| Parke, Davis & Company 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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| REPORT
OF THE DIRECTORS |
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| AUDITORS'
REPORT TO MEMBERS |
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| BALANCE
SHEET |
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| PROFIT
AND LOSS ACCOUNT |
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| CASH
FLOW STATEMENT |
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| STATEMENT
OF CHANGES IN EQUITY |
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| NOTICE
OF THE ACCOUNTS |
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| LOCATION
MAP |
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| Company
Information |
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| BOARD
OF DIRECTORS |
M. Raziuddin Ansari |
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|
Chairman, Chief Executive |
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|
and Managing Director |
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|
Irtiza Husain |
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|
Badaruddin F. Vellani |
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|
Dr. Amjad Waheed |
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|
Abdul Majeed |
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|
Adil Zaman |
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|
Syed Arif Masood |
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| COMPANY
SECRETARY |
Abdul Majeed |
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| AUDITORS |
|
Taseer Hadi Khalid &
Co. |
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|
Chartered Accountants |
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| BANKERS |
|
American Express Bank
Limited |
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|
Citibank, N.A. |
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|
Standard Chartered Bank |
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|
Muslim Commercial Bank
Limited |
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|
National Bank of Pakistan |
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| REGISTERED
OFFICE |
B-2, S. I. T. E., |
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| &
FACTORY |
Karachi-75700 |
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| Notice
of Meeting |
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| Notice
is hereby given that the 40th Annual General Meeting of the Company will be
held at B-2, S.I.T.E., |
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| Karachi,
on Monday, April 30, 2001 at 10:00 a.m. to transact the following business: |
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| 1.
To consider, and if deemed appropriate, to approve the audited Balance Sheet
of the Company as at |
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| December
31, 2000 and the Profit and Loss Account for the year ended December 31, 2000
as well as the |
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| Reports
of the Directors and Auditors of the Company thereon. |
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| 2.
To consider, and if deemed appropriate, to approve the payment of dividend of
the Company for the year |
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| ended
December 31, 2000 as recommended by the Directors of the Company. |
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| 3.
To appoint the Auditors of the Company and to fix their remuneration. |
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By Order of the Board |
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ABDUL MAJEED |
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|
Company Secretary & Director |
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| Karachi:
April 2, 2001 |
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| NOTES: |
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| 1.
The Share Transfer Books of the Company will be closed from April 23, 2001 to
April 30, 2001 |
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| (both
days inclusive). |
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| 2.
A member entitled to attend, speak and vote at the Annual General Meeting may
appoint a proxy to attend |
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| and
vote on his behalf. Proxies in order to be effective must be received at the
Registered Office of the |
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| Company
not less than 48 hours before the Meeting. The proxy must be a member of the
Company, except |
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| that
a corporation being a member of the Company may appoint as its proxy one of
the officers or some |
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| other
person though not a member of the Company. |
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| 3.
Members are requested to notify us immediately of any change in their
Registered Address currently |
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| available
with us. |
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| 4.
The Registered Office of the Company is located at B-2, S.I.T.E, Karachi. |
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| Report
of the Directors |
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| We
are pleased to present your Company's Annual Report together with the audited
accounts for the year ended |
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| December
31, 2000. Prior year's figures of Profit and Loss Account are for the
thirteen months period ended |
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| December
31, 1999. |
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| BUSINESS
REVIEW |
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| This
year saw the first price increase after a lapse of three and a half year. The
Ministry of Health allowed an 8% |
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| price
increase on controlled drugs and a 10% price increase on decontrolled
products. However, the devaluation |
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| of
10% in the Pak Rupee- US Dollar parity soon after the announcement of the
much awaited price increase |
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| eroded
its positive impact. We have utilised our internal efficiencies and
aggressive cost containment drives to |
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| successfully
meet the challenges posed by the operating environment. |
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|
| Despite
the difficult economic situation, the net sales for the year under review
grew to Rs. 1,006 million |
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| reflecting
a growth of 12% over last year. If the extraordinary event of the corporate
restructuring is not taken in |
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| account,
the Company's profit before tax increased to Rs. 149 million reflecting a
growth of 29%. The corporate |
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| restructuring
whereby severance packages of about Rs.45 million were required to be paid to
those employees who |
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| took
early retirement resulted in a diluted profit before tax of Rs. 104 million.
This restructuring was necessary to |
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| ensure
long term savings and will enable the Company to reduce its administration
costs, and enhance its |
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| competitiveness
and long term viability. |
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| The
products of the Company have shown improved market share. The Company
introduced LIPITOR ® |
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| (atorvastatin),
a cholesterol reducer, towards the end of the year which generated sales of
Rs. 19 million. Our high |
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| volume
products, including PONSTAN ® (mefanamic acid) and BENADRYL ®
(dyphenhydramine) cough |
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| syrup,
have shown consistent growth over last year volumes. |
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| FINANCIAL
RESULTS |
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| Results
for 2000 together with Directors' recommendations for appropriations are
given below: |
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| Rs. 000 |
|
| Profit
after taxes |
|
65,097 |
|
| Add:
Unappropriated profit brought forward |
370 |
|
|
----------- |
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|
65,467 |
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| Less:
Transfer to general reserve |
|
36,000 |
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|
----------- |
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| Balance
available for appropriation |
|
29,467 |
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| Recommended
dividend ~ 150% |
|
29,376 |
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|
----------- |
|
| Unappropriated
profit carried forward |
|
91 |
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|
========== |
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| DIVIDEND |
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| The
Directors recommend a cash dividend of 150% for the year ended December 31,
2000. |
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| FUTURE
PROSPECTS |
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| The
future performance of your Company is dependent on the economic conditions in
the country and the |
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| Government's
policies towards the pharmaceutical industry. The pharmaceutical industry
continues to be highly |
|
| regulated.
The registration process requires to be made more transparent and the
patented products require to be |
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| protected.
However, the present Government's policy towards deregulation, privatisation
and increasing the export |
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| potential
of local products augurs well for the economy. |
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| The
Company has a pool of highly skilled, dedicated, and competent manpower. Our
product portfolio is |
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| diversified,
competitively priced and we have some excellent products which are soon to be
launched in the |
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| Pakistan
market. We have been investing regularly over the years in order to modemise
our manufacturing |
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| facilities,
and to make them environmentally friendly and quality oriented. As a result
of pursuing policies and |
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| processes
that reflect our commitment to a clean and green environment, your Company
achieved ISO 14001 |
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| certification,
thus becoming the first pharmaceutical company in Pakistan to achieve this
distinction. |
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| Future
prospects of your Company remain good if the investor friendly policies
announced by the Government are |
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| implemented
and the economic conditions in the country stabilise as a consequence. |
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| SUBSEQUENT
EVENTS |
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| After
the end of the financial year of the Company under review, the Board of
Directors considered the most |
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| expedient
manner of fully utilising the benefits accruing from the fact that Pfizer
Laboratories Limited ("PLL") |
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| and
the Company have, become associated companies. The synergies which are likely
to arise upon the |
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| amalgamation
of the two Companies, have led the Directors to resolve that a scheme of
arrangement be prepared |
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| for
the merger of the two Companies for consideration by the Board. In this
connection, the Directors have |
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| appointed
Taseer Hadi Khalid & Co. to undertake the valuation of the Company as at
December 31, 2000. A |
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| similar
exercise is being undertaken for the valuation of PLL. On the basis of such
valuation, the swap ratio of the |
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| shares
of the two companies will be determined. |
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| PLL
has applied to the Ministry of Health (MOH) for allowing its products to be
toll manufactured at the |
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| manufacturing
facility of the Company. In case the approval is granted by MOH, a Toll
Manufacturing Agreement |
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| will
be executed between the two companies. |
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| EMPLOYEES |
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| A
service agreement was executed between PLL and the Company w.e.f. June 19,
2000, in order to enable the |
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| employees
of both the companies to work together and for the two associated companies
to utilise their synergies |
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| for
their economic benefit. The common utilisation of the sales staff and the
field force of both the companies will |
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| enable
the Company to enjoy the benefits of economies of scale and sharing of costs.
By virtue of this agreement |
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| the
Company will get the benefit (at cost) of the services provided by PLL
employees. |
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| Any
company is ultimately only as strong as its human resources and we have been
fortunate to have highly |
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| motivated,
skilled and committed employees. Your Company has achieved good results in
the year under review |
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| despite
a challenging economic environment in the country. |
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| We
would like to express our sincere appreciation to our employees at all
levels, as without their dedication and |
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| hard
work these results would not have been possible. |
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| A
two year agreement was successfully negotiated between the workers' union
(CBA) and the Company. This |
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| agreement
will expire on December 31, 2002. |
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| Total
number of employees at December 31, 2000 was 349. |
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| BOARD
OF DIRECTORS |
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| During
August 2000 Mr. M. Saleem and Mr. S. Khalid Hussain resigned from the Board
and the resulting |
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| vacancies
were filled in by the appointments of Mr. Abdul Majeed and Mr. Adil Zaman
respectively. In March |
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| 2001,
Mr. Ramesh Thadani resigned from the Board and the resulting vacancy was
filled in by the appointment of |
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| Mr.
Syed Arif Masood. |
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|
| While
welcoming the new appointees the Board wishes to record its appreciation of
the contributions made by the |
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| outgoing
Directors to the business operations of the Company. |
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| PARENT
COMPANY |
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| The
Company's holding company is Parke Davis & Company, USA, a subsidiary of
Pfizer Inc., a company |
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| incorporated
in the United States of America. |
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|
| As
mentioned in our half yearly report, during June 2000, Pfizer Inc., a company
incorporated in the United States |
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| of
America, acquired Warner-Lambert Company also incorporated in the United
States of America. Parke Davis & |
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| Company,
of the USA which holds 75.6% of the issued shares in the capital of Parke,
Davis & Company, Limited, |
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| Pakistan,
is a wholly owned subsidiary of Warner-Lambert Company, USA. As a consequence
of the above change |
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| the
ultimate holding company of Parke, Davis & Company, Limited, Pakistan is
now Pfizer Inc., USA. |
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| AUDIT
REPORT/ACCOUNTS |
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| The
format of the Audit Report for the current year is different from that issued
last year and has been |
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| necessitated
by the issuance of SRO No. 597 (1)/2000 dated August 25, 2000, by the
Securities and Exchange |
|
| Commission.
This notification provides for the Auditors Report to be given as per the new
format. |
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|
| Current
years tax provisions is based on normal tax regime. However from 2001 and
onwards, the Company has |
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| opted
for the presumptive tax regime and accordingly the deferred tax liability at
December 31, 2000, has been |
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| reversed. |
|
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| The
Capital Project Appropriations (CPA) relates to the refurbishment/enhancement
of the office of the Company. |
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|
| EARNINGS
PER SHARE |
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| The
after-tax earnings per ordinary share of Rs. 10 is Rs. 33.25. |
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| PATTERN
OF SHAREHOLDING |
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| The
pattern of share holding is attached with this report. |
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| AUDITORS |
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| The
auditors Messrs. Taseer Hadi Khalid & Co., Chartered Accountants, retire
at the conclusion of the Annual |
|
| General
Meeting and being eligible offer themselves for re-appointment. |
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|
On behalf of the Board |
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|
|
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|
M. Raziuddin Ansari |
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| Karachi:
April 2, 2001 |
|
Chairman |
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|
|
| Pattern
of holding of shares |
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|
| Pattern
of holding of shares held by the shareholders of Parke, Davis & Company,
Limited as at |
|
| December
31, 2000. |
|
|
| NUMBER
OF |
|
SHAREHOLDING |
|
TOTAL |
|
| SHAREHOLDERS |
FROM |
|
TO |
SHARES HELD |
|
|
| 92 |
|
1 |
-- |
100 |
8,665 |
|
| 39 |
|
101 |
-- |
500 |
11,565 |
|
| 19 |
|
501 |
-- |
1000 |
16,200 |
|
| 10 |
|
1001 |
-- |
5000 |
26,900 |
|
| 4 |
|
5001 |
-- |
10000 |
29,500 |
|
| 2 |
|
10001 |
-- |
15000 |
28,000 |
|
| 1 |
|
70001 |
-- |
75000 |
75,000 |
|
| 1 |
|
280001 |
-- |
285000 |
282,270 |
|
| 1 |
|
1480001 |
-- |
1485000 |
1,480,300 |
|
| ----------- |
|
----------- |
|
| 169 |
|
1,958,400 |
|
| ========== |
|
========== |
|
|
|
|
|
| CATEGORIES
OF - |
|
|
Shares |
|
|
| SHAREHOLDERS |
|
Number |
Held |
Percentage |
|
| INDIVIDUALS |
|
158 |
89,830 |
4.58 |
|
| INVESTMENT
COMPANIES |
2 |
284,770 |
14.54 |
|
| INSURANCE
COMPANIES |
1 |
75,000 |
3.83 |
|
| JOINT
STOCK COMPANIES |
5 |
1,506,600 |
76.93 |
|
| FINANCIAL
INSTITUTIONS |
1 |
2,000 |
0.10 |
|
| MODARABA
COMPANIES |
1 |
100 |
0.01 |
|
| CO-OPERATIVE
SOCIETIES |
1 |
100 |
0.01 |
|
|
----------- |
----------- |
----------- |
|
|
169 |
1,958,400 |
100.00 |
|
|
========== |
========== |
========== |
|
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|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Parke, Davis & Company, Limited
as at 31 December 2000 and the related |
|
| profit
and loss account, cash flow statement and 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. |
|
|
| It
is the responsibility of the company's management to establish and maintain a
system of internal control, and prepare and |
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| 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 account have been kept by the company as
required by the Companies |
|
| Ordinance,
1984; |
|
|
| b)
in our opinion: |
|
| i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn up |
|
| in
conformity with the Companies Ordinance, 1984, and are in agreement with the
books of |
|
| account
and are further in accordance with accounting policies consistently applied. |
|
|
| ii)
the expenditure incurred during the 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, 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 cash |
|
| flows
and changes in equity 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. |
|
|
| The
financial statements for the thirteen months period ended 31 December 1999
were audited by another firm |
|
| of auditors. |
|
|
| Date:
19 March 2001 |
|
Taseer Hadi Khalid & Co. |
|
| Karachi |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| As
at 31 December 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
(Rupees'000) |
|
| SHARE
CAPITAL AND RESERVES |
|
| Share capital |
|
| Authorised |
|
| 4,000,000
ordinary shares of Rs. 10 each |
|
40,000 |
40,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
3 |
19,584 |
19,584 |
|
| General
reserve - revenue |
|
4 |
604,000 |
568,000 |
|
| Unappropriated
profit |
|
|
91 |
370 |
|
|
|
------------ |
------------ |
|
|
|
623,675 |
587,954 |
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
|
| Staff
retirement benefits |
|
5 |
31,963 |
17,151 |
|
| Deferred
taxation |
|
6 |
-- |
8,675 |
|
|
| CURRENT
LIABILITIES |
|
| Running
finance under mark-up arrangements |
7 |
202 |
4,976 |
|
| Creditors,
accrued and other liabilities |
|
8 |
151,480 |
160,093 |
|
| Proposed
dividend |
|
|
29,376 |
34,272 |
|
|
|
------------ |
------------ |
|
|
|
181,058 |
199,341 |
|
| CONTINGENCIES
AND COMMITMENTS |
9 |
|
|
------------ |
------------ |
|
|
836,696 |
813,121 |
|
|
|
========== |
========== |
|
|
|
|
| FIXED
ASSETS - TANGIBLE |
|
| Operating
assets |
|
10 |
215,326 |
234,474 |
|
| Capital
work-in-progress |
|
11 |
11,186 |
16,825 |
|
|
|
------------ |
------------ |
|
|
226,512 |
251,299 |
|
|
| LONG-TERM
LOANS |
|
12 |
2,423 |
1,958 |
|
|
| LONG-TERM
DEPOSITS |
|
1,955 |
1,812 |
|
|
| CURRENT
ASSETS |
|
|
| Spares |
|
13 |
12,960 |
131,131 |
|
| Stock-in-trade |
|
14 |
233,617 |
2,319,991 |
|
| Trade debts |
|
15 |
207,254 |
122,937 |
|
| Loans
and advances |
|
16 |
3,128 |
5,904 |
|
| Deposits
and short-term prepayments |
|
17 |
22,535 |
25,663 |
|
| Other
receivables |
|
18 |
3,156 |
3,127 |
|
| Taxation
- payments less provision |
|
|
39,705 |
31,740 |
|
| Cash
and bank balances |
|
19 |
83,451 |
123,569 |
|
|
|
------------ |
------------ |
|
|
605,806 |
558,052 |
|
|
------------ |
------------ |
|
|
836,696 |
813,121 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
M. Raziuddin Ansari |
|
Abdul Majeed |
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended 31 December 2000 |
|
|
|
Note |
Year ended |
Thirteen months |
|
|
|
31 December |
period ended |
|
|
|
2000 |
31 December |
|
|
|
1999 |
|
|
(Rupees'000) |
|
| Sales |
|
20 |
1,006,360 |
972,143 |
|
| Cost of sales |
|
21 |
678,826 |
666,415 |
|
|
|
----------- |
----------- |
|
|
|
327,534 |
305,728 |
|
|
|
|
|
| Administration
and selling expenses |
|
22 |
235,934 |
183,893 |
|
|
|
----------- |
----------- |
|
| Operating
profit |
|
|
91,600 |
121,835 |
|
|
|
|
|
| Other
income |
|
23 |
17 809 |
15,763 |
|
|
|
----------- |
----------- |
|
|
|
109,409 |
137,598 |
|
| Financial
charges |
|
24 |
2,287 |
2,778 |
|
| Other
charges |
|
25 |
2,700 |
9,252 |
|
|
|
----------- |
----------- |
|
|
|
4,987 |
12,030 |
|
|
|
----------- |
----------- |
|
| Profit
before taxation |
|
|
104,422 |
125,568 |
|
|
|
|
| Taxation |
|
26 |
|
| -
Current year |
|
480,001 |
44,701 |
|
| - Deferred |
|
(8,675) |
3,147 |
|
|
----------- |
----------- |
|
|
39,325 |
47,848 |
|
|
----------- |
----------- |
|
| Profit
after taxation |
|
65,097 |
77,720 |
|
|
| Unappropriated
profit brought forward |
|
370 |
797 |
|
|
----------- |
----------- |
|
| Profit
available for appropriation |
|
65,467 |
78,517 |
|
|
| Appropriations |
|
|
|
| Dividend
at Rs. 3 per share out of 1998 profit |
|
-- |
5,875 |
|
| Proposed
final dividend at Rs. 15 per share |
|
|
|
| (1999:
Rs. 17.50 per share) |
|
29,376 |
34,272 |
|
|
----------- |
----------- |
|
|
29,376 |
40,147 |
|
| Transfer
to general reserve |
|
36,000 |
38,000 |
|
|
----------- |
----------- |
|
|
65,376 |
78,147 |
|
|
----------- |
----------- |
|
| Unappropriated
profit carried forward |
|
91 |
370 |
|
|
========== |
========== |
|
| Earnings
per share - basic and diluted |
|
27 |
33.25 |
39.69 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
M. Raziuddin Ansari |
|
Abdul Majeed |
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| for
the year ended 31 December 2000 |
|
|
|
|
Note |
Year ended |
Thirteen months |
|
|
|
|
|
31 December |
period ended |
|
|
|
2000 |
31 December |
|
|
|
|
|
1999 |
|
|
|
|
(Rupees'000) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
31 |
59,235 |
233,189 |
|
| Financial
charges paid |
|
(619) |
(2,374) |
|
| Taxes paid |
|
(55,965) |
(49,463) |
|
|
----------- |
----------- |
|
| Net
cash flows from operating activities |
|
2,651 |
181,352 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
(10,287) |
(33,703) |
