| RECKITT & COLMAN PAKISTAN |
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
| CONTENTS |
|
| Notice
of Meeting |
|
| Review
of the Year |
|
| Comparison
of Results |
|
| Report
of the Directors |
|
| Auditors'
Report to the Members |
|
| Profit
and Loss Account |
|
| Balance
Sheet |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
| List
of Products |
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| K.J.
Dinshaw |
Chairman |
|
| Tariq Ikram |
|
Chief Executive |
|
| J.C.L.
de Mel |
(Alternate: |
|
|
Ishtiaqur Rehman) |
|
| M.F.
Turrell |
(Alternate: |
|
|
Isar Ahmad) |
|
| M.
Waddington |
|
|
| Rasheed
Y. Chinoy |
|
|
| Razi-ur-Rahman
Khan |
(NIT) |
|
| Yusuf
G. Mandviwalla |
|
|
| SECRETARY |
|
| N.H. Haqqi |
|
|
| BANKERS |
|
| ANZ
Grindlays Bank |
|
| Citibank |
|
| Standard
Chartered Bank |
|
| Muslim
Commercial Bank |
|
| Prime
Commercial Bank |
|
|
| AUDITORS |
|
| A.F.
Ferguson & Co. |
|
|
| SOLICITORS |
|
| Surridge
& Beecheno |
|
|
| REGISTRARS |
|
| Ferguson
Associates (Pvt) Ltd. |
|
| State
Life Building 1-A |
|
| I.I.
Chundrigar Road |
|
| P.O.
Box 4716 |
|
| Karachi
74000. |
|
| Tel:
2426682-6, 2426711-5 |
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the Forty-Seventh Annual General Meeting of the Company
will be held at 10:00 |
|
| a.m.
on Wednesday, 22 April, 1998 at the Avari Towers, Fatima Jinnah Road,
Karachi, to transact the |
|
| following
business: |
|
|
| 1.
To receive and consider the Statement of Accounts for the fifty-two week
financial period ended |
|
| January
3, 1998 and the Reports of the Directors and Auditors thereon. |
|
|
| 2.
To declare a final dividend. |
|
|
| 3.
To appoint auditors and to fix their remuneration. |
|
|
| NOTES: |
|
|
| i.
The Share Transfer Books of the Company will be closed from April 13, 1998 to
April 22, 1998 both |
|
| days
inclusive. |
|
|
|
|
| ii.
A Member entitled to attend the Annual General Meeting is entitled to appoint
a proxy to attend and |
|
| vote
instead of him/her. No person shall act as a proxy (except for a corporation)
unless he/she is entitled |
|
| to
be present and vote in his/her own right. The completed proxy form must be
received at the Registered |
|
| Office
Of the Company not less than 48 hours before the Meeting. |
|
|
| iii.
Shareholders are requested to immediately notify the Company of any change of
address. |
|
|
| REVIEW
OF THE YEAR |
|
|
| Trading
Performance |
|
|
| Despite
a general sluggishness in the market place, the Company has fared relatively
well in the year under |
|
| report.
A number of non-performing products were discontinued and this has helped
focus on the core lines |
|
| to
which strong and selective pricing and marketing policies and new innovative
selling pressures have been |
|
| applied.
Also, this was the first full year with us of the household insecticide
business which was acquired from |
|
| AgrEvo
end 1996, the performance of which has been most encouraging. |
|
|
| Company
sales have grown 27.9%, the Pharma segment being the larger contributor.
Gross Margin too has |
|
| improved
(30% as against 29.2% in 1996) helped by inventories carried at
pre-devaluation and pre-duty- |
|
| increase
rates. With the Selling and Administration ratio contained at 15.0% (1996:
16.3%) the Operating |
|
| Profit
of Rs.295.279 mn. for the year is an improvement of Rs. 97.990 mn. over 1996. |
|
|
| The
higher level generally of working assets this year combined with the impact
of the AgrEvo acquisition |
|
| cost
has exerted pressure on cash leading to a net increase in financial costs.
Taxation was extraordinarily low |
|
| in
1996 due reversal of prior years' provisions, whereas this phenomenon has had
a much lower bearing in |
|
| 1997.
Accordingly, the improvement in Operating Profit has been erased at Profit
after Taxation level, which |
|
| latter
is Rs. 197.727 mn as against Rs. 197.962 mn. in the previous year. |
|
|
| Appropriations |
|
|
| The
Board recommends: |
|
|
| -
a final dividend of Rs. 76.940 mn.[ @ Rs.2.40 per share] which together with
the interim ofrs.35.265 |
|
| mn.
makes a total of Rs. 112.205 mn. [ 1996: Rs. 112.205mn.]. |
|
|
| -
the transfer of Rs. 85 mn. to General Reserve [ 1996:Rs.85 mn.]. |
|
|
| Prospects
and Development |
|
|
| The
full impact of the withdrawal of exemption from duty on certain raw materials
for our largest |
|
| pharmaceutical
products category will be felt in 1998. Besides, the Governments indefinite
withholding of |
|
| price
increases on pharma products, now already four months overdue, is cause for
much concern. |
|
|
| A
development which could impact the business adversely is the alliance which
Reckitt & Colman plc, U.K. |
|
| has
entered into with Schering-Plough under which Schering has been given the
rights to market and distribute |
|
| Reckitts'
buprenorphine product under the TEMGESIC brand. Schering has not yet
announced what their |
|
| plans
for Pakistan are and until then we will continue to import, promote and sell
this product. |
|
|
| Another
growing concern is the spread across the country of low priced but very cheap
quality paste shoe |
|
| polish
which is being smuggled in mainly via the Afghan transit trade facility. The
large extent of this product' s |
|
| availability
is an indication of the well organised network for its procurement, import
and subsequent |
|
| distribution
within Pakistan. The Government has been apprised of the significant loss of
revenue due to the |
|
| sale
of smuggled polish and the Company will step up further its efforts to
convince the concerned officials |
|
| upto
the highest level to take appropriate measures. |
|
|
| Despite
the factors enumerated above, the Company is confident in the ability of its
team to face challenges |
|
| and
will intensify its efforts to grow the business through maintaining high
product quality standards, by |
|
| aggressive
and skillful marketing and selling, and through cost containment. |
|
|
| Directors |
|
|
| There
was no change in the constitution of the Board during the year under report. |
|
|
| COMPARISON
OF RESULTS |
|
|
|
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
|
|
|
|
(Rupees '000) |
|
|
|
|
| EARNINGS
& DISTRIBUTION (RECKITT & COLMAN OF PAKISTAN LTD.) |
|
|
|
|
| Sales |
|
498,526 |
602,149 |
741,278 |
792,200 |
922,447 |
1,534,110 |
1,962,397 |
| Profit
before tax |
|
93,519 |
110,070 |
118,183 |
123,104 |
157,839 |
199,416 |
253,555 |
| Taxes |
|
41,731 |
53,751 |
43,016 |
46,594 |
52,556 |
1,454 |
55,828 |
| Net
earnings |
|
51,788 |
56,319 |
75,167 |
76,510 |
105,283 |
197,962 |
197,727 |
| Dividend |
|
29,409 |
35,290 |
41,172 |
45,172 |
59,288 |
112,205 |
112,205 |
| Retained
in business |
|
22,379 |
21,029 |
33,995 |
31,338 |
45,995 |
85,757 |
85,522 |
| Bonus
shares issued |
|
10,892 |
19,606 |
0 |
23,527 |
28,232 |
49,368 |
0 |
|
|
|
|
|
|
| EARNINGS
& DISTRIBUTION (FORMER RECKITT & COLMAN PHARMACEUTICALS (PVT.) LTD.) |
|
|
|
|
| Sales |
|
200,726 |
249,239 |
293,985 |
373,284 |
417,200 |
|
| Profit
before tax |
|
38,672 |
47,404 |
75,222 |
105,698 |
110,756 |
|
| Taxes |
|
20,937 |
24,679 |
37,155 |
47,864 |
22,025 |
|
| Net
earnings |
|
17,735 |
22,725 |
38,067 |
57,834 |
88,731 |
|
| Dividend |
|
8,655 |
10,230 |
12,835 |
17,113 |
20,964 |
|
| Retained
in business |
|
9,080 |
12,495 |
25,232 |
40,721 |
67,767 |
|
| Bonus
shares issued |
|
5,167 |
5,167 |
4,651 |
7,130 |
17,114 |
|
|
|
|
| FINANCIAL
POSITION (RECKITT & COl. MAN OF PAKISTAN LTD.) |
|
|
|
|
|
| Share
Capital |
|
98,029 |
117,635 |
117,635 |
141,162 |
169,394 |
320,587 |
320,587 |
| Capital and revenue reserves |
|
78,678 |
80,101 |
114,096 |
121,907 |
137,128 |
282,633 |
368,155 |
|
|
|
| Shareholders
equity |
|
176,707 |
197,736 |
231,731 |
263,069 |
306,522 |
603,220 |
688,742 |
| Surplus
on revaluation |
|
671 |
671 |
671 |
671 |
671 |
1,408 |
1,408 |
| Long
term loans and deferred liabilities/tax |
18,435 |
22,240 |
20,642 |
27,438 |
33,421 |
54,787 |
64,136 |
| Total
capital employed |
|
195,813 |
220,647 |
253,044 |
291,178 |
340,614 |
659,415 |
754,286 |
| Represented
by: |
|
|
| Fixed
assets |
|
53,132 |
62,228 |
101,578 |
128,083 |
151,738 |
327,147 |
345,796 |
| Long-term
loans/deposits & deferred cost |
1,209 |
944 |
2,511 |
4,779 |
3,964 |
39,798 |
34,515 |
| Net
current assets |
|
141,472 |
157,475 |
148,955 |
158,316 |
184,912 |
292,470 |
373,975 |
|
|
|
| STATISTICS
(RECKITT & COLMAN OF PAKISTAN LTD.) |
|
|
|
|
| Net
earnings per share (Rs.) |
|
5.28 |
4.79 |
6.39 |
5.42 |
6.22 |
6.17 |
6.17 |
| Dividend
declared per share (Rs.) |
|
3.00 |
3.00 |
3.50 |
3.20 |
3.50 |
3.50 |
3.50 |
| Bonus issue |
|
2:10 |
0 |
2:10 |
2:10 |
3:20 |
0 |
0 |
| Break
up value per share (Rs.) |
|
18.03 |
16.81 |
19.70 |
18.64 |
18.10 |
18.82 |
21.48 |
|
| *
COMBINED RESULTS INCLUDING THE FORMER RECKITT & COLMAN PHARMACEUTICALS
(PVT.) LTD. |
|
|
|
|
| REPORT
OF THE DIRECTORS |
|
|
| The
Directors submit their Report together with the audited Statement of Accounts
for the fifty-two week |
|
| financial
period ended January 3, 1998. |
|
|
| Business
Review |
|
|
| The
annexed Review deals with the year's activities and the Directors of the
Company endorse the contents |
|
| thereof. |
|
|
| Financial
Results and Appropriations |
|
|
| The
profit and appropriations are as follows: |
|
|
| Rupees'000 |
|
|
| Net
profit for the year before tax |
|
|
253,555 |
|
| Less:
Provision for tax |
|
|
55,828 |
|
|
|
|
---------- |
|
| Profit
after tax |
|
|
|
197,727 |
|
| Unappropriated
profit from previous year |
|
5,333 |
|
|
|
|
---------- |
|
| Profit
available for appropriation |
|
|
203,060 |
|
|
| Appropriations: |
|
|
|
|
|
|
35,265 |
|
|
|
|
76,940 |
|
| Transfer
to General Reserve |
|
85,000 |
197,205 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward to next year |
5,855 |
|
|
========== |
|
| Earnings
per share |
|
| The
"earnings per share" numbers are provided at page 4. |
|
|
| Pattern
of Shareholding |
|
| The
pattern of shareholding is provided at page 31. The Company's holding company
is Reckitt & Colman |
|
| plc,
which is incorporated in the U.K. |
|
|
| Directors |
|
| Directors
were last elected for a period of three years at the Annual General Meeting
held on March 28, 1996. |
|
|
| Auditors |
|
| The
Company's auditors Messrs. A.F. Ferguson & Co., retire and offer
themselves for re-appointment. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Reckitt & Colman of Pakistan
Limited as at January 3, 1998 |
|
| and
the related profit and loss account and cash flow statement, together with
the notes forming part thereof, |
|
| for
the fifty two weeks then ended and we state that we have obtained all the
information and explanations |
|
| which
to the best of our knowledge and belief were necessary for the purposes of
our audit and, after due |
|
| verification
thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the company as
required by the Companies |
|
| Ordinance,
1984; |
|
|
| (b)
in our opinion: |
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn up |
|
| in
conformity with the Companies Ordinance, 1984 and are in agreement with the
books of |
|
| account
and are further in accordance with accounting policies consistently applied; |
|
|
| (ii)
the expenditure incurred during the period was for the purpose of the
company's business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the period were |
|
| in
accordance with the objects of the company; |
|
|
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the |
|
| balance
sheet, profit and loss account and the cash flow statement, together with the
notes forming part |
|
| thereof,
give the information required by the Companies Ordinance, 1984 in the manner
so required and |
|
| respectively
give a true and fair view of the state of the company's affairs as at January
3, 1998 and of |
|
| the
profit and cash flows for the fifty two weeks then ended; and |
|
|
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was deducted by |
|
| the
company and deposited in the Central Zakat Fund established under Section 7of
that Ordinance. |
|
|
|
|
|
|
A.F. Ferguson & Co. |
|
|
|
Chartered Accountants |
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE 52 WEEKS ENDED JANUARY 3, 1998 |
|
|
|
|
Note |
52 weeks |
53 weeks |
|
|
|
|
ended January |
ended January |
|
|
|
|
3, 1998 |
4, 1997 |
|
|
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
|
|
| Sales |
|
3 |
1,962,397 |
1,534,110 |
|
| Cost
of sales |
|
3 |
1,373,083 |
1,086,017 |
|
|
|
|
---------- |
---------- |
|
|
|
|
589,314 |
448,093 |
|
| Selling
and administrative expenses |
3 |
294,035 |
250,804 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
3 |
295,279 |
197,289 |
|
| Other
income |
|
6 |
10,585 |
29,886 |
|
|
|
|
---------- |
---------- |
|
|
|
|
305,864 |
227,175 |
|
|
|
|
---------- |
---------- |
|
| Financial
expenses |
|
7 |
18,759 |
9.48 |
|
| Other
charges |
|
8 |
33,550 |
18,279 |
|
|
|
|
---------- |
---------- |
|
|
|
|
52,309 |
27,759 |
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
253,555 |
199,416 |
|
| Taxation |
|
9 |
55,828 |
1,454 |
|
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
197,727 |
197,962 |
|
| Unappropriated
profit brought forward |
|
5,333 |
4,576 |
|
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
|
203,060 |
202,538 |
|
| Appropriations |
|
|
|
|
|
|
| Transfer
to general reserve |
|
85,000 |
850,001 |
|
| Interim
dividend |
|
10 |
35,265 |
41,676 |
|
| Proposed
final dividend |
|
10 |
76,940 |
70,529 |
|
|
|
|
---------- |
---------- |
|
|
|
197,205 |
197,205 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
5,855 |
5,333 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| BALANCE
SHEET AS AT 3, JANUARY 1998 |
|
|
|
Note |
As at |
As at |
|
|
|
January |
January |
|
|
|
3, 1998 |
4, 1997 |
|
|
|
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Share
capital |
|
|
|
| Authorised |
|
|
|
| 50,000,000
ordinary shares of Rs. 10 each |
|
500,000 |
500,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
11 |
320,587 |
320,587 |
|
| Reserves |
|
|
12 |
362,300 |
277,300 |
|
| Unappropriated
profit |
|
|
5,855 |
5,333 |
|
|
|
|
---------- |
---------- |
|
|
|
|
688,742 |
603,220 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS 13 |
|
1,408 |
1,408 |
|
| LONG-TERM
LOANS |
|
|
- |
766 |
|
|
|
|
|
| DEFERRED
LIABILITY - Staff Gratuity |
14 |
75,850 |
62,063 |
|
| CURRENT
LIABILITIES |
|
|
---------- |
---------- |
|
| Short-term
finance under mark-up arrangements |
15 |
1,116 |
48,789 |
|
| Creditors,
accured and other liabilities |
16 |
317,572 |
241,877 |
|
| Taxation |
|
|
|
9 |
2,564 |
16,646 |
|
| Dividends |
|
|
|
17 |
78,589 |
71,912 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
399,841 |
379,224 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
18 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,165,841 |
1,046,681 |
|
|
|
|
========== |
========== |
|
|
| FIXED
ASSETS |
|
|
|
| - Tangible |
|
|
|
| Operating
assets |
|
19 |
298,088 |
294,960 |
|
| Capital
work-in-progress - at cost |
|
20 |
35,708 |
17,187 |
|
|
|
|
| - Intangible |
|
|
|
| Goodwill |
|
21 |
12,000 |
15,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
345,796 |
327,147 |
|
| DEFERRED
COST |
|
22 |
24,000 |
30,000 |
|
| DEFERRED
TAXATION |
|
23 |
1,714 |
8,042 |
|
| LONG-TERM
LOANS |
|
24 |
5,439 |
4,042 |
|
| LONG-TERM
DEPOSITS AND PREPAYMENTS |
|
25 |
5,076 |
5,756 |
|
| CURRENT
ASSETS |
|
|
---------- |
---------- |
|
| Stores,
spares and loose tools |
|
26 |
4,580 |
8,212 |
|
| Stock-in-trade |
|
27 |
242,045 |
280,126 |
|
| Trade debts |
|
|
28 |
454,789 |
205,710 |
|
| Current
portion of long-term loans |
|
|
1,686 |
1,197 |
|
| Advances |
|
|
29 |
8,839 |
22,824 |
|
| Deposits
and short-term prepayments |
30 |
11,116 |
13,089 |
|
| Other
receivables |
|
31 |
30,893 |
54,141 |
|
| Short-term
investment |
|
32 |
2,000 |
77,000 |
|
| Cash
and bank balances |
|
33 |
17,868 |
9,395 |
|
|
|
|
---------- |
---------- |
|
|
|
|
773,816 |
671,694 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,165,841 |
1,046,681 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| CASH
FLOW STATEMENT FOR THE 52 WEEKS ENDED JANUARY 3, 1998 |
|
|
|
Note |
52 weeks |
53 weeks |
|
|
|
ended January |
ended January |
|
|
|
3, 1998 |
4, 1997 |
|
|
|
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
37 |
280,622 |
176,999 |
|
| Financial
expenses paid |
|
|
(18,827) |
(6,404) |
|
| Taxes paid |
|
|
(73,582) |
(113,353) |
|
| Payment
of gratuity |
|
|
(5,034) |
(4,659 |
|
| Increase
in long-term loans |
|
|
(1,886) |
|
|
| Decrease
in long-term deposit and prepayments |
|
680 |
219 |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from operating activities |
|
181,973 |
50,894 |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
---------- |
---------- |
|
| Fixed
capital expenditure |
|
|
(57,222) |
(126,282 |
|
| Sale
proceeds of fixed assets |
|
|
2,439 |
2,463 |
|
| Interest
received |
|
|
35,250 |
23,060 |
|
| Payment
on account of |
|
|
- |
- |
|
| - Goodwill |
|
|
- |
(15,000) |
|
| -
Deferred cost |
|
|
- |
(30,000) |
|
|
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
|
(19,533) |
(145,759) |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
---------- |
---------- |
|
| Dividend
paid |
|
|
(105,5281 |
(93,019) |
|
| Repayment
of long term loans |
|
|
(7661 |
- |
|
|
|
|
---------- |
---------- |
|
| Net
cash outflow from financing activities |
|
(106,294) |
(93,019) |
|
|
|
|
---------- |
---------- |
|
| Net
increase/(decrease) in cash and cash equivalents |
56,146 |
(187,884) |
|
| Cash
and cash equivalents at the beginning of the year |
(39,394) |
148,490 |
|
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
38 |
16,752 |
(39,394) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE 52 WEEKS ENDED JANUARY 3, 1998 |
|
|
| L
STATUS AND NATURE OF BUSINESS |
|
|
| The
Company is incorporated in Pakistan and its shares are quoted on the Karachi
and Lahore Stock |
|
