| Johnson & Phillips |
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| Annual
Report 1997-98 |
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| CONTENTS |
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| Board
of Directors |
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| Notice
of Meeting |
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| Chairman's
Review |
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| Report
of the Directors |
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| Auditors'
Report to the Members |
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| Balance sheet |
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| Profit
and Loss Account |
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| Statement
of changes in financial position |
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| Notes
to the Accounts |
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| Statement
U/S 237 (1) E of the Companies Ordinance, 1984 |
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| 10
Years Comparative Results |
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| Pattern
of Share Holding |
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| Johnson
& Phillips Industries (Pakistan) Limited |
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| Johnson
& Phillips Transformers (Private) Limited |
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| J&P
EMO Pakistan (Private) Limited |
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| DIRECTORS |
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| RAJA
AHMED KHAN (CHAIRMAN) |
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| SHEHRYAR
ANWER SAEED (CHIEF EXECUTIVE) |
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| NADIM
S. QURAISHI |
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| RIAZ
MOHAMMAD KHAN |
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| AHMED
BILAL MALIK |
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| MOHAMMAD
ASAD KHAN |
|
| I. A. HANAFI |
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| COMPANY
SECRETARY |
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| RIAZ
MOHAMMAD KHAN |
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| AUDITORS |
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| Messrs
Ebrahim & Co. |
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| Chartered
Accountants |
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| SOLICITORS |
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| Messrs
Surridge & Beecheno |
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| BANKERS |
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| MUSLIM
COMMERCIAL BANK LIMITED |
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| UNITED
BANK LIMITED |
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| HABIB
BANK LIMITED |
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| REGISTERED
OFFICE |
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| C/10,
South Avenue, S.I.T.E., Karachi-75700 |
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| Tel:
2560030 to 2560037 |
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| Telex:
20695 JPK PK |
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| Fax:
2564603 & 2563201 |
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| E-Mail:
test@johnson.khi.erum.com.pk |
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| REGIONAL
OFFICES: |
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| 5-B,
LDA Complex, |
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| Lawrence
.Road, Garden View, Lahore |
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| Tel: 6314006-9 |
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| Telex:
44790 JPL PK |
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| Fax: 6368817 |
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| E-Mail:
johnson@jppl,brain.com.pk |
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| 291/1
Street 56, F7/4 |
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| Islamabad: |
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| Tel: 274984-90 |
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| Telex:
54148 JPI PK |
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| Fax: 274988 |
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| E-Mail:
isd@johnson.sdnpk.undp.org |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that thirty seventh Annual General Meeting of Johnson &
Phillips (Pakistan) Limited will be |
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| held
on Monday June 28, 1999 at Pearl Continental Hotel Karachi at 10.00 a.m. to
transact the following business: |
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|
| 1.
To confirm the minutes of the thirty sixth Annual General Meeting held on 26
March 1998. |
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| 2.
The receive, consider and approve the audited accounts for the twelve months
ended 30 June 1998 and the |
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| reports
of Directors and Auditors thereon. |
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| 3.
To appoint Auditors and fix their remuneration. |
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| 4.
To consider any other business which may be placed before the meeting with
the permission of the Chair. |
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By Order of the Board |
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|
(Riaz Mohammad Khan) |
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| Karachi:
June 07, 1999 |
|
Company Secretary |
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| NOTE : |
|
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| l.
The Shares Transfer Books of the Company will be closed from 21 June 1999 to
28 June 1999 both days |
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| inclusive.
Transfers received in order at the Registered Office of the Company before
the close of business on |
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| 20
June 1999 will be in time for the purpose of the Annual General Meeting. |
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| 2.
A member entitled to attend, speak and vote at the Annual General Meeting is
entitled to appoint a proxy who |
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| must
be a member of the Company and such proxy will have a right to attend speak
and vote in place of the |
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| member.
The instrument appointing a proxy to be valid must be deposited at the
Registered Office of the |
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| company
at least 48 hours before the meeting, duly stamped, signed and witnessed. |
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| 3.
Shareholders are requested to promptly notify the Company of any change in
their addresses. |
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| CHAIRMAN'S
REVIEW |
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|
| The
financial statements of your company and its subsidiaries for the year ended
30th June 1998 are |
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| being
presented to you. |
|
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| I
regret to inform you that the position of your company has not improved. The
economic scenario of |
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| the
country remains stagnant. The power sector has been the worst and until it
improves, making this |
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| company
profitable is going to be a long drawn out process; the only silver lining
being that after the |
|
| induction
of the army in the near "bankrupt" utility companies, things are
looking better. After a |
|
| period
of about 2 years the utility companies have started making some purchases and
we hope this |
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| will
be a turning point. |
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| Over
the past few years, our industry has been operating under extremely
difficult, rather impossible |
|
| conditions.
It would not be an exaggeration to say that there is not a single company in
our sector |
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| which
is performing well. A number of our competitors have practically closed down,
and nearly |
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| everyone
has had to make large scale redundancies to survive. Although this is no
consolation, but |
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| this
does give an idea of the extent of the collapse of the power sector. |
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| We
have also reduced our work force by over 50% and have taken other stringent
measures to cut |
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| down
costs and are making efforts to diversify into the service sector, as it
seems that the engineering |
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| sector
has a bleak future in this Country. If the trend does not change, in the next
5 years we will be a |
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| nation
of traders, already a number of manufacturing companies are turning into
indenting houses. |
|
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| If
the Government does not pay its suppliers on one hand and then charges them
penalties for late |
|
| deliveries
on the other hand and are also on the look out to encash performance bonds,
the closure of |
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| the
industry becomes a reality. It is ironic; first we ensure that our units
become sick and collapse and |
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| then
we try to re-structure and revive them. |
|
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| It
is only the resilience of our people that we are still surviving, because the
government through its |
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| utility
companies, financial and other institutions have done everything possible to
close down the |
|
| industry,
it is pure determination and faith in the future that a few of us are still
in business. |
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| We
are trying to consolidate and plan for the future, a long term plan has been
made. We are |
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| negotiating
with the banks to provide us working capital. The few orders in the market
are also being |
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| aggressively
pursued. The saving grace being that with lesser orders, there are also
lesser |
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| competitors,
because every few weeks some competitor, closes down. |
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| We
are very hopeful that with the support of our Bankers we will be in a
position to turn around the |
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| Company.
We anticipate considerable improvement in the next few months, and we hope
once again |
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| the
company will be in a situation next few months, and we hope once again the
company will be in a |
|
| situation
where we could look forward to profits. |
|
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| The
two subsidiary companies namely Johnson & Phillips Industries Pakistan
Limited and Johnson & |
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| Phillips
Transformers (Pvt.) Limited have been temporarily closed down to cut
operational costs. We |
|
| are
trying to sell some of our assets to improve our cash flow and raise working
capital. The |
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| management
labour relations have been strained because of the retrenchment which had to
be carried |
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| out.
Nearly all the ex-workers have gone to the labour court. My colleagues have
been facing the |
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| workers,
the court officials and the labour department, their demands are unending.
Fortunately, we |
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| have
not succumbed to the "or else" warnings. |
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|
| Mr.
Shehryar Saeed has taken over as the new Chief Executive of the Company, he
has a challenging |
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| task
in front of him. I wish him goodluck. |
|
|
| I
also take this opportunity to thank the staff who have been working under
difficult conditions. |
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|
RAJA AHMED KHAN |
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|
| DIRECTORS'
REPORT |
|
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| The
Directors of your Company are pleased to present the annual report alongwith
the audited accounts for the year |
|
| ended
June 30, 1998. |
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|
| FINANCIAL
RESULTS |
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| Summarised
position of the financial results for the year and its appropriation is as
follows: |
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|
RUPEES |
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|
(000) |
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| Loss
for the year before provision for |
|
|
|
| diminution
in value of investment and taxation |
|
|
(54,211) |
|
| Provision
for diminution in value of investment |
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|
10,000 |
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|
------------------ |
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| Net
loss for the year |
|
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|
(64,211) |
|
| Taxation |
- current |
|
(513) |
|
|
|
- prior |
|
(1,012) |
|
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|
- deferred |
|
2,453 |
928 |
|
|
|
------------------ |
------------------ |
|
| Net
loss after taxation |
|
|
|
(63,283) |
|
| Accumulated
loss brought forward |
|
|
(55,477) |
|
|
|
|
------------------ |
|
| Accumulated
loss carried over to balance sheet |
|
|
(118,760) |
|
|
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|
========== |
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| DIVIDENDS |
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| The
Directors propose not to declare a dividend due to loss sustained during the
year under review. |
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|
| PERFORMANCE
REVIEW |
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|
| During
the year under review the management of your Company could not achieve better
results due to the following |
|
| factors,
among others:- |
|
|
| *
Continued depreciation of rupee against US dollar. |
|
|
| *
No significant projects or orders from the utilities companies. |
|
|
| *
Fewer orders in the private sector projects. |
|
|
| *
Rigid attitude adopted by banks and financial institutions for normal
approved facilities. |
|
|
| *
High financial charges, charged by financial institutions. |
|
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| The
management of your Company has taken positive steps to curtail the expenses
and improve the quality and |
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| profitability
by restructuring the organisation. Despite the prevailing problems the
management expects that the |
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| Company
will be able to recoup its losses and look forward to making profits. |
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|
| AUDITORS'
QUALIFICATION |
|
|
| 1.
The Management is striving hard to achieve restructuring of their existing
debt obligations and obtain working |
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| capital
financing. They are also making continuous efforts to obtain business even if
the orders are not available at |
|
| desired
level of profitability. They are confident that their efforts would bear
fruit and the Company shall continue |
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| operations
in the foreseeable future. |
|
|
| 2.
The Management believe that the operations of the subsidiaries shall
recommence soon and the existing debt |
|
| obligations
would be restructured. They are also implementing plans for sale of surplus
assets and intend to use |
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| part
of the proceeds as working capital. They are of the opinion that the
provision for diminution in value of |
|
| investments
is adequate taking also into account the current market value of the fixed
and operating assets of the |
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| subsidiaries. |
|
|
| CHANGES
IN THE BOARD OF DIRECTORS |
|
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| The
following changes in the Board of Directors of your Company occurred during
the period: |
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|
| Name
of resigning Director/CE. |
|
Name of Director. C.E.
appointed |
|
| Mr.
Bilal Ahmed Qureshi (C.E) |
|
Mr. Saiyed Hashim Ishaque
(C.E) |
|
| Mr.
Saiyed Hashim Ishaque (C.E) |
|
Mr. Shehryar Anwer Saeed
(C.E) |
|
| Mr. H. U. Beg |
|
|
Mr. Azizur Rahman |
|
| Mr.
Shahid Ghaffar |
|
Mr. I. A. Hanafi |
|
|
| Mr.
Syed Wiqar Ali |
|
Mr. Ahmed Bilal Malik |
|
| Mr.
Abdur Rehman Khan |
|
Mr. Nadim S. Qureshi |
|
| Mr.
Rashid Y. Chinoy |
|
Mr. Riaz Mohammad Khan |
|
|
| FUTURE
PROSPECTS |
|
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| The
management is confident that after anticipated restructuring of WAPDA and
K.E.S.C. the company is expected to |
|
| receive
orders. After overcoming the financial hurdles your Company will be able to
recoup its losses and look forward |
|
| to
making profits in the future years. |
|
|
| EARNING
PER SHARE |
|
|
| Earning
per ordinary share of Rs. 10 each is in negative at Rs. 11.61 due to the loss
for the year. |
|
|
| SUBSIDIARY
COMPANIES |
|
|
| 1.
JOHNSON & PHILLIPS INDUSTRIES (PAKISTAN) LIMITED |
|
|
|
|
|
| The
factory operations have been temporarily suspended in order to restrict the
accumulated losses. Other |
|
| reasons
have been explained in the Directors' Report of the subsidiary. Manufacturing
operations shall |
|
| recommence
as soon as market situation improves. |
|
|
|
|
|
|
| The
Company had a negative earning per share of Rs. 5.79 due to loss during the
year under review. |
|
|
| 2.
J&P EMO PAKISTAN (PRIVATE) LIMITED |
|
|
| Reasons
for the loss during the year have been explained in the Directors' Report of
the subsidiary company. |
|
| When
the economic conditions improve the company is expected to gain projects from
government and semi |
|
| government
organisations. |
|
|
|
| The
Company had a negative earning per share of Rs. 21.37 due to loss during the
year. |
|
|
|
| 3.
JOHNSON & PHILLIPS TRANSFORMERS (PRIVATE) LIMITED |
|
|
| In
the subsidiary's Directors' Report reasons for the loss have been explained
Manufacturing operations have |
|
| been
temporarily suspended to restrict the losses. |
|
|
|
|
|
|
| The
Company had negative earning per share of Rs. 4.72 due to loss during the
year. |
|
|
| INDUSTRIAL
RELATIONS |
|
|
| The
management and workers have had a strained relationship due to retrenchment
of workers however the Directors |
|
| would
like to place on record their appreciation for the loyalty in promoting
Company's objectives during the difficult |
|
| period. |
|
|
| YEAR
2000 COMPLIANCE |
|
|
| Appropriate
measures have been taken for necessary. modification in the softwares. Your
company shall be Y2K |
|
| compliant
in due course. |
|
|
| AUDITORS |
|
|
| We
thank Messrs. Ebrahim & Co., Chartered Accountants, retiring auditors of
the company for their valuable services. |
|
| The
Directors propose the appointment of Messrs. Mansha Mohsin Dossani Khan &
Co., Chartered accountants as |
|
| auditors
for the ensuring year 1998-1999. |
|
|
| PATTERN
OF SHAREHOLDING |
|
|
| The
Pattern of shareholding in prescribed form is included in this report. |
|
|
|
|
On behalf of the |
|
|
|
Board of Directors |
|
|
|
|
| Karachi |
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|
(Shehryar/Anwer Saeed) |
|
| Dated:
3rd June, 1999 |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| 1.
We have audited the annexed balance sheet of JOHNSON AND PHILLIPS (PAKISTAN)
LIMITED as at |
|
| June
30, 1998 and the related profit and loss account and statement of changes in
financial position (cash flow |
|
| statement),
together with the notes forming part thereof, for the year then ended. |
|
|
| 2.
The accumulated losses of the Company aggregating to Rs. 118.760 million have
wiped out the equity and |
|
| current
liabilities aggregating to Rs. 223.688 million exceed the current assets by
Rs. 81.445 million. These |
|
| factors
together with the information given in Note: 1.2 indicate that there is
substantial doubt regarding the |
|
| ability
of the Company to continue as a going concern. Consequently, adjustments may
be required to the |
|
| recorded
asset amounts and classification of liabilities. |
|
|
| 3.
Long term investments in subsidiaries are being carried Rs. 51.000 million.
In the absence of reliable |
|
| estimates
of the valuation of fixed and other operating assets of the subsidiaries we
have not been able to |
|
| ascertain
the realisable value of these investments and, therefore, we are unable to
confirm the adequacy of |
|
| provision
for diminution in value of investments. |
|
|
| 4.
Except for the matters referred above, we state that we have obtained all the
information and explanations |
|
| which
to 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 accounts 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 accounts and are further in accordance with accounting policies
consistently |
|
| applied; |
|
|
|
|
|
|
| ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
|
|
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the year were |
|
| in
accordance with the objects of the Company: |
|
|
|
|
|
| c)
Except for the effect of adjustments in respect of matters referred in paras
2 and 3 above, in our |
|
| opinion
and to the best of our information and according to explanations given to us,
the balance |
|
| sheet,
profit and loss account and statement of changes in financial position,
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 June |
|
| 30,
1998 and of the loss and the changes in financial position for the year then
ended; .and |
|
|
|
|
| d)
in our opinion no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| KARACHI |
|
|
EBRAHIM & CO. |
|
| DATED:
3rd June, 1999 |
|
CHARTERED ACCOUNTANTS |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
NOTES |
JUNE 30, |
JUNE 30, |
|
|
|
1998 |
1997 |
|
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
capital |
|
|
|
| 8,000,000
ordinary shares of |
|
|
| Rs. 10 each |
|
|
80,000 |
80,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
|
3 |
54,500 |
54,500 |
|
|
|
|
| Capital
reserves - share premium |
|
|
29,727 |
29,727 |
|
|
|
|
|
|
| Revenue
reserve - general |
|
|
23,073 |
23,073 |
|
|
|
|
|
|
| Profit
and loss account - (adverse balance) |
|
|
(118,760) |
(55,477) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(11,460) |
51,823 |
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
|
42,642 |
42,642 |
|
| LONG
TERM LOAN |
|
4 |
-- |
3,100 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
| TO
FINANCE LEASES |
|
5 |
1,783 |
5,234 |
|
|
|
|
|
| DEFERRED
LIABILITY |
|
|
|
| Staff gratuity |
|
|
4,975 |
6,614 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term loan and running finances |
|
6 |
130,298 |
85,603 |
|
| Current
portion of long term liabilities |
|
7 |
4,676 |
7,791 |
|
| Creditors,
accrued and other liabilities |
|
8 |
86,115 |
102,111 |
|
| Dividends |
|
9 |
2,599 |
2,546 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
223,688 |
198,051 |
|
|
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
------------------ |
------------------ |
|
|
|
|
261,628 |
307,464 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
NOTES |
JUNE 30, |
JUNE 30, |
|
|
|
1998 |
1997 |
|
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
11 |
63,378 |
68,557 |
|
| LONG
TERM INVESTMENTS |
|
12 |
51,000 |
61,000 |
|
| DEFERRED
TAXATION |
|
13 |
3,167 |
714 |
|
| LONG
TERM DEPOSITS |
|
|
| Security
deposits |
|
|
1,840 |
2,431 |
|
|
|
|
| CURRENT
ASSETS |
|
|
| Stores
and loose tools |
|
14 |
374 |
463 |
|
| Stock in trade |
|
15 |
79,357 |
106,449 |
|
| Trade debts |
|
16 |
18,377 |
15,094 |
|
| Advances
and deposits |
|
17 |
36,669 |
45,277 |
|
| Prepayments
and other |
|
|
| receivables |
|
18 |
5,028 |
5,200 |
|
| Cash
and bank balances |
|
19 |
2,438 |
2,279 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
142,243 |
174,762 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
261,628 |
307,464 |
|
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
| KARACHI |
|
| DATED:
3rd June 1999 |
Chief Executive |
|
Director |
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
NOTES |
JUNE 30, |
JUNE 30, |
|
|
|
1998 |
1997 |
|
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
| Sales (Net) |
|
20 |
102,853 |
151,771 |
|
| Cost of sales |
|
21 |
107,424 |
135,652 |
|
| Gross
(loss)/profit |
|
|
(4,571) |
16,119 |
|
| Administrative
and selling expenses |
|
22 |
27,801 |
29,648 |
|
|
|
|
------------------ |
------------------ |
|
| Operating loss |
|
|
(32,372) |
(13,529) |
|
| Other income |
|
23 |
4,773 |
3,556 |
|
|
|
|
------------------ |
------------------ |
|
|
|
(27,599) |
(9,973) |
|
|
|
------------------ |
------------------ |
|
| Research
and development expenses |
|
1,164 |
323 |
|
| Financial
charges |
|
|
24 |
25,448 |
26,742 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
26,612 |
27,065 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(54,211) |
(37,038) |
|
| Provision
for diminution in value |
|
|
|
| of investments |
|
|
10,000 |
10,510 |
|
|
|
|
------------------ |
------------------ |
|
| Net
loss for the year |
|
|
(64,211) |
(47,548) |
|
|
|
|
|
| Taxation |
- current |
|
|
513 |
759 |
|
|
- prior year |
|
|
1,012 |
-- |
|
|
- deferred |
|
|
(2,453) |
1,972 |
|
|
|
------------------ |
------------------ |
|
|
|
(928) |
2,731 |
|
|
|
------------------ |
------------------ |
|
| Net
loss after taxation |
|
|
(63,283) |
(50,279) |
|
| Accumulated
(losses) brought forward |
|
(55,477) |
(5,198) |
|
|
|
------------------ |
------------------ |
|
| Accumulated
(losses) carried over to balance sheet |
|
(118,760) |
(55,477) |
|
|
|
|
========== |
========== |
|
|
| Note:
The annexed notes form an integral part of these accounts. |
|
|
| KARACHI |
|
| DATED:
3rd June, 1999 |
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
