Gillet Pakistan Limited - Annual Reports

For business information, annual reports, laws, ordinances, regulations and articles.

Gillette Pakistan Limited

Annual Report 2000

CONTENTS

Directors' Report

Auditors' Report

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Accounts

Pattern of Shareholding

Notice of Meeting

BRIDGING THE GAP

Bridging the gap between the past and a

vibrant present, Gillette has led the way in

introducing a new world of convenience to

Pakistan.

TOILETRIES

The best a man can get

Arctic Ice, a bold and adventurous

fragrance, adds a new note to the

Gillette Series male toiletries line,

which delivers the ultimate in skin

care benefits to men around the world.

ORAL-B

The brand more dentists use themselves worldwide

The Company's superior product

performance and technological

strengths have made it a leader in

a number of categories, including

oral care. Gillette's Oral-B brand

has become a household name in

Pakistan. From the time its first

toothbrush was designed more

than fifty years ago, Oral-B has

developed a number of innovative

products, including toothbrushes

with the wear sensitive Indicator

technology that won an award

for product innovation. As the

toothbrush brand more dentists

use themselves worldwide, Oral-B

is the hallmark of excellence in oral care.

DURACELL

Nothing powers your life like Duracell

The Company also leads in the

growing alkaline battery market with

the premium Duracell brand. The

new generation Duracell Ultra

batteries add a super performance

advantage as they outlast all other

alkaline batteries.

BRAUN

designed to make a difference

Braun, launched in Pakistan in 2000,

has been a tremendous success.

Backed by the Gillette organization,

Braun is a global company with

products that score a hit with

consumers everywhere. Designed to

make a difference, Braun products

offer innovative features, high quality

and convenient handling to make

every task an easier one. Whether

you're thinking of kitchen chores,

body and hair care or personal

diagnostics at home, Braun has the

right ideas, making life more

convenient and enjoyable.

In The Gillette Company, new

product development is accompanied

by sound organization and planning

that contributes to the maintenance

of a worldwide network, bringing the

most advanced of Gillette products to

your doorstep. Gillette Pakistan

Limited benefits from the scientific

and technological expertise of The

Gillette Company, headquartered in

Boston, Massachusetts.

As the country takes a stride into the

new millennium, the Company takes

pride in bringing to it the finest

products in the grooming, oral care

and portable power categories. In a

changing world, as consumers turn

towards innovative products to meet

their needs, the Company stands

ready to serve this vibrant and

growing market.

BOARD OF DIRECTORS

Chairman

Sanaullah Qureshi

Chief Executive

Muhammed Amin

(Alternate: Mohammad Azhar Aqil)

Andrew J. Redpath

(Alternate: Naqi H. Sheriff)

Peter Mee

(Alternate: Saeed Akram)

G. S. Gill

Salim Adaya

Rashid Abdulla

DIRECTORS' REPORT

The Directors of your Company take pleasure in presenting their Report

and the Audited Accounts of the Company, together with the Auditors'

Report thereon, for the year ended 31 December 2000.

BOARD OF DIRECTORS

At the Thirteenth Annual General Meeting, held on 4 April 2000, Messrs.

Sanaullah Qureshi, Muhammed Amin, Peter Mee, Andrew J. Redpath,

G. S. Gill, Salim Adaya and Rashid Abdulla, were elected as Directors

of the Company, for a term of three years.

During the year under review, Mr. Sanaullah Qureshi has been elected

as the Chairman of the Board, in place of Mr. Jamsheed R. Rahim. The

Board welcomes Mr. Sanaullah Qureshi and wishes to place on record,

appreciation for the invaluable services rendered by Mr. Jamsheed R.

Rahim, throughout his association with Gillette Pakistan.

FINANCIALS

The year 2000 proved to be yet another year of strong growth for your

Company. The financial results reflect continued progress and

consolidation of gains, made in the last few years.

The results at a glance are:

Rupees in '000

2000

1999

Profit before taxation

88,874

68,249

Taxation

(17,071)

(7,882)

------------------

Profit after taxation

71,803

60,367

Appropriations:

Proposed final

dividend - Rs. 2.00 per share

(1999: Rs. 0.75 per share)

(38,400)

(14,400)

------------------

33,403

45,967

Accumulated loss brought forward

(10,695)

(56,662)

Unappropriated profit/(accumulated loss)

------------------

carried forward

22,708

(10,695)

==========

Profit before taxation at Rs. 88.9 million shows an excellent growth of

30.2% compared to Rs. 68.2 million for the year 1999. This healthy

growth in profitability is also reflected in Profit after taxation, which rose

by 19% from Rs. 60.4 million in 1999 to Rs. 71.8 million during the year

under review. Earnings per share have improved to Rs. 3.74 per share,

against Rs. 3.14 per share in the year 1999.

The Directors are pleased to propose payment of a dividend at the rate

of Rs. 2.00 per share (1999: Rs. 0.75 per share) to the shareholders for

the year ended 31 December 2000.

Our domestic sales for the year grew by 16% to Rs. 538 million. We

continued our focus on high performing premium products, yielding

significantly better trading margins. Trading profit at Rs. 253 million was

28% higher than last year whereas, trading margin at 47% has

improved significantly from 42% achieved last year.

Operating profit at Rs. 74 million was 14% higher than Rs. 65 million of

last year. This was achieved despite our continued investment in brand

building programs, which increased our administrative and selling

expenses by 34%. Our financial expenses have reduced by 85% versus

last year, depicting better liquidity positions and lower reliance on

borrowings.

The Gillette Company, USA has signed a definitive agreement to sell its

stationery products business to Newell Rubbermaid Inc. on December

29, 2000. As part of this divestiture, your Company has sold its relevant

assets to Newell Rubbermaid Inc.

MARKETING AND SALES

We have strengthened our leadership position in the shaving systems by

launching Gillette Mach3, the first triple blade shaving system. Gillette

Mach3 launch was very successful. It was supported by advertising and in-

store display throughout the year. The launch of Mach3 also reinforced

Gillette's technological superiority in blades and razors.

We continued to enjoy leadership position in disposable razors category.

Gillette Blue II remained the growth driver in the category and was

instrumental in expanding the disposable razors category further. Our

premium double edge held its volume base despite the growth in

disposable razors. However, our low price double edge blades were

affected by the influx of smuggled and cheaper double edge blades.

During the year, we added the fourth fragrance 'Arctic Ice' in the Gillette

Series toiletries range of products. Our advertising remained focused on

Gillette Series shaving gel expanding the overall premium shaving

preparation category. The launch of the fourth fragrance, combined with

shaving gel advertising and strong in-store display programs, have

resulted in significant growth in the toiletries business.

Your Company has also made a successful entry in the toothbrush

segment with the introduction of Oral-B range of toothbrushes at three

different price levels. A strong media and sales promotion campaign

throughout the second half of the year supported the launch. Oral-B has

already carved out its place, in a highly competitive category, and we

believe it will deliver a good growth in the long run.

Braun personal care and household appliances proved to be yet another

successful launch of the year 2000. This range of products was

launched in the middle of the year and has yielded excellent results. We

expect that Braun products will be able to capture a major segment of

personal care and household appliances in the years to come, which in

turn would further bolster the Company's turnover and profitability.

FUTURE OUTLOOK

We have started the year 2001 with the launch of Gillette Blue II Plus Ultra

Grip disposable razor. The initial feedback from the market is very

encouraging. The new products launched during the year 2000, and all

existing major products are showing healthy growth trends. We expect

that sales growth momentum, generated last year, will continue during the

year 2001. On the other hand, Rupee devaluation and inflationary trends

are creating pressures on the profitability. However, leaving this aside, our

business is well poised for both sales and profit growth.

HOLDING COMPANY

The Gillette Company, incorporated in Delaware, United States of

America, is the holding Company.

PATTERN OF SHAREHOLDING

The pattern of shareholding is given on page 42 of this Annual Report.

AUDITORS

The present auditors Messrs. Taseer Hadi Khalid and Co., Chartered

Accountants, Karachi retire and being eligible, offer themselves for re-appointment.

We would like to thank the Company's employees for their tremendous

efforts without which we would not have achieved these results. We

would also like to thank our Shareholders for their continued support.

On behalf of the Board.

Karachi

MUHAMMED AMIN

28 February 2001

CHIEF EXECUTIVE

AUDITORS' REPORT TO THE MEMBERS

We have audited the annexed balance sheet of Gillette Pakistan Limited

as at 31 December 2000 and the related profit and loss account, cash

flow statement and statement of changes in equity 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.

It is the responsibility of the Company's management to establish and

maintain a system of internal control, and prepare and present the

above said statements in conformity with the approved accounting

standards and the requirements of the Companies Ordinance, 1984.

Our responsibility is to express an opinion on these statements based

on our audit.

We conducted our audit in accordance with the auditing standards as

applicable in Pakistan. These standards require that we plan and

perform the audit to obtain reasonable assurance about whether the

above said statements are free of any material misstatement. An audit

includes examining, on a test basis, evidence supporting the amounts

and disclosures in the above said statements. An audit also includes

assessing the accounting policies and significant estimates made by

management, as well as, evaluating the overall presentation of the

above said statements. We believe that our audit provides a

reasonable basis for our opinion and, after due verification, we report that:

a) in our opinion, proper books of accounts 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,

cash flow statement and statement of changes in equity together

with the notes forming part thereof conform with approved

accounting standards as applicable in Pakistan, and, 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 31 December 2000 and of the

profit, its cash flows and changes in equity 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.

Karachi

TASEER HADI KHALID & CO.

28 February 2001

CHARTERED ACCOUNTANTS

BALANCE SHEET AS AT 31 DECEMBER 2000

Rupees in '000

NOTE

2000

1999

SHARE CAPITAL AND RESERVES

Authorized share capital

20,000,000 ordinary shares of Rs. 10/- each

200,000

==========

Issued, subscribed and paid-up share capital

192,000

Unappropriated profit/(accumulated loss)

22,708

(10,695)

------------------

214,708

181,305

CURRENT LIABILITIES

Short-term finances

103,899

Creditors, accrued and other liabilities

82,960

56,279

Proposed dividend

38,400

14,400

------------------

121,360

174,578

COMMITMENTS

------------------

336,068

355,883

==========

These accounts should be read in conjunction with the attached notes.

TANGIBLE FIXED ASSETS

Operating fixed assets

32,405

26,398

Capital work-in-progress

2,025

3,871

Non-operating fixed assets

3,268

------------------

37,698

33,537

LONG-TERM LOANS

2,595

LONG-TERM DEPOSITS

1,090

1,320

CURRENT ASSETS

Stock-in-trade

100,552

98,224

Trade debts

77,961

124,534

Loans and advances

12,917

8,182

Deposits, short-term prepayments

and other receivables

13,010

29,214

Taxation - net

40,629

20,327

Cash and bank balances

49,596

40,545

------------------

294,685

321,026

------------------

336,068

355,883

==========

SANAULLAH QURESHI

MUHAMMED AMIN

CHAIRMAN

CHIEF EXECUTIVE

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2000

Rupees in '000

NOTE

2000

1999

Sales - net

538,332

473,274

Cost of goods sold

(285,076)

(275,146)

------------------

Trading profit

253,256

198,128

Administrative and selling expenses

(179,579)

(133,578)

------------------

Operating profit

73,677

64,550

Financial expenses

(3,230)

(20,885)

------------------

70,447

43,665

Voluntary separation scheme expenses

(40,537)

Other income / (charges)

18,427

65,121

------------------

Profit before taxation

88,874

68,249

Taxation - current

(17,071)

(7,882)

------------------

Profit after taxation

71,803

60,367

Appropriation:

Proposed final dividend: Rs. 2.00 per share

(1999: Rs. 0.75 per share)

(38,400)

(14,400)

------------------

33,403

45,967

Accumulated loss brought forward

(10,695)

(56,662)

Unappropriated profit/(accumulated loss)

------------------

carried forward

22,708

(10,695)

==========

Rupees

Earnings per share

3.74

3.14

==========

These accounts should be read in conjunction with the attached notes.

SANAULLAH QURESHI

MUHAMMED AMIN

CHAIRMAN

CHIEF EXECUTIVE

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2000

Rupees in '000

NOTE

2000

1999

Cash flows from operating activities

Cash generated from operations

180,580

47,529

Financial expenses paid

(1,757)

(21,583)

Taxes paid

(37,373)

(13,893)

Long-term deposits

230

Long-term advances

(2,595)

------------------

Net cash inflow from operating activities

139,085

12,136

Cash flows from investing activities

Fixed capital expenditure incurred

(15,981)

(23,175)

Sale proceeds on disposal of fixed assets

4,246

15,392

------------------

Net cash outflow from investing activities

(11,735)

(7,783)

Cash flows from financing activities

Dividend paid

(14,400)

Net cash outflow from financing activities

(14,400)

Net increase in cash

and cash equivalents

4,353

112,950

Cash and cash equivalents at the

beginning of the year

(63,354)

(67,707)

------------------

Cash and cash equivalents at the

end of the year

49,596

(63,354)

==========

SANAULLAH QURESHI

MUHAMMED AMIN

CHAIRMAN

CHIEF EXECUTIVE

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2000

Rupees in '000

Share capital

Unappropriated

Total

profit/