| Lever Brothers Pakistan 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 Annual General Meeting |
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| Statement
in Respect of Special Business |
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| Report
of the Directors |
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| Auditors'
Report |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Equity |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Shareholdings |
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| Statement
and Report under section 237 (1) |
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| of Companies Ordinance,
1984 |
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| Reports
& Accounts of Subsidiary Companies |
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| -
Lever Chemicals (Private) Limited |
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| -
Levers Associated Pakistan Trust (Private) Limited |
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| -
Sadiq (Private) Limited |
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| Consolidated
Accounts |
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| Board
of Directors |
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| Mr.
Jean-Marc Delpon de Vaux |
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| Chairman
& Chief Executive |
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| Mr.
Robert Zoon |
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| Mr.
Perwaiz Hasan Khan |
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| Mr.
Syed Baber Ali |
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| Mr.
Fatehali W. Vellani |
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| Mr.
Irtiza Husain |
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| Mr.
Pervaiz Mahboob Malik |
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| Mr.
Soomro Mohammad Ibrahim |
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| Mr.
Omar H. Karim |
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| Company
Secretary |
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| Mr.
Amar Naseer |
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| Auditors |
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| Messrs
A.F. Ferguson & Co |
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| State
Life Building No. 1-C |
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| I.I.
Chundrigar Road |
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| Karachi. |
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| Registered
Office |
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| Avari Plaza |
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| Fatima
Jinnah Road |
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| Karachi |
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| Share
Registration Office |
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| c
/ o Ferguson Associates (Pvt) Ltd |
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| State
Life Building No. 1-A |
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| I.I.
Chundrigar Road |
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| Karachi. |
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| Notice
of Annual General Meeting |
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| Notice
is hereby given that the 52nd Annual General Meeting of Lever Brothers
Pakistan Limited will be held |
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| at
Darbar Hall 'C' Hotel Sheraton, Club Road, Karachi, on Tuesday, 15th May 2001
at 11.00 a.m. to transact |
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| the
following business: |
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| Ordinary
Business |
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| 1.
To receive and consider the Company's Accounts for the year ended 31 December
2000, together with |
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| the Reports of the Auditors and Directors. |
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| 2.
To declare the final dividend on the Ordinary shares of the Company. |
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| The
Directors recommend a final dividend of 166% (or Rs. 83 per share). With the
interim dividend |
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| of
66% (or Rs. 33 per share) already paid, the total dividend for 2000 will thus
amount to 232% (or |
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| Rs.
116 per share). |
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| 3.
To appoint Auditors for the ensuing year, and fix their remuneration. |
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| (Messrs.
A. F. Ferguson & Co., Chartered Accountants, retire, and being eligible,
offer themselves for |
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| re-appointment). |
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| Special
Business* |
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| 4.
To approve the remuneration of Executive Directors including the Chief
Executive. |
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| 5.
To approve increase in borrowing limit of the company. |
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| By
order of the Board |
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| |
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| Karachi |
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AMAR NASEER |
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| 18 April 2001 |
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Company Secretary |
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| Notes: |
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| 1.
Share Transfer Books will be closed from 8 to 15 May 2001 (both days
inclusive). |
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| 2.
All Members (whether holding Preference or Ordinary Shares) are entitled to
attend and vote at the |
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| meeting.
A Member may appoint a proxy who need not be a Member of the Company. |
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| 3.
The instrument appointing the proxy and the other authority under which it is
signed, or a notarially |
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| certified
copy thereof, must be lodged at the Company's Registered Office at least 48
hours before the |
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| time
of the Meeting. |
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| 4.
Any change of address should be notified immediately to the Company's Share
Registrars, Fergusons |
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| Associates
(Pvt) Ltd, State Life Building l-A, I.I. Chundrigar Road, Karachi. |
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| CDC
Account Holders will further have to follow the undermentioned guidelines as
laid down by the |
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| Securities
and Exchange Commission of Pakistan: |
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| A.
For Attending the Meeting: |
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| i) In case of individuals, the account holder
or sub-account holder and/or the person whose securities |
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| are
in group and their registration details are uploaded as per the Regulations,
shall authenticate his |
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| identity
by showing his original national Identity Card (NIC) or original passport at
the time of |
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| attending
the meeting. |
|
|
| ii)
In case of corporate entity, the Board of Directors' resolution/power of
attorney with specimen |
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| signature
of the nominee shall be produced (unless it has been provided earlier) at the
time of the |
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| meeting. |
|
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| B.
For Appointing Proxies: |
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| i)
In case of individuals, the account holder or sub-account holder and/or the
person whose securities |
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| are
in group account and their registration details are uploaded as per the
Regulations, shall submit |
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| the
proxy form as per the above requirement. |
|
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| ii)
The proxy form shall be witnessed by two persons whose names, addresses and
NIC numbers shall |
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| be
mentioned on the form. |
|
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| iii)
Attested copies of NIC or the passport of the beneficial owners and the proxy
shall be furnished with |
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| the
proxy form. |
|
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| iv)
The proxy shall produce his original NIC or original passport at the time of
the meeting. |
|
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| v)
In case of corporate entity, the Board of Director's resolution/power of
attorney with specimen |
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| signature
shall be submitted (unless it has been provided earlier) alongwith proxy form
to the |
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| Company. |
|
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| *[A
Statement in respect of the Special Business to be transacted at the AGM is
attached]. |
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| Statement
in respect of Special Business |
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| and
related Draft Resolution |
|
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| Material
facts concerning the Special Business to be transacted at the Annual General
Meeting and |
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| the
proposed Resolutions related thereto are given below. |
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| Item
4 of the Agenda - Remuneration of Executive Directors including the Chief |
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| Executive |
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| According
to law, it is necessary to obtain Shareholders' approval for the holding of
office of profit |
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| by
any of the Directors as well as of their remuneration. It is therefore
proposed to pass the |
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| following
as an Ordinary Resolution. |
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| Resolved
that approval is hereby granted for the holding of office of profit with the
Company |
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| by
the Executive Directors including the Chief Executive, and for the payment of
remuneration to |
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| them
for their respective periods of service in accordance with their individual
contracts and the |
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| rules
of the Company, amounting in the aggregate to Rs. 28 million actuals for the
year January |
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| -
December 2000, and Rs. 35.6 million estimated for 1 January to 31 December
2001. |
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| [The
Executive Directors, namely, Messrs. Jean-Marc Delpon de Vaux, Robert Zoon
and Perwaiz |
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| Hasan
Khan, are interested to the extent of the remuneration payable to them
individually]. |
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| Item
5 of the Agenda - Increase in Borrowing Limit |
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| Shareholders
of the Company had approved the Company's borrowing limit upto Rs. five
billion |
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| in
the E.G.M. held on 26 August 1998. In view of expansion in Company's business
over years |
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| coupled
with continued inflation and decline in Rupee value, the Company's finance |
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| requirements
have increased considerably. |
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| In
order to be able to arrange adequate finances for the business as and when
required, it is |
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| proposed
that the total borrowing limit be increased from Rupees five billion to
Rupees seven |
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| billion,
to be exercised by the Directors on behalf of the Company. For this purpose
the following |
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| Ordinary
Resolution is proposed to be passed at the Annual General Meeting. |
|
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| Resolved
that under Article 71(1) of the Company's Articles of Association, the total
limit of |
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| the
amount remaining undischarged in respect of moneys raised or securities
provided by the |
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| Company
is hereby raised to Rs.7 billion (Rupees seven thousand million only)
[subject to any |
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| restrictions
under the Government regulations], to be obtained, as and when required, from
the |
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| Company's
bankers for the time being, the financial institutions, and / or other
sources, as may |
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| be
determined by the Company's Board of Directors from time to time, upon such
terms and |
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| conditions
and with such securities or charges, including hypothecation or mortgages
over all or |
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| any
of the Company's assets, as may be agreed with the lenders. |
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| Report
of the Directors |
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| The
Directors have pleasure in presenting their Annual Report together with the
Company's |
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| audited
accounts for the year ended December 31, 2000. |
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| Results
and Dividends |
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|
Jan. 2000 - |
Jan 1999 - |
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|
Dec. 2000 |
Dec. 1999 |
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|
Rs' 000 |
Rs' 000 |
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| Profit
after taxation |
|
1,339,114 |
763,960 |
|
| Unappropriated
profit brought forward |
|
358,071 |
259,044 |
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|
----------- |
----------- |
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|
1,697,185 |
1,023,004 |
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----------- |
----------- |
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| Appropriations: |
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| Dividends: |
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| On
5% Cumulative Preference shares |
|
478 |
239 |
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| On
Ordinary Shares |
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|
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| -
Interim Dividend of Rs.33 (1999:Rs. 25) per share |
|
438,698 |
332,347 |
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|
|
| -
Final Dividend of Rs. 83 (1999 :Rs. 25 ) per share |
|
1,103,391 |
332,347 |
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----------- |
----------- |
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1,542,567 |
664,933 |
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----------- |
----------- |
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| Unappropriated
profit carried forward |
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154,618 |
358,071 |
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----------- |
----------- |
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| The
Profit after tax grew by 75% over the previous year to a record Rs 1.3
billion benefiting from |
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| sales
value growth of 6% and margin improvements as a result of focus on cost
reduction. The |
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| financial
expenses were lower by more than Rs 100 million due to reduction in stock
levels by |
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| Rs
1500 million over last two years. There were no business restructuring
charges during the year |
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| (1999:
Rs 190 million). The earnings per share increased by 75% to Rs. 100.71 (1999:
57.45). |
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| The
Directors propose a final dividend of Rs 83 per share. The Company has
already paid an |
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| interim
dividend of Rs.33 per share for the year 2000. |
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|
| Detergents
& Personal Products |
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| Growth
in sales was achieved through robust performance in Detergents and volume
increase of |
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| 27%
in Personal Products. The Laundry business was restructured, focusing on a
smaller number |
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| of
brands. A stream of innovation and successful relaunches of Surf Excel, Vim
dish wash bar, |
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| Sunsilk,
Fair & Lovely and Close Up sachet increased value of our propositions for
consumers. |
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| The
consumer was engaged through home to home sampling, and promotions at point
of |
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| purchase
for generating trials. |
|
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| During
the year a compromise between the company and International Laboratories
(Private) |
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| Limited
(ILL) was reached in the Sindh High Court. Under the terms of the compromise
all |
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| counter
suits have been withdrawn by both the parties, and the company is now free to
import, |
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| manufacture,
market, sell and distribute in Pakistan, any products under any of the trade
marks |
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| including
Pond's, and Vaseline owned by Conopco Inc., USA (formerly Chesebrough Ponds
Inc., |
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| USA).
An amount of Rs. 343 million was paid to ILL during the year in terms of the
compromise. |
|
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| Efficient
sourcing, reinforced by a downward trend in international prices of materials
and |
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| rigorous
cost effectiveness programmes contributed towards a substantial growth of 69%
in |
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| HPC's
operating profit over last year. Profitable growth will be sustained through
focused brand |
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| building,
innovation and superior management of the supply chain to achieve cost |
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| competitiveness.
This will enable the business to expand its share of consumer spending
despite |
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| the
increasing level of competition. |
|
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| The
business continues to deal with an uneven playing field on account of influx
of smuggled |
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| products
in the country. The company will persist in its efforts with the Government
for improved |
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| business
environment and competition from bonafide market players, which will also
result in |
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| increased
realisation of taxes for the exchequer. |
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|
| Foods |
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| Cooking
Fats and Oils showed 5% volume growth as a result of focused marketing
activities. |
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| Introduction
of low unit price pack was a success and contributed significantly to volume
growth. |
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| However,
the sales value dropped due to lower international oil prices. The Operating
Margins |
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| have
improved from 4% in 1999 to 10% in 2000 because of a very aggressive cost
effectiveness |
|
| program
and low raw material costs as compared to 1999. |
|
|
| The
pressure on consumer disposable income due to economic stagnancy coupled with
inflation |
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| is
the main cause for decline in non-essential foods market. This led to decline
in Ice Cream sales |
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| revenue;
however, the operating margin in 2000 is a healthy 9% compared to -1% in
1999. This |
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| turnaround
was achieved by carrying out an intensive cost effectiveness programme. The |
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| integration
of Walls' and Polka has been successfully completed and the synergies from |
|
| restructuring
also had a positive impact on margins. |
|
|
| For
2001, Ice Cream business will focus on growth through strengthening of its
distribution |
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| network,
which will increase market penetration. There will be enhanced support and
focus on |
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| key
brands. A number of new products are planned for launch. |
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|
| Beverages |
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| The
Beverages business grew by 11% in value and maintained its profitability
despite a very |
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| difficult
external environment and severe competition. These good results have been
achieved |
|
| through
major efforts to reconnect with consumers, focus on key Brands, improvement
in the |
|
| quality
of the products, excelling in communication contents and the use of a broad
spectrum of |
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| communication
channels. |
|
|
| At
the same time an intensive cost saving programme has been implemented to
cover all aspects |
|
| from
sourcing of tea, processing, packaging and distribution. This has enabled the
business to |
|
| keep
the prices competitive, despite rupee devaluation and increased international
tea prices due |
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| to
drought in East Africa. |
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| The
business is facing major threat from smuggled tea, counterfeits and
infringinement of brands |
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| which
are on the increase due to high duties / taxes, and lack of effective laws
and mechanism to |
|
| check
these nefarious activities. |
|
|
| The
tea-growing project is progressing well at Shinkiari despite low rainfall,
and the Tea |
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| Processing
plant is expected to be commissioned in June 2001. |
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|
| Expansion
and Finance |
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| The
company has invested Rs 325M in capital assets during the year (1999: Rs
259M), which |
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| includes
expenditure on modernising the production and IT facilities. The capital
expenditure has |
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| been
incurred keeping in view product innovations and expansion in the business. |
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| Prospects |
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| The
company is committed to achieving growth in its core business by offering
improved value |
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| and
product innovations to meet the changing needs of consumers as well as
venturing in new |
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| business
that compliments in its core business strength. The continuing drive for cost
effectiveness |
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| is
aimed at sustaining competitive edge in the market. |
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|
| Staff
Relations |
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| The
company is committed to building a high performance team with a passion for
winning by |
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| providing
an enterprise culture, and recognition of talent and performance. The company |
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| continues
to benefit from the efforts and dedication of all its employees, and the
directors are once |
|
| more
pleased to record their appreciation in this respect. |
|
|
| Directors |
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| Since
the last Report, the following changes have taken place in the Board of
Directors. |
|
|
| Mr.
Rai Ijaz Ali Zaigam, the Punjab Government nominee was replaced by Mr.
Pervaiz Mehboob |
|
| Malik
on the Board. The Board wishes to place on record its appreciation of the
valuable services |
|
| rendered
to the Company by Mr. Rai Ijaz Ali Zaigam. |
|
|
| The
term of office of present directors will expire on 28.06.2002. |
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| Holding
Company |
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| Through
its wholly-owned subsidiary, Unilever Overseas Holdings, U.K., Unilever PLC,
a |
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| company
incorporated in the United Kingdom, is the ultimate holding company of Lever
Brothers |
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| Pakistan
Limited. |
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| Auditors |
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| The
Auditors, Messrs A. F. Ferguson & Co., Chartered Accountants, retire at
the conclusion of the |
|
| meeting.
Being eligible, they have offered themselves for re-appointment. |
|
|
|
On behalf of the Board |
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|
|
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| Karachi: |
|
Jean-MarcDelpon de Vaux |
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| 20March, 2001 |
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Chairman & Chief Executive |
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| A
GOOD CORPORATED CITIZEN |
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| As
part of its commitment to |
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| society,
Lever Brothers regularly |
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| contributes
to social and charitable |
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| activities.
During the year 2000, |
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| substantial
product donations were |
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| given
for the drought affected |
|
| people.
Contributions were also |
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| extended
to Marie Adelaide |
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| Leprosy
Centre, IBP-School of |
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| Special
Education, Layton |
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| Rahmatullah
Benevolent Trust, |
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| Kidney
Centre, and others. |
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|
| LOCAL
PRODUCTION OF TEA |
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| The
foundation stone of the first |
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| ever
tea-processing plant was laid |
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| by
the Minister of Commerce and |
|
| Industries,
NWFP in 2000. The tea |
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| processing
plant is part of the tea |
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| growing
project being sponsored |
|
| by
Lever Brothers. Local |
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| production
of tea will ease import |
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| burden
for the country. The project |
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| also
supports the local agrarian |
|
| community. |
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|
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| CONTINUED
INVESTMENT IN PAKISTAN |
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| Lever
Brothers is committed to |
|
| investment
in modern production |
|
| facilities
thereby contributing to |
|
| economic
growth and employment |
|
| opportunities.
A new production |
|
| line
was recently added to the |
|
| Walls
factory near Lahore, which |
|
| was
inaugurated by the Governor |
|
| of
Punjab. The move also signifies |
|
| Lever
Brothers' efforts to produce |
|
| world-renowned
products locally. |
|
|
| PEPSODENT
SCHOOL HEALTH PROGRAMME |
|
| In
order to enhance awareness |
|
| regarding
dental health and |
|
| hygiene,
Lever Brothers in |
|
| collaboration
with Pakistan Dental |
|
| Association
initiated a School |
|
| Health
Programme. Over a period |
|
| of
two years, 400,000 school |
|
| children
benefited from the |
|
| programme. |
|
|
| SURF
CLOTHS BANK |
|
| Recently,
a Clothes Bank, the first |
|
| of
its kind, was jointly launched by |
|
| Lever
Brothers and Edhi Trust. The |
|
| Clothes
Bank operates to collect, |
|
| wash
and redo used clothes. A |
|
| warm
response was received from |
|
| all
sections of the society, |
|
| especially
school children. |
|
|
| LIFE
BUOY AT THE CENTER OF SOCIAL PROGRAMS |
|
| Lifebouy
Karachi to Khyber (K2K) Rural |
|
| Drive
Programme targeted 1 million |
|
| children
nationwide. This drive organized |
|
| specialised
Health Education Programme |
|
| for
schools in rural areas. |
|
| Lever
Brothers also organized the |
|
| Lifebouy
Gold Hospital Programme. |
|
|
| SAFER
AND GREENER ENVIRONMENT |
|
| Committed
towards a safer and |
|
| greener
environment, Lever |
|
| Brothers
invested over Rs 100 |
|
| million
for effluent facilities and |
|
| environmental
upgradation. The |
|
| Company
is among the first group |
|
| of
volunteers for the self-monitoring |
|
| programme
sponsored by |
|
| Environment
Protection Agency of |
|
| Pakistan. |
|
|
| AWARDS
FOR LEVER BROTHERS |
|
| Lever
Brothers was the recipient of |
|
| Management
Association of Pakistan (MAP) |
|
| and
Karachi Stock Exchange Awards, in |
|
| recognition
of its performance. For the |
|
| purpose
of MAP Award it was judged the |
|
| best
among the companies that have |
|
| performed
well in the areas of financial |
|
| discipline,
management practices such as |
|
| Risk
Management, Corporate Governance, |
|
| Social
Responsibility, and Research and |
|
| Development. |
|
|
| Accounts |
|
| LEVER
BROTHERS PAKISTAN LIMITED |
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Lever Brothers Pakistan Limited as
at December |
|
| 31,
2000 and the related profit and loss account, statement of changes in equity
and cash flow |
|
| statement
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. |
|
|
| It
is the 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 the 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 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 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 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, statement of changes in
equity and cash |
|
| flow
statement 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 December 31, 2000 and of the
profit, |
|
| changes
in equity and its cash flows for the year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 (XVIII |
|
| of
1980), was deducted by the Company and deposited in the Central Zakat Fund |
|
| established
under section 7 of that Ordinance. |
|
|
|
A. E FERGUSON & CO. |
|
| Karachi:
20 March 2001 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet |
|
| as
at December 31, 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
(Rupees in
thousand) |
|
| SHARE
CAPITAL AND RESERVES |
|
| Share capital |
|
| Authorised |
|
3 |
800,000 |
800,000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
|
4 |
669,477 |
669,477 |
|
| Reserves |
|
5 |
434,507 |
433,124 |
|
| Unappropriated
profit |
|
|
154,618 |
358,071 |
|
|
|
------------ |
------------ |
|
|
|
1,258,602 |
1,460,672 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
6 |
103,325 |
104,708 |
|
| REDEEMABLE
CAPITAL |
|
|
|
|
| Long
term finance under mark-up |
|
|
|
|
| arrangements
- secured |
|
7 |
1,000,000 |
300,000 |
|
|
|
|
|
