| Crescent Boards Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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|
| Company
Information |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Notice
of Meeting |
|
| Pattern
of Holdings of Shares |
|
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
| Farzana Munaf |
|
|
(Nominee NIT) |
|
| Humayun
Maqbool |
|
| Khalid Bashir |
|
|
| Maqbul
Ahmad |
|
(Chief Executive) |
|
| Muhammad
Shafi |
|
(Nominee NIT) |
|
| Nadeem
Maqbool |
|
| Riaz Masood |
|
|
| S.
Shaukat Ali Rizvi |
|
(Nominee NBP) |
|
| Saifullah Khan |
|
|
(Nominee PICIC) |
|
|
| Company
Secretary |
|
| Javaid Hussain |
|
|
| Auditors |
|
| M.
Yousuf Adil Saleem & Company |
|
| Chartered
Accountants |
|
|
| Legal Advisor |
|
| Mohsin
Tayebali & Sons |
|
|
|
| Registered
Office |
|
| 104-
Shadman- 1, |
|
| Lahore - 54000 |
|
| Tel
: (042) 757-6482, 757-9641 |
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| Fax
: (042) 756-0963 |
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|
| Factory Units |
|
|
| Board Division |
|
Faisalabad |
|
| Chemical
Division |
Sheikhupura |
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| Textile Division |
|
Nooriabad and Sheikhupura |
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|
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| DIRECTORS'
REPORT |
|
|
| The
Company suffered a loss of Rs. 41.6 million for the period ended September
30, 1999 due to a down |
|
| turn
in the textile and board Sectors as well as overall economic instability in
the country. However, the |
|
| second
half of the year yielded significantly better results as compared to the
first six months when the |
|
| company
had reported a pre-tax loss of Rs. 37.1 million. |
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|
Rupees in millions |
|
|
|
1998-99 |
1997-98 |
Increase/ |
|
|
|
Rs. |
% of Sales |
Rs. |
% of Sales |
(Decrease) |
|
|
|
|
| Sales |
|
865.5 |
100.0% |
943.3 |
100.0% |
-8% |
|
| Cost of Sales |
|
(798.7) |
92.3% |
(844.9) |
89.6% |
-5% |
|
|
|
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
|
| Gross Profit |
|
66.8 |
7.7% |
98.4 |
10.4% |
-32% |
|
| Admin.
& Selling |
(42.3) |
4.9% |
(56.6) |
6.0% |
-25% |
|
|
|
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
|
| Operating
Profit |
24.5 |
2.8% |
41.8 |
4.4% |
-41% |
|
| Other Income |
|
2.2 |
0.3% |
1.5 |
0.2% |
47% |
|
| Financial
Charges |
(68.4) |
7.9% |
(83.5) |
8.9% |
-18% |
|
| Profit/(Loss)
Before Taxes |
(41.6) |
4.8% |
(40.2) |
4.3% |
4% |
|
| Taxation |
|
(4.6) |
0.5% |
(6.0) |
0.6% |
-23% |
|
|
|
----------------- |
----------------- |
----------------- |
----------------- |
----------------- |
|
| Profit/(Loss)
After Taxes |
(46.2) |
5.3% |
(46.2) |
4.9% |
0% |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
| The
Management continued its policy of focusing on quality and enforcing strict
cost controls. Sales were |
|
| lower
by 8% due to reduced textile prices and underutilized capacity in the board
division. As a result the |
|
| gross
margin was 7.7% as compared to 10.4% last year. Due to the thin operating
margins, the |
|
| Management
focussed on reducing other expenses. Administrative and selling expenses as a |
|
| percentage
of sales were reduced from 6.0% to 4.9% and financial charges were reduced
from 8.9% of |
|
| sales to 7.9%. |
|
|
| Board
and Chemical Divisions |
|
| Shortage
of raw material has not allowed the board division to operate at capacity and
over the years the |
|
| production
of both particle board and urea formaldehyde has declined. The production
figures for the last |
|
| three
years were as follows: |
|
|
| Board
and Chemical Divisions |
|
|
|
| Production
Data, Metric Tons |
1998-99 |
Increase/ |
1997-98 |
Increase/ |
1996-97 |
|
|
|
|
(Decrease) |
|
(Decrease) |
|
|
|
|
|
| Particle
Board (from Bagasse) |
-- |
-100% |
1,725 |
67% |
5,193 |
|
|
|
|
| Particle
Board (from Wood) |
500 |
-- |
400 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
|
| Total |
|
500 |
76% |
2,125 |
59% |
5,193 |
|
|
|
|
|
|
========== |
========== |
========== |
========== |
========== |
|
| Urea
Formaldehyde |
112 |
-82% |
625 |
80% |
3,157 |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
| During
the year under review, total production of particleboard was 76% less than
1997-98. The lower |
|
| production
of particle board affected the production of urea formaldehyde, which is used
in the production |
|
| of
particle board. The summarized financial results for the Board and Chemical
Divisions for the last two |
|
| years
were as follows: |
|
|
| Board
and Chemical Divisions |
|
|
|
|
|
1998-99 |
1997-98 |
Increase/ |
|
|
|
Rs. |
% of Sales |
Rs. |
% of Sales |
(Decrease) |
|
|
|
|
| Sales |
|
13.8 |
100% |
51.9 |
100% |
-73% |
|
| Cost of Sales |
|
(31.5) |
228% |
(49.7) |
96% |
-37% |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Gross Profit |
|
(17.7) |
128% |
2.2 |
4% |
nm |
|
| Admin.
& Selling |
(12.5) |
91% |
(15.1) |
29% |
-17% |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Operating
Profit |
(30.2) |
219% |
(12.9) |
25% |
134% |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
| Future
Outlook |
|
| Continuing
shortages of raw material and deteriorating market conditions had restricted
the ability of the |
|
| Management
to improve the results of the Board Division. However, the Management has
developed a |
|
| restructuring
plan which entails reduction of financial charges through sale of unutilized
assets and |
|
| arrangements
with the banks for injection of working capital. Once the rescheduling
package is in place, |
|
| the
operations of the division will start to turn around and we expect a better
performance in the next |
|
| financial year. |
|
|
| Textile
Division |
|
| The
Textile Division earned an operating profit of Rs. 54.7 million which was the
same level as the last |
|
| year
even though the prices of yarn were lower. The summarized financial results
for the Textile Division |
|
| for
the last two years were as follows: |
|
|
| Textile
Division |
|
|
| Summarized
Financial Results |
|
|
|
|
|
1998-99 |
1997-98 |
Increase/ |
|
|
|
Rs. |
% of Sales |
Rs. |
% of Sales |
(Decrease) |
|
|
|
|
| Total Sales |
|
851.7 |
100% |
891.4 |
100% |
-4% |
|
| Cost of Sales |
|
(767.1) |
90% |
(795.2) |
89% |
-4% |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Gross Profit |
|
84.6 |
10% |
96.2 |
11% |
-12% |
|
| Admin.
& Selling |
(29.8) |
3% |
(41.5) |
5% |
-28% |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Operating
Profit |
54.8 |
6% |
54.7 |
6% |
0% |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
| Owing
to reduced price levels, sales were lower by 4% but operational efficiencies
and cost controls |
|
| resulted
in a small reduction in the gross margin and the same operating margin as
last year. The gross |
|
| margin
was 10% in 1998-1999 as compared to 11% in 1997-1998 and the operating margin
was 6% in |
|
| the
year under review which was the same as last year. |
|
|
| Future
Outlook: The current cotton crop has brought prices to international levels.
Realistic raw material |
|
| prices
combined with improved yarn demand will result in improved profitability for
the company. The |
|
| Management
is optimistic about the prospects and will focus on using the improved cash
flows to reduce |
|
| debt
and improve profitability. |
|
|
| Millennium
Bug |
|
| The
millennium bug did not affect any of the company's manufacturing and
management systems. |
|
|
| Auditors |
|
| The
present auditors, Messrs. Yousuf Adil and Company, retire, and being eligible
offer themselves for |
|
| re-appointment. |
|
|
| Appreciation |
|
| The
Management wishes to place on record its appreciation for the hard work and
devotion of its workers |
|
| and
the invaluable advice and support of the Company's Directors, shareholders
and bankers. |
|
|
|
|
MAQBUL AHMAD |
|
|
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of CRESCENT BOARDS LIMITED as at
September 30, |
|
| 1999
and the related profit and loss account and statement of changes in financial
position (cash flow |
|
| statement)
together with the notes forming part thereof, for the year ended on that date
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 and, after due verification thereof, 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, |
|
| except
for non provision for diminution in the value of short term investments of
Rs.17,931,429/- |
|
| as
stated in Note 19, the balance sheet, profit and loss account and statement
of changes in |
|
| financial
position together with the notes forming part thereof, give the information
required by the |
|
| Companies
Ordinance, 1984in the manner so required and respectively give a true and
fair view |
|
| of
the state of the Company's affairs as at September 30, 1999 and of the loss
and the changes |
|
| in
financial position for the year the ended; and |
|
|
| d.
in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
| Karachi: |
|
|
M. YOUSUF ADIL SALEEM & CO., |
|
| Date:
March 03, 2000 |
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
share capital |
|
|
|
| 10,000,000
Ordinary shares of Rs.10/- each |
|
|
100,000,000 |
100,000,000 |
|
|
|
|
| Issued,
subscribed and paid up capital |
|
3 |
88,699,120 |
88,699,120 |
|
| Capital Reserve |
|
|
58,555,261 |
5,855,526 |
|
| Accumulated
loss |
|
|
(323,587,715) |
(277,369,461) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(229,033, 069) |
(182,814,815) |
|
| SURPLUS
ON REVALUATION |
|
|
|
|
| OF
FIXED ASSETS |
|
4 |
289,653,353 |
289,653,353 |
|
|
|
|
|
| LONG
TERM LOANS |
|
5 |
252,682,844 |
259,129,624 |
|
|
|
|
|
| LIABILITIES
AGAINST ASSETS |
|
|
|
| SUBJECT
TO FINANCE LEASE |
|
6 |
12,525 |
627,433 |
|
|
|
|
|
| DEFERRED
LIABILITY |
|
|
|
| Financial
charges |
|
7 |
18,816,999 |
25,633,999 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term borrowings |
|
8 |
177,642,954 |
220,350,050 |
|
| Current
portion of long term liabilities |
|
9 |
46,821,236 |
12,291,887 |
|
| Creditors,
accrued and other liabilities |
|
10 |
204,846,932 |
195,357,386 |
|
| Taxation |
|
|
15,439,407 |
41,414,808 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
444,750,529 |
469,414,131 |
|
| CONTINGENCIES |
|
11 |
|
|
|
|
------------------ |
------------------ |
|
|
|
776,883,181 |
861,643,725 |
|
|
|
|
========== |
========== |
|
|
| OPERATING
FIXED ASSETS |
|
12 |
489,104,763 |
515,128,169 |
|
| LONG
TERM INVESTMENTS |
|
13 |
296,500 |
296,500 |
|
| LONG
TERM ADVANCES |
|
200,300 |
424,500 |
|
| LONG
TERM DEPOSITS |
|
1,544,709 |
1,645,393 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
14 |
30,098,417 |
30,198,995 |
|
| Stock in trade |
|
15 |
82,935,345 |
87,303,487 |
|
| Trade debts |
|
16 |
50,979,382 |
63,100,308 |
|
| Loans
and advances |
|
17 |
47,358,115 |
87,916,486 |
|
| Deposits
and prepayments |
|
18 |
2,343,086 |
3,967,445 |
|
| Short
term investments |
|
19 |
47,244,477 |
47,244,477 |
|
| Other
receivables |
|
20 |
15,359,931 |
14,984,493 |
|
| Cash
and bank balances |
|
21 |
9,418,156 |
9,433,472 |
|
|
|
|
------------------ |
------------------ |
|
|
285,736,909 |
344,149,163 |
|
|
------------------ |
------------------ |
|
|
776,883,181 |
861,643,725 |
|
|
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 36 form an integral part of these accounts. |
|
|
|
|
|
|
|
MAQBUL AHMAD |
|
NADEEM MAQBOOL |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
22 |
865,461,606 |
943,318,464 |
|
| Cost
of goods sold |
|
23 |
(798,674,150) |
(844,917,021) |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
66,787,456 |
98,401,443 |
|
|
|
|
|
|
| Operating
expenses |
|
|
|
|
| Administration |
|
24 |
25,038,979 |
26,489,698 |
|
| Selling |
|
25 |
17,226,763 |
30,102,817 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(42,265,742 |
(56,592,515) |
|
|
|
|
------------------ |
------------------ |
|
| Operating
profit |
|
|
24,521,714 |
41,808,928 |
|
| Other income |
|
26 |
2,239,456 |
1,524,926 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
26,761,170 |
43,333,854 |
|
| Financial
charges |
|
27 |
(68,397,291) |
(83,538,919) |
|
|
|
|
------------------ |
------------------ |
|
| Loss
before taxation |
|
|
(41,636,121) |
(40,205,065) |
|
| Taxation |
|
28 |
(4,582,133) |
(5,959,606) |
|
|
|
|
------------------ |
------------------ |
|
| Loss
after taxation |
|
|
(46,218,254) |
(46,164,671) |
|
| Accumulated
loss brought forward |
|
|
(277,369,461) |
(231,204,790) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
loss carried forward |
|
|
(323,587,715) |
(277,369,461) |
|
|
|
|
========== |
========== |
|
| Earning
per share |
|
29 |
(5.21) |
(5.20) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 36 form an integral part of these accounts |
|
|
|
MAQBUL AHMAD |
|
NADEEM MAQBOOL |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
|
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
|
Rupees |
Rupees |
|
| A.
CASH FROM OPERATING ACTIVITIES |
|
|
| Loss
before taxation |
|
(41,636,121) |
(40,205,065) |
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
31,108,624 |
33,902,205 |
|
| Gain
on disposal of assets |
|
(598,215) |
15,282 |
|
| Financial
charges |
|
68,397,291 |
83,538,919 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
profit before working capital changes |
|
57,271,579 |
77,251,341 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
| Changes
in working capital |
|
|
| (Increase)/decrease
in current assets |
|
|
| Stores.
spares and loose tools |
|
100,578 |
1,063,481 |
|
| Stock in trade |
|
4,368,142 |
19,498,143 |
|
| Trade debts |
|
12,120,926 |
5,070,633 |
|
| Loans
and advances |
|
13,767,925 |
(10,708,002) |
|
| Deposits
.and prepayments |
|
1,624,359 |
(1,343,860) |
|
| Other
receivables |
|
(375,438) |
(5,346,987) |
|
| Increase/(decrease)
in current liabilities |
|
|
|
| Creditors
accrued and other liabilities |
|
(13,735,905) |
2,162,855 |
|
|
|
|
------------------ |
------------------ |
|
|
|
17,870,587 |
10,396,263 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
75,142,166 |
87,647,604 |
|
| Financial
charges paid |
|
(45,171,840) |
(39,659,572) |
|
| Taxes paid |
|
(3,767,088) |
(6,442,736) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities |
|
26,203,238 |
41,545,296 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
| B.
CASH USED IN INVESTING ACTIVITIES |
|
|
| Proceeds
from disposal of fixed assets |
|
1,144,274 |
19,700 |
|
| Fixed
capital expenditure |
|
(5,631,277) |
(1,727,950) |
|
| Long
term advances |
|
224,200 |
(162,616) |
|
| Long
term deposits |
|
100,684 |
-- |
|
|
|
------------------ |
------------------ |
|
| Net
cash used in investing activities |
|
(4,162,119) |
(1,870,866) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
| C.
CASH USED IN FINANCING ACTIVITIES |
|
|
| Repayment
of long term loans |
|
(10,792,005) |
(39,792,029) |
|
| Finance
lease obtained |
|
-- |
497,000 |
|
| Repayment
of lease liability |
|
(1,031,589) |
(1,521,727) |
|
| Short
term borrowings |
|
(10,232,841) |
4,012,992 |
|
|
|
------------------ |
------------------ |
|
| Net
cash used in financing activities |
|
(22,056,435) |
(36,803,764) |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Net
(decrease)/increase in cash and bank balances (A+B+C) |
|
(15,316) |
2,870,666 |
|
| Cash
and bank balances at the beginning of the year |
|
9,433,472 |
6,562,806 |
|
|
|
------------------ |
------------------ |
|
| Cash
and bank balances at the end of the year |
|
9,418,156 |
9,433,472 |
|
|
|
|
|
|
========== |
========== |
|
|
|
MAQBUL AHMAD |
|
NADEEM MAQBOOL |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| NOTES
TO THE ACCOUNTS SEPTEMBER 30, 1999 |
|
|
| 1.
STATUS AND ACTIVITIES |
|
|
| 1.
The Company is limited by shares incorporated in Pakistan on August 06, 1977
under |
|
| Companies
Act, 1913 (repealed by Companies Ordinance, 1984) and quoted at Stock |
|
| Exchanges
in Pakistan. The principal business of the Company is to manufacture |
|
|
| and
sale of yarn at yarn spinning units at Nooriabad Industrial Area, District
Dadu |
|
| in
the province of Sindh and at Sheikhupura in the province of Punjab and |
|
|
| manufacture,
purchase, produce and trade in particle and hard boards, furniture, urea |
|
| formaldehyde
and formalin at Board unit at Faisalabad and Sheikhupura in the |
|
|
| province
of Punjab. |
|
|
|
|
| 1.2
In order to improve the operating results and financial health of the company
and to |
|
| continue
as going concern. The management has approved various plans for the |
|
| Company,
including rescheduling/deferment of long term installments as well as short |
|
| term
dues. Management has approached lenders for transfer of shod term dues to
long |
|
| term
and for availing the unutilized amount to improve the liquidity position of
the |
|
| Company.
Further more the Company has full support from sponsors/group companies |
|
| which
is proved form the credit facilities provided by them. During the year the
textile |
|
| units
produced better results as compared to last year and the loss during the year
is |
|
| mainly
due to the discontinuation of operation by the Board unit. The management is |
|
| taking
steps to revive the Board unit in respect of which various plan are under |
|
| consideration.
Furthermore, the textile industry is reviving and management feels that the |
|
| coming
years will bring better results for the company. |
|
|
| 1.3
During the year only 1% of the installed capacity was utilised in respect of
Board unit. |
|
| This
was mainly due to |
