 1,175,677
8,506,736 8,343,260
=========================================================================================10.2. The following is a statement of operating property, plant and equipment:===========================================================================================================================================================================
Land Limebeds on Buildings Plant and Railway Rolling stock Furniture and Total
Freehold Leasehold freehold land On freehold On leasehold machinery sidings and vehicles equipment
land land
2007
===========================================================================================================================================================================
Net carrying value basis
Year ended 31 December 2007
Opening net
book value (NBV) 836,702 106,459 75,337 261,712 354,344 5,379,846 - 25,052 128,131 7,167,583
Additions/transfer (at cost) - - - 6,400 186,197 1,180,450 - 4,592 32,453 1,410,092
Disposals/transfer (at NBV) - - - - (664) (2,858) - (2,403) (489) (6,414)
Depreciation charge - (78,549) (6,011) (25,152) (55,509) (635,130) - (5,751) (36,250) (842,352)
Closing net
book value (NBV) 836,702 27,910 69,326 242,960 484,368 5,922,308 - 21,490 123,845 7,728,909
Gross carrying value basis
At31 December2007
Cost/Revaluation 836,702 567,799 118,322 857,020 938,726 14,658,112 297 141,079 572,991 18,691,048
Accumulated
Depreciation - (539,889) (48,996) (614,060) (454,358) (8,735,804) (297) (119,589) (449,146) (10,962,139)
Net book value 836,702 27,910 69,326 242,960 484,368 5,922,308 - 21,490 123,845 7,728,909
Depreciation
rate % per annum - 2 to 4 3.33 to 7.5 5 to 10 2.5 to 10 3.33 to 10 3.33 10 to 25 10 to 33.33
===========================================================================================================================================================================
===========================================================================================================================================================================
2006
Net carrying value basis
Year ended 31 December 2006
Opening net
===========================================================================================================================================================================
book value (NBV) 49,706 25,904 81,314 191,721 381,009 3,822,409 - 11,612 126,833 4,690,508
Additions/transfer (at cost) - - 50 122,600 10,766 2,301,010 - 20,307 43,992 2,498,725
Revaluation 786,996 90,841 - - - (209,870) - - - 667,967
Disposals/transfer (at NBV) - - - - - (41) - (437) (263) (741)
Depreciation charge - (10,286) (6,027) (52,609) (37,431) (533,662) - (6,430) (42,431) (688,876)
Closing net
book value (NBV) 836,702 106,459 75,337 261,712 354,344 5,379,846 - 25,052 128,131 7,167,583
Gross carrying value basis
At 31 December 2006
Cost/Revaluation 836,702 567,799 118,322 850,620 754,006 13,536,096 297 140,705 564,773 17,369,320
Accumulated Depreciation - (461,340) (42,985) (588,908) (399,662) (8,156,250) � (297) (115,653) (436,642) (10,201,737)
Net book value 836,702 106,459 75,337 261,712 354,344 5,379,846 - 25,052 128,131 7,167,583
Depreciation
rate % per annum - 2 to 4 3.33 to 7.5 5 to 10 2.5 to 10 3.33 to 10 3.33 10 to 25 10 to 33.33
===========================================================================================================================================================================10.3. Subsequent to revaluation on 1 October 1959 and 30 September 2000, which had resulted in a surplus of Rs 14.207 million and Rs 1,569.869 million respectively, the land and plant and machinery were revalued again on 15 December 2006 resulting in a net surplus of Rs 667.967 million. The valuation was conducted by independent valuers. Valuations for plant and machinery was the open market value of the asset based on estimated gross replacement cost, depreciated to reflect the residual service potential of the asset having paid due regard to age, condition and obsolescence. Land was valued on the basis of fair market value. 10.4. Had there been no revaluation, the net book value of specific classes of operating property, plant and equipment would have amounted to: =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Net Book Value
Freehold land 20,929 20,929
Leasehold land 32 37
Plant and machinery 5,622,648 5,028,634
Rolling stock and vehicles 21,490 25,052
Furniture and equipment 123,845 128,131
5,788,944 5,202,783
=========================================================================================10.5. The depreciation charge for the year has been allocated as follows: =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Cost of sales - note 24 807,881 655,652
Selling and distribution expenses - note 25 1,068 947
Administration and general expenses - note 26 33,403 32,277
842,352 688,876
=========================================================================================10.6. Assets held under finance lease The depreciation charge of Rs Nil (2006: Rs 58.8 million) has been allocated to the cost of sales - note 24. 10.7. The following is a statement of capital work-in-progress: =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Designing, consultancy and engineering fee 23,741 30,965
Civil works and buildings 92,658 164,844
Plant and machinery 529,461 899,307
Miscellaneous equipment 47,298 52,950
Advances to suppliers / contractors 84,669 27,611
777,827 1,175,677
=========================================================================================10.8. Details of operating property, plant and equipment disposals having net book value in excess of Rs 50,000 are as follows: ===========================================================================================================
Amounts in Rs '000
Cost Accumulated Net book Sale Particulars of buyers
depreciation value proceeds
===========================================================================================================
Building
Scrapped 1,250 721 529 2 Shahbaz & Company, Malakwal
Plant and machinery
Sold by negotiation 181 59 122 128 Shaz Services, Karachi
Scrapped 17,088 14,478 2,610 321 Shahbaz & Company, Malakwal
Rolling stock and vehicles
Sold by negotiation 225 - 225 800 M/s Asif Brothers, Karachi
Sold by auction 2,260 82 2,178 4,365 Various
Furniture and equipment
Sold by negotiations 15,364 14,944 420 764 Various
===========================================================================================================11. Intangible Asset=========================================================================================
2007 2006
=========================================================================================
Net carrying value basis
Year ended 31 December
Opening net book value (NBV) 71,774 103,811
Additions (at cost) - -
Amortisation charge (32,037) (32,037)
Closing net book value (NBV) 39,737 71,774
Gross carrying amount
At 31 December
Cost 168,781 168,781
Accumulated amortisation (129,044) (97,007)
Net book value 39,737 71,774
=========================================================================================11.1. The amortisation charge for the year has been allocated as follows: =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Cost of sales - note 24 15,128 15,128
Selling and distribution expenses - note 25 2,657 2,657
Administration and general expenses - note 26 14,252 14,252
32,037 32,037
=========================================================================================12. Deferred Tax Asset - net =========================================================================================
Amounts in '000
2006 Charge/ 2007
(reversal)
=========================================================================================
Deductible temporary differences
Tax losses carried forward 1,880,628 591,479 1,289,149
Provisions for retirement benefits, doubtful debts 149,395 (20,494) 169,889
and others
Taxable temporary differences
Property, plant and equipment (1,000,434) 104,148 (1,104,582)
1,029,589 675,133 354,456
=========================================================================================13. Long - Term Investments =========================================================================================
2007 2006
=========================================================================================
Unquoted
Subsidiary
ICI Pakistan PowerGen Limited (wholly owned) - note 13.1 & 13.2
5,800,000 ordinary shares (2006: 2,100,000) of Rs 100 each 580,000 210,000
Others
Equity security available for sale
Arabian Sea Country Club Limited 2,500 2,500
582,500 212,500
=========================================================================================13.1. During the year the Company has made a further investment of Rs 370 million in the wholly owned subsidiary. This investment has been approved by the shareholders in the annual general meeting held on 26 April 2007 and extraordinary general meeting held on 20 July 2007 in which Company had agreed to invest a further sum of Rs 600 million (including Rs 400 million in equity and Rs 200 million as loan). 13.2. The value of the Company's investment on the basis of net assets of the Subsidiary as disclosed in the audited financial statements for the year ended 31 December 2007 amounted to Rs 288.332 million (2006: Rs 83.829 million). 14. Long-Term Loans - Considered good =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Due from Subsidiary - Unsecured
- Long term loan - note 14.1 & 19 96,000 72,000
Due from Directors, Executives and Employees - note 14.2 108,867 103,687
204,867 175,687
=========================================================================================14.1. This represents loan given to ICI Pakistan PowerGen Limited which was rescheduled during the current year. As per the old agreement the loan carried a rate of return of 4% per annum payable quarterly and principal amount payable in five equal semi annual instalments starting from March 2007. As per the revised agreement the loan carries a rate of return of three months KIBOR + 1% on each instalment and the principal amount is due in five equal semi-annual instalments, commencing from 1 October 2008. The above terms have been approved by the shareholders in the annual general meeting held on 26 April 2007. 14.2. Due from Executives and Employees =========================================================================================
Amounts in Rs '000
2007 2006
Motor car House Total Total
building
=========================================================================================
Due from Executives 37,463 34,450 71,913 75,682
Less: Receivable within one year 5,164 12,840 18,004 17,682
32,299 21,610 53,909 58,000
Due from Employees 82,509 73,023
Less: Receivable within one year 27,551 27,336
54,958 45,687
108,867 103,687
Outstanding for period:
- less than three years but over one year 58,134 59,395
- more than three years 50,733 44,292
108,867 103,687
=========================================================================================14.3. Reconciliation of the carrying amount of loans to Executives: =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Opening balance at beginning of the year 75,682 63,891
Disbursements 30,893 56,551
Repayments (34,662) (44,760)
Balance at end of the year 71,913 75,682
=========================================================================================The loan to executives includes an amount of As 4.145 million (2006: As 5.420 million) in respect of house building relating to key management personnel. Loan outstanding during the year relates to Mr. Ali A. Aga, who was provided this loan as per his terms of employment. 14.4. Loans for purchase of motor cars and house building are repayable between two to ten years. These loans are interest free and granted to the employees including executives of the Company in accordance with their terms of employment. 14.5. The maximum aggregate amount of long-term loans and advances due from the Executives at the end of any month during the year was As 83.397 million (2006: Rs 75.682 million). 15. Long-Term Deposits and Prepayments =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Deposits 21,120 54,987
Prepayments 38,768 17,932
59,888 72,919
=========================================================================================16. Stores and Spares =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Stores (include in-transit As 30.528 million; 2006: 65,519 47,740
Rs 19.579 million)
Spares 520,644 629,792
Consumables 74,978 83,768
661,141 761,300
Less: Provision for slow moving and obsolete items 55,661 55,661
605,480 705,639
=========================================================================================17. Stock-in-Trade =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Raw and packing material (include in-transit Rs 244.345; 1,116,753 940,720
million 2006: Rs 355.516 million)
Work-in-process 192,127 141,151
Finished goods (include in-transit As 28.068 million;
2006: Rs 56.948 million) 1,120,188 1,333,205
2,429,068 2,415,076
Less: Provision for slow moving and obsolete stock
- Raw material 89,363 31,046
- Finished goods 28,369 36,240
117,732 67,286
2,311,336 2,347,790
=========================================================================================18. Trade Debts =========================================================================================
Amounts in Rs'000
2007 2006
=========================================================================================
Considered good
- Secured 291,456 277,509
- Unsecured 901,469 544,366
1,192,925 821,875
Considered doubtful 146,457 111,734
1,339,382 933,609
Less: Provision for:
- Doubtful debts 146,457 111,734
- Discounts payable 143,461 91,199
289,918 202,933
1,049,464 730,676
=========================================================================================19. Loans and Advances =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Considered good
Loans due from:
Executives - note 14.2 18,004 17,682
Employees - note 14.2 27,551 27,336
Subsidiary - unsecured - note 14.1 24,000 48,000
69,555 93,018
Advances to:
Directors and Executives 8,903 1,679
Employees 1,070 2,846
Contractors and suppliers 54,802 74,127
Others 3,350 2,369
68,125 81,021
137,680 174,039
Considered doubtful 8,120 8,120
145,800 182,159
Less: Provision for doubtful loans and advances 8,120 8,120
137,680 174,039
=========================================================================================19.1. The maximum aggregate amount of advances due from the Directors and Executives at the end onth during the year was Rs 1.992 million and Rs 8.068 million (2006: Rs Niland Rs 7.782 million) respectively.20. Trade Deposits and Short-Term Prepayments =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Trade deposits 12,323 4,208
Short-term prepayments 306,275 268,606
Balances with statutory authorities 24,972 14,345
343,570 287,159
=========================================================================================21. Other Receivables =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Considered good
Duties, sales tax and octroi refunds due 306,870 185,955
Due from Associate - note 21.1 67,582 67,582
Insurance claims 21,267 -
Commission receivable 22,560 23,354
Interest income receivable from subsidiary 3,239 1,210
Interest income receivable 8,775 -
Rebates receivable 108,414 194,627
Others 19,782 77,205
658,489 549,933
Considered doubtful 15,904 20,733
674,393 570,666
Less: Provision for doubtful receivables 15,904 20,733
658,489 549,933
=========================================================================================21.1. The maximum aggregate amount due from ICI Omicron B.V. at the end of any month during the year was Rs 67.582 million (2006: Rs 67.582 million). 22. Cash and Bank Balances =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Deposit accounts 1,950,000 520,000
Current accounts 1,385,398 1,074,470
In hand
- Cheques 262,972 183,976
- Cash 16,686 12,705
3,615,056 1,791,151
=========================================================================================23. Operating Results=====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
Sales
Inter-segment - - - - - - - - 483,496 442,877 - -
10,344,658 8,458,475 4,936,218 4,394,676 5,812,097 5,071,975 2,710,278 2,236,181 2,089,499 1,723,943 25,892,750 21,885,250
10,344,658 8,458,475 4,936,218 4,394,676 5,812,097 5,071,975 2,710,278 2,236,181 2,572,995 2,166,820 25,892,750 21,885,250
Commission income - - - - - - - - 80,259 62,438 80,259 62,438
Turnover 10,344,658 8,458,475 4,936,218 4,394,676 5,812,097 5,071,975 2,710,278 2,236,181 2,653,254 2,229,258 25,973,009 21,947,688
Sales tax 3,042 2,205 701,316 528,575 717,941 628,464 2 5 187,162 145,951 1,609,463 1,305,200
Commission and
discounts to distributors
and customers 81,846 43,998 71,037 91,705 754,714 600,370 302,892 221,496 123,322 110,801 1,333,811 1,068,370
84,888 46,203 772,353 620,280 1,472,655 1,228,834 302,894 221,501 310,484 256,752 2,943,274 2,373,570
Net sales and
commission income 10,259,770 8,412,272 4,163,865 3,774,396 4,339,442 3,843,141 2,407,384 2,014,680 2,342,770 1,972,506 23,029,735 19,574,118
Cost of sales- note 24 9,429,385 7,763,951 2,952,549 2,808,514 2,831,789 2,434,777 1,595,024 1,314,129 1,898,364 1,614,154 18,223,615 15,492,648
Gross profit 830,385 648,321 1,211,316 965,882 1,507,653 1,408,364 812,360 700,551 444,406 358,352 4,806,120 4,081,470
Soling and distribution
expenses-note 25 41,816 33,056 122,486 90,789 487,410 397,408 293,772 256,877 129,065 97,945 1,074,549 876,075
Administration and
general expenses - note 26 146,717 148,791 226,236 239,866 167,734 139,985 115,667 114,487 103,847 83,248 760,201 726,377
Operating result 641,852 466,474 862,594 635,227 852,509 870,971 402,921 329,187 211,494 177,159 2,971,370 2,479,018
=====================================================================================================================================================================================================================================================23.1. Segment assets=====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
6,593,630 6,801,307 5,117,075 4,524663 2,282,076 2,037,346 780,799 732,725 808,722 633,983 15,582,302 14,730,024
=====================================================================================================================================================================================================================================================23.2. Unallocated assets=====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
3,223,989 2,199,560
18,806,291 16,929,584
=====================================================================================================================================================================================================================================================23.3. Segment liabilities=====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
2,780,508 2,482,402 880,592 908,835 811,225 662,390 1,063,928 738,972 499,470 383,387 6,035,723 5,175,986
Unallocated liabilities 359,951 364,368
6,395,674 5,540,354
=====================================================================================================================================================================================================================================================23.5. Non-cash Items=====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
(excluding depreciation 5,855 10,659 15,356 7,519 1,281 932 2,484 5,888 1,231 2,809 26,207 27,807
& amortisation)
=====================================================================================================================================================================================================================================================23.6. Depreciation & amortisatlon=====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
365,961 342,696 428,203 366,241 49,381 39,238 14,725 16,144 16,119 15,394 874,389 779,713
=====================================================================================================================================================================================================================================================23.7. Capital expenditure=====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
219,416 244,169 675,424 826,173 73,411 101,172 12,225 12,841 31,767 25,582 1,012,243 1,209,937
=====================================================================================================================================================================================================================================================23.8. inter-segment salesInter-segment sales have been eliminated from the total. 23.9. Inter-segment pricing Transactions among the business segments are recorded at arm's length precis using admissible valuation methods 24. Cost of Sales =====================================================================================================================================================================================================================================================
Amounts in Rs 'C
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
Raw and packing
materials consumed
Opening stock 431,019 749,881 137,713 88,874 191,552 202,570 86,305 141,217 63,085 94,964 909,674 1,277,506
Purchases
Inter-segment - - - - 483,496 442,877 - - - - - -
Others 8,056,597 6,296,153 1,000,168 898,633 2,201,831 1,873,099 624,893 419,197 692,100 462,274 12,575,589 9,949,356
8,056,597 6,296,153 1,000,168 898,633 2,685,327 2,315,976 624,893 419,197 692,100 462,274 12,575,589 9,949,356
8,487,616 7,046,034 1,137,881 987,507 2,876,879 2,518,546 711,198 560,414 755,185 557,238 13,485,263 11,226,862
Closing stock (506,824) (431,019) (135,447) (137,713) (146,172) (191,552) (159,410) (86,305) (79,537) (63,085) (1,027,390) (909,674)
7,980,792 6,615,015 1,002,434 849,794 2,730,707 2,326,994 551,788 474,109 675,648 494,153 12,457,873 10,317,188
Salaries, wages
and benefits 217,280 194,546 345,449 339,125 86,261 68,020 2,625 4,329 20,128 21,549 671,743 627,569
Stores and spares
consumed 83,697 83,030 79,714 119,030 6,992 1,528 - - 4,105 4,136 174,508 207,724
Conversion fee paid to
contract manufacturers - - - - - - 134,795 123,100 4,874 3,549 139,669 126,649
Oil, gas and electricity 453,313 460,456 804,066 756,102 12,046 11,327 - - 6,820 5,073 1,276,245 1,232,996
Rent, rates and taxes 1,318 846 499 525 444 445 - - 176 180 2,437 1,996
Insurance 46,510 53,228 28,268 33,953 14,965 21,907 6 8 376 581 90,125 109,677
Repairs and maintenance 740 948 837 441 12,172 12,079 - - 1,940 1,561 15,689 15,029
Depreciation & amortisation -
note 10.5, & 11.1 359,755 337,203 413,407 352,512 39,799 30,729 662 681 9,386 8,455 823,009 729,580
Excise duty - - - - 23,996 988 - - - 8 23,996 996
Technical fees - - - - 31,210 29,474 - - - - 31,210 29,474
Royalty - - - - 11,024 - - - 13,924 9,839 24,948 9,839
General expenses 74,664 63,180 53,494 42,779 21,893 20,320 1,438 801 8,856 11,162 160,345 138,242
Opening stock of
work-in-process 88,102 83,195 - - 50,570 25,213 - - 2,479 4,693 141,151 113,101
Closing stock of
work-in-process (72,892) (88,102) - - (115,205) (50,570) (3,084) - (946) (2,479) (192,127) (141,151)
Cost of goods
manufactured 9,233,279 7,803,545 2,728,168 2,494,261 2,926,874 2,498,454 688,230 603,028 747,766 562,460 15,840,821 13,518,871
Opening stock of
finished goods 572,009 530,229 99,359 93,636 150,675 93,106 285,909 219,095 189,013 184,808 1,296,965 1,120,871
Finished goods
purchased - 2,186 141,783 334,976 - - 951,168 780,508 1,156,050 1,055,899 2,249,001 2,173,569
9,805,288 8,335,960 2,969,310 2,922,873 3,077,549 2,591,560 1,925,307 1,602,631 2,092,829 1,803,167 19,386,787 16,813,314
Closing stock of
finished goods (375,903) (572,009) (12,876) (99,359) (188,092) (150,675) (330,283) (285,909) (184,665) (189,013) (1,091,819) (1,296,965)
Provision for obsolete
stocks - note 26 - - (3,885) (15,000) (57,668) (6,108) - (2,593) (9,800) - (71,353) (23,701)
9,429,385 7,763,951 2,952,549 2,808,514 2,831,789 2,434,777 1,595,024 1,314,129 1,898,364 1,614,154 18,223,615 15,492,648
=====================================================================================================================================================================================================================================================24.1. Inter-segment purchasesInter-segment purchases have been eliminated from the total. 24.2. Staff retirement benefits Salaries, wages and benefits include As 44.875 million (2006: Rs 47.611 million) in respect of staff retirement benefits. 24.3. Severance cost Salaries, wages and benefits include Rs Nil million (2006: Rs 10.754 million) in respect of severance cost. 25. Selling and Distribution Expenses =====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
Salaries and benefits 26,030 20,266 13,128 38,649 140,474 129,420 119,687 111,839 42,133 41,161 341,452 341,335
Repairs and maintenance 89 16 854 1,138 1,580 1,516 1,228 1,077 511 379 4,262 4,126
Advertising and sales promotion 344 878 1,082 424 136,015 96,238 74,202 60,687 2,014 990 213,657 159,217
Rent, rates and taxes - 80 1,196 1,713 9,564 9,077 3,953 4,188 570 693 15,283 15,751
Insurance - - 808 642 147 10 2,002 2,189 3,652 3,720 6,609 6,561
Lighting, heating and cooling 12 - 859 841 3,426 2,752 1,552 1,267 281 239 6,130 5,099
Depreciation and amortisation
note 10.5 & 11.1 248 248 330 209 - - 1,670 1,670 1,477 1,477 3,725 3,604
Outward freight and handling 7,145 4,705 92,212 37,439 120,687 100,900 - - 20,710 20,040 240,754 163,084
Provision for doubtful
trade debts - - - - - 1,200 - 2,116 - - - 3,316
Travelling expenses 3,695 3,672 2,848 1,597 49,410 43,534 45,168 37,651 12,772 7,627 113,893 94,081
Postage, telegram,
telephone and telex 457 422 879 745 6,497 5,596 4,677 4,211 3,530 2,659 16,040 13,633
General expenses 3,796 2,769 8,290 7,392 19,610 7,165 39,633 29,982 41,415 18,960 112,744 66,268
41,816 33,056 122,486 90,789 487,410 397,408 293,772 256,877 129,065 97,945 1,074,549 876,075
=====================================================================================================================================================================================================================================================25.1. Staff retirement benefitsSalaries, wages and benefits include Rs 38.171 million (2006: Rs 31.471 million) in respect of staff retirement benefits. 25.2. Severance cost Salaries and benefits include As Nil million (2006: Rs 20.936 million) in respect of severance cost. 26. Administration and General Expenses =====================================================================================================================================================================================================================================================
Amounts in Rs '000
Polyester Soda Ash Paints Life Sciences Chemicals Company Company
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
=====================================================================================================================================================================================================================================================
Salaries and benefits 69,540 109,618 141,059 146,368 72,233 51,765 63,240 64,600 62,287 54,356 408,359 426,707
Repairs and maintenance 1,917 2,241 2,802 2,779 5,595 4,331 1,254 1,246 639 571 12,207 11,168
Advertising and sales promotion 1,455 1,783 3,418 4,615 - 573 935 1,379 776 941 6,584 9,291
rates and taxes 2,876 2,871 2,490 3,145 605 531 451 568 513 629 6,935 7,744
Insurance 734 849 2,107 2,444 420 303 5,877 3,556 443 507 9,581 7,659
Lighting, heating and cooling 2,489 2,481 4,037 4,226 2,530 2,141 2,477 1,843 832 848 12,365 11,539
Depreciation & amortisation -
note 10.5 & 11.1 5,958 5,245 14,466 13,520 9,582 8,509 12,393 13,793 5,256 5,462 47,655 46,529
Provision for doubtful
trade debts 36,100 - - - - - - - - - 36,100 -
Provision for obsolete stock - - 3,885 15,000 57,668 6,108 - 2,593 9,800 - 71,353 23,701
Travelling expenses 5,114 6,902 9,147 10,724 10,063 6,524 9,185 7,607 4,005 3,500 37,514 35,257
Postage, telegram,
telephone and telex 965 1,333 1,715 1,861 7,919 5,892 2,202 2,399 947 761 13,748 12,246
General expenses 19,569 15,468 41,110 35,184 1,119 53,308 17,653 14,903 18,349 15,673 97,800 134,536
146,717 148,791 226,236 239,866 167,734 139,985 115,667 114,487 103,847 83,248 760,201 726,377
=====================================================================================================================================================================================================================================================26.1. Staff retirement benefitsSalaries, wages and benefits include Rs 57.267 million (2006: Rs 61.12 million) in respect of staff retirement benefits. 26.2. Severance cost Salaries and benefits include Rs 4.554 million (2006: Rs 43.148 million) in respect of severance cost. 27. Financial Charges =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Mark-up on short-term financing and others 20,909 8,927
Interest on:
- Workers' profit participation fund - note 8.3 4,774 2,058
-Finance lease - 143,166
Discounting charges on receivables 92,241 99,204
Exchange loss 22,192 61,016
Interest on security deposits 3,928 3,967
Others 2,377 963
146,421 319,301
=========================================================================================28. Other Operating Charges=========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Auditors' remuneration - note 28.1 5,188 7,749
Donations - note 28.2 14,692 9,448
Workers' profit participation fund note 8.3 145,964 111,571
Workers' welfare fund 56,501 42,359
222,345 171,127
=========================================================================================28.1. Auditors' remuneration=========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Audit fee 2,340 2,120
Group reporting and SOX audit review 1,573 4,469
Half yearly review and other certifications 890 810
Out-of-pocket expenses 385 350
5,188 7,749
=========================================================================================28.2. Donations include Rs 11.277 million (2006: Rs 8.539 million) to ICI Pakistan Foundation (Head office, Karachi) Mr. Waqar A Malik, Chief Executive; Mr. Pervaiz A. Khan and Mr. Feroz Rizvi, Directors of the Company and Mr. Ali Asrar Aga and Mr. Nasir Jamal, Executives of the Company are amongst the Trustees of the Foundation.29. Other Operating Income =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Income from investment from related party
Return on loan due from Subsidiary 10,956 4,800
Return from other financial assets
Profit on short-term and call deposits 34,513 30,034
Income from non-financial assets
Scrap sales 41,005 35,236
Gain on disposal of property, plant and equipment 1,100 6,701
Others
Provisions and accruals no longer required written back 20,962 1,655
Income on technical assistance 27,903 7,298
Service fees from related parties - note 29.1 7,982 7,077
Sundries 21,498 36,406
165,919 129,207
=========================================================================================29.1. This represents amount charged by the Company for Certain management and other services rendered to its related parties (Pakistan PTA Limited and ICI Pakistan PowerGen Limited), in accordance with the Service Agreements based on commercial terms between the companies.30. Taxation =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Current 126,545 -
Prior years 182,045 -
Total current tax charge - note 30.1 308,590 -
Deferred - note 12 & 30.1 675,133 662,169
Net tax charged - note 30.2 983,723 662,169
=========================================================================================30.1. This represents tax charge on income taxable under Final Tax Regime (FIR) and the revision of tax calculations in respect of current and prior years as the Company's tax liability under FIR is higher than the turnover tax. This revision has also resulted in an increase in deferred tax asset of prior years amounting to Rs 231.199 million recognised in the current year.30.2. Tax reconciliation =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Profit for the year 2,768,523 2,117,797
Tax @ 35% 968,983 741,229
Tax impact on adoption of IFRIC 4 - (41,685)
Additional net deferred tax asset available
after adjustment of FIR for prior years (231,199) (12,950)
Prior years' tax charge 182,045 -
Tax impact on income under FTR of the current year 16,893 -
Permanent difference 5,142 3,284
Others 41,859 (27,709)
983,723 662,169
=========================================================================================31. Earnings per share - Basic and diluted=========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Profit after taxation for the year 1,784,800 1,455,628
Number of shares
Weighted average number of ordinary shares in issue 138,802,300 138,802,300
during the year
Rupees
Earnings per share 12.86 10.49
Amounts in Rs '000
=========================================================================================32. Remuneration of Directors and ExecutivesThe aggregate amounts charged in the accounts for the remuneration, including all benefits, to the Chairman, Chief Executive, Directors and Executives of the Company were as follows: ============================================================================================================================
Chairman Chief Executive Directors Executives Total
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
============================================================================================================================
Managerial remuneration 1,000 1,066 16,380 12,370 32,485 20,263 330,003 340,783 379,868 374,482
Retirement benefits - - 3,396 3,173 5,451 4,322 71,618 81,867 80,465 89,362
Group insurance - - 30 30 90 68 2,403 2,574 2,523 2,672
Rent and house maintenance - - 5,424 8,480 - 4,113 77,257 80,125 82,681 92,718
Utilities - - 670 1,213 - 916 19,055 19,680 19,725 21,809
Medical expenses - - 2,836 121 1,361 114 7,426 9,522 11,623 9,757
Leave passage - - 257 624 - 750 - 150 257 1,524
1,000 1,066 28,993 26,011 39,387 30,546 507,762 534,701 577,142 592,324
Number of persons 1 1 1 1 5 6 211 212 218 220
============================================================================================================================32.1. The Directors and certain Executives are provided with free use of Company cars in accordance with their entitlement. The Chief Executive is provided with Company owned and maintained furnished accommodation and free use of Company car.32.2. Aggregate amount charged in the financial statements for fee to three Directors was Rs 2.276 million (2006: Rs 2.408 million), and for the remuneration of our director seconded by Pakistan PTA Limited amounted to Rs Nil (2006: Rs 6.794 million). 32.3. The above balances include an amount of Rs 78.079 million (2006: Rs 105.693 million) on account of remuneration of key management personnel out of which Rs 13.255 million (2006: Rs 12.844 million) relates to post employment benefits. 33. Transactions with Related Parties The related parties comprise parent company (ICI Omicron B.V.), related group companies, local associated company, directors of the Company, companies where directors also hold directorship, key management employees (note 32) and staff retirement funds (note 6). Details of transactions with related parties, other than those which have been specifically disclosed elsewhere in these financial statements are as follows: =========================================================================================
Amounts in Rs '000
2007 2006
=========================================================================================
Subsidiary Company
Purchase of goods, materials and services 265,070 196,045
Provision of services and other receipts 1,980 1,980
Return on loan to Subsidiary 10,956 4,800
Investment by ICI Pakistan 370,000 -
Associated companies
Purchase
of goods, materials and services 6,059,706 5,600,876
Provision of services and other receipts 6,002 14,123
Sale of goods and materials 7,563 7,337
Dividends 315,687 315,678
Donations 11,277 8,539
Others
Purchase
of goods, materials and services 196 840
Provision of services and other receipts 1,705 4,826
Sale of goods and materials 58,300 18,142
=========================================================================================34. Plant Capacity and Annual Production- in metric tonnes except Paints which is in thousands of litres: ==============================================================================
2007 2006
Annual Production Annual Production
Name Plate Name Plate
Capacity Capacity
==============================================================================
Polyester 122,000 110,656 122,000 96,559
Soda Ash 285,000 258,320 235,000 239,500
Paints - 39,188 - 35,564
Chemicals - 9,259 - 8,101
Sodium Bicarbonate 20,000 22,768 20,000 20,500
==============================================================================34.1. The capacity of Paints and Chemicals is indeterminable because these are multi-product plants involving varying processes of manufacture.35. Fair Value of Financial Assets and Liabilities The carrying amounts of the financial assets and financial liabilities approximate their fair values. 36. Interest / Mark-up Rate Risk Management 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 I mark-up bearing financial liabilities, the following table indicate their effective interest / mark-up rates at the balance sheet date and the periods in which they will re-price or mature: Interest/mark-up bearing =======================================================================================================================
Effective Maturity Maturity Maturity Non-interest
Mark-up / upto one one to five after five /mark-up Total
interest rates % year years years bearing
2007
=======================================================================================================================
Financial Assets
Long term investment - - - - 2,500 2,500
Long term loans 4 & Kibor � 1 - 96,000 - 108,867 204,867
Long term deposits - - - - 21,120 21,120
Trade debts - - - - 1,049,464 1,049,464
Loans and advances 4 & Kibor + 1 24,000 - - 113,680 137,680
Trade deposits - - - - 12,323 12,323
Other receivables - - - - 351,619 351,619
Cash and bank balances 8.50 1,950,000 - - 1,665,056 3,615,056
1,974,000 96,000 - 3,324,629 5,394,629
Financial Liabilities
Trade and other payables 7.50 56,092 - - 5,689,172 5,745,264
56,092 - - 5,689,172 5,745,264
Net financial assets / (liabilities) 1,917,908 96,000 - (2,364,543) (350,635)
=======================================================================================================================
=======================================================================================================================
2006
=======================================================================================================================
Financial Assets
Long term investment - - - - 2,500 2,500
Long term loans 4 - 72,000 - 103,687 175,687
Long term deposits - - - - 54,987 54,987
Trade debts - - - - 730,676 730,676
Loans and advances 4 48,000 - - 49,543 97,543
Trade deposits - - - - 4,208 4,208
Other receivables - - - - 431,749 431,749
Cash and bank balances - 520,000 - - 1,271,151 1,791,151
568,000 72,000 - 2,648,501 3,288,501
Financial Liabilities
Trade and other payables 7.50 56,670 - - 4,951,874 5,008,544
56,670 - - 4,951,874 5,008,544
Net financial assets / (liabilities) 511,330 72,000 - (2,303,373) (1,720,043)
=======================================================================================================================37. Credit 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. The Company does not have significant exposure to any individual customer. To reduce exposure to credit risk the Company has developed a formal approval process whereby credit limits are applied to its customers. The management also continuously monitors the credit exposure towards the customers and makes provision against those balances considered doubtful of recovery. The sector wise analysis of receivables, comprising trade debts, deposits, loans excluding loans to associates and other receivables is given below: =========================================================================================
Amounts in Rs '000
2007 2006
Public Sector
=========================================================================================
- Government 157,883 69,759
- Armed forces 5,038 2,835
- Communication 2,368 422
- Oil and gas 1,379 2,574
- Health 1,251 -
- Trade 63,647 63,385
- Others 22,371 45,160
253,937 184,135
Private Sector
- Institutional 84,991 24,052
- Trade 985,817 667,291
-Bank 8,775 2,148
- Others 326,053 499,724
1,405,636 1,193,215
1,659,573 1,377,350
=========================================================================================38. Foreign Exchange Risk ManagementForeign currency risk arises mainly where receivables and payables exist due to transactions entered into foreign currencies. The Company is exposed to foreign currency risk on sales, purchases and borrowings, if any, that are entered in a currency other than Pak Rupees. The Company uses forward foreign exchange contracts to hedge its foreign currency risk, when considered appropriate. 39. Capital Risk Management The Company's objective when managing capital is to safe guard the Company's 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 shareholders or issue new shares. 40. Accounting Estimates and Judgements Income Taxes The Company takes into account the current income tax law and decisions taken by appellate authorities. Instances where the Company's view differs from the view taken by the income tax department at the assessment stage and where the Company considers that its view on items of material nature is in accordance with law, the amounts are shown as contingent liabilities. The tax department reopened the income tax assessment for the assessment year 2001-2002 on the ground that demerger of PTA business from ICI Pakistan Ltd. was effective from the completion date i.e. August 6, 2001. This was challenged by the Company in the High Court which upheld the Company's contention that the department did not have the right to reopen this finalized assessment. The department has however filed an appeal in the Supreme Court against the High Court's order. For the assessment year 2002-2003, the Company has filed the writ petition in the Supreme Court challenging the tax department's contention that the effective date of PTA's demerger was August 6, 2001 rather than the effective date given in the Scheme of Arrangement as October 1, 2000 and reopen a settled issue through review of the PTA tax demerger. The Income tax department reopened the assessment for the year 1998-99 which was set aside by the Income Tax Appellate Tribunal (ITAT). The department revised its order working out an additional tax liability of As 298.8 million which in view of our tax consultant is contrary to the direction given by the ITAT, in his view the Company has a strong case and would be able to get the decision in its favour. Pension and Gratuity Certain actuarial assumptions have been adopted as disclosed in note 6 to the financial statements for valuation of present value of defined benefit obligations and fair value of plan assets. Any changes in these assumptions in future years might affect unrecognized gains and losses in those years. 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. The said recommendations also include estimates with respect to residual values and depreciable lives. Further, the Company reviews the value of the assets for possible impairment on an annual basis. The future cashflows used in the impairment testing of assets is based on management's best estimates which may change in future periods. 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. 41. Initial Application of a standard or an interpretation Standards, amendments and interpretations effective in 2007 Amendment to IAS 1 "Presentation of Financial Statements - Capital Disclosures", introduces new disclosures about the level of an entity's capital and how it manages capital. Adoption of this amendment has only resulted in additional disclosures given in note 39 to the financial statements. Standards or Interpretations not yet effective The following standards, interpretations and amendments of approved accounting standards are effective for accounting periods beginning from the dates specified below. These standards are either not relevant to the Company's operations or are not expected to have significant impact on the Company's financial statements other than increase in disclosures in certain cases: Revised lAS 1 - Presentation of financial statements (effective for annual periods beginning on or after 1 January 2009). The objective of revising lAS 1 is to aggregate information in the financial statements on the basis of shared characteristics. The changes affect the presentation of owner changes in equity and of comprehensive income. It introduces a requirement to include in a complete set of financial statements, a statement of financial position as at the beginning of the earliest comparative period whenever the entity retrospectively applies an accounting policy or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements. Revised lAS 23-Borrowing costs (effective from 1 January 2009). Revised lAS 23 removes the option to expense borrowing costs and requires that an entity capitalize 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. IFRIC 11 - IFRS 2-Group and Treasury Share Transactions (effective for annual periods beginning on or after 1 March 2007). IFRIC 11 requires that a share based payment arrangement in which an entity receives goods or services as consideration for its own equity instruments to be accounted for as equity settled share based payment regardless of how the equity instruments are obtained. IFRIC 11 is not expected to have any material impact 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 1 July 2008). IFRIC 13 addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes for their customers. IFRIC 14 IAS 19- The Limit on Defined Benefit Asset, Minimum Funding Requirements and their interaction (effective for annual periods beginning on or after 1 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. 42. Dividend The directors in their meeting held on 14 February 2008 have declared a final dividend of Rs 3.50 per share in respect of year ended 31 December 2007. The financial statements for the year ended 31 December 2007 do not include the effect of the above dividend which will be accounted for in the period in which it is declared. 43. Date of Authorisation These financial statements were authorised for issue in the Board of Directors meeting held on 14 February 2008. 44. General 44.1. Figures have been rounded off to the nearest thousand rupees. 44.2. Corresponding Figures Corresponding figures have been rearranged and reclassified, whenever necessary, for better presentation and disclosure. =============================================================================================
Reclassification from component Reclassification to component Amounts in Rs '000
=============================================================================================
Cost of sales Other operating income-Service tees
from related parties 1,740
Administration and general expenses Other operating income-Service fees
from related parties 240
Other operating income-Others Other operating income-Income on
technical assistance 7,298
Other operating income-Others Other operating income-Service fees
from related parties 5,097
Financial charges-Others Financial charges-Interest on security deposits 3,967
Other receivable-Others Other receivable-Duties, sales tax and
Other refund due 67,771
Other receivable-Others Other receivable-Rebates receivable 194,627
Other receivable-Others Other receivable-Interest income receivable 1,210
Trade payable-Others Trade payable-Accrued expenses 13,995
Trade payable-Others Trade payable-Technical service fee 19,755
============================================================================================= |