| Johnson & Phillips (Pakistan) Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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|
| Notice
of Meeting |
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|
| Chairman's
Review |
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| Auditor's
Report to the Members |
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| Consolidated
Balance Sheet |
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| Consolidated
Profit and Loss Account |
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| Statement
of changes in financial position |
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| Notes
to the Accounts |
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| Johnson
& Phillips (Pakistan) Limited |
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| Statement
U/S 237 (1)E of the Companies Ordinance, 1984 |
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| 10
Years Comparative Results |
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| Pattern
of share Holding |
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| Johnson
& Phillips Industries (Pakistan) Limited |
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| Johnson
& Phillips Transformers (Private) Limited |
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| J&P
EMO Pakistan (Private) Limited |
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| DIRECTORS |
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| RAJA
AHMED KHAN (CHAIRMAN) |
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| SHEHRYAR
ANWER SAEED (CHIEF EXECUTIVE) |
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| NADEEM
S. QURAISHI |
|
| MOHAMMAD
ASAD KHAN |
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| RIAZ
HAIDER RIZVI |
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| FAYAZ
LONGI - (NIT-NOMINEE) |
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| MS.
SARAH JAWED - (NIT-NOMINEE) |
|
| SHAMIM
A. NAIK - (MCB-NOMINEE) |
|
|
| COMPANY
SECRETARY |
|
| RIAZ
HAIDER RIZVI |
|
|
| AUDITORS |
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| Messrs
Ebrahim & Co. |
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| Chartered
Accountants |
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| SOLICITORS |
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| Messrs
Surridge & Beecheno |
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| BANKERS |
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| MUSLIM
COMMERCIAL BANK LIMITED |
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| UNITED
BANK LIMITED |
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| HABIB
BANK LIMITED |
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| REGISTERED
OFFICE |
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| C/10,.
South Avenue, S.I.T.E., Karachi-75700 |
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| Tel:
2560030 to 2560037 |
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| Telex:
20695 JPK PK |
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| Fax:
2564603 & 2563201 |
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| E-Mail:
test@johnson.khi.erum.com.pk |
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|
| REGIONAL
OFFICES: |
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| 5-B,
LDA Complex, |
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| Lawrence
Road, Garden View, Lahore |
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| Tel: 6314006 - 9 |
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| Telex:
44790 JPL PK |
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| Fax: 6368817 |
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| E-Mail:
johnson@jppl.brain.com.pk |
|
|
| ISLAMABAD
OFFICE: |
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| House
No. 10-A, Street 10, F-8/3, Islamabad |
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| Tel.:
294300 - 294854 |
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| Fax: 293550 |
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| E-Mail:
Abikhan@hotmail.com |
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|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
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|
| Notice
is hereby given that the adjourned thirty eight Annual General Meeting of
Johnson & Phillips (Pakistan) |
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| Limited
will be held on Tuesday August 8, 2000 at the Registered Office of the
Company at C-10, South Avenue, |
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| S.I.T.E.,
Karachi at 10.00 a.m. to transact the following business: |
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| 1.
To receive, consider and approve the audited accounts for the twelve months
ended 30 June 1999 and the |
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| reports
of Directors and Auditors thereon. |
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| 2.
To appoint Auditors and fix their remuneration. |
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|
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| 3.
To consider any other business with the permission of the Chair. |
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|
By the orders of the Board |
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| Karachi. |
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|
(RIAZ HAIDER RIZVI) |
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| Dated:
18 July, 2000 |
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Company Secretary |
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|
| Note: |
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|
| 1.
A member entitled to attend, speak and vote at the Annual General Meeting is
entitled to appoint to proxy |
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| who
must be a member of the Company and such proxy will have a right to 'attend,
speak and vote in place |
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| of
the member. The instrument appointing a proxy to be valid must be deposited
at the Registered Office of |
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| the
Company at least 48 hours before the time of the meeting buy stamped, signed
and witnessed. |
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|
|
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| 2.
Shareholders are requested to promptly notify the Company of any change in
their addresses. |
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| CHAIRMAN'S
REVIEW |
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|
| This
was one of the most difficult year in terms of business opportunity in the
industry. During this year the economy |
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| of
the country remained sluggish. We faced continues recession, in the country
and the financial crises in the public |
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| and
private sectors and lack of economic activity in the countey further
aggravated the situation. |
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| Due
to fewer orders from the utility companies and the private sector, the
engineering companies whose manufacturing |
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| facilities
remained partly utilised, resulting in very low prices, resulting in
continued losses due to inadequate profit |
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| margins
to cover selling and administrative expenses and financial charges. |
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| To
overcome the difficulties in such an environment our effort were directed
towards corporate restructuring, |
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| streamlining
production capacities, and taking other stringent measures to cut costs and
look towards new business |
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| avenues,
since it seems that manufacturing has a bleak future until and unless the
government realizes the crises the |
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| engineering
industry is facing. |
|
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| Priority
has never been given to Engineering industry, and no real incentives were
provided for the exports of |
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| engineering
goods. Engineering Capital goods industry has particularly suffered because
of lack of government support |
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| or
consistent policy. |
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| Support,
seems a far cry, when the government organizations are not even willing to
pay their bills on time. |
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| We
are trying to consolidate and plan for the future. A long term plan has been
made. We are hopeful of securing |
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| further
line for working capital, which would put us in a position to turn around the
Company. |
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|
| Sales
went down due to the inability of the Utility Companies to place orders or
pay their bills on time owning to |
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| their
financial crises and stagnant private sector business. |
|
|
| Losses
went up due to lower sales. The effect was further compounded because of high
financial charges. We are |
|
| making
efforts to reduce these debts and put in an efficient financial management
system. |
|
|
| The
margins were not satisfactory due to cut throat competition in the shrinking
market. Production capacities of all |
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| our
products remained substantially under utilised for major portion of the year. |
|
|
| Trade
debts increased because of nonpayment by the public sector customers owing to
Shortage of funds. |
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| The
company has an excellent reputation with good demand for its products. What
is required is a better business |
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| and
investment climate in the country to improve. |
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| The
Government needs to be more aware of some of the problems hindering progress
in the engineering sector and |
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| take
positive steps to improve the business climate. |
|
|
| We
can only wait and hope for this change, which in turn would improve out'
future and we can once again look |
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| forward
to profits. |
|
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| The
two subsidiary companies namely JPT and JPI have been closed to cut
operational costs. We are trying to sell |
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| some
of our assets and regulate a settlement with NDFC on outstanding of these
subsidiaries. |
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| Our
thanks to all our managers, officers, workers who have been working under
difficult conditions. |
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|
|
|
Raja Ahmed Khan |
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|
Sd/- |
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|
Chairman |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have examined the annexed consolidated financial statements comprising
consolidated balance sheet |
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| of
JOHNSON & PHILLIPS (PAKISTAN) LIMITED and its subsidiary companies as at
June 30, 1999 |
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| and
the related consolidated profit and loss account and consolidated cash flow
statement together with |
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| the
notes forming part thereof, for the year ended June 30, 1999. We have also
expressed separate |
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| opinions
on the financial statements of Johnson & Phillips (Pakistan) Limited and
the individual financial |
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| statements
of all the subsidiary companies. These financial statements are the
responsibility of the Holding |
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| Company's
management. Our responsibility is to express an opinion on these financial
statements |
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| based
on our examination. |
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|
| 2.
Our examination was made in accordance with generally accepted auditing
guidelines and accordingly |
|
| included
such tests of accounting records and such other auditing procedures as we
considered necessary |
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| in
the circumstances. |
|
|
| 3.
The subsidiaries of the group, Johnson and Phillips Industries (Pakistan)
Limited and Johnson and |
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| Phillips
Transformers (Private) Limited ceased production in July 1997 and February
1998 respectively. |
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| The
accumulated losses of the Group aggregating to Rs. 285.172 million have wiped
out the equity and |
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| current
liabilities aggregating to Rs. 462.465 million exceed the current assets by
Rs. 235.362 million. |
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| These
factors together with the information given in Note: 1.2 indicate that there
is substantial doubt |
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| regarding
the ability of the Group to continue as a going concern. Consequently,
adjustments may be |
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| required
to the recorded asset amounts and classification of liabilities. |
|
|
| 4.
The Group is contesting a suit filed by National Development Finance
Corporation claiming recovery of |
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| Rs.
161.554 million. No provision has been made in these accounts for liquidated
damages amounting |
|
| to
Rs. 31.707 million included in the amount of this claim. |
|
|
| 5.
In the absence of information regarding realisable value of several balances
under stores and spares, |
|
| stock
in trade, trade debts, advances to suppliers, deposits and other receivables
aggregating to Rs. |
|
| 107.171
million we have not been able to confirm that the amount would be realised at
carrying values. |
|
|
| 6.
In the absence of supports and information and explanations, balances
amounting to Rs. 7.942 million |
|
| are
being carried forward as "Receivable from Ex-management". In our
opinion provision should be |
|
| made
for the loss that would arise in the event this amount is not recovered as
explained in Note: 1.3. |
|
|
| 7.
Except for the matters referred in paras 3 to 6 above, in our opinion the
consolidated financial statements |
|
| examined
by us present fairly the financial position of Johnson & Phillips
(Pakistan) Limited and its |
|
| subsidiary
as at June 30, 1999 and the results of their operations for the year then
ended. |
|
|
| KARACHI |
|
| DATED: |
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|
CHARTERED ACCOUNTANTS |
|
|
|
| CONSOLIDATED
BALANCE SHEET AS AT JUNE 30, 1999 |
|
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|
1999 |
1998 |
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|
|
NOTE |
(Rs. 000 's) |
(Rs. 000 's) |
|
| SHARE
CAPITAL AND RESERVE |
|
|
| Authorised
capital |
|
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|
| 8,000,000
ordinary shares of |
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|
| Rs. 10/- each |
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|
80,000 |
80,000 |
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|
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|
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|
------------------- |
------------------- |
|
| Issued,
subscribed and paid-up capital |
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4 |
54,500 |
54,500 |
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| Capital
reserves - share premium |
|
|
29,727 |
29,727 |
|
| Revenue
reserve - general |
|
|
23,073 |
23,073 |
|
| Profit
and loss account - (adverse balance) |
|
|
(285,172) |
(196,416) |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
(177,872) |
(89,116) |
|
| MINORITY
INTEREST |
|
5 |
-- |
-- |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
|
44,842 |
44,842 |
|
| LONG
TERM LOAN |
|
6 |
7,577 |
9,741 |
|
|
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|
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|
| LIABILITIES
AGAINST ASSETS |
|
|
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| SUBJECT
TO FINANCE LEASES |
|
7 |
3,900 |
2,054 |
|
| DEFERRED
LIABILITIES |
|
8 |
4,986 |
5,205 |
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|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term loans and running finance |
|
9 |
257,499 |
193,641 |
|
| Current
portion of long term liabilities |
|
10 |
9,580 |
10,624 |
|
| Creditors,
accrued and other liabilities |
|
11 |
192,787 |
147,066 |
|
| Dividend
- unclaimed |
|
|
2,599 |
2,599 |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
462,465 |
353.93 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
12 |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
345,898 |
326,656 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
13 |
118,034 |
133,534 |
|
| DEFERRED
TAXATION |
|
|
-- |
2,374 |
|
|
|
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
|
| Security
deposits |
|
|
761 |
2,286 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and loose tools |
|
14 |
3,108 |
3,167 |
|
| Stock in trade |
|
15 |
104,580 |
114,376 |
|
| Trade debts |
|
16 |
68,480 |
26,120 |
|
| Advances
and deposits |
|
17 |
32,688 |
30,856 |
|
| Prepayments
and other receivables |
|
18 |
16,226 |
9,874 |
|
| Cash
and bank balances |
|
19 |
2,021 |
4,069 |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
|
227,103 |
188,462 |
|
|
|
|
|
------------------- |
------------------- |
|
|
|
|
|
345,898 |
326,656 |
|
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
| KARACHI |
|
|
CHIEF EXECUTIVE |
|
|
|
|
|
|
| DATED: |
|
|
DIRECTOR |
|
|
|
|
|
| CONSOLIDATED
PROFIT AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
NOTE |
(Rs.000's) |
(Rs.000's) |
|
|
|
|
| Sales
and services (Net) |
|
20 |
103,568 |
117,257 |
|
| Cost
of sales and services |
|
21 |
102,162 |
121,352 |
|
|
|
|
|
| Gross
profit/(1oss) |
|
|
1,406 |
(4,095) |
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|
|
|
| Fixed
factory expenses of non-operating subsidiaries |
22 |
4,279 |
3,905 |
|
| Administrative
and selling expenses |
|
23 |
32,288 |
37,768 |
|
| Amortisation
of pre-operating expenses |
|
|
-- |
1,818 |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
36,567 |
43,491 |
|
|
|
|
------------------- |
------------------- |
|
| Operating (loss) |
|
|
(35,161) |
(47,586) |
|
| Other income |
|
24 |
4,624 |
6,655 |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
(30,537) |
(40,931) |
|
|
|
|
------------------- |
------------------- |
|
| Research
and development expenses |
|
|
109 |
1,164 |
|
| Financial
charges |
|
25 |
54,345 |
44,891 |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
54,454 |
' 46,055 |
|
|
|
|
| Net
loss before taxation and minority interest |
|
(84,991) |
(86,986) |
|
| Taxation |
|
|
|
|
| - Current |
|
510 |
584 |
|
| - Prior year |
|
-- |
1,034 |
|
| - Deferred |
|
3,255 |
(1,660) |
|
|
|
------------------- |
------------------- |
|
|
|
3,765 |
(42) |
|
|
|
------------------- |
------------------- |
|
| Net
loss before minority interest |
|
(88,756) |
(86,944) |
|
| Minority
interest in loss for the year |
|
3,044 |
5,297 |
|
|
|
------------------- |
------------------- |
|
|
|
(85,712) |
(81,647) |
|
| Minority
share in excess of the Capital transferred to |
|
| Profit
& Loss Account of the Group |
|
|
(3,044) |
(5,297) |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
(88,756) |
(86,944) |
|
| Accumulated
(losses) brought forward |
|
|
(196,416) |
(109,472) |
|
|
|
|
------------------- |
------------------- |
|
| Accumulated
(losses) carried over to balance sheet |
|
|
(285,172) |
(196,416) |
|
|
|
|
========== |
========== |
|
| Loss
per share - Basic and Diluted |
|
26 |
(16.29) |
(15.95) |
|
|
|
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
| KARACHI |
|
|
CHIEF EXECUTIVE |
|
| DATED: |
|
|
DIRECTOR |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| CONSOLIDATED
(CASH FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
(Rs.000's) |
(Rs.000's) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Net
(loss) for the year |
|
|
(84,99l |
(86,986) |
|
| Adjustments
for items not involving |
|
|
|
|
| Movement
of funds |
|
|
|
|
| Depreciation |
|
|
9,450 |
12,560 |
|
| Provision
for staff gratuity (Net) |
|
|
(870) |
(169) |
|
| Amortisation
of loose tools |
|
|
130 |
285 |
|
| Amortisation
of pre-operating expense |
|
|
-- |
1,818 |
|
| Profit
on sale of fixed assets |
|
|
(780) |
(4,540) |
|
| Financial
charges |
|
|
54,345 |
44,891 |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
(22,716) |
(32,141) |
|
|
|
|
| (Increase)/Decrease
in current assets |
|
|
| Consumable
stores |
|
|
|
(71) |
3,382 |
|
| Stock in trade |
|
|
|
|
9,796 |
40,213 |
|
| Installation
work in progress |
|
|
|
-- |
974 |
|
| Trade debts |
|
|
|
|
(42,360) |
(4,745) |
|
| Advances
and deposits |
|
|
|
(4,686) |
1,790 |
|
| Prepayments
and other receivables |
|
|
(6,249) |
496 |
|
|
|
|
------------------- |
------------------- |
|
|
|
|
(43,570) |
42,110 |
|
|
|
|
| Increase/(Decrease)
in current liabilities |
|
|
| Creditors,
accrued and other liabilities |
|
2,837 |
(29,331) |
|
| Net
cash from operating activities before |
|
|
|
|
| Tax
and financial charges |
|
|
(63,449) |
(19,362) |
|
| Tax refunded |
|
|
2,243 |
2,255 |
|
| Financial
charges paid |
|
|
(11,693) |
(19,764) |
|
|
|
|
|
|
------------------- |
------------------- |
|
| Net
(decrease) in cash from operating activities |
|
|
(72,899) |
(36,871) |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Addition
to fixed assets and capital |
|
|
|
|
| work
in progress |
|
|
|
(35) |
(938) |
|
| Proceeds
from sale of fixed assets |
|
|
|
7,765 |
5,136 |
|
| Long
term deposit |
|
|
|
1,525 |
881 |
|
|
|
|
------------------- |
------------------- |
|
| Net
cash from investing activities |
|
|
|
9,255 |
5,079 |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Long term loan |
|
|
-- |
(6,200) |
|
| Repayment
of liabilities against |
|
|
|
|
| finance leases |
|
|
(2,262) |
(4,840) |
|
| Short
term loans and running finances |
|
|
63,858 |
42,483 |
|
| Dividend paid |
|
|
-- |
53 |
|
|
|
|
------------------- |
------------------- |
|
| Net
cash from financing activities |
|
|
61,596 |
31,496 |
|
|
|
|
------------------- |
------------------- |
|
| Net
(decrease) in cash and cash equivalents |
|
|
(2,048) |
(296) |
|
| Cash
and cash equivalents at the beginning of the year |
|
4,069 |
4,365 |
|
|
|
|
------------------- |
------------------- |
|
| Cash
and cash equivalents at the end of the year |
|
|
2,021 |
4,069 |
|
|
|
|
========== |
========== |
|
|
| KARACHI |
|
|
CHIEF EXECUTIVE |
|
| DATED: |
|
|
DIRECTOR |
|
|
|
| NOTES
TO THE CONSOLIDATED ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
NATURE AND STATUS OF BUSINESS |
|
|
|
|
|
| 1.1
Johnson and Phillips (Pakistan) Limited was incorporated in
Pakistan as public limited company and its shares |
|
| are
quoted on Karachi Stock Exchange. The Company is principally engaged in the
manufacture, installation and |
|
| sale
of electrical equipments. |
|
|
|
|
|
|
| Subsidiaries
of Johnson & Phillips (Pakistan) Limited are public and private limited
companies and are engaged |
|
| in
the business of manufacturing and sale of electrical and mechanical
equipments and appliances and participation |
|
| in
turnkey engineering industrial projects. |
|
|
|
|
|
| The
following subsidiaries have been consolidated in the accounts of the Holding
Company: |
|
|
| Subsidiaries |
|
Company |
Group |
Operating status |
|
|
|
Status |
Holding |
|
|
|
|
|
| M/s
Johnson & Phillips Industries |
Public |
100% |
Ceased production in |
|
| (Pakistan)
Limited |
|
Limited |
|
July, 1997 |
|
| M/s
Johnson & Phillips Transformers |
Private |
70% |
Ceased production in |
|
| (Private) Limited |
|
Limited |
|
February, 1998 |
|
| M/s
Johnson & Phillips EMO |
|
Private |
51% |
Operating |
|
| (Private) Limited |
|
Limited |
|
|
| 1.2
The ability of the Group to continue as a going concern is dependent on the
following significant factors: |
|
|
|
|
| a.
negotiate a package with the lenders for restructuring existing debt
obligations on reasonable terms |
|
| b.
negotiate adequate working capital facilities for short term so that orders
in hand can be serviced |
|
| c.
successfully contest the suit filed by National-Development Finance
Corporation |
|
| d.
negotiate profitable contracts with the utility companies who are the primary
customers of the Group. |
|
|
|
|
| The
Management is in the process of negotiating a package with the lenders for
rescheduling current overdue |
|
| debts
on more favourable terms. Subsequent to balance sheet date they have
successfully negotiated additional |
|
| working
capital facilities to service the current orders in hand. As regards future
business prospects, because |
|
| of
adverse economic conditions of the industry in general and the utility
companies in particular, the |
|
| Management
is of the opinion that they may not be able to procure contracts at desired
level of profitability |
|
| in
the foreseeable future. |
|
|
| Under
these circumstance the Management is of the opinion that they have no
alternative but to streamline the |
|
| asset
base of the Group by disposing surplus assets at market values and using the
proceeds to clear interest |
|
| bearing
and other current debts. The plan of action in this regard is being reviewed
for implementation. |
|
|
| The
financial statements are prepared on going concern basis and, therefore, do
not include any adjustments |
|
| relating
to the recoverability and classification of recorded asset amounts and
classification of liabilities. |
|
|
| 1.3
On August 31, 1997 there was a change in management of a subsidiary company.
The Ex-Management was |
|
| r |
