20000118

Brief recordings

BY SCANNER

Chemical & Pharmaceutical

BOC Pakistan Limited

Year Ended September 30, 1999

Overview

The main business areas of the company are, industrial gases, speciality gases, health care Ñ medical gases and equipment and welding products. BOC Pakistan is an associate company of the BOC Group plc, UK which adds value to wide-range of industries worldwide: from electronics and food to environmental clean-up, from coating most of the world's high performance glass to distributing food, clothes and other consumables. The company's sales and pre-tax profit substantially improved. After tax profit of the year under review if compared with previous year's after tax profit (before write back in the previous year), shows 6% increase. The company has been awarded Top 25 Companies Award by Karachi Stock Exchange for the financial year 1998. So far the company has been given this award for the twelfth time.

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The company is principally engaged in the manufacture of industrial gases, welding electrodes and marketing of medical equipments.

BOC Pakistan Ltd. was incorporated in the province of Sindh in 1949. So it is, "celebrating 50 years of service to industry."

The company has received Karachi Stock Exchange's Top 25 Companies' Award for the financial year 1998. So far the company has won this coveted award for the twelfth time and consecutively for seven years since 1992.

The company was awarded the highly prestigious award, "Corporate Excellence Award" by the Management Association of Pakistan for the year 1997.

The company's holding company is BOC Group plc, UK which held 12.519 million paid-up ordinary shares of the company out of total 20.865 million shares which works out to 60% stake in its equity.

The other major category of institutional shareholders are seven financial institutions, seven insurance companies and seven investment companies with 10.72%, 8.57% and 3.16% respectively shareholding. Seventeen joint stock companies owned 1.58% of the company's share capital. Individual shareholders numbering 1203 out of total 1244, held 15.36% of the company's stock.

The company was listed at the Karachi Stock Exchange in 1958. It shares remain blue chip despite downturn in the stock market index. At present the share is quoted ex-dividend price of Rs 123 at a very high premium over its par value of Rs 10. The share, however has suffered diminution in market value for several years. The highest price of the share was quoted at Rs 410 in 1992 and relative to that the present market price has suffered diminution in value by 70%. During 1998, the share's lowest price was recorded at Rs 83.

During the last ten years the company has not skipped dividend payout. Last year the payout was at 60% and for the year under review, FY 1998-99, the company's dividend distribution for both cash and stock dividends works out to 65%.

The financial health of the balance sheet is formidable. Long term debt to equity ratio at 18:82 reflects easy long term debt coverage position. However the current ratio at 0.57 is still below the minimum desirable ratio of 'ONE', so liquidity pressure is visible. On the other hand current maturity of long term debts at Rs 366.67 million registered 175% rise over preceding year's Rs 133.33 million. The financial charges also show high escalation rate.

The company's balance sheet comprised large fixed asset in the sum of Rs 1.47 billion which is nearly 73.4% of its total assets. Further capital expenditure has been reported in the Directors Report. J. R. Rahim chairman of the company mentioned;

"The company will soon be installing a nitrogen facility with back-up storage for a high purity nitrogen supply scheme to Pak-Arab Refinery at Mahmood Kot. The plant and other equipment, expected to reach Pakistan in December 1999 and the facility is expected to come on stream shortly."

The company has outstanding track record of social responsiveness. In addition to regular profit distribution, the company maintain international safety standard. The directors reported about the international safety audit which was conducted at the company's three production factories by a team of international auditors, where current safety gradings have been maintained.

During FY 1998-99, the period under review sales at Rs 1145.91 million (FY 1997-98: Rs 1,020.79 million), trading profit at Rs 542.76 million (FY 1997-98: Rs 445.78 million) and profit before taxation at Rs 319.71 million (FY 1997-98: Rs 266.98 million) posted 12.2%, 21.76% and 19.75% over preceding year's.

About profit after tax the Director reported.

"In the Finance Act 1999, the income tax rates for companies have been frozen at 33% and benefit under section 80-C nullified. This has adversely affected tax charge for the year. The company has therefore, taken up the matter with the Control Board of Revenue.

Despite all these unfavourable steps company's net profit after tax at Rs 245.7 million is 6% higher than last year excluding the tax write back of Rs 51.7 million in last year." After including tax write back of last year then the net profit of last year amounts to Rs 282.96 million and compared to that, the net profit of the year under review shows 13.2% decline.

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Performance Statistics (Million Rupees)

September 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 208.65 181.44

Revenue Reserves: 704.27 590.09

Equity: 912.92 771.53

L.T. Debts: 200.00 566.67

Cylinder Deposits: 63.14 62.90

Current Liabilities: 827.43 598.77

AssetsÉÉÉ

Fixed Assets ÑTangible: 1,470.37 1,553.68

Other Non Current Assets: 12.78 12.22

Current Assets: 520.34 433.97

Total Assets: 2,003.49 1,999.87

Sales, Profit & PayoutÉÉÉ

Sales: 1,145.91 1,020.79

Trading Profit: 542.76 445.78

Operating Profit: 377.49 300.64

Other Income: 52.42 55.51

Depreciation: 114.45 84.03

Financial Charges: 108.31 75.31

Profit Before Taxation: 319.71 266.98

Profit After Taxation: 245.72 282.96

Dividend Cash 50% (1998: 60%): 104.33 108.64

Dividend Bonus Stock 15% (1998: Nil): 27.21 Ñ

Financial RatiosÉÉÉ

Share Price (Rs) 6/1/2000: 123.00 Ñ

Book Value Per Share (Rs): 43.75 42.52

Price Book Value Ratio: 2.81 Ñ

Debt/Equity Ratio: 18:82 42:58

Current Ratio: 0.62 0.72

Asset Turn Over Ratio: 0.57 0.51

Trading Profit Margin (%): 47.36 43.67

Net Profit Margin (%): 21.44 27.72

EPS (Rs): 11.78 15.60

Price/Earning Ratio: 10.44 Ñ

R.O.E. (%): 26.92 10.44

R.O.A. (%): 12.26 14.15

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Company information: Chairman: J. R. Rahim. Chief Executive & Managing Director: Javaid Anwar. Directors: H. P. Careless/R. Ahmad, I. Hussain/A. U. Khawaja/S. Qureshi. Company Secretary: Mohammad Aslam. Registered Office: West Wharf, Karachi.