HALF YEARLY REPORT JULY - DECEMBER 2017

Transcription

1 HALF YEARLY REPORT JULY DECEMBER

2 CONTENTS Page COMPANY INFORMATION 2 DIRECTORS REVIEW 34 DIRECTORS REVIEW IN URDU 56 AUDITORS' REPORT TO THE MEMBERS ON REVIEW OF INTERIM FINANCIAL INFORMATION 7 CONDENSED INTERIM BALANCE SHEET 8 CONDENSED INTERIM PROFIT AND LOSS ACCOUNT 9 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY 10 CONDENSED INTERIM CASH FLOW STATEMENT 11 NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS 1222 Half Yearly Report 18 1

3 COMPANY INFORMATION BOARD OF DIRECTORS ADVISOR Iqbal Ali Lakhani Amin Mohammed Lakhani Tasleemuddin Ahmed Batlay Aliya Saeeda Khan Vinod Nambiar Peter John Graylin Zulfiqar Ali Lakhani Sultan Ali Lakhani AUDIT COMMITTEE Aliya Saeeda Khan Iqbal Ali Lakhani Amin Mohammed Lakhani HUMAN RESOURCE & REMUNERATION COMMITTEE Iqbal Ali Lakhani Zulfiqar Ali Lakhani Amin Mohammed Lakhani COMPANY SECRETARY AUDITORS Mansoor Ahmed A. F. Ferguson & Co. Chartered Accountants INTERNAL AUDITORS BDO Ebrahim & Co. Chartered Accountants REGISTERED OFFICE Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi74200 Pakistan SHARES REGISTRAR FAMCO Associates (Private) Limited 8F, Near to Hotel Faran, Nursery, Block6, P.E.C.H.S., ShahraeFaisal, Karachi. FACTORIES WEBSITE G6, S.I.T.E., Kotri District Jamshoro (Sindh) 217, Sundar Industrial Estate, Raiwind Road, Lahore Chairman Chief Executive Chairperson Chairman 2 Half Yearly Report 18

4 DIRECTORS REVIEW The directors of your Company are pleased to present unaudited condensed financial statements of the Company for the six months. Financial Performance Highlights The financial performance of the Company for the period is summarized below: Operating Results Turnover July December July December 2016 Amount in PKR million 20,165 18,043 Increase/ (Decrease) 11.76% Gross Profit 5,656 5, % as %age to Net Sales 35.91% 37.49% (158 bps) Selling & Distribution Costs 3,155 2, % as %age to Net Sales 20.03% 19.82% 21 bps Administrative Expenses % as %age to Net Sales 1.38% 1.28% 10 bps Profit from Operations 2,285 2, % Profit After Tax 1,668 1, % Earnings per Share Rupees % The Company registered a growth of 11.76% in turnover over the corresponding period last year mainly driven by growth in volume of all categories. Increase in prices of key commodities continued to put pressure on gross profit margins which witnessed a decline of 158 bps. The revenue growth was supported by continued investment on media and promotional campaigns due to which selling and distribution costs increased by 12.72%. Administrative expenses recorded an increase of 20.30% primarily on account of employee related costs. Profit after tax and earnings per share increased by 3.87% as compared to corresponding period last year. Business Performance Highlights In fabric care, competition intensified as key players in the market invested heavily on media and instore promotional campaigns. However, the Company also increased its media investment along with ground and instore activities to defend and grow its market share. Half Yearly Report 18 3

5 The Company continues to enjoy the market leadership position in oral care. The category saw both international and local brands becoming very active in media, digital and promotional activities. The flagship brand, Colgate Maximum Cavity Protection remained focused on building consumption and increasing penetration through effective oral health school education program 'Bright Smiles, Bright Futures'. The Company also started local manufacturing of value segment toothbrushes aiming for margin improvement and locally relevant packaging versus imported toothbrushes. Future Outlook Devaluation of rupee and increase in raw material and commodity prices witnessed during the period has started affecting the margins of the Company. Plans of increasing selling prices of selected products are in place to manage margin. It is further anticipated that the uncertain economic and political environment of the country will pose more business challenges in future. The Company intends to deal with these challenges and achieve topline growth through product innovation that is consumer relevant and based on indepth understanding of how people live their lives today. Acknowledgement We would like to express deep gratitude to our customers for their trust in our brands. We would also like to appreciate our shareholders, bankers and suppliers for their continued support and our employees for their dedication and contribution to the Company. On behalf of Board of Directors IQBAL ALI LAKHANI Chairman ZULFIQAR ALI LAKHANI Chief Executive Karachi : January 23, Half Yearly Report 18

6 / % 6.86% ( 158) 12.72% % % 3.87% 3.87% 18,043 5, % 2, % % 2,270 1, ,165 5, % 3, % % 2,285 1, Half Yearly Report 18 5

7 6 Half Yearly Report 18

8 A. F. FERGUSON & CO. AUDITORS' REPORT TO THE MEMBERS ON REVIEW OF INTERIM FINANCIAL INFORMATION Introduction We have reviewed the accompanying condensed interim balance sheet of Colgate Palmolive (Pakistan) Limited as at, the related condensed interim profit and loss account, condensed interim statement of changes in equity, condensed interim cash flow statement and notes thereto for the sixmonth period then ended (hereinafter referred to as the interim financial information ). Management is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. The figures included in the condensed interim profit and loss account for the quarters ended and 2016 and the notes thereto have not been reviewed as we are required to review only the cumulative figures for the six months period ended. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Chartered Accountants Karachi : January 23, 2018 Engagement Partner : Khurshid Hasan A. F. FERGUSON & CO., Chartered Accountants, a member firm of the PwC network State Life Building No. 1C, I.I Chundrigar Road, P.O. Box 4716, Karachi74000, Pakistan Tel: +92 (21) / ; Fax: +92 (21) / / ; < KARACHI LAHORE ISLAMABAD 7

9 CONDENSED INTERIM BALANCE SHEET (UnauditedNote 2) As at Note June 30, (unaudited) (audited) (Rupees in 000) ASSETS NONCURRENT ASSETS Long term loans 47,877 44,221 Long term security deposits 18,032 17,960 Property, plant and equipment Intangibles 4 2,837,221 18,071 2,731,203 23,157 2,921,201 2,816,541 CURRENT ASSETS Stores and spares 218, ,150 Stock in trade 5 3,234,081 3,107,762 Trade debts 783, ,032 Loans and advances 229, ,512 Trade deposits and short term prepayments 225, ,646 Other receivables 10,454 11,530 Accrued profit 17,462 14,600 Taxation 539, ,220 Short term investments 6 6,499,913 6,570,291 Cash and bank balances 1,311, ,140 13,071,716 12,133,883 TOTAL ASSETS 15,992,917 14,950,424 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorised share capital 750, ,000 Issued, subscribed and paidup capital 479, ,549 Reserves 12,067,591 11,358,955 Remeasurement on post retirement benefits obligation (88,621) (88,621) Surplus on revaluation of investments 33,631 4,043 12,492,150 11,753,926 LIABILITIES NONCURRENT LIABILITIES Deferred taxation 187, ,925 Long term deposits 77,860 66, , ,797 CURRENT LIABILITIES Trade and other payables 7 3,234,942 2,928,701 TOTAL LIABILITIES 3,500,767 3,196,498 TOTAL EQUITY AND LIABILITIES 15,992,917 14,950,424 CONTINGENCIES AND COMMITMENTS 8 The annexed notes 1 to 15 form an integral part of these condensed interim financial statements. 8 Zulfiqar Ali Lakhani Chief Executive Half Yearly Report 18 Tasleemuddin Ahmed Batlay Director Mirza Rehan Ahmed Chief Financial Officer

10 CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (Unaudited Note 2) For the Quarter and Note Quarter ended Quarter ended 2016 (Rupees in 000) 2016 Turnover 10,036,050 9,248,379 20,165,479 18,043,191 Sales tax (1,592,194) (1,469,134) (3,195,737) (2,860,427) Trade and other discounts (625,293) (521,511) (1,220,419) (1,063,982) Net turnover 7,818,563 7,257,734 15,749,323 14,118,782 Cost of sales (5,022,771) (4,505,782) (10,093,323) (8,825,422) Gross profit 2,795,792 2,751,952 5,656,000 5,293,360 Selling and distribution costs (1,593,034) (1,448,510) (3,154,722) (2,798,919) Administrative expenses (108,514) (91,041) (216,779) (180,216) Other expenses (101,996) (91,179) (199,151) (179,884) Other income 124,078 68, , ,757 Profit from operations 1,116,326 1,189,637 2,285,094 2,270,098 Finance cost and bank charges (6,636) (6,914) (13,036) (12,231) Profit before taxation 1,109,690 1,182,723 2,272,058 2,257,867 Taxation Current for the period 287, , , ,961 for prior year (28,136) (29,518) (28,136) (29,518) 259, , , ,443 Deferred (882) (32,980) (18,182) (41,170) (258,523) (312,963) (604,323) (652,273) Profit after taxation 851, ,760 1,667,735 1,605,594 Other comprehensive ( loss) / income for the period net of tax Items that may be reclassified subsequently to profit and loss (Deficit) / surplus on investments categorised as 'available for sale' net (3,184) 44,755 34,810 74,355 Impact of deferred tax 477 (6,713) (5,222) (11,153) (2,707) 38,042 29,588 63,202 Total comprehensive income for the period 848, ,802 1,697,323 1,668,796 Earnings per share (Rupees) The annexed notes 1 to 15 form an integral part of these condensed interim financial statements. Zulfiqar Ali Lakhani Chief Executive Tasleemuddin Ahmed Batlay Director Mirza Rehan Ahmed Chief Financial Officer Half Yearly Report 18 9

11 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (Unaudited Note 2) For the Balance as at July 1, 2016 Comprehensive income for the period Profit after taxation for the six months 2016 Other comprehensive income Total comprehensive income for the 2016 Transfer to general reserve Transactions with owners Final dividend for the year ended June 30, 2016 (Rs 30 per share) Balance as at 2016 Issued, subscribed and paid up share capital 479, ,549 Capital reserveshare premium 13,456 13,456 Revenue reserves Unappropriated General reserve profit 7,428,000 1,380,000 8,808,000 Sub Totalreserves (Rupees in 000) 2,819,048) 10,260,504) 1,605,594) 1,605,594) (1,380,000) (1,438,648) 1,605,594) 1,605,994) 10,427,450) 1,605,594) (1,438,648) Remeasurement on post retirement benefits obligation net of tax (69,982) (69,982) Surplus on revaluation of investmentsnet of tax 7,296 63,202 63,202 70,498 Total Equity 10,677,367) 1,605,594) 63,202) 1,668,796) (1,438,648) 10,907,515) Balance as at July 1, 479,549 13,456 8,808,000 2,537,499) 11,358,955) (88,621) 4,043 11,753,926) Comprehensive income for the period Profit after taxation for the six months 1,667,735) 1,667,735) 1,667,735) Other comprehensive income Total comprehensive income for the 1,667,735) 1,667,735) 29,588 29,588 29,588) 1,697,323) Transfer to general reserve 1,578,000 (1,578,000) Transactions with owners Final dividend for the year ended June 30, (Rs 20 per share) (959,099) (959,099) (959,099) Balance as at 479,549 13,456 10,386,000 1,668,135) 12,067,591) (88,621) 33,631 12,492,150) The annexed notes 1 to 15 form an integral part of these condensed interim financial statements. Zulfiqar Ali Lakhani Chief Executive Tasleemuddin Ahmed Batlay Director Mirza Rehan Ahmed Chief Financial Officer 10 Half Yearly Report 18

12 CONDENSED INTERIM CASH FLOW STATEMENT (Unaudited Note 2) For the Note 2016 (Rupees in 000) CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 10 2,447,916 2,277,082 Staff retirement gratuity paid (2,683) Finance cost and bank charges paid (13,036) (12,231) Taxes paid (1,018,657) (641,584) Long term loans (3,656) (6,947) Long term security deposits (assets) (72) Long term deposits (liabilities) 10,988 11,176 Net cash generated from operating activities 1,423,483 1,624,813 Capital expenditure (434,351) (181,418) Purchase of intangibles (1,976) Proceeds from disposal of property, plant and equipment 11,953 16,647 Profit received on savings accounts and term deposit receipts 67,295 23,266 Profit received on Treasury Bills 52,080 Profit received on Pakistan Investment Bonds 5,058 11,121 Profit received on Musharakah Certificates 3,896 Short term investments made during the period (5,693,193) (2,305,907) Disposal / redemption of short term investments 5,626,586 3,483,186 Net cash (used in) / generated from investing activities (360,676) 1,044,919 CASH FLOWS FROM FINANCING ACTIVITY Dividend paid (958,126) (1,435,187) Net increase in cash and cash equivalents 104,681 1,234,545 Cash and cash equivalents at the beginning of the period 4,415,140 1,798,227 Cash and cash equivalents at the end of the period 11 4,519,821 3,032,772 The annexed notes 1 to 15 form an integral part of these condensed interim financial statements. Zulfiqar Ali Lakhani Chief Executive Tasleemuddin Ahmed Batlay Director Mirza Rehan Ahmed Chief Financial Officer Half Yearly Report 18 11

13 NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited Note 2) For the THE COMPANY AND ITS OPERATIONS ColgatePalmolive (Pakistan) Limited (the Company) was initially incorporated in Pakistan on December 5, 1977 as a public limited company with the name of National Detergents Limited. The name of the Company was changed to ColgatePalmolive (Pakistan) Limited on March 28, 1990 when the Company entered into a Participation Agreement with ColgatePalmolive Company, USA. The Company is listed on Pakistan Stock Exchange. The registered office of the Company is situated at Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi. The Company is mainly engaged in the manufacture and sale of detergents, personal care and other related products. 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES 2.1 STATEMENT OF COMPLIANCE As per the requirements of circular no. CLD/CCD/PR(11)/ dated October 4, issued by the Securities & Exchange Commission of Pakistan (SECP), companies whose financial year, including quarterly and other interim periods, closes on or before, shall prepare their financial statements, including interim financial statements in accordance with the provisions of the repealed Companies Ordinance, Accordingly, these condensed interim financial statements have been prepared in accordance with the requirements of the International Accounting Standard (las) 34, Interim Financial Reporting and provisions of and directives issued under the repealed Companies Ordinance, In case where requirements differ, the provisions of or directives issued under the repealed Companies Ordinance, 1984 have been followed. 2.2 These condensed interim financial statements do not include all the information and disclosures required in an annual audited financial statements, and should be read in conjunction with the Company's annual audited financial statements for the year ended June 30,. 2.3 These condensed interim financial statements comprise of the condensed interim balance sheet as at and the condensed interim profit and loss account, the condensed interim statement of changes in equity, the condensed interim cash flow statement and notes thereto for the six months period then ended which have been subjected to a review in accordance with the listing regulations but not audited. These condensed interim financial statements also include the condensed interim profit and loss account for the quarter ended which has neither been reviewed nor audited. 2.4 The comparative balance sheet presented in these condensed interim financial statements as at June 30, has been extracted from the annual audited financial Half Yearly Report 18

14 statements of the Company for the year ended June 30, whereas the comparative condensed interim profit and loss account, condensed interim statement of changes in equity and condensed interim cash flow statement together with the notes thereto for the six months 2016 have been extracted from the condensed interim financial statements of the Company for the six months period then ended, which were subjected to a review but not audited. The comparative condensed interim profit and loss account for the quarter ended 2016 included in these condensed interim financial statements was neither subjected to a review nor audited. 2.5 Change in accounting standards, interpretations and amendments to published approved accounting standards that are effective a) Standards, interpretations and amendments to published approved accounting standards that are effective There are certain new amendments to approved accounting standards which are mandatory for the Company's accounting periods beginning on or after July 1,. However, such do not have any significant impact on the Company s financial reporting, therefore, have not been detailed in these condensed interim financial statements. b) Standards, interpretations and amendments to published approved accounting standards that are not yet effective but relevant The following are the new standards, amendments to existing approved accounting standards and new interpretations that will be effective for the periods beginning on or after July 1, 2018 that may have an impact on the financial statements of the Company. IFRS 9 'Financial instruments' This standard replaces the guidance in IAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit loss model that replaces the current incurred loss impairment model. IFRS 15 'Revenue from contracts with customers' IFRS 15 replaces the previous revenue standards: las 18 Revenue, las 11 Construction Contracts, and the related interpretations on revenue recognition. IFRS 15 introduces a single fivestep model for revenue recognition and establishes a comprehensive framework for recognition of revenue from contracts with customers based on a core principle that an entity should recognise revenue representing the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The management is in the process of assessing the impact of changes laid down by these standards on its financial statements. 2.6 The accounting policies and the methods of computation adopted in the preparation of these condensed interim financial statements are same as those applied in the preparation of the financial statements for the year ended June 30,. Half Yearly Report 18 13

15 3. SIGNIFICANT ACCOUNTING ESTIMATES, JUDGEMENTS AND FINANCIAL RISK MANAGEMENT The preparation of these condensed interim financial statements in conformity with the approved accounting standards as applicable in Pakistan for interim reporting requires management to make estimates, assumptions and use judgments that affect the application of policies and reported amounts of assets and liabilities and income and expenses. Estimates, assumptions and judgments are continually evaluated and are based on the historical experience and other factors, including reasonable expectations of future events. Revision to accounting estimates are recognised prospectively commencing from the period of revision. Judgements and estimates made by the management in the preparation of these condensed interim financial statements are same as those applied to financial statements as at and for the year ended June 30,. The Company's financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended June 30,. 4. PROPERTY, PLANT AND EQUIPMENT Note (unaudited) (Rupees in 000) June 30, (audited) Operating fixed assets (at net book value) 4.1 to 4.5 2,563,649 2,465,377 Capital workinprogress (at cost) , ,826 2,837,221 2,731, Additions operating fixed assets (at cost) 2016 (Rupees in 000) 14 Factory building on leasehold land 17,676 2,200 Plant and machinery 217,772 58,518 Electric fittings and installation 18,810 4,692 Furniture and fixtures 37, Tools and equipment 40,854 10,995 Vehicles 64,315 31,561 Computers and accessories 15,256 5,070 Office equipment 14,623 5,281 Half Yearly Report , , Additions include transfers from capital workinprogress aggregating Rs million ( 2016: Rs 1.26 million).

16 4.2 Disposals operating fixed assets (at net book value) 2016 (Rupees in 000) Plant and Machinery 1,833 Vehicles 4,017 6,533 Computers and accessories Office equipment Tools and equipment 60 6,082 6, Depreciation charge for the period 322, , Included in operating fixed assets are items having aggregate cost of Rs million (June 30, : Rs million) held by third parties for manufacturing certain products of the Company. These operating fixed assets are free of lien and the Company has full right of repossession of these assets. 4.5 During the period, the Company has identified certain items of operating fixed assets from which further economic benefits are no longer being derived. Therefore, assets having cost of Rs million ( 2016: Rs million) and net book value of Rs million ( 2016: Rs million) have been retired from active use and have been written off in these condensed interim financial statements. 4.6 Additions capital workinprogress (at cost) Factory building on leasehold land 22,664 17,350 Plant and machinery 223,197 15,746 Electric fittings and installation 8,587 4,201 Tools and equipment 4,337 2,768 Furniture and fixtures 5,245 15,125 Office equipment 7,396 6,011 Computer and accessories 127 2, ,553 64, During the period, the Company has written off capital workinprogress aggregating Rs Nil ( 2016: Rs million). Half Yearly Report 18 15

17 5. STOCK IN TRADE Note June 30, (unaudited) (audited) (Rupees in 000) Raw and packing materials 1,827,150 1,961,803 Workinprocess 428, ,372 Finished goods Manufactured 752, ,651 Finished goods Trading 225, , , ,587 3,234,081 3,107, Stock in trade include raw and packing materials in transit aggregating Rs million (June 30, : Rs million) and finished goods in transit aggregating Rs million (June 30, : Rs million). 6. SHORT TERM INVESTMENTS Investments Loans and receivables (term deposits) 6.1 3,211,000 3,426,000 Investments Available for sale 6.2 3,288,913 3,144,291 6,499,913 6,570, The rates of profits on these term deposits range between 5.0% to 6.7% (June 30, : 6.50% and 6.70%) per annum maturing between January and August Name of the investees As at July 01, Lakson Money Market Fund (associated undertaking) Lakson Income Fund (asociated undertaking) Atlas Money Market Fund NAFA Money Market Fund Sukuk Bonds 5,000 9,943 1,597 71,107 87,647 Purchase during the period 1,972 9,699 1, ,264 Sales / Redemptions during the period As at Average cost as at December 31, Fair Value as at December 31, (Number of units in 000) (Rupees in 000) (9,943) (1,596) (11,539) 6,972 9,699 1,555 71,146 89, ,000 1,000, , ,000 49,500 3,249, ,715 1,001, , ,334 49,500 3,288,913 Unrealised Gain as at December 31, 16,715 1,044 1,320 20,334 39, Half Yearly Report 18

18 7. TRADE AND OTHER PAYABLES Note June 30, (unaudited) (audited) (Rupees in 000) Trade creditors , ,303 Accrued liabilities 7.2 1,661,153 1,357,178 Bills payable 241, ,449 Advances from distributors ,692 43,225 Sales tax payable 162,923 Royalty payable to an associated undertaking 133, ,091 Workers profits participation fund 121, ,321 Workers welfare fund 44,671 98,642 Retention money payable 6,068 5,622 Unclaimed dividend 10,669 9,696 Others ,030 46,174 3,234,942 2,928, This includes Rs million (June 30, : Rs million) payable to related parties. 7.2 This includes Rs million (June 30, : Rs million) payable to related parties. 7.3 This includes Rs million (June 30, : Rs million) in relation to advance from a related party. 7.4 This includes Rs million (June 30, : Rs million) payable to related parties. 7.5 There has been no change in shortterm borrowing facilities from various banks on markup basis from those that are mentioned in note 22.1 of annual audited financial statements for the year ended June 30,. 8. CONTINGENCIES AND COMMITMENTS 8.1 Contingencies Certain cases have been filed against the Company by some employees claiming Rs million (June 30, :Rs million) in aggregate. Provision has not been made in these condensed interim financial statements for the said amounts as the management of the Company, based on the advice of its legal counsel handling the subject cases, is of the opinion that matters shall be decided in the Company's favour During the year ended June 30,, the Company received letters dated April 20, from the Directorate of Post Clearance Audit (PCA), Customs House, Karachi, stating that the Company has imported various consignments of "Colgate Brand Toothbrushes" and cleared the subject goods at a lowered value than the Half Yearly Report 18 17

19 value determined vide valuation database Letter No.32 issued by Directorate General Customs Valuation dated August 19, 2016 (i.e. $ 0.33 per piece) and sought an explanation from the Company as to why Customs Duty of Rs million, Regulatory Duty of Rs million, Sales Tax of Rs million, Additional Sales Tax of Rs million and Income Tax of Rs million may not be recovered from the Company. During the period, these orders were withdrawn by the respective authorities. Further, the Company has also filed a revision petition against the valuation ruling No / issued by Collectors of Customs determining values of Branded Toothbrushes on a higher rate. The Company has also obtained a stay order against the aforementioned ruling (issued by Collector of Customs) to restrain the custom authorities from taking any coercive action against the Company. The management of the Company, based on the advice of its legal counsel is confident of a favourable outcome During the period, the Company received an order dated August 10, from The Competition Commission of Pakistan imposing a penalty of Rs 10 million under section 10 of The Competition Act, 2010 against the show cause notice issued for indulging in deceptive marketing practices. The amount of the penalty has been recognised in these financial statements under the head 'Other Expenses.' However, the Company has filed an appeal with the Competition Appellate Tribunal against the above mentioned order which has also granted an interim relief order in favour of the Company stating that no coercive action shall be taken until the disposal of appeal There has been no change in the cases disclosed as contingency in notes , and to the Company's financial statements for the year ended June 30, Contingent liabilities in respect of indemnities given to financial institutions for guarantees issued by them on behalf of the Company in the normal course of business aggregate Rs million (June 30, : Rs million) Contingent liabilities in the form of bank guarantees issued in favour of Collector of Customs for clearance of tooth brushes shipments under section 81 aggregate Rs million (June 30, : Rs million) as mentioned in note Commitments Commitments in respect of capital expenditure and inventory items amount to Rs million and Rs million respectively (June 30, : Rs million and Rs 1,050 million respectively) Outstanding letters of credit amount to Rs 1, million (June 30, : Rs million) Outstanding duties leviable on clearing of stocks amount to Rs million (June 30, : Rs million). 18 Half Yearly Report 18

20 9. EARNINGS PER SHARE Quarter ended Quarter ended 2016 (Rupees in 000) Profit after taxation 851, ,760 1,667,735 1,605,594 (Number of shares) Weighted average number of ordinary shares outstanding during the period 47,954,929 47,954,929 47,954,929 47,954,929 (Rupees) 2016 Earnings per share There were no dilutive potential ordinary shares outstanding as at and CASH GENERATED FROM OPERATIONS Note 2016 (Rupees in 000) Profit before taxation 2,272,058 2,257,867 Adjustment for noncash and other items: Depreciation and amortisation expense 327, ,882 Gain on disposal of items of operating fixed assets (5,871) (9,987) Property plant and equipment written off Profit on savings accounts and Term Deposit Receipts (72,812) (28,755) Profit on Treasury Bills (52,080) (61,117) Profit on PIBs (1,956) (10,159) Profit on Sukuks (447) Profit on Musharakah Certificates (3,896) Gain on redemption of short term investments (46,205) (8,581) Finance cost and bank charges 13,036 12,231 Stock in trade written off 502 4,288 Capital workinprogress charged off 139 Working capital changes ,250 (162,960) 2,447,916 2,277,082 Half Yearly Report 18 19

21 10.1 Working capital changes Note 2016 (Rupees in 000) (Increase) / decrease in current assets: Stores and spares (22,554) (22,593) Stock in trade (126,821) (84,992) Trade debts (41,913) 43,788 Loans and advances 12,540 47,928 Trade deposits and short term prepayments (109,346) (1,586) Other receivables 1,076 (554) (287,018) (18,009) Increase / (decrease) in current liabilities: Trade and other payables 305,268 (144,951) 18,250 (162,960) 11. CASH AND CASH EQUIVALENTS Cash and bank balances 1,311, ,393 Short term investments TDRs 6 3,208,000 2,100,000 Short term investments Held to maturity 154, RELATED PARTIES 4,519,821 3,032, Disclosure of transactions and closing balances between the Company and related parties. The related parties comprise associated companies, staff retirement funds, directors and key management personnel. The Company in the normal course of business carries out transactions with various related parties. The Company enters into transactions with related parties on the basis of mutually agreed terms. Significant balances and transactions with related parties are as follows: Nature of Transactions Relationship with the Company 2016 (Rupees in 000) Sale of goods, services provided and reimbursement of expenses Associates 32, Purchase of goods, services received and reimbursement of expenses Associates 1,178, ,535 Purchase of short term investments Associates 1,200, ,000 Sale proceeds on redemption of short term investments Associates 1,000, ,000 Profit on short term investments Associates 24,808 2,643 Rent, allied and other charges Associates 17,901 16,538 Royalty charges Associates 69,952 63,359 Insurance claims received Associates 5, Half Yearly Report 18

22 Nature of Transactions Relationship with the Company 2016 (Rupees in 000) Insurance commission income Associates 4,652 5,934 Purchase of property, plant and equipment Associates Contribution to staff retirement benefits Employees funds 33,813 50,819 Key management personnel compensation paid Key management personnel 35,124 30,576 Donations Associate 10,500 9,000 Dividend paid Associates 843,497 1,265,245 Nature of balances Relationship with the Company June 30, (unaudited) (audited) (Rupees in 000) Trade debts Associates 595 2,827 Loans and advances Associates 8,200 1,609 Other receivables Associates Short term investments Associates 1,717,759 1,501,761 Trade and other payables Associates Refer note ENTITYWIDE INFORMATION 13.1 The Company constitutes of a single reportable segment, the principal classes of which are Personal Care, Home Care and others Information about products The Company's principal classes of products accounted for the following percentages of sales: 2016 Personal Care 24% 24% Home Care 72% 73% Others 4% 3% 100% 100% Half Yearly Report 18 21

23 13.3 Information about geographical areas The Company does not hold noncurrent assets in any foreign country. Revenues from external customers attributed to foreign countries in aggregate are not material Information about major customers The Company does not have transactions with any external customer which amount to 10 percent or more of the Company's revenues. 14. NONADJUSTING EVENT AFTER THE BALANCE SHEET DATE The Board of Directors in its meeting held on January 23, 2018 have proposed an interim cash dividend of Rs. 15 per share ( 2016: Rs. 15 per share) in respect of the year ending June 30, The condensed interim financial information for the half year ended, does not include the effect of this dividend which will be accounted for in the condensed interim financial information for the quarter ending March 31, DATE OF AUTHORISATION FOR ISSUE These condensed interim financial statements were authorised for issue on January 23, 2018 by the Board of Directors of the Company. Zulfiqar Ali Lakhani Chief Executive Tasleemuddin Ahmed Batlay Director Mirza Rehan Ahmed Chief Financial Officer 22 Half Yearly Report 18

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