| Reckitt & Colman of 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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| Review of the Year |
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| Report of the Directors |
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| Auditors'
Report to the Members |
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| Profit
and Loss Account |
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| Balance Sheet |
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| Statement
of Changes in Equity |
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| Cash Flow Statement |
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| Notes to the Accounts |
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| Comparison of Results |
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| Pattern of Shareholding |
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| List of Products |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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| K.J. Dinshaw |
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Chairman |
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| Tariq Ikram |
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Chief Executive |
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| Brian Bentley |
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(Alternate: |
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Ishtiaqur Rehman) |
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| Freddy Caspers |
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(Alternate: |
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S. Aslam Ali) |
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| M. Waddington |
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(Alternate: |
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Nadir A. Jamal) |
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| Rasheed Y. Chinoy |
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| Yusuf G. Mandviwalla |
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| Sayed
Muzafar Ali Shah |
(NIT) |
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| COMPANY
SECRETARY |
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| Nadir A. Jamal |
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| BANKERS |
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| ANZ Grindlays Bank |
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| Bank of America |
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| Citibank N.A. |
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| Habib Bank Limited |
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| Hong
Kong & Shanghai Banking Corporation |
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| Muslim
Commercial Bank Ltd. |
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| Prime
Commercial Bank Ltd. |
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| Standard
Chartered Bank |
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| AUDITORS |
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| A. F. Ferguson & Co. |
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| SOLICITORS |
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| Surridge & Beecheno |
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| REGISTRARS |
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| Ferguson
Associates (Pvt) Ltd. |
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| State Life Building 1-A |
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| I.I. Chundrigar Road |
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| P.O. Box 4716 |
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| Karachi 74000 |
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| Tel:
2426682-6, 2426711-5 |
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| REGISTERED
AND HEAD OFFICE |
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| 1lth
Floor, State Life Building No. 11, |
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| Abdullah
Haroon Road, |
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| Karachi - 74400. |
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| Factories: |
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| F-18, |
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| Sindh
Industrial Trading Estates Ltd. |
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| Karachi. |
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| Plot: 5, 6, 23 and 24 |
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| Sector 16 |
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| Korangi
Industrial Area, |
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| Karachi. |
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| C-36, |
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| Sindh
Industrial Trading Estates Ltd. |
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| Karachi. |
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| A-44, |
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| Sindh
Industrial Trading Estates Ltd. |
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| Karachi. |
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| NOTICE
OF MEETING |
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| NOTICE
is hereby given that the Forty-Ninth Annual General Meeting of the Company
will be held at 10:30 a.m. |
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| on
Thursday, March 30, 2000 at Hotel Regent Plaza, Sharea Faisal, Karachi, to
transact the following business: |
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| 1.
To receive and consider the Audited Accounts for the year ended December 31,
1999 and the Reports of |
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| the
Directors and Auditors thereon. |
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| 2.
To appoint auditors and to fix their remuneration. |
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| BY
ORDER OF THE BOARD |
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| February 23, 2000 |
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|
NADIR A. JAMAL |
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| Karachi |
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|
Company Secretary |
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| NOTES: |
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| 1.
The Share Transfer Books of the Company will remain closed from March 21,
2000 to March 30, 2000, |
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| both days inclusive. |
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| 2.
A Member entitled to attend the Annual General Meeting is entitled to appoint
a proxy to attend and vote |
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| instead
of him/her. No person shall act as proxy (except for a corporation) unless
he/she is entitled to be |
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| present
and vote in his/her own right. The completed proxy form must be received at
the Registered Office |
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| of
the Company not less than 48 hours before the Meeting. |
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| 3.
Members are requested to communicate to the Company any change in their
addresses. |
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| CDC
Account Holders will further have to follow the undermentioned guidelines as
laid down in |
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| Circular
I dated January 26, 2000 issued by the Securities and Exchange Commission of
Pakistan: |
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| A.
For Attending the Meeting: |
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| i) In case of individuals, the account
holder or sub-account holder and/or the person whose securities are in |
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| group account and their registration
details are uploaded as per the Regulations, shall authenticate his |
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| identity by showing his original National
Identity Card (NIC) or original passport at the time of attending |
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| the meeting. (CDC account holders are also
requested to bring their participant ID numbers and account |
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| numbers in CDS). |
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| ii)
In case era corporate entity, the Board of Directors' resolution/power of
attorney with specimen signature |
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| of
the nominee shall be produced (unless it has been provided earlier) at the
time of the meeting. |
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| B. For Appointing Proxies: |
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| i)
In case of individuals, the account holder or sub-account holder and/or the
person whose securities are in |
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| group
account and their registration details are uploaded as per the Regulations,
shall submit the proxy |
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| form
as per the above requirement (note 2 above). |
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| ii)
The proxy form shall be witnessed by two persons whose names, addresses and
NIC numbers shall be |
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| mentioned on the form. |
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| iii)
Attested copies of NIC or the passport of the beneficial owners and the proxy
shall be furnished with the |
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| proxy form. |
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| iv)
The proxy shall produce his original NIC or original passport at the time of
the meeting. |
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| v)
In the case of a corporate entity, the Board of Directors' resolution/power
of attorney with specimen |
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| signature
of the proxy holder shall be submitted (unless it has been provided earlier)
alongwith proxy |
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| form to the Company. |
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| REVIEW
OF THE YEAR |
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| Trading Performance |
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| The
Year 1999 has been an exceptionally challenging year for the Company.
Recessionary conditions continued, |
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| consumer
purchasing power kept on declining and significant reduction of distributor
and trade stock levels of |
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| the
Company's products was made to fall in line with consumer demand levels. As a
consequence, the Company's |
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| Sales
decreased by 21.1% over the previous year, with almost all major categories
showing a contraction. |
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| Given
the social, economic and political realities, and being unable to wait any
further, the Company developed |
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| and
put into effect a major cost saving programme mainly through restructuring
and right-sizing. Unfortunately |
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| this
leads to a sizeable reduction in the number of employees in the business.
Whilst the benefits of this programme |
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| are
significant and will impact from year 2000, the element of staff severance
costs which have been charged to |
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| the
1999 Accounts comes to a total of Rs.146.5 M. |
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| Due
to the above factors together with inflation, and because now for almost
three years no price increases have |
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| been
allowed for pharma products by the Government, the Company incurred an
Operating Loss of Rs. 170.3 M |
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| (Rs.
34.8 M loss as at end June 1999) against an Operating Profit of Rs.252.1 M
last year and the peak Operating |
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| Profit
delivered of Rs.293.0 M in 1997. After-tax Profit for the year was negative
Rs.215.7 M (Rs. 69.6 M |
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| negative
as at June 30, 1999) against a favourable Rs.112.8 M in 1998. The Board,
therefore, does not recom- |
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| mend
payment of dividend in view of the adverse results. |
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| During
the year, the Government directed the Company to reduce the selling prices of
some of its major decontrolled |
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| drugs;
the Company filed a suit against this order in the High Court of Sindh. The
Honourable High Court |
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| of
Sindh granted a temporary stay in favour of the Company which is still
continuing. The issue of Sales Tax on |
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| Dettol
antiseptic liquid pertaining to prior periods is pending with the Sales Tax
Tribunal. Unfortunately inspite |
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| of
a large number of hearings, the delaying tactics of the Sales Tax department
have prevented a final resolution |
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| of
the issues. The matter continues to be aggressively pursued. A new demand
raised by the Sales Tax authorities |
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| during
the year on Dettol of a total value of Rs.241 M was contested and
successfully quashed. However, based |
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| on
a totally untennable view the Department has re-raised a part of this demand
which is currently being contested. |
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| Year
2000 & Computers |
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| The
Company entered the Millennium with all hardware, plant, systems and
processes intact and unaffected. |
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| Major Shareholders |
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| During
the year Reckitt & Colman plc, UK, the Company's major shareholder, and
Benckiser N.V., the Netherlands, |
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| merged
to form a new Company - Reckitt Benckiser plc, UK. |
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| Prospects
& Development |
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| The
benefits of business restructuring and the aggressive cost of goods reduction
programme which has been |
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| initiated
are expected to noticeably impact the Company financials in the year 2000 and
thereafter. The Pharma |
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| price
freeze and smuggling under the Afghan Transit Trade Agreement, however, are
the major issues and continue |
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| to
remain the major barriers to growth. These are in Government's powers to
remove and the Company will |
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| continue
to press for the redress which it so urgently needs. |
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|
| Directors |
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| Mr.
J. C. L. de Mel resigned in May 1999 and Dr. Brian Bentley was appointed in
his place. Mr. de Mel joined the |
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| Board
in 1977 and until a few years ago was the Regional Director based in London
responsible for Asia. The |
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| Directors
are very grateful for the significant contribution which Mr. de Mel made
towards the growth and development |
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| of
the business. Mr. Razi-ur-Rahman Khan, nominee of National Investment Trust
Limited resigned in |
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| April
1999 and was replaced by Dr. Amjad Waheed. Dr. Waheed resigned in July 1999
and was replaced by Sayed |
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| Muzafar
Ali Shah. The Board acknowledges the valuable services of the outgoing
directors and welcomes the |
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| incoming directors. |
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|
| K. J. DINSHAW |
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|
TARIQ IKRAM |
|
| Chairman |
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|
Chief Executive |
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| February 23, 2000 |
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|
| REPORT
OF THE DIRECTORS |
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| The
Directors submit their Report together with the audited Statement of Accounts
for the year ended December 31, |
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| 1999. |
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|
| Business Review |
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| The
annexed Review deals with the year's activities and the Directors of the
Company endorse the contents thereof. |
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| Financial Results |
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| The
results for the year are as follows: |
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|
|
Rupees'000 |
|
|
| Net
loss for the year before taxation |
|
(212,769) |
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| Provision for taxation |
|
|
(2,906) |
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|
------------------- |
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| Loss after taxation |
|
|
(215,675) |
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| Unappropriated
profit from previous year |
269 |
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|
------------------- |
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| Loss
carried forward to next year |
|
(215,406) |
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|
=========== |
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| Earnings per share |
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| The
"earnings per share" numbers are provided at page 7 and 31. |
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| Pattern
of Shareholding |
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| The
pattern of shareholding is provided at page 32. The Company's holding company
is Reckitt Benckiser plc (formerly |
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| Reckitt
& Colman plc) which is incorporated in the U.K. |
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|
| Directors |
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| Directors
were last elected for a period of three years at the Annual General Meeting
held on April 29,1999. |
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|
|
| Auditors |
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| The
Company's auditors Messrs A.F. Ferguson & Co., retire and offer
themselves for re-appointment. |
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|
BY ORDER OF THE BOARD |
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|
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|
TARIQ IKRAM |
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| February 23, 2000 |
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|
Chief Executive |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed balance sheet of Reckitt & Colman of Pakistan
Limited as at December 31, 1999 |
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| and
the related profit and loss account, statement of changes in equity 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; |
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|
|
| (b) in our opinion: |
|
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn |
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| up
in conformity with the Companies Ordinance, 1984 and are in 'agreement with
the books of |
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| 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 |
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| balance sheet, profit and loss account,
statement of changes in equity and the cash flow statement, together |
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| with the notes forming part thereof, give
the information required by the Companies Ordinance, 1984 |
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| in the manner so required and respectively
give a true and fair view of the state of the company's affairs |
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| as at December 31, 1999 and of the loss,
changes in equity and cash flows for the year then ended; |
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| and |
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|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was deducted by |
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| the
company and deposited in the Central Zakat Fund established under Section 7
of that Ordinance. |
|
|
| A. F. Ferguson & Co. |
|
| Chartered
Accountants |
|
| Karachi: March 3, 2000 |
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|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 1999 |
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|
Note |
Year |
Period |
|
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|
ended |
ended |
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|
December |
December |
|
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|
31, 1999 |
31, 1998 |
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|
(Rupees in thousand) |
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| Sales |
|
3 |
1,773,884 |
2,247,447 |
|
| Cost of sales |
|
3 |
( 1,474,116) |
( 1,605,051 ) |
|
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|
|
-------------------- |
-------------------- |
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|
|
|
299,768 |
642,396 |
|
| Selling
and administrative expenses |
|
3 |
(470,081) |
(390,273) |
|
|
|
|
-------------------- |
-------------------- |
|
| Operating (loss)/profit |
|
3 |
(170,313) |
252,123 |
|
| Other income |
|
6 |
6,801 |
4,458 |
|
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
(163,512) |
256,581 |
|
| Financial expenses |
|
7 |
(34,857) |
(29,217) |
|
| Other charges |
|
8 |
(14,400) |
(27,530) |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
(49,257) |
(56,747) |
|
|
|
|
|
|
| (Loss)/Profit
before taxation |
|
|
(212,769) |
199,834 |
|
| Taxation |
|
9 |
(2,906) |
(87,068) |
|
|
|
|
-------------------- |
-------------------- |
|
| (Loss)/Profit
after taxation |
|
|
(215,675) |
112,766 |
|
| Unappropriated
profit brought forward |
|
|
269 |
5,855 |
|
|
|
|
-------------------- |
-------------------- |
|
| (Accumulated
loss)/Profit available for appropriation |
|
(215,406) |
118,621 |
|
|
|
|
|
| Appropriations |
|
|
|
|
|
|
| Transfer to
general reserve |
|
|
-- |
(35,000) |
|
|
| Interim
dividend Nil ( 1998: 13%) |
|
-- |
(41,676) |
|
| Final
dividend Nil (1998: 13%) |
|
|
-- |
(41,676) |
|
|
|
|
|
-------------------- |
-------------------- |
|
|
-- |
(118,352) |
|
|
-------------------- |
-------------------- |
|
| (Accumulated
loss)/Unappropriated profit carried forward |
|
(215,406) |
269 |
|
|
=========== |
=========== |
|
| (Loss)/Basic
earnings per share |
|
10 |
Rs. (6.72) |
Rs. 3.52 |
|
|
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| TARIQ IKRAM |
|
|
RASHEED Y. CHINOY |
|
| Chief Executive |
|
|
Director |
|
|
|
|
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|
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|
|
| BALANCE
SHEET AS AT DECEMBER 31, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
(Rupees in thousand) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Share capital |
|
| Authorised |
|
|
| 50,000,000
ordinary shares of Rs 10 each |
|
|
500,000 |
500,000 |
|
|
|
|
=========== |
=========== |
|
| Issued,
subscribed and paid-up |
|
11 |
320,587 |
320,587 |
|
| Reserves |
|
12 |
397,300 |
397,300 |
|
| (Accumulated
loss)/Unappropriated profit |
|
(215,406) |
269 |
|
|
-------------------- |
-------------------- |
|
|
502,481 |
718,156 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
13 |
1,408 |
1,408 |
|
| DEFERRED
LIABILITY - Staff Gratuity |
|
14 |
92,522 |
93,102 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
| Short-term
finance under mark-up arrangements |
15 |
39,760 |
185,367 |
|
| Creditors,
accrued and other liabilities |
|
16 |
519,981 |
563,901 |
|
| Dividends |
|
17 |
1,566 |
65,043 |
|
|
|
-------------------- |
-------------------- |
|
|
|
561,307 |
814,311 |
|
| COMMITMENTS |
|
18 |
|
|
-------------------- |
-------------------- |
|
|
|
1,157,718 |
1,626,977 |
|
|
|
=========== |
=========== |
|
|
|
|
|
| FIXED ASSETS |
|
| - Tangible |
|
| Operating assets |
|
19 |
305,293 |
325,768 |
|
| Capital
work-in-progress - at cost |
|
20 |
7,688 |
19,773 |
|
| - Intangible |
|
|
|
|
| Goodwill |
|
21 |
6,000 |
9,000 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
318,981 |
354,541 |
|
| DEFERRED COST |
|
|
22 |
12,000 |
18,000 |
|
| DEFERRED
TAXATION |
|
23 |
36,040 |
8,946 |
|
| LONG-TERM LOANS |
|
|
24 |
6,382 |
6,644 |
|
| LONG-TERM
DEPOSITS AND PREPAYMENTS |
25 |
4,493 |
5,741 |
|
|
|
|
|
|
|
| CURRENT ASSETS |
|
|
|
|
| Stores,
spares and loose tools |
|
26 |
5,217 |
4,527 |
|
| Stock-in-trade |
|
|
27 |
284,217 |
328,560 |
|
| Trade debts |
|
|
28 |
359,737 |
653,151 |
|
| Loans and advances |
|
|
29 |
7,331 |
13,427 |
|
| Deposits
and short-term prepayments |
|
30 |
24,998 |
39,666 |
|
| Other receivables |
|
|
31 |
5,282 |
35,022 |
|
| Taxation |
|
|
|
42,805 |
3,699 |
|
| Short-term investment |
|
|
32 |
2,000 |
2,000 |
|
| Cash
and bank balances |
|
33 |
48,235 |
153,053 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
779,822 |
1,233,105 |
|
|
-------------------- |
-------------------- |
|
|
|
|
1,157,718 |
1,626,977 |
|
|
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| TARIQ IKRAM |
|
|
RASHEED Y. CHINOY |
|
| Chief Executive |
|
|
Director |
|
|
|
|
|
|
|
|
|
|
|
| STATEMENT
OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 1999 |
|
|
|
|
|
Capital Reserves |
|
|
|
Share |
Preincor- |
Share |
General |
Unappro- |
Total |
|
|
capital |
poration |
premium |
Reserves |
priated |
|
|
|
|
profit |
|
profit |
|
|
|
|
|
(Rupees in
thousand) |
|
|
| Balance
as on January 3, 1998 |
320,587 |
41 |
486 |
361,773 |
5,855 |
688,742 |
|
|
|
|
|
| Profit for the year |
|
-- |
-- |
-- |
-- |
112,766 |
112,766 |
|
|
|
|
|
| Transfer
during the year |
-- |
-- |
-- |
35,000 |
(35,000) |
-- |
|
|
|
|
|
| Dividends |
|
|
|
(83,352) |
'(83,352) |
|
|
|
--------------------- |
--------------------- |
--------------------- |
--------------------- |
--------------------- |
--------------------- |
|
| Balance
as on December 31, 1998 |
320,587 |
41 |
486 |
396,773 |
269 |
718,156 |
|
|
| Loss for the year |
|
-- |
-- |
-- |
-- |
(215,675) |
'(215,675) |
|
|
| Balance
as on December 31, 1999 |
320,587 |
41 |
486 |
396,773 |
'(215,406) |
502,481 |
|
|
=========== |
=========== |
=========== |
=========== |
=========== |
=========== |
|
|
| TARIQ IKRAM |
|
|
RASHEED Y. CHINOY |
|
| Chief Executive |
|
|
|
Director |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR |
|
| ENDED
DECEMBER 31, 1999 |
|
|
|
Note |
Year |
Period |
|
|
|
ended |
ended |
|
|
|
December |
December |
|
|
|
31, 1999 |
31, 1998 |
|
|
|
|
(Rupees in thousand) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
35 |
267,684 |
209,537 |
|
| Mark up paid |
|
|
(40,189) |
(18,227) |
|
| Taxes paid |
|
|
(69,106) |
(90,563) |
|
| Payment of gratuity |
|
|
(15,642) |
(4,188) |
|
| Increase
/ (Decrease) in long-term loans |
|
|
262 |
(1,447) |
|
| Increase
/ (Decrease) in long-term deposits and prepayments |
1,248 |
(665) |
|
|
|
|
--------------------- |
--------------------- |
|
| Net
cash inflow from operating activities |
|
144,257 |
94,447 |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Fixed
capital expenditure |
|
|
(42,605) |
(50,990 |
|
| Sale
proceeds of fixed assets |
|
1,885 |
2,735 |
|
| Investment
income received |
|
729 |
1,640 |
|
|
|
--------------------- |
--------------------- |
|
| Net
cash outflow from investing activities |
|
(39,991 ) |
(46,615) |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Dividend paid |
|
|
(63,477) |
(96,898) |
|
|
|
|
--------------------- |
--------------------- |
|
| Net
increase / (decrease) in cash and cash equivalents |
|
40,789 |
(49,066) |
|
| Cash
and cash equivalents at the beginning of the year |
|
(32,314) |
16,752 |
|
|
|
|
--------------------- |
--------------------- |
|
| Cash
|
