abbott 2005

Abbott Laboratories Pakistan Ltd - 2005

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BALANCE SHEET AS AT NOVEMBER 30, 2005

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2005 2004

Notes (Rupees '000)

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SHARE CAPITAL AND RESERVES:

Authorised capital 3 1,000,000 1,000,000

Issued, subscribed and paid-up capital 4 679,863 566,552

Reserves - capital 140,004 253,315

-general 1,798,422 1,363,422

Unappropriated profit 793,555 606,313

2,731,981 2,223,050

3,411,844 2,789,602

NON-CURRENT LIABILITIES:

Deferred taxation 5 21,081 24,145

CURRENT LIABILITIES:

Trade and other payables 6 696,130 554,876

Contingencies and commitments 8

Fixed assets, property, plant and equipment 9 1,187,749 972,968

Long-term loans and advances 10 28,336 27,937

Long-term deposits - considered good 4,947 3,332

CURRENT ASSETS:

Stores and spares 11 49,983 44,933

Stock-in-trade 12 1,217,900 917,621

Trade debts 13 147,297 88,050

Loans and advances - considered good 14 19,429 17,444

Trade deposits and short-term prepayments 15 67,156 62,968

Interest accrued 8,111 491

Other receivables 16 106,139 14,219

Taxation recoverable 131,233 135,478

Cash and bank balances 17 1,160,775 1,083,182

2,908,023 2,364,386

4,129,055 3,368,623

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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED NOVEMBER 30, 2005

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2005 2004

Notes (Rupees '000)

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Sales - net 18 5,176,264 4,598,074

Service fee for toll manufacturing 50,820 60,851

5,227,084 4,658,925

Cost of goods sold and services 19 2,930,965 2,673,535

Gross profit 2,296,119 1,985,390

Selling and distribution expenses 21 749,331 733,242

Administration expenses 22 91,184 103,600

Operating profit 1,455,604 1,148,548

Other income 23 49,064 26,408

1,504,668 1,174,956

Finance cost 24 2,902 3,142

Other charges 25 135,587 91,991

Profit before taxation 1,366,179 1,079,823

Taxation - net 26 404,007 332,704

Profit after taxation 962,172 747,119

(Rupees)

Earnings per share - basic and diluted 27 14.15 10.99

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CASH FLOW STATEMENT FOR THE YEAR ENDED NOVEMBER 30, 2005

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2005 2004

Notes (Rupees '000)

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CASH FLOWS FROM OPERATING ACTIVITIES:

Cash generated from operations 28 1,150,043 1,062,097

Taxes paid (402,826) (234,119)

Long-term loans and advances (399) 3,367

Long-term deposits (1,615) (127)

Long-term prepayments - 600

Net cash inflow from operating activities 745,203 831,818

CASH FLOWS FROM INVESTING ACTIVITIES:

Fixed capital expenditure (365,332) (183,591)

Sale proceeds of fixed assets 1,560 11,100

Income received from investments 38,269 12,635

Net cash outflow on investing activities (325,503) (159,856)

CASH FLOWS FROM FINANCING ACTIVITIES:

Finance cost paid (2,902) (3,145)

Dividends paid (339,205) (282,682)

Net cash outflow on financing activities (342,107) (285,827)

Net increase in cash and cash equivalents 77,593 386,135

Cash and cash equivalents at the beginning of the year 1,083,182 697,047

Cash and cash equivalents at the end of the year 29 1,160,775 1,083,182

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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED NOVEMBER 30, 2005

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Reserves

Capital Reserves

Share Un Grand

Capital Share Reserves Reserve General appropri- Total Total

Premium for issue arising on Sub-total reserve ated

account shares merger profit

Notes (Rupees '000)

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Balance as at November 30, 2003

as reported earlier 472,127 207,218 94,425 46,097 347,740 1,363,422 142,470 1,853,632 2,325,759

Effect of change in accounting policy 2.10

Transfer to reserve for issue of bonus share

appropriated subsequent to year ended - - (94,425) - (94,425) - 94,425 - -

Transfer to general reserve appropriated

subsequent to year ended - - - - - (199,000) 199,000 - -

Balance as at November 30, 2003- restated 472,127 207,218 - 46,097 253,315 1,164,422 435,895 18,53,632 2,325,759


Transfer to reserve for issue of bonus share

appropriated subsequent to year ended - - 94,425 - 94,425 - (94,425) - -


subsequent to year ended - - - - - 199,000 (199,000) - -

Issue of bonus shares 94,425 - (94,425) - (94,425) - - (94,425) -

Final dividend for the year ended November 30,

2003 declared subsequent to the year end - - - - - - (141,638) (141,638) (141,638)

Dividend - Interim - - - - - - (141,638) (141,638) (141,638)

Profit after taxation for the year ended

November30, 2004 - - - - - - 747,119 747,119 747,119

94,425 - - - - 199,000 170,418 369,418 463,843

Balance as at November 30, 2004 - restated 566,552 207,218 - 46,097 253,315 1,363,422 606,313 2,223,050 2,789,602

Balance as at November 30, 2004

as reported earlier 566,552 93,907 113,311 46097 253,315 1,798,422 171,313 2,223,050 2,789,602


Transfer from share premium account

to reserve for issue of bonus shares made

subsequent to year end - 113,311 (113,311) - - - - - -


subsequent to year end - - - - - (435,000) 435,000 - -

Balance as at November 30, 2004- restated 566,552 207,218 - 46,097 253,315 1,363,422 606,313 2,223,050 2,789,602


Transfer from share premium account to reserve

for issue of bonus share made

subsequent to year ended - (113,311) 113,311 - - - - - --

Transfer to general reserve appropriated made

subsequent to year end - - - 435,000 (435,000) - -

Issue of bonus shares 113,311 - (113311) - -(113,311) - - (113,311) --

Final dividend for the year ended November 30,

2004 declared subsequent to the year end - - - - - - (169,965) (169,965) (169,965)

Dividend - Interim - - - - - - (169,965) (169,965) (169,965)

Profit after taxation for the year ended

November30, 2005 - - - - - - 962,172 962,172 962,172

113,311 (113,311) - - (113,311) 435,000 187,242 505,931 622,242

Balance as at November 30, 2005 679,863 93,907 - 46,097 140,004 1,798,422 793555 2,731,981 3,411,844

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NOTES TO THE FINANCIAL STATEMENTS for the year ended November 30, 20051. THE COMPANY AND ITS OPERATIONSAbbott Laboratories (Pakistan) Limited (ALPL) is a public limited company incorporated in Pakistan on July 2, 1948, and its shares are quoted on the Karachi, Lahore and Islamabad stock exchanges.The address of its registered office is opposite Radio Pakistan Transmission Centre, Hyderabad Road, Landhi, Karachi.The company is principally engaged in the manufacture, import and marketing of research based pharmaceutical, nutritional, diagnostic, hospital and consumer products and in providing toll manufacturing services.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1. STATEMENT OF COMPLIANCEThese financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984.Approved accounting standards comprise of such International Accounting Standards (IASs) as notified under the provisions of the Companies Ordinance, 1984.Wherever the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence.2.2. ACCOUNTING CONVENTIONThese financial statements have been prepared under the historical cost convention.2.3. FIXED ASSETS - PROPERTY, PLANT AND EQUIPMENT - TANGIBLE(a) OwnedThese assets are stated at cost less accumulated depreciation or impairment, if any.Freehold land and capital work-in-progress are stated at cost.(b) LeasedLeased asset comprises of leasehold land which is stated at cost less accumulated depreciation.(c) DepreciationDepreciation is charged to income applying the straight line method whereby the cost less residual value of an asset is written off over its estimated useful life.Half year's depreciation is charged on additions and disposals during the year except in case of certain demonstration equipment on which depreciation is charged from the month in which they are installed upto the month of disposal.(d) Gain / (loss) on disposal of fixed assetsGains or losses on disposal of fixed assets are included in income currently.(e) Renewals and improvementsMajor renewals and improvements are capitalised and the assets so replaced, if any, are retired.Normal repairs and maintenance are charged to income as and when incurred.(f) Capital work-in-progressAll expenditure connected to the specific assets incurred during installation and construction period are carried under this head.These are transferred to specific assets as and when assets are available for use.2.4. STORES AND SPARESThese are valued at cost determined on weighted average basis.Items in transit are valued at cost comprising invoice value and other charges incurred thereon up to the balance sheet date.Provision is made in the financial statements for obsolete and slow moving items based on estimate regarding their use ability.2.5. STOCK-IN-TRADEStock of raw and packing material, work-in-process and finished goods are valued at lower of cost, calculated on first-in-first-out basis and net realisable value.Cost in relation to work-in-process and finished goods represents direct cost of materials, direct wages and an appropriate portion of production overheads.Items in transit are valued at cost comprising invoice value plus other charges incurred thereon up to the balance sheet date.Provision is made in the financial statements for obsolete and slow moving items based on estimate regarding their use ability.Net realisable value signifies the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.2.6. TRADE DEBTS AND OTHER RECEIVABLESTrade debts and other receivables are carried at original invoice amount less an estimate made for doubtful receivables based on review of all outstanding amounts at the year-end.Balances considered bad and irrecoverable are written off when identified.2.7. SAMPLE INVENTORYSample inventory is classified as prepayment in the balance sheet.The cost of sample inventory is charged to income on issuance of samples to medical practitioners.2.8. TAXATION CURRENTProvision for current taxation is based on taxable income at the current rates of taxation after taking into account tax credits and rebates available, if any, or one half of one percent of turnover, whichever is higher.DeferredDeferred tax is recognised using the balance sheet liability method on all major temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefit will be realised.2.9. CASH AND CASH EQUIVALENTSCash and cash equivalents are carried in the balance sheet at cost.Cash and cash equivalents comprise of cash in hand, cheques in hand and balances with banks in current, savings, deposit accounts and short-term running finance.2.10. TRANSFER BETWEEN RESERVESDuring the year the company has changed its accounting policy pertaining to transfers between reserves made subsequent to the year end.The change has made consequent to the amendment made in the Fourth Schedule to the Companies Ordinance 1984 and the new policy is in accordance with the requirements of IAS 10 "Events After The Balance Sheet Date".As per the new policy transfers between reserves made subsequent to the balance sheet date are considered as non-adjusting events and are not recognised in the financial statements.Previously, such transfers between reserves were being treated as adjusting events in the financial statements of the company.The change in accounting policy has been applied retrospectively and the comparative information has been restated in accordance with the benchmark treatment specified in IAS 8 (Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies).Had there been no change in the accounting policy, the unappropriated profit for the years ended November 30, 2003 and November 30, 2004 would have been lower by Rs 293.425 million and Rs 435 million respectively and the general reserves and capital reserves for the years ended November 30, 2003 and November 30, 2004 would have been higher by Rs 199 million and Rs 94.425 million and Rs 435 million and Rs Nil respectively.2.11. TRADE AND OTHER PAYABLESShort-term liabilities for trade and other amounts payable are carried at amortised cost.2.12. PROVISIONSProvisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.Provisions are reviewed at each balance sheet date to reflect the current best estimate.2.13. STAFF RETIREMENT BENEFITSThe company operates:-- a recognised provident fund for all permanent employees who have completed six months' service; and-- an approved funded pension scheme for all its permanent employees. Contributions and annual provisions to cover the obligation are made based on actuarial valuation.The actuarial valuation is carried out every year using the Projected Unit Credit Method.The actuarial gains and losses arising at each valuation date are recognised immediately.Staff retirement benefits are payable to staff on completion of the prescribed qualifying period of service under the scheme.2.14. LIABILITY FOR EMPLOYEES COMPENSATED ABSENCESThe company accounts for the liability in respect of employees' compensated absences in the year in which these are earned.Provisions to cover the obligations are made using the current salary levels of the employees.2.15. FOREIGN CURRENCY TRANSACTIONSTransactions denominated in foreign currencies are accounted for in rupees at the foreign currency rates prevailing on the date of transaction.Monetary assets and liabilities in foreign currencies are translated into rupees at the rates of exchange approximating those at the balance sheet date.Exchange differences are taken to the profit and loss account.2.16. REVENUE RECOGNITION-- Sales are recorded on despatch of goods to customers.-- Service income is recognised when the related services are rendered.-- Income on investments/deposits and other income are recognised on accrual basis.2.17. IMPAIRMENTThe carrying amounts of the company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss.If any such indication exists the assets recoverable amount is estimated in order to determine the extent of impairment loss, if any.Impairment losses are recognised as expense in profit and loss account.2.18. FINANCIAL INSTRUMENTSFinancial instruments carried on the balance sheet include loans, deposits, trade debts, interest accrued, other receivables, cash and bank balances and trade and other payables.The particular recognition method adopted are disclosed in the individual policy statements associated with each item.Financial assets and liabilities are offset and the net amount reported in the financial statements only when the company has a legally enforceable right to offset the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.2.19. SEGMENT REPORTINGA segment is a distinguishable component within a company that is engaged in providing products and is under a common control environment (business segment) or in providing products within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments.The company records the revenues and a substantial portion of costs on a segment wise basis.However, certain costs are allocated to the segments using the best available bases for apportionment.The company has the following reportable segments on the basis of product characteristics and the criteria defined by International Accounting Standard - 14, Segment Reporting:PharmaceuticalPharmaceutical segment is engaged in manufacture, import and marketing of research based pharmaceutical products registered with the Ministry of Health and in providing toll-manufacturing services.OthersOthers represent import, manufacture and marketing of diagnostic equipment, their testing kits, consumer healthcare, nutritional and hospital products.3. AUTHORISED CAPITAL

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2005 2004 2005 2004

Number of shares

(Rupees '000)

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100,000,000 100,000,000 Ordinary shares of Rs 10 each 1,000,000 1,000,000

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4. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL

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2005 2004 2005 2004

Number of shares

(Rupees '000)

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5,832,196 5,832,196 Ordinary shares of Rs 10 58,322 58,322

each issued as fully paid

for cash



for consideration other

than cash



bonus shares

67,986,321 56,655,268 679,863 566,552

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Abbott Laboratories, USA, Abbott Laboratories (Pacific) Limited and Abbott Equity Holdings Limited, UK held 33,245,574, 463,044 and 19,249,338 shares of Rs 10 each respectively as at November 30, 2005 (2004: 27,704,643, 385,870 and 16,041,115 shares of Rs 10 each respectively).5. DEFERRED TAXATION

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2005 2004

(Rupees '000)

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Deferred tax liability arising due to 43,350 40,129

accelerated tax depreciation allowance.

Deferred tax asset arising in respect (22,269) (15,984)

of short-term Provisions.

21,081 24,145

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6. TRADE AND OTHER PAYABLES

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2005 2004

Notes (Rupees '000)

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Creditors 22,960 35,593

Accrued liabilities 255,575 223,537

Advances from customers 21,348 14,016

Payable to ALPL pension fund 20 - 17,339

Unclaimed dividends 4,274 3,549

Bills payable 6.1 203,341 102,916

Payable to associated undertakings 6.2 16,400 14,514

Sales tax payable 6,295 8,320

Workers' Profits Participation Fund 6.3 73,184 57,974

Central Research Fund 16,840 13,918

Material on loan 9 217

Workers' Welfare Fund 65,172 58,489

Others 10,732 4,494

696,130 554,876

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6.1. BILLS PAYABLE INCLUDE THE FOLLOWING AMOUNTS DUE TO ASSOCIATED UNDERTAKINGS

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2005 2004

(Rupees '000)

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Abbott Pharmaceuticals Inc. Puerto Rico 4,252 4,536

APL-Chemical and Fermentation Plant 22,582 16,475

Abbott France S.A. 509 -

Abbott Italy S.p.A 12,394 -

Abbott Fermentation Products 37,855 27,343

Abbott Diagnostic GmbH 4,657 3,983

Abbott UK International 3,224 1,387

Abbott Logistics B.V. 86,305 30,709

Abbott Labs PTE Ltd - Singapore 11,257 2,877

Abbott International LLC. 12,765 9,611

195,800 96,921

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6.2. PAYABLE TO ASSOCIATED UNDERTAKINGS REPRESENTS

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2005 2004

(Rupees '000)

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AMOUNT PAYABLE TO:

Abbott Australasia Pty Limited 49 118

Abbott Laboratories S.A. 595 509

Abbott International LLC 14,687 13,887

Abbott International Thailand 223 -

Abbott International Japan 562 -

Abbott International Germany 284 -

16,400 14,514

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6.3. WORKERS' PROFIT PARTICIPATION FUND

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2005 2004

Notes (Rupees '000)

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Balance at the beginning of the year 57,974 43,911

Interest on funds utilised

in the company's business 24 - 124

57,974 44,035

Allocation for the year 25 73,184 57,974

131,158 102,009

Less: Amount paid to the

fund/deposited with government 57,974 44,035

73,184 57,974

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7. SHORT-TERM RUNNING FINANCES

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2005 2004

Note (Rupees '000)

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Under mark-up arrangements - Secured 7.1 - -

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7.1. The facilities for short-term running finances under mark-up arrangements available from various banks amounted to Rs 465 million as at November 30, 2005 (2004: Rs 390 million).The facilities carry mark-up at rates ranging between Re 0.10958 to Re 0.27972 (2004: Re 0.10958 to Re 0.24657) per Rs 1,000 per day and the purchase prices are payable on various dates by July 2006.The facilities are secured by pari-passu charge against hypothecation of stock-in-trade, stores and spares and book debts.7.2. The facility for letters of credit as at November 30, 2005 amounted to Rs 1,325 million (2004: Rs 1,105 million) out of which an amount of Rs 973.516 million (2004: Rs 940 million) was unutilised at the year end.The facility is secured against first pari passu charge over stocks and book debts of the company and corporate guarantee from Abbott International, LLC.7.3. The facility for post shipment export refinance as at November 30, 2005 amounted to Rs 40 million (2004: Rs 110 million).This facility is secured against confirmed letters of credit.8. CONTINGENCIES AND COMMITMENTS8.1. CONTINGENCIES(a) The Deputy Commissioner of Income Tax (DCIT) had increased the taxable income of the company for the accounting periods 1982 to 2001 on account of excess amounts allegedly paid for import of materials resulting in additional tax liability amounting to Rs 356.525 million (2004: Rs 356.525 million).The High Court of Sindh through its order dated October 13, 1999 has decided the matter in favour of the company in respect of the assessment year 1983-84 due to which the above additional tax liability has been reduced by Rs 4.624 million.In the current year the Income Tax Appellate Tribunal (ITAT) through its order dated May 31, 2005 has decided the matter in favour of the company in respect of the assessment years / tax years 1997-98, 1999-2000 and 2002 to 2003 due to which the above additional tax liability has further been reduced by Rs 160.829 million.The disallowances in respect of a number of assessment years has been set aside by various appellate authorities for re-assessment while the company's appeals in respect of the remaining assessment years are currently pending.The management is confident that the eventual outcome of the matter will be in favour of the company and, accordingly, no provision has been made in these accounts in respect of the above mentioned net tax demand of Rs 191.072 million raised by the authorities.(b) The company has given bank guarantees of Rs 68.550 million (2004: Rs 77.078 million) to the Customs Department and other institutions.Guarantees given to the Customs Department will be released on consumption of materials in pharmaceutical products as certified by the Drug Controller.8.2. COMMITMENTSCommitments for capital expenditure as at November 30, 2005 aggregated to approximately Rs 88.406 million (2004: Rs 221.972 million).Commitments in respect of letters of credit as at November 30, 2005 aggregated to approximately Rs 351 million (2004: Rs 165 million).9. FIXED ASSETS - PROPERTY, PLANT AND EQUIPMENT

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2005 2004

Notes (Rupees '000)

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Operating fixed assets 9.1 823,498 819,481

Capital work-in-progress 9.5 364,251 153,487

1,187,749 972,968

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9.1. OPERATING FIXED ASSETSThe following is a statement of operating assets:Cost as at Additions/Cost as at Accumulated Depreciation Accumulated Written down Annual December 1,(disposals/ November 30,depreciation as charge for depreciation as value as at rate of 2004 write off)/2005at December 1, the yeart November 30,November 30, depreciation

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Cost as at Additions/ Cost as at Accumulated Depreciation Accumulated Written down Annual

December 1, (disposals/ November 30, depreciation as charge for depreciation as value as at rate of

2004 write off)/ 2005 at December 1, the year/ at November 30, November 30,depreciation

(adjustments) 2004 (accumulated 2005 2005 %

depreciation

on disposals

write off)/

(adjustments)

Note (Rupees '000)

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TANGIBLE:

Freehold land 148 20,531 20,679 20,679 -

Leasehold land 2,718 - 2,718 571 29 600 2,118 1.06

Buildings on freehold land 170,314 - 170,314 110,644 11,381 122,025 48,289 5-10

Buildings on leasehold land 59,508 7,175 66,683 49,397 2,691 52,088 14,595 5-10

Plant and machinery 1,141,758 42,404 1,175,758 599,934 78,510 670,931 504,827 10-20

(8,404) (7,513)

Vehicles 141,037 10,193 148,897 63,016 18,153 79,303 69,594 20-25

(2,333) (1,866)

Office equipment 80,789 3,519 84,308 59,632 2,300 61,932 22,376 10-33

Computers 120,086 9,546 113,630 99,974 11,673 95,645 17,985 20-33

(16,002) (16,002)

Demonstration 178,993 63,395 233,250 92,702 24,050 110,245 123,035 12.5-33

equipment 9.2 (5,503) (5,097)

(3,605) (1,410)

2005 1,895,351 156,763 2,016,267 1,075,870 148,787 1,192,769 823,498

(32,242) (30,478)

(3,605) (1,410)

2004 1,747,801 168,138 1,895,351 942,582 148,325 1,075,870 819,481

(20,530) (14,986)

(58) (51)

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9.2. Demonstration equipment of the company is in the possession of various hospitals and clinics.9.3. THE DEPRECIATION CHARGE FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS

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2005 2004

Notes (Rupees '000)

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Cost of goods sold and services 19 90,830 91,450

Selling and distribution expenses 21 52,823 52,162

Administration expenses 22 5,134 4,713

148,787 148,325

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9.4. Details of disposals of operating fixed assets having book value exceeding Rs 50,000:

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Description Cost Accumulated Book Sale Mode of Particulars of purchaser

Depreciation value proceeds disposal

(Rupees '000)

======================================================================================

Vehicles 619 495 124 497 Negotiation Mr Abdul Rehman Employee

715 572 143 499 Negotiation Mr lmtiazuddin Employee

999 799 200 564 Negotiation Mr Haseeb-ur-Rebman

Executive

2,333 1,866 467 1.560

Plant and 1,833 1,650 183 - Written off

machinery

821 443 378 - Wrilten off

2,654 2,093 561 -

Demonstration

equipment 749 343 406 - Written off

5,736 4,302 1,434 1,560

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9.5. CAPITAL WORK-IN-PROGRESS

================================================================================

2005 2004

(Rupees '000)

================================================================================

Advance against land acquisition - 20,265

Civil works 217,318 67,719

Plant and machinery 120,687 55,294

Advances to suppliers 11,696 3,879

Others 14,550 6,330

364,251 153,487

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10. LONG-TERM LOANS AND ADVANCES

================================================================================

2005 2004

(Rupees '000)

================================================================================

LONG-TERM LOANS

CONSIDERED GOOD

DUE FROM:

- Executives 968 18

- Employees 42,285 42,039

43,253 42,057

LESS: RECOVERABLE WITHIN ONE YEAR

- Executives 343 18

- Employees 16,329 15,915

16,672 15,933

26,581 26,124

LONG-TERM ADVANCES:

- Employees 1,755 1,813

28,336 27,937

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10.1. Reconciliation of carrying amount of loans and advances to Directors and Executives:

================================================================================

2005 2004

Directors Executives Directors Executives

(Rupees '000)

================================================================================

Opening balance - 18 198 235

Disbursement during the year - 658 - 4

Transfer of balances

of employee cadre

to executive cadre - 844 - -

Repayments during the year - 552 198 221

Closing Balance - 968 - 18

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10.2. Loans given to executives and employees are in accordance with the company's policy.These loans are interest free and are repayable in equal monthly installments within a maximum period of four years.These loans are for the purpose of purchase of fridges, scooters, vehicles and television sets.The loans for purchase of vehicles are secured by way of registration of vehicles purchased in the name of the company.10.3. The maximum aggregate amounts due from the directors and the executives at the end of any month during the year were Rs NIL and Rs 1.091 million (2004: Rs 0.177 million and Rs 0.239 million) respectively.11. STORES AND SPARES

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2005 2004

Note (Rupees '000)

================================================================================

Stores 34,288 37,628

Spares [Including spares in transit

Rs 7.261 million(2004: Rs NIL)]

36,696 25,218

70,984 62,846

Less: Provision for slow-moving

and obsolete items 11.1 21,001 17,913

49,983 44,933

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11.1. RECONCILIATION OF PROVISION FOR SLOW-MOVING AND OBSOLETE ITEMS

================================================================================

2005 2004

(Rupees '000)

================================================================================

Opening provision 17,913 15,982

Charge for the year 3,088 1,931

Closing provision 21,001 17,913

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12. STOCK-IN-TRADE

================================================================================

2005 2004

Note (Rupees '000)

================================================================================

Raw and packing materials

[including stock-in-transit

Rs 122.878 million

(2004: Rs 107.912 million)] 487,703 436,474

Work-in-process 138,957 137,970

Finished goods [including

stock-in-transit

Rs 27.605 million (2004: Rs

24.472 million)] 629,699 370,796

1,256,359 945,240

Less: Provision for slow-moving and

obsolete items 12.2 38,459 27,619

1,217,900 917,621

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12.1. Stock-in-trade includes finished goods costing Rs 74.579 million (2004: Rs 23.066 million) valued at net realisable value amounting to Rs 61.247 million (2004: Rs 12.608 million).12.2. RECONCILIATION OF PROVISION FOR SLOW-MOVING AND OBSOLETE ITEMS

================================================================================

2005 2004

(Rupees '000)

================================================================================


Charge for the year 10,840 21,823

Write backs during the year - (6,193)

Write off against provision - (4,980)


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13. TRADE DEBTS

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2005 2004

Notes (Rupees '000)

================================================================================

CONSIDERED GOOD

SECURED:

- Due from related

parties - associated undertakings 13.1 8,872 606

- Others 49,993 19,541

58,865 20,147

Unsecured 88,432 67,903

147,297 88,050

Considered doubtful - unsecured 19,844 9,007

167,141 97,057

Less: Provision for doubtful debts 13.2 19,844 9,007

147,297 88,050

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13.1. DUE FROM ASSOCIATED UNDERTAKINGS

================================================================================

2005 2004

(Rupees '000)

================================================================================

Abbott Laboratories (Malaysia) SDN BHD 1,120 606

Abbott Laboratories Thailand 1,294 -

Abbott Laboratories South Africa 5,544 -

Abbott Laboratories (Philippines) 914 -

8,872 606

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13.2. RECONCILIATION OF PROVISIONS FOR DOUBTFUL DEBTS

================================================================================

2005 2004

(Rupees '000)

================================================================================


Charge/(reversal) for the year 10,837 (189)


================================================================================

13.3. THE MAXIMUM AGGREGATE AMOUNT DUE FROM ASSOCIATED UNDERTAKING AT THE END OF ANY MONTH DURING THE YEAR

================================================================================

2005 2004

(Rupees '000)

================================================================================

9,340 4,094

================================================================================

14. LOANS AND ADVANCES - CONSIDERED GOOD

================================================================================

2005 2004

Note (Rupees '000)

================================================================================

Current portion of long-term loan 10 16,672 15,933

ADVANCES TO:

- Directors 73 13

- Executives 325 48

- Employees 407 147

805 208

- Suppliers 1,952 1,303

2,757 1,511

19,429 17,444

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14.1. The maximum aggregate amount of advances due from the chief executive, directors and executives at the end of any month during the year were Rs 471 thousand, Rs 253 thousand and Rs 1,372 thousand (2004: Rs 275 thousand, Rs 655 thousand and Rs 1,481 thousand) respectively.15. TRADE DEPOSITS AND SHORT-TERM PREPAYMENTS

================================================================================

2005 2004

Note (Rupees '000)

================================================================================

CONSIDERED GOOD:

Trade deposits 11,249 5,834

Prepayments [including sample inventory

Rs 34.938 million (2004: Rs 31 .914 million)] 55,907 57,134

67,156 62,968

CONSIDERED DOUBTFUL:

Trade deposits 15.1 918 931

68,074 63,899

Less: Provision for doubtful trade deposits 918 931

67,156 62,968

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15.1. RECONCILIATION OF PROVISION FOR DOUBTFUL TRADE DEPOSITS

================================================================================

2005 2004

(Rupees '000)

================================================================================

Opening provision 931 825

(Reversal)/charge for the year (13) 106

Closing provision 918 931

================================================================================

16. OTHER RECEIVABLES

================================================================================

2005 2004

Notes (Rupees '000)

================================================================================

CONSIDERED GOOD:

Due from associated undertakings 16.1 12,037 8,150

Material on loan 2,561 1,255

Insurance claim receivable 3,361 730

Service fee for toll manufacturing 2,124 1,667

ALPL pension fund 20 79,051 -

Others 7,005 2,417

106,139 14,219

Considered doubtful 1,201 1,238

107,340 15,457

Less: Provision for doubtful receivables 16.2 1,201 1,238

106,139 14,219

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16.1. DUE FROM ASSOCIATED UNDERTAKINGS

================================================================================

2005 2004

(Rupees '000)

================================================================================

Abbott Labs PTE Ltd - Singapore 8,412 5,897

Abbott International, LLC 667 992

Abbott Egypt - 143

Hospira, Inc. 1,655 780

P.T. Abbott Indonesia - 141

Abbott Laboratories S.A. Geneva - 67

Abbott Hong Kong - 130

Abbott Malaysia 57 -

Abbott Mearo 178 -

Abbott China 194 -

Abbott South Africa 230 -

Others - below US$ 1,000 644 -

12,037 8,150

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16.2. RECONCILIATION OF PROVISION FOR DOUBTFUL RECEIVABLES

================================================================================

2005 2004

(Rupees '000)

================================================================================

Opening provision 1,238 876

(Reversal) /charge for the year (37) 362


================================================================================

16.3. THE MAXIMUM AGGREGATE AMOUNT DUE FROM ASSOCIATED UNDERTAKINGS AT THE END OF ANY MONTH DURING THE YEAR

================================================================================

2005 2004

(Rupees '000)

================================================================================

12,037 9,452

================================================================================

17. CASH AND BANK BALANCES

================================================================================

2005 2004

(Rupees '000)

================================================================================

WITH BANKS

SAVINGS ACCOUNTS:

- Local currency 288,576 449,911

- Foreign currency 3,191 5,566

291,767 455,477

DEPOSIT ACCOUNTS:


CURRENT ACCOUNTS:


1,129,091 1,010,704

IN HAND:

- Foreign currency 305 789

Cheques and drafts in transit 31,379 71,689

1,160,775 1,083,182

================================================================================

18. SALES - NET

================================================================================

2005 2004

(Rupees '000)

================================================================================

Local 5,155,536 4,645,241

Export - to associated undertakings 25,096 8,650

-to others 115,045 100,130

140,141 108,780

5,295,677 4,754,021

LESS:

Sales returns and discounts 60,329 180,189

Sales tax & excise duty 59,084 75,758

119,413 155,947

5,176,264 4,598,074

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19. COST OF GOODS SOLD AND SERVICES

================================================================================

2005 2004

Notes (Rupees '000)

================================================================================

Opening work-in-process 137,970 149,692

Raw and packing materials consumed 1,713,706 1,465,746

1,851,676 1,615,438

MANUFACTURING EXPENSES:

Salaries, wages and staff welfare 19.1 389,513 404,980

Stores and spares consumed 30,885 31,932

Fuel and power 79,706 73,319

Depreciation 9.3 90,830 91,450

Repairs and maintenance 35,531 23,969

Technical service fee 57,008 52,427

Insurance 5,652 6,835

Printing and stationery 2,657 2,593

Travelling and entertainment 3,362 2,704

Rent, rates and taxes 506 3,300

Laboratory testing supplies 14,341 11,979

Computer expenses 12,412 11,633

Postage, telephone and telegram 3,771 4,228

Others 19.2 20,098 23,267

746,272 744,616

2,597,948 2,360,054

Closing work-in-process (138,957) (137,970)

Cost of goods manufactured and services 2,458,991 2,222,084

FINISHED GOODS:

Opening stock 370,796 286,468

Purchases 730,877 535,779

3,560,664 3,044,331

Closing stock (629,699) (370,796)

2,930,965 2,673,535

================================================================================

19.1. Salaries, wages and staff welfare include a net reversal of Rs 14.799 million -note 20.1.2 (2004: charge of Rs 43.030 million) in respect of staff retirement benefits.19.2. DETAILS OF OTHER EXPENSES

================================================================================

2005 2004

(Rupees '000)

================================================================================

Other fees and purchased services 18,184 16,045

Recruitment and training expenses 303 324

Membership and subscription 62 89

Conference expenses 213 266

Miscellaneous expenses 1,336 6,543

20,098 23,267

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20. STAFF RETIREMENT BENEFITS20.1. DEFINED BENEFIT SCHEMEAs mentioned in note 2.13, the company operates a funded pension scheme for all its permanent employees.Contributions are made to the scheme based on actuarial recommendations.The latest actuarial valuation was carried out as at November 30, 2005.Projected Unit Credit method using the following significant assumptions was used for the valuation of the scheme:

================================================================================

2005 2004

(Percent per annum)

================================================================================

Discount rate / interest rate 10.78 8.00

Expected rate of increase in salaries 8.66 5.90

Expected rate of return on investments 10.78 8.00

================================================================================

20.1.1. The fair value of the schemes' assets and liabilities for past services of the employees at the valuation date are as follows:

================================================================================

2005 2004

(Rupees '000)

================================================================================

Present value of defined benefit obligation 1,002,136 909,953

Less: Fair value of plan assets 1,081,187 892,614

(Surplus) / deficit (79,051) 17,339

================================================================================

20.1.2. The following amounts were charged in the profit loss account during the year in respect of this scheme:

================================================================================

2005 2004

(Rupees'000)

================================================================================

Current service cost 50,327 42,254

Interest cost 71,156 62,690

Expected return on plan assets (71,523) (64,852)

49,960 40,092

Actuarial (gains) / losses recognised (101,629) 25,092

(51,669) 65,184

================================================================================

20.1.3. THE MOVEMENT IN THE AMOUNTS RECOGNISED IN THE BALANCE SHEET WERE AS FOLLOWS

================================================================================

2005 2004

(Rupees '000)

================================================================================

Balance as at December 1 17,339 (6,974)

Amount recognised (51,669) 65,184

Payments made (44,721) (40,871)

Balance as at November 30 (79,051) 17,339

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20.2. DEFINED CONTRIBUTION SCHEMEAn amount of Rs 22.67 million (2004: Rs 15.868 million) has been charged during the year in respect of contributory provident fund maintatined by the company.21. SELLING AND DISTRIBUTION EXPENSES

================================================================================

2005 2004

Notes (Rupees '000)

================================================================================

Salaries, wages, allowances and staff welfare 21.1 265,412 274,721

Rent, rates and taxes 6,256 7,023


Royalty 9,182 8,196

Insurance 6,132 7,220


Legal, professional and other services 10,399 10,987



Travelling, conveyance and entertainment 68,544 82,811

Advertising, samples and sales promotion 210,596 190,267

Forwarding expenses 49,920 45,011

Electricity 5,801 4,534


Training and development expenses 7,901 8,538

Provision for doubtful trade debts 10,837 -

Packing and miscellaneous supplies 7,688 7,906

Others 21.2 15,561 18,022

765,437 745,724

Less: Reimbursement from an associated

undertaking- Abbott Labs PTE Ltd - Singapore 16,106 12,482

749,331 733,242

================================================================================

21.1. Salaries, wages, allowances and staff welfare include a net reversal of Rs 15.042 million - note 20.1.2 (2004: charge of Rs 34.715 million) in respect of staff retirement benefits.21.2. DETAILS OF OTHER EXPENSES

================================================================================

2005 2004

(Rupees '000)

================================================================================


Security expenses 1,789 2,768

Membership and subscription 517 982

Air conditioning expenses 2,437 3,753

Housekeeping expenses 2,196 2,310

Water charges 243 238

Purchased gas 126 94

Miscellaneous expenses 1,767 2,299

15,561 18,022

================================================================================

22. ADMINISTRATION EXPENSES

================================================================================

2005 2004

Notes (Rupees '000)

================================================================================

Salaries, wages, allowances and staff welfare 22.1 52,262 72,430

Rent, rates and taxes 2,156 2,056


Insurance 797 1,002


Legal, professional and other services 931 381



Travelling, conveyance and entertainment 7,078 4,912

Advertising 601 326

Electricity 1,790 1,418


Training and development expenses 894 323

Packing and miscellaneous supplies 804 661

Others 22.2 14,871 9,933

101,052 112,598

Less: Reimbursement from

an associated undertaking

- Abbott Labs PTE Ltd - Singapore 9,868 8,998

91,184 103,600

================================================================================

22.1. Salaries, wages, allowances and staff welfare include a net charge of Rs 0.843 million - note 20.1.2 (2004: Rs 10.341 million) in respect of staff retirement benefits.22.2. DETAILS OF OTHER EXPENSES

================================================================================

2005 2004

(Rupees '000)

================================================================================


Security expenses 853 845

Membership and subscription 1,157 998

Air conditioning expenses 2,408 2,082

Housekeeping expenses 1,250 620

Water charges 105 96

Miscellaneous expenses 2,351 816

14,871 9,933

================================================================================

23. OTHER INCOME

================================================================================

2005 2004

Note (Rupees '000)

================================================================================

Gain on disposal of fixed assets 5,556

Income on investment and deposits 23.1 45,918 11,032

Scrap sales 2,410 2,449

Provision no longer required written back 50 189

Exchange gain - 6,599

Others 686 583

49,064 26,408

================================================================================

23.1. Income on investment and deposits include an amount of Rs 1.708 million (2004: Rs 1.788 million) on account of interest income earned from Abbott Labs PTE Ltd - Singapore - an associated undertaking @ 6.5% (2004: 6.5%) of half of the written down value of assets deployed by the company on their behalf in the company's diagnostic division in Pakistan.24. FINANCE COST

================================================================================

2005 2004

(Rupees '000)

================================================================================

Mark-up on short-term running finances

utilised under mark-up arrangements 10 92

Bank charges 2,892 2,926

Interest on Workers' Profits Participation Fund - 124

2,902 3,142

================================================================================

25. OTHER CHARGES

================================================================================

2005 2004

Notes (Rupees '000)

================================================================================

Workers' Profits Participation Fund 73,184 57,974

Auditors' remuneration 25.1 1,244 963

Donations 25.2 8,989 471

Workers' Welfare Fund 24,323 21,676

Central Research Fund 13,759 10,907

Loss on disposal of fixed assets 204 -

Exchange loss 13,884 -

135,587 91,991

================================================================================

25.1. AUDITORS' REMUNERATION

================================================================================

2005 2004

(Rupees '000)

================================================================================

Statutory audit fee 800 750

Tax advisory services 144 -

Special certifications 144 113

Out of pocket expenses 156 100

1,244 963

================================================================================

25.2. Donations include an amount of Rs 0.2 million (2004: Rs Nil) paid to Marie Adelaide Leprosy Centre in which the spouse of Mr Kamran Y. Mirza (Chief Executive) is a member of the management committee.26. TAXATION - NET

================================================================================

2005 2004

(Rupees '000)

================================================================================

CURRENT TAX CHARGE:

- Current year 426,789 354,444

- Prior year (19,718) (18,354)

407,071 336,090

Deferred (3,064) (3,386)

404,007 332,704

================================================================================

26.1. RELATIONSHIP BETWEEN TAX EXPENSE AND ACCOUNTING PROFIT

================================================================================

2005 2004

(Rupees '000)

================================================================================

Accounting profit before taxation 1,366,179 1,079,823

Tax rate 35% 35%

Tax on accounting profit 478,163 377,938

Tax for prior years (19,718) (18,354)

TAX EFFECT OF:

- Expenses that are not deductible in 12,352 5,454

determining taxable profit

- Applying lower tax rates to certain income (71,178) (29,103)

- Others (including the impact arising as a 4,388 (3,231)

consequence of reversal of deferred tax

liability and change in allocation ratio of

revenue chargeable under FIR and Non-FIR)

404,007 332,704

================================================================================

27. EARNINGS PER SHARE - BASIC / DILUTED

================================================================================

2005 2004

================================================================================

Net profit for the year after taxation 962,172 747,119

Weighted average number of ordinary shares in

issue during the year 67,986,268 67,986,268

Earnings per share 14.15 10.99

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28. CASH GENERATED FRO

abbott 2005

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