| Frontier Ceramics Ltd - 2005 |
============================================================================================== BALANCE SHEET AS AT JUNE 30, 2005 ============================================================================================== 2005 2004 Notes Rupees Rupees ============================================================================================== PROPERTY AND ASSETS: Fixed Assets - at cost less accumulated depreciation 3 348,916,876 363,844,774 Long term security deposits 150,250 1,832,209 349,067,126 365,676,983 CURRENT ASSETS: Stores, spares and loose tools 12,403,732 35,709,118 Stock in trade 4 48,532,685 170,300,372 Trade debtors 5 61,743,890 61,993,395 Advances, deposits, prepayments & other receivables 6 9,556,158 8,743,245 Cash and bank balances 7 47,785 663,052 132,284,250 277,409,182 CURRENT LIABILITIES: Current portion of long term liabilities 8 83,999,408 52,751,911 Creditors, accruals & other liabilities 9 78,796,766 92,008,833 Provision for taxation 786,099 786,099 Finance under mark-up arrangements 10 2,030,000 2,030,000 165,612,273 147,576,842 Working capital (33,328,023) 129,832,339 Gross capital employed 315,739,104 495,509,323 LESS: LONG TERM LOANS & DEFERRED LIABILITIES: Long term loans - secured 11 2,990,062 36,027,355 Disputed bank liabilities 12 121,111,265 121,456,192 Deferred liabilities 13 36,880,182 36,677,260 160,981,509 194,160,807 Net capital employed 154,757,596 301,348,516 REPRESENTED BY SHARE CAPITAL AND RESERVES: Share Capital 14 Authorised 80,000,000 80,000,000 Issued, Subscribed & Paid up Capital 77,412,000 77,412,000 Accumulated loss (167,630,127) (31,049,142) (90,218,127) 46,362,858 Surplus on revaluation of fixed assets 15 244,975,723 254,985,658 Contingencies and commitments 16 - - 154,757,596 301,348,516 ============================================================================================== ============================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2005 ============================================================================================== 2005 2004 Notes Rupees Rupees ============================================================================================== Sales 17 - 43,213,268 Cost of Sales 18 - 51,292,109 Gross Loss - (8,078,841) OPERATING EXPENSES: Administrative Expenses 19 11,937,230 16,957,081 Selling and Distribution Expenses 20 - 5,878,358 11,937,230 22,835,439 OTHER INCOME: Profit on sale of fixed assets 118,475 1,932,302 - Other income 652,221 1,932,720 770,696 3,865,022 Operating profit / (loss) before interest and taxation (11,166,534) (27,049,258) Financial Cost 2,358,574 4,237,867 Loss before abnormal losses and prior year adjustments (13,525,108) (31,287,125) Prior Year Adjustment 22,514,119 - Profit /(Loss) before abnormal losses 8,989,011 (31,287,125) Abnormal Items, write off 21 (145,569,996) 150,000 Loss before taxation (136,580,985) (31,137,125) Taxation 22 - 266,066 Net loss for the year (136,580,985) (31,403,191) Accumulated loss brought forward (31,049,142) 354,049 Accumulated loss carried to Balance Sheet (167,630,127) (31,049,142) Earning/(Loss) Per Share 24 (17.64) (4.06) ============================================================================================== ============================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2005 ============================================================================================== 2005 2004 Note Rupees Rupees ============================================================================================== CASH FLOW FROM OPERATING ACTIVITIES: Net loss for the year after abnormal item and stock write off 8,989,011 (31,287,125) ADJUSTMENT FOR: Depreciation 4,861,437 5,338,231 (Gain)/ loss on sale of fixed assets (118,475) (1,932,302) Income tax paid - (50,000) Cash flow from operating activities before working capital changes 13,731,973 (27,931,196) Working Capital changes 23 (13,812,815) 14,243,084 Cash flow from operating activities (80,843) (13,688,112) CASH FLOW FROM INVESTING ACTIVITIES: Fixed capital expenditures - (822,957) Sate proceeds of operating fixed assets 175,000 3,325,000 Long term security deposits 1,681,959 (629,959) Net cash flow from investing activities 1,856,959 1,872,084 CASH FLOW FROM FINANCING ACTIVITIES: Proceeds / (repayment) of loans (1,931,801) 5,592,647 Net cash flow from financing activities (1,931,801) 5,592,647 Net Cash flow during the year (155,685) (6,223,381) Cash and bank balances at beginning of the year 663,052 6,886,433 Cash written off during the year (459,583) - Cash and bank balances at end of the year 47,784 663,052 ============================================================================================== ===============================================================================================================================================
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2005
===============================================================================================================================================
(Rupees)
Share Capital Surplus on revaluation Accumulated Losses Total
===============================================================================================================================================
Balance as at June 30, 2003 77,412,000 196,485,443 354,049 274,251,492
Net loss for the year (31,403,191) (31,403,191)
Incremental amortisation of depreciation to revaluation surplus (7,859,417) - (7,859,417)
Revaluation adjustment for the year 66,359,632 66,359,632
Balance as at June 30, 2004 77,412,000 254,985,658 (31,049,142) 301,348,516
Net loss for the year (136,580,985) (136,580,985)
Incremental amortisation of depreciation to revaluation surplus (10,009,935) (10,009,935)
Balance as at June 30, 2005 77,412,000 244,975,723 (167,630,127) 154,757,596
===============================================================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 20051. LEGAL STATUS AND OPERATIONS The company was incorporated in July 1982 as a Public Limited Company with its shares quoted on Karachi and Lahore Stock Exchanges of Pakistan. The company is engaged in the manufacturing and sale of sanitary and related ceramics products. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance 1984. (The Ordinance). Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Ordinance. Wherever, the requirements of the Ordinance or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of the Ordinance or the requirements of the said directives take precedence. 2.2. STAFF RETIREMENT BENEFITS The company operates an unfunded recognised provident fund scheme for all its employees, contributions in respect thereof are made in accordance with the terms of the scheme. 2.3. FIXED ASSETS Operating fixed assets are stated at revalued amounts or at cost less accumulated depreciation. Depreciation is charged on reducing balance method at the rate specified in note 3. Full year depreciation is charged on fixed assets acquired during first half of the accounting year while for the additions during second half no depreciation is charged. Similarly no depreciation is charged for the assets disposed off in first half of the accounting year and full year depreciation is charged on the assets disposed off during second half of the year. Maintenance and repair is charged to profit and loss account as and when incurred, while major renewals and replacements are capitalised. Profit or loss on the disposal of fixed assets is included in the current year's income. 2.4. TAXATION Provision for current taxation is based on taxable income of the company after taking into account rebates, if any, allowable to the company. The company account for deferred taxation using liability method arising on all major timing differences. Deferred income tax, if any, is accounted for using the balance sheet liability method in respect of all temporary differences arising between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised. Deferred tax is calculated at the rates that are expected to apply to the period when the timing differences reverse, based on the tax rates that have been enacted. Deferred tax is charged or credited to income except in the cases where it is included in equity. 2.5. STORES, SPARES AND LOOSE TOOLS These are valued at cost less allowance for obsolete items. 2.6. STOCK IN TRADE Stock in trade is stated at the lower of average cost and net realisable value. 2.7. REVENUE RECOGNITION Revenue from sales is recognised on delivery of products ex-factory to the customers. 2.8. FOREIGN EXCHANGE TRANSACTIONS Foreign Exchange transactions are translated into reporting currency at the rates of exchange prevailing on the date of transactions except repayments of foreign currency loans, which are covered against exchange rate risk. Monitory assets and liabilities denominated in foreign currency are translated into reporting currency equivalents using balance sheet date exchange rates except for foreign currency loans for the same reason stated before. Non monetary assets and liabilities are stated using exchange rates that existed when the values were determined. Exchange differences on foreign currency transactions are included in profit and loss account. 2.9. FINANCIAL INSTRUMENTS Consequent to the adoption of IAS 39, "Financial Instruments: recognition and measurement" financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument and de-recognised when the company loses control of the contractual rights that comprise the financial asset and in case of financial liability when the obligation specified in the contract is discharged cancelled or expired the particular measurement methods adopted are disclosed in the individual policy statements associated with each items as shown below: (a) Long term loans and accrued interest All loans are initially recognised at cost. After initial recognition, all loans and accrued interest thereon are subsequently measured at fair value and any gain or loss arising from a change in fair value is included in the profit and loss account. (b) Trade and other payables Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in future for goods and services received. Payable to related parties are recognised and carried at cost. (c) Provisions Provisions are recognised when a Company has a legal or constructive obligation as a result of past event if it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. (d) Trade and other receivables Trade and other receivables are recognised and carried at original invoice amount / cost less an allowance for any uncollectable amounts. (e) Cash and bank balances Cash in hand and at bank are earned at fair value. 3. FIXED ASSETS =======================================================================================================================================================
Cost / Revaluation Rate Depreciation Written down value
Additions/ As on June 30, For the year/ As on June 30,
As on July 1, 2004 (deletions) 2005 As on July 1, 2004 (adjustment) 2005 As on June 30, 2005
(Rupees)
=======================================================================================================================================================
Lease hold land 20,580,000 - 20,580,000 - - - 20,580,000
Buildings
Factory on lease hold land 111,951,197 - 111,951,197 5.0% 47,262,197 3,234,450 50,496,647 61,454,550
Office on freehold land 2,648,885 - 2,648,885 5.0% 1,212,024 71,843 1,283,867 1,365,018
PLANT & MACHINERY:
Imported 415,123,745 - 415,123,745 4.0% 150,276,267 10,593,899 160,870,166 254,253.579
Locally manufactured 6,434,532 - 6,434,532 10.0% 2,838,547 359,599 3,198,146 3,236,387
Electrification 12,060,564 - 12,060,564 5.0% 6,622,774 271,889 6,894,663 5,165,900
Casting Benches 1,796,000 - 1,796,000 10.0% 1,463,199 33,280 1,496,479 299,521
Furniture and Fixtures 2,362,167 2,362,167 10.0% 1,746,694 61,547 1,808,241 553,926
Vehicles 392,810 (172,500) 220,310 20.0% 142,450 38,767 85,242 155,068
(115,975)
Air conditioners and coolers 1,086,389 - 1,086,389 10.0% 743,642 34,275 177,917 308,472
Office Equipment 3,106,943 - 3,106,943 10.0% 1.911,404 119,554 2.030,958 1,075,985
Generators 450,000 - 460,000 10.0% 321,541 13,846 335,387 124,613
Laboratory Ware 30,130 - 30,130 20.0% 28,185 389 28.574 1,556
Other Assets 1,019,204 - 1,019,204 10.0% 638,869 38,034 676.903 342,302
2005 (Rupees) 579,052,566 - 578,880,066 215,207,793 14,871,372 229,963,190 348,916,876
(172,500) (115,975)
2004 (Rupees) 516,105,827 67,182,589 579,052,566 204,853,296 13,197,648 218,050,944 363,844,774
(4,235,850) (2,843,152)
=======================================================================================================================================================3.1. ALLOCATION OF DEPRECIATION==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Cost of sales - 4,270,585
Administrative Expenses 4,861,437 533,523
Selling Expenses - 533,823
Surplus on revaluation of fixed assets 10,009,935 7,859,417
14,871,372 13,197,648
==============================================================================================3.2. DISPOSAL OF FIXED ASSETS==============================================================================================================================================
Asset Cost Accumulated Book Value Sale price Mode of Particulars of buyer
Depreciation disposal
(Rupees)
==============================================================================================================================================
During the year ended June 30, 2005
Suzuki Swift (F-4363) 172,500 115,975 56,525 175,000 By Negotiation Ijaz Minhas-Employee
516,278,327 63,062,714 56,525 231,425,596
During the year ended June 30, 2004
Toyota Hiace (C-9907) 288,000 249,504 38,496 310,000 By quotation Mr Zahid ( Swabi)
Suzuki Swift (F-4362) 176,000 134,632 41,368 175,000 By Negotiation Mr Hukam Khan (Employed)
Suzuki Swift (F-4361) 176,000 134,632 41,368 175,000 By Negotiation Mr Ashfaq (Employee)
Suzuki Pick up (RIUN-4504) 90,000 51,657 38,343 90,000 By Negotiation Mr Shafqat (Employee)
Mitsubishi Lancer (F-3883) 224,000 156,028 67,972 225,000 By Negotiation Mr lftihar (Employee)
Mitsubishi Lancer F-4369) 200,000 156,028 43,972 280,000 By quotation Mr Zakaullah (Rawalpindi)
Suzuki Swift (F-4365) 175,310 133,966 41,344 155,000 By quotation Mr Akhtar Razi (Karachi)
Mitsubishi Jeep (F-4340) 500,000 422,442 77,558 300,000 By Negotiation Mr Iftikhar (Employee)
Suzuki Bolan (Cj-6398) 135,000 92,402 42,598 100,000 By Negotiation Mr Mehmood Ali (Employee)
Scooter Vespa (MNL-6561) 26,500 25,903 597 10,000 By Negotiation Mr Khalid (Employee)
Honda Motor Cycle (RIW-1964) 61,000 48,207 12,793 50,000 By Negotiation Mr Naeem (Employee)
Shahzor Pick up 535,000 280,688 254,312 360,000 By quotation Mr Iftihar (Employee)
Shahzor Pick up 740,850 214,560 526,290 450,000 By quotation Mr Chand (Engg)
Nissan Sunny (MNK-514) 220,000 175,148 44,852 200,000 By Negotiation Mr Fayyaz than (Employee)
Toyota Wagnar 229,000 190,524 38,476 100,000 By Negotiation Mr Noman Ghani (Employee)
Mazda Couch 310,000 271,249 38,751 270,000 By Negotiation Mr Noor Khan (Employee)
Honda- Motor cycle 27,590 26,377 1,213 20,000 By Negotiation Mr Naeem (Employee)
Other Assets 121,600 79,200 42,400 55,000 By Negotiation Mr Fazalullah (Employee)
4,235,850 2,843,152 1,392,698 3,325,000
==============================================================================================================================================4. STOCK IN TRADE==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Raw material 1,757,396 38,580,126
Packing material 303,412 4,140,504
Fittings and accessories 351,978 6,125,742
Work in process 2,571,174 42,832,000
Finished Goods 43,548,725 78,622,000
48,532,685 170,300,372
==============================================================================================5. TRADE DEBTORS==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Considered good 61,743,890 61,993,393
Considered doubtful 8,690,376 8,690,376
70,434,266 70,683,769
Less: Provision for doubtful debts (8,690,376) (8,690,376)
61,743,890 61,993,395
==============================================================================================6. ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
ADVANCES:
to suppliers 2,721,985 2,695,733
to contractors and consultants 912,654 912,655
to employees for expenses - 753,550
to employees against salaries - 639,280
Sales tax - 383,990
Excise duty 75,114 75,114
Income Tax 365,554 365,554
Duty and taxes refundable 627,869 627,869
DEPOSITS:
Deposit against sales tax 1,500,000 1,500,000
Deposit for LG margin 513,750 789,500
Other Receivables 2,839,232 -
9,556,158 8,743,245
==============================================================================================7. CASH AND BANK BALANCES==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Cash in hand 6,964 531,642
Cash at bank in current account 40,821 131,410
47,785 663,052
==============================================================================================8. CURRENT PORTION OF LONG TERM LIABILITIES==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Pakistan Industrial Credit & Investment Corporation (PICIC) 34,775,340 25,162,240
ORIX Investment Bank Pakistan Limited 9,565,716 4,781,858
BEL led Consortium Loan 39,658,352 22.807,813
83,999,408 52,751,911
==============================================================================================9. CREDITORS, ACCRUALS AND OTHER LIABILITIES==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Creditors 4,906,095 10,750,633
Accrued Liabilities 9,623,514 8,957,737
Other liabilities 18,479,447 28,895,740
Accrued interest on secured loans 44,727,708 42,369,719
Auditors remuneration payable 350,000 325,000
Workers Profit Participation Fund 710,002 710,002
78,796,766 92,008,833
==============================================================================================10. FINANCE UNDER MARK-UP ARRANGEMENTSFirst Crescent Modarba sanctioned this credit facility of Rs 3.00 million under a Musharaka Agreement for working capital needs of the company at a mark-up of 18% per annum. The facility is secured by way of hypothecation of debts and assets of the company. 11. LONG TERM LOANS - SECURED ==============================================================================================
2005 2004
Notes Rupees Rupees
==============================================================================================
Pakistan Industrial Credit & Investment Corporation 11.1 - 9,613,100
ORIX Investment Bank Pakistan Limited 11.2 2,990,062 9,563,716
Bankers Equity Limited (BEL) led Consortium Loan 11.3 - 16,850,539
2,990,062 36,027,355
==============================================================================================11.1. PAKISTAN INDUSTRIAL CREDIT & INVESTMENT CORPORATION (PICIC)==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Restructured balance brought forward 34,775,340 35,568,420
Less: Paid during the year - (793,080)
34,775,340 34,775,340
Less: Current Maturity and overdue (34,775,340) (25,162,240)
- 9,613,100
==============================================================================================PICIC extended this restructured facility to the company through consent decree in the Sindh High Court on June 8th, 1999.The total restructured loan liability of Rs 103.738 million entailed remission of Rs 68.435 million according to PICIC original claims of Rs 172.173 million as on 31-12-1998, however this remission/waiver was allowed over the period and in proportion to the actual payment to be made by the company. The restructured liability of Rupees 103.738 million consists of Rupees 64.907 million as old outstanding principal, Rupees 15.843 million as outstanding foreign exchange risk fee and Rupees 22.988 million as interest on new principal of Rs 64.907 million @ 10% p.a. on reducing balance basis. The principal amount of the new restructured liability was repayable in 84 equal monthly instalments of Rupees 961,310/- each, commencing April 15th 1999. The restructured loan is secured by first charge already created on all the moveable and immovable fixed assets of the company besides hypothecation of all other assets i e. book debt and other present and future current assets of the company. These charges rank pari pasu with the securities offered to NDFC and BEL Consortium. For repayment of future interest, PICIC have offered following options to the company: -- If the company receive its sales tax refund of Rs 150 million, the full amount of Rupees 22.988 million shall be paid to the bank. -- In case the Sales Tax is not refunded to the company by June 30, 2001, the company shall dispose off its office at Kashif Center, Karachi and the proceeds, which are expected to be in the range of Rupees 25.00 million, shall be applied to repay the full a -- In case either of the above two options do not materialise, the amount shall be paid by the company from its own sources in monthly instalment of Rupees 961,310 starting from the month immediately after payment of Rupees 80.750 million. 11.2. ORIX INVESTMENT BANK PAKISTAN LIMITED ==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Balance brought forward 14,345,574 8,921,603
Add: Sanctioned during the year - 5,423,971
Less: Paid / adjusted during the year (1,789,796) -
12,555,778 14,345,574
Less: Current Maturity and overdue (9,565,716) (4,781,858)
2,990,062 9,563,716
==============================================================================================The company in July 27, 2002 obtained a long term finance facility of Rupees 9.5 million from Orix Investment Bank Pakistan Ltd under markup arrangements @ 43.84 paisas/1000/day.The facility was valid for a period of three years, repayment of principal was decided to be effected in 34 monthly instalments commencing three months after the date of agreement while mark-up was to be repaid on monthly basis from the date of loan agreement. This facility is secured by way of hypothecation / charge over fixed assets of the company amounting to Rs 12,667,000/- inclusive of 25% margin, which is to be maintained at all times and Pledge of certificate of investment amounting to Rs 1,000,000. 11.3. BEL LED CONSORTIUM LOAN ===========================================================================================================
BEL NBP HBL UBL MCB ABL 2005 2004
(Rupees in million)
===========================================================================================================
Restructured redeemable capital 19.47 7.34 4.76 3.48 2.57 2.05 39.66 39.77
Paid during the year - - - - - - (0.11)
19.47 7.34 4.76 3.48 2.57 2.05 39.66 39.66
Less: current & overdue portion of
long term loans (19.47) (7.34) (4.76) (3.48) (2.57) (2.05) (39.66) (22.81)
- - - - - - - 16.85
===========================================================================================================All the BEL led consortium members have approved the restructuring proposal with effect from Jan 1st, 2000.Outstanding principal and 20% of the outstanding mark-up were restructured and merged into a single loan which was payable in 84 equal monthly instalments. Mark-up on restructured loan was fixed @ 10% p.a. on reducing balance method, payable on out of the proceeds of sales tax refund of Rs 150 million or from the sale proceeds of Kashif Center premises or in case both of these events do not materialise till the completion of 84 monthly instalments, the same instalments shall be continued to pay off the interest. The restructured loan is secured by way of first charge already created on all the moveable and immovable fixed assets of the company besides a floating charge and hypothecation of all other assets i.e. book debt and other present and future current assets of the company. These charges rank pari passu with the securities offered to NDFC and PICIC. All consortium members i.e. BEL, HBL, UBL, MCB, ABL has approved this loan restructuring except NBP that have not yet issued formal approval letter. 12. DISPUTED BANK LIABILITIES ==============================================================================================
2005 2004
Notes Rupees Rupees
==============================================================================================
Cash finance facility against hypothecation from NBP 12.1 60,000,000 60,000,000
Cash finance facility against pledge from NBP 12.2 9,348,000 9,761,000
Running finance facility from BOK 12.3 25,819,131 25,751,058
National Development Finance Corporation 12.4 25,944,134 25,944,134
121,111,265 121.456,192
==============================================================================================12.1. CASH FINANCE FACILITY AGAINST HYPOTHECATION FROM NBPNational Bank of Pakistan sanctioned this cash finance facility of Rs 60.00 million in 1985. The facility is secured by way of first charge against hypothecation of stock in trade, spares, book debts, current asset and risk sharing guarantees of BEL and MCB. The facility expired on 30-06-98 and got disputed, where as the company filed a case in Resolution Committee of SBP to eliminate RIBA factor from the outstanding amount. 12.2. CASH FINANCE FACILITY AGAINST PLEDGE FROM NBP National Bank of Pakistan granted cash finance facility of Rupees 10 million and other unfunded facilities of Rupees 30.00 million. These facilities are secured against 100% pledge of stocks of finished goods. The rate of mark-up is 0.43836 paisa per Rs 1000 per day on daily product basis payable half yearly. The validity of facility was uptil June 30, 2001 after which the liability got disputed as the company filled a case in Resolution Committee of SBP to eliminate the RIBA factor. 12.3. RUNNING FINANCE FACILITY FROM BOK Bank of Khyber has sanctioned cash finance facility of Rs 25 million and guarantee limits up to one million Rupees. The facility is secured by hypothecation of stocks, stores and spares of the company. The rate of mark-up is Rs 0.43 (2003: Rs 0.46) per 1000 per day on daily product basis, payable quarterly. The validity of the facility has been renewed for a full period of one year ending 30-04-2002. The liability got disputed when BOK took up the case in a recovery suite in the banking court Peshawar and the company filed a case in Resolution Committee of SBP for the elimination of RIBA factor from outstanding balance. 12.4. NATIONAL DEVELOPMENT FINANCE CORPORATION ==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Balance brought forward 25,944,134 25,944,134
Less: Paid during the year - -
25,944,134 25,944,134
Less: Current Maturity and overdue - -
25,944,134 25,944,134
==============================================================================================This foreign currency loan was obtained to cover exchange rate risk and was originally payable in 16 half yearly instalments, (15th of March and 15th of September) commencing March 1993.The rate of interest was 11% p.a and foreign exchange risk coverage fee was 3% per annum. The company regularly paid till March 1997, however the bank unlawfully adjusted the payments against mark-up, mark-up on mark-up and other illegal charges. The company made several attempts to settle the loan under S.B.P scheme, circular No 19 dated 05-06-1997 claiming remission in wrongfully charged mark-up and other charges. However after no positive response, the company sued the bank in court of law and the matter is subjudice with Honorable Peshawar High court. Mark-up on mark-up has been deferred by the company till decision of the court, which recently has issued directions to the company to deal directly with the bank and to present the case as submitted to SBP. The loan was secured by first pari passu charge with PICIC & BEL Syndicate on the fixed assets of the company both moveable & immoveable floating charge and hypothecation of all other assets i.e. book debts and another current assets, present and future. 13. DEFERRED LIABILITIES Deferred liabilities pertain to loan liabilities that are restructured and includes remission and waiver of principal as well as mark-up thereon subject to the fulfillment of certain conditions. The details are as follows: Remission / waiver on the restructuring of loans from: ==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
29,562,580 30,782,012
PICIC COMMERCIAL BANK:
Principal amount 12,407,394 16,543,193
Mark-up 17,155,186 14,238,819
BEL CONSORTIUM:
Mark-up 11,453,401 10,031,047
41,015,981 40,813,059
Less: Remission / Waiver adjusted till June 30, 2004 (4,135,799) (4,135,799)
36,880,182 36,677,260
==============================================================================================The restructured loan liabilities entail remissions and waivers which would be allowed to the company in proportion to the actual payment to be made over the period.Future markup of the restructured loan 10% p.a. on the principal amount on reducing balance shall be payable over a period of 84 months. 14. SHARE CAPITAL ==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
AUTHORISED:
8,000,000 Ordinary shares of Rs 10/- each 80,000,000 80,000,000
Issued, subscribed and paid up
Ordinary shares issued for cash
7,741,200 Ordinary shares of Rs 10/-each, 77,412,000 77,412,000
==============================================================================================15. SURPLUS ON REVALUATION OF FIXED ASSETS==============================================================================================
2005 2004
Notes Rupees Rupees
==============================================================================================
Plant & machinery 15.1 188,626,026 196,485,443
Land & building 15.2 66,359,632 66,359,632
254.985,658 262,845,076
Less amortisation during the year (10,009,935) (7,859,417)
244,975,723 254,985,658
==============================================================================================15.1. Revaluation of plant and machinery was carried out on June 30, 1996 by M/s Global Engineering (Pvt) Limited, Faisalabad, an independent valuer.The valuation was duly certified by RH. & Co Chartered Accountants, a firm approved by the State Bank of Pakistan for the purpose of revaluation of fixed assets. Revaluation was carried out on the basis of depreciated replacement value. 15.2. Revaluation of land and building was carried out on June 8, 2004 by M/s Industrial Consultants and Machinery linkers Peshawar an independent valuer firm approved by State Bank of Pakistan for the purpose of revaluation of fixed assets. Revaluation was carried output on the basis of replacement cost of similar assets under similar conditions. 15.3. Surplus on revaluation of fixed assets is amortised during the year for the incremental depreciation arising out of revaluation under the provision of Section 235 (2) of the Companies Ordinance, 1984. 16. CONTINGENCIES & COMMITMENTS The company stopped payment of sales tax between March 1995 till November 1995, after the favourable decision of honourable ombudsman (Wafaqi Mohtasib). The department imposed complete embargo on the clearance of goods from the factory till payment of Rs 14,772,024/- in respect of principal amount and additional tax. The company paid Rs 7,502,925/- as the principal amount and appealed the waiver of additional sales tax amounting to Rs 7,269,099/-. The appeal is pending before Peshawar High Court. 17. SALES ==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
LOCAL SALES:
Tiles - 48,008,610
Sanitary - 1,669,626
Export sales - -
- 49,678,236
LESS:
Sales tax - -
Discount to customers - (6,464,968)
- 43,213,268
==============================================================================================18. COST OF SALES==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Raw material consumed - 19,868,802
Gas and electricity - 9,839,189
Oil & Lubricants - 268,867
Salaries, wages & other benefits - 9,968,585
Insurance - 88,230
Repairs and maintenance - 3,232,772
Research & Development - 7,008
Other Production expenses - 59,594
Packing Material Consumed - 877,484
Consumption of fittings and accessories - 43,775
Depreciation - 4,270,585
Production cost during the year - 48,524,891
Adjustment for work in process
Beginning Stock 42,832,000 43,719,656
Stock written off during the year (40,260,826) -
Closing Stock (2,571,174) (42,832,000)
- 887,656
Cost of good manufactured during the year - 49,412,547
Adjustment for finished goods stock
Beginning Stock 78,622,000 80,501,562
Stock written off during the year (35.073,275)
Closing Stock (43,548,725) (78,622,000)
- 1,879,562
Cost of goods sold during the year - 51,292,109
==============================================================================================Since there is no production activity during current year, the related salaries and depreciation cost is charged to administrative expenses19. ADMINISTRATIVE EXPENSES ==============================================================================================
2005 2004
Note Rupees Rupees
==============================================================================================
Salaries, allowances & benefits 4,838,807 8,417,868
Rent, rates and taxes 1,150,056 152,725
Printing & stationary 80,350 382,481
Postage, telegram, telephone & telex 103,673 1,145,732
Fee and subscription 12,500 241,518
Travelling & conveyance 136,292 875,444
Legal & professional charges 465,610 1,156,569
Electricity, Gas and Water Charges 24,628 589,537
Repair & Maintenance 2,494 30,398
Motor Vehicle Expenses 112,310 1,531,323
General Expenses 24,073 764,163
Bad Debts - 1,000,000
Auditors remuneration 19.1 125,000 125,000
Charity & Donation - 10,500
Depreciation 4,861,437 533,823
11,937,230 16,957,081
==============================================================================================19.1. AUDITORS REMUNERATION==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Audit fee 120,000 120,000
Out of pocket expenses 5,000 5,000
Corporate services 125,000 125,000
==============================================================================================20. SELLING & DISTRIBUTION EXPENSES==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Salaries, Allowances & Benefits - 1,862,047
Advertisements and Promotion - 1,049,600
Travelling and Conveyance - 116,316
Postage, Telephones, Telegrams & Telex - 240,321
Motor Vehicle Expenses 408,860
Entertainment 75,727
Printing & Stationery - 19,994
Rent, Rates & Taxes - 240,000
Freight Carnage - 1,199,985
Other Expenses - 131,685
Depreciation - 533,823
5,878,358
==============================================================================================Since there are no sales during current year, the related expenses are charged to administrative expense21. ABNORMAL LOSSES AND PRIOR YEAR ADJUSTMENTS ==============================================================================================
2005 2004
Note Rupees Rupees
==============================================================================================
Prior Year Adjustments (22,514,119) (150,000)
Cash written off 459,583
Stock and stores written off during the year 21.1 145,110,413
Raw Material store imported 34,601,716
Raw Material store local 2,229,014
Packing Material Store 3,837,092
Seat Cover Fitting Store (Packing material) 5,773,765
Work in process - Tiles 40,260,826
Finished Goods Tiles 35,073,275
Spares Stores imported 13,665,125
Oil & Lube Store 1,592,708
General Store 8,076,892
123,055,877 (150,000)
==============================================================================================21.1. Due to the closure of factory for more than three years, stock worth Rupees 121.06 million has been destroyed or got obsolete which is written off during the current financial year.22. TAXATION ==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
Current - 216,066
Prior year - 50,000
- 266,066
==============================================================================================Income tax assessments of the company are finalised up to assessment year 2004-05.No provision for current years taxation is made due to no operations of the company. 23. WORKING CAPITAL CHANGES ==============================================================================================
2005 2004
Rupees Rupees
==============================================================================================
(INCREASE) / DECREASE IN CURRENT ASSETS:
Stores, spares & loose tools (29,338) (2.247,295)
Stock in trade (8,000) (676,338)
Trade debtors 249,504 2,384,236
Advance, deposits, prepayments & other receivables (812,914) (691,602)
INCREASE / (DECREASE) IN CURRENT LIABILITIES:
Creditor accruals & other liabilities (13,212,067) 15,474,083
(13,812,815) 14,243,084
==============================================================================================24. EARNING PER SHARE-BASIC==============================================================================================
2005 2004
==============================================================================================
Profit/(Loss) After Taxation (136,580,985) (31,403,191)
Weighted average number of ordinary
shares In issue during the year 7,741,200 7,741,200
Basic Earning per share (17.64) (4.06)
==============================================================================================25. FINANCIAL INSTRUMENTSThese comprises advances, deposits, cash, loans and certain other assets and liabilities (a) Financial Assets The financial assets of the company amount to Rs 71,498,083 (2004: 9,406,297) of which interest bearing financial assets are nil (2004: nil). =========================================================================================================================================
Interest Bearing Non - Interest Bearing
Maturity Maturity Maturity
upto one Maturity after upto one after one
Interest Rate Year one Year Sub - Total Year Year Sub - Total Total
% (Rupees)
=========================================================================================================================================
Year ended June 30, 2005
Trade Debtors 61,743,890 61,743,890 61,743,890
ADVANCES:
Suppliers - - 2,721,985 2,721,985 2,721,985
Contractor and consultants - 912,654 - 912,654 912,654
Employees for expenses - - - - -
Employees against salaries - - - - - - - -
Sale tax - - -
Excise duty - - - - - 75,114 75,114 75,114
Income tax - - - - - 365,554 365,554 365,554
Duty and tax refundable - - - - - 627,869 627,869 627,869
DEPOSITS:
Other advances and deposits - - - - - 1,500,000 1,500,000 1,500,000
Deposit for LG margin - - - - - 513,750 513,750 513,750
RECEIVABLE:
Other Receivables - - - - - 2,839,232 2,839,232 2,839,232
Cash and Bank Balances - - - - - 47,785 47,785 47,785
Long term security deposits - - - - - 150,250 150,250 150,250
- - - - 71,347,833 150,250 71,498,083 71,498,083
Year ended June 30, 2004
Trade Debtors 61,993,395 61,993,395 61,993,395
ADVANCES:
Suppliers - - - - - 2,695,733 2,695,733 2,695,733
Contract or and consultants - 912,655 912,655 912,655
Employees for expenses - - 753,550 753,550 753,550
Employees against salaries 639,280 639,280
Sale tax - - - - - 383,990 383,990 383,990
Excise duty - - - - 75,114 75,114 75,114
Income tax - - - - 365,554 365,554 365,554
Duty and tax refundable - - - - - 627,869 627,869 627,869
DEPOSITS:
Other advances and deposits - - - - - 1,500,000 1,500,000 1,500,000
Deposit for LG margin - - - - - 789,500 789,500 789,500
Cash and Bank Balances - - - - - 663,052 663,052 663,052
- - - - - 71,399,692 71,399,692 8,767,017
========================================================================================================================================= Currency RiskCurrency risk is the risk that the value of financial asset will fluctuate due to changes in foreign exchange rates. As no asset of the company Is denominated in foreign currency as such the exposure of the company to currency risk is minimum. Credit risk and Concentration of credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to Incur a financial loss. Concentration of credit risk indicates relative sensitivity of a company's performance to developments effecting a particular industry. The company believes that it has no major credit risk due to the high credit worthiness of corresponding parties. The financial assets exposed to credit risk amount to Rupees 71,498,083 (2004: 11,629,466). (b) Financial Liabilities The financial liabilities of the company amount to Rs 289,713,600 (2004: 85,144,496) of which Rs 210,130,735 (2003: 10,037,228) are interest bearing and subject to interest rate risk. These include loans from banks. =======================================================================================================================================================
Interest Bearing Non - Interest Bearing
Maturity Maturity Maturity
upto one Maturity after upto one after one
Interest Rate Year one Year Sub - Total Year Year Sub - Total Total
% (Rupees)
=======================================================================================================================================================
Year ended June 30, 2005
Creditors - - - - 4,906,095 4,906,095 4,906,095
Accrued liabilities - - - - 9,623,514 9,623,514 9,623,514
Other liabilities - - - - 18,479,447 18,479,447 18,479,447
Accrued interest on secured loans - - - - 44,727,708 44,727,708 44,727,708
Provision for auditor remuneration - - - - 350,000 350,000 350,000
Workers' profit participation fund - - - - 710,002 710,002 710,002
Provision for taxation - - - - 786,099 786,099 786,099
Long term loans - secured 2,990,062 2,990,062 - - - - 2,990,062
Disputed bank liabilities 121,111,265 121,111,265 - - - - 121,111,265
Current portion of long term liabilities 83,999,408 - 83,999,408 - - - 83,999,408
Finance under mark-up arrangement 2,030,000 - 2,030,000 - - - 2,030,000
86,029,408 124,101,327 210,130,735 79,582,865 - 79,582,865 289,713,600
Year ended June 30, 2004
Creditors - - - - 10,750,633 - 10,750,633 10,750,633
Accrued liabilities - - - - 8,957,737 8,957,737 8,957,737 8,957,737
Other liabilities 28,895,740 - 28,895,740 28,895,740
Accrued interest on secured loans 42,369,719 42,369,719 42,369,719 42,369,719
Provision for auditor remuneration 325,000 325,000 325,000 325,000
Workers profit participation fund 710,002 - 710,002 710,002
Provision for taxation 786,099 786,099 786,099 786,099
- - - 92,794,930 52,438,555 92,794,930 92,794,930
======================================================================================================================================================= Interest rate riskInterest rate risk is the risk that the value of financial liabilities will fluctuate due to changes in market inetest rates. Interest / mark-up bearing financial liabilities of the company. Currency risk Currency risk is the risk that the value of financial asset will fluctuate due to changes in foreign exchange rates. As no material liability of the company is denominated in foreign currency as such the exposure of the company to the currency risk is minimum. (c) Fair Value of Financial Assets and Liabilities The carrying value of all Financial assets and Liabilities reflected in the financial statements approximate their fair values. 26. PLANT CAPACITY AND PRODUCTION The Installed production capacity of the plant is 3000 tone for sanitary ware and 620,000 Sqm for tiles. Actual capacity attained during the year in respect of tile were Nil (2004: 195000 Sqm) due to the closure of the production. 27. NUMBER OF EMPLOYEES Total number of employees as at June 30, 2005 were 238 (2004:292) 28. DATE OF AUTHORISATION FOR ISSUE These Financial Statements were authorised for issue on May 12, 2006 by the Board of Directors of the Company. 29. CORRESPONDING FIGURES Corresponding Figures have been rearranged and reclassified, wherever necessary, for the purpose of comparison. |