Cables & Electrical Goods :SIEMENS (PAKISTAN) ENGINEERING COMPANY LIMITED - Six Months Ended March 31, 2005 (Un-audited)

Siemens (Pakistan) Engineering Company Limited (Siemens Pakistan) is incorporated in Pakistan as a public limited company and its shares are quoted on the Karachi, Islamabad and Lahore Stock Exchanges. Siemens Pakistan is principally engaged in the manufacture, installation and sale of electronic and electrical capital goods and also executes projects under contracts.
The Company is a subsidiary of Siemens AG (incorporated in Germany), which holds 64 % of the total shares. The number of employees of Siemens Pakistan as at September 30, 2004 was 1,284 persons.
The Directors in their Review of the financial statements of the company for the six months period ended March 31, 2005 state that the economy of Pakistan continued to enjoy significant growth and that their key export market - Dubai - grew unabated in power transmission and distribution.
New orders of Rs 9.2 billion have been received during first half of the financial year - a record performance. Major contributions include projects for building grid stations in Dubai and projects in Telecommunication sector mainly mobile phone networks.
Orders in hand position is satisfactory as a whole at the end of the first half of the year. All efforts are continuing to achieve the targets set for the current business year but due to the uncertainties inherent in different segments of the company's business it is difficult to make a fair prognosis of the second half of the business year.
In order to comply with the requirements of IAS-14 "Segment Reporting" the activities of the company have been grouped into five segments of related products and services. The energy segment (contributing 51 % of revenue during 6 months period under review) mainly relates to supply and installation of transformers, switchboards, and other related power generation, transmission, and distribution equipment. Rotary machines and product segment (contributing 6% of revenue) includes diesel generating set, motors, alternators and drives etc.
Industry automation and services segment (contributing 14 % of revenue) includes designing, engineering and construction services in electrical field, mechanical field and information technology services. Information and communication segment (contributing 27% of revenue) covers supply and installation of telecommunication and other related equipments. Other operations (contributing 2 % of revenue) include supply and services of health care equipments, solar equipments and installation of railway signalling.
It has been stated in the notes that the transactions with related parties were carried out on commercial terms and conditions and at prices agreed based on inter company prices. Shared services are charged by Siemens, AG at uniform rates to all locations in the region. Major related parties comprise of Siemens, AG, its subsidiaries and associates and other companies with common directors that of Siemens Pakistan with significant influence on other companies, employee retirement benefit funds and key employees.
For the six months ended March 31, 2005 the total value of such transactions is Rs 3,108 million (54 % of net sales) as against Rs 1,432 million (47% of net sales) for corresponding six months last year.
Total assets of the company increased from Rs 4,991 million as at September 30, 2004 to Rs 6,671 million, an increase of 34 %. This has been due to increased level of operational activities. Siemens Pakistan enjoys sound financial position.
Current ratio is above one. There is no long term debt. Paid up capital as at March 31, 2005 is relatively small (Rs 78 Million) but shareholders equity is large (Rs 2,247 million) which equals 34 % of total assets. Considering the performance of the first half year and good liquidity position, the directors have declared interim dividend at 300% (2004: 200%). Due to improved turnover, Inventory level has decreased from 192 days as at September 30, 2004 to 141days as March 31, 2005.
The level of Receivables has also improved from 114 days as at September 30, 2004 to 69 days as at march 31, 2005.
Net sales for the six months ended March 31, 2005 increased by 92% to Rs 5,802 million as compared to Rs 3,022 million for the corresponding six months period last year, largely due to the projects being undertaken in Energy and Telecommunication sector.
This has been a record performance. This increase, however, was not fully reflected in the profit margins as cost of goods sold was 86 % of net sales during the period under review as against 81 % of net sales in the corresponding period last year. Profit after tax for the period under review increased in absolute terms but remains constant at 6 % of net sales with the comparative period last year. Return on equity increased from 9 % for the previous period to 15 % for the six months ended March 31, 2005. This has been good performance. Performance statistics are enclosed.

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Performance Statistics                (Million Rupees)

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Balance sheet                                  -As At-

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                             September 30     March 31

                                     2005         2004

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Share Capital-Paid-up:                420          420

Share Capital-Paid-up:             77,696       77,696

Reserves:                       1,812,935    1,812,935

Un-appropriated Profit:           356,295      257,681

Equity-Basic:                   2,246,926    2,148,312

Surplus on Revaluation of Assets:       0            0

Total Equity:                   2,246,926    2,148,312

Non-current liabilities:           84,277       10,256

Capitalisation:                 2,331,203    2,158,568

Current Liabilities:            4,339,864    2,831,961

Total Liabilities and Equity:   6,671,067    4,990,529

Fixed Assets,

 including intangibles:           646,670      568,759

LT receivables, etc               359,445      178,282

Stock-in-trade:                 2,243,540    1,589,546

Trade Debts:                    1,089,765      946,953

Current Assets:                 5,664,952    4,243,488

Total Assets:                   6,671,067    4,990,529

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Ratios:

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Current ratio:                       1.31         1.50

Debt-Equity Ratio:                No debt      No debt

Book Val./share - Rs:              289.19       276.50

Quoted Share Price- (1-7-05)- Rs:  685.00            -

Price / Book Value Ratio:            2.37            -

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Profit & Loss A/c for Nine Months Ended

 March 31                            2005         2004

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Net Sales:                      5,801,516    3,021,955

Gross Profit:                     822,435      561,304

Operating Profit:                 584,647      364,767

Profit before Taxation:           581,497      327,118

Profit after taxation:            331,702      195,547

Interim Cash Dividends declared:     300%         200%

Dividend actual paid out:         232,550      100,747

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Ratios:

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Gross Profit to sales:                14%          19%

Operating profit to sales:            10%          12%

Profit after tax to sales:             6%           6%

Net profit to Equity - %:             15%           9%

ROA:                                   5%           4%

ROCE:                                 14%           9%

Earnings per share (Rs):            42.69        25.17

Inventory turnover (times):          2.59         1.90

Receivable turnover (times):         5.32         3.19

Price/Earning Ratio:                16.05            -

Asset Turnover (times):              0.87         0.61

Days Inventory:                       141          192

Days Receivable:                       69          114

Debt Service Coverage (times):    No debt      No debt

Capacity (Sep.30, 04)           Installed            -

Electric Motors- (HP):            300,000            -

Motor Control gears/board(HP):    150,000            -

Electric Transformers- (MVA):       2,000            -

Generating Sets- (KVA):            40,000            -

Switchgears/Distribution boards:    4,500 Nos        -

Electro-medical Equipment:            350 Nos        -

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