Pharmaceuticals: PARKE DAVIS & COMPANY LIMITED - Half Year Ended June 30 2004

This is a public limited company incorporated in the province of Sindh having its registered office and manufacturing facilities located at B-2 S.I.T.E. Karachi. The company was listed at Karachi Stock Exchange in 1983. As per note annexed with the accounts under review, it is informed that the company together with the Pfizer Laboratories Ltd, (PLL) jointly petitioned the Honourable High Court of Sindh and prayed, inter-alia, that the company be amalgamated with PLL.
Based on the Honourable Court order fresh valuation as at 31st December 2002 was conducted and the valuation report submitted to the Honourable Court. It has been also stated in the Note.
"The minority shareholders of PLL have challenged such report and the matter is yet pending final evaluation".
Another Note reported that the company has policy whereby purchases from related parties Pfizer Corporation, Pharma (the parent company) and its affiliated companies are entered into arm's length prices using "transactional margin method".
It has been also reported that the company has entered into executive, marketing, medical, financial, but man resource service agreement with Pfizer Laboratories Ltd (PLL) and into a general services agreement with Pharmacia Pakistan (Private) Ltd.
There functions of the companies have been pooled and costs are shared by each company under "Cost plus method" based on management's estimate of utilisation of such services.
The company has also entered into a toll manufacturing agreement with PLL. The toll manufacturing charges have been determined under "comparable uncontrolled price" (CUP) method based on the toll manufacturing charges to unrelated parties by affiliated companies less directly attributable costs borne by PLL to facilitate the production of its goods.
During the half year under review the company's sales at Rs 594.50 million, Gross Profit at Rs 269.11 million and operating profit at Rs 166.77 million showed increased over related figures in the corresponding period of last year by 4.9%, 3.2% and 12.6% respectively. Gross margin was slightly lower.
Other income was nearly three times. Net Profit after taxation was 26% higher at Rs 152.48 million over Rs 126.91 million in the HY 2003-04.
The closing price of its share on 6/12/04 was recorded at Rs 900 per share which is 90 times of the par value. The company has highly attractive profit distribution profile. During the last two yearly the dividend pay-outs were at 250 percent per year. The growth in sales is mainly due to volume sales.

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Performance Statistics                (Million Rupees)

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Balance sheet                                  -As At-

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                                  June 30  December 31

                                     2004         2003

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Share Capital-Paid-up:              19.58        19.58

Reserves & Profit:               1,176.28     1,023.81

Shareholders Equity:             1,195.86     1,043.39

Deferred Liabilities:               66.10        62.34

Current Liabilities:               233.05       154.16

Fixed Assets:                      247.03       251.52

L T Loans:                           1.98         2.36

L.T Deposits:                        1.18         1.25

Current Liabilities:             1,244.82     1,004.76

Total Assets:                    1,495.01     1,259.89

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Profit & Loss A/c For the

 Half Year Ended June 30             2004         2003

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Sales-Net:                         594.50       566.62

Gross Profit:                      269.11       260.84

Operating Profit:                  166.77       148.15

Financial (Charges):                (2.67)      (1.38)

Other Income:                       28.94        10.81

Profit Before Taxation:            183.06       149.41

Profit After Taxation:             152.48       126.91

Earning Per Share (Rs):             77.86        64.80

Share Price (Rs) on 6/12/04:       900.00            -

Price/Earning Ratio:                11.56            -

Book Value of Share (Rs):          610.75       532.86

Debt/Equity Ratio:                  0:100        0:100

Current Ratio:                       5.34         6.52

Gross Profit Margin (%):            45.27        46.03

Net Profit Margin (%):              25.65        22.39

R O A (%):                          10.20        10.07

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