Directors has greeted on having
the best ever financial performance in the year ended June 2013 which is 13.47%
increase in revenue compared to the last year. It has got the highest after tax
profit of Rs.9.7 billion in its life that is 43.2% increase over last year
profit after tax. The overall growth of company is 1.4% due to increase in Units sold from 5.97 million tons to 6.06 million tons; Local sales
volume registered a growth of 1.3% while exports grew up to 1.7%.
Major portion of total
dispatches (62%) goes in local sales that increased upto 48000 tons that is
1.3% growth while comparing with the industry financial year 2013 has proved as
an excellent year for cement industry which gives a growth upto 3% to local sales
in tons which eventually declined the local market share of LCL from 15.5% to
15%, on the other hand the industry exports decline nearly 2% and LCL managed
to remain the market leader, its exports increased by 1.7% due to 38000 tons increased
dispatches that increase its market share in exports from 26.3% to 27.3% making
a total market share of 18.1%.
In respect to financial performance company has earned the highest ever revenue in
this financial year which is Rs. 37.8 billion a growth of 13.7% and a humongous
increase of 43.22% in profit after tax which results in increase of Earning per share from 20.97 in last
year to 30.04 in the year in review.
Cost of production
was marginally increased by 0.9% due to increase in transportation and energy
cost. Deferred taxation provisions
of Rs.1.72 billion for deferred tax have been made which makes the cumulative
deferred tax liability up to Rs.4.58 billion.
During the year, Rs.12.82
billion was generated from operations in which Rs.6.11 billion is allocated for
long term investment, Rs.1.93 billion for dividends and Rs.1.87 billion for
capital expenditures. LCL has proposed dividend
of Rs. 8 per share in this year. There is efficient and timely repayment of
debts.
LCL contributed Rs.8.42
billion into the government treasury in account of taxes, levies, excise duty
and sales tax. In addition to this, an amount of US$ 151.96 million has added
in foreign exchange through exports.
LCL is mainly focus on
educational assistance to deserving students in the regard of Corporate Social Responsibility
activities. The company has donated for building State-of-the-art academic Block in IBA Karachi, entered into MoU with KSBL (Karachi School of Business and Leadership)
for providing scholarships, Supporting NGO’s who are working for
education.
LCL has actively participated
in various health projects at Pezu Plant. The company has ensures environment
preservation. It has participated in WWF Earth Hour initiatives.
The company has started the
following new projects to control its cost and enhance the quality of products
which will show their results in future.
PROJECTS
1.
Two State-of-the-art Vertical Grinding Mills
at Karachi plant
2.
TDF plant at Pezu
3.
Electricity supply to PESCO
LCL has made new investments for expanding its operation internationally
and adds diversity in its product portfolio.
INVESTMENTS
1. Investment in Lucky Holdings Limited for
acquisition of ICI Pakistan:
Company acquired 75% of shares of Lucky Holdings Limited (LHL) which in turn
acquired 75.93% shares of ICI Pakistan. Consequently, both have become the
subsidiaries of LCL.
2.
Joint Venture Investment in Cement plant at
DR Congo: Company is in the
process of negotiating terms and conditions of financing with multilaterals and
international financial institutions.
3.
Joint Venture Investment in Cement Grinding
facility in Iraq: plant and
machinery has arrived at site and project start commissioning and trial
production from early November 2013.
4.
Equity Investment in Associated company in
50 MW Wind farm: The
project is likely to be completed by the end of 2015.Its cost is estimated to
US$ 143 million which would financed through 75:25 Debt/Equity ratio. LCL would
contribute US$ 5 million for 14% share of equity.
In future, it is expected that
the consumption of cement will grow because of Development program of
Government. On the other hand, the coming year will be quite challenging due to
expected increase in utility cost, increase in interest rates, weakening of
Pakistani Rupee. To mitigate these, LCL is planning to install Waste Heat
Recovery (WHR) plant. Company’s Balance sheet is completely unleveraged that
will help in expansion plans.
On the positive side, the
prices of coal have declined in international market that will reduce the fuel
cost. With the strong Brand image, LCL is confident to produce impressive
results in next financial year.
AUDITOR’S
REPORT
Auditor says in his report that
there is no scope limitation in the audit and in Auditor’s opinion:
Proper books of account have
been kept by the company as required by the companies’ ordinance 1984, all the
financial statement are in accordance with the accounting policies consistently
applied, except some amendments in the presentation of financial statements and
income taxes (recovery of underlying assets) that does not have any material
effects on the financial statements of the company.
The Auditor has given a modified
clean opinion by drawing attention to the “note 16” of financial statement which explains that the
company has included an amount of Rs.538.812 million as an asset representing a
claim of refund of excise duty in its books of account, while the company has a
dispute with Federal Board of Revenue (FBR) on the calculation of the excise
duty on retail price of cement from the first day of its sales of cement in
1996.
FBR has calculated excise duty
on the declared retail price inclusive of excise duty while company was in the opinion
that excise duty should not be included in retail price for the calculation of
excise duty payable and filed a petition in Peshawar High Court for this
matter. The High Court announced the judgment that this system of calculating
excise duty is unlawful and the petitioners are not liable to pay duties of
excise forming part of the retail price of cement.
As a result of High Court judgment,
LCL has filed a refund claim of Rs.538.812 million on May 08, 2007 with the
collector of Central excise and Sales Tax Peshawar. While verifying the refund
claim, the collector has issued show cause notice to the company raising
certain objections, whereas Peshawar High Court has granted a stay order to
company against any adverse proceeding by the FBR. The company filed a
complaint before the Federal Tax Ombudsman (FTO) with an application for early
issuance of refund, the FTO has directed the FBR to verify the refund and
submit the report.
SATAEMENT OF COMPLAINCE
LCL
has prepared this statement in compliance with the code of corporate governance in regulation no. 35 of the listing
regulations of Stock Exchanges to ensure the best practices of corporate
governance. The company has applied principles in following manners.
- Management: LCL’s Board of Directors comprises of 5 non- executive, 2 executive and 1 independent director.
- Accounts/Financial Setups: The CFO of the company has appointed by the board and all the corporate and financial reporting requirements of CCG has met by the company.
- Audit: Board has set an effective internal audit committee in accordance with the CCG.
Auditor says in his report that the
company has provide all the required documents in this regard and they have
ensured the compliance of requirement to the extent of approval of related
party transactions by the Board and its placement before the audit committee of
the company but they have not chased that whether the transactions were
undertaken at arm’s length price or not.
He further says they have not found
any immateriality or any discrepancy that leads to inappropriate reflection of
company’s compliance.
SIGNIFICANT
ACCOUNTING POLICIES
Revenue Recognition
LCL uses a conservative approach in
revenue recognition. Revenue is recognized when it’s probable that economic
benefits will flow to company. Revenue is measured at fair value of
consideration. Revenue policy on sale of different goods and services:
- ŒGoods: Revenue is recognized at the point of sale when risks and reward of ownership is transferred to the buyer.
- Electricity: Revenue is recorded on the basis of output delivered and capacity available.
- Return on bank deposit: is recorded on a time proportion basis.
No comments:
Post a Comment