Annual Report of Packages Limited 2011

For the year ended December 31, 2011

Financial Statements

61

Balance Sheet
as at December 31, 2011
(Rupees in thousand) Note 2011 2010

EQUITY AND LIABILITIES CAPITAL AND RESERVES Authorised capital 150,000,000 (2010: 150,000,000) ordinary shares of Rs. 10 each 22,000,000 (2010: 22,000,000) 10 % non-voting cumulative preference shares / convertible stock of Rs. 190 each Issued, subscribed and paid up capital 84,379,504 (2010: 84,379,504) ordinary shares of Rs. 10 each Reserves Preference shares / convertible stock reserve Accumulated (loss) / profit NON-CURRENT LIABILITIES Long-term finances Deferred income tax liabilities Retirement benefits Deferred liabilities CURRENT LIABILITIES Current portion of long-term finances - secured Finances under mark up arrangements - secured Trade and other payables Accrued finance costs 7 11 12 13 380,952 796,227 1,731,255 534,021 3,442,455 14,286 141,231 1,794,059 471,712 2,421,288 7 8 9 10 8,575,339 2,004,000 12,358 161,795 10,753,492 7,956,291 2,168,000 167 149,173 10,273,631 5 6 7 843,795 28,179,067 1,605,875 (1,080,744) 29,547,993 843,795 24,218,774 1,605,875 261,441 26,929,885 4,180,000 4,180,000 1,500,000 1,500,000

CONTINGENCIES AND COMMITMENTS

14

43,743,940

39,624,804

62

Annual Report of Packages Limited 2011

(Rupees in thousand)

Note

2011

2010

ASSETS NON-CURRENT ASSETS Property, plant and equipment Investment property Intangible assets Investments Long-term loans and deposits Retirement benefits 15 16 17 18 19 9 18,346,058 29,943 38,888 16,288,141 110,873 89,299 34,903,202 18,614,814 31,588 2,392 12,219,037 128,429 94,557 31,090,817

CURRENT ASSETS Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments and other receivables Income tax receivable Cash and bank balances 23 24 25 454,548 941,439 175,676 8,840,738 43,743,940 The annexed notes 1 to 46 form an integral part of these financial statements. 265,361 766,107 1,140,143 8,533,987 39,624,804 20 21 22 978,741 4,525,757 1,764,577 1,049,950 3,669,151 1,643,275

Towfiq Habib Chinoy Chairman

Syed Hyder Ali Chief Executive & Managing Director

Syed Aslam Mehdi Director

63

819 3.323) 997.475.567.912 (511.375.259) (1.952) (18.993.301.238) (579.732.679 (498.626.908 (17.189) (1.668) (55.887.556 34.969 3.198 1.726.598.768) (555) 358.Profit and Loss Account for the year ended December 31.260 (317.256 3.94) (3.362 (18.94) The annexed notes 1 to 46 form an integral part of these financial statements.598) 1.283) (1.433 3.58) (3.756) (92.101.58) (18.852 213.079) (332.368 (104.040.196) (1.210.362) 382.996) 802.201 18.535.837.947) (562.967 23.791) (15.425) Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing costs Projects expenditure Other operating expenses Other operating income Loss from operations Finance costs Investment income Impairment charged on investments Loss before tax Taxation Loss for the year Loss per share basic diluted Rupees Rupees 42 42 35 32 33 34 27 28 29 30 31 26 19.266.349) (3.239.457 20. 2011 (Rupees in thousand) Note 2011 2010 Local sales Export sales Gross sales Less: Sales tax and excise duty Commission 22.708.346) (15.290 (391.185) 202.525 18. Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 64 .000 (619.235 21.

460.952) (332.211 The annexed notes 1 to 46 form an integral part of these financial statements.425) 4.293 2.892. 2011 (Rupees in thousand) 2011 2010 Loss after taxation Other comprehensive income Surplus on re-measurement of available for sale financial assets Total comprehensive income for the year (1.567. Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 65 .341 4.636 3.119.787.Annual Report of Packages Limited 2011 Statement of Comprehensive Income for the year ended December 31.

744) 29.876. 2010 Rs.233) (1.952) 4.460.605.000.907 Balance as on December 31.233) (332.912 General reserve 13.333 1. 2010 Appropriation of funds Transferred to profit and loss account Transactions with owners Final Dividend for the year ended December 31.993 The annexed notes 1 to 46 form an integral part of these financial statements.875 (Rupees in thousand) Balance as on December 31.893 9.233) (332. 2011 Preference shares / convertible stock reserve 1.660.425) 261. 2009 Rs.000 (3.795 2.547.333 1.293 (274.000 843. 2009 Appropriation of funds Transferred from profit and loss account Transactions with owners Final Dividend for the year ended December 31.099 Total 23.952) (274.441 (274.605.25 per share Loss for the year Other comprehensive income Balance as on December 31.893 Fair value reserve 561.080.141.875 (274.233) (1.460.119.876.333 Accumulated profit / (loss) 3.636 26.868.929.Statement of Changes in Equity for the year ended December 31.548 16.795 2.425) 4.119.681.416.841 16.660.876.875 (1.795 Share premium 2.25 per share Loss for the year Other comprehensive income 4.160.605. 2011 843.893 4.636 4.567.885 3. 3.000) 500.567. 3.293 (500.000) Share capital 843. Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 66 .000.

Annual Report of Packages Limited 2011 Cash Flow Statement for the year ended December 31.684 (14. 2011 (Rupees in thousand) Note 2011 2010 Cash flow from operating activities Cash (used in) / generated from operations Finance cost paid Taxes paid Payments for accumulating compensated absences Retirement benefits paid Net cash (used in) / generated from operating activities Cash flow from investing activities Fixed capital expenditure Investments .289) (431.secured Dividend paid Net cash generated from / (used in) financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 40 (66.942 (1.968 11.688 369.418) (1.048.574) 712.912 41 (620.564.035 17.263) (16.938) (272.148 25.023 384.563 1.758) 50.619.000. Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 67 .828.034 946.secured Proceeds from long-term finances .831) (2.938) 629.551) (272.292) (490.528) (10.net Net decrease in long-term loans and deposits Proceeds from disposal of property.140 (1.790 (988.135.224 998.488) 502.590) 2.463) 998.556 190.292 399.445) 3.000 (273.912 The annexed notes 1 to 46 form an integral part of these financial statements.013) (633.524) (62.255 (196.805) (50.037.286) 1. plant and equipment Proceeds from assets written off due to fire Dividends received Net cash (used in) / generated from investing activities Cash flow from financing activities Repayment of long-term finances .

clarifies that an entity shall present an analysis of other comprehensive income for each component of equity. The application of this amendment has no material impact on the Company’s financial statements. Legal status and nature of business Packages Limited (‘The Company’) is a public limited Company incorporated in Pakistan and is listed on Karachi. ‘Financial instruments: Disclosures’. such right issues are now classified as equity regardless of the currency in which the exercise price is denominated. ‘Presentation of financial statements’. IAS 1 (Amendments). either in the statement of changes in equity or in the notes to the financial statements.1 Amendments to published standards effective in current year New and amended standards. 1984 or the requirements of the said directives prevail. 2011: IFRS 7 (Amendments). the equity instruments should be measured to reflect the fair value of the financial liability extinguished. ‘Consolidated and separate financial statements’. apply prospectively for annual periods beginning on or after July 1. The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability (debt for equity swap). 1984. The application of this amendment has no material impact on the Company’s financial statements. 1984. IFRIC 19. beginning on or after the following dates: 2. amendments or an interpretation to existing standards The following amendments to existing standards have been published that are applicable to the Company’s financial statements covering annual periods.Notes to and Forming Part of the Financial Statements for the year ended December 31. provisions of and directives issued under The Companies Ordinance. (Amendments). issued in 2003. Accordingly. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by Institute of Chartered Accountants of Pakistan as are notified under The Companies Ordinance. ‘Interests in joint ventures’. IAS 27. IAS 28.1 Basis of preparation These financial statements have been prepared in accordance with the requirements of The Companies Ordinance. IAS 32 ‘Financial instruments presentation . paperboard. 1984 or directives issued by Securities and Exchange Commission of Pakistan differ with the requirements of IFRS or IFAS. Initial application of standards. 2. Wherever the requirements of The Companies Ordinance. It is principally engaged in the manufacture and sale of paper. The application of this interpretation has no material impact on the Company’s financial statements. Lahore and Islamabad Stock Exchanges. If the fair value of the equity instruments issued cannot be reliably measured. It requires a gain or loss to be recognised in profit or loss. 2. Previously.2. which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the Government and other governmentrelated entities. issued in November 2009 supersedes IAS 24. ‘Extinguishing financial liabilities with equity instruments’. ‘Related party disclosures’. The application of this amendment has no material impact on the Company’s financial statements. 2009. or earlier when IAS 27 is applied earlier. 2011 1. and interpretations mandatory for the first time for the financial year beginning January 01. 2. the Company has presented analysis of other comprehensive income for each component of equity in the statement of changes in equity.classification of right issues’. issued in October 2009 addresses the accounting for right issues that are denominated in a currency other than the functional currency of the issuer. clarifies that the consequential amendments from IAS 27 made to IAS 21. these issues had to be accounted for as derivative liabilities. The application of this standard has impacted the related party disclosures in the Company’s financial statements. Provided certain conditions are met. ‘Investments in associates’ and IAS 31. ‘Related party disclosures’. ‘The effect of changes in foreign exchange rates’. emphasises the interaction between quantitative and qualitative disclosures about the nature and extent of risks associated with financial instruments. the requirements of The Companies Ordinance. packaging materials and tissue products. IAS 24 (Revised).2 68 . 1984 (the Ordinance) and the approved accounting standards as applicable in Pakistan.

currently requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. The amendments corrects an unintended consequence of IFRIC 14. 2012. This is applicable on accounting periods beginning on or after January 01.‘Disclosures of interests in other entities’. This is applicable on accounting periods beginning on or after January 01. This is applicable on accounting periods beginning on or after July 01. 2013. IFRS 9. The standard is not applicable until January 01. IFRS 9 has two measurement categories: amortised cost and fair value. as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss. in cases where the fair value option is taken for financial liabilities. IFRS 13 . These include amortised-cost accounting for most financial liabilities. This is the first part of a new standard on classification and measurement of financial assets and financial liabilities that shall replace IAS 39. The amendments shall promote transparency in the reporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position. 2012 and does not expect to have a material impact on its financial statements. It can be difficult and subjective to assess whether recovery shall be through use or through sale when the asset is measured using the fair value model in IAS 40. IAS 12 (Amendments). the standard retains most of the IAS 39 requirements. 2013 and does not expect to have a material impact on its financial statements. amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company The following amendments and interpretations to existing standards have been published and are mandatory for the Company’s accounting periods beginning on or after January 1. IAS 12. For liabilities. IFRS 12 . This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs.Annual Report of Packages Limited 2011 IFRIC 14 (Amendment). 2013 and does not expect to have a material impact on its financial statements. special purpose vehicles and other off-balance sheet vehicles. and the amendments correct this. A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. Without the amendment. The amendment does not address which items are presented in OCI. This change shall mainly affect financial institutions. The Company shall apply this standard from January 01. ‘Income taxes’. and the Company does not have any such liabilities. The Company shall apply these amendments from January 01. ‘IAS 19 – The limit on a defined benefit asset. including joint arrangements.2. 2013 and does not expect to have a material impact on its financial statements. entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. The Company shall apply this standard from January 01. IAS 1 (Amendments). particularly those involving securitisation of financial assets. This amendment therefore introduces an exception to the existing principle for the 69 . minimum funding requirements and their interaction’. do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. These amendments arise from the IASB’s review of off-balance sheet activities. but the Company has not early adopted them: IFRS 7 (Amendments). This standard includes the disclosure requirements for all forms of interests in other entities. 2012.‘Fair value measurement’. which are largely aligned between IFRSs and US GAAP. addresses the classification. 2013. ‘Financial instruments: Recognition and measurement’. associates. 2013 but is available for early adoption. with bifurcation of embedded derivatives. measurement and recognition of financial assets and financial liabilities. The application of this amendment has no material impact on the Company’s financial statements. 2. All equity instruments are measured at fair value. 2011. The main change resulting from these amendment is a requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are potentially recycled to profit or loss (reclassification adjustments). These are applicable on accounting periods beginning on or after July 01. ‘Investment property’. ‘Financial instruments’. Earlier application is permitted. ‘Income taxes’. The Company shall apply this amendment from January 01. 2012 or later periods. There shall be no impact on the Company’s accounting for financial liabilities. ‘Prepayments of a minimum funding requirement’. This was not intended when IFRIC 14 was issued. ‘Presentation of Financial Statements’.2 Standards. These are applicable on accounting periods beginning on or after January 01. The requirements. ‘Financial instruments: Disclosures’. the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement. unless this creates an accounting mismatch. The main change is that.

Deferred tax is charged or credited in the profit and loss account. Not all of these significant policies require the management to make difficult. ‘Income taxes − recovery of revalued non-depreciable assets’. 3.measurement of deferred tax assets or liabilities arising on investment property measured at fair value. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. including expectations of future events that are believed to be reasonable under the circumstances. unused tax losses and tax credits can be utilised. 3. 70 . The Company shall apply this standard from January 01. ‘Separate financial statements’ includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.2 Provision for taxation . plant and equipment . Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits shall be available against which the deductible temporary differences. 2012 and does not expect to have a material impact on its financial statements.1 Taxation Current Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income.note 35 Significant accounting policies The significant accounting policies adopted in the preparation of these financial statements are set out below. SIC 21. where considered necessary. shall no longer apply to investment properties carried at fair value. The revised standard is applicable for accounting periods beginning on or after January 1. 2013. judgment and estimation involved in their application and their impact on these financial statements. subjective or complex judgments or estimates. The charge for current tax also includes adjustments. unless otherwise stated. 4. Judgments and estimates are continually evaluated and are based on historical experience. to provision for tax made in previous years arising from assessments framed during the year for such years.678 million due to recognition of current unrealised actuarial losses on its defined benefit plans. except in the case of items credited or charged to equity in which case it is included in equity. which is withdrawn. 3. These judgments involve assumptions or estimates in respect of future events and the actual results may differ from these estimates.1. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the balance sheet date. The Company shall apply these amendments from January 01.2 i) ii) iii) iv) 4. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year.note 4. if enacted. IAS 27 (Revised 2011). The amendments also incorporate into IAS 12 the remaining guidance previously contained in SIC 21. The Company shall apply this amendment from January 01. These policies have been consistently applied to all the years presented. IAS 19 (Amendments). 2013 and does not expect to have a material impact on its financial statements. 2013. The Company’s significant accounting policies are stated in note 4.2 Provision for employees’ retirement benefits . The following is intended to provide an understanding of the policies the management considers critical because of their complexity. The amendment shall eliminate the corridor approach and calculate finance costs on a net funding basis. ‘Employee benefits’ is applicable on accounting periods beginning on or after January 01. 480. As a result of the amendments. The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates are significant to the financial statements are as follows: Estimated useful lives of property.note 18.1 Basis of measurement These financial statements have been prepared under the historical cost convention except for revaluation of certain financial instruments at fair value and recognition of certain employee retirement benefits at present value. 2013 and its impact on retained earnings shall be Rs.7 & 9 Recoverable amount of certain investments in equity instruments .note 4.

If such indication exists. Depreciation on buildings is charged to profit on the straight line method so as to write off the depreciable amount of building over its estimated useful life at the rates ranging from 3. plant and equipment is charged to profit on the straight-line method so as to write off the depreciable amount of an asset over its estimated useful life at the following annual rates: Buildings Plant and machinery Other equipments Furniture and fixtures Vehicles 2. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount.Annual Report of Packages Limited 2011 4. All other repair and maintenance costs are charged to profit and loss account during the period in which they are incurred. Freehold land and capital work-in-progress are stated at cost less any identified impairment loss. plant and equipment. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. except freehold land and capital work-in-progress. at each financial year end. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.33% 33.3 Investment property Property not held for own use or for sale in the ordinary course of business is classified as investment property. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset.67% per annum. The Company’s estimate of the residual value of its investment property as at December 31. 4.33% 20% The assets’ residual values and useful lives are reviewed. Depreciation on additions to property.e. plant and equipment Property. If such indication exists. The Company assesses at each balance sheet date whether there is any indication that investment property may be impaired. 2011 has not required any adjustment as its impact is considered insignificant.25% 10% 10% 20% to to to to 20% 33. plant and equipment as at December 31. only when it is probable that future economic benefits associated with the item shall flow to the Company and the cost of the item can be measured reliably. 2011 has not required any adjustment as its impact is considered insignificant. Depreciation on all property. The investment property of the Company comprises land and buildings and is valued using the cost method i. The Company’s estimate of the residual value of its property. gains and losses transferred from equity on qualifying cash flow hedges as referred to in note 4. Where an impairment loss is recognised. 71 . Depreciation on additions to investment property is charged from the month in which a property is acquired or capitalised while no depreciation is charged for the month in which the property is disposed off. The Company assesses at each balance sheet date whether there is any indication that property. at each financial year end. are stated at cost less accumulated depreciation and any identified impairment loss. and adjusted if impact on depreciation is significant. the depreciation charge is adjusted in the future periods to allocate the asset’s revised carrying amount over its estimated useful life.5% 6. and adjusted if impact on depreciation is significant. assets are written down to their recoverable amounts and the resulting impairment loss is recognised in profit and loss account.33% to 6.17 and borrowing costs as referred to in note 4. as appropriate.20. plant and equipment is charged from the month in which an asset is acquired or capitalised while no depreciation is charged for the month in which the asset is disposed off. at cost less any accumulated depreciation and any identified impairment loss. Where carrying amounts exceed the respective recoverable amount. The assets’ residual values and useful lives are reviewed. Where carrying amounts exceed the respective recoverable amount. assets are written down to their recoverable amount and the resulting impairment loss is recognised in profit and loss account. plant and equipment may be impaired. Cost in relation to certain plant and machinery signifies historical cost.2 Property. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognised as an income or expense.

They are depreciated over their expected useful lives on a basis consistent with similar owned property.The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. The related rental obligations. If such indication exists. Where carrying amounts exceed the respective recoverable amount. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit on a straight-line basis over the lease / Ijarah term unless another systematic basis is representative of the time pattern of the Company’s benefit. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the balance outstanding. Amortisation on additions to intangible assets is charged from the month in which an asset is acquired or capitalised while no amortisation is charged for the month in which the asset is disposed off. The interest element of the rental is charged to profit over the lease term. Operating leases Leases including Ijarah financing where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Where an impairment loss is recognised. the amortisation charge is adjusted in the future periods to allocate the asset’s revised carrying amount over its estimated useful life. 4. The liabilities are classified as current and long-term depending upon the timing of the payment. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term. (2) The Company is the lessor: Operating leases Assets leased out under operating leases are included in investment property as referred to in note 16. are included in liabilities against assets subject to finance lease. Intangible assets are amortised using the straight line method over a period of three to five years. assets are written down to their recoverable amounts and the resulting impairment loss is recognised in profit and loss account. net of finance charges. Assets acquired under a finance lease are depreciated over the useful life of the asset on a straight-line method at the rates given in note 4. 4. Where an impairment loss is recognised.2. Depreciation of leased assets is charged to profit and loss account. 72 . Asset subject to finance lease are initially recognised at the lower of present value of minimum lease payments under the lease agreements and the fair value of the assets. Subsequently these assets are stated at cost less accumulated depreciation and any identified impairment loss. The Company assesses at each balance sheet date whether there is any indication that intangible assets may be impaired. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognised as an income or expense. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.4 Intangible assets Expenditure incurred to acquire computer software and SAP Enterprise Resource Planning (ERP) System are capitalised as intangible assets and stated at cost less accumulated amortisation and any identified impairment loss. the depreciation charge is adjusted in the future periods to allocate the asset’s revised carrying amount over its estimated useful life.5 (1) Leases The Company is the lessee: Finance leases Leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. plant and equipment. Depreciation on additions to leased assets is charged from the month in which an asset is acquired while no depreciation is charged for the month in which the asset is disposed off.

If any such indication exists. are included in current assets. Available for sale The financial assets including investments in associated undertakings where the Company does not have significant influence and that are intended to be held for an indefinite period of time or may be sold in response to the need for liquidity are classified as available for sale. Unrealised gains and losses arising from the changes in the fair value are included in fair value reserves in the period in which they arise. At each balance sheet date. these investments are re-measured at fair value (quoted market price). All purchases and sales of investments are recognised on the trade date which is the date that the Company commits to purchase or sell the investment. cumulative impairment loss less any impairment loss on that financial asset previously recognised in profit and loss account. in the consolidated financial statements. the Company reviews the carrying amounts of the investments to assess whether there is any indication that such investments have suffered an impairment loss. In making an estimate of recoverable amount of these investments. At each balance sheet date. that suffered an impairment. Investments in equity instruments of subsidiaries and associates Investments in subsidiaries and associates where the Company has significant influence are measured at cost in the Company’s financial statements. all other investments are classified as non-current. Impairment losses recognised in the profit and loss account on investments in subsidiaries and associates are reversed through the profit and loss account. if any. are being accounted for using the equity method. Impairment losses are recognised as expense in the profit and loss account. Investments in associates. is removed from equity and recognised in the profit and loss account. Cost in relation to investments made in foreign currency is determined by translating the consideration paid in foreign currency into Pak Rupees at exchange rates prevailing on the date of transactions. Impairment losses recognised in the profit and loss account on equity instruments are not reversed through the profit and loss account. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Impairment losses are recognised as expense in the profit and loss account. are measured at cost as it is not possible to apply any other valuation methodology. the recoverable amount is estimated in order to determine the extent of the impairment loss.6 Investments Investments intended to be held for less than twelve months from the balance sheet date or to be sold to raise operating capital. if any. the recoverable amount is estimated in order to determine the extent of the impairment loss. The investments for which a quoted market price is not available. The Company is required to issue consolidated financial statements along with its separate financial statements. unless fair value cannot be reliably measured. If any such indication exists. being the fair value of consideration given. In respect of ‘available for sale’ financial assets. At subsequent reporting dates. Other investments The other investments made by the Company are classified for the purpose of measurement into the following categories: Held to maturity Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held to maturity and are initially measured at cost and at subsequent reporting dates measured at amortised cost using the effective yield method. in accordance with the requirements of IAS 27 ‘Consolidated and separate financial statements’. 73 . Investments classified as available for sale are initially measured at cost. Cost of purchase includes transaction cost. the Company reviews the carrying amounts of the investments in subsidiaries and associates to assess whether there is any indication that such investments have suffered an impairment loss. Investments in subsidiaries and associates.Annual Report of Packages Limited 2011 4. the management considers future dividend stream and an estimate of the terminal value of these investments. are reviewed for possible reversal of impairment at each reporting date.

The Company uses the valuation performed by an independent actuary as the present value of its accumulating compensated absences. 2011.7. it has been assumed that the yield on equity shares would match the return on debt. During the current period. The future contribution rates of these plans include allowances for deficit and surplus. The Company’s policy with regard to actuarial gains / losses is to follow minimum recommended approach under IAS 19 ‘Employee benefits’. 26. Expected rate of increase in salary level 10. using the following significant assumptions. The annual leaves can be encashed at the time the employee leaves the Company on the basis of the gross salary while no encashment is available for medical leaves to executives. In prior periods. 27. (b) Accumulating compensated absences The Company provides for accumulating compensated absences when the employees render services that increase their entitlement to future compensated absences. there is an approved funded defined benefit gratuity plan for all employees. 8. there is no clear indication of return on equity shares. The actual returns on plan assets during the year were Rs.1 (a) Defined benefit plans All the executive staff participate in an approved funded defined benefit pension plan. 54 million to the pension fund and Rs. The executives and workers are entitled to earned annual and medical leaves on basis of their service with the Company.418 million for the pension and gratuity funds respectively. Expected rate of return 14.50 percent per annum of basic salaries for gratuity. using the following significant assumptions.5 percent per annum. 16 million to the gratuity fund in the next financial year. has been used for valuation of accumulating compensated absences: Discount rate 12.263 million. however. is used for valuation of these schemes: Discount rate 12.5 percent per annum. Return on Government bonds and debt is at fixed rates. Projected unit credit method. Plan assets include long-term Government bonds. Expected rate of increase in salary level 10. due to increased volatility of share prices in recent months. In addition. and Future pension increase 4 percent per annum. 74 .7 Employee retirement benefits The main features of the schemes operated by the Company for its employees are as follows: 4. equity instruments of listed companies and term deposits with banks. It has been accounted for as a change in accounting estimate during the current year resulting in a decrease in liability of Rs.5 percent per annum. therefore. The latest actuarial valuation for the pension and gratuity schemes was carried out as at December 31. and Expected mortality rate EFU 61-66 mortality table.242 million and Rs.5 percent per annum. The actual returns on plan assets represent the difference between the fair value of plan assets at beginning of the year and end of the year after adjustments for contributions made by the Company as reduced by benefits paid during the year. Projected unit credit method.4. provision for deferred liabilities (accumulating compensated absences) was made annually on the basis of unavailed accumulated leaves.25 percent per annum. Expected mortality rate EFU 61-66 mortality table. The benefit was calculated with reference to the last drawn salary and accumulated leave balances of the employees. Monthly contributions are made to these funds on the basis of actuarial recommendation at the rate of 20 percent per annum of basic salaries for pension and 4. The Company is expected to contribute Rs. actuarial valuation has been carried out by the Company for the estimation of the defined benefit obligation based on the assumptions mentioned above.

based on the number of its employees participating in the plans.Employee benefits. work-in-process and finished goods are valued principally at the lower of cost and net realisable value. cash and bank balances. 4. 4. Cost of raw materials is determined using the weighted average cost method. regarding defined benefit plans. Similarly. Retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. managed assets and costs.2 Defined contribution plan There is an approved contributory provident fund for all employees. Items in transit are valued at cost comprising invoice value plus other charges paid thereon. Equal monthly contributions are made by the Company and the employees to the fund. Stores and spares Stores and spares are valued at moving average cost. Gratuity plan is also a multi-employer plan formed by the Company in collaboration with DIC Pakistan Limited.7.10 Financial instruments Financial assets and financial liabilities are recognised at the time when the Company becomes a party to the contractual provisions of the instrument and derecognised when the Company loses control of contractual rights that comprise the financial assets and in the case of financial liabilities when the obligation specified in the contract is discharged. Bad debts are written off when identified. 4. investments. Cost of work-in-process and finished goods comprises direct production costs such as raw materials. All financial assets and liabilities are initially measured at cost.12 Trade debts Trade debts are carried at original invoice amount less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. trade and other debts.Annual Report of Packages Limited 2011 4. If the expected sales price less completion costs and costs to execute sales (net realisable value) is lower than the carrying amount. 4. cancelled or expired.8 4. Provision is made in the financial statements for obsolete and slow moving stock-in-trade based on management estimate. Financial instruments carried on the balance sheet include loans. depreciation. while items considered obsolete are carried at nil value. 4. except for those in transit. Provision is made in the financial statements for obsolete and slow moving stores and spares based on management estimate. Packages reports its proportionate share of the plan’s commitments. a write-down is recognised for the amount by which the carrying amount exceeds its net realisable value. accrued expenses and unclaimed dividends.9 Stock-in-trade Stock of raw materials. Materials in transit are stated at cost comprising invoice value plus other charges paid thereon. etc.11 Offsetting of financial assets and liabilities Financial assets and liabilities are offset and the net amount is reported in the financial statements only when there is a legally enforceable right to set off the recognised amount and the Company intends either to settle on a net basis or to realise the assets and to settle the liabilities simultaneously. The production overheads are measured based on a standard cost method. These financial assets and liabilities are subsequently measured at fair value or cost as the case may be. in accordance with guidance provided by IAS 19 . maintenance. 75 . consumables and labour as well as production overheads such as employee wages. which is reviewed regularly to ensure relevant measures of utilisation. Contribution by the companies is based on the respective number of employees of each company. which is the fair value of consideration given and received respectively.7. borrowings. production lead time etc. trade and other payables.3 Pension plan is a multi-employer plan formed by the Company in collaboration with Tri-Pack Films Limited and DIC Pakistan Limited. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. Any gain or loss on derecognition of financial assets and financial liabilities is included in the profit and loss account for the year.

Amounts accumulated in equity are recognised in profit and loss account in the periods when the hedged item shall effect profit or loss.16 Trade and other payables Liabilities for creditors and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for the goods and / or services received. 4. Finance costs are accounted for on an accrual basis and are shown as accrued finance cost to the extent of the amount remaining unpaid. of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items.18 Revenue recognition Revenue is recognised on despatch of goods or on the performance of services. borrowings are stated at amortised cost using the effective yield method.15 Borrowings Borrowings are initially recorded at the proceeds received. They are stated at the lower of carrying amount and fair value less cost to sell. whether or not billed to the Company.4. when the forecast hedged transaction results in the recognition of a non-financial asset or a liability.14 Non-current assets held-for-sale Non-current assets are classified as assets held-for-sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Return on deposits is accrued on a time proportion basis by reference to the principal outstanding and the applicable rate of return. 4. other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value and finances under mark up arrangements. The Company designates certain derivatives as cash flow hedges. 76 .13 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost.17 Derivative financial instruments These are initially recorded at cost on the date a derivative contract is entered into and are re-measured to fair value at subsequent reporting dates. In the balance sheet. 4. The Company documents at the inception of the transaction the relationship between the hedging instruments and hedged items. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument. 4. The gain or loss relating to the ineffective portion is recognised immediately in the profit and loss account. the nature of the item being hedged. as well as its risk management objective and strategy for undertaking various hedge transactions. both at hedge inception and on an ongoing basis. finances under mark up arrangements are included in current liabilities. the gain and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability. For the purpose of cash flow statement. 4. demand deposits. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in statement of other comprehensive income. Dividend income and entitlement of bonus shares are recognised when right to receive such dividend and bonus shares is established. and if so. cash and cash equivalents comprise cash in hand. The Company also documents its assessment. However. In subsequent periods.

The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. it is probable that an outflow of resources shall be required to settle the obligation. The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. Provisions are not recognised for future operating losses. All non-monetary items are translated into Pak Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. All other mark up.23 Provisions Provisions for environmental restoration. interest and other charges on borrowings are capitalised up to the date of commissioning of the related property.Annual Report of Packages Limited 2011 4. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. restructuring costs and legal claims are recognised when: (i) (ii) (iii) the Company has a present legal or constructive obligation as a result of past events. Subsequent to initial recognition.19 Foreign currency transactions and translation Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at the dates of the transactions. Where there are a number of similar obligations. 4. The financial statements are presented in Pak Rupees.22 Compound financial instruments Compound financial instruments issued by the Company represent preference shares / convertible stock that can be converted into ordinary shares or can be settled in cash. Restructuring provisions comprise lease termination penalties and employee termination payments. 4. 77 . 4. plant and equipment acquired out of the proceeds of such borrowings. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Foreign exchange gains and losses on translation are recognised in the profit and loss account.21 Dividend Dividend distribution to the Company’s shareholders is recognised as a liability in the period in which the dividends are approved. and the amount has been reliably estimated.20 Borrowing costs Mark up. 4. interest and other charges are charged to profit and loss account. which is the Company’s functional and presentation currency. All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date. the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. the likelihood that an outflow shall be required in settlement is determined by considering the class of obligations as a whole.

603.488 506.912 4.487) ordinary shares of the Company are held by IGI Insurance Limited.018.379.893 561.274 843.795 336.6 this represents the unrealised gain on re-measurement of available for sale financial assets at fair value and is not available for distribution. This shall be transferred to profit and loss account on derecognition of investments.660. an associated undertaking. 10 each issued as fully paid for consideration other than cash Ordinary shares of Rs.714 2.429 84.000.274 843.185.893 4.295 148.556. 10 each fully paid in cash Ordinary shares of Rs.119.2 Revenue General reserve At the beginning of the year Transferred (to) / from profit and loss account 6. Long-term finances These are composed of: Local currency loans .2 This reserve can be utilised by the Company only for the purposes specified in section 83(2) of The Companies Ordinance.714 1.714 314.286) 7.1.500.488 506.2 7.067 13.441 16.033 1.841 12.548 7.780 50. Issued.160.286 5.5.956. subscribed and paid up capital 2011 2010 (Number of shares) 2011 2010 (Rupees in thousand) 33.603. Note 2011 2010 (Rupees in thousand) 7.1 7.577 8.000.2 5.956.unsecured Current portion shown under current liabilities 7.876. As referred to in note 4.291 78 .218.295 148.577 7.333 (500.151.774 6.876.460.179.333 24.379. (Rupees in thousand) Note 2011 2010 6.636 4.293 9.627.000) 16.000 6.504 33.575.141.627.3 7.558.333 3.660.504 Ordinary shares of Rs. 10 each issued as fully paid bonus shares 336.000 2.970.795 20.780 50.470.470.681. Reserves Movement in and composition of reserves is as follows: Capital Share premium Fair value reserve At the beginning of the year Fair value gain during the year 6.339 5.secured Consortium Loan Term Finance Loan Others Preference shares / convertible stock .734 2.291 (380.333 28.1.681.650 (2010: 20.485.033 1.1.429 84.1 2. 1984.000 300.577 (14.1 6.000 16.952) 8.660.548 4.185.

1. Rate of return The preference share / convertible stock holders have a preferred right of return at the rate of 10 % per annum on a cumulative basis till December 31. It carries mark up at six month Karachi Inter Bank Offered Rate (KIBOR) plus 1. January 5. 422 million have been provided under the State Bank of Pakistan’s Long-Term Finance Facility (LTFF).1. The Company may.67 % per annum. either in the form of fixed number of ordinary shares.3 Others This loan has been obtained from Citibank. This carries a fixed mark up of 11.35 % per annum and is payable in 11 unequal semi-annual installments starting in June 2012 and ending June 2017. 31 million on May 20. 2011 respectively. 2013. It is secured by a first ranking exclusive hypothecation / equitable mortgage charge over all present and future fixed assets of the Company amounting to Rs.Annual Report of Packages Limited 2011 7.2011 and November 16.914 million (2010: Rs. The entire amount is secured by a ranking charge over all present and future fixed assets of the Company amounting to Rs.secured Consortium Loan This loan has been obtained from a consortium of commercial banks led by MCB Bank Limited.1.120. 2009 with IFC. It is secured by a first ranking exclusive hypothecation / equitable mortgage charge over all present and future fixed assets of the Company amounting to Rs. The effective mark up charged during the year ranges from 14. It carries mark up at the rate of six month KIBOR plus 0. It carries mark up at six month KIBOR plus 0. 419 million (2010: Rs. 578 million have been provided by Bank Al-Habib Limited through its own source and Rs. 2014 respectively and ending on July 5.2 Preference shares / convertible stock .1. 500 million. 1. 2018 and November 15.90 % per annum and is payable in 4 unequal semi-annual installments commenced in December 2011 and ending June 2013.65 % per annum and is repayable within 7 years (including two years grace period) in 10 equal semi-annual installments starting on November 19. The effective mark up charged during the year ranges from 13.unsecured During the year 2009.34 % to 14. Terms of redemption / conversion Each holder of preference shares / convertible stock shall have a right to settle at any time. or cash. 2014 and May 15. 2013 and thereafter. 7. 2014 and June 29.2 Term Finance Loan During the year. these shall become non-cumulative till the date of settlement of preference shares / convertible stock either in cash or ordinary shares.2 Loan under Long-Term Finance Facility (under SBP-LTFF facility) The loan obtained from Bank Al-Habib Limited under State Bank of Pakistan.86 % to 14. July 6. 2011 and December 30. 2011.914 million) in favour of MCB Bank Limited being security trustee on behalf of consortium. 7.2.1 7. one ordinary share for one preference share / convertible stock. 7. the Company has obtained a long-term loan from Bank Al-Habib Limited for expansion in its paper and board manufacturing capacity. 6. the Company issued 10 % local currency non-voting cumulative preference shares / convertible stock at the rate of Rs. 190 per share amounting to USD 50 million equivalent to PKR 4. 84 million disbursed on July 6 . refuse to purchase the preference shares / convertible stock offered to it for purchase in cash.1 Loan under Term Finance Facility (BAHL own source) The loan was disbursed in tranches of Rs. 7. The effective mark up charged during the year ranges from 12. July 5.1 Local currency loans . 6.2.12 % per annum.20 % and is repayable within 7 years (including two years grace period) in 10 equal semiannual installments starting on January 5. 79 . 2018 respectively. 2011 respectively. 419 million) in favour of MCB Bank Limited being security trustee on behalf of Citibank.1. 422 million is comprised of Rs. Long-Term Finance Facility of Rs.31 % to 15. Out of the total disbursement. at the option of holder. 47 million and Rs. 338 million and Rs. 2014 respectively and ending on May 19.44 % per annum.5 million under “Subscription Agreement” dated March 25. The preference shares / convertible stock can be held till perpetuity if preference shareholders do not opt for the conversion or cash settlement.400 million (2010: Nil) in favour of Bank Al-Habib Limited (BAHL). Rs. 2018 respectively. In case of refusal by the Company. in its discretion. 2018 and December 29. Rs. 2018. 7. preference shareholders shall have the right to either retain the preference shares / convertible stock or to convert them into ordinary shares.

available to the Company for adjustment against future profits.50 % till perpetuity which represents the rate of similar instrument with no associated equity component.163 million (2010: Nil) available till December 31.576 (1.751) 8. 2015 and unused tax losses of Rs. 2013 in view of management’s estimate that these tax credits may not be utilized till December 31.861) 8.076.605. 300.299 94.470. 2001 amounting to Rs.748 million) available till December 31.493) (49.241 million (2010: Rs.1 The Company has not adjusted the net deferred tax liability against tax credit available to the Company under section 113 of the Income Tax Ordinance.875) 2.181) (10. representing the value of the equity conversion component.168.120.745) (54.1 Provision for accumulating compensated absences Provision for doubtful debts Preference shares / convertible stock transaction cost .801 2.000 3.500 (44.974) (203. (Rupees in thousand) Note 2011 2010 8.358 167 80 .048) 4.750.classified under long-term finances Accrued return on preference shares / convertible stock classified under accrued finance cost 4.946 2.577 4. as referred to in note 35.452 (1.liability portion 3.842) (183. 2015 due to sufficient unused tax losses.219) (13.076. 132. Retirement benefits Classified under non-current liabilities Pension fund Classified under non-current assets Gratuity fund 89.classified under capital and reserves Liability component . Deferred income tax liabilities The liability for deferred taxation comprises timing differences relating to: Accelerated tax depreciation Unused tax losses Minimum tax available for carry forward 8.452 (1.557 12.684. is included in shareholders equity as preference shares / convertible stock reserve.050 412.951.000 8.Preference shares / convertible stock are recognised in the balance sheet as follows: (Rupees in thousand) 2011 2010 Face value of preference shares / convertible stock Transaction costs Equity component .500 (44.605.050 The fair value of the liability component of the preference shares / convertible stock is calculated by discounting cash flows at a rate of approximately 16.743 (1.470. The residual amount.875) 2.048) 4. 116. (Rupees in thousand) 2011 2010 9.004.577 412.347.120.

215) 240.299 304.449 42.360 317.520 27.168 303.760) 13.192) 100.750 272.215 33.081 685.086 73.622 11.879 194.502 (27.168 219.870 649.300) (2.744 52.332 18.425 35.819 181.384 (55.581) 394.322 (55.724 (42.803 (55.618 94.074) 86.299 94.979 122.870 (167) 317.724 (27.750 592.636 94.502 89.192) (65.200 49.751 18.784 11.168 (314.666) 11.086 27.260 185.408 13.300) (2.358) 649.636 94.760 15.092.923 (55.568 (890.473 (12.067) (1.355) (9.605 (11.568 93.296 (35.205 89.358) (167) (61.409 173.520) 49.979 122.332) 38.449 33.656 767.295 (52.557 94.557 (18.349 Present value of defined benefit obligation as at December 31 1.110 38.500) (5.532 29.110) (10.666 327.568 235.355) 29.200) (14.449 (285.911 79.203 79.557 890. wages and amenities Plan assets are comprised as follows: Debt Equity Cash 649.449 81 .532 29.349 18.480 (167) 13.215 285.322) 13.500) (5.349) 75.893 15.384 (73.157 6.329 14.067) 63.693 38.897 1.074 247.023) 304.092.457 94.870 10.983 285.923 (93.568 304.976 890.784) 2.491) 314.408) 3.618 (37.750 (1.329 (12.Annual Report of Packages Limited 2011 Pension Fund (Rupees in thousand) 2011 2010 Gratuity Fund 2011 2010 The amounts recognised in the balance sheet are as follows: Fair value of plan assets Present value of defined benefit obligation Unrecognised actuarial loss (Liability) / asset as at December 31 Net (liability) / asset as at January 1 Charge to profit and loss account Contribution by the Company Net (liability) / asset as at December 31 The movement in the present value of defined benefit obligation is as follows: Present value of defined benefit obligation as at January 1 Service cost Interest cost Benefits paid Transferred to IGI Insurance Limited Transferred to Tri-pack Films Limited Experience loss / (gain) 685.693 38.201) (15.958) 685.296 (37.089 304.201) (1.990) 317.621 61.803) 12.581 The movement in fair value of plan assets is as follows: Fair value as at January 1 Expected return on plan assets Company contributions Employee contributions Benefits paid Transferred to IGI Insurance Limited Transferred to Tri-pack Films Limited Experience loss Fair value as at December 31 The amounts recognised in the profit and loss account are as follows: Current service cost Interest cost for the year Expected return on plan assets Contribution made by the employees Recognition of loss Total included in salaries.953) 649.

532 5% -1% 211.319 (10.173 11. the fair value of plan assets and the deficit or surplus of pension fund is as follows: (Rupees in thousand) 2011 2010 2009 2008 2007 As at December 31 Present value of defined benefit obligation Fair value of plan assets (Deficit) / surplus Experience adjustment on obligation Experience adjustment on plan assets 1.474 71.The present value of defined benefit obligation.852 41.215 649.146 172. 55 million (2010: Rs.125 141.836 283.805) 149.979 296.808 493. 13 million).581 685.secured Running finances .638 9% -10% 178.349 304.041 644.568 (240.168 3.227 600.3 196.173 23.000) 6% 5% 595.088 (102.227 107.524) 161. The present value of defined benefit obligation.2 11.074 317.750 (406.100 9% -3% 247.720) 1% -51% 547. whose fair value as at December 31.000 796.647) 5% 0% 767. Deferred liabilities This represents provision made to cover the obligation for accumulating compensated absences.secured Bills discounted .086 592. 9 million (2010: Rs.1 11.425 55.296 97.secured 11. 2011 is Rs.126 165.831) 11% -10% 890. Opening balance Provision for the year Payments made during the year Closing balance 149. whose fair value as at December 31.231 82 .449 19. 85 million).086 (175.secured Short-term finances .795 124. 2011 is Rs. the fair value of plan assets and the surplus of gratuity fund is as follows: (Rupees in thousand) 2011 2010 2009 2008 2007 As at December 31 Present value of defined benefit obligation Fair value of plan assets Surplus Experience adjustment on obligation Experience adjustment on plan assets 314.094 -1% -5% 285.490 2% 7% Fair value of plan assets include ordinary shares of the Company.092.255 2% 17% Fair value of plan assets include ordinary shares of the Company. Finances under mark up arrangements .893 303.469 117. (Rupees in thousand) Note 2011 2010 10.978 (16.106 34.

4 12.4037 to Re.551 million) respectively. stock-in-trade and trade debts. 621. in addition to the securities referred to in note 11. mark up is to be computed at the rates ranging from Re.4 Workers’ welfare fund Opening balance Provision for the year Payments made during the year Closing balance 117. (Rupees in thousand) Note 2011 2010 12.896 324.865 million) are available to the Company as a sub-limit of the running finance facilities referred to in note 11.2.3 Trade creditors include amount due to related parties Rs. The aggregate running finances are secured by hypothecation of stores.1 12. 1.secured Short-term running finances available from a consortium of commercial banks under mark up arrangements amount to Rs.380 576. 572.3811 per Rs. 78.376 million). 7.387 11. Of the facility for guarantees. 331 million) are available to the Company as a sub-limit of the running finance facilities referred to in note 11. 5.255 658. The outstanding balance of bills discounted is secured.3364 to Re.000 per diem or part thereof on the balances outstanding.000 per diem or part thereof on the balances outstanding.430 591.731.059 12. In the event the Company fails to pay the balances on the expiry of the quarter.746 117. 1.794. 10. 0. 7.457 8. Rs.340 83.313 million (2010: Nil).3 Short-term finances .secured Facilities for discounting of export / inland bills of Rs.294 million (2010: Rs. 109.1.294 million (2010: Rs. spares.923 46. as referred to in note 22.004 60.335 million (2010: Rs.615 million (2010: Rs.294 million) for guarantees.298 million) for opening letters of credit and Rs.secured Facilities for obtaining short-term finances of Rs.2 821.1 12.interest free repayable on demand Workers’ welfare fund TFCs payable Unclaimed dividends Others 12. Markup is to be fixed as per mutual agreement at the time of transaction.207 59.6849 per Rs. 0.544 million (2010: Rs.387 11. 0. 5.677 27.3290 to Re.840 9. 11. 1.346. stock-in-trade and trade debts.4082 per Rs.746 (117. 13. Advances from customers include amounts from related party Rs.574 million) and Rs.250 30.240 million). 1. 2011 2010 (Rupees in thousand) 12.210 59. spares. The rates of mark up range from Re. 11.000 per diem or part thereof on the balances unpaid. 689.440 1.739 1. 1.4 Letters of credit and bank guarantees Of the aggregate facility of Rs.2 Bills discounted .294 million) is secured by second hypothecation charge over stores.1.250 88.1 Running finances . 11.883 million). 0.627 15.290 million (2010: Rs.1.3 12. 1. The facility has not been availed in the current year. The rates of mark up range from Re. Trade and other payables Trade creditors Accrued liabilities Bills payable Retention money payable Sales tax payable Excise duty payable Advances from customers Deposits .814 million (2010: Rs. 10. on the specific bills discounted.581 million (2010: Rs. 1. the amount utilised at December 31. Accrued liabilities include amounts in respect of related parties Rs. 7.746) - 83 . year or earlier demand. 0. 0. 581 million (2010: Rs.585 1.Annual Report of Packages Limited 2011 11.619 million (2010: Rs.2 12.264 38. 1. 2. 2011 was Rs.021 1.

100 million). Property.397 million (2010: Rs.1 15.2 Commitments in respect of (i) (ii) Letters of credit and contracts for capital expenditure Rs.712 14.219 million (2010: Rs.692 814. 761.secured Preference shares / convertible stock .346.375 125.769 million) in respect of goods imported. plant and equipment Operating assets Capital work-in-progress 15.683 18. Accrued finance costs Accrued mark up / return on: Long-term local currency loans .secured 103. 14.771 15. 88.861.1 Contingencies and commitments Contingencies (i) (ii) Claims against the Company not acknowledged as debts Rs.unsecured Short-term borrowings .005.203 412.058 17.(Rupees in thousand) 2011 2010 13.328 18. 102.050 459 471.612 million (2010: Rs. 18.486 753.862 534.614.021 59. 782. payments will become due are as follows: (iii) The amount of future payments under operating leases and Ijarah financing and the period in which these (Rupees in thousand) Note 2011 2010 Not later than one year Later than one year and not later than five years 191. Letters of credit and contracts other than for capital expenditure Rs.337.952 million).814 84 . Post dated cheques not provided in the financial statements have been furnished by the Company in favour of the Collector of Customs against custom levies aggregated to Rs.605 million).092 1.784 219.109 412.118.612 1.159 1.2 18. 433. 310. 17.814 million (2010: Rs. 14.050 18.220.

330 2.987.787 6.928) 2.143.745.494 22.386.1.627 (300) 6.608 17.717 (31.372) (104.2.028 4.421 74.180 (487.373.001) 26.897 12.354 (11. 85 .134. 3.258 179. 2010 Depreciation charge / (deletions) for the year Assets written off due to fire (note 15.906.364) (269.505.718) 1.529.4 During the current year fire at the tissue conversion line and stores damaged certain items of property.614 145.815. lab equipments and other office equipments) 422.988 6.216) Furniture and fixtures Vehicles 19.342 2.704 140.489 311.226 123.495 14. 2010 Accumulated depreciation as at December 31.662 (40.296 1.330 2. 2011 Book value as at December 31.783 2.432 311.641 (25.140 67.704 140.375 14.127 million (2010: Nil).808 1.372 (4.752 (26.126.815.196 million).624.188) (140.1.829 (9.894 1.172 million (2010: Rs.630) 1.345 (4.359 17.740 463.897.949) (193.3 The depreciation charge for the year has been allocated as follows: Cost of sales Administrative expenses Distribution and marketing costs 26 27 28 1.953.485 (1.694 133.515 million (2010: Rs.453) 495.232 8.311.972 (73.486 13.318 317.494 416.494 8.650 131.330 3.275) 76.530 6.654) 28.568 179.313 14.603.372.373 186 51. 3.304) Other equipments (computers.026) Buildings on freehold land 3.796 7.774 5.012 37.294 321.342 7.167) 1.318 285.284 321.995) Furniture and fixtures Vehicles 19.835 3. 129.774.Annual Report of Packages Limited 2011 15. 2010 (Rupees in thousand) Freehold land 321. 2011 Accumulated depreciation as at December 31.909 (487.089 (300) Buildings on leasehold land Plant and machinery 179.856 19.796 7.1.185 (12.837 104.294 (58.965) 518. plant and equipment include assets amounting to Rs.048 320.709 91.684.824 23.378.577 1.619.867 50.026 million) of the Company which are not in operation.162 18.953. plant and equipment with an aggregate book value of Rs.698 14.318 285.151 42.458.602 157.172.123 320.350 74.373. 15.527) 9. 2010 Book value as at December 31.686 (1.545 23.219) (5.366 7.043) 2. 83.537 8.575 19.1.897 59.414 (27.681 41.715 15.832) 3. 12.715 (36.293 (18.2 The cost of fully depreciated assets which are still in use as at December 31.861.856 17.258 30.494 22.508 126.572 13.808 1.151 274.739) 26.172. 2010 Transfer in Additions / (deletions) Transfer in 15. lab equipments and other office equipments) 463.600 Cost as at December 31.213 (532.544 (4.578.1.716 160. 2011 Additions / (deletions) 2010 Cost as at December 31.215 416.529. The Company has claimed such loss from its insurance providers in accordance with the relevant insurance policies as referred to in note 31. (Rupees in thousand) Note 2011 2010 15.420) 167. 2011 is Rs.915) 361.021 (510.489 Assets written off due to fire (note 15.867 142.132 274.281.907 23.138) 26.755.054 35.774 (5.421 128.039) 1.549 47.4) Accumulated depreciation as at December 31.1 Property. 2009 (Rupees in thousand) Freehold land Buildings on freehold land Buildings on leasehold land Plant and machinery 307.603.1.464 244.113.1 Operating assets 2011 Cost as at December 31.4) Cost as at December 31.021 1.672.494 22. 2009 Depreciation charge / (deletions) for the year Accumulated depreciation as at December 31.464 13.979.894 287.987.647) Other equipments (computers.220.

979 89.278 1.453 737 72 4.009 994 1.Related Party Muhammad Amin Other Equipments Outsiders IGI Insurance Limited .145 84 103.337 39.Related Party IGI Insurance Limited .070 759 130 101 343 102 165 110 310 174 158 132 129 82 442 164 102 211 131 131 156 129 636 217 247 100 136 595 352 368 1. 50.063 109.715 104 151.218 392 Negotiation .do 487 618 1.436 1.550 Negotiation Buildings Outsiders IGI Insurance Limited . plant and equipment disposed off during the year is as follows: (Rupees in thousand) Particulars of assets Sold to Cost Accumulated depreciation Book value 2011 Sales proceeds Mode of disposal Land Outsiders Haji Muhammad Ibrahim and others 12.810 Insurance Claim Negotiation 86 .081 802.15.281 Insurance Claim Plant and machinery Outsiders IGI Insurance Limited .500 4.018 14.1.977 650.349 520 403 610 372 507 368 467 366 507 480 450 329 610 625 354 841 525 523 623 515 697 825 520 402 375 700 134 456 208 590 390 302 267 270 342 258 157 192 349 348 321 247 168 461 252 630 394 392 467 386 61 608 273 302 239 105 353 162 1.026 12.071 983 288 192 434 167 277 164 359 191 310 255 231 650 469 373 157 549 292 290 372 284 631 464 321 192 170 617 Company policy -do-do-do-do-do-do-do-do-do-do-do-do-do-doNegotiation Company policy -do-do-do-do-do-do-do-do-do-do-do-do-do5.022 476.311 365.303 4.5 Disposal of property. Arshad Mahmood Ehtisham Qureshi Faisal Amjad Ghulam Sarwar Hafiz Farhan Muhammad Jaffar Ishtiaq Ahmad Javed Iqbal Maheen Saqib Mehreen Bilal Mohammad Yasin Muhammad Ali Muhammad Farhan Muhammad Haroon Muhammad Imran Aziz Muhammad Ismail Muhammad Naveed Muhammad Rizwan Muhammad Uffan Sharif Muhammad Umar Rashid Sajjad Hussain Sajjad Nadeem Shoaib Kazi Suleman Javed Syed Haris Raza Syed Ihsanullah Shah Syed Kashif Alam Zafar Ahmad Outsiders DIC Pakistan Limited .Related Party Muhammad Jawaid Other assets with book value less than Rs.Related Party 70.781 31.000 28.Related Party Packages Lanka (Private) Limited Related Party Vehicles Employees Adnan Yousaf Akhtar Javed Almaee Hassan Jafri Dr.131 198 72 Insurance Claim Insurance Claim Negotiation 199.444 70.028 1.915 530 16 538 207 56 2.026 143. plant and equipment Detail of property.000 15.877 475.037 506 3.

000 21.do .730 36.784 105.do .do .Annual Report of Packages Limited 2011 (Rupees in thousand) Particulars of assets Sold to Cost Accumulated depreciation 2010 Book value Sales proceeds Mode of disposal Plant and Machinery Outsiders Muhammad Amin Scrapped 559 28.295 318 107 639 768 406 799 293 74 489 329 743 388 196 312 588 330 490 605 659 638 660 1.328 15.400 620 800 775 1.2.do .do .do .093 125.2.do .do .do .do .do .001 21.928 222 9.do . The Company has claimed such loss from its insurance providers in accordance with the relevant insurance policies as referred to in note 31.do .571 235 4.do .do .293 125 Negotiation Scrapped Vehicles Employees Ahsan Majeed Malik Amer Iqbal Amjad Hussain Asad Ali Mufti Asghar Abbas Ashfaq Khattak Dr.do - Other assets with book value less than Rs.do .168 312 22.683 19.073 25.400 405 516 659 787 649 816 320 482 644 304 725 419 222 437 Company policy .do . 50.952 73.536 984 900 479 888 851 418 814 493 403 609 67 325 369 425 266 326 611 105 302 693 136 768 578 101 186 814 362 89 71 105 207 297 603 280 498 424 584 515 387 1.537 million)] Others Advances 15.do .995 336 162.2 Capital work-in-progress Civil works Plant and machinery [including in transit Nil (2010: Rs.072 - 36.076 331 67 430 358 152 242 365 421 431 519 229 834 702 421 500 236 375 848 Negotiation .do . 301. BabarAli Farooq Ahmad Qureshi Imran Zaheer Major Arif Shaheed Mujeeb Rashid Mushtaq Ahmad Nasir Hussain Shah Bukhari Nauman Noor Sahil Zaheer Salman Yunus Shafi Karim Shahid Ul Haq Shamiyal Shariq Syed Ali Murtaza Syed M Shahid Outsiders Adnan Rafique Qureshi Azeem Ahmad Fauzia Masood Irfan Traders Jawaid Roshan Ali Shaheen Mujeeb 696 488 861 877 381 1.679 million (2010: Nil).do . 2.do .034 2011 2010 (Rupees in thousand) 15.695 570. 87 .do .1 During the current year fire at the tissue conversion line and stores damaged certain items of capital work-in-progress with an aggregate book value of Rs.302 753.461 247 6. Abida Riaz Dr.do 670 605 867 849 850 841 998 1.do .do .

547 22.827 1.312 19.959 38. Intangible assets These represent computer software and ERP system.567) 2.984 19.224 1.16.588 16.051 21. 173. (Rupees in thousand) Note 2011 2010 17.760 38.733 20.573 126.698 - 8.494) (2.281 1.926 million (2010: Rs.162 (23.296 38.808 53.037 29. as at December 31. 2009 (Rupees in thousand) Cost as at December 31.620 (124.494) 3.165) (126.776 17.594 29.594 6.698 3.943 2010 Cost as at December 31.645 - 3.261 31.959 (124.110 421 1.777 (2.594 6.153 2.594 2.808 53.771 23.110 8. 2009 Depreciation charge for the year Accumulated depreciation as at December 31.464) 8. Cost As at January 1 Additions As at December 31 Accumulated amortisation As at January 1 Amortisation for the year As at December 31 126. 2010 Depreciation charge for the year Accumulated depreciation as at December 31. 2010 Transfer out Transfer out Land Buildings on freehold land Buildings on leasehold land 8.567) (2.698 4. 2011 Book value as at December 31.1 The amortisation charge for the year has been allocated as follows: Cost of sales Administrative expenses 26 27 12 2. 2011 is Rs. 2011 2011 Accumulated depreciation as at December 31.165 88 .661 165.808 53.392 18 300 318 17. 2010 Accumulated depreciation as at December 31.594 6.594 2.808 77. Fair value of the investment property.547 22. 2010 Book value as at December 31.1 16.563 18.386 2. 171.755 8.496 2.296 38.249) (318) (124. 2011 Transfer out Transfer out Land Buildings on freehold land Buildings on leasehold land 8. 2010 (Rupees in thousand) Cost as at December 31. based on the valuation carried out by an independent valuer.563 18.732) 38. Investment property Cost as at December 31.313 million).464) (23.2 Depreciation charge for the year has been allocated to administrative expenses.296 38.888 124.

98%) Packages Construction (Private) Limited 18.Rs.1.233 2.146. 738.141.33% (2010: 33.1 Related parties Subsidiaries .389 million respectively as referred to in note 34.17% (2010: 2.3 2. 1.2 442.378 10.61% (2010: 10.1.141 3.698.120) fully paid ordinary shares of SL Rupees 10 each Equity held 79. the recoverable amount of investment in Tri-Pack Films Limited exceeds its existing carrying amount.681. 4.294) fully paid ordinary shares of Rs.038 442.510 million) 4.3 11. IGI Insurance Limited and IGI Investment Bank Limited during the year of Rs.2 & 18. 18.17%) Market value .98% (2010: 54.000 (2010: 2.1.2 The number of shares in IGI Insurance Limited increased due to issuance of bonus shares during the year.890 million and Rs. 10 each Equity held 2.000 15.377.1.87% in profit after tax till 2020 and terminal growth of Nil. 30.141.219. 10 each Equity held 33.unquoted DIC Pakistan Limited 3.488 million (2010: Rs.010 2.288.370 35.07% (2010: 79.488 878.625. 10 each Equity held 99.669.010 15.915 (2010: 4.2 18.Rs.1.1 18.3 19.537.33%) Market value .150 million (2010: Rs.915) fully paid ordinary shares of Rs.610.000.99%) Packages Lanka (Private) Limited 44. The Company’s investment in IGI Insurance Limited and IGI Investment Bank Limited is less than 20% but they are considered to be associates as per the requirement of IAS 28 ‘Investments in Associates’ because the Company has significant influence over the financial and operating policies of these companies.559 18.910 million.948 523.698.233 4.Annual Report of Packages Limited 2011 (Rupees in thousand) Note 2011 2010 18.054.248) fully paid ordinary shares of Rs.267 (2010: 7.99% (2010: 99. Based on the above.000) fully paid ordinary shares of Rs.000 (2010: 10.090 25.500.3 89 . 5.000 3. 523. The Company has assessed the recoverable amount of investment in Tri-Pack Films Limited based on value in use calculation.771 16.500.221.611 2. 10 each Equity held 54. 354.332 3.478 12.938 482.938 477. 10 each Equity held 10.000) fully paid ordinary shares of Rs.2 & 18.120 (2010: 44. Rs. This calculation has been made on discounted cash flow methodology for real cash flows using a weighted average cost of capital of approximately 8%.377.07%) Associates Quoted IGI Insurance Limited 18.61%) Market value .141.1 18.248 (2010: 3. The Company has recognised impairment losses in Packages Construction (Private) Limited.037 18.370 13.611 3.559 8.6 million) IGI Investment Bank Limited 18.838.000.146. 18.537. cumulative annual growth rate of 7.815 million) Tri-Pack Films Limited 18.Rs. 1. Investments These represent the long-term investments in: Related parties Other long-term investments 18.603 million (2010: Rs. 13.610.4 3.

however.746 million (2010: Rs. Note 2011 2010 (Rupees in thousand) 19.248 (2010: 3.126.000.126.447 128.5 10. 10 each Coca-Cola Beverages Pakistan Limited 500.05%) Market value . 1. 2.2 4.2 This represents an unsecured loan given to Sui Northern Gas Pipelines Limited (SNGPL) for the development of the infrastructure for the supply of natural gas to the plants at Bulleh Shah Paper Mill.000 (2010: 1. investments in others have been classified as available for sale and measured at fair value as referred to in note 4.000 18.400 25.025 8. 10 each Orient Match Company Limited 1.649. for the purpose of measurement. The remaining loans are unsecured. The remaining amount is receivable in 6 annual installments.000 10.400) (16.453 18.649.226 145.000) fully paid non-voting shares of Rs.1 19.125 23 23 (852) (16.5 13.141. 90 .125 million (2010: Rs. 19.771 15.478 25 25 5.800 27. 10 each Equity held 0.278 98.873 3.4 Other long-term investments Quoted Nestle Pakistan Limited 3. 13.746 8.975) 128.248) fully paid ordinary shares of Rs.500) fully paid ordinary shares of Rs.(Rupees in thousand) Note 2011 2010 18.000 (2010: 500.000.025 13.429 19.900 (2010: 1. Loans to employees aggregating Rs. 8.Rs.252) 110. 100 each 15.666.5 Nestle Pakistan Limited and Tetra Pak Pakistan Limited are associated undertakings as per The Companies Ordinance.500 (2010: 2. 10 each Equity held 8.400) (17.000 18.6.5% per annum and is received annually.453 million) Unquoted Tetra Pak Pakistan Limited 1.900) fully paid ordinary shares of Rs.681. Long-term loans and deposits Considered good Loans to employees Loan to SNGPL Security deposits Receivable within one year Loans to employees Loan to SNGPL 19.666.404 (575) (16.05% (2010: 8.000 5. Mark up is charged at the rate of 1. 1984.378 114.284 million) are secured by joint registration of motor cycles in the name of employees and the Company.14%) Pakistan Tourism Development Corporation Limited 2.000) fully paid ordinary shares of Rs.14% (2010: 0.1 These represent interest free loans to employees for purchase of motor cycles and cycles and are repayable in monthly installments over a period of 60 to 260 months.

852 1. The Company has claimed such loss from its insurance providers as referred to in note 31.757 1.755.778 2.452 million (2010: Nil) in respect of provision for slow moving stores and spares. The carrying value of the assets damaged was Rs.257 483.unsecured Others Considered doubtful Provision for doubtful debts 22.2 (Rupees in thousand) Note 2011 2010 22. 653.736 million)].354.201 million (2010: Nil).637.1 Stores and spares include items which may result in fixed capital expenditure but are not distinguishable and are net of an amount of Rs.329 million (2010: Rs.2. 1.725 3.479 million)] 571.269) 1. 21.778 1.577 5.524) 1.580 million (2010: Rs. 21.593 2. 189.525.497 1.189.969 million respectively.806.3 22.725 1.673.444 million (2010: Rs. 783. 14.683. 215. 1.693 1. (Rupees in thousand) Note 2011 2010 21.349 4.959 8.034 209.916 1.815 256. 20.799 (40.745 million and Rs.766 2.577 42.unsecured Subsidiaries DIC Pakistan Limited Packages Lanka (Private) Limited Associate Tri-Pack Films Limited These are in the normal course of business and are interest free. Trade debts Considered good Related parties .669.524 1.151 26 26 21.1 Raw materials and finished goods with a cost of Rs. 1.721 million)] Spares [including in transit Rs.702 978.643.950 20.2.092.127 5.Annual Report of Packages Limited 2011 (Rupees in thousand) 2011 2010 20.2 8. The carrying value of the assets damaged was Rs.764. 261.2 During the current year fire at the tissue conversion line and stores damaged certain items of stores and spares.201 3. The Company has claimed such loss from its insurance providers as referred to in note 31.039 407. Work-in-process Finished goods 2.275 22.275 40. During the current year fire at the tissue conversion line and stores damaged certain items of stock-in-trade.049.786. 11.079. 243.643.212 439 91 . 1.846 (42. Stores and spares Stores [including in transit Rs.1 22.447 million (2010: Nil).764. 5.269 1.741 566.1 Related parties . Stock-in-trade Raw materials [including in transit Rs.129 million and Rs.412 million are being valued at net realisable value of Rs.

400 12.905 6. Out of these.2 23.915 76.307 10.2 Others include debts of Rs. advances.524 8. 2011 2010 (Rupees in thousand) 23.838 million) which are secured by way of bank guarantees and inland letters of credit.822 7. 0.482 17.092 (6.299 million (2010: Rs.269 34.524 23.unsecured Trade deposits Prepayments Balances with statutory authorities Customs duty Sales tax recoverable Mark up receivable on Loan to SNGPL Term deposits and saving accounts Insurance claim receivable from related party Other receivables 19 19 23.482 3.469 96.956 265. debts amounting to Nil (2010: Rs.393 14.1 Included in advances to employees are amounts due from executives of Rs.400 10.469 8.034 million (2010: Rs.487 11.125 million) are under lien against credit facilities available as referred to in note 11.358 97 278 11.244 10.896 million).612 92 .548 575 16. Loans.307 77 838 915 172.167 52.422 14.072 454. 34.255 64.1 852 16.791 55. 210.358 95.347) 42.392 2.298 90 2. 198. prepayments and other receivables Current portion of loans to employees Current portion of loan receivable from SNGPL Advances .unsecured Subsidiaries DIC Pakistan Limited Packages Lanka (Private) Limited Associates Tri-Pack Films Limited IGI Insurance Limited These are in the normal course of business and are interest free. (Rupees in thousand) Note 2011 2010 22.306 40. deposits. 1.279 7.572 87.187 24. 59 478 14.872 17.22.2 Due from related parties .considered good To employees To suppliers Due from related parties .2.3 The movement in provision during the year is as follows: Balance as at January 1 Provision during the year Trade debts written off during the year Balance as at December 31 28 40.361 23.218 6.542 5.

0 % to 11. 36.2 The balances in saving accounts bear mark up which ranges from 5.473 5.094 36.535 1.177 (2010: USD 305. 1979.668 175. 1.332 million (2010: Rs.1 905. The tax credit amounting to Rs.426 36. 1979 and the Company has filed a writ petition against the aforesaid notices with the High Court of Sindh. the Income Tax Officer (ITO) re-opened the Company’s assessments for the accounting years ended December 31. The ITO has filed an appeal against the Commissioner’s order with the Income Tax Appellate Tribunal (ITAT).129)] In hand 25. The assessing officer after the receipt of the appellate order passed by CIT (A). in his order issued in 1988.670 1.134.150 166.107 24. The recoverable amount Rs.013 million represents the additional taxes paid as a result of the disallowance of the tax credits on reframing of the assessments.013 million on its capital expenditure for these years was refused on the grounds that such expenditure represented an extension of the Company’s undertaking which did not qualify for tax credit under this section in view of the Company’s location.1 25. Included in these are total restricted funds of Rs. 36.2 76. The Company had filed an appeal against the revised orders of the ITO before the Commissioner of Income Tax (Appeals) [CIT(A)].65% per annum. 1983 and 1984 disallowing primarily tax credit given to the Company under section 107 of the Income Tax Ordinance.Annual Report of Packages Limited 2011 (Rupees in thousand) Note 2011 2010 24.140.013 941.938 182.143 25. has issued notices under section 65 of the Income Tax Ordinance.439 730. the outcome of which is still pending. The Commissioner has. 93 . 1.858 89. The ITAT has in its order issued in 1996 maintained the order of CIT(A).013 766.1 In 1987. (Rupees in thousand) Note 2011 2010 25. Cash and bank balances At banks: On saving accounts [including USD 29.332 million) held as payable to TFC holders. held the assessments reframed by the ITO for the years 1983 and 1984 presently to be void and of no legal effect.162)] On current accounts [including USD 4. Income tax receivable Income tax refundable Income tax recoverable 24.676 951.008 9. The assessments for these years were revised by the ITO on these grounds and taxes reassessed were adjusted against certain sales tax refunds and the tax credits previously determined by the ITO and set off against the assessments framed for these years. Karachi.1 25.973 (2010: USD 801.

976) 9.733 million) and Rs.396.987 (1. (Rupees in thousand) 2011 2010 26.493 million) for stores and spares consumed.805 (57.955 75.1 10.510 1.201 (2.093 348. 3.201) 17.291.047 691. Cost of sales Materials consumed Salaries. 4.267 76.771 million) for raw material and stores and spares written off respectively.916) 17.992 84.3 21 21 21 21 Cost of goods produced includes Rs.137.997 265.410) (6.283 488.783 37.786. 19.593) 19.475) (9. Rs.452 million (2010: Nil).545 million (2010: Rs.947.732.022 million (2010: Rs.187 209. rates and taxes Insurance Repairs and maintenance Packing expenses Depreciation on property. salaries.940 18.466 2.209 111.392 million) in respect of provident fund contribution by the Company and accumulating compensated absences respectively.240 25.3 Rent.2 15. plant and equipment Amortisation of intangible assets Technical fee and royalty Other expenses Opening work-in-process Closing work-in-process Cost of goods produced Opening stock of finished goods Closing stock of finished goods 26.505.705 million) and Rs. rates and taxes include operating lease / ujrah rentals amounting to Rs.210.886 4.539 1.362 10.1 26.735 million).484.034.819 1. wages and amenities include following in respect of retirement benefits: Pension Current service cost Interest cost for the year Expected return on plan assets Contribution made by the employees Recognition of loss Gratuity Current service cost Interest cost for the year Expected return on plan assets Recognition of loss 12.993. 2.210 2.2 26. 39.745. 94 .3 17.356 2. wages and amenities Salaries.289 35.294 216.450 21. wages and amenities Traveling Fuel and power Production supplies Excise duty and sales tax Rent.359 12 27.694 235.109.644 1. 11.929 million (2010: Rs.608 18 16. wages and amenities include Rs. 344.867) 2.189.1 Salaries.769 11.395 million (2010: Rs.787 (49.737.597 (26.648 million (2010: Rs. 20.996 26.380) 1. 1.916 (256. 1.677 63.578. 231. Other expenses include provision for slow moving stores and spares amounting to Rs.724 26.548.128) 7.102.767 1.140 (209.328 627.553 12.886 464.367 In addition to above. 23.456 million (2010: Rs.412 31.600 20.(Rupees in thousand) Note 2011 2010 26. 26.349) 18.986 145.443.970 147.933 8.1. 24.359 (28.127 3.786.209 17.651 19.

276 18. salaries.179 9.720 million (2010: Rs.729 (24.843) (2. 277.992 million) and Rs.939 million (2010: Rs.1 16.377 13.850 619.727 16.589 (9. stationery and periodicals Postage and telephone Motor vehicles running Computer charges Professional services Repairs and maintenance Depreciation on property.016 16.3 Professional services The charges for professional services include the following in respect of auditors’ services for: Statutory audit Half yearly review Tax services Workers’ profit participation fund audit.2 337.981 21.284 18.145 13.Annual Report of Packages Limited 2011 (Rupees in thousand) Note 2011 2010 27.233 million (2010: Rs.645 71. 4.151 1.406) 832 4.1 (Rupees in thousand) 2011 2010 27. wages and amenities Traveling Rent.942) 3.161 2.965 844 516 9.367 21.127 17.2 Rent.047 32.000 650 5. plant and equipment Amortisation of intangible assets Depreciation on investment property Other expenses 27.146 8.059 28.689 20.815) (3. rates and taxes Insurance Printing.238 27.3 15.1. wages and amenities include Rs.943 17.947 Administrative expenses include Rs.361 16.378) 3.815 511.120 14.530 300 2.683) 490 2.471 (6.380 6.1 Salaries.056 In addition to above.863 45. 6. rates and taxes include operating lease rentals amounting to Rs. management staff pension and gratuity fund audit. Administrative expenses Salaries.153 1.633 million) in respect of provident fund contribution by the Company and accumulating compensated absences respectively. 2011 2010 (Rupees in thousand) 27.601 5. audit of consolidated financial statements and other certification charges Out of pocket expenses 2. 10.059 95 .1 27. 62. 12. wages and amenities include following in respect of retirement benefits: Pension Current service cost Interest cost for the year Expected return on plan assets Contribution made by the employees Recognition of loss Gratuity Current service cost Interest cost for the year Expected return on plan assets Recognition of loss 4.800 575 2.366 2. 53.654 19.447 17. wages and amenities Salaries. 11. 27.744 (16.901 5.161 373 346 6.588 6.422 million (2010: Rs.493 22.823 17.166 12.762 million) for stores and spares consumed.536 21.3 17.777 64. 6.291 million).

185 30.733) 1.296 8.662 million (2010: Rs.662 562.004 7.101 million) in respect of provident fund contribution by the Company and accumulating compensated absences respectively.199 million). wages and amenities Traveling Rent. 100.853 (6. 2.1 28.1 Salaries.668 115.857) (968) 1.3 Distribution and marketing costs include Rs.3 22.977 14.1. None of the directors and their spouses had any interest in any of the remaining donees during the year. Other operating expenses Loss on disposal of property.577 6. wages and amenities include Rs.094 6.823 3.200 2.194 579.846 million (2010: Rs. wages and amenities Salaries. 3. 96 . These represent expenses incurred on prospective projects which are not capitalised under International Financial Reporting Standards.146 15.1 555 555 11.135) 366 1.909 In addition to above. 3.389 (10.049 3.306 34. wages and amenities include following in respect of retirement benefits: Pension Current service cost Interest cost for the year Expected return on plan assets Contribution made by the employees Recognition of loss Gratuity Current service cost Interest cost for the year Expected return on plan assets Recognition of loss 1. Chief Executive Officer of the Company is also a member of the Board of trustees of Syed Maratib Ali Religious & Charitable Trust Society.596 1.000 to Syed Maratib Ali Religious & Charitable Trust Society.493 887 108.830 1.349 15. 5.092 33.(Rupees in thousand) Note 2011 2010 28. (Rupees in thousand) 2011 2010 28.498 18. 2. Distribution and marketing costs Salaries. rates and taxes include operating lease rentals amounting to Rs.2 143.952 million (2010: Rs. 28. Rent.228 (2. plant and equipment Donations 30.721) 199 887 3.564 25.2 29.062 120. Note 2011 2010 (Rupees in thousand) 30.807 million) for stores and spares consumed. salaries.101 3.199 286.477 7. 2.289 4. plant and equipment Provision for doubtful debts Other expenses 28.592 8. 2.910) (1.181 2.039 4.1 During the year the Company donated Rs. rates and taxes Freight and distribution Insurance Advertising Depreciation on property.776 (4.032 million) and Rs. 4.343 220.343 million (2010: Rs.

20.955 10.679 54.867 6.net Income from non-financial assets Management and technical fee [including Rs.007 49.234 4.900 4.2 and 21.145 538 2.907 million (2010: Rs.757 20.354 million has been determined as due from its insurers as of balance sheet date.911 1.969 million) from related parties] Profit on disposal of property. Surveyor is expected to complete its survey work during the year 2012 and any incremental insurance claim resulting from surveyor’s final report will be recognised accordingly.368 7. spares and stock-in-trade Stores and spares Stock-in-trade 20. As referred to in notes 15.806 Stores. stores and spares and stock-in-trade.630 5.2. Other operating income Income from financial assets Income on bank deposits Interest on loan to SNGPL Exchange gain . 557.236 44.447 215.1 15.930 5. The Company filed the insurance claim in respect of these assets.806 million) from related parties] Insurance commission from related party Rental income from investment property [including Rs.001 million (2010: Rs.577 89.1 15. 2.4.324 202.2 189.645 million (2010: Rs. 15. 373.620 37.352 349.040 167. during the year a fire incident at the tissue conversion line and stores damaged certain items of property.046 153.264 36. 22.2.777 million).082 1.2 50. 13.354 20.069 31.687 434 23.201 404.Annual Report of Packages Limited 2011 (Rupees in thousand) Note 2011 2010 31. 20.059 358.1 31. plant and equipment Buildings on freehold land Buildings on leasehold land Plant and machinery Other equipments (computers. lab equipments and other office equipments) Capital work-in-progress 15.679 131.709 9.957 6.1 31. 1.1. plant and equipment. 11.1 15.1 32.1.2 21.2. plant and equipment Net gain on insurance claim of assets written off due to fire Scrap sales Provisions and unclaimed balances written back Profit on outside jobs from related party Others 57.454 557.500 million from the insurance company and is in the process of recovering the remaining insurance proceeds. The insurer had appointed a surveyor who has submitted a survey certificate based on which a claim receivable of Rs. during the year recovered Rs.044 31.1 15.2 The expenses relating directly to the income from investment property amount to Rs.900 - 97 .847 20. The Company has.648 Carrying value of assets written off due to fire Insurance claim verified to date Net gain on insurance claim of assets written off due to fire 536. Note 2011 2010 (Rupees in thousand) Carrying value of assets written off due to fire Property.

secured Discounting charges Return on preference shares / convertible stock Loan handling charges Exchange loss .323 181.110 905.210 12. For quoted associates.709 3.unquoted Packages Construction (Private) Limited Associates .640 5.409 1. 98 .626. 220.398 28.091 50.290 33.000 181.841 412.189 5.201 50.net Bank charges Investment income Dividend income from related parties Dividend income from others Gain on sale of short-term investments 33.050 1.215 72.035 1.820 412.890 30.050 350 23.040.958 117. Impairment charged on investments Subsidiary .568 3.321 34.052 34.31.968 997.386 40.000 220.1 22.512 100.secured Finances under mark up arrangements .1 Dividend income from related parties Subsidiaries DIC Pakistan Limited Packages Lanka (Private) Limited Associates IGI Insurance Limited Tri-Pack Films Limited 35.038 59.651 159.910 - This represents impairment loss recognised based on assessment of recoverable amount. the recoverable amount is equal to fair value which has been determined with reference to active market value.546 816.quoted IGI Insurance Limited IGI Investment Bank Limited 354.389 391.598 768.546 23.3 The future minimum lease payments receivable under non-cancelable operating leases are as follows: Note 2011 2010 (Rupees in thousand) Not later than one year Later than one year and not later than five years 32.091 765.468 7.527 17.260 33.210.895 12.839 100.301 1. Finance costs Interest and mark up including commitment charges on: Long-term finances .245 12.

079 (185. 2011 are estimated approximately at Rs.25) 35.609 million).609 million (2010: Rs.86) (41.000) 15. 377.196 256.196 201.39 (0.992 million).00 (19. 377.981 million (2010: Rs.00 (13. the tax losses available for carry forward as at December 31.995.72) (21.604.000) 92.75) Average effective tax rate charged to profit and loss account (6. Taxation Current Current year Prior years Deferred 216.79) 3.40) 8.14) 4.75) (4.1 Tax charge reconciliation Numerical reconciliation between the average effective tax rate and the applicable tax rates is as follows: Applicable tax rate Tax effect of amounts that are: Not deductible for tax purposes Exempt for tax purposes Chargeable to tax at different rates Effect of change in prior years’ tax Tax credits and losses in respect of which no deferred tax asset has been recognised Tax effect under presumptive tax regime and others 35.39) (7.65 0. 2001.000 (921) 200.25) 99 . 5. For the purposes of current taxation. 2011 % age 2010 % age 35. Unused tax losses available to the Company contain unused business losses amounting to Rs.29 (36.86 3.196 (164.Annual Report of Packages Limited 2011 (Rupees in thousand) 2011 2010 35.53) (2. 3.079 The current tax provision represents the minimum tax on turnover for the year due under Section 113 of the Income Tax Ordinance.64 (39.000 40.

647 643 63 17. 36.143 3. 100 .345 25.314 The Company also provides the Chief Executive and some of the Directors and Executives with free transport and residential telephones.470 93.209 156.802 6.258 28.629 1.629 7.695 11.145 1.547 134. to the Chief Executive.443 1. 36.379 62.336 1.026 2. 360.539 3.613 411 22. 520.624 5.000).867 114 17.000 (2010: Rs. including certain benefits.314 646 19.205 37.337 742 2.2 Remuneration to other directors Aggregate amount charged in the financial statements for the year for fee to 7 directors (2010: 7 directors) is Rs.039 1.811 2.445 46.625 2.338 829 105 10.975 2.343 901 2.164 1.287 4.334 106 16.104 240.826 21.638 852 27.36.070 16.553 6.713 1.174 1.950 4.782 2.1 Remuneration of Chief Executive.102 8.225 220 202 19.394 211. full time working Directors including alternate directors and Executives of the Company are as follows: Chief Executive 2011 2010 2011 Directors 2010 Executives 2011 2010 Number of persons (Rupees in thousand) 1 1 2 2 82 60 Short-term employee benefits Managerial remuneration Housing Utilities Bonus Leave passage Medical expenses Club expenses Others Post employment benefits Contribution to provident.385 3. gratuity and pension funds Other long-term benefits Accumulating compensated absences 952 21.560 2.966 12. Directors and Executives The aggregate amount charged in the financial statements for the year for remuneration.786 9.065 244 229 23.226 4.

associates.234 57.001 22.928 119.1161 (2010: USD 1.392 5. Associates iii. Transactions with related parties The related parties comprise subsidiaries.197 1.727 - All transactions with related parties have been carried out on commercial terms and conditions.000 288.907 757.511 ii.1641).069 408.128 135.8757). amounts due from directors and key management personnel are shown under receivables and remuneration of directors and key management personnel is disclosed in note 36.Annual Report of Packages Limited 2011 37. plant and equipment Dividend income Rental income Management and technical fee Purchase of goods and services Purchase of property.707 13.6864 (2010: SEK 7.084 The variance of actual production from capacity is on account of the product mix.106 20. 101 .290 84.7225 (2010: GBP 0. CAD 1.4486 (2010: SGD 1.176 52. 39.236 1.834 20. directors. SEK 7.8767) equal to Rs.826 110. 100.tons Capacity 2011 2010 Actual production 2011 2010 Paper and paperboard produced Paper and paperboard converted Plastics all sorts converted 316.579 11. SFR 1. Subsidiaries Nature of transactions Purchase of goods and services Sale of goods and services Sale of property.250 146.498 176. 100.500 145.801 18.8777) equal to Rs.152 146.027 6.1136 (2010: USD 1.1368 (2010: Nil) and YEN 86. Post employment benefit plans 110.8624 (2010: EURO 0.250 159.334 (2010: YEN 94.600 46 90. plant and equipment Sale of goods and services Insurance premium Insurance commission Insurance claims received Dividend income Expense charged in respect of retirement benefit plans Mark up on temporary loans 898. The Company in the normal course of business carries out transactions with various related parties.7539).619 950 30.839 618.8678).829 123.316 14. Assets in foreign currencies have been translated into PAK Rupees at USD 1.1669) and EURO 0. Rates of exchange Liabilities in foreign currencies have been translated into PAK Rupees at USD 1.0922). Other significant transactions with related parties are as follows: (Rupees in thousand) 2011 2010 Relationship with the Company i.0481 (2010: SFR 1.4981).806 456.969 20.8604 (2010: EURO 0.834 19. key management personnel and post employment benefit plans. Capacity and production . GBP 0. 38.950 119. SGD 1. Amounts due from and to related parties are shown under receivables and payables. EURO 0.480 13.

645 2.922 (2.245 102.635 (61.807) (129.1.529.379.146 80.021 1.503) 84.140.346 Diluted loss per share Rupees (11.475.567.777 318 41.346) 1.72) (332.567.231) 998.343 (317.3 16 17.292) 1.425) 329.504 21. 102 .603.996 (118.255) 1.912 41.189 23.761) (66.379.210.842 106.002 (1.968) (946.394) (16. deposits.998 6.794 2.842 106.071.037.126 63.756) 15.323 (50. plant and equipment Finance costs Gain on sale of short-term investments Dividend income Profit before working capital changes Effect on cash flow due to working capital changes Increase in stores and spares (Increase) / decrease in stock-in-trade (Increase) / decrease in trade debts Increase in loans.626.074 (1.039 1.227) (620.net of tax Rupees in thousand Rupees in thousand (1.847) (20.280 8.379.900) 1.035) (1.999) 433. accordingly the diluted EPS is restricted to the basic EPS.031.676 (796.598 (3.504 (18.457 497.048.242.686.097.165 391. prepayments and other receivables Increase in trade and other payables (1.418) (178.02) The effect of the conversion of the preference shares / convertible stock into ordinary shares is anti-dilutive.94) 42. advances.066.238) (1.550.425) 84.092 (167.396) 238.1 Loss per share Basic loss per share Loss for the year Weighted average number of ordinary shares Loss per share Rupees in thousand Numbers Rupees (1.544) 202.1 34 10 9 22.504 21.2 Diluted loss per share Loss for the year Return on preference shares / convertible stock .504 (3.346 (0.143 (141. 42.715 2. Cash and cash equivalents Cash and bank balances Finances under mark up arrangements .3 31 31.551) 42. Cash (used in) / generated from operations Loss before tax Adjustments for: Depreciation on property.(Rupees in thousand) Note 2011 2010 40. plant and equipment Depreciation on investment property Amortisation on intangible assets Impairment charged on investments Provision for accumulating compensated absences Provision for retirement benefits Provision for doubtful debts Net profit on disposal of property.686.790 1.952) 84.950) Weighted average number of ordinary shares Weighted average number of notionally converted preference shares / convertible stock Numbers Numbers 84.58) (332.066.952) 325.306 11.2 30 32 33 33 1.secured 25 11 175.379. plant and equipment Net gain on insurance claim of assets written off due to fire Net loss on disposal of property.

Annual Report of Packages Limited 2011

43. 43.1

Financial risk management Financial risk factors The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by the Company’s finance department under policies approved by the Board of Directors. The Company’s finance department evaluates and hedges financial risks. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

(a)  (i) 

Market risk Foreign exchange risk Foreign exchange risk is the risk that the fair value of future cash flows of a financial instrument shall fluctuate because of changes in foreign exchange rates. The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and the Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities and net investments in foreign operations. At December 31, 2011, if the Rupee had weakened / strengthened by 10% against the US dollar with all other variables held constant, post-tax loss for the year would have been Rs. 15.286 million higher / lower (2010: Rs. 2.035 million lower / higher) mainly as a result of foreign exchange losses / gains (2010: gains / losses) on translation of US dollardenominated financial assets and liabilities. At December 31, 2011, if the Rupee had weakened / strengthened by 10% against the Euro with all other variables held constant, post-tax loss for the year would have been Rs. 6.497 million (2010: Rs. 19.620 million) higher / lower, mainly as a result of foreign exchange losses / gains on translation of Euro-denominated financial assets and liabilities.

(ii)

Price risk The Company is exposed to equity securities price risk because of investments held by the Company and classified as available for sale. The Company is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Board of Directors. The Company’s investments in equity of other entities that are publicly traded are included in all of the following three stock exchanges, Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange. The table below summarises the impact of increases / decreases of the KSE-100 index on the Company’s post-tax profit for the year and on equity. The analysis is based on the assumption that the KSE had increased / decreased by 10% with all other variables held constant and all the Company’s equity instruments moved according to the historical correlation with the index:
Impact on post-tax profit 2011 (Rupees in thousand) 2010 Impact on other components of equity 2011 2010

Karachi Stock Exchange

-

-

643,211

632,651

Post-tax profit for the year would increase / decrease as a result of gains / losses on equity securities classified as ‘at fair value through profit or loss account’. Other components of equity would increase / decrease as a result of gains / losses on equity securities classified as available for sale.

103

(iii)

Cash flow and fair value interest rate risk As the Company has no significant floating interest rate assets, the Company’s income is substantially independent of changes in market interest rates. The Company’s interest rate risk arises from short-term and long-term borrowings. These borrowings issued at variable rates expose the Company to cash flow interest rate risk. The Company analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing positions. At December 31, 2011, if interest rates on floating rate borrowings had been 1% higher / lower with all other variables held constant, post-tax loss for the year would have been Rs. 64.406 million (2010: Rs. 55.220 million) higher / lower, mainly as a result of higher / lower interest expense on floating rate borrowings.

(b)

Credit risk Credit risk represents the risk of financial loss being caused if counter party fails to discharge an obligation. Credit risk of the Company arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to distributors and wholesale and retail customers, including outstanding receivables and committed transactions. The management assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored and major sales to retail customers are settled in cash. For banks and financial institutions, only independently rated parties with a strong credit rating are accepted. The Company monitors the credit quality of its financial assets with reference to historical performance of such assets and available external credit ratings. The carrying values of financial assets exposed to credit risk and which are neither past due nor impaired are as under:

(Rupees in thousand)

2011

2010

Long-term loans and deposits Trade debts Loans, advances, deposits, prepayments and other receivables Balances with banks

110,873 1,270,175 454,548 166,008 2,001,604

128,429 1,090,556 265,361 1,134,473 2,618,819

As of December 31, 2011, trade receivables of Rs. 494.402 million (2010: Rs. 552.719 million) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging analysis of these trade receivables is as follows:
(Rupees in thousand) 2011 2010

Up to 90 days 90 to 180 days 181 to 365 days

463,453 15,496 15,453 494,402

490,212 40,860 21,647 552,719

The management estimates the recoverability of trade receivables on the basis of financial position and past history of its customers based on the objective evidence that it shall not receive the amount due from the particular customer. The provision is written off by the Company when it expects that it cannot recover the balance due. Any subsequent repayments in relation to amount written off are credited directly to profit and loss account.

104

Annual Report of Packages Limited 2011

The credit quality of Company’s bank balances can be assessed with reference to external credit ratings as follows:
(Rupees in thousand) Rating Short-term Rating Long-term Rating Agency 2011 2010

Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Bank Al-Habib Limited BankIslami Pakistan Limited Barclays Bank PLC Pakistan Citibank N.A. Deutsche Bank A.G. Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited HSBC Bank Middle East Limited JS Bank Limited MCB Bank Limited Meezan Bank Limited National Bank of Pakistan NIB Bank Limited Samba Bank Limited Silk Bank Limited Soneri Bank Limited Standard Chartered Bank Pakistan Limited The Bank of Punjab The Bank of Tokyo-Mitsubishi UFJ, Limited United Bank Limited (c) Liquidity risk

A1+ A1+ A1+ A1+ A1 A1+ A1 A1 A1 A1+ A1+ A1+ P1 A1 A1+ A1+ A1+ A1+ A1 A-2 A1+ A1+ A1+ A1 A1+

AA AA AA AA+ A AAA+ A+ A AA AA+ AA+ A1 A AA+ AAAAA AAA+ AAAAAA AAA+ AA+

PACRA PACRA PACRA PACRA PACRA S&P S&P S&P JCR-VIS JCR-VIS JCR-VIS PACRA Moody’s PACRA PACRA JCR-VIS JCR-VIS PACRA JCR-VIS JCR-VIS PACRA PACRA PACRA S&P JCR-VIS

4 2,675 13,773 10,568 50 723 619 56 2,729 614 790 36,710 19,222 2,392 2 14 74,236 9 278 544 166,008

7,542 302,571 1,122 389 2,510 83,376 3,522 725 149 2,200 899 1,402 7,860 71,277 796 320,973 275,329 3,403 2 14 47,512 824 76 1,134,473

Liquidity risk represents the risk that the Company shall encounter difficulties in meeting obligations associated with financial liabilities. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the Company’s businesses, the Company’s finance department maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors the forecasts of the Company’s cash and cash equivalents (note 41) on the basis of expected cash flow. This is generally carried out in accordance with practice and limits set by the Company. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the Company’s liquidity management policy involves projecting cash flows in each quarter and considering the level of liquid assets necessary to meet its liabilities, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans. The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows as the impact of discounting is not significant.

105

886.952 4.286 141.857 Between 2 and 5 years 578.123.233.231 1.442.929.255 534. 2011 and 2010 were as follows: (Rupees in thousand) 2011 2010 Long-term finances Total equity Total capital Gearing ratio 8. 2010 Less than 1 year Over 5 years Long-term finances Finances under mark up arrangements .333 Between 1 and 2 years 4.292.339 29.(Rupees in thousand) At December 31.421.secured Trade and other payables Accrued finance cost 14.547.092.572 (Rupees in thousand) At December 31. Consistent with others in the industry.956.885 34.011.291 26.092. The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions. In order to maintain or adjust the capital structure. the Company monitors capital on the basis of the gearing ratio.993 38.572 578.857 1.secured Trade and other payables Accrued finance cost 380.952 380.455 1.712 2. the Company may adjust the amount of dividends paid to shareholders or issue new shares.794.011.575.227 1.021 3.731.332 22% 7.905 4.233.288 380. The gearing ratios at December 31.2 Capital risk management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.857 4. the Company’s strategy was to maintain the gearing ratio below 60% and AA credit rating.857 43. During 2011.059 471. 2011 Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Long-term finances Finances under mark up arrangements .176 23% 106 .952 796.292.333 1.905 1.

44. 1. 45. 107 . The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments.250 million (2010: Rs. The quoted market price used for financial assets held by the Company are the current bid prices. 274. 2012 has resolved to transfer the Company’s paper & paperboard and corrugated businesses into a separate 100% owned subsidiary acquired subsequent to yearend. through the process of hive down subject to all necessary corporate. 2012. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. 500 million) to accumulated profit / (loss) from general reserves. The Board of Directors has proposed a final cash dividend for the year ended December 31.569 million (2010: Rs. 2012 by the Board of Directors of the Company.233 million) at its meeting held on March 21. The board has also recommended to transfer Rs. 3. 126.50 per share (2010: Rs. Once the said transfer is duly approved.25 per share). Date of authorisation for issue These financial statements were authorised for issue on March 21. the assets and liabilities of the paper & paperboard and corrugated businesses would be transferred to and vested in Bulleh Shah Paper Mill (Private) Limited. a 100% owned subsidiary of Packages Limited against the issue of shares by Bulleh Shah Paper Mill (Private) Limited to the Company. The financial instruments that are not traded in active market are carried at cost and are tested for impairment according to IAS 39. 2012 for approval of the members at the Annual General Meeting to be held on April 30. Non-Adjusting events after the balance sheet date The Board of Directors of the Company in its meeting held on March 21. shareholder and regulatory approvals.3 Fair value estimation The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. 1. 2011 of Rs. The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values. amounting to Rs.Annual Report of Packages Limited 2011 43.

711 25. advances.Property. Plant and Equipment.485 765.681. wages and amenities re-classified from Cost of sales to: Administrative expenses Distribution and marketing costs Traveling expense re-classified from Administrative expenses to Cost of sales 8.453 211.739 12. Corresponding figures Corresponding figures have been re-arranged and re-classified. prepayments and other receivables Amounts re-classified from ‘’related parties’’ to ‘’advances to suppliers’ Re-classified within investment income Amounts re-classified from ‘’dividend income from related parties’’ to ‘’dividend income from others’ Other re-classifications Aggregation as a single line item on the face of the balance sheet Re-classified “capital work in progress” to “property. ‘Related party disclosures’. Re-classified within cash and bank balances Amounts re-classified from “current accounts” to “saving accounts” Re-classified as a separate line item on face of the profit and loss account Projects expenditure re-classified from Administrative expenses Re-classified within different line items of the profit and loss account Salaries. for the purposes of comparison.46.356 Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 108 . plant and equipment” as it is considered a better presentation under International Accounting Standard 16 .116 13. deposits.328 26.791 19. issued in November 2009 Re-classified within investments Amounts re-classified from ‘’investments in related parties” to “investments in others” Re-classified within trade debts Amounts re-classified from ‘’related parties’’ to ‘’others’’ Re-classified within loans.201 753. wherever necessary.152 3. Significant re-arrangements made are as follows: (Rupees in thousand) Re-classification in respect of IAS 24 (Revised).

Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 Consolidated Financial Statements For the year ended December 31. 2011 109 .

Directors’ Report on the Consolidated Financial Statements The directors are pleased to present the audited consolidated financial statements of the Group for the year ended December 31. The Company has generated profit before tax of Rs. 1. In view of decline in the value of equity securities.457 million of last year. 1.591 million of last year achieving a sales growth of 23%. price rationalization and better working capital management. the Group reviewed the carrying amount of its investment portfolio to assess whether there was any indication of possible impairment in their carrying values as per treatments laid down in IAS 36 and 39. 2012 110 .e. product diversification. March 21.649 million with loss from operations of Rs.399 million during the year 2011 as compared to SLR 1.253) 20. 2011. Being socially responsible corporate.700 million have been recognized in Profit and Loss account in respect of shareholding in IGI Insurance Limited and IGI Investment Bank Limited respectively. Moving forward. 2012 (Syed Hyder Ali) Chief Executive & Managing Director Karachi. 616. IGI Insurance Limited and IGI Investment Bank Limited were assessed to be higher than their recoverable amounts. the Company is investing into new printing line for which civil works have been completed.955 million during the year 2011 as compared to Rs. PACKAGES LANKA (PRIVATE) LIMITED Packages Lanka (Private) Limited is a Sri Lanka based subsidiary of Packages Limited. (Towfiq Habib Chinoy) Chairman Karachi. It is principally engaged in manufacturing. 122 million generated during 2010 and showed profit growth of 39%. impairment loss of Rs. It is primarily engaged in production of flexible packaging solutions. Consequently. March 21. 175 million. Operating loss is mainly attributable to planned shut down of Paper Machine (PM-6) for re-build. the Company will continue its focus on improving operating results through tighter operating cost control.203 million and Rs. operational issues faced at boiler and natural gas shortages that resulted in use of expensive furnace oil and adversely impacted product margins of the Parent Company. the management is confident of consolidating its market share in the increasingly competitive local market. During the current year. 26. the Company embarked upon a CSR project during the year 2011 and funded construction of a Clinic Building in a neighborhood hospital for public welfare. The Company has achieved sales of Rs. The Company has generated profit before tax of SLR 112 million in the year 2011 as compared to SLR 221 million of 2010. With installation of new printing line. 170 million during the year 2011 as against Rs. price rationalization and efficient working capital management. processing and selling of industrial inks. 21.649 (175) 439 820 (643) (1. The Company has achieved turnover of SLR 1. DIC PAKISTAN LIMITED Group Results The comparison of annual audited results for the year 2011 as against 2010 is as follows: (Rupees in million) 2011 2010 A brief review of the operational performance of the Group subsidiaries is as follows: DIC Pakistan Limited is a non-listed public limited subsidiary of Packages Limited. the carrying amounts of Investment in equity instruments of associates i. This incremental profit growth is attributable to higher sales volume. the Group achieved sales of Rs. Invoiced Sales – Net (Loss) / profit from operations Share of profit of associates Investment income Impairment charged on investments in associates (Loss) / Profit before tax 21. This decline in profit is mainly attributable to increase in raw material prices in the international market which could not be passed on completely to the customers.696 246 324 816 119 During the year 2011. In view of growing competition in flexible packaging market.

39. We have also expressed separate opinions on the financial statements of Packages Limited and its subsidiary companies except for Packages Lanka (Private) Limited which was audited by other firm of auditors. 111 .2.546 million. for the year then ended. 5. March 21. 2011 and the results of their operations for the year then ended. 2012 Except for the effect. Chartered Accountants Lahore. 439. of the matter referred to in the preceding paragraph. is based solely on the report of such other auditors. amendments or interpretations to existing standards. 2011 and the related consolidated profit and loss account. Our audit was conducted in accordance with the International Standards on Auditing and accordingly included such tests of accounting records and such other auditing procedures as we considered necessary in the circumstances.550 million and taxation of Rs.243 million and taxation relating to associates of Rs.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 Auditors’ Report to the Members We have audited the annexed consolidated financial statements comprising consolidated balance sheet of Packages Limited (the holding company) and its subsidiary companies (the Group) as at December 31. These financial statements are the responsibility of the holding company’s management. The Group’s Share of income from associates of Rs. consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part thereof.355 million shown in the consolidated profit and loss account and note 18 to the consolidated financial statements includes a profit of Rs. representing Group’s share of profit in two of its associates.FERGUSON & CO. if any.F. As stated in note 2. consolidated statement of comprehensive income. 144. Our responsibility is to express an opinion on these financial statements based on our audit. and is based on unaudited financial statements of the associates. Engagement partner: Shahzad Hussain A.1 annexed to the financial statements the Group has changed its accounting policies on initial application of standards. whose report has been furnished to us and our opinion in so far as it relates to the amounts included for such company. in our opinion the consolidated financial statements present fairly the financial position of Packages Limited and its subsidiary companies (the Group) as at December 31.

000) 10 % non-voting cumulative preference shares / convertible stock of Rs.875 (1. 2011 (Rupees in thousand) Note 2011 2010 EQUITY AND LIABILITIES CAPITAL AND RESERVES Authorised capital 150.238 NON-CONTROLLING INTEREST NON-CURRENT LIABILITIES Long-term finances Deferred income tax liabilities Retirement benefits Deferred liabilities CURRENT LIABILITIES Current portion of long-term finances .047 29.249 46.689 1.795 28. 190 each Issued.512 7.479.348.914.937 542.000.379.000 (2010: 22.184.892.311 112 .844 12.000.956.469.000 4.979 14.472 1.291 2.575.439 1.846 213.952 1.832 3.015 225.875 577.504) ordinary shares of Rs. 10 each 22.853 10.605.795 24.504 (2010: 84.339 2.664 475.718 27.732 7 8 9 10 8.943.704 167 163.secured Trade and other payables Accrued finance costs Provision for taxation 7 11 12 13 380.031 13.500.500.286 511.564 4.265.094 2.632.285 843.938.283.227 1.170. subscribed and paid up capital 84.Consolidated Balance Sheet as at December 31. 10 each Reserves Preference shares / convertible stock reserve Accumulated (loss) / profit 5 6 7 843.971 11.180.000 1.secured Finances under mark up arrangements .605.000 CONTINGENCIES AND COMMITMENTS 14 44.904) 29.831.000.000 1.000) ordinary shares of Rs.575.180.400.487 27.776 40.358 179.379.000.000 (2010: 150.896.350.238.

311 Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 113 .261 49.449 9.616 821.914.962.080. plant and equipment Investment property Intangible assets Investments in associates Other long-term investments Long-term loans and deposits Retirement benefits 15 16 17 18 19 20 9 18.766 5.682 21 22 23 1.109.316 44. advances.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (Rupees in thousand) Note 2011 2010 ASSETS NON-CURRENT ASSETS Property.947.228 282.163.717 1.921 13.803.681.557 31.241 2.892.299 35.629 CURRENT ASSETS Stores and spares Stock-in-trade Trade debts Loans.013. prepayments and other receivables Income tax receivable Cash and bank balances 24 25 26 466.424 89.564 983.320 9.548 18.028.181 4.834 3.184 139.099 3.029.971 5.332 5.166. 40.477 111.403 1.430.461.800 200.776 The annexed notes 1 to 49 form an integral part of these financial statements.141. deposits.530.537 1.685.111.589 16.943 94.286 8.

430) (210.366) 181.581 25.355) (773.895.74) (24.333.960 1.026.695.838) (144.482.424 18.791 (19.158) 60.445.680 24.249 3.193) (625.903) 439.178.155) Loss for the year Attributable to: Equity holders of the parent Non-controlling interest Combined loss per share Basic Diluted Rupees Rupees 43 43 (2.699 3.057 (597.340 (713.981 (2.680 (175.176 (129.856) 886.668 247.453) (3. Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 114 .762.80) The annexed notes 1 to 49 form an integral part of these financial statements.318.791) (27.155) (1.219 119.629 3.849 20.245) 61.282.150 37.694.331) (91.624) (55.734) 1.253) 816.193) 22.169 324.053 21.744 (642.80) (1.177) (24.196 (20.74) (152.090 (91.177) (2.087.243 (1.005) (1.984) (628.932.581.041 (1.252.063) 819.913.768) (14.787 246.922) (616.267.711) 339.026. 2011 (Rupees in thousand) Note 2011 2010 Local sales Export sales Gross sales Less: Sales tax and excise duty Commission Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing costs Projects expenditure Other operating expenses Other operating income (Loss) / profit from operations Finance costs Investment income Impairment charged on investments in associates Share of profit of associates (Loss) / profit before tax Taxation Group Associates 36 33 34 35 18 28 29 30 31 32 27 25.649.Consolidated Profit and Loss Account for the year ended December 31.640 3.901) (80.377.

572 4.net of tax Gain on re-measurement of available for sale financial assets Other comprehensive income for the year Total comprehensive income for the year Attributable to: Equity holders of the parent Non-controlling interest (2.625 61.293 4.177) (91.776 2.511) 4.047. 2011 (Rupees in thousand) 2011 2010 Loss after taxation Other comprehensive income Exchange differences on translating foreign subsidiary Other reserves relating to associates .138.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 Consolidated Statement of Comprehensive Income for the year ended December 31.977 4.076 64.208 4.460. Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 115 .578 2.026.420.119.401 3.155) 3.401 18.053 The annexed notes 1 to 49 form an integral part of these financial statements.047.053 2.982.446.796 (17.636 4.358.420.

245) 577.233) (274.134.578 (1.090 3.660. 2011 Noncontrolling interest Attributable to equity holders of the parent Exchange difference on translation Share of foreign Fair value premium subsidiary reserve 2.647) 61.487 (152.177) 795 4.912 Preference Other shares / reserves Accumulated convertible relating to profit / stock reserve associates (loss) 1.965 Total equity (Rupees in thousand) Balance as on December 31.003 186.445.875 - (152.893 14.447) (274.841 16.000) - - - - - - - - - - (274.333 Total 23.685 19.647) (91.141.893 5.887 (37.265.795 General reserve 13. 3.783 60.160.795 2.875 (17. Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 116 .605.605.876.000.233) (50.605.245) 4. 3.25 per share Dividends relating to 2010 paid to non-controlling interest (Loss) / profit for the year Other comprehensive income Balance as on December 31.321 27.000 - - - - - - - - - - (274.558.876.000.681. 2010 Rs.846 (37.460.915 4.087.904) 29. 2009 Rs.001 22.158) 4.233) - (274.660.293 9.564 - - - - (500.208 213.511) (2.876. 2009 Appropriation of funds Transferred from consolidated profit and loss account Transactions with owners Final Dividend for the year ended December 31.795 2.000) - - 500.285 The annexed notes 1 to 49 form an integral part of these financial statements.511) (17. 2010 Appropriation of funds Transferred to consolidated profit and loss account Transactions with owners Final Dividend for the year ended December 31.875 4.718 27.003.230 561.047 29.893 3.916 4.119.350.25 per share Dividends relating to 2009 paid to non-controlling interest (Loss) / profit for the year Other comprehensive income Balance as on December 31.333 1.026.575.548 16.233) - (274.388 23.447) 843.744.479.155) 4.000 - - (3.158) - (2.138.981 (2.636 4.283.233) - (50.238 225.087. 2011 Share capital 843.391 - - - - 3.233) 843.333 1.Consolidated Statement of Changes in Equity for the year ended December 31.446.

548 (315.010 42 (969.562) (62.712 308.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 Consolidated Cash Flow Statement for the year ended December 31.132) 588. Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 117 .000.693 (1.205 66.447) 661.547) (272.874.907) (19.053.202) (50.574) (50.579) (678.488) 609.secured Repayment of finance lease liabilities Proceeds from long-term finances .035 28.634 (1.831) (1.627.secured Dividend paid to equity holders of parent Dividend paid to non-controlling interest Net cash generated from / (used in) financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 41 271.805 655.281) (541.801) (10. plant and equipment Proceeds from assets written off due to fire Dividends received Net cash (used in) / generated from investing activities Cash flow from financing activities Repayment of long-term finances .031) 2.647) (330.924 888.917) 655.323) (597.624.254) (19.286) 1.968 (42) 47.444 (1.010 The annexed notes 1 to 49 form an integral part of these financial statements.971.net Net decrease / (increase) in long-term loans and deposits Proceeds from disposal of property.592) 50.563 952.411) 3.329.970 (14.938) (37. 2011 (Rupees in thousand) Note 2011 2010 Cash flow from operating activities Cash generated from operations Finance cost paid Taxes paid Payments for accumulating compensated absences and staff gratuity Retirement benefits paid Net cash (used in) / generated from operating activities Cash flow from investing activities Fixed capital expenditure Investments .519 190.000 (273.167 384.367 (1.

1 Amendments to published standards effective in current year New and amended standards. provides measurement guidance for noncontrolling interests and un-replaced and voluntarily replaced share-based payment awards. The application of this amendment has no material impact on the Group’s financial statements.2. 1984 or directives issued by Securities and Exchange Commission of Pakistan differ with the requirements of IFRS or IFAS. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by Institute of Chartered Accountants of Pakistan as are notified under The Companies Ordinance. issued in November 2009 supersedes IAS 24. ‘Financial instruments: Disclosures’. issued in 2003. 2011 1. 1984. provisions of and directives issued under The Companies Ordinance. ‘The effect of changes in foreign exchange rates’. ‘Related party disclosures’. ‘Investments in associates’ and IAS 31. or earlier when IAS 27 is applied earlier. Previously. emphasises the interaction between quantitative and qualitative disclosures about the nature and extent of risks associated with financial instruments. DIC Pakistan Limited. amendments or an interpretation to existing standards The following amendments to existing standards have been published that are applicable to the Group’s financial statements covering annual periods. The application of this amendment has no material impact on the Group’s financial statements. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the Government and other governmentrelated entities. IAS 1 (Amendments). such right issues are now classified as equity regardless of the currency in which the exercise price is denominated. IAS 28. and interpretations mandatory for the first time for the financial year beginning January 01. packaging materials and tissue products. paperboard. 2011: IFRS 3 (Amendments). Packages Lanka (Private) Limited and Packages Construction (Private) Limited (together. IAS 32 ‘Financial instruments presentation .2 118 . ‘Presentation of financial statements’. ‘Consolidated and separate financial statements’. Initial application of standards. beginning on or after the following dates: 2. clarifies the transition requirements for contingent consideration from business combination that occurred before the effective date of revised IFRS. IAS 27. Legal status and nature of business Packages Limited (the Parent Company) and its subsidiaries. 1984 or the requirements of the said directives prevail. The application of this amendment has no material impact on the Group’s financial statements. ‘Interests in joint ventures’. either in the statement of changes in equity or in the notes to the financial statements. 2. ‘The Group’) are engaged in the following businesses: Packaging: Representing manufacture and sale of paper. The application of this standard has impacted the related party disclosures in the Group’s financial statements. issued in October 2009 addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. 1984 (the Ordinance) and the approved accounting standards as applicable in Pakistan. the requirements of The Companies Ordinance. 1984.1 Basis of preparation These financial statements have been prepared in accordance with the requirements of The Companies Ordinance. Construction: Representing all types of construction activities and development of real estate. clarifies that an entity shall present an analysis of other comprehensive income for each component of equity. Accordingly. the Group has presented analysis of other comprehensive income for each component of equity in the consolidated statement of changes in equity. 2009. ‘Related party disclosures’. (Amendments). these issues had to be accounted for as derivative liabilities. IFRS 7 (Amendments).Notes to and Forming Part of the Consolidated Financial Statements for the year ended December 31. The application of this amendment has no material impact on the Group’s financial statements. Inks: Representing manufacture and sale of finished and semi finished inks. Provided certain conditions are met. IAS 24 (Revised).classification of right issues’. clarifies that the consequential amendments from IAS 27 made to IAS 21. 2. ‘Business Combinations’. Wherever the requirements of The Companies Ordinance. 2. apply prospectively for annual periods beginning on or after July 1.

‘Financial instruments: Disclosures’. This was not intended when IFRIC 14 was issued. The amendments correct an unintended consequence of IFRIC 14. There shall be no impact on the Group’s accounting for financial liabilities.2 Standards. IFRS 10 . and establishes controls as the basis for consolidation. IFRS 9. The Group shall apply this standard from January 01. A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. There are two types of joint arrangement: joint operations and joint ventures. and the Group does not have any such liabilities.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 IFRIC 19. addresses the classification. Further. it sets out the accounting requirements for the preparation of consolidated financial statements. Earlier application is permitted. revenues and expenses. This change shall mainly affect financial institutions. liabilities. 2012 or later periods. but the Group has not early adopted them: IFRS 7 (Amendments). 2012 and does not expect to have a material impact on its financial statements. The application of this standard has no material impact on the Group’s financial statements. The amendments shall promote transparency in the reporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position. Without the amendment. It defines the principles of control. ‘Prepayments of a minimum funding requirement’. IFRS 11 is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. The application of this interpretation has no material impact on the Group’s financial statements. 2. entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group The following amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after January 1. with bifurcation of embedded derivatives. particularly those involving securitisation of financial assets.2. 119 . These are applicable on accounting periods beginning on or after July 01. in cases where the fair value option is taken for financial liabilities. All equity instruments are measured at fair value. which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.‘Consolidated financial statements’. 2013 and does not expect to have a material impact on its financial statements. These include amortised-cost accounting for most financial liabilities. ‘Financial instruments’. the standard retains most of the IAS 39 requirements. and the amendments correct this. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest. The interpretation clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability (debt for equity swap). unless this creates an accounting mismatch. IFRIC 14 (Amendment). Proportional consolidation of joint ventures is no longer allowed. The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entity (an entity that controls one or more other entities) to present consolidated financial statements. If the fair value of the equity instruments issued cannot be reliably measured. minimum funding requirements and their interaction’. The Group shall apply these amendments from January 01. The standard is not applicable until January 01. It requires a gain or loss to be recognised in consolidated profit and loss account. Sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee. measurement and recognition of financial assets and financial liabilities. IFRS 9 has two measurement categories: amortised cost and fair value.‘Joint arrangements’. Joint operations arise where a joint operator has a right to the assets and obligations relating to the arrangement and hence accounts for its interest in assets. 2013 but is available for early adoption. IFRS 11 . For liabilities. The main change is that. 2011. ‘Financial instruments: Recognition and measurement’. This is the first part of a new standard on classification and measurement of financial assets and financial liabilities that shall replace IAS 39. the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement. The application of this amendment has no material impact on the Group’s financial statements. These amendments arise from the IASB’s review of off-balance sheet activities. ‘IAS 19 – The limit on a defined benefit asset. ‘Extinguishing financial liabilities with equity instruments’. as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss. the equity instruments should be measured to reflect the fair value of the financial liability extinguished.

The amendment shall eliminate the corridor approach and calculate finance costs on a net funding basis. IAS 19 (Amendments). This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. IAS 1 (Amendments). associates. judgment and estimation involved in their application and their impact on these financial statements. including expectations of future events that are believed to be reasonable under the circumstances. 2013 and does not expect to have a material impact on its financial statements. shall no longer apply to investment properties carried at fair value.2 120 . which is withdrawn. Not all of these significant policies require the management to make difficult. ‘Employee benefits’ is applicable on accounting periods beginning on or after January 01. The Group shall apply this amendment from January 01.IFRS 12 . 3. including joint arrangements. 2012 and does not expect to have a material impact on its financial statements. do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. ‘Income taxes’. IAS 27 (Revised 2011). The Group shall apply this standard from January 01. subjective or complex judgments or estimates. ‘Investment property’. This amendment therefore introduces an exception to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. The requirements. as well as associates. special purpose vehicles and other off-balance sheet vehicles. IAS 12 (Amendments). IFRS 13 .‘Disclosures of interests in other entities’. IAS 12. 2013. 3. 2013 and does not expect to have a material impact on its financial statements. 2012. 2013. ‘Separate financial statements’ includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10. 2013. currently requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale.1 Basis of measurement These financial statements have been prepared under the historical cost convention except for revaluation of certain financial instruments at fair value and recognition of certain employee retirement benefits at present value.678 million due to recognition of current unrealised actuarial losses on its defined benefit plans. These are applicable on accounting periods beginning on or after January 01. The main change resulting from these amendment is a requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are potentially recycled to consolidated profit and loss account (reclassification adjustments). ‘Income taxes’. This is applicable on accounting periods beginning on or after January 01. The Group shall apply this standard from January 01. This is applicable on accounting periods beginning on or after July 01. SIC 21. 2013 and its impact on retained earnings shall be Rs. The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates are significant to the financial statements are as follows: 3. 2013 and does not expect to have a material impact on its financial statements.‘Fair value measurement’. The Group shall apply this standard from January 01. These judgments involve assumptions or estimates in respect of future events and the actual results may differ from these estimates. This standard includes the disclosure requirements for all forms of interests in other entities. The Group shall apply this standard from January 01. 2013 and does not expect to have a material impact on its financial statements. The Group’s significant accounting policies are stated in note 4. The amendments also incorporate into IAS 12 the remaining guidance previously contained in SIC 21. The Group shall apply these amendments from January 01. It can be difficult and subjective to assess whether recovery shall be through use or through sale when the asset is measured using the fair value model in IAS 40. As a result of the amendments. 2012. 2013. The Group shall apply this amendment from January 01. to be equity accounted following issue of IFRS 11. 2013 and does not expect to have a material impact on its financial statements. ‘Associates and joint ventures’ includes the requirements for joint ventures. The amendment does not address which items are presented in OCI. 480. The revised standard is applicable for accounting periods beginning on or after January 1. Judgments and estimates are continually evaluated and are based on historical experience. which are largely aligned between IFRSs and US GAAP. This is applicable on accounting periods beginning on or after January 01. The following is intended to provide an understanding of the policies the management considers critical because of their complexity. IAS 28 (Revised 2011). ‘Income taxes − recovery of revalued non-depreciable assets’. ‘Presentation of financial statements’.

equity instruments issued and liabilities incurred or assumed at the date of exchange. When the Group ceases to have control or significant influence. The cost of an acquisition is measured as the fair value of the assets given. the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. the difference is recognised directly in the consolidated profit and loss account.note 18. with the change in carrying amount recognised in consolidated profit and loss account.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 i) ii) iii) iv) 4. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate.note 4. 121 . Inter company transactions. any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed off the related assets or liabilities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. plant and equipment . Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. In addition. plus costs directly attributable to the acquisition. Gains or losses on disposals to noncontrolling interests are also recorded in equity. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired. If the ownership interest in an associate is reduced but significant influence is retained. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. joint venture or financial asset. the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. For purchases from non-controlling interests. They are de-consolidated from the date that control ceases.9 & 9 Recoverable amount of certain investments in equity instruments . Estimated useful lives of property. unless otherwise stated.1 a) Principles of consolidation Subsidiaries Subsidiaries are all entities over which the holding company has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. only a proportionate share of the amounts previously recognised in other comprehensive income are re-classified to consolidated profit and loss account where appropriate. These policies have been consistently applied to all the years presented.1. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. 4. beneficially owns or holds more than 50% of the voting securities or otherwise has power to elect and appoint more than 50% of its directors. irrespective of the extent of any non-controlling interest. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. On an acquisition-by-acquisition basis. any retained interest in the entity is re-measured to its fair value.3 Provision for employees’ retirement benefits . b) Non-Controlling Interest The Group treats transactions with non-controlling interest as transactions with equity owners of the Group. balances and unrealised gains on transactions between group companies are eliminated. This may mean that amounts previously recognised in other comprehensive income are re-classified to consolidated profit and loss account.note 36 Significant accounting policies The significant accounting policies adopted in the preparation of these financial statements are set out below.note 4. The consolidated financial statements include Packages Limited and all companies in which it directly or indirectly controls.2 Provision for taxation .

generally accompanying a shareholding of between 20% and 50% of the voting rights.2 Taxation Current Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. the Group does not recognise further losses. to provision for tax made in previous years arising from assessments framed during the year for such years. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. except freehold land and capital work-in-progress. When the Group’s share of losses in an associate equals or exceeds its interest in the associate. if enacted. plant and equipment acquired under finance leases are capitalised at the lease’s commencement at the lower of the present value of minimum lease payments under the lease arrangements and the fair value of the leased property.c) Associates Associates are all entities over which the Group has significant influence but not control. 4. unless it has incurred obligations or made payments on behalf of the associate. The Group’s investment in associates includes goodwill identified on acquisition. Property. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the balance sheet date. as it is not the intention to distribute more than the dividends.19 and borrowing costs as referred to in note 4. the tax on which is included in the financial statements. The Group’s share of its associates’ post-acquisition profits or losses is recognised in the consolidated profit and loss account. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits shall be available against which the deductible temporary differences.3 Property. Freehold land and capital work-in-progress is stated at cost less any identified impairment loss. Dilution gains and losses arising in investments in associates are recognised in the consolidated profit and loss account. including any other unsecured receivables. 4. net of any accumulated impairment loss.22. where considered necessary. The cumulative postacquisition movements are adjusted against the carrying amount of the investment. are stated at cost less accumulated depreciation and any identified impairment loss. except in the case of items credited or charged to equity in which case it is included in equity. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. unused tax losses and tax credits can be utilised. and its share of post-acquisition movements in reserves is recognised in reserves. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. plant and equipment. Cost in relation to certain plant and machinery signifies historical cost. plant and equipment Property. Provision is not made for taxation which would become payable if retained profits of subsidiaries were distributed to the Parent Company. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. The charge for current tax also includes adjustments. 122 . Deferred tax is charged or credited in the consolidated profit and loss account. gains and losses transferred from equity on qualifying cash flow hedges as referred to in note 4. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost.

at each financial year end.33% 20% The assets’ residual values and useful lives are reviewed. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset.5% 6. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. as appropriate. at cost less any accumulated depreciation and any identified impairment loss. Where an impairment loss is recognised.67% per annum. and adjusted if impact on depreciation is significant. 2011 has not required any adjustment as its impact is considered insignificant. 4. The Group assesses at each balance sheet date whether there is any indication that investment property may be impaired. Where carrying amounts exceed the respective recoverable amount. 2011 has not required any adjustment as its impact is considered insignificant. The Group assesses at each balance sheet date whether there is any indication that property. If such indication exists. the depreciation charge is adjusted in the future periods to allocate the asset’s revised carrying amount over its estimated useful life. assets are written down to their recoverable amounts and the resulting impairment loss is recognised in consolidated profit and loss account during the year. Depreciation on additions to investment property is charged from the month in which a property is acquired or capitalised while no depreciation is charged for the month in which the property is disposed off. The assets’ residual values and useful lives are reviewed. If such indication exists.33% 33. plant and equipment may be impaired. plant and equipment as at December 31.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 Depreciation on all property. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognised as an income or expense. Depreciation on buildings is charged to profit on the straight line method so as to write off the depreciable amount of building over its estimated useful life at the rates ranging from 3. Where an impairment loss is recognised. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. plant and equipment is charged to profit on the straight-line method so as to write off the depreciable amount of an asset over its estimated useful life at the following annual rates: Buildings Plant and machinery Other equipments Furniture and fixtures Vehicles 2. plant and equipment is charged from the month in which an asset is acquired or capitalised while no depreciation is charged for the month in which the asset is disposed off. The investment property of the Group comprises buildings and is valued using the cost method i. and adjusted if impact on depreciation is significant. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Depreciation on additions to property. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognised as an income or expense. assets are written down to their recoverable amount and the resulting impairment loss is recognised in consolidated profit and loss account during the year. at each financial year end. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. The Group’s estimate of the residual value of its property.25% 10% 10% 20% to to to to 20% 33. Where carrying amounts exceed the respective recoverable amount.33% to 6.4 Investment property Property not held for own use or for sale in the ordinary course of business is classified as investment property. the depreciation charge is adjusted in the future periods to allocate the asset’s revised carrying amount over its estimated useful life. only when it is probable that future economic benefits associated with the item shall flow to the Group and the cost of the item can be measured reliably.e. The Group’s estimate of the residual value of its investment property as at December 31. 123 . All other repair and maintenance costs are charged to consolidated profit and loss account during the period in which they are incurred.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the balance outstanding. Where carrying amounts exceed the respective recoverable amount. 4. The interest element of the rental is charged to profit over the lease term.4. 4. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 124 . are included in liabilities against assets subject to finance lease.6 (1) Leases The Group is the lessee: Finance leases Leases where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Goodwill on acquisitions of associates is included in ‘investments in associates’ and is tested for impairment as part of the overall balance. Where an impairment loss is recognised. Operating leases Leases including Ijarah financing where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Asset subject to finance lease are stated at the lower of present value of minimum lease payments under the lease agreements and the fair value of the assets. The Group assesses at each balance sheet date whether there is any indication that intangible assets may be impaired. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. If such indication exists. all other investments are classified as non-current. Impairment losses on goodwill are not reversed. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’. The liabilities are classified as current and long-term depending upon the timing of the payment. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount.8 Investments Investments intended to be held for less than twelve months from the balance sheet date or to be sold to raise operating capital. Amortisation on additions to intangible assets is charged from the month in which an asset is acquired or capitalised while no amortisation is charged for the month in which the asset is disposed off. Intangible assets are amortised using the straight line method over a period of three to five years.5 Intangible assets Expenditure incurred to acquire computer software and SAP Enterprise Resource Planning (ERP) System are capitalised as intangible assets and stated at cost less accumulated amortisation and any identified impairment loss. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit on a straight-line basis over the lease / Ijarah term unless another systematic basis is representative of the time pattern of the Group’s benefit. the amortisation charge is adjusted in the future periods to allocate the asset’s revised carrying amount over its estimated useful life. The related rental obligations. assets are written down to their recoverable amounts and the resulting impairment loss is recognised in consolidated profit and loss account. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term.7 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary / associate at the date of acquisition. plant and equipment. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. net of finance charges. 4. They are depreciated over their expected useful lives on a basis consistent with similar owned property. (2) The Group is the lessor: Operating leases Assets leased out under operating leases are included in investment property as referred to in note 16. are included in current assets.

unless it has incurred obligations or made payments on behalf of the associate.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 Investments in equity instruments of associates Associates are all entities over which the Group has significant influence but not control. Other investments The other investments made by the Group are classified for the purpose of measurement into the following categories: Held to maturity Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held to maturity and are initially measured at cost and at subsequent reporting dates measured at amortised cost using the effective yield method.9 Employee retirement benefits The main features of the schemes operated by the Group for its employees are as follows: 4. 125 . The Group’s share of its associates’ post-acquisition profits or losses is recognised in the consolidated profit and loss account. The latest actuarial valuation for the pension and gratuity schemes was carried out as at December 31. these investments are re-measured at fair value (quoted market price). are measured at cost as it is not possible to apply any other valuation methodology. is removed from equity and recognised in the consolidated profit and loss account. and its share of post-acquisition movements in reserves is recognised in reserves. 2011. The cumulative postacquisition movements are adjusted against the carrying amount of the investment. 27. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Investments in equity instruments of associates are accounted for using the equity method of accounting and are initially recognised at cost. In addition. including any other unsecured receivables.1 (a) Defined benefit plans All the executive staff participate in an approved funded defined benefit pension plan. the Group reviews the carrying amounts of the investments to assess whether there is any indication that such investments have suffered an impairment loss. Impairment losses are recognised as expense.418 million for the pension and gratuity funds respectively. All purchases and sales of investments are recognised on the trade date which is the date that the Group commits to purchase or sell the investment. 26. being the fair value of consideration given. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.9. The actual returns on plan assets during the year were Rs. Monthly contributions are made to these funds on the basis of actuarial recommendation at the rate of 20 percent per annum of basic salaries for pension and 4. if any. cumulative impairment loss less any impairment loss on that financial asset previously recognised in consolidated profit and loss account. If any such indication exists. Unrealised gains and losses arising from the changes in the fair value are included in fair value reserves in the period in which they arise. 4. At subsequent reporting dates. At each balance sheet date.242 million and Rs. In respect of ‘available for sale’ financial assets. When the Group’s share of losses in an associate equals or exceeds its interest in the associate. The investments for which a quoted market price is not available. Investments classified as available for sale are initially measured at cost. unless fair value cannot be reliably measured. the recoverable amount is estimated in order to determine the extent of the impairment loss.50 percent per annum of basic salaries for gratuity. The actual returns on plan assets represent the difference between the fair value of plan assets at beginning of the year and end of the year after adjustments for contributions made by the Group as reduced by benefits paid during the year. Cost of purchase includes transaction cost. the Group does not recognise further losses. there is an approved funded defined benefit gratuity plan for all employees. Impairment losses recognised in the consolidated profit and loss account on equity instruments are not reversed through the consolidated profit and loss account. Available for sale The financial assets including investments in associated undertakings where the Group does not have significant influence that are intended to be held for an indefinite period of time or may be sold in response to the need for liquidity are classified as available for sale. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates.

2 Defined contribution plan There is an approved contributory provident fund for all employees.5 percent per annum. The executives and workers are entitled to earned annual and medical leaves on basis of their service with the Group. Gratuity plan is also a multi-employer plan formed by the Parent Company in collaboration with DIC Pakistan Limited. 4. equity instruments of listed companies and term deposits with banks. It has been accounted for as a change in accounting estimate during the current year resulting in a decrease in liability of Rs. is used for valuation of these schemes: Discount rate 12. there is no clear indication of return on equity shares.5 percent per annum.797 million. it has been assumed that the yield on equity shares would match the return on debt. however. Contribution by the Group companies is based on the respective number of employees of each company. Retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. In prior periods. and Expected mortality rate EFU 61-66 mortality table.3 Pension plan is a multi-employer plan formed by the Parent Company in collaboration with Tri-Pack Films Limited and DIC Pakistan Limited. 4. Projected unit credit method. Similarly. The Group uses the valuation performed by an independent actuary as the present value of its accumulating compensated absences. Expected rate of return 14.9. The annual leaves can be encashed at the time the employee leaves the Group on the basis of the gross salary while no encashment is available for medical leaves to executives. 126 . and Future pension increase 4 percent per annum. Each Group company reports its proportionate share of the plan’s commitments. 16 million to the gratuity fund in the next financial year. (b) Accumulating compensated absences The Group provides for accumulating compensated absences to certain employees when they render services that increase their entitlement to future compensated absences. During the current period.Employee Benefits. using the following significant assumptions. therefore. due to increased volatility of share prices in recent months. has been used for valuation of accumulating compensated absences: Discount rate 12. The Group is expected to contribute Rs.25 percent per annum.5 percent per annum. managed assets and costs.9. Equal monthly contributions are made by the Group and the employees to the fund. based on the number of its employees participating in the plans. Expected mortality rate EFU 61-66 mortality table. regarding defined benefit plans. The Group’s policy with regard to actuarial gains / losses is to follow minimum recommended approach under IAS 19 ‘Employee Benefits’. using the following significant assumptions. Plan assets include long-term Government bonds. Projected unit credit method.5 percent per annum. Expected rate of increase in salary level 10. 7. Expected rate of increase in salary level 10. Return on Government bonds and debt is at fixed rates. The benefit was calculated with reference to the last drawn salary and accumulated leave balances of the employees. in accordance with guidance provided by IAS 19 . provision for accumulating compensated absences was made annually on the basis of unavailed accumulated leaves.The future contribution rates of these plans include allowances for deficit and surplus. actuarial valuation has been carried out by the Group for the estimation of the defined benefit obligation based on the assumptions mentioned above. 54 million to the pension fund and Rs.

borrowings. consumables and labour as well as production overheads such as employee wages. cash and cash equivalents comprise cash in hand.13 Offsetting of financial assets and liabilities Financial assets and liabilities are offset and the net amount is reported in the financial statements only when there is a legally enforceable right to set off the recognised amount and the Group intends either to settle on a net basis or to realise the assets and to settle the liabilities simultaneously. trade and other payables. work-in-process and finished goods are valued principally at the lower of cost and net realisable value. If the expected sales price less completion costs and costs to execute sales (net realisable value) is lower than the carrying amount. other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value and finances under mark up arrangements. finances under mark up arrangements are included in current liabilities. which is the fair value of consideration given and received respectively. In the consolidated balance sheet. 4. Financial instruments carried on the consolidated balance sheet include loans. Cost of raw materials is determined using the weighted average cost method.12 Financial instruments Financial assets and financial liabilities are recognised at the time when the Group becomes a party to the contractual provisions of the instrument and derecognised when the Group loses control of contractual rights that comprise the financial assets and in the case of financial liabilities when the obligation specified in the contract is discharged.15 Cash and cash equivalents Cash and cash equivalents are carried in the consolidated balance sheet at cost. For the purpose of consolidated cash flow statement. 4. Bad debts are written off when identified.16 Non-current assets held-for-sale Non-current assets are classified as assets held-for-sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. 4. cash and bank balances. depreciation. These financial assets and liabilities are subsequently measured at fair value or cost as the case may be. while items considered obsolete are carried at nil value. They are stated at the lower of carrying amount and fair value less cost to sell. trade and other debts. which is reviewed regularly to ensure relevant measures of utilisation.10 Stores and spares Stores and spares are valued at moving average cost. Cost of work-in-process and finished goods comprises direct production costs such as raw materials. Any gain or loss on derecognition of financial assets and financial liabilities is included in the consolidated profit and loss account for the year. cancelled or expired. 4. production lead time etc. accrued expenses and unclaimed dividends. Provision is made in the financial statements for obsolete and slow moving stock-in-trade based on management estimate. Provision is made in the financial statements for obsolete and slow moving stores and spares based on management estimate. The production overheads are measured based on a standard cost method.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 4. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. Items in transit are valued at cost comprising invoice value plus other charges paid thereon. All financial assets and liabilities are initially measured at cost. 127 . 4. a write-down is recognised for the amount by which the carrying amount exceeds its net realisable value. investments. 4.11 Stock-in-trade Stock of raw materials. Materials in transit are stated at cost comprising invoice value plus other charges paid thereon. etc. demand deposits.14 Trade debts Trade debts are carried at original invoice amount less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. maintenance. except for those in transit.

All non-monetary items are translated into Pak Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in consolidated statement of comprehensive income. of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items.17 Borrowings Borrowings are initially recorded at the proceeds received. Finance costs are accounted for on an accrual basis and are shown as accrued finance cost to the extent of the amount remaining unpaid. The Group also documents its assessment.21 Foreign currency transactions and translation Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at the dates of the transactions. Exchange differences arising on the translation of foreign subsidiary are classified as equity reserve until the disposal of interest in such subsidiary. However. which is the Group’s functional and presentation currency. both at hedge inception and on an ongoing basis. Foreign exchange gains and losses on translation are recognised in the consolidated profit and loss account. The Group documents at the inception of the transaction the relationship between the hedging instruments and hedged items. as well as its risk management objective and strategy for undertaking various hedge transactions. the nature of the item being hedged. 4. All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date. Foreign exchange gains and losses are recognised in the consolidated profit and loss account except incase of items recognised in equity in which case it is included in equity. 4. the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability. and if so. 128 . The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument. In subsequent periods. The gain or loss relating to the ineffective portion is recognised immediately in the consolidated profit and loss account.20 Revenue recognition Revenue is recognised on despatch of goods or on the performance of services. The Group designates certain derivatives as cash flow hedges. It includes sales to associates but does not include sales by associates or sales between Group companies. Amounts accumulated in equity are recognised in consolidated profit and loss account in the periods when the hedged item shall effect profit or loss. All monetary and non monetary assets and liabilities are translated at the exchange rate prevailing at the balance sheet date except for share capital which is translated at historical rate. borrowings are stated at amortised cost using the effective yield method.4. Dividend income and entitlement of bonus shares are recognised when right to receive such dividend and bonus shares is established.18 Trade and other payables Liabilities for creditors and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for the goods and / or services received. whether or not billed to the Group. 4. Return on deposits is accrued on a time proportion basis by reference to the principal outstanding and the applicable rate of return. income and expense items of the foreign subsidiary are translated at annual average exchange rate.19 Derivative financial instruments These are initially recorded at cost on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. when the forecast hedged transaction results in the recognition of a nonfinancial asset or a liability. 4. For the purposes of consolidation. The financial statements are presented in Pak Rupees.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. restructuring costs and legal claims are recognised when: (i) the Group has a present legal or constructive obligation as a result of past events.24 Compound financial instruments Compound financial instruments issued by the Parent Company represent preference shares / convertible stock that can be converted into ordinary shares or can be settled in cash. 4. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. (ii) it is probable that an outflow of resources shall be required to settle the obligation. 129 . and (iii) the amount has been reliably estimated. The chief operating decision-maker. Subsequent to initial recognition. Where there are a number of similar obligations. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry. Restructuring provisions comprise lease termination penalties and employee termination payments. 4.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 4.25 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The increase in the provision due to passage of time is recognised as interest expense. has been identified as the Board of Directors of the Parent Company. the likelihood that an outflow shall be required in settlement is determined by considering the class of obligations as a whole. Provisions are not recognised for future operating losses. interest and other charges on borrowings are capitalised up to the date of commissioning of the related property.22 Borrowing costs Mark up. who is responsible for allocating resources and assessing performance of the operating segments. All other mark up.26 Provisions Provisions for environmental restoration. plant and equipment acquired out of the proceeds of such borrowings. 4.23 Dividend Dividend distribution to the shareholders is recognised as a liability in the period in which the dividends are approved. the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. interest and other charges are charged to consolidated profit and loss account. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. 4.

915 561.916 4.033 1.356 6.660.2 130 . 10 each issued as fully paid bonus shares 336.429 Ordinary shares of Rs.504 84. 10 each issued as fully paid for consideration other than cash Ordinary shares of Rs.893 19.333 24.780 50.2 Revenue General reserve At the beginning of the year Transferred (to) / from consolidated profit and loss account Other reserves relating to associates At the beginning of the year Loss during the year 16.504 20. As referred to in note 4. Issued.333 3.660.915 3.660.650 2.795 84.160. Reserves Movement in and composition of reserves is as follows: Capital Share premium Exchange difference on translation of foreign subsidiary At the beginning of the year Exchange difference for the year Fair value reserve At the beginning of the year Fair value gain during the year 6.627.379.295 148.429 33.238.876.000 16.578.333 16.295 148.230 14.636 4.333 (17.876.274 843.511) (17.000.650 (2010: 20.627.033 1.5.685 19.379.460.780 50. subscribed and paid up capital 2011 2010 (Number of shares) 2011 2010 (Rupees in thousand) 33.841 12.488 506.822 28.548 4.893 5. This shall be transferred to consolidated profit and loss account on derecognition of investments.141.119.681.511) 16.184.333 (500.681. an associated undertaking.041. (Rupees in thousand) Note 2011 2010 6.000) 16.8 this represents the unrealised gain on re-measurement of available for sale financial assets at fair value and is not available for distribution.689 6.795 336.293 9.660. 1984.274 843.556.472 13.603. 10 each fully paid in cash Ordinary shares of Rs.912 4. 6.487) ordinary shares of the Parent Company are held by IGI Insurance Limited.1 This reserve can be utilised by the Parent Company only for the purposes specified in section 83(2) of the Companies Ordinance.1 2.142.488 506.548 7.151.603.001 22.

This carries a fixed mark up of 11.1 Loan under Term Finance Facility (BAHL own source) The loan was disbursed in tranches of Rs. 2011.339 5.1 Local currency loans .1. 2011 and December 30. 578 million have been provided by Bank Al-Habib Limited through its own source and Rs. 1. 2018 respectively.35 % per annum and is payable in 11 unequal semi-annual installments starting in June 2012 and ending June 2017.291 7. the Parent Company has obtained a long-term loan from Bank Al-Habib Limited for expansion in its paper and board manufacturing capacity.000.1 7. 7.000 6.000 300.1.2 5.unsecured Current portion shown under current liabilities 7.2.secured Consortium loan Term Finance Loan Others Preference shares / convertible stock . 6.400 million (2010: Nil) in favour of Bank Al-Habib Limited (BAHL).1.2.1. 7.12 % per annum.485. January 5. 422 million have been provided under the State Bank of Pakistan’s Long-Term Finance Facility (LTFF).1.34 % to 14.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (Rupees in thousand) Note 2011 2010 7.575.577 7. 2018 respectively.577 8. It is secured by a first ranking exclusive hypothecation / equitable mortgage charge over all present and future fixed assets of the Parent Company amounting to Rs. July 6. It carries mark up at six month Karachi Inter Bank Offered Rate (KIBOR) plus 1. Out of the total disbursement. Rs.000 2.970. 31 million on May 20. 2014 respectively and ending on July 5. The effective mark up charged during the year ranges from 13. 2018. 7.500. The effective mark up charged during the year ranges from 14. 6. 131 .577 (14. Long-Term Finance Facility of Rs. 2014 respectively and ending on May 19.914 million (2010: Rs.2 Term Finance Loan During the year. 2011 respectively. 2011 respectively.952) 8. 2013. 47 million and Rs.714 1.714 2.65 % per annum and is repayable within 7 years (including two years grace period) in 10 equal semi-annual installments starting on November 19.3 7.914 million) in favour of MCB Bank Limited being security trustee on behalf of consortium.956.2 7. July 5.470.286) 7. 2014 and June 29. 500 million. Rs.44 % per annum.185. 84 million disbursed on July 6.20 % and is repayable within 7 years (including two years grace period) in 10 equal semi-annual installments starting on January 5. 2011 and November 16.secured Consortium Loan This loan has been obtained from a consortium of commercial banks led by MCB Bank Limited.714 314. 2014 and May 15. 2018 and December 29.291 (380. 2018 and November 15.286 5.1. 422 million is comprised of Rs.956. Long-term finances These are composed of: Local currency loans . 338 million and Rs.31 % to 15.185. It carries mark up at the rate of six month KIBOR plus 0.1 7.1.470.2 Loan under Long-Term Finance Facility (under SBP-LTFF facility) The loan obtained from Bank Al-Habib Limited under State Bank of Pakistan. The entire amount is secured by a ranking charge over all present and future fixed assets of the Parent Company amounting to Rs.

132 .875) 2. these shall become non-cumulative till the date of settlement of preference shares / convertible stock either in cash or ordinary shares of the Parent Company. It carries mark up at six month KIBOR plus 0.120.452 (1.unsecured During the year 2009. The residual amount.500 (44. or cash.120.90 % per annum and is payable in 4 unequal semi-annual installments commenced in December 2011 and ending June 2013. In case of refusal by the Parent Company.7.classified under capital and reserves Liability component .50% till perpetuity which represents the rate of similar instrument with no associated equity component.452 4. either in the form of fixed number of ordinary shares of the Parent Company. representing the value of the equity conversion component. The effective mark up charged during the year ranges from 12. the Parent Company issued 10 % local currency non-voting cumulative preference shares / convertible stock at the rate of Rs.605.470.050 Equity component .605. at the option of holder. Rate of return The preference share / convertible stock holders have a preferred right of return at the rate of 10 % per annum on a cumulative basis till December 31.050 The fair value of the liability component of the preference shares / convertible stock is calculated by discounting cash flows at a rate of approximately 16.076.120.2 Preference shares / convertible stock . It is secured by a first ranking exclusive hypothecation / equitable mortgage charge over all present and future fixed assets of the Parent Company amounting to Rs.1. The Parent Company may.076.048) 4.875) 2. 2013 and thereafter. Terms of redemption / conversion Each holder of preference shares / convertible stock shall have a right to settle at any time.67 % per annum. The preference shares / convertible stock can be held till perpetuity if preference shareholders do not opt for the conversion or cash settlement. 419 million) in favour of MCB Bank Limited being security trustee on behalf of Citibank.classified under long-term finances Accrued return on preference shares / convertible stock classified under accrued finance cost (1.500 (44. preference shareholders shall have the right to either retain the preference shares / convertible stock or to convert them into ordinary shares of the Parent Company.5 million under “Subscription Agreement” dated March 25. 2009 with IFC.048) 4. in its discretion.470. 419 million (2010: Rs.577 412. refuse to purchase the preference shares / convertible stock offered to it for purchase in cash. is included in shareholders equity as preference shares / convertible stock reserve. one ordinary share of the Parent Company for one preference share / convertible stock.577 412.3 Others This loan has been obtained from Citibank. 7. 190 per share amounting to USD 50 million equivalent to PKR 4.86 % to 14. Preference shares / convertible stock are recognised in the balance sheet as follows: (Rupees in thousand) 2011 2010 Face value of preference shares / convertible stock Transaction costs 4.

1 The Group has not adjusted the net deferred tax liability against tax credit available to the Parent Company under section 113 of the Income Tax Ordinance.799) (14.457 94.704 8.329 (12.liability portion Provision for slow moving items Provision for doubtful receivables Investments in associates Exchange Difference Provision for unfunded defined benefit plan 3.019) 2.632. as referred to in note 36.493) (52.557 12.011 (1.299 94. 2015 due to sufficient unused tax losses.295 (52.896) (527) 163.946 (1.208 (1.978.557 133 .684. 132.348.320) 2. 2015 and unused tax losses of Rs.745) (57.163 million (2010: Nil) available till December 31. (Rupees in thousand) 2011 2010 9.844 3.241 million (2010: Rs.358) (167) (61.496) (527) 611. 300.347.1 8.349) 75.046) (11.750 (1. Deferred income tax liabilities The liability for deferred taxation comprises timing differences relating to: Accelerated tax depreciation Unused tax losses Minimum tax available for carry forward Provision for accumulating compensated absences Provision for doubtful debts Preference shares / convertible stock transaction cost .205 89.618 94.581) 394.215) 240.557 (18.557 94.870 (167) 317. 116.480 (167) 13.332) 38.168 (314.074) 86.358) 649.502 89. Retirement benefits Classified under non-current liabilities Pension fund Classified under non-current assets Gratuity fund 89.760) 13.473 (12.520) 49.000 613 (2.633) 8.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (Rupees in thousand) Note 2011 2010 8. 2001 amounting to Rs.801 (1.299 304.449 (285.841) (183.776.299 94.974) (203.092.899) 8.605 (11.568 (890.748 million) available till December 31. 2013 in view of management’s estimate that these tax credits may not be utilized till December 31.666) 11.000 184 (2. available to the Parent Company for adjustment against future profits.358 167 Pension Fund (Rupees in thousand) 2011 2010 Gratuity Fund 2011 2010 The amounts recognised in the consolidated balance sheet are as follows: Fair value of plan assets Present value of defined benefit obligation Unrecognised actuarial loss (Liability) / asset as at December 31 Net (liability) / asset as at January 1 Charge to consolidated profit and loss account Contribution by the Parent Company Net (liability) / asset as at December 31 685.

425 35.803 (55.750 592.081 685.355) 29.296 (37.983 285.979 122.300) (2.192) (65.520 27.979 122.636 94.023) 304.568 304.300) (2.581 The movement in fair value of plan assets is as follows: Fair value as at January 1 Expected return on plan assets Parent Company contributions Employee contributions Benefits paid Transferred to IGI Insurance Limited Transferred to Tri-pack Films Limited Experience loss Fair value as at December 31 649.751 18.086 73.329 14.911 79.622 11.990) 317.349 18.332 18.502 (27.215 285.879 194.449 134 .636 94.449 42.355) (9.201) (1.532 29.110) (10.409 173.157 6.744 52.086 27.491) 314.408 13.074 247.067) (1.Pension Fund (Rupees in thousand) 2011 2010 Gratuity Fund 2011 2010 The movement in the present value of defined benefit obligation is as follows: Present value of defined benefit obligation as at January 1 Service cost Interest cost Benefits paid Transferred to IGI Insurance Limited Transferred to Tri-pack Films Limited Experience loss / (gain) 890.203 79.500) (5.532 29.870 10.349 Present value of defined benefit obligation as at December 31 1.693 38.200) (14.260 185.089 304.322) 13.092.976 890.958) 685.200 49.360 317.168 303.621 61.449 The amounts recognised in the consolidated profit and loss account are as follows: Current service cost Interest cost for the year Expected return on plan assets Contribution made by the employees Recognition of loss Total included in salaries.693 38.784) 2.803) 12.760 15. wages and amenities 33.322 (55.724 (42.215 33.067) 63.953) 649.568 93.923 (55.893 15.168 219.201) (15.784 11.384 (73.110 38.724 (27.618 (37.666 Plan assets are comprised as follows: Debt Equity Cash 327.656 767.296 (35.750 272.192) 100.819 181.923 (93.384 (55.897 1.568 235.870 649.408) 3.500) (5.

296 97.357 6.720) 1% -51% 547.227 182.581 685. (Rupees in thousand) Note 2011 2010 10.2 172. 2011 is Rs. 11.092.088 (102. the fair value of plan assets and the surplus of gratuity fund is as follows: (Rupees in thousand) 2011 2010 2009 2008 2007 As at December 31 Present value of defined benefit obligation Fair value of plan assets Surplus Experience adjustment on obligation Experience adjustment on plan assets 314.202) 157.439 135 . whose fair value as at December 31.750 (406. whose fair value as at December 31.949 179.168 3.086 592.170.022 132.255 2% 17% Fair value of plan assets include ordinary shares of the Parent Company.638 9% -10% 178.357 10.314 34.022 7. 2011 is Rs.074 317.000) 6% 5% 595.647) 5% 0% 767.000 511.1 Accumulating compensated absences This represents provision made to cover the obligation for accumulating compensated absences.853 10.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 The present value of defined benefit obligation.946 43.425 55.584 (10.469 117.349 304.secured Bills discounted .215 649. Finances under mark up arrangements .490 2% 7% Fair value of plan assets include ordinary shares of the Parent Company.1 11.3 275.2 Staff gratuity This represents staff gratuity of employees of Packages Lanka (Private) Limited and is unfunded.474 71.893 303.227 895.125 340.357 25. 85 million).041 644. 9 million (2010: Rs. the fair value of plan assets and the deficit or surplus of pension fund is as follows: (Rupees in thousand) 2011 2010 2009 2008 2007 As at December 31 Present value of defined benefit obligation Fair value of plan assets (Deficit) / surplus Experience adjustment on obligation Experience adjustment on plan assets 1. 55 million (2010: Rs.808 493.562) 172. 13 million).831) 11% -10% 890.971 157.496 163.100 9% -3% 247.2 11. Opening balance Provision for the year Payments made during the year Closing balance 157.000 1. Deferred liabilities Accumulating compensated absences Staff gratuity 10.227 137.836 283.086 (175.979 296.secured 11.449 19.568 (240.secured Running finances .532 5% -1% 211.094 -1% -5% 285.559 (19.613 176. The present value of defined benefit obligation.secured Short-term finances .1 10.

3 12.551 million) respectively. Mark up is to be fixed as per mutual agreement at the time of transaction.1.354 (2.432 1.264 42. Note 2011 2010 (Rupees in thousand) 12.4 Letters of credit and bank guarantees Of the aggregate facility of Rs. 602.458 million (2010: Rs. 6.4 24. 0. 581 million (2010: Rs.1. 11.758 1.1 12.571 million (2010: Rs. spares. 32.294 million) is secured by second hypothecation charge over stores.250 35.596 124 1. Trade and other payables Trade creditors Accrued liabilities Bills payable Retention money payable Sales tax payable Excise duty payable Advances from customers Deposits . 1.207 59.387 11.819) 2.secured Short-term running finances available from a consortium of commercial banks under mark up arrangements amount to Rs.313 million (2010: Nil).624 million) and Rs.879 27.937 652.596 6. 0.2 Bills discounted .577 (120.205 million) are available to the Group as a sub-limit of the running finance facilities referred to in note 11. 0.000 per diem or part thereof on the balances unpaid. 1. The rates of mark up range from Re. 2011 was Rs. 0.3 Short-term finances . 1. 1.250 97.882 2.3 Trade creditors include amount due to related parties Rs. (Rupees in thousand) Note 2011 2010 12. in addition to the securities referred to in note 11. stock-in-trade and trade debts. year or earlier demand. In the event the Group fails to pay the balances on the expiry of the quarter.739 2.577 125. 0. Of the facility for guarantees.734 million). 3. 8.1.758 136 .867 1.799 million (2010: Rs. The facility has not been availed in the current year.177 9.secured Facilities for discounting of export / inland bills of Rs.758 3.2 806.397.2.005 million). stock-in-trade and trade debts. 7. 8.874 million (2010: Rs.secured Facilities for obtaining short-term finances of Rs. on the specific bills discounted.interest free repayable on demand Workers’ welfare fund Workers’ profit participation fund TFCs payable Unclaimed dividends Others 12.875 million (2010: Rs. 0.923 51. Rs. spares.11.000 per diem or part thereof on the balances outstanding. Advances from customers include amounts from related party Rs. 1. 6.3364 to Re. The rates of mark up range from Re.3 12.015 million (2010: Rs.3830 per Rs. mark up is to be computed at the rates ranging from Re.551 8.060 million). 28.021 3.3290 to Re.294 million (2010: Rs. 689. 331 million) are available to the Group as a sub-limit of the running finance facilities referred to in note 11.878 million) for opening letters of credit and Rs. The outstanding balance of bills discounted is secured.406 631.294 million (2010: Rs. 1.831.000 per diem or part thereof on the balances outstanding. 1.4 Workers’ welfare fund Opening balance Provision for the year Payments made during the year Closing balance 31 2.387 11.6849 per Rs.453 641. Accrued liabilities include amounts in respect of related parties Rs. The aggregate running finances are secured by hypothecation of stores.210 59.1 Running finances .4037 to Re.294 million) for guarantees.2 12.695 123.1 12.581 million (2010: Rs.442 324.596 120.896.664 12.697 15.758) 3. 1. 10. 621. 11. 33.004 108. the amount utilised at December 31.4658 per Rs. 54. as referred to in note 23. 11.

88. 14. Letters of credit and contracts other than for capital expenditure Rs.649 125.2 Commitments in respect of (i) (ii) (iii) Letters of credit and contracts for capital expenditure Rs.secured Preference shares / convertible stock .685.996 475. Post dated cheques not provided in the financial statements have been furnished by the Parent Company in favour of the Collector of Customs against custom levies aggregated to Rs.952 million).050 3. Accrued finance costs Accrued mark up / return on: Long-term local currency loans .872 542.2 18.unsecured Short-term borrowings .secured 103.130.397 million (2010: Rs.139 232.874 million (2010: Rs.1 Contingencies and commitments Contingencies (i) (ii) Claims against the Parent Company not acknowledged as debts Rs.769 million) in respect of goods imported.295 818.150 million). 812. 18.050 26.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (Rupees in thousand) 2011 2010 13. 102.683 18.167 1.929 15. 17. plant and equipment Operating assets Capital work-in-progress 15.332 18.362.219 million (2010: Rs. 463.612 million (2010: Rs.605 million).328 18.643 753.021.1 15.962.559. 14. Property.249 14.209.109 412.203 412.844 1. The amount of future payments under operating leases and Ijarah financing and the period in which these payments shall become due are as follows: Note 2011 2010 (Rupees in thousand) Not later than one year Later than one year and not later than five years 202.971 137 . 310.762 1. 782.031 59.

074) - 2.703 1.1.701) 59.236.209.053 13.618 147. The Parent Company has claimed such loss from its insurance providers in accordance with the relevant insurance policies as referred to in note 32.450 (4.668 3.515 million (2010: Rs.301 163.518 27.832) (11.543 24.643 1.284 308.700 (141) 41.459.722 7.133 119.649 2010 Accumulated depreciation as at December 31.895) - - 27.949) (193.070 203.869 (300) 7. lab equipments and other office equipments) 599.822 203.606 26.908.986.248 9.811 32.236 (487. plant and equipment include assets amounting to Rs.744 (19.668 2. 2011 (Rupees in thousand) Owned assets Freehold land Buildings on freehold land Buildings on leasehold land Plant and machinery 360.744 (4.700) 1.944) 554.832 1.1. 3.059 203 183 - 430.462. 2011 Cost as at December 31.404 1.657.513 9.481 million (2010: Rs.933 (7.608 174.586) 351.465 33.513 169.157. 2010 Book value as at December 31.159 354.531 23.914.3 The depreciation charge for the year has been allocated as follows: Cost of sales Administrative expenses Distribution and marketing costs 27 28 29 1.527) 480.518 27.497 Furniture and fixtures Vehicles 40.454 351.275) 130.640 1. 2009 Exchange adjustment on opening cost Transfer in Additions / (deletions) Cost as at December 31.980 27.493 378.4) 2011 Accumulated depreciation as at December 31.1.704 1.311.427 18.781 7.582.1.420) 2.671 83 - (2.596 1. damaged certain items of property.754) 55. plant and equipment with an aggregate book value of Rs.597.671.052 8.352 4.138 18.462.548.654) 638.728 15.876 5.808.967.026) 55.937 84. 2010 Additions / (deletions) Cost as at December 31.582.965) (5. 129.086 191.347.838 86.471.917.841) 2.467 29.089 9.404 (510.492 22.583) 44. Note 2011 2010 (Rupees in thousand) 15.709 (18.773.915) (140.1.122 360.873) 2.098 18.657.472 (63.787 15. 2010 Transfer in (Rupees in thousand) Owned assets Freehold land Buildings on freehold land Buildings on leasehold land Plant and machinery 345.458 1.894 27.427.548 (300) 1.728 (61.15.127 million (2010: Nil).1 Operating assets Assets written Exchange off due to adjustment on fire opening cost (note 15.643 15.551 180.959 5.161 Other equipments (computers.839 (8.170 430. 2011 is Rs. 3.789. 2010 Exchange adjustment on opening accumulated depreciation Assets written Depreciation off due to charge / fire (deletions) (note 15.070 203.239. 12.312 (589) 58.122 8.809 (47.050 76.4 During the current year fire at the tissue conversion line and stores of the Parent Company.668 3.305 317.1.305 304 600 3.593 (58.553 4.796 29.754) 1.955 156.239.497 40. 2009 Exchange adjustment on opening accumulated depreciation Depreciation charge / (deletions) for the year Accumulated depreciation as at December 31.943) 2.671.467 29.370 8.052 29.453) (269.612 56.131 2.908.126 million).256 320. 83.307 (533.671.781 768 9 48 5.520 Leased assets Plant and machinery 32.026 million) of the Group which are not in operation.492 22.256 320.937 84.209.179) 1.559.197.138 696 37 37 3.760 2.615 (481) 40. 138 .053) 278.248 9.348 27.096 (27.419 6.136.030 10.495 14.671 12.080.171 Furniture and fixtures Vehicles 39. The cost of fully depreciated assets which are still in use as at December 31.462.781 7.611 56.516.311.621.493 27.144 14.687 (488.1 15.494 2.047 (153) 62.4) for the year Accumulated Book value depreciation as at as at December December 31.001 - (33.492 22.366 3.572 30.807 3.185 (12.055 Other equipments (computers.144 297 2.557 19.021) 360.323) 48.582.521 18.728 (59.1. lab equipments and other office equipments) 559.842 449.153 (120.802 9.011 (31.031. 2010 Cost as at December 31.322 (5.681.033) 1.623) 2.2 Property. 2011 31.716 10.216.526 7.754 128.613 42.383 (25.138 18.149) 278.187 249 280 - 599.226 145.141) 449.955 156.415.131 3.372) (104.186 (4.153 (153.248 105.080 157.

848 803. plant and equipment Detail of property.349 520 403 610 372 507 368 467 366 507 475 480 450 329 610 625 354 841 525 523 623 515 697 825 520 402 375 700 134 456 208 590 390 302 267 270 342 258 157 192 349 71 348 321 247 168 461 252 630 394 392 467 386 61 608 273 302 239 105 353 162 1. Arshad Mahmood Ehtisham Qureshi Faisal Amjad Ghulam Sarwar Hafiz Farhan Muhammad Jaffar Ishtiaq Ahmad Javed Iqbal Maheen Saqib Mehreen Bilal Mohammad Yasin Mubashir Ahmed Muhammad Ali Muhammad Farhan Muhammad Haroon Muhammad Imran Aziz Muhammad Ismail Muhammad Naveed Muhammad Rizwan Muhammad Uffan Sharif Muhammad Umar Rashid Sajjad Hussain Sajjad Nadeem Shoaib Kazi Suleman Javed Syed Haris Raza Syed Ihsanullah Shah Syed Kashif Alam Zafar Ahmad Outsider IGI Insurance Limited .070 759 130 101 343 102 165 110 310 174 158 404 132 129 82 442 164 102 211 131 131 156 129 636 217 247 100 136 595 352 368 1.009 552 1.145 84 538 207 70.769 5.444 89. plant and equipment disposed off during the year is as follows: (Rupees in thousand) Particulars of assets Sold to Cost Accumulated depreciation Book value 2011 Sales proceeds Mode of disposal Land Buildings Outsiders Haji Muhammad Ibrahim and others Outsiders IGI Insurance Limited .131 198 Insurance Claim Insurance Claim Negotiation Insurance Claim Insurance Claim 12.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 15.026 12.Related Party Muhammad Jawaid Other assets with book value less than Rs.000 28.278 1.781 199.Related Party IGI Insurance Limited .1.877 475.Related Party 70.810 2.335 365.453 737 31.337 109.184 651. 50.000 552 4.240 16.281 103.071 983 288 192 434 167 277 164 359 191 310 410 255 231 650 469 373 157 549 292 290 372 284 631 464 321 192 170 617 Group policy -do-do-do-do-do-do-do-do-do-do-do-doNegotiation Group policy -doNegotiation Group policy -do-do-do-do-do-do-do-do-do-do-do-do-do- 16.580 - 139 .063 5.028 392 Insurance Claim Negotiation 487 618 1.022 476.979 4.5 Disposal of property.Related Party Muhammad Amin Other Equipments Outsiders IGI Insurance Limited .026 143.Related Party Vehicles Employees Adnan Yousaf Akhtar Javed Almaee Hassan Jafri Dr.915 530 39.037 3.471 664 151.550 Negotiation Plant and machinery Outsiders IGI Insurance Limited .

113 247 15.536 984 1.432 47. Sohail Yaseen Muhammad Jahangir Shaheen Mujeeb 696 365 488 861 877 381 465 500 1.880 10.do . Abida Riaz Dr. Shahid Tanveer Ahmed Outsiders Adnan Rafique Qureshi Anees Sozer Azeem Ahmad Fauzia Masood Irfan Traders Jawaid Roshan Ali M.do .do 367 670 605 867 849 850 841 998 1.do .do .439 - Negotiation .do .820 312 21.do .400 620 800 378 775 1.do - Other assets with book value less than Rs.400 405 516 197 659 787 649 1.do .do .do .do .(Rupees in thousand) Particulars of assets Sold to Cost Accumulated depreciation Book value 2010 Sales proceeds Mode of disposal Plant and machinery Outsiders Muhammad Amin Tetra Pak Pakistan Limited Scrapped Employee Nadeem Aslam 559 21.000 33.do .do .do . Babar Ali Farooq Ahmad Qureshi Imran Zaheer Jawad Gill Major Arif Shaheed Mujeeb Rashid Mushtaq Ahmad Nadeem Aslam Nasir Hussain Shah Bukhari Nauman Noor Sahil Zaheer Salman Yunus Shafi Karim Shahid Ul Haq Shamiyal Shariq Syed Ali Murtaza Syed M.do .do .293 125 18.826 38.do .021 32.141 448 60.233 120.do .do .076 331 233 67 430 358 152 105 25 242 365 132 421 431 519 229 360 475 834 702 232 421 500 236 375 360 490 848 Negotiation .063 799 293 74 489 329 743 388 196 312 421 164 588 330 490 605 659 638 660 1.do .do Scrapped Computer Hardware 90 32 58 57 Negotiation Vehicles Employees Ahmed Raza Ahsan Majeed Malik Amer Iqbal Amjad Hussain Asad Ali Mufti Asghar Abbas Ashfaq Khattak Dr.do .826 22. 50.do .924 - 140 .do .do .do .do .785 59.295 318 107 185 639 768 406 1.063 816 320 482 644 304 725 419 222 437 528 Group policy .do .255 900 479 888 851 418 814 493 403 609 841 306 67 325 369 425 266 326 611 105 302 693 193 136 768 578 192 101 186 814 362 89 71 105 207 297 420 61 603 280 498 424 584 515 387 1.do .do .do .do .do .

598 38.460 (2. as at December 31.976 15.695 570.834 142.494) (2. 2011 Book value as at December 31.715 5. 2011 is Rs.589 5.499) (4. 2. The Parent Company has claimed such loss from its insurance providers in accordance with the relevant insurance policies as referred to in note 32. 38.079 17. Investment property Cost as at December 31.976 - 15.953 million).598 (125. Cost As at January 1 Additions As at December 31 Accumulated amortisation As at January 1 Amortisation for the year As at December 31 144.387 5.259 (128.635 9.421 859 601 1. 2011 Accumulated depreciation as at December 31.261 Cost as at December 31.328 15.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (Rupees in thousand) 2011 2010 15.914 4.679 million (2010: Nil).589 16. 2010 Depreciation charge for the year Accumulated depreciation as at December 31. based on the valuation carried out by an independent valuer.2 Depreciation charge for the year has been allocated to administrative expenses.573 144.926) (133. (Rupees in thousand) Note 2011 2010 17.797 million (2010: Rs.465) (23.441 (23. 2010 Buildings on freehold land Buildings on leasehold land 23. Fair value of the investment property.976 15.420) (3. 301.1 During the current year fire at the tissue conversion line and stores of the Parent Company damaged certain items of capital work-in-progress with an aggregate book value of Rs.537 million)] Others Advances 15. Intangible assets These represent computer software and ERP system.061 3.465) 15.261 5. 2009 Depreciation charge for the year Transfer out Accumulated depreciation as at December 31. 2010 (Rupees in thousand) Cost as at December 31.976 39.499) 16.995 336 162.099 18 3. 2011 16.302 753.784 105.465 15. 2009 (Rupees in thousand) Transfer out Cost as at December 31.715 10. 38.425) 49. 2010 Book value as at December 31.387 10.2.1 The amortisation charge for the year has been allocated as follows: Cost of sales Administrative expenses 27 28 12 4.025 2.494) 10.2 Capital work-in-progress Civil works Plant and machinery [including in transit Nil (2010: Rs.661 183.387 2010 328 328 - 10.976 10. 2010 Accumulated depreciation as at December 31.976 1.926 141 .387 10.1 16.683 19.571 235 4.079) (128.786 11.1.976 15. 2011 Transfer out Transfer out Buildings on leasehold land 15.093 125.

815 million) Tri-Pack Films Limited 10.1.789 3.17%) Market value .1 & 18.000 (2010: 10.61% (2010: 10.Rs.653.500.488 million (2010: Rs.286 18.510 million) 18.410.243 (144. the recoverable amount of investment in Tri-Pack Films Limited exceeds its existing carrying amount.625. 616.33% (2010: 33.286 439.355) 294.33%) Market value .530.150 million (2010: Rs.008 324.2 18.530. 18.511) 3.357.386 (228. This calculation has been made on discounted cash flow methodology for real cash flows using a weighted average cost of capital of approximately 8%. cumulative annual growth rate of 7. 26.758.000. 10 each Equity held 10. 1. 738.700 million respectively as referred to in note 35.286 18.123 3. The Group has recognised impairment losses in IGI Insurance Limited and IGI Investment Bank Limited during the year of Rs.135.610.294) fully paid ordinary shares of Rs.1 18. 10 each Equity held 2.17% (2010: 2.450 18. 13.87% in profit after tax till 2020 and terminal growth of Nil.100) 3.386 (348.530.253) 3.1 (17.Rs.610. The Group’s investment in IGI Insurance Limited and IGI Investment Bank Limited is less than 20% but they are considered to be associates as per the requirement of IAS 28 ‘Investments in associates’ because the Group has significant influence over the financial and operating policies of these companies.888 3.6 million) IGI Investment Bank Limited 4.2 The number of shares in IGI Insurance Limited increased due to issuance of bonus shares during the year.838.915) fully paid ordinary shares of Rs.221.1 Associates Quoted IGI Insurance Limited 18. Investments in associates Cost Post acquisition loss brought forward Profit for the year: Before taxation Provision for taxation 3.839) (642.758.488 1.(Rupees in thousand) Note 2011 2010 18.3 4.3 142 .430) 243. The Group has assessed the recoverable amount of investment in Tri-Pack Films Limited based on value in use calculation.511) (135.203 million and Rs.267 (2010: 7. 523.028.Rs.61%) Market value .822 2.1.2 2.1.903) (796.219 (80.3 523.825.611 3.603 million (2010: Rs.174 Other comprehensive income Dividends received during the year Impairment charged on investments in associates Balance as on December 31 18.915 (2010: 4.921 37.511) (123. 1.797 (123. Based on the above. 4. 10 each Equity held 33.921 3.378) 3.000) fully paid ordinary shares of Rs.713 11.000.028.1.

453 148.706 4.759 164.4 The Group’s share of the result of its associates. Other long-term investments Quoted Nestle Pakistan Limited 3.17% 1.466.992 2011 97.248 (2010: 3.177 2. 10 each Equity held 8.14%) Pakistan Tourism Development Corporation Limited 2.337 3. 2011 IGI Insurance Limited Tri-Pack Films Limited IGI Investment Bank Limited December 31. however.104 1.539.000 19.025.000.333 (5. and its share of the assets and liabilities in case of those associates whose financial information is available publicly. 10 each Coca-Cola Beverages Pakistan Limited 500. 10 each Orient Match Company Limited 1.876 (Rupees in thousand) 10.126.453 10.8.906 869. 143 .33% 2.248) fully paid ordinary shares of Rs.323. are as follows: (Rupees in thousand) Name Percentage interest held Assets Liabilities Revenues Profit/(loss) December 31.61% 33. investments in others have been classified as available for sale and measured at fair value as referred to in note 4.649.764) 277.453 million) Unquoted Tetra Pak Pakistan Limited 1. all of which are incorporated in Pakistan. 1984.068) 249.33% 2.830 2.666.184 25 25 4. 2010 IGI Insurance Limited Tri-Pack Films Limited IGI Investment Bank Limited 10.500 (2010: 2.1 Nestle Pakistan Limited and Tetra Pak Pakistan Limited are associated undertakings as per The Companies Ordinance.909 3.294 110.649.655.681.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 18.666. 100 each 14.291 17.473 3.05%) Market value .126. 8.327 1.Rs.900) fully paid ordinary shares of Rs.141.435 184.731 8.633 1.164.375.371 88. for the purpose of measurement.936 23.656 1.969 82.05% (2010: 8.802 243.000) fully paid non-voting shares of Rs.451.064.477 14.000 (2010: 500.14% (2010: 0.61% 33.900 (2010: 1.000) fully paid ordinary shares of Rs.932 (4.17% 1.746 million (2010: Rs.500) fully paid ordinary shares of Rs.643.623 2010 19. 13.480.731 13.000 (2010: 1.706 13. 10 each Equity held 0.597 248.752 39.000.746 8.654.336.744 80.639 2.000 10.952 146.544 3.

The carrying value of the assets damaged was Rs. damaged certain items of stores and spares.2 Raw materials and finished goods with a cost of Rs. Stores and spares Stores [including in transit Rs. 22.049) 139. 1. The carrying value of the assets damaged was Rs. The remaining amount is receivable in 6 annual installments. 783.(Rupees in thousand) Note 2011 2010 20.2 4.241 2.992 (649) (16.2 This represents an unsecured loan given by the Parent Company to Sui Northern Gas Pipelines Limited (SNGPL) for the development of the infrastructure for the supply of natural gas to the plants at Bulleh Shah Paper Mill.444 million (2010: Rs. The Parent Company has claimed such loss from its insurance providers as referred to in note 32. 1.1 22.556 156.029.536 million) are secured by joint registration of motor cycles in the name of employees and the Group companies.221 1. 653.163.412 million are being valued at net realisable value of Rs.1 21.351) 111. 189.728 440.638 98.181 21. During the current year fire at the tissue conversion line and stores of the Parent Company.136 269.400) (17.775 24 24 (951) (16. Long-term loans and deposits Considered good Loans to employees Loan to SNGPL Security deposits Receivable within one year Loans to employees Loan to SNGPL 20.275) 5.820 (5. 2011 2010 (Rupees in thousand) 21.5% per annum and is received annually.800 38.721 million)] Spares [including in transit Rs.943 20.516 (4.013.2 Stores and spares include items which may result in fixed capital expenditure but are not distinguishable and are net of an amount of Rs.225.271 2.904 1.471. Mark up is charged at the rate of 1.1.038 1. Note 2011 2010 (Rupees in thousand) 22.073.417) 4. 1.745 million and Rs.354.447 million (2010: Nil).1.356 336.080.1 These represent interest free loans to employees for purchase of motor cycles and cycles and are repayable in monthly installments over a period of 60 to 260 months.766 573. 14. 1.168. 290.300 million (2010: Rs. The remaining loans are unsecured.400 25.1 20.014 million (2010: Rs.400) (17.636 114.201 million (2010: Nil). Loans to employees aggregating Rs. 306. 20.889 5. 2. Stock-in-trade Raw materials [including in transit Rs. 215.424 3.485 million (2010: Rs.969 million respectively.403 27 27 22. During the current year fire at the tissue conversion line and stores of the Parent Company. 1.452 million (2010: Nil) in respect of provision for slow moving stores and spares.826. Work-in-process Finished goods Provision for slow moving items 2.308 million)].737 128. 144 .129 million and Rs. 11.033.463 4.277 506. damaged certain items of stock-in-trade.479 million)] 573. The Parent Company has claimed such loss from its insurance providers as referred to in note 32.092.

537 3.596 (45.059 38.540) 1.154 422 101.400 11.947.679 2.856 (43.540 24.959 3.943.540 1.059) 2. Note 2011 2010 (Rupees in thousand) 23.909 69.378 649 16.2 145 .838 million) which are secured by way of bank guarantees and inland letters of credit.2 30.573) 45. advances.574) 43. Loans.2 Others include debts of Rs.125 million) are under lien against credit facilities available as referred to in note 11.059 2.316 43.400 13. 198.947. prepayments and other receivables Current portion of loans to employees Current portion of loan receivable from SNGPL Advances .858 2.109.540 8.092 (6.2.346 1.194 880 117 25.901 24.808 6.215 238.unsecured Associate Tri-Pack Films Limited Other Related Party DIC Asia Pacific Pte Ltd 24. 210. 219 3.considered good To employees To suppliers Due from related parties .Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (Rupees in thousand) Note 2011 2010 23. deposits.034 million (2010: Rs.439 55.881 100. 34.899 30.078.945 116 19.127 23.316 23.348 2.unsecured Trade deposits .1 23.considered good Trade deposits .537 45. debts amounting to Nil (2010: Rs.722 101.3 The movement in provision during the year is as follows: Balance as at January 1 Provision during the year Trade debts written off during the year Balance as at December 31 29 43.unsecured Others Considered doubtful Provision for doubtful debts 23.990.considered doubtful Security deposits Prepayments Carried Forward 20 20 24.346 5.154. Out of these.970 1.109.306 (1.1 Related parties .858 These are in the normal course of business and are interest free.766 217.1 951 16.273 88.3 23. Trade debts Considered good Related parties .

36. Income tax receivable Income tax refundable Income tax recoverable 25.386) 466.748 (7.000 7.(Rupees in thousand) Note 2011 2010 Brought Forward Balances with statutory authorities Customs duty Sales tax recoverable Octroi .053 468.704 36.013 821.000 9.unsecured Associates Tri-Pack Films Limited IGI Insurance Limited Other Related Party DIC Asia Pacific Pte Ltd These are in the normal course of business and are interest free. the Income Tax Officer (ITO) re-opened the Parent Company’s assessments for the accounting years ended December 31.567) (124) 748 7.901 7.787 36.013 million on its capital expenditure for these years was refused on the grounds that such expenditure represented an extension of the Parent Company’s undertaking which did not qualify for tax credit under this section in view of the Parent Company’s location. 1.1 Included in advances to employees are amounts due from executives of Rs.791 66.473 284.2 Due from related parties . The tax credit amounting to Rs.530 2.564 24.378 10.800 785.1 947. The assessments for these years were revised by the ITO on these grounds and taxes reassessed were adjusted against certain sales tax refunds and the tax credits previously determined by the ITO and set off against the assessments framed for these years.3 172.616 Workers’ profit participation fund Insurance claim receivable from related party Other receivables Provision against doubtful debts 24. 1.506 15.813 77 838 915 238.443 (9.122 (1. 1983 and 1984 disallowing primarily tax credit given to the Parent Company under section 107 of the Income Tax Ordinance.722 422 59 1.411 2.classified as trade and other payables 443 9.133 97 325 24.013 983.393 1.905 6.506) 282.299 million (2010: Rs.501 443 26. 2011 2010 (Rupees in thousand) 24.considered doubtful Mark up receivable on Loan to SNGPL Term deposits and saving accounts 217.3 Workers’ profit participation fund Opening balance Payments made during the year Provision for the year Closing balance .896 million).506 11.950 (2. 146 . 0.1 In 1987.717 25.307 1.804 90 2.305) 443 25. 1979.

36.963 (2010: USD 7. The recoverable amount Rs.160.162)] On current accounts [including USD 5.177 (2010: USD 305.340)] On saving accounts [including USD 29.166.384 207.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 The Parent Company had filed an appeal against the revised orders of the ITO before the Commissioner of Income Tax (Appeals) [CIT(A)].061 (2010: USD 801.449 26.939 200.1 26. Cash and bank balances At banks On deposit accounts [including USD 6. Included in these are total restricted funds of Rs.320 616 952.381 9. (Rupees in thousand) Note 2011 2010 26.332 million (2010: Rs. has issued notices under section 65 of the Income Tax Ordinance. 1. The assessing officer after the receipt of the appellate order passed by CIT (A).332 million) held as payable to TFC holders. in his order issued in 1988.862 1. held the assessments reframed by the ITO for the years 1983 and 1984 presently to be void and of no legal effect.587 1.222)] In hand 622 26.587 5.401 190.7% per annum.0 % to 12. Karachi.2 84.2 The balances in saving accounts bear mark up which ranges from 5.358 105.1 26. The ITAT has in its order issued in 1996 maintained the order of CIT(A).013 million represents the additional taxes paid as a result of the disallowance of the tax credits on reframing of the assessments. The ITO has filed an appeal against the Commissioner’s order with the Income Tax Appellate Tribunal (ITAT). The Commissioner has. the outcome of which is still pending. 1. 1979 and the Parent Company has filed a writ petition against the aforesaid notices with the High Court of Sindh. 147 .

311 293.879 4.359 (28. 21.174.377 1. 148 .929 million (2010: Rs.603 32.787 (49. salaries.450 21.771 million) for raw materials and stores and spares written off respectively. rates and taxes include operating lease / ujrah rentals amounting to Rs.3 Rent.677 63.162.069 465.826.3 22 22 22 22 Cost of goods produced includes Rs.332 269.410) (6.380) 1.1 12.178.106.1 27. wages and amenities Salaries.674 million) and Rs. rates and taxes Insurance Repairs and maintenance Packing expenses Depreciation on property.087 736.124 3.979 1.762. Rs.992 86.724 million) in respect of provident fund contribution by the Group and accumulating compensated absences respectively. 2.805 (57.330 187.486 million) for stores and spares consumed.494.018.030 489.289 35.621.271) 21.155.229.562 million (2010: Rs.497 19.128) 7.090 3. 4.997 million (2010: Rs.769 18.(Rupees in thousand) Note 2011 2010 27.282 1. 20. 1.475) (9.548.093 348. plant and equipment Amortisation of intangible assets Technical fee and royalty Other expenses Opening work-in-process Closing work-in-process Cost of goods produced Opening stock of finished goods Closing stock of finished goods 27.388. 39. Other expenses include provision for slow moving stores and spares amounting to Rs.2 15.221 (336.809.940 12. 3.609 (269. (Rupees in thousand) 2011 2010 27.3 17.867) 2.022 million (2010: Rs.463) 19.196.724 26. wages and amenities include following in respect of retirement benefits: Pension Current service cost Interest cost for the year Expected return on plan assets Contribution made by the employees Recognition of loss Gratuity Current service cost Interest cost for the year Expected return on plan assets Recognition of loss 20. wages and amenities Traveling Fuel and power Production supplies Excise duty and sales tax Rent.894 12 68.139 2.071.933 8.955 75.788 1. 1.176 663.208 143.889) 20. Cost of sales Materials consumed Salaries.622 39. 27.600 In addition to above.553 12.1.856 11.976) 9.058 (1.1 Salaries.826.735 million).908 240.456 million (2010: Rs.367 11.2 27.225.377.751 227.866 million (2010: Rs.783 37.597 (26. 24. 344.267 1.606 18 55. 11.133.903 21. 231. 24.694 234. wages and amenities include Rs.452 million (2010: Nil).734 27.733 million) and Rs.463 (2.797 2.729 78.221) 19.

961 713.2 Rent.367 21. salaries.421 27.193 28.179 9.226 14.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (Rupees in thousand) Note 2011 2010 28.1 28.737 597. 5. wages and amenities include following in respect of retirement benefits: Pension Current service cost Interest cost for the year Expected return on plan assets Contribution made by the employees Recognition of loss Gratuity Current service cost Interest cost for the year Expected return on plan assets Recognition of loss 4.683) 490 2.914 328 3.267 532 21. 149 . rates and taxes include operating lease rentals amounting to Rs.771 million (2010: Rs.751 6.536 29.526 3.729 (24.3 17. 62.061 1.361 16. (Rupees in thousand) 2011 2010 28.020 23.877 25.1 Salaries.762 million) for stores and spares consumed. 11.166 12. 13. wages and amenities include Rs.136 35. 10.014 15. 7. 28. stationery and periodicals Electricity Postage and telephone Motor vehicles running Computer charges Professional services Repairs and maintenance Depreciation on property. rates and taxes Insurance Printing.233 million (2010: Rs.237 15.485 million) and Rs.378) 3.459 million (2010: Rs.901 5.589 (9.531 18. 53.922 323.744 million) in respect of provident fund contribution by the Group and accumulating compensated absences respectively.1.863 49.1 Administrative expenses include Rs. wages and amenities Traveling Rent.1 16.319 17.136 22. Administrative expenses Salaries.285 18.180 74.283 26.146 8.460 2.815) (3. wages and amenities Salaries.926 18.744 (16.291 million).172 5. plant and equipment Amortisation of intangible assets Depreciation on investment property Security services Advances written off Other expenses 28.406) 832 4.052 4.188 23.942) 3.056 In addition to above. 7.919 587 23.843) (2.3 15.161 2.2 385.715 66.471 (6.380 6.955 6.422 million (2010: Rs.047 32.

telephone and telex Advertising Depreciation on property.624 15.030 616.473 7.289 4.120 2.633 3.397 28.099) 39.330 1.298 667 13.733) 1.776 (4.(Rupees in thousand) Note 2011 2010 28.389 (10.2 162. wages and amenities Traveling Rent.458 72 8.3 23.967 1.592 8.1 Salaries.853 (6. 5. plant and equipment Repairs and maintenance Provision for doubtful debts Bad debts written off Other expenses 29. wages and amenities Salaries.477 7.830 1.603 2. Distribution and marketing costs Salaries.181 2.1.171 8. management staff pension and gratuity fund audit.543 1.453 29.090 6.228 (2.421 297.857) (968) 1.200 2.910) (1. audit of consolidated financial statements and other certification charges Out of pocket expenses 2.1 29.092 (541) 41.977 14. (Rupees in thousand) 2011 2010 29.269 36.328 391 334 124.560 875 3.125 355 346 113.862 129.394 231.595 million (2010: Rs.596 20 6. wages and amenities include following in respect of retirement benefits: Pension Current service cost Interest cost for the year Expected return on plan assets Contribution made by the employees Recognition of loss Gratuity Current service cost Interest cost for the year Expected return on plan assets Recognition of loss 1.135) 366 1.721) 199 887 3.550 625.3 Distribution and marketing costs include Rs. rates and taxes Freight and distribution Insurance Electricity Postage.3 Professional services The charges for professional services include the following in respect of auditors’ services for: Statutory audit Half yearly review Tax services Workers’ profit participation fund audit.306 (2.823 3.909 150 .142 373 451 7.083 3. 2.807 million) for stores and spares consumed.

Other operating expenses Workers’ profit participation fund Workers’ welfare fund Loss on disposal of property.039 167.000 to Syed Maratib Ali Religious & Charitable Trust Society.4 31.2. 5. plant and equipment Net gain on insurance claim of assets written off due to fire Scrap sales Provisions and unclaimed balances written back Rebate income Profit on outside jobs from related party Others 35.net Income from non-financial assets Management and technical fee Insurance commission from related party Rental income from investment property Profit on disposal of property.145 million) in respect of provident fund contribution by the Group and accumulating compensated absences respectively. rates and taxes include operating lease rentals amounting to Rs.711 6. The insurer had appointed a surveyor who has submitted a survey certificate based on which a claim receivable of Rs.976 1. plant and equipment Donations 12. during the year recovered Rs.343 million (2010: Rs. during the year a fire incident at the tissue conversion line and stores of the Parent Company. wages and amenities include Rs.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 In addition to above. 15. Surveyor is expected to complete its survey work during the year 2012 and any incremental insurance claim resulting from surveyor’s final report will be recognised accordingly. (Rupees in thousand) Note 2011 2010 32.955 11. 373.809 1.500 million from the insurance company and is in the process of recovering the remaining insurance proceeds.331 million) and Rs.525 20.459 million (2010: Rs.2. The Parent Company filed the insurance claim in respect of these assets.265 11.596 1. 151 .497 32. Chief Executive Officer of the Parent Company is also a member of the Board of trustees of Syed Maratib Ali Religious & Charitable Trust Society.162 339.2 and 22. 29.851 2.124 5.648 51.787 8.695 12. 2.968 8. salaries.1.610 434 23.199 million).900 12. stores and spares and stock-in-trade.1 As referred to in notes 15. The Parent Company has.354 million has been determined as due from its insurers as of balance sheet date.208 181.558 2.579 32.059 130.368 20.1 32.881 3.124 3. (Rupees in thousand) Note 2011 2010 31. These represent expenses incurred on prospective projects which are not capitalised under International Financial Reporting Standards. plant and equipment.321 million (2010: Rs. 21.157 27.1. damaged certain items of property.956 5.680 34. Other operating income Income from financial assets Income on bank deposits Interest on loan to SNGPL Exchange gain . 3. Rent. 3.991 14.1 9.2 30.1 During the year the Parent Company donated Rs.709 10. 557.518 37.366 31. 100.263 329.438 37. 5.050 6.4. 3. None of the directors and their spouses had any interest in any of the remaining donees during the year.098 37.

net Bank charges 34. For quoted associates. Finance costs Interest and mark up including commitment charges on: Long-term finances .357 1.(Rupees in thousand) Note 2011 2010 Carrying value of assets written off due to fire Property.050 350 30.145 538 2.568 55.1 15.651 218.secured Finances under mark up arrangements .806 - This represents impairment loss recognised based on assessment of recoverable amount.1 15. lab equipments and other office equipments) Capital work-in-progress Stores.secured Finance lease Discounting charges Return on preference shares / convertible stock Loan handling charges Exchange loss .679 131.863 117. Investment income Dividend income Gain on sale of short-term investments 35. Impairment charged on investments in associates Quoted IGI Insurance Limited IGI Investment Bank Limited 616.648 536.2 22.063 768.709 3.1 15.2 189.1 32. plant and equipment Buildings on freehold land Buildings on leasehold land Plant and machinery Other equipments (computers.744 765.1 15.035 819.253 21. the recoverable amount is equal to fair value which has been determined with reference to active market value. spares and stock-in-trade Stores and spares Stock-in-trade Carrying value of assets written off due to fire Insurance claim verified to date Net gain on insurance claim of assets written off due to fire 33.561 12.867 6.903 816.577 89.968 816.354 20.454 557.210 14.201 404.169 905.447 215.841 412.700 642.694.203 26.267.775 1.820 412.050 1.900 15.248 2.2.972 8.201 50. 152 .

992 million).698 284.000).2 Remuneration to other directors Aggregate amount charged in the financial statements for the year for fee to 7 directors (2010: 7 directors) is Rs. 3. Directors and Executives The aggregate amount charged in the financial statements for the year for remuneration.019 63 1.Group Current Current year Prior years Deferred 306.754 The Group also provides the Chief Executive and some of the Directors and Executives with free transport and residential telephones.271 74.411 21.247 1. including certain benefits.901 For the purposes of current taxation. 377.604. Taxation .811 2.803 12. gratuity and pension funds Other long-term benefits Accumulating compensated absences 952 21.334 106 16.328 242.629 1. 153 .112 5.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (Rupees in thousand) 2011 2010 36.287 5.923 27.713 1.995.460 4.666 6.942 112.336 1.213 (7. 37.638 1.096 1. to the Chief Executive.164 1.039 1.889 31.636 974 105 562 12. 37.539 3. 2011 are estimated approximately at Rs.802 Post employment benefits Contribution to provident.000 (2010: Rs.503 153.926 6.026 3.377 3.437 38.364 239 202 232 22.867 114 17. 5.782 2.609 million).560 2. 360.966 15.127 12.981 million (2010: Rs.892 8.366 33. full time working Directors including alternate directors and Executives of the Group is as follows: Chief Executive 2011 Number of persons (Rupees in thousand) 1 2010 1 2011 2 Directors 2010 2 90 Executives 2011 2010 65 Short-term employee benefits Managerial remuneration Housing Utilities Bonus Leave passage Medical expenses Club expenses Overseas travels Others 8.609 million (2010: Rs. Unused tax losses available to the Parent Company contain unused business losses amounting to Rs.385 3.255 37.838 307.983 52.261 344.1 Remuneration of Chief Executive. 37.157 6.048 20.231) 299.081) 129.333 2.174 1.314 646 19.913 178. 377.916 17.950 595 26. 520.982 (170.443 1.068 2. the tax losses available for carry forward as at December 31.161 1.970 275.337 742 2.140 628.781 2.315 267 229 106 28.

38.

Transactions with related parties The related parties comprise associates, directors, key management personnel and post employment benefit plans. The Group in the normal course of business carries out transactions with various related parties. Amounts due from and to related parties are shown under receivables and payables, amounts due from directors and key management personnel are shown under receivables and remuneration of directors and key management personnel is disclosed in note 37. Other significant transactions with related parties are as follows:

(Rupees in thousand)

2011

2010

Relationship with the Group i. Associates

Nature of transactions Purchase of goods & services Sale of goods & services Insurance premium Insurance claim received Insurance commission Dividend income Purchase of property, plant & equipment Purchase of goods & services Sale of goods & services Royalty and technical fee - expense Rebate received Expense charged in respect of retirement benefit plans Mark up on temporary loans 766,947 52,152 151,687 408,128 6,098 135,839 220,063 25,153 41,355 562 475,198 30,928 126,662 1,829 5,497 123,511 950 164,549 38,433 2,610

ii. Other related parties

iii. Post employment benefit plans

117,755 46

95,967 -

All transactions with related parties have been carried out on commercial terms and conditions. 39. Capacity and production
Capacity 2011 2010 Actual production 2011 2010

Paper and paperboard produced - tons Paper and paperboard converted - tons Plastics all sorts converted - tons Inks produced - tons Flexible packaging material - meters ‘000’

316,250 159,834 20,000 7,100 90,000

288,250 146,834 19,500 7,100 90,000

145,826 110,316 14,498 5,930 51,572

176,950 119,480 13,084 5,319 53,038

The variance of actual production from capacity is on account of the product mix. 40. Rates of exchange Liabilities in foreign currencies have been translated into PAK Rupees at USD 1.1136 (2010: USD 1.1641), EURO 0.8604 (2010: EURO 0.8757), SFR 1.0481 (2010: SFR 1.0922), SEK 7.6864 (2010: SEK 7.8678), GBP 0.7225 (2010: GBP 0.7539), SGD 1.4486 (2010: SGD 1.4981), CAD 1.1368 (2010: Nil) and YEN 86.334 (2010: YEN 94.8767) and SLR 127.3561 (2010: SLR 128.6173) equal to Rs. 100. Assets in foreign currencies have been translated into PAK Rupees at USD 1.1161 (2010: USD 1.1669) and EURO 0.8624 (2010: EURO 0.8777) and SLR 127.3561 (2010: SLR 128.6173) equal to Rs. 100.

154

Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011

(Rupees in thousand)

Note

2011

2010

41.

Cash generated from operations (Loss) / profit before tax Adjustments for: Depreciation on property, plant and equipment Depreciation on investment property Amortisation on intangible assets Impairment charged on investments in associates Provision for accumulating compensated absences and staff gratuity Provision for retirement benefits Provision for doubtful debts Exchange adjustments Net profit on disposal of property, plant and equipment Net gain on insurance claim of assets written off due to fire Net loss on disposal of property, plant and equipment Finance costs Gain on sale of short-term investments Dividend income Share of profit of associates Profit before working capital changes Effect on cash flow due to working capital changes Increase in stores and spares (Increase) / decrease in stock-in-trade (Increase) / decrease in trade debts Increase in loans, advances, deposits, prepayments and other receivables Increase in trade and other payables (1,252,984) 15.1.3 16 17.1 35 1,657,404 328 4,926 642,903 26,680 80,280 8,092 3,796 (167,525) (20,900) 1,694,063 (3,035) (816,709) (439,243) 1,418,076 119,176 1,582,728 1,460 3,079 44,891 63,998 6,306 18,572 12,956 1,267,253 (50,968) (765,201) (324,219) 1,980,031

9 23.3 32 32.1 31 33 34 34 18

(123,032) (1,081,039) (170,313) (11,157) 238,909 (1,146,632) 271,444

(181,798) 320,587 78,368 (72,430) 204,876 349,603 2,329,634

42.

Cash and cash equivalents Cash and bank balances Finances under mark up arrangements - secured 26 11 200,320 (1,170,227) (969,907) 1,166,449 (511,439) 655,010

43. 43.1

Combined (loss) / earnings per share Combined basic loss per share Net loss for the year attributable to equity holders of the Parent Company Weighted average number of ordinary shares Combined basic loss per share Rupees in thousand Numbers Rupees (2,087,158) 84,379,504 (24.74) (152,245) 84,379,504 (1.80)

155

(Rupees in thousand)

Note

2011

2010

43.2

Combined diluted (loss) / earnings per share Net loss for the year attributable to equity holders of the Parent Company Return on preference shares / convertible stock - net of tax Rupees in thousand Rupees in thousand (2,087,158) 325,002 (1,762,156) Weighted average number of ordinary shares Weighted average number of notionally converted preference shares / convertible stock Numbers Numbers 84,379,504 21,686,842 106,066,346 Combined diluted (loss) / earnings per share Rupees (16.61) (152,245) 329,922 177,677 84,379,504 21,686,842 106,066,346 1.68

The effect of the conversion of the preference shares / convertible stock into ordinary shares is anti-dilutive, accordingly the diluted EPS is restricted to the basic EPS.

156

135) 1.253) 1.112.517) 18.355 773.247) 14.403 (80.914.267.180.475.109 (530.459.317 160.970 6.884) 16.892.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 44.906 930 (2.928.720 121.062) 26.953 General & Others 2011 235.650 (184.402 5.2 Reconciliation of reportable segment assets Total assets for reportable segments Intersegment assets Other corporate assets Total assets 27.551 (3.395 583.004.035 642.196.900 43.215.245 (127.447) 168.158 27.520) 180.400 (207.443.643) 723.119) 11.811) 79.997 (201.546 (49.839) 8.563) 1.035 642. Segment Information A Business segment is a Group of assets and operations engaged in providing products that are subject to risk and returns that are different from those of other business segments.658 3.637.398 (5.752 (117.352) 1.838 (1.997 26.902 (138.684 108.234 1.918) 119.717 (155.046) (1.382 1.649.693.169.3 Reconciliation of segment taxation Total tax expense for reportable segments Intercompany consolidation adjustments Group Associates Taxation as per consolidated profit and loss account 180.865.482) 90.085) 1.654.635.1 Reconciliation of segment (loss) / profit before tax Total loss for reportable segments Income from associates Intercompany adjustment (Loss) / profit before tax (1.582 (2.888 19.246 1.111.252.694.838 448.611 Interest revenue Interest expense Depreciation and amortisation Gain on sale of investments Impairment on investments in associates Segment profit / (loss) before tax Segment taxation Segment profit / (loss) after tax Segment assets 5.348 Ink Division 2011 1.000 144.901 19.176 44.680) 14. paperboard and tissue products Manufacture and market industrial and commercial ink products Workshop and other general businesses (Rupees in thousand) Packaging Division 2011 Total revenue Intersegment revenue 14.453 Paper & Board Division 2011 14.753 61.217 (Rupees in thousand) 2011 2010 44.976.420.587.791 10.071 (60) 30.517) 27.267 50.121 4.559 18.203.564.205 (9.443.216 (173.565) (8.703.240 2010 14.662.141.958 171.622.087 757.984) (27.776 26.060.903 605.045.000 80.968 1.798 1.903 (1.518 39.930 (530.968 (27.534) 18.273.539 169.709 (53.674 2010 296.430 210.331 157 .350 2010 11.983) 65.475.342 40.767 2010 1.820 3.291.791) 19.615) 110.064) (1.291 (660.520) 303.867) (1.311 44.889 (1.954.069 799.917 (3.523 1.358) 1.073.004.196 20.393 Consolidated 2011 2010 31.591.615) 200.386.414) 21.446.980.206 (1.309 (2.731 50.712 6.910 (774.656.813 78.086) 26.285. Types of Segments Packaging Paper & Board Ink General & Others Nature of business Manufacture and market packing products Manufacture and market paper.188 (22.296 44.962) (7.915 1.118.785 633.961) 326.315.592.558 (63.465.000.133) 327.193 110.531.325.695.

credit risk and liquidity risk.368 54.853 18.124.316. Risk management is carried out by the Group’s finance department under policies approved by the Board of Directors.126 39.196 98.12 million) of the Group’s total revenue. 158 .current assets 2011 2010 44.871.026.308.791 18. 8.620 133.4 Reconciliation of segment loss after tax Total loss after tax for reportable segments Intercompany adjustment for profit before tax Intercompany adjustment for taxation Loss as per consolidated profit and loss account (1.579 20.5 Information by geographical area Revenue 2011 (Rupees in thousand) Afghanistan Bangladesh Belgium Germany Malaysia Pakistan Singapore Sri Lanka Sweden UAE USA Others 88.60 million (2010: Rs. interest rate risk. and investment of excess liquidity.1 Financial risk management Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk. The board provides written principles for overall risk management. The Group uses derivative financial instruments to hedge certain risk exposures. 45.549 20.811 8.929. 5. The Group’s finance department evaluates and hedges financial risks in close cooperation with the Group’s operating units.851.177) (138.851 18.738 34.201 230.711 24.016 50.791 (99.503 20.996 33. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.095.358) 222.715 23.118. fair value interest rate risk.644.791 1.725 194.355) (2.6 Information about major customers Included in the total revenue is revenue from three (2010: two) customers of the Group from the packaging (2010: packaging and paper & board) segments which represent approximately Rs.877 19.531.517) 146.(Rupees in thousand) 2011 2010 44.381 41.695. use of derivative financial instruments and nonderivative financial instruments. cash flow interest rate risk and price risk).232 21.584 169.602 2010 Non .656.588 40.508 18.536 (592.625 1.155) 44. 45. such as foreign exchange risk. credit risk. as well as written policies covering specific areas.649.429) (91.343 207.

Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 (a)  (i)  Market risk Foreign exchange risk Foreign exchange risk is the risk that the fair value of future cash flows of a financial instrument shall fluctuate because of changes in foreign exchange rates. 2011. (ii) Price risk The Group is exposed to equity securities price risk because of investments held by the Group and classified as available for sale. (iii) Cash flow and fair value interest rate risk As the Group has no significant floating interest rate assets. post-tax loss for the year would have been Rs. Karachi Stock Exchange. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities and net investments in foreign operations.471 million (2010: Rs.209 million lower / higher) mainly as a result of foreign exchange losses / gains (2010: gain / losses) on translation of US dollar-denominated financial assets and liabilities.211 632. 19. At December 31. 2011. mainly as a result of foreign exchange losses / gains on translation of Euro-denominated financial assets and liabilities. the Group’s income and operating cash flows are substantially independent of changes in market interest rates. other component of equity would have been Rs.735 million) higher / lower. Diversification of the portfolio is done in accordance with the limits set by the Board of Directors. post-tax loss for the year would have been Rs. To manage its price risk arising from investments in equity securities. 15. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. The analysis is based on the assumption that the KSE had increased / decreased by 10% with all other variables held constant and all the Group’s equity instruments moved according to the historical correlation with the index: Impact on post-tax profit 2011 2010 Impact on other components of equity 2011 2010 (Rupees in thousand) Karachi Stock Exchange 643. 159 . 1. At December 31. Lahore Stock Exchange and Islamabad Stock Exchange. denominated in Sri Lankan Rupee. 53. primarily with respect to the US dollar. if the Rupee had weakened / strengthened by 10% against the Euro with all other variables held constant. mainly as a result of foreign exchange gains / losses on translation of net assets of Packages Lanka (Private) Limited. 6. At December 31. The table below summarises the impact of increases / decreases of the KSE-100 index on the Group’s post-tax profit for the year and on equity. if the Rupee had weakened / strengthened by 10% against the US dollar with all other variables held constant. Euro and Sri Lankan Rupees. if the Rupee had weakened / strengthened by 10% against the Sri Lankan rupee with all other variables held constant. The Group’s investments in equity of other entities that are publicly traded are included in all of the following three stock exchanges.651 Post-tax profit for the year would increase / decrease as a result of gains / losses on equity securities classified as ‘at fair value through profit or loss’. Other components of equity would increase / decrease as a result of gains / losses on equity securities classified as available for sale. 55. the Group diversifies its portfolio.210 million higher / lower (2010: Rs.293 million (2010: Rs.057 million) higher / lower. 2011. The Group is not exposed to commodity price risk.

405 20.223 million (2010: Rs.413 million) were past due but not impaired. trade receivables of Rs. Various scenarios are simulated taking into consideration refinancing. only independently rated parties with a strong credit rating are accepted.628 48.616 1. These borrowings issued at variable rates expose the Group to cash flow interest rate risk. Any subsequent repayments in relation to amount written off are credited directly to consolidated profit and loss account. The utilisation of credit limits is regularly monitored and major sales to retail customers are settled in cash. 57. The Group monitors the credit quality of its financial assets with reference to historical performance of such assets and available external credit ratings.943 1. taking into account their financial position. the Group calculates the impact on consolidated profit and loss of a defined interest rate shift. including outstanding receivables and committed transactions. The carrying values of financial assets exposed to credit risk and which are neither past due nor impaired are as under: (Rupees in thousand) 2011 2010 Long-term loans and deposits Trade debts Loans.903 282. deposits.818 million) higher / lower. derivative financial instruments and deposits with banks and financial institutions.982 139.376 642. 2011. The management assesses the credit quality of the customers. 642. These relate to a number of independent customers for whom there is no recent history of default. 160 .160.409 23.433. advances.413 The management estimates the recoverability of trade receivables on the basis of financial position and past history of its customers based on the objective evidence that it shall not receive the amount due from the particular customer. For banks and financial institutions. At December 31. (b) Credit risk Credit risk represents the risk of financial loss being caused if counter party fails to discharge an obligation. The aging analysis of these trade receivables is as follows: (Rupees in thousand) 2011 2010 Up to 90 days 90 to 180 days 181 to 365 days 634. Based on these scenarios.The Group’s interest rate risk arises from short-term and long-term borrowings. 675. as well as credit exposures to distributors and wholesale and retail customers.564 190. post-tax loss for the year would have been Rs. The provision is written off by the Group when it expects that it cannot recover the balance due. 2011. alternative financing and hedging.201.504 675.304.424 1. mainly as a result of higher / lower interest expense on floating rate borrowings.049 As of December 31.613 466. 68. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board.587 2.015 21. prepayments and other receivables Balances with banks 111. past experience and other factors. if interest rates on floating rate borrowings had been 1% higher / lower with all other variables held constant. The Group analyses its interest rate exposure on a dynamic basis.924 570.381 2.924 million (2010: Rs.888. The scenarios are run only for liabilities that represent the major interest-bearing positions. Credit risk of the Group arises from cash and cash equivalents. renewal of existing positions.

Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited Hatton Bank Limited Sri Lanka HSBC Bank Middle East Limited JS Bank Limited MCB Bank Limited MCB Bank Limited Sri Lanka Meezan Bank Limited National Bank of Pakistan NDB Bank Plc NIB Bank Limited Samba Bank Limited Silk Bank Limited Soneri Bank Limited Standard Chartered Bank Pakistan Limited Standard Chartered Bank Sri Lanka The Bank of Punjab The Bank of Tokyo-Mitsubishi UFJ. These limits vary by location to take into account the liquidity of the market in which the entity operates. the Group’s liquidity management policy involves projecting cash flows in each quarter and considering the level of liquid assets necessary to meet its liabilities.875 655 27.291 9.402 7. Management monitors the forecasts of the Group’s cash and cash equivalents (note 42) on the basis of expected cash flow.512 928 824 82 1.236 827 9 527 554 190. Commercial Bank Limited Sri Lanka Deutsche Bank A.571 1.523 12 725 467 3.127 389 2.179 3. monitoring consolidated balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.905 636 283.873 1.972 2.757 949 36.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 The credit quality of Group’s bank balances can be assessed with reference to external credit ratings as follows: Rating Short-term (Rupees in thousand) Rating Long-term Rating Agency 2011 2010 Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Bank Al-Habib Limited BankIslami Pakistan Limited Barclays Bank PLC Pakistan Citibank N. Limited United Bank Limited (c) Liquidity risk A1+ A1+ A1+ A1+ A1 A1+ A1 A1 A1 A1+ A1+ A1+ P1 A1 A1+ A1+ A1+ A1+ A1+ A1 A-2 A1+ A1+ A1+ A1 A1+ AA AA AA AA+ A AAA+ AA A+ A AA AA+ AA+ AAA1 A AA+ AA+ AAAAA AA AAA+ AAAAAA AAA AAA+ AA+ PACRA PACRA PACRA PACRA PACRA S&P S&P Fitch S&P JCR-VIS JCR-VIS JCR-VIS PACRA Fitch Moody’s PACRA PACRA PACRA JCR-VIS JCR-VIS Fitch PACRA JCR-VIS JCR-VIS PACRA PACRA Fitch PACRA S&P JCR-VIS 10 4 2.601 2. 161 . This is generally carried out in accordance with practice and limits set by the Group.693 1 8 10.381 7.542 302.587 Liquidity risk represents the risk that the Group shall encounter difficulties in meeting obligations associated with financial liabilities. Due to the dynamic nature of the Group’s businesses.392 2 14 74.675 14. The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. In addition.376 3.403 2 14 47.576 50 723 619 1. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities.730 628 11. The amounts disclosed in the table are the contractual undiscounted cash flows as the impact of discounting is not significant.361 899 1.201 322.160.G.861 71. the availability of funding through an adequate amount of committed credit facilities.510 83. the Group’s finance department maintains flexibility in funding by maintaining availability under committed credit lines.A.210 56 2.

339 29.575.857 4.638 380.952 380.435.147 1.952 1.664 475.952 4.624 22% 7. The gearing ratios at December 31.479.956.092.572 578.896. the Group’s strategy was to maintain the gearing ratio below 60% and AA credit rating. 2010 Less than 1 year Between 1 and 2 year Between 2 and 5 years Over 5 years Long-term finances Finances under mark up arrangements .(Rupees in thousand) At December 31.857 578.905 4.572 (Rupees in thousand) At December 31.897.150.937 542.secured Trade and other payables Accrued finance cost 14. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions.333 4.2 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. 2011 Less than 1 year Between 1 and 2 year Between 2 and 5 years Over 5 years Long-term finances Finances under mark up arrangements .249 2.857 1.031 3.170.575.292.secured Trade and other payables Accrued finance cost 380. the Group may adjust the amount of dividends paid to shareholders or issue new shares . In order to maintain or adjust the capital structure.925.092. the Group monitors capital on the basis of the gearing ratio.855 22% 162 .227 1.233.857 45.564 35.905 1.292.831.439 1.286 511.333 1.011.291 27.233.011. Consistent with others in the industry.285 38. 2011 and 2010 were as follows: (Rupees in thousand) 2011 2010 Long-term finances Total equity Total capital Gearing ratio 8. During 2011.

2012 by the Board of Directors of the Parent Company. 2011 December 31. 1. Date of authorisation for issue December 31.3 Fair value estimation The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. 2012 for approval of the members at the Annual General Meeting to be held on April 30. 3. Once the said transfer is duly approved.233 million) at its meeting held on March 21. 163 .25 per share).569 million (2010: Rs. 2011 79. The quoted market price used for financial assets held by the Group are the current bid prices. 46. through the process of hive down subject to all necessary corporate. 274. 2012 has resolved to transfer the Parent Company’s paper & paperboard and corrugated businesses into a separate 100% owned subsidiary acquired subsequent to year-end. shareholder and regulatory approvals.Annual Report of Packages Limited 2011 | Consolidated Financial Statements 2011 45. a 100% owned subsidiary of the Parent Company against the issue of shares by Bulleh Shah Paper Mill (Private) Limited to the Parent Company. 2011 December 31. 48. 126. the assets and liabilities of the paper & paperboard and corrugated businesses would be transferred to and vested in Bulleh Shah Paper Mill (Private) Limited. The board has also recommended to transfer Rs. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. The Board of Directors of the Parent Company has proposed a final cash dividend for the year ended December 31. amounting to Rs. The financial instruments that are not traded in active market are carried at cost and are tested for impairment according to IAS 39.99% Sri Lanka Pakistan Pakistan These financial statements were authorised for issue on March 21. 2012. 2011 of Rs. Non-Adjusting events after the balance sheet date The Board of Directors of the Parent Company in its meeting held on March 21.07% 54. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. Detail of subsidiaries Accounting Name of the subsidiaries year end Percentage of holding Country of incorporation Packages Lanka (Private) Limited DIC Pakistan Limited Packages Construction (Private) Limited 47. The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values.98% 99. 1.50 per share (2010: Rs. 500 million) to accumulated profit / (loss) from general reserves.250 million (2010: Rs.

711 25.116 13. Significant re-arrangements made are as follows: (Rupees in thousand) Re-classification in respect of IAS 24 (Revised).791 19. issued in November 2009 Re-classified within trade debts Amounts re-classified from ‘’related parties’’ to ‘’others’’ Re-classified within loans.356 Towfiq Habib Chinoy Chairman Syed Hyder Ali Chief Executive & Managing Director Syed Aslam Mehdi Director 164 . wages and amenities re-classified from Cost of sales to: Administrative expenses Distribution and marketing costs Traveling expense re-classified from Administrative expenses to Cost of sales 239. deposits.756 765. advances.217 20.Property. Plant and Equipment. prepayments and other receivables Amounts re-classified from ‘’related parties’’ to ‘’advances from suppliers’’ Re-classified within investment income Amounts re-classified from ‘’dividend income from related parties’’ to ‘’dividend income’’ Other re-classifications Aggregation as a single line item on the face of the consolidated balance sheet Re-classified “capital work-in-progress” and “assets subject to finance lease” to “property. Re-classified within cash and bank balances Amounts re-classified from “current accounts” to “saving accounts” Re-classified as a separate line item on face of the consolidated profit and loss account Projects expenditure re-classified from Administrative expenses Re-classified within different line items of the consolidated profit and loss account Salaries.201 753. wherever necessary.49. for the purposes of comparison. Corresponding figures Corresponding figures have been re-arranged and re-classified.152 3. plant and equipment” as it is considered a better presentation under International Accounting Standard 16 .328 26. ‘Related party disclosures’.

on my behalf at the Annual General Meeting of the Company to be held on Monday.m. No. A proxy need not to be a member of the Company. Moulvi Tamizuddin Khan Road. at Beach Luxury Hotel. CDC Shareholders and their Proxies are requested to attach an attested photocopy of their Computerised National Identity Card or Passport with this proxy form before submission to the Company. Signature : Name : Address : CNIC or Passport No. Signature Rupees five revenue stamp (Signature should agree with the specimen signature registered with the Company) Note : Proxies. in order to be effective.Form of Proxy 57th Annual General Meeting I/We of holder of (Number of Shares) and / or CDC Participant I.D. April 30. Signed this day of 2012. . here by appoint of or failing him / her of of and Sub Account No. or failing him / her as my proxy to vote for me and being a member of Packages Limited and Ordinary Shares as per Shares Register Folio No. must be received by the Company not less than 48 hours before the meeting. WITNESSES: 1. 2012 at 10:30 a. Karachi and at any adjournment thereof. Please affix. Signature : Name : Address : CNIC or Passport No. 2.

75600 . Clifton. Karachi . Khayaban-e-Jami. Block 9. The Forum Suite # 416 .AFFIX CORRECT POSTAGE The Company Secretary PACKAGES LIMITED 4th Floor.422 G-20.

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