| Highnoon Laboratories Limited |
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| Annual
Report 2000 |
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| Contents |
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| Company
Information |
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| Notice
of Meeting |
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| Directors'
Report |
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| Chairman's
Review |
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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 Sources and Application of Funds |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| COMPANY
INFORMATION |
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| Board
of Directors |
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|
| Mr.
Jawaid Tariq Khan |
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| (Chairman) |
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| Mr.
Tausif Ahmad Khan |
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| (Chief
Executive) |
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|
| Mr.
Anees Ahmad Khan |
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| Mr.
Ghulam Hussain Khan |
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| Mr.
M. Usman Satti |
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| Mst.
Farhat Jabeen |
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| Mrs.
Zainub Abbas |
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| Mrs.
Nosheen Riaz Khan |
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| Company
Secretary |
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| Mian
Ahson Farooq |
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| Auditors |
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| Sidat
Hyder Qamar & Company |
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| Chartered
Accountants |
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| Legal Advisors |
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| Sardar
Iqbal & Company |
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| Attorneys
at Law |
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| & |
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| Raja
Mohammed Akram & Co. |
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| Advocates
& Legal Consultants |
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|
| Registered
Office & Shares Department |
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| Mr.
Khadim Hussain Mirza |
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| Group
Corporate Secretary |
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| 17.5
Kilometer, Multan Road. Lahore-53700 |
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| Phones:
7510023-27 (5 lines)Tlx: 47681 HINON PK. |
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| Fax:
92-42-7510037 |
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| Head
Office & Plant |
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| 17.5
Kilometer, Multan Road, Lahore-53700 |
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| Phones:
7510023-27 (5 lines) Tlx: 47681 HINON PK. |
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| Fax:
92-42-7510037 |
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| e-mail:
info@highnoon.com.pk |
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| Web:
http://www.highnoon-labs.com |
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| Bankers |
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| Habib Bank Ltd. |
|
Prime Commercial Bank
Ltd. |
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| Muslim
Commercial Bank Ltd. |
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Emirates Bank
International |
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| National
Bank of Pakistan |
|
Faysal Bank Ltd. |
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| Allied
Bank of Pakistan Ltd. |
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Bank A1 Habib Ltd. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
is hereby given that 18th Annual General Meeting of Highnoon Laboratories
Limited will be held on Friday, |
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| June
29, 2001 at 9.00 a.m. at Registered Office, 17.5 Kilometer, Multan Road,
Lahore to transact the following business: |
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| 1.
To confirm minutes of last Annual General Meeting held on June 29, 2000. |
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| 2.
To receive, consider and adopt the Audited Accounts of the Company for the
year ended December 31, 2000 |
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| together
with Directors' and Auditors' Reports thereon. |
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| 3.
To approve payment of Cash Dividend @ 20% as recommended by the Board of
Directors. |
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| 4.
To appoint Auditors and fix their remuneration for the year ending December
31, 2001. The present Auditors, |
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| M/s
Sidat Hyder Qamar & Company, Chartered Accountants retire and being
eligible offer themselves for |
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| re-appointment. |
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| 5.
To discuss any other business with the permission of the Chair. |
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By Order of the Board |
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| Lahore. |
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(Mian Ahson Farooq) |
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| June
06, 2001 |
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Company Secretary |
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| Notes: |
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| 1.
Share transfer books of the Company will remain closed from June 26, 2001 to
July 05, 2001 (both days inclusive). |
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| 2.
A member entitled to attend and vote at this meeting may appoint another
member as proxy to attend and vote |
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| instead of him. |
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| 3.
The instrument of proxy must be received at the Registered Office of the
Company not less than 48 hours before |
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| the
time of holding the meeting. |
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| 4.
The shareholders are requested to immediately notify the change in address,
if any. |
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| 5.
CDC shareholders are requested to bring with them their National Identity
Cards alongwith participants' ID |
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| numbers
and their account numbers at the time of attending the Annual General Meeting
in order to facilitate |
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| identification. |
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| DIRECTORS'
REPORT |
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| Your
Directors have pleasure in presenting the Eighteen Annual Report of your
Company together with Audited |
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| Accounts
for the year ended December 31, 2000. |
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| 1.
FINANCIAL HIGHLIGHTS |
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|
Rs. in Million |
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| The
profit and appropriations for the year are as follows: |
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| Net
profit before tax for the year |
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30.068 |
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| Taxation |
|
10.097 |
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------------------ |
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| Profit after tax |
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19.971 |
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| Unappropriated
profit brought forward |
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0.518 |
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------------------ |
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| Profit
available for appropriation |
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20.489 |
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| Appropriations: |
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| Transferred
to General Reserve |
|
2.000 |
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| Proposed
dividend @ 20% |
|
18.444 |
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| Transferred
to Reserve for issuance of Bonus Shares |
-- |
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------------------ |
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|
20.444 |
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------------------ |
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| Unappropriated
profit carried forward |
|
0.045 |
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|
========== |
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| 2.
CHAIRMAN'S REVIEW |
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| Chairman's
Review on page 5 deals with the activities during the year. The Directors
endorse the contents |
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| of the Review. |
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| 3.
DIVIDEND AND BONUS SHARES |
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| The
Directors recommended that cash dividend @ 20% be paid for the year ended
December 31, 2000. |
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| 4.
EARNING PER SHARE |
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| The
after tax earnings per ordinary share of Rs. 10 was Rs. 2.17 (December 31,
1999: Rs. 1.99). |
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| 5.
PATTERN OF SHAREHOLDING |
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| The
pattern of shareholding is detailed on page 33. |
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| 6. AUDITORS |
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| The
present Auditors, Messrs Sidat Hyder Qamar and Company, Chartered
Accountants, retire and, being |
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| eligible,
offer themselves for re-appointment. |
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ON BEHALF OF THE BOARD |
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| Lahore |
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|
TAUSIF AHMAD KHAN |
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| June 04, 2001 |
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|
Chief Executive |
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| CHAIRMAN'S
REVIEW |
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| It
gives me immense pleasure in welcoming you to the eighteenth Annual General |
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| Meeting
of Highnoon Laboratories Limited. |
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| Business
Review |
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| We
grew faster than the market. Sales were 12% above last year. |
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| This
sales performance was well above the Pakistan pharmaceutical |
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| market
growth of 6% and Pakistan Industrial growth rate of 1.6%. |
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| Net
profit on pre-tax basis increased by 23%, while profit after tax |
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| improved
by 9%. It is mainly because of this improvement that the |
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| pre-tax
return on shareholders equity registered an improvement of |
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| more
than 4% and after tax earnings per share improved from Rs. |
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| 1.99
in 1999 to Rs. 2.17 in 2000. |
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| Your
Company has also recorded significant increase in its asset |
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| base,
mainly emanating from acquisition of improved production |
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| equipment. |
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| Sales
and profitability improvements of your Company are considered |
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| to
be satisfactory in light of sluggish industrial activity in the country, |
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| devaluation
of our currency and price controls by the government. |
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| Marketing
& Sales |
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| Highnoon
maintained its position and remained among the top 20 |
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| pharmaceutical
companies operating in Pakistan. Our top ten products |
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| maintained
their leadership in the market and seven of these products |
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| remained
brand leaders in their respective therapeutic segments. |
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| Following
new products were launched during the year. |
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| Heprovac
B, a recombinant Hepatitis - B vaccine; Unitinase, a thrombolytic agent;
Skilax tablets, |
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| a
laxative; Loprin 300mg, enteric-coated aspirin. |
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| A
number of new products have been negotiated for the coming years. Highnoon
obtained marketing |
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| and
manufacturing rights of Kestine, a non-sedating anti-histamine from Almirall
Prodesfarma and |
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| Rhone-Poulenc
Rorer. Kestine is a well-established brand in the market and sales of Kestine
will |
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| have
a positive impact on your Company's profitability. We are actively
collaborating with top |
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| international
companies to license in novel products for the Pakistani market. Many of our
promising |
|
| products
are under registration with the government. |
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|
| Human
Resource Development |
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| As
a policy matter, your Company believes in continuous human resource |
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| development
through on going in-house training workshops along with participation |
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| of
employees in external training programs at prestigious institutions. By
virtue of |
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| effective
HR induction policies we possess highly skilled and technically competent |
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| people
in each area of Highnoon's operations constituting the Highnoon Family. |
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| Your
Company has recently introduced and successfully implemented an
"Appraisal |
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| by-objectives"
scheme of performance evaluation, in order to meet rigorous |
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| competition
amongst pharmaceutical companies. While the results are beginning |
|
| to
materialise, this system is directed towards translation of Highnoon's
objectives |
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| into
individual goals. |
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| Your
Company lauds the continuing efforts and dedication of its staff members |
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| towards
achievement of overall corporate objectives. |
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| Production
and Technology |
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| While
maintaining the required standards of producing quality |
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| medicines
and upholding the primary status amid the pharmaceutical |
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| industry,
your Company continues to endeavour for enhancement and |
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| upgradation
of its manufacturing facilities. A sachet filling and sealing |
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| section
is being installed as the Company intends to launch sachet |
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| packed
products. |
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| A
dedicated Antibiotic facility of about 7000 sq-ft is built according to
current Good Manufacturing Practices that |
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| will
accommodate the manufacturing, packaging and quality control of Highnoon's
antibiotics. We have also increased |
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| our
warehousing facility by 12,000 sq.ft to meet our projected sales growth. |
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| Research
& Development & Quality Assurance Divisions of the Company have also
been upgraded by inducting |
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| additional
instruments to facilitate product development activities and to keep abreast
with constantly changing standards |
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| of
Good Manufacturing Practices. Our quality assurance system is well in place
and steers our products quality |
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| objectives. |
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| Future Outlook |
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| Highnoon
has proven to be a wealth maximizing entity for its |
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| shareholders.
The sales and profitability figures of your Company |
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| show
a promising picture. The management of your Company will |
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| strive
hard to increase profitability by managing factors in its control. |
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| Financial
health of the Company and the pharmaceutical industry is |
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| nevertheless
decisively dependent on regular price adjustments and |
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| speedy
product registration by the government. |
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| Our
mission to control costs and improve efficiency remains the |
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| driving
force while we continue to launch new pharmaceutical and |
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| consumer
products in the future. |
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| I,
on behalf of the management of your Company, assure shareholders |
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| of
our continuous commitment for improved profitability and growth. |
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|
|
Jawaid Tariq Khan |
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|
Chairman |
|
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|
| HIGHNOON
FOR A HEALTHIER NATION |
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|
| AUDITORS'
REPORT TO THE MEMBERS |
|
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| We
have audited the annexed balance sheet of HIGHNOON
LABORATORIES LIMITED as at 31 December 2000 |
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| and
the related profit and loss account, statement of sources and application of
funds (cash flow statement) mid statement |
|
| of
changes in equity together with the notes forming part thereof, for the year
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. |
|
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| It
is responsibility of the company's management to establish and maintain a
system of internal control and prepare and |
|
| present
the above said statements in conformity with the approved accounting
standards and the requirements of the |
|
| Companies
Ordinance, 1984. Our responsibility is to express an opinion on these
statements based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These standards require |
|
| that
we plan and perform the audit to obtain reasonable assurance about whether
the above said statements are free of |
|
| any
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures |
|
| in
the above said statements. An audit also includes assessing the accounting
policies and significant estimates made |
|
| by
management, as well as, evaluating file overall presentation of the above
said statements. We believe that our audit |
|
| provides
a reasonable basis for our opinion and, after due verification, 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 ill |
|
| 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 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 |
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| 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 |
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| sheet,
profit and loss account, statement of sources and application of funds (cash
flow statement) and statement |
|
| of
changes in equity together with the notes forming part thereof conform with
approved accounting standards |
|
| as
applicable in Pakistan, and, 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 31 December |
|
| 2000
and of the profit, its changes in sources and application of funds (cash
flows) and changes in equity for |
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| the
year then ended; and |
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|
|
|
| d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 (XVIII of 1980), was |
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| deducted
by the Company and deposited in the Central Zakat Fund established under
Section 7 of that Ordinance. |
|
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| Lahore: |
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|
|
(SIDAT HYDER QAMAR & COMPANY) |
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|
| June 5, 2001 |
|
|
|
CHARTERED ACCOUNTANTS |
|
|
|
|
| BALANCE
SHEET AS AT 31 DECEMBER 2000 |
|
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|
NOTE |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL |
|
3 |
92,217,750 |
87,826,430 |
|
| RESERVES |
|
4 |
42,600,000 |
40,600,000 |
|
|
|
|
|
| RESERVE
FOR ISSUANCE OF BONUS SHARES |
|
-- |
4,391,320 |
|
| UNAPPROPRIATED
PROFIT |
|
|
45,572 |
517,806 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
134,863,322 |
133,335,556 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
5 |
116,264,331 |
116,264.33 |
|
| LONG
TERM LOANS - Secured |
|
6 |
12,487,754 |
-- |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
| TO
FINANCE LEASE |
|
7 |
63,097,579 |
5,061,643 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
8 |
25,150,538 |
17,434,682 |
|
| LONG
TERM ADVANCES AND DEPOSITS |
9 |
1,399,009 |
3,417,116 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term bank borrowings - Secured |
10 |
167,256,089 |
193,498,646 |
|
| Current
portion of long term liabilities |
11 |
18,096,024 |
5,644,848 |
|
| Creditors,
advances, accrued |
|
|
|
| and
other liabilities |
|
12 |
56,336,464 |
65,469,026 |
|
| Proposed
dividend |
|
|
18,433,550 |
13,173,965 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
260,132,127 |
277,786,485 |
|
| CONTINGENCIES
AND COMMITMENTS |
13 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
613,394,660 |
553,299,813 |
|
|
|
|
========== |
========== |
|
|
| The
Auditors' Report to the members is annexed hereto. |
|
| The
annexed notes from 1 to 37 form an integral part of these accounts. |
|
|
|
|
ANEES AHMAD KHAN |
|
|
|
DIRECTOR |
|
|
|
| OPERATING
FIXED ASSETS |
|
14 |
298,157,360 |
236,562,449 |
|
|
| CAPITAL
WORK IN PROGRESS |
15 |
37,034,056 |
21,826,725 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
335,191,416 |
258,389,174 |
|
|
| LONG
TERM INVESTMENTS |
|
16 |
16,000 |
15,000 |
|
|
| LONG
TERM DEPOSITS |
|
|
308,765 |
308,765 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
17 |
4,184,079 |
4,001,592 |
|
| Stock in trade |
|
18 |
161,415,396 |
135,344,313 |
|
| Trade debts |
|
19 |
7,382,186 |
5,823,232 |
|
| Advances,
deposits and prepayments |
20 |
61,872,011 |
87,687,897 |
|
| Other
receivables |
|
21 |
34,387,309 |
57,445,004 |
|
| Cash
and bank balances |
|
22 |
8,637,498 |
4,284,836 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
277,878,479 |
294,586,874 |
|
|
------------------ |
------------------ |
|
|
|
613,394,660 |
553,299,813 |
|
|
|
========== |
========== |
|
|
|
|
|
|
|
TAUSIF AHMAD KHAN |
|
|
|
|
CHIEF EXECUTIVE |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 31 DECEMBER 2000 |
|
|
|
NOTE |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
|
| SALES - net |
|
23 |
633,021,100 |
566,387,332 |
|
| COST
OF SALES |
|
24 |
425,528,453 |
394,616,661 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
207,492,647 |
171,770,671 |
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
and general |
|
25 |
59,977,569 |
48,488,887 |
|
| Selling
and promotional |
|
26 |
76,974,985 |
65,222,146 |
|
| Research
and development |
|
27 |
4,825,436 |
5,581,279 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
141,777,990 |
119,292,312 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
65,714,657 |
52,478,359 |
|
| OTHER
INCOME |
|
28 |
3,516,460 |
3,538,136 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
69,231,117 |
56,016,495 |
|
| FINANCIAL
AND OTHER CHARGES |
29 |
39,163,287 |
31,553,587 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
30,067,829 |
24,462,908 |
|
| TAXATION |
|
30 |
10,096,513 |
6,129,488 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
19,971,316 |
18,333,420 |
|
| UNAPPROPRIATED
PROFIT |
|
|
| BROUGHT
FORWARD |
|
|
517,806 |
76,102 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATIONS |
|
20,489,122 |
18,409,522 |
|
|
| APPROPRIATIONS: |
|
| Transferred
to general reserves |
|
2,000,000 |
2,500,000 |
|
| Proposed
dividend @ 20 % (1999: @ 15%) |
|
18,443,550 |
13,173,965 |
|
| Transferred
to reserve for issuance of Bonus shares Nil (1999: @ 55%) |
-- |
2,217,751 |
|
|
|
|
------------------ |
------------------ |
|
|
|
20,443,550 |
17,891,716 |
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT CARRIED |
|
| TO
BALANCE SHEET |
|
|
45,572 |
517,806 |
|
|
|
|
========== |
========== |
|
| Earnings
per share (Basic and diluted) |
31 |
2.17 |
1.99 |
|
|
| The
annexed notes from 1 to 37 form an integral part of these accounts. |
|
|
|
|
|
ANEES AHMAD KHAN |
|
TAUSIF AHMAD KHAN |
|
|
DIRECTOR |
|
CHIEF EXECUTIVE |
|
|
|
| STATEMENT
OF SOURCES AND APPLICATION OF FUNDS |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED 31 DECEMBER 2000 |
|
|
|
|
NOTE |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
A |
117,702,308 |
56,692,437 |
|
|
| Add/(less): |
|
|
|
|
|
| Gratuity paid |
|
|
(1,663,168) |
(1,579,844) |
|
|
| Taxes paid |
|
|
(12,605,433) |
(13,393,046) |
|
|
| Financial
charges paid |
|
|
(34,986,076) |
(29,776,246) |
|
|
|
|
|
------------------ |
------------------ |
|
|
| Net
cash flow from operating activities |
|
68,447,631 |
11,943,301 |
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
|
(34,039,841) |
(17,018,991) |
|
| (Including
capital work in progress) |
|
|
|
| Long
term deposit |
|
|
-- |
(200,000) |
|
| Long
term investment |
|
|
-- |
4,605,000 |
|
| Sale
proceeds of fixed assets |
|
|
13,783,878 |
4,563,493 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from Investing activities |
|
(20,255,963) |
(8,050,498) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long
term advances |
|
(740,127) |
(244,757) |
|
| Repayment
of liabilities against assets subject to |
|
|
|
| finance lease |
|
|
(18,849,449) |
(11,448,560) |
|
| Short
term bank borrowings |
|
(12,242,558) |
(10,817,989) |
|
| Dividend paid |
|
|
(12,006,872) |
(2,935,650) |
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from financing activities |
|
(43,839,006) |
(25,446,956) |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase/(decrease) in cash and cash equivalents |
4,352,662 |
(21,554,153) |
|
| Cash
and cash equivalents at the beginning of the year |
4,284,836 |
25,838,989 |
|
