Food & Personal Care-products: CLOVER PAKISTAN LIMITED - Year Ended 30-06-2005
During the year under review the company posted highest sales and gross profit. Its main brand Tang continues to keep up with the growth momentum of the past three years. This is despite increasingly competitive environment.
Timely consumers promotions and strategic advertising helped the company to safeguard its own share of the market.
The company directors emphasized that their new global advertising campaign was particularly appreciated by target consumers. Profit before tax increased from Rs 96.23 million last year to Rs 106.07 million during the year under review showing 10.2% rise. Resultantly, profit after tax also increased by 8.8%.
As regards future prospects, the directors visualise that the company will expand and improve its facilities and product offerings in the next fiscal year.
This includes capital expenditure at the manufacturing unit as well as out box strategies to help capture diverse geographic markets in the country.
Clover Pakistan Limited is one of the constituent members of the Lakson Group of Companies which has diversified interests in food processing, real estate, cigarette manufacturing, food chain, information technology etc.
The company was incorporated in the province of Sindh having its registered office located at Lakson Square Building No 2, Sarwar Shaheed Road, Karachi. The shares of Clover Pakistan are listed on the Karachi and Lahore Stock Exchanges and it is principally engaged in the manufacture and sale of food and plastic products.
The company is marketing products of popular brands such as Tang, Maxwell House, Toblerone, Philadelphia and Clover.
As regards shareholdings in the company 18.6% stock of the company are held by company directors and their family members and 30.9% by associated companies. Local shareholders from general public own 19.41% and foreign shareholders hold 30.77% of the company's stock.
As present the share of the company is trading at Rs 112.50 per share which is 11.25 times of the par value. At this price the market capitalisation of its paid up capital (Rs 54.60 million) works out to Rs 614.25 million. Although the company has modest capital base but the reserves have swelled the shareholders equity to Rs 211.15 million which figures out to the breakup value at Rs 38.67 per 10-rupee share.
The company has strong financial backbone as evidenced from the financial ratios appended with this write up. The balance sheet is relatively awash with cash and cash equivalents at Rs 197.62 million.
The company has very attractive profit distribution profile as its six years financial highlights show that the company made yearly announcements of dividends without fail and the payout percentages were between 12.50% to 65% during last six years. For the year under review the company announced cash dividend @65% (2004: 45%).
Its manufacturing facilities are located in the province of Balochistan at Hub Industrial Trading Estate which is adjacent to Karachi, the populous city of the country having largest concentration of middle income consumers. The proximity to Karachi leverages its business in terms of market, supply chain and export.
The food processing plant of the company has been rated at the annual production capacity of 2.3 million kgs of food products. During FY 2004-05, the company's production exceeded the rated capacity as it attained 159% capacity utilisation. In case of plastic products also the company's output surpassed rated production capacity as it reached 135% capacity utilisation.
This enabled the company to optimise overhead per unit due to economies of scale.
During the year under review, the company generated net turnover in the sum of Rs 585.41 million (2004: Rs 516.13 million) registering 13.4% growth over preceding year's. The sale has been characterised by registering record highest figure and since the last six years it sustained upward trend.
Trading revenue of Rs 61.8 million constituted 8.3% of gross sales and export proceeds at Rs 14.10 million were 1.9% gross sales. While trading revenue was higher compared to last year's, the export sales were lower.
Although gross profit in the sum of Rs 251 million were also highest, the gross profit margin eroded as compared to preceding year's. The directors reasoned for the drop in margin that there were higher trade discount passed on to distributors and retailers to meet the competitive pressures.
The price of sugar which is a major constituent of the company's products, continued to increase in international market.
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Performance Statistics (Million Rupees)
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30th June 2005 2004
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Share Capital-Paid-up: 54.60 54.60
Reserves: 156.55 110.34
Shareholders Equity: 211.15 164.94
L.T. Debts: 0.32 0.71
Deferred Taxation: 0.18 2.50
L.T. Deposits: 2.37 1.66
Current Liabilities: 121.28 120.80
Fixed Assets: 39.49 48.51
L.T. Loans: 1.11 1.13
L.T. Security Deposits: 0.65 0.81
Current Assets: 294.05 240.16
Total Assets: 335.30 290.61
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Sales, Profit & Pay Out
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Net-Turnover: 585.41 516.13
Gross Profit: 250.56 230.99
Other Operating Income: 4.10 1.38
Operating Profit: 107.53 97.36
Finance (Costs): (1.46) (1.12)
(Depreciation): (14.35) (5.91)
Profit Before Taxation: 106.07 96.23
Profit After Taxation: 70.78 65.02
Earnings Per Share (Rs): 12.96 11.91
Dividend Cash (%): 65.00 45.00
Share Price (Rs) on 24/05/06: 112.50 -
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Financial Ratios:
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Price/Earning Ratio: 8.68 -
Book Value Per Share: 38.67 30.21
Price/Book Value Ratio: 2.91 -
Debt/Equity Ratio: 0:100 0:100
Current Ratio: 2.42 1.99
Asset Turn Over Ratio: 1.75 1.78
Days Receivables: 9 15
Days Inventory: 79 111
Gross Profit Margin (%): 42.80 44.75
Net Profit Margin (%): 12.09 12.60
R.O.A. (%): 21.10 22.37
R.O.C.E. (%): 33.07 38.29
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Capacity & Production (000 Kgs)
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Food Products
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Capacity: 2,334.00 2,334.00
Production: 3,708.03 3,387.71
Capacity Utilization (%): 158.78 145.15
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Plastic Products
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Capacity: 27.00 27.00
Production: 36.50 30.58
Capacity Utilization (%): 135.19 113.26
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COMPANY INFORMATION: Advisor: Sultanali Lakhani; Chairman: Iqbal Ali Lakhani; Chief Executive: Zulfiqar Ali Lakhani; Director: Tasleemuddin Ahmed Batlay; Company Secretary: Ramzan Ali Halani; Registered Office: Lakson Square Building No 2 Sarwar Shaheed Road, Karachi 74200; Web Address: not reported; Factory: B-182, Hub Industrial Trading Estate Hub, District, Lasbella, Balochistan.
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