| Spencer & Co. (Pakistan) Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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| Board
of Directors |
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| Notice
of meeting |
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| Chairman's
review |
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| Report
of the Directors |
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| Auditors'
report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Notes
to the accounts |
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| Statement
under sub-section (1) (E) of |
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| section
237 of the Company Ordinance, 1984 |
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| Pattern
of shareholdings |
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| Consolidated
Financial Statements |
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| Auditors'
Report to the Members |
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| Consolidated
Balance Sheet |
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| Consolidated
Profit & Loss Account |
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| Consolidated
Cash Flow Statement |
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| Notes
to the Consolidated Financial Statements |
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| Spencer
Powergen Company of Pakistan Limited - Subsidiary Company |
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| Audited
accounts for the year ended June 30, 2000 |
|
| Spencer
Pharma (Pvt) Ltd - Subsidiary Company |
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| Audited
accounts for the year ended June 30, 2000 |
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| Board
of Directors |
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| DIRECTORS |
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| Byram
D. Avari, Chairman & C.E.O. |
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| Dinshaw
B. Avari |
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| Xerxes B. Avari |
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| Nauzer
B. Commissariat |
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| Keky R. Dastur |
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| Mr.
Zia-ur-Rehman Shami |
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| Col.
(Rtd) Aziz Khan |
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| COMPANY
SECRETARY |
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| Abdul
Rahim Suriya |
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| AUDITOR |
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| Ford,
Rhodes, Robson, Morrow |
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| BANKERS |
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| Allied
Bank of Pakistan Ltd. |
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| American
Express Bank Ltd. |
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| ANZ
Grindlays Bank p.l.c. |
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| Habib
Bank A.G. Zurich |
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| Metropolitan
Bank Ltd. |
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| Union Bank Ltd. |
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| Doha Bank Ltd. |
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| REGISTERED
OFFICE |
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| 2nd
Floor, Beach Luxury Hotel, |
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| M.T.
Khan 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 Spencer & Co.
(Pakistan) Ltd., will |
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| be
held on Friday, December 22, 2000, at 12.30 p.m. at the Beach Luxury Hotel,
M.T. Khan Road, Karachi, |
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| to
transact the following business:- |
|
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| 1.
To read the notice of !he me6,.ting. |
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| 2.
To confirm the Minutes of the 51st Annual General Meeting held on March 30,
2000. |
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| 3.
To receive, consider and adopt Audited Accounts, together with the Directors'
and Auditors' Report |
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| thereon,
for the year ended June 30, 2000. |
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| 4.
To appoint Auditors and to fix their remuneration. |
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| 5.
To transact any other business with the permission of the Chair. |
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By Order of the Board |
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|
Abdul Rahim Suriya |
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| Karachi:
November 30, 2000 |
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Company Secretary |
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| NOTE: |
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| (a)
A member entitled to attend and vote at the Annual General Meeting, is
entitled to appoint another |
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| member
as proxy to attend and vote instead of him/her at the Meeting. |
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| (b)
The share transfer books of the Company will remain closed from December 15,
2000 to December |
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| 22,
2000 (both days inclusive). Transfers received in order at the Registered
Office of the Company |
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| upto
December 14, 2000 will be considered in time. |
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|
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| (c)
The instrument appointing a proxy must be received at Registered Office of
the Company not later |
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| than
48 hours before the time appointed for the Meeting. |
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| CHAIRMAN'S
REVIEW |
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| I
am pleased to present the Chairman's Review, along with the Annual Report and
the Audited Accounts |
|
| of
Spencer & Company (Pakistan) Limited for the year ended June 30, 2000. |
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| The
unprecedented economic recession experienced for the first time in the
history of our country has |
|
| definitely
made the year under Review difficult. I would certainly be doing an injustice
if I did not mention |
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| that
in recent days, there is a perceptible up-tick in economic and business
activity, which reflects the |
|
| underlying
confidence and is indicative of better future prospects. |
|
|
| The
income from rental has declined over last year. This is on account of the
sale of a portion of the Karachi |
|
| property
as recorded last year. The decline in income has also been registered because
the majority of the |
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| tenants
have been vacated from the Company's three properties. This has been done at
a cost which is |
|
| reflected
in the Accounts and through Court settlements and these costs are being
charged over a period |
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| of
time to the rental income as detailed below. Additionally, the buildings
being nearly vacant has resulted |
|
| in
the decline of this income. The purpose is to refurbish the properties to
bring them up to the standards |
|
| required
to extricate their full potential. After adjusting insurance, taxes,
conservancy charges and amortization |
|
| of
deferred charges (representing the charges to vacate tenants) from the
income, the net rental income is |
|
| in
the negative. This is actually not a cash loss to the Company since the
amortization of deferred charges |
|
| is
only a book entry. This, coupled with heavy depreciation charges and
financial expenses, has contributed |
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| to
the net loss inspite of strict control of administrative expenses which are
less then last year. |
|
|
| The
Auditors have sought to qualify your Company's advance to Spencer Powergen
Company of (Pakistan) |
|
| Limited,
which is a subsidiary of your Company, and whose Accounts are annexed hereto.
With this |
|
| Company
being a 100% subsidiary, our investment remains fully protected. The reason
for this has been |
|
| explained
in previous years. In the meantime the Writ Petition filed by your Company
against the cancellation |
|
| of
this Project by the Benazir Bhutto Government, is being continued to be
vigorously pursued. |
|
|
| Spencer-Pharma
recorded a decline in Sales, which was expected as explained last year, since
Pharmaceuticals |
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| were
also not immune to the down-turn. However, I am pleased to mention that the
bottom line has |
|
| improved,
but owing to a Book Entry to expense the advance tax paid the bottom line
remains the same |
|
| as
last year. This improvement is on account of strong tolling revenue generated
from the existing contracts |
|
| in
place. It is expected that further improvements will be realized by the
Ministry granting a price-increase, |
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| further
tolling products being obtained and owing to the reduction in the
distribution commission being paid. |
|
|
| I
am delighted to inform you that another leading Multi-national has selected
us to Toll Manufacture their |
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| products.
The Agreement is expected to be signed shortly. This will contribute
substantially to the bottom |
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| line
and it is expected that this Contract will be the real break-through that the
Management has been |
|
| working
to achieve. |
|
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| No
material changes or any other commitments have been made which would be
affecting the financial |
|
| position
of the Company between the end of the financial year and the date of this
Report. |
|
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| The
present Auditors. M/s. Ford, Rhodes, Robson Morrow retire and being eligible
offer themselves for |
|
| reappointment. |
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| On
behalf of your Directors and Management, I take this opportunity of thanking
all the Executives and Staff |
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| for
their ever loyal dedication, diligent hardwork and competence. I would also
like to express our gratitude |
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| to
our customers, bankers, distributors and advisers. |
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|
Byram D. Avari |
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|
Chairman & CEO |
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|
| REPORT
OF THE DIRECTORS |
|
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| In
submitting the Accounts of the Company and the Auditors' Report |
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| for
the year ended June 30, 2000 the Directors report that: |
|
|
|
|
Rupees |
|
|
| Loss
for the year before providing for |
|
| the taxation is |
|
|
(33,867,939) |
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| Less:
Provision for Taxation |
|
(1,839,841) |
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|
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|
------------------ |
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|
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|
(35,707,780) |
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| Add:
Amount brought forward from last year |
|
(29,069,085) |
|
|
|
|
------------------ |
|
| Accumulated
loss carried forward to reserves |
|
(64,776,865) |
|
|
========== |
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|
On behalf of the Board |
|
|
|
|
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|
Byram D. Avari |
|
| Karachi:
November 30, 2000 |
|
Chairman & C.E.O. |
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|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the, annexed balance sheet of SPENCER &
COMPANY (PAKISTAN) LIMITED as at June |
|
| 30,
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. |
|
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| 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)
provisions against (i) long term investments in the subsidiaries of the
company, aggregating to Rs. |
|
| 5.678
million and (ii) short and long term advances extended thereto, aggregating
to Rs. 532.058 |
|
| million,
at the end of the year have not been made in the accounts of the current year
for the reasons |
|
| disclosed
by the company in notes 4, 5 and 8 to the accounts. in our opinion, the above
referred |
|
| provisions
should be made in the accounts of the current year. Had the company made
these |
|
| provisions,
long term investments and short and long term advances would have reduced by
Rs. |
|
| 5.678
million and Rs. 532.058 million respectively, net loss for the year and
accumulated losses at |
|
| the
end of the year would have increased by Rs. 537.736 million and reserves at
the end of the year |
|
| would
have been converted into a deficit of Rs. 312.235 million at the end of the
current year: |
|
|
| (b)
in our opinion, proper books of accounts have been kept by the company as
required by the Companies |
|
| Ordnance, 1984 |
|
|
|
|
|
|
| (c)
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; |
|
|
|
|
| (d)
in our opinion, except for the effects on the financial statements of the
matters referred to in paragraph |
|
| (a)
above, 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 June
30, 2000 and |
|
| of
the loss, its cash flows and changes in equity for the year then ended; |
|
|
| (e)
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; and |
|
|
|
|
| (f)
without qualifying our opinion, we draw attention to the presentation of a
loan of Rs. 50 million from |
|
| a
bank under long term finances in note 14.1 to the accounts and related
disclosure therein, which |
|
| is
on the basis of a request made by the company for extention in the repayment
of the above |
|
| referred
loan. The said request is currently pending approval of the bank. |
|
|
|
|
Ford, Rhodes, Robson, Morrow |
|
| Karachi:
November 30, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
| TANGIBLE
FIXED ASSETS |
|
Note |
Rupees |
Rupees |
|
|
| Operating
fixed assets at cost less |
|
| accumulated
depreciation |
|
3 |
236,593,060 |
155,626,092 |
|
| LONG
TERM INVESTMENTS |
|
4 |
10,317,631 |
11,345,971 |
|
| LONG
TERM ADVANCES AND DEPOSITS |
5 |
48,543,089 |
52,789,995 |
|
| DEFERRED
COST |
|
6 |
2,770,000 |
3,120,553 |
|
|
|
| CURRENT
ASSETS |
|
| Trade debts |
|
7 |
1,289,971 |
1,360,378 |
|
| Advances,
deposits and other receivables |
8 |
494,328,564 |
511,200,494 |
|
| Cash
and bank balances |
|
9 |
235,933 |
5,254,770 |
|
|
------------------ |
------------------ |
|
|
495,854,468 |
517,815,642 |
|
|
------------------ |
------------------ |
|
| CAPITAL
AND RESERVES |
|
794,078,248 |
740,698,253 |
|
|
|
========== |
========== |
|
|
|
|
|
| Share Capital |
|
|
| Authorised |
|
10 |
25,000,000 |
25,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
10 |
15,423,010 |
15,423,010 |
|
| Reserves |
|
|
11 |
225,501,280 |
261,209,060 |
|
|
------------------ |
------------------ |
|
|
|
|
240,924,290 |
276,632,070 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
12 |
228,722,198 |
162,955,862 |
|
| LONG
TERM LOANS |
|
13 |
19,933,404 |
25,480,128 |
|
| LONG
TERM FINANCES |
|
14 |
94,070,970 |
85,000,000 |
|
|
|
| CURRENT
LIABILITIES |
|
| Current
maturities of long term loans and finances |
|
25,598,158 |
19,160,042 |
|
| Short term loan |
|
15 |
17,500,000 |
20,000,000 |
|
| Accrued
and other liabilities |
|
16 |
37,766,609 |
34,681,763 |
|
| Current
account with an associated undertaking |
17 |
120,047,254 |
107,255,812 |
|
| Dividends
payable |
|
18 |
9,515,365 |
9,532,576 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
210,427,386 |
190,630,193 |
|
| CONTINGENCY |
|
19 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
794,078,248 |
740,698,253 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
Byram D. Avari |
|
Col. (Rtd) Aziz Khan |
|
|
Chairman & C.E.O. |
|
Director |
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
|
|
|
|
| (LOSS)
/ INCOME |
|
20 |
(912,449) |
5,731,621 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
| Administrative
expenses |
|
21 |
(2,733,854) |
(3,696,539) |
|
| Depreciation |
|
|
(3,593,613) |
(3,566,156) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(6,327,467) |
(7,262,695) |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
LOSS |
|
|
(7,239,916) |
(1,531,074) |
|
| Financial
charges |
|
22 |
(26,628,023) |
(27,217,338) |
|
| Other
operating income |
|
|
-- |
554,180 |
|
|
|
|
------------------ |
------------------ |
|
| LOSS
BEFORE TAXATION |
|
|
33,867,939) |
(28,194,232) |
|
|
|
|
|
|
| TAXATION |
|
| Current |
|
23 |
(10,588) |
(28,650( |
|
| Prior |
|
24 |
(1,829,253) |
(1,186,577) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(1,839,841) |
(1,215,227) |
|
|
|
|
------------------ |
------------------ |
|
| NET
LOSS FOR THE YEAR |
|
|
35,707,780) |
(29,409,459) |
|
|
| (Accumulated
loss) / Unappropriated profit |
|
| brought forward |
|
|
(29,069,085) |
340,374 |
|
|
|
------------------ |
------------------ |
|
| ACCUMULATED
LOSSES CARRIED FORWARD |
(64,776,865) |
29,069,085) |
|
|
|
|
========== |
========== |
|
| LOSS
PER SHARE |
|
25 |
(23.15) |
(19.07) |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Byram D. Avari |
|
Col. (Rtd) Aziz Khan |
|
|
Chairman & C.E.O. |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
utilised by operations |
|
28 |
(3,831,985) |
(26,348,500) |
|
| Payment
of financial charges |
|
(22,318,654) |
(27,542,361) |
|
| Payment
of taxes |
|
(2,751,700) |
(1,457,509) |
|
| Long
term advances |
|
6,753,906 |
(11,755,889) |
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from operating activities |
|
(22,148,433) |
(67,104,259) |
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets |
|
|
-- |
(18,500) |
|
| Sale
proceeds of fixed assets |
|
|
300,000 |
119,000,000 |
|
| Deferred cost |
|
|
(900,000) |
(1,260,000) |
|
| Increase
in long term deposits |
|
|
(2,507,000) |
-- |
|
|
------------------ |
------------------ |
|
| Net
cash inflow from investing activities |
|
(3,107,000) |
117,721,500 |
|
|
|
------------------ |
------------------ |
|
|
|
(25,255,433) |
50,617,241 |
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long term loans |
|
|
(6,660,040) |
10,640,170 |
|
| Long
term finances |
|
|
26,622,405 |
100,000,000 |
|
| (Repayment)
/ Receipt of short term loan |
|
(12,500,000) |
(2 ,500,000) |
|
| Payment
of dividend |
|
(17,211) |
(660,836) |
|
| Repayment
of rent |
|
-- |
(23,512,554) |
|
| (Payment
to) / Receipt from an associated undertaking |
12,791,442 |
(81,381,750) |
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow from financing activities |
|
20,236,596 |
2,585,030 |
|
|
|
------------------ |
------------------ |
|
| NET
(DECREASE) / INCREASE IN CASH AND |
|
|
|
| CASH
EQUIVALENTS |
|
(5,018,837) |
53,202,271 |
|
| CASH
AND CASH EQUIVALENTS AT THE |
|
|
|
| BEGINNING
OF THE YEAR |
|
5,254,770 |
(47,947,501) |
|
| CASH
AND CASH EQUIVALENTS AT |
|
------------------ |
------------------ |
|
| THE
END OF THE YEAR |
|
29 |
235,933 |
5,254,770 |
|
|
========== |
========== |
|
|
|
Byram D. Avari |
|
Col. (Rtd) Aziz Khan |
|
|
Chairman & C.E.O. |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
Share Capital |
|
Capital Reserve |
|
Revenue
Reserves |
|
|
|
|
|
Issued, |
Profit arising 0n |
Premium on |
Capital |
General |
Unappropriated |
|
|
|
subscribed and |
sale of land and |
issue of |
redemption |
reserve |
profit / (loss) |
Total |
|
|
Paid-up |
building on prior |
ordinary |
reserve |
|
|
|
|
years |
shares |
|
|
|
|
|
| Balance
as at June 30, 1998 |
15,423,010 |
249,902 |
1,542,300 |
2,375,000 |
152,261,510 |
340,374 |
172,192,096 |
|
| Net
loss for the year ended June 30, 1999 |
-- |
-- |
-- |
-- |
-- |
(29,409,459) |
(29,409,459) |
|
| Realisation
of surplus on revaluation |
|
|
|
| of fixed assets |
|
-- |
-- |
-- |
-- |
133,849,433 |
-- |
133,849,433 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 1999 |
15,423,010 |
249,902 |
1,542,300 |
2,375,000 |
286,110,943 |
(29,069,085) |
276,632,070 |
|
|
|
|
|
|
| Net
loss for the year ended |
|
|
|
| June 30, 2000 |
|
-- |
-- |
-- |
-- |
-- |
(35,707,780) |
(35,707,780) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2000 |
15,423,010 |
249,902 |
1,542,300 |
2,375,000 |
286,110,943 |
(64,776,865) |
240,924,290 |
|
|
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| Spencer
and Company (Pakistan) Limited is a public limited company, quoted on the
Karachi Stock |
|
| Exchange.
The business of the company is property management and pharmaceutical
manufacturing |
|
| through
its subsidiary company and is a holding company. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
|
| 2.1
Basis of Preparation |
|
|
|
| These
accounts have been prepared in accordance with the requirements of the
Companies |
|
| Ordinance,
1984 and International Accounting Standards as applicable in Pakistan. |
|
|
| 2.2
Accounting convention |
|
|
| These
accounts have been prepared under the historical cost convention except land
and |
|
| building
which are stated at revalued amounts. |
|
|
|
|
| 2.3 Fixed assets |
|
|
|
| These
are stated at cost less accumulated depreciation except freehold and
leasehold |
|
| land
and buildings thereon which were revalued in 1974, 1994 and during the
current year. |
|
|
| Leasehold
land is amortised over the period of the lease. Depreciation on all other
assets |
|
| is
charged to income applying the reducing balance method whereby the cost of an
asset |
|
| is
written off over its estimated useful life. |
|
|
|
|
|
|
| Depreciation
is charged on additions during the year from the month in which the asset |
|
| is
put into use and in respect of disposals during the year upto the month in
which the |
|
| asset
is disposed of. |
|
|
|
|
|
