| Knoll Pharmaceuticals Limited Pakistan |
|
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
| Contents |
|
|
| Notice
of meeting |
|
|
|
| Company
information |
|
|
|
| Results
at a glance |
|
|
|
| Five
years at a glance |
|
|
|
| Report
of the Directors |
|
|
|
| Auditors'
report to the members |
|
|
|
| Balance Sheet |
|
|
|
| Profit
and loss account |
|
| Cash
flow statement |
|
|
|
| Notes
to the accounts |
|
|
|
| Pattern
of shareholdings |
|
|
|
| Ten
years at a glance |
|
|
|
| Comparison
of results |
|
|
|
|
|
| Notice
of Meeting |
|
|
| Notice
is hereby given that the Fifty-second Annual |
|
| General
Meeting of Knoll Pharmaceuticals Limited will |
|
| be
held at Hotel Sheraton, Karachi, on Thursday, |
|
| June
29, 2000 at 11.00 a.m., to transact the |
|
| following
business: |
|
|
|
|
| Ordinary
Business |
|
|
| 1.
To receive, consider and adopt the Balance Sheet |
|
| and
Profit & Loss Account together with the Report |
|
| of
the Directors and .the Auditors' Report for the |
|
| year
ended December 31, 1999. |
|
|
|
| 2.
To approve dividend for the year ended December |
|
| 31, 1999, as recommended
by the Directors. |
|
|
| 3.
To appoint Auditors and to fix their remuneration. |
|
|
|
|
| Special
Business |
|
|
| 4.
To approve increase in Authorised Capital of the |
|
| Company
and consequent amendments in the |
|
| Memorandum
and Articles of Association. |
|
|
| 5.
To approve issue of Bonus Shares in the proportion |
|
| of
two shares for every one share held. |
|
|
|
|
By Order of the Board |
|
|
|
|
|
|
|
|
|
ABDUL BAQY KHAN |
|
| Karachi:
June 4, 2000 |
|
Director & Secretary |
|
|
| Notes: |
|
|
| 1.
The Share Transfer Books of the Company will |
|
| remain
closed from June 16 to June 29, 2000 (both |
|
| days inclusive). |
|
|
| 2.
A member entitled to attend and vote at the |
|
|
| meeting
may appoint a proxy to attend and vote |
|
|
| instead
of him/her. Proxies must be deposited at |
|
|
| the
Company's Registered Office not less than 48 |
|
|
| hours
before the time for holding the meeting. A |
|
|
| member
shall not be entitled to appoint more than |
|
|
| one proxy. |
|
|
|
|
| CDC
Account Holders will further have to follow |
|
| the
undermentioned guidelines as laid down in |
|
| Circular
I dated January 26, 2000 issued by the |
|
| Securities
and Exchange Commission of Pakistan: |
|
|
|
|
|
| A.
For Attending the Meeting: |
|
|
| i)
In case of individuals, the account holder or |
|
| sub-account
holder and/or the person whose |
|
| securities
are in group account and their |
|
| registration
details are uploaded as per the |
|
| Regulations,
shall authenticate his identity by |
|
| showing
his original National Identity Card (NIC) |
|
| or
original passport at the time of attending the |
|
| meeting.
In addition they are required to bring |
|
| their
participation ID numbers and account numbers. |
|
|
|
|
| ii)
In case of corporate entity, the Board of |
|
| Directors'
resolution/power of attorney with |
|
| specimen
signature of the nominee shall be |
|
| produced
(unless it has been provided earlier) at |
|
| the
time of the meeting. |
|
|
| B.
For Appointing Proxies: |
|
| i)
In case of individuals, the account holder or |
|
| sub-account
holder and/or the person whose |
|
| securities
are in group account and their |
|
| registration
details are uploaded as per the |
|
| Regulations,
shall submit the proxy form as per |
|
| the
above requirement. |
|
|
| ii)
The proxy form shall be witnessed by two |
|
| persons
whose names, addresses and NIC |
|
| numbers
shall be mentioned on the form. |
|
|
| iii)
Attested copies of NIC or the passport of the |
|
| beneficial
owners and the proxy shall be |
|
| furnished
with the proxy form. |
|
|
| iv)
The proxy shall produce his original NIC or |
|
| original
passport at the time of the meeting. |
|
|
| v)
In case of corporate entity, the Board of |
|
| Directors'
resolution/power of attorney with |
|
| specimen
signature of the proxy holder shall be |
|
| submitted
(unless it has been provided earlier) |
|
| alongwith
proxy form to the Company. |
|
|
| 3.
A statement under Section 160 of the Companies |
|
| Ordinance,
1984, pertaining to Special Business, is |
|
| annexed
to the Notice of the Meeting. |
|
|
| Statement
Pertaining to Special Business and |
|
| Related
Draft Resolutions |
|
|
| 1.
Increase in Authorised Capital and amendment |
|
| in
Memorandum and Articles of Association: |
|
|
|
| The
shareholders' approval is required for the |
|
| increase
in Authorised Capital and amendment in |
|
| Memorandum
and Articles of Association of the |
|
| Company,
as recommended by the Directors, and in |
|
| this
regard to pass the following Special Resolution: |
|
|
| "Resolved
that the authorised capital of the |
|
| Company
be and is hereby increased from |
|
| Rs.
100,000,000 divided into 10,000,000 ordinary |
|
| shares
of Rs. 10 each to Rs. 500,000,000 divided |
|
| into
50,000,000 ordinary shares of Rs 10 each |
|
| and
in that connection the figures "Rs. |
|
| 500,000,000
divided into 50,000,000 shares" be |
|
| substituted
for the figures "Rs. 100,000,000 |
|
| divided
into 10,000,000 shares" respectively |
|
| appearing
in clause V of the Memorandum of |
|
| Association
and Article 5 of the Articles of |
|
| Association
of the Company." |
|
|
| 2.
Issue of Bonus Shares: |
|
|
| The
shareholders' approval is required for the issue |
|
| of
Bonus Shares, as recommended by the |
|
| Directors,
and in this regard to pass the following |
|
| Ordinary
Resolution: |
|
|
|
| "Resolved
that a sum of Rs. 153,657,000 out of |
|
| the
Company's reserves, Rs 67,224,938 from |
|
| Share
Premium Reserve and Rs. 86,432,062 from |
|
| Revenue
Reserve, be capitalised for issuing fully |
|
| paid
shares of Rs. 10 each as Bonus Shares to |
|
| be
allotted to those shareholders whose names |
|
| appear
in the members' register on June 29, 2000 |
|
| in
the proportion of two shares for every one share |
|
| held,
the said Bonus Shares to rank pari passu |
|
| with
the existing shares of the Company, |
|
| excepting
that these shares shall not be eligible |
|
| for
the dividend for the year ended December 31, 1999." |
|
|
| "Further
resolved that Bonus Shares entitlement |
|
| in
fractions be sold by the Secretary on the stock |
|
| exchange
and the proceeds be donated to Edhi |
|
| Welfare Trust." |
|
|
|
| Company
information |
|
|
| Board
of Directors |
|
| A. H. Hashemy |
|
Chairman |
|
| Juergen Koenig |
|
Managing Director |
|
| Peter Wakeford |
|
|
| Pir Ali Gohar |
|
(Alternate A. Gohar) |
|
| Samir Ahmed |
|
| Abdul
Baqy Khan |
|
| Arshad
Rahim Khan |
|
|
| Secretary |
|
| Abdul
Baqy Khan |
|
|
| Auditors |
|
| A.
F. Ferguson & Co |
|
| Chartered
Accountants |
|
|
| Solicitors |
|
| Orr,
Dignam & Co |
|
|
| Bankers |
|
| ANZ
Grindlays Bank Limited |
|
| Emirates
Bank International |
|
| Standard
Chartered Bank |
|
| The
Hongkong and Shanghai Banking Corporation Limited |
|
| United
Bank Limited |
|
|
| Registered
Office & Factory |
|
| Plot
No. 13, Sector No. 20, |
|
| Korangi
Industrial Area, |
|
| Karachi |
|
|
| Registrars
and Share Transfer Office |
|
| Ferguson
Associates (Pvt) Ltd. |
|
| l-A,
State Life Building, |
|
| I.I.
Chundrigar Road, |
|
| Karachi |
|
|
|
| Results
at a glance |
|
|
|
|
1999 |
1998 |
|
|
|
(Rupees
'000) |
|
|
| Sales |
|
|
719,492 |
619,047 |
|
| Profit before tax |
|
|
123,011 |
109,091 |
|
| Profit after tax |
|
|
85,699 |
100,896 |
|
| Dividend |
|
|
153,657 |
76,828 |
|
| Shareholders'
equity |
|
|
453,349 |
521,307 |
|
| Earnings
per share after tax |
|
|
11.15 |
13.13 |
|
| Number
of employees |
|
|
430 |
431 |
|
|
|
| Report
of the Directors |
|
|
| Your
Directors are pleased to present their report |
|
| together
with the accounts of the Company for the |
|
| year
ended December 31, 1999. |
|
|
| Financial
Highlights |
|
(Rs '000) |
|
|
|
|
| Profit
before taxation |
|
123,011 |
|
| Less: Taxation |
|
|
37,312 |
|
|
|
|
------------------ |
|
| Profit
after taxation |
|
85,699 |
|
| Add:
Transfer from Revenue Reserve |
|
67,958 |
|
|
|
|
------------------ |
|
| Available
for Appropriation |
|
153,657 |
|
|
| Appropriation |
|
| Proposed
dividend at Rs 20 |
|
|
|
| (1998:
Rs 10) per share |
|
153,657 |
|
|
------------------ |
|
| Unappropriated
profit |
|
-- |
|
|
========== |
|
|
| Earnings
per share |
|
| The
after-tax earnings per ordinary share of Rs 10 was |
|
| Rs
11.15 (1998: Rs 13.13). |
|
|
| Business
Review |
|
| Sales
of your Company at Rs 719.5 million for the year |
|
| have
grown by 16% over previous year. Since there is no |
|
| increase
in pharmaceutical product price for more than |
|
| three
years, the entire growth in sales reflects volume |
|
| increase.
The above industry growth reflects improved |
|
| performance
of all major brands, launch of line extensions |
|
| of
Cefanol and Arinac and improved sales force contact |
|
| with
target customers. The market destabilised for a short |
|
| period
after the overthrow of the previous government but |
|
| now
it shows signs of stability. |
|
|
| Operating
profit at Rs 79 million for the year, has declined |
|
| by
6% inspite of healthy sales growth. Cost of production |
|
| continues
to increase due to inflation, Rupee devaluation |
|
| and
sales tax on packaging material; whereas, prices of |
|
| our
products remain unchanged. The decline in profit |
|
| would
have been much more if the management of your |
|
| Company
had not taken cost optimisation measures |
|
| earlier
without compromising on product quality. The much |
|
| needed
investment in promotional activities has been |
|
| made
to fuel sales growth and maintain leadership of our |
|
| major brands. |
|
|
| Profit
before tax has increased by Rs 14 million over last |
|
| year
reflecting mainly higher income on account of |
|
| exchange
gain on foreign currency deposits. |
|
|
| Employees |
|
| The
Directors would like to thank all the employees for |
|
| their
continuing support and hard work during the year. |
|
|
| Good
union/management relations will help to ensure |
|
| achievement
of our common Company objectives. |
|
|
| Dividends |
|
| Due
to declining profitability of your Company and low |
|
| future
investment plans, reflecting current government |
|
| policies,
the Directors have recommended dividends from |
|
| the
profits of prior years so that the shareholders can |
|
| continue
to get some return on their investment. It is |
|
| important
for the shareholders that the return is viewed in |
|
| absolute
terms if the capital base was not enhanced in |
|
| the past. |
|
|
| * Cash Dividend |
|
| The
Directors have recommended a dividend at the |
|
| rate
of Rs 20 per share for the year ended December |
|
| 31,
1999, as against Rs 10 per share paid in the |
|
| previous
year. If approved, the proposed dividend will |
|
| amount
to Rs 153.7 million as compared to Rs 76.8 |
|
| million
paid last year. |
|
|
| * Bonus Issue |
|
| The
Directors have recommended issuing of fully paid |
|
| ordinary
shares of Rs 10 each as bonus share to be |
|
| allotted
in the proportion of two shares for every one |
|
| share
held by the shareholders (i.e. 200%) for the year |
|
| ended
December 31, 1999. If approved a sum of Rs |
|
| 153,657,000
will be capitalised out of Company |
|
| reserves. |
|
|
| Prospects |
|
| The
present government will have to take immediate |
|
| remedial
actions to encourage further investments in the |
|
| pharmaceuticals
industry through deregulation (as the |
|
| world
is moving towards it) in product pricing/registration; |
|
| as
well as, consistent and transparent policies. The law |
|
| relating
to price adjustment (SRO 1038) has not been |
|
| implemented
since November 1997, whereas the overall |
|
| cost
escalation for the pharmaceutical industry in |
|
| Pakistan
has been approximately 45% since the last |
|
| adjustment
in 1996. Registration of the latest new |
|
| products
from the West are inordinately delayed, thus |
|
| depriving
the people of Pakistan from these hi-tech |
|
| products.
Consequently it is leading to smuggling of these |
|
| products
into the country, as well as, loss to the |
|
| government
revenue. |
|
|
| Shareholders
of the pharmaceutical companies in |
|
| Pakistan,
both local and foreign, are sensitive towards |
|
| return
on their investments and may look for better |
|
| opportunities
in Pakistan or other countries. The question |
|
| here
is not only how much the country will lose in the |
|
| future,
but also how much the country has already lost in |
|
| the past. |
|
|
| The
Directors and all employees of your Company are |
|
| committed
to create value for the shareholders by |
|
| providing
the customers with advance health care |
|
| solutions.
Profitability of your Company is under serious |
|
| pressure
and will decline in future if the pharmaceutical |
|
| industry
in Pakistan is not allowed adjustment for the |
|
| increase
of the cost of production. |
|
|
| Subsequent
Events |
|
| No
other material changes or commitments, which could |
|
| affect
the financial position of the Company, have |
|
| occurred
between the end of the financial year and the |
|
| date
of this review. |
|
|
| Parent
Company |
|
| The
Company is a subsidiary of Lupharma, GmbH, which |
|
| is
a wholly owned subsidiary of Knoll AG (a BASF group |
|
| Company);
these companies are incorporated in |
|
| Germany. |
|
|
| Auditors |
|
| The
present Auditors, A F Ferguson & Co, Chartered |
|
| Accountants,
retire and, being eligible, offer themselves |
|
| for
reappointment. |
|
|
| Millennium
issue |
|
| The
time and money spent by the Company to overcome |
|
| theY2K
problem paid off and the Company sailed |
|
| smoothly
into the new millennium without any |
|
| complication
in any operational activity. |
|
|
| Shareholding |
|
| The
pattern of shareholdings is detailed on page 30. |
|
|
|
|
By Order of the Directors |
|
|
|
|
|
|
|
|
|
JUERGEN KOENIG |
|
| Karachi:
February 29, 2000 |
|
Managing Director |
|
|
|
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed Balance Sheet of Knoll |
|
| Pharmaceuticals
Limited as at December 31, 1999 and |
|
| the
related Profit and Loss Account and Cash Flow |
|
| Statement,
together with the notes forming part thereof, |
|
| for
the year then ended and we state that we have |
|
| obtained
all the information and explanations which to the |
|
| best
of our knowledge and belief were necessary for the |
|
| purposes
of our audit 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, |
|
|
| the
Balance Sheet, Profit and Loss Account and |
|
|
| Cash
Flow Statement, together with the notes |
|
|
| forming
part thereof, give the information required |
|
|
| by
the Companies Ordinance, 1984 in the manner |
|
|
| so
required and respectively give a true and fair |
|
|
| view
of the state of the Company's affairs as at |
|
|
| December
31, 1999 and of the profit and cash |
|
|
| flows
for the year then ended; and |
|
|
|
|
|
| (d)
in our opinion zakat deductible at source under |
|
|
| the
Zakat and Ushr Ordinance, 1980 was |
|
|
| deducted
by the Company and deposited in the |
|
|
| Central
Zakat Fund established under section 7 |
|
|
| of
that Ordinance. |
|
|
|
|
|
|
A. F. Ferguson & Co |
|
| Karachi:
March 1, 2000 |
|
Chartered Accountants |
|
|
|
|
| Balance
Sheet as at December 31, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
(Rupees
'000) |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
capital |
|
|
|
| 10,000,000
(1998:10,000,000) ordinary |
|
|
| shares
of Rs 10 each |
|
100,000 |
100,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital - |
|
3 |
76,828 |
76,828 |
|
| Reserves |
|
4 |
376,521 |
444,479 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
453,349 |
521,307 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
5 |
9,306 |
8,629 |
|
|
|
|
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
|
| Short-term
running finances utilised |
|
|
|
| under
mark-up arrangements |
|
6 |
15,445 |
14,114 |
|
|
|
|
|
| Creditors,
accrued and other liabilities |
|
7 |
77,251 |
94,435 |
|
| Taxation |
|
|
38,383 |
33,005 |
|
| Proposed
dividend |
|
|
153,657 |
76,828 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
284,736 |
218,382 |
|
| COMMITMENTS |
|
8 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
747,391 |
748,318 |
|
|
|
|
========== |
========== |
|
|
| FIXED ASSETS |
|
|
|
| Operating
assets |
|
9 |
139,590 |
137,145 |
|
| Capital
work-in-progress |
|
10 |
1,103 |
4,918 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
140,693 |
142,063 |
|
|
|
|
|
|
| LONG-TERM
INVESTMENTS |
|
|
-- |
75,000 |
|
| LONG-TERM
LOANS |
|
11 |
2,839 |
2,899 |
|
| LONG-TERM
DEPOSITS AND PREPAYMENTS |
|
12 |
3,220 |
4,280 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Spares |
|
13 |
5,157 |
1,306 |
|
| Stock-in-trade |
|
14 |
183,437 |
154,393 |
|
| Trade debts |
|
15 |
4,399 |
8,389 |
|
| Loans
and advances |
|
16 |
4,795 |
4,792 |
|
| Deposits
and prepayments |
|
17 |
12,497 |
14,000 |
|
| Other
receivables |
|
18 |
2,414 |
11,874 |
|
| Investments |
|
19 |
367,818 |
315,686 |
|
| Cash
and bank balances |
|
20 |
20,122 |
13,636 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
600,639 |
524,076 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
747,391 |
748,318 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
JUERGEN KOENIG |
|
ABDUL BAQY KHAN |
|
|
Chief Executive |
|
Director |
|
|
|
|
| Profit
and loss account |
|
| For
the year ended December 31, 1999 |
|
