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Acknowledgement

Pakistan Tobacco Company | Final Project

Pakistan Tobacco Company


Pakistan Tobacco Company Limited (PTC) is a part of British American Tobacco - the world's
most international tobacco group - with brands sold in 180 markets around the world.
Pakistan Tobacco's operations in Pakistan began in 1947, making it one of Pakistan's first
foreign investments.
The company produces high quality tobacco products to meet the diverse preferences of
millions of consumers, and it works in all areas of the business - from seed to smoke.
The company provides a number of reputed brands of cigarettes to consumers in Pakistan,
including Benson and Hedges, Embassy, Gold Flake, Capstan and Gold Leaf.

Vision
Like a lighthouse in a dark, stormy sea... Our vision serves as a beacon of light and
hope, helping us navigates the waters

Mission Statement

Transform PTC to perform responsibly with the speed, flexibility and enterprising
spirit of an innovative, consumer focused Company

Strategic Objectives

Our strategy reflects our vision of being the champions of Growth, Productivity,
Responsibility and a Winning Organisation

Pakistan Tobacco Company | Final Project

Companys Brands
We have always considered ourselves a consumer focused company. We aim to
offer a product that excels in all aspects and exceeds the expectations of our
consumers
Pakistan Tobacco Company invests in trying to understand the consumers preferences and
ensures that adult smokers make informed choices about different brands available in the
market. We have put in particular effort in promoting two of our Global Drive Brands,
Dunhill and Pall Mall; and two of our great value for money brands, John Player Gold Leaf
and Gold Flake.

Dunhill
Dunhill, a premium global brand, celebrated its centenary in 2007.
2008 was an exceptional year for Dunhill in Pakistan as the brand witnessed exponential
growth; fuelled by its re-launch in July. Going forward, Dunhill is poised to strengthen its
foothold in the premium segment.

Benson & Hedges


In 1873, Richard Benson & William Hedges started a partnership in London.
Benson & Hedges was launched in Pakistan in March 2003 and has since been able to build
strong brand loyalty among its consumers showing excellent year on year growth.

Gold Leaf
The story of John Player Gold Leaf has to start from the story of its founder, John Player. An
enterprising businessman, John Player started a small tobacco selling business in 1877 and
turned it into a thriving cigarette company, John Player and Sons.
John Player Gold Leaf has become an institution in itself, becoming one of the most
recognisable cigarette brands in the country. John Player Gold Leaf has recently been
declared the largest Urban Brand in Pakistan, beating out products across the F.M.C.G.
spectrum.

Pakistan Tobacco Company | Final Project

Capstan
Capstan has a rich heritage, originating in Britain in the 19th century. The brand was created
under the auspices of W.D. & H.O. WILLS at Bristol and London.

Gold Flake
Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O. WILLS where it
was a premium brand around the end of the 19th century. Launched in 1982, in 'soft cup'
packaging, the brand took off when it was repositioned in the Value For Money (VFM)
segment and later a 'hinge lid' variant was introduced in 2000.
Gold Flake has grown tremendously as a brand since 2004, making it the largest volume
brand in Pakistan, and the second largest brand in British American Tobacco's Asia Pacific
region. The key to Gold Flakes success has been its novel engagement schemes which have
fuelled growth over the years. Through consumer relevant initiatives, Gold Flake has
established itself as a fresh and modern offering in the VFM segment and is all set to
consolidate its position as the major volume driver for Pakistan Tobacco Company.

Embassy
Embassy, is a leading volume brand in Pakistan, and is most popular in Punjab where it
enjoys a leading position. Having built its heritage over a number of years, Embassy thrives
on its brand loyalty and locally tailored taste characteristics.

Pakistan Tobacco Company | Final Project

Financial Highlights
Gross Turn Over

Year
2004
2005
2006
2007
2008
2009

Gross Turnover
25,453 Million Rupees
30,615 Million Rupees
35,715 Million Rupees
40,889 Million Rupees
49,054 Million Rupees
57,544 Million Rupees

Gross Turn over


60000

Million Rupees

50000

40000

30000

20000

10000

0
2004

2005

2006

2007

2008

2009

Years

Pakistan Tobacco Company | Final Project

Financial Highlights
Property Plant and Equipment (Fixed Assets)

Years

Property Plant and Equipment

2004
2005
2006
2007
2008
2009

3,564 Million Rupees


3,798 Million Rupees
4,529 Million Rupees
5,154 Million Rupees
5,600 Million Rupees
5,952 Million Rupees

Fixed Assets

Million Rupees

6000
5000
4000
3000
2000
1000
0
2004

2005

2006

2007

2008

2009

Years

Pakistan Tobacco Company | Final Project

Earnings per Share and Dividend Yield

Year
2004
2005
2006
2007
2008
2009

Earnings
2.60/Share
5.17/Share
7.46/Share
9.47/Share
9.91/Share
11.83/Share

Dividend Yield
3.25%
5.37%
7.64%
6.37%
9.08%
9.10%

Earning per Share and Dividend Yield


12

Rs per share

10
8
6

Earning per Share


Dividend Yield

4
2
0

Years

Gross Volume
Pakistan Tobacco Company | Final Project

Year
2004
2005
2006
2007
2008
2009

Volume
27 Billion
31 Billion
35 Billion
37 Billion
41 Billion
41 Billion

Gross Profit
3,483 Million
4530 Million
5534 Million
6516 Million
7277 Million
8224 Million

Operating Profit
After Tax Profit
1,077 Million
665 Million
2,081 Million
1,322 Million
2,841 Million
1,905 Million
3,720 Million
2,420 Million
3,860 Million
2,532 Million
4,589 Million
3,022 Million

Volume

50
40
30
20
10
0
2004

2005

2006

2007

2008

2009

Pakistan Tobacco Company | Final Project

Profit
9000

8000

7000

Million Rupees

6000

5000
Gross Profit
Operating Profit
Profit after Tax

4000

3000

2000

1000

0
2004

2005

2006

2007

2008

2009

Years

Pakistan Tobacco Company | Final Project

Financial Analysis 2004-2005


Balance Sheet (Horizontal Analysis)

ITEMS

2004

2005

Horizontal Analysis

Property plant and


Equipment
Investment in
Subsidiary
Company
Long term Loans

3,564,407

4,529,366

4529366 - 3564407 3564407

27.07%

5,000

5,000

5000 5000 5000

---

16,324

17,782

17782 16324 16324

8.93%

Long Term Deposits

4,433

11,365

11365 4433 4433

156.3%

3,074,052

3,780,931

3780931 3074052 3074052

22.99%

Stores and Spares

131,464

125,232

125232 131464 131464

(4.70%)

Trade Debts

12,486

2,894

2894 12486 12486

(76.82%)

Loans and Advances

32,273

32,676

32676 32273 32273

1.24%

Short term
Payments
Other Receivables

36,003

31,987

31987 36003 36003

(11.15%)

119,126

104,791

104791 119126 119126

(12.03%)

Cash and Bank

39,197

57,605

57605 39197 39197

46.96

Total Current Assets

3,434,601

4,136,116

4136116 3434601 3434601

20.42%

Total Assets

7,024,765

7,968,453

7968453 7024765 7024765

13.43%

NON CURRENT
ASSETS

CURRENT
ASSETS
Stock in Trade

Pakistan Tobacco Company | Final Project

10

Balance Sheet

ITEMS

2004

2005

Horizontal Analysis

2,554,938

2,554,938

2554938 2554938 2554938

---

707,885

1,084,456

1084456 707885 707885

53.19%

---

---

---

---

624,475

724,673

724673 624475 624475

16.04%

Trade and other


payables

2,056,298

2,515,824

2515824 2056298 2056298

22.34%

Accrued Interest

5,041

10,911

10911 5041 5041

116.44%

Short term running


finance

996,579

400,662

400662 996579 996579

(59.79%)

Income tax liability

79,549

676,969

676969 79549 79549

75.10%

Total Current
Liabilities

3,137,467

3,604,366

3604366 3137467 3137467

14.88%

Total Liabilities

7,024,765

7,968,453

7968453 7024765 7024765

13.43%

SHARE CAPITAL
AND RESERVES
Share Capital
Revenue Reserves
NON CURRENT
LIABILITIES
Retirement Benefits
Deferred Taxation
CURRENT
LIABILITIES

Pakistan Tobacco Company | Final Project

11

Profit and Loss Account

ITEMS

2004

2005

Horizontal Analysis

Gross turnover

25,452,634

30,615,062

30615062 25452634 25452634

20.28%

Excise Duties

12,466,912

14,758,558

14758558 12446912 12446912

18.57%

Sales Tax

3,413,146

4,103,324

4103324 3413146 3416146

20.20%

Net Sales

9,572,576

11,753,180

11753180 9572576 9572576

22.77%

Cost of Sales

6,089,955

7,223,576

7223576 6089955 6089955

18.61%

Gross Profit

3,482,621

4,529,604

4529604 3482621 3482621

30.06%

Selling and
distribution

1,442,356

1,578,656

1578656 1442356 1442356

9.44%

Administrative
Expenses

595,637

573,285

573285 595637 595637

(3.75%)

Other Operating
Income

14,590

8,100

8100 14590 14590

(44.48
%)

Other Operating
Expense

381,914

304,462

304462 381914 381914

(20.27
%)

Operating Profit

1,077,304

2,081,301

2081301 1077304 1077304

93.19%

Finance Income

---

26,317

---

100

Finance Cost

21,265

25,554

25554 21265 21265

20.16%

Profit Before
Tax
Income Tax
Expense
Profit of the
Year

1,056,039

2,082,064

2082064 1056039 1056039

97.15%

390,812

760,145

760145 390812 390812

94.50%

665,227

1,321,919

1321919 665227 665227

98.77%

Pakistan Tobacco Company | Final Project

12

Financial Analysis 20042005


Balance Sheet (Vertical Analysis)

ITEMS

2004

2005

Vertical Analysis

Property plant and


Equipment
Investment in
Subsidiary
Company
Long term Loans

3,564,407

4,529,366

4529366 7968453

56.84%

5,000

5,000

5000 7968453

0.006%

16,324

17,782

17782 7968453

0.22%

Long Term Deposits

4,433

11,365

11365 7968453

0.14%

3,074,052

3,780,931

3780931 7968453

47.57%

Stores and Spares

131,464

125,232

125232 7968453

1.57%

Trade Debts

12,486

2,894

2894 7968453

0.03%

Loans and Advances

32,273

32,676

32676 7968453

0.41%

Short term
Payments
Other Receivables

36,003

31,987

31987 7968453

0.40%

119,126

104,791

104791 7968453

1.31%

Cash and Bank

39,197

57,605

57605 7968453

0.72%

Total Current Assets

3,434,601

4,136,116

4136116 7968453

51.90%

Total Assets

7,024,765

7,968,453

7968453 7968453

100%

NON CURRENT
ASSETS

CURRENT
ASSETS
Stock in Trade

Pakistan Tobacco Company | Final Project

13

Balance Sheet

ITEMS

2004

2005

Vertical Analysis

2,554,938

2,554,938

2554938 7968453

32.06%

707,885

1,084,456

1084456 7968453

13.62%

---

---

---

---

624,475

724,673

724673 7968453

9.09%

Trade and other


payables

2,056,298

2,515,824

2515824 7968453

31.57%

Accrued Interest

5,041

10,911

10911 7968453

0.13%

Short term running


finance

996,579

400,662

400662 7968453

5.03%

Income tax liability

79,549

676,969

676969 7968453

8.49%

Total Current
Liabilities

3,137,467

3,604,366

3604366 7968453

45.26%

Total Liabilities

7,024,765

7,968,453

7968453 7968453

100%

SHARE CAPITAL
AND RESERVES
Share Capital
Revenue Reserves
NON CURRENT
LIABILITIES
Retirement Benefits
Deferred Taxation
CURRENT
LIABILITIES

Pakistan Tobacco Company | Final Project

14

Profit and Loss Account

ITEMS

2004

2005

Vertical Analysis

Gross turnover

25,452,634

30,615,062

30615062 11753180

260.48%

Excise Duties

12,466,912

14,758,558

14758558 11753180

125.57%

Sales Tax

3,413,146

4,103,324

4103324 11753180

34.91%

Net Sales

9,572,576

11,753,180

11753180 11753180

100%

Cost of Sales

6,089,955

7,223,576

7223576 11753180

61.46%

Gross Profit

3,482,621

4,529,604

4529604 11753180

62.70%

Selling and
distribution

1,442,356

1,578,656

1578656 11753180

13.43%

Administrative
Expenses

595,637

573,285

573285 11753180

4.8%

Other Operating
Income

14,590

8,100

8100 11753180

0.06%

Other Operating
Expense

381,914

304,462

304462 11753180

2.59%

Operating Profit

1,077,304

2,081,301

2081301 11753180

17.70%

Finance Income

---

26,317

---

0.22%

Finance Cost

21,265

25,554

25554 11753180

0.21%

Profit Before
Tax
Income Tax
Expense
Profit of the
Year

1,056,039

2,082,064

2082064 11753180

17.71%

390,812

760,145

760145 11753180

6.46%

665,227

1,321,919

1321919 11753180

11.24%

Pakistan Tobacco Company | Final Project

15

Financial Analysis 2005-2006


Balance Sheet

ITEMS

2005

2006

Horizontal
Analysis

Vertical
Analysis

19.25

51.86

NON CURRENT
ASSETS
Property plant and
Equipment
Investment in Subsidiary
Company
Long term Loans
Long Term Deposits and
Payments

4,529,366 4,529,366
5,000

5,000

---

0.006

17,782

18,660

4.94

0.21

11,365

8,424

(25.88)

0.10

0.26

43.40

CURRENT ASSETS
Stock in Trade

3,780,931 3,690,893
125,232

140,008

11.80

1.60

Trade Debts

2,894

2,406

(16.86)

0.03

Loans and Advances

32,676

12,205

(62.65)

0.14

Short term Payments

31,987

72,235

125.83

0.83

Other Receivables

104,791

92,360

(11.86)

1.06

Cash and Bank Balances

57,605

62,883

9.16

0.72

Stores and Spares

Total Current Assets

4,136,116 4,172,950

0.89

47.78

Total Assets

7,968,453 8,734,400

9.61

100

Pakistan Tobacco Company | Final Project

16

Balance Sheet

ITEMS

2005

2006

Horizontal
Analysis

Vertical
Analysis

SHARE CAPITAL
AND RESERVES

Share Capital

2,554,938 2,554,938

---

29.25

Revenue Reserves

1,084,456 1,584,249

46.08

18.14

NON CURRENT
LIABILITIES

Retirement Benefits
Deferred Taxation

---

---

---

---

724,673

845,004

16.60

9.67

(12.07)

25.23

CURRENT
LIABILITIES
Trade and other
payables

2,515,824 2,212,241

Accrued Interest

10,911

11,115

1.87

0.13

Short term running


finance

400,662

1,293,114

222.75

14.81

Income tax liability

676,969

233,712

(65.48)

2.68

Total Current liability

3,604,366 3,750,209

4.05

42.94

Total Liabilities

7,024,765 8,734,400

9.61

100

Pakistan Tobacco Company | Final Project

17

Profit and Loss Account

ITEMS

2005

2006

Horizontal
Analysis

Vertical
Analysis

Gross turnover

30,615,062

35,715,451

16.66

---

Excise Duties

14,758,558

16,991,172

15.13

---

Sales Tax

4,103,324

4,833,285

17.79

---

Net Sales

11,753,180

13,890,994

18.19

100

Cost of Sales

7,223,576

8,357,747

15.70

60.16

Gross Profit

4,529,604

5,533,520

22.16

39.84

Selling and
distribution
Administrative
Expenses

1,578,656

1,816,198

15.05

13.07

573,285

644,981

12.75

4.64

Other Operating
Income

8,100

20,686

155.38

0.15

Other Operating
Expense

304,462

251,932

(17.25)

1.81

Operating Profit

2,081,301

2,841,095

36.51

20.45

Finance Income

26,317

47,402

80.12

0.34

Finance Cost

25,554

27,824

8.88

0.20

Profit Before Tax

2,082,064

2,860,673

37.40

20.59

Income Tax
Expense
Profit of the Year

760,145

955,685

25.72

6.88

1,321,919

1,904,988

44.11

13.74

Pakistan Tobacco Company | Final Project

18

Financial Analysis 2006-2007


Balance Sheet

ITEMS

2006

2007

Horizontal
Analysis

Vertical
Analysis

13.80

52.45

NON CURRENT ASSETS

Property plant and


Equipment
Investment in
Subsidiary Company
Long term Loans
Long Term Deposits
and Payments

4,529,366 5,154,326
5,000

5,000

---

0.05

18,660

12,513

(32.94)

0.13

8,424

13,025

54.62

0.13

5.47

40.69

CURRENT ASSETS
Stock in Trade

3,690,893 3,998,181
140,008

140,777

0.55

1.43

Trade Debts

2,406

2,386

(0.83)

0.02

Loans and Advances

12,205

38,580

216.10

0.39

Short term Payments

72,235

64,887

(10.17)

0.66

Other Receivables

92,360

229,891

148.91

2.34

Cash and Bank


Balances
Total Current Assets

62,883

166,666

165.04

1.70

4,172,950 4,641,368

11.23

47.23

Total Assets

8,734,400 9,826,232

12.50

100

Stores and Spares

Pakistan Tobacco Company | Final Project

19

Balance Sheet

ITEMS

2006

2007

Horizontal
Analysis

Vertical
Analysis

SHARE CAPITAL AND


RESERVES

Share Capital

2,554,938 2,554,938

---

26.00

Revenue Reserves

1,584,249 1,149,742

(27.43)

11.70

NON CURRENT
LIABILITIES

Retirement Benefits
Deferred Taxation

---

1,149,742

100

4.98

845,004

809,109

(4.25)

8.23

60.39

36.11

(24.42)

0.09

(19.69)

10.57

(2.55)

2.32

CURRENT
LIABILITIES
Trade and other
payables
Accrued Interest
Short term running
finance
Income tax liability

2,212,241 3,548,237
11,115

8,401

1,293,114 1,038,550
233,712

227,752

Total Current
liabilities

3,750,209 4,822,940

28.60

49.08

Total Liabilities

8,734,400 9,826,232

12.50

100

Pakistan Tobacco Company | Final Project

20

Profit and Loss Account

ITEMS

2006

2007

Horizontal
Analysis

Vertical
Analysis

Gross turnover

35,715,451

40,889,275

14.49

--

Excise Duties

16,991,172

19,311,946

13.66

--

Sales Tax

4,833,285

5,534,452

14.51

--

Net Sales

13,890,994

16,042,877

15.49

100

Cost of Sales

8,357,747

9,527,306

14.00

59.39

Gross Profit

5,533,520

6,515,571

17.75

40.61

Selling and
distribution
Administrative
Expenses

1,816,198

1,795,793

(1.12)

11.19

644,981

736,147

14.13

4.59

Other Operating
Income

20,686

71,756

246.88

0.45

Other Operating
Expense

251,932

335,763

33.28

2.09

Operating Profit

2,841,095

3,719,624

30.92

23.19

Finance Income

47,402

30,878

(34.86)

0.19

Finance Cost

27,824

25,928

(6.81)

0.16

Profit Before Tax

2,860,673

3,724,574

30.20

23.22

Income Tax
Expense
Profit of the Year

955,685

1,304,367

36.49

8.13

1,904,988

2,420,207

27.05

15.09

Pakistan Tobacco Company | Final Project

21

Financial Analysis 2007-2008


Balance Sheet

ITEMS

2007

2008

Horizontal
Analysis

Vertical
Analysis

Property plant and


Equipment
Investment in
Subsidiary Company
Long term Loans

5,154,326

5,599,758

8.64

53.87

5,000

5,000

---

0.05

12,513

9,244

(26.12)

0.09

Long Term Deposits


and Payments

13,025

41,172

216.10

0.40

3,998,181

4,059,063

1.52

39.05

140,777

190,646

35.42

1.83

Trade Debts

2,386

2,666

11.74

0.03

Loans and Advances

38,580

65,917

70.86

0.63

Short term Payments

64,887

105,728

62.94

1.02

Other Receivables

229,891

246,675

7.30

2.37

Cash and Bank


Balances
Total Current Assets

166,666

69,172

(58.50)

0.67

4,641,368

4,739,867

2.12

45.60

Total Assets

9,826,232 10,395,041

5.79

100

NON CURRENT ASSETS

CURRENT ASSETS
Stock in Trade
Stores and Spares

Pakistan Tobacco Company | Final Project

22

Balance Sheet

ITEMS

2007

2008

Horizontal
Analysis

Vertical
Analysis

Share Capital

2,554,938

2,554,938

---

24.58

Revenue Reserves

1,149,742

1,053,393

(8.38)

10.13

1,149,742

739,133

51.00

7.11

809,109

836,939

3.44

8.05

Trade and other


payables

3,548,237

4,324,704

21.88

41.60

Accrued Interest

8,401

10,354

23.25

0.10

Short term running


finance

1,038,550

572,397

(44.88)

5.51

Income tax liability

227,752

303,183

33.12

2.92

Total Current Liability

4,822,940

5,210,638

8.04

50.13

Total Liabilities

9,826,232 10,395,041

5.79

100

SHARE CAPITAL AND


RESERVES

NON CURRENT
LIABILITIES
Retirement Benefits
Deferred Taxation
CURRENT
LIABILITIES

Pakistan Tobacco Company | Final Project

23

Profit and Loss Account

ITEMS

2007

2008

Horizontal
Analysis

Vertical
Analysis

Gross turnover

40,889,275

49,053,928

19.97

--

Excise Duties

19,311,946

23,351,734

20.92

--

Sales Tax

5,534,452

6,829,699

23.40

--

Net Sales

16,042,877

18,872,495

17.64

100

Cost of Sales

9,527,306

11,595,736

21.71

61.44

Gross Profit

6,515,571

7,276,759

11.68

38.56

Selling and
distribution
Administrative
Expenses

1,795,793

1,933,364

7.66

10.24

736,147

928,358

26.11

4.92

Other Operating
Income

71,756

60,551

(15.62)

0.32

Other Operating
Expense

335,763

615,458

83.30

3.26

Operating Profit

3,719,624

3,860,130

3.78

20.45

Finance Income

30,878

59,600

93.02

0.32

Finance Cost

25,928

26,013

0.33

0.14

Profit Before Tax

3,724,574

3,893,717

4.54

20.63

Income Tax
Expense
Profit of the Year

1,304,367

1,361,422

4.37

7.21

2,420,207

2,532,295

4.63

13.42

Pakistan Tobacco Company | Final Project

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Financial Analysis 2008-2009


Balance Sheet

ITEMS

2008

2009

Horizontal
Analysis

Vertical
Analysis

Property plant and


Equipment
Investment in Subsidiary
Company
Long term Loans

5,599,758

5,952,108

6.29

48.68

5,000

5,000

9,244

7,310

(20.92)

0.06

Long Term Deposits and


Payments

41,172

19,915

(51.63)

0.16

4,059,063

5,765,367

42.04

47.15

190,646

218,375

14.54

1.79

Trade Debts

2,666

1,684

(36.83)

0.01

Loans and Advances

65,917

48,598

(26.27)

0.40

Short term Payments

105,728

72,483

(31.44)

0.59

Other Receivables

246,675

88,147

(64.27)

0.72

Cash and Bank Balances

69,172

47,874

(30.79)

0.39

Total Current Assets

4,739,867

6,242,528

31.70

51.06

Total Assets

10,395,041 12,226,861

17.62

100

NON CURRENT ASSETS

0.04

CURRENT ASSETS
Stock in Trade
Stores and Spares

Pakistan Tobacco Company | Final Project

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Balance Sheet

ITEMS

2008

2009

Horizontal
Analysis

Vertical
Analysis

Share Capital

2,554,938

2,554,938

---

20.90

Revenue Reserves

1,053,393

1,705,296

61.89

13.95

Retirement
Benefits

739,133

---

(100)

0.00

Deferred Taxation

836,939

1,109,847

32.61

9.08

Trade and other


payables

4,324,704

5,037,469

16.48

41.20

Accrued Interest

10,354

27,659

167.13

0.23

Short term
running finance

572,397

1,300,837

127.26

10.64

Income tax
liability

303,183

490,815

61.89

4.01

Total Current
Liability

5,210,638

6,856,780

31.59

56.08

Total Liability

10,395,041 12,226,861

17.62

100

SHARE CAPITAL
AND RESERVES

NON CURRENT
LIABILITIES

CURRENT
LIABILITIES

Pakistan Tobacco Company | Final Project

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Profit and Loss Account

ITEMS

2008

2009

Horizontal
Analysis

Vertical
Analysis

Gross turnover

49,053,928

57,544,309

17.31

--

Excise Duties

23,351,734

27,654,345

18.43

--

Sales Tax

6,829,699

8,223,439

20.41

--

Net Sales

18,872,495

21,666,525

14.80

100

Cost of Sales

11,595,736

13,442,066

15.92

62.04

Gross Profit

7,276,759

8,224,459

13.02

37.96

Selling and
distribution
Administrative
Expenses

1,933,364

2,246,014

16.17

10.37

928,358

1,100,814

18.58

5.08

Other Operating
Income

60,551

226,499

274.06

1.05

Other Operating
Expense

615,458

514,665

(16.38)

2.38

Operating Profit

3,860,130

4,589,465

18.89

21.18

Finance Income

59,600

102,826

72.53

0.47

Finance Cost

26,013

43,802

68.39

0.20

Profit Before Tax

3,893,717

4,648,489

19.38

21.45

Income Tax
Expense
Profit of the Year

1,361,422

1,626,083

19.44

7.51

2,532,295

3,022,406

19.35

13.95

Pakistan Tobacco Company | Final Project

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Financial Analysis 2009-2010


Balance Sheet

ITEMS

2009

2010

Horizontal
Analysis

Vertical
Analysis

Property plant and


Equipment
Investment in
Subsidiary Company
Long term Loans

5,952,108

5,680,296

(4.5)

39.58

5,000

5000

---

0.03

7,310

4170

(42.9)

0.02

Long Term Deposits


and Payments

19,915

29,721

49.2

0.20

5,765,367

7,255,007

25.83

50.55

218,375

249,632

14.31

1.73

Trade Debts

1,684

1,554

(7.71)

0.01

Loans and Advances

48,598

68,559

41.07

0.47

Short term Payments

72,483

135,267

86.61

0.94

Other Receivables

88,147

124,896

41.69

0.87

Cash and Bank


Balances
Total Current Assets

47,874

56,910

18.87

0.39

6,242,528

7,893,825

26.45

55.01

Total Assets

12,226,861 14,349,473

17.72

100

NON CURRENT ASSETS

CURRENT ASSETS
Stock in Trade
Stores and Spares

Pakistan Tobacco Company | Final Project

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Balance Sheet

ITEMS

2009

2010

Horizontal
Analysis

Vertical
Analysis

Share Capital

2,554,938

2,554,938

---

17.80

Revenue Reserves

1,705,296

1,313,955

(22.94)

9.15

---

---

---

---

1,109,847

1,113,833

0.35

7.76

Trade and other


payables

5,037,469

5,815,867

15.45

40.53

Accrued Interest

27,659

53,648

93.96

0.37

Short term
running finance

1,300,837

2,561,362

96.90

17.84

490,815

199,409

(59.37)

0.13

Total Current
Liability

6,856,780

8,630,286

25.86

60.14

Total Liability

12,226,861 14,349,473

17.36

100

SHARE CAPITAL
AND RESERVES

NON CURRENT
LIABILITIES

Retirement
Benefits
Deferred
Taxation
CURRENT
LIABILITIES

Income tax
liability

Pakistan Tobacco Company | Final Project

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Profit and Loss Account

ITEMS

2009

2010

Horizontal
Analysis

Vertical
Analysis

Gross turnover

57,544,309

44,458,074

(22.74)

283.24

Excise Duties

27,654,345

22,347,073

(19.9)

142.37

Sales Tax

8,223,439

6,414,894

(21.99)

40.86

Net Sales

21,666,525

15,696,107

(27.25)

100

Cost of Sales

13,442,066

10,789,048

(19.73)

68.73

Gross Profit

8,224,459

4,907,059

(40.33)

31.26

Selling and
distribution
Administrative
Expenses

2,246,014

2,007,158

(10.63)

12.78

1,100,814

943,256

(14.31)

6.00

Other Operating
Income

226,499

158,253

(30.13)

1.00

Other Operating
Expense

514,665

24,193

(95.29)

0.15

Operating Profit

4,589,465

1,822,585

(60.28)

11.61

Finance Income

102,826

34,669

(66.28)

0.22

Finance Cost

43,802

101,415

131.5

0.64

Profit Before Tax

4,648,489

1,755,839

(62.22)

11.18

Income Tax
Expense
Profit of the Year

1,626,083

614,218

(62.22)

3.91

3,022,406

1,141,621

(62.22)

7.2

Pakistan Tobacco Company | Final Project

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Ratio Analysis 2005-2010


Liquidity Ratios
1. Current Ratio
Years

Current Assets

Current Liabilities

Current Ratio

2004

3,434,601

3,137,467

1.094

2005

4,136,116

3,604,366

1.147

2006

4,172,950

3,750,209

1.112

2007

4,641,368

4,822,940

0.962

2008

4,739,867

5,210,638

0.909

2009

6,242,528

6,856,780

0.910

2010

7,893,825

8,630,286

0.914

2. Quick Ratio
Years

Quick Assets

Current Liabilities

Quick Ratio

2004

3,60,549

3,137,467

0.1149

2005

3,55,185

3,604,366

0.098

2006

3,82,097

3,750,209

0.101

2007

6,43,187

4,822,940

0.133

2008

6,80,804

5,210,638

0.130

2009

4,77,161

6,856,780

0.069

2010

6,38,818

8,630,286

0.074

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Liquidity Ratios
3. Inventory Turnover
Years

Cost of Sales

Average Inventory

Inventory Turnover

2004

6,089,955

3,069,090

1.98

2005

7,223,576

3,427,491

2.10

2006

8,357,474

3,785,892

2.20

2007

9,527,306

3,894,517

2.44

2008

11,595,736

4,028,622

2.87

2009

13,442,066

4,972,215

2.70

2010

10,789,048

6,510,187

1.67

4. Average Account Receivables Turnover

Years

Credit Sales

Average A/R

A/R Turnover

2004

9,572,576

1,05,266

90.93

2005

11,753,180

1,11,958

104.97

2006

13,890,994

98,575

140.91

2007

16,042,877

1,61,125

99.56

2008

18,872,495

2,38,282

117.15

2009

21,666,525

1,67,411

129.41

2010

15,696,107

1,06,521

147.34

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Profitability Ratios
1. Assets Turnover

Years

Sales

Average Total Assets Assets Turnover

2004

9,572,576

6,641,792

1.45

2005

11,753,180

7,496,609

1.56

2006

13,890,994

8,351,426

1.66

2007

16,042,877

9,280,316

1.78

2008

18,872,495

10,110,636

1.86

2009

21,666,525

11,310,951

1.91

2010

15,696,107

12,964,936

1.21

2. Profit Margin

Years

Sales

Cost of Goods Sold

Profit Margin

2004

9,572,576

6,089,955

36.38 %

2005

11,753,180

7,223,576

38.53 %

2006

13,890,994

8,357,474

39.83 %

2007

16,042,877

9,527,306

40.61 %

2008

18,872,495

11,595,736

38.55 %

2009

21,666,525

13,442,066

37.95 %

2010

15,696,107

10,789,048

31.27%

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Profitability Ratios
3. Return on Assets

Years

Net Income

Average Total Assets Return on Assets

2004

665,227

6,641,792

0.10

2005

1,321,919

7,496,609

0.17

2006

1,904,988

8,351,426

0.22

2007

2,420,207

9,280,316

0.26

2008

2,532,295

10,110,636

0.25

2009

3,022,406

11,310,951

0.27

2010

1,141,621

12,964,936

0.80

4. Return on Common Stockholders Equity

Years

Net Income

Average Stock
Holders Equity

Return on Stock
holders Equity

2004

665,227

3,262,823

0.20

2005

1,321,919

3,451,118

0.38

2006

1,904,988

3,889,300

0.48

2007

2,420,207

4,081,022

0.59

2008

2,532,295

3,656,505

0.69

2009

3,022,406

3,934,282

0.76

2010

1,141,621

4,065,563

0.28

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Profitability Ratios
5. Earnings per Share
Years

Net Income

Average Shares
Outstanding

Earnings per Share

2004

665,227

2,55,494

2.60

2005

1,321,919

2,55,494

5.17

2006

1,904,988

2,55,494

7.46

2007

2,420,207

2,55494

9.47

2008

2,532,295

2,55,494

9.91

2009

3,022,406

2,55,494

11.83

2010

1,141,621

2,55,494

4.47

6. Payout Ratios
Years

Dividends per
Share

Earnings per Share

Payout Ratio

2004

1.61

2.60

0.61

2005

3.69

5.17

0.71

2006

5.48

7.46

0.73

2007

7.88

9.47

0.83

2008

11.62

9.91

1.17

2009

9.53

11.83

0.80

2010

5.99

4.47

1.34

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Profitability Ratios
7. Price Earnings Ratio

Years

Market Price of
Share

Earnings per Share

2004

2.60

2005

5.17

2006

7.46

2007

9.47

2008

9.91

2009

11.83

2010

4.47

Price Earnings
Ratio

Pakistan Tobacco Company | Final Project

36

Solvency Ratios
1. Debt to Assets Ratio

Years

Total Debts

Total Assets

Debt to Assets Ratio

2004

1,896,686

7,024,765

0.27

2005

2,916,486

7,968,453

0.33

2006

3,505,382

8,734,400

0.40

2007

4,586,767

9,826,232

0.46

2008

4,897,101

10,395,041

0.47

2009

6,338,306

12,226,861

0.51

2010

8,377,229

13,613,012

0.61

2. Times Interest Earned

Years

Operating Income

Interest Expense

Times Interest Earned

2004

1,056,039

390,812

2.70

2005

2,082,064

760,145

2.73

2006

2,860,673

955,685

2.99

2007

3,724,574

1,304,367

2.85

2008

3,893,717

1,361,422

2.86

2009

4,648,489

1,626,083

2.85

2010

1,755,839

614,218

2.85

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Interpretation of Analysis
Liquidity Ratios

The analysis of Pakistan Tobacco Companys financial statement shows that it has a high
tendency to pay its debts and to convert assets into liquid form within short intervals of time.

The current ratio of PTC remained between 0.90 1.14 in the last six years and it
shows its ability to pay short term liabilities.

The quick ratio of PTC ranged between 0.069 0.133 from 2005 to 2010. It shows the
companys ability to convert its current assets into liquid form (cash form) in order to
meet current liabilities.

On yearly basis from the year 2005 2010, we observed that the number of times the
total inventory or stock of the company was sold on the average of 2.25 times/year.
It shows the sales of the company are on a very large scale and also gives rise to the
company opportunity to generate huge profits in the long run.

Average Account Receivables Turnover shows that how many times a company is
able to recover the amount of credit sales to people. PTC has shown a high Accounts
Receivables turnover rate which shows its high liquidity transformation rate.

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Profitability Ratios

Pakistan Tobacco Companies Profitability ratios clearly reflect its great ability to generate
huge profits and of generating dividends for its shareholders.

Average Assets turnover of the company ranges between 1.21 - 1.91 times per year.
It shows the generation of huge sales from the worth of assets of the company and in
the case of Pakistan Tobacco Company, it shows the firm's efficiency at using its
assets in generating sales or revenue - the higher the number the better.

The profit margin of PTC lies between 31.27% - 40.61% in previous six years. It
measures the percentage of each dollars of sales that results in net income. A higher
profit margin indicates a more profitable company that has better control over its
costs compared to its competitors.

The return on assets of PTC ranges among 0.80 to 0.27 according to preceding six
years record. An overall measure of profitability is return on assets. ROA gives an
idea as to how efficient management is at using its assets to generate earnings. This
number tells you what the company can do with what it has, i.e. how many rupees of
earnings they derive from each rupee of assets they control.

Return on common stockholders equity of PTC varies between 0.28 0.76 between
the years 2005 to 2006. Another widely used profitability ratio is return on common
stockholders equity. It measures profitability from common stockholders point of
view. Return on equity measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have invested.
Averaging ROE over the past 5-10 years can give you a better idea of the historical
growth.

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Earnings per share are a measure of net income earned on each share of common
stock. PTCs earning per share of last six years lies among 4.47 - 11.83. The EPS
formula does not include preferred dividends for categories outside of continued
operations and net income. Earnings per share serve as an indicator of a company's
profitability.

Payout ratio of this company ranges from 0.8 - 1.34. It measures the percentage of
earnings distributed in the form of cash dividends. The amount of earnings paid out
in dividends to shareholders. Investors can use the payout ratio to determine what
companies are doing with their earnings. Dividend payout ratio is the fraction of net
income a firm pays to its stockholders in dividend.

Price earnings ratio is an oft-quoted measure of the ratio of the market price of each
share of common stock to the earnings per share. It is also called its "P/E", or simply
"multiple". The P/E ratio is a vital ratio for investors. Basically, it gives us an
indication of the confidence that investors have in the future prosperity of the
business. A P/E ratio of 1 shows very little confidence in that business whereas a P/E
ratio of 20 expresses a great deal of optimism about the future of a business. It is the
valuation ratio of a company's current share price compared to its per-share
earnings.

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SOLVENCY RATIOS

Solvency ratios measure the ability of a company to survive over a long period of time. It
provides a measurement of how likely a company will be to continue meeting its debt
obligations. Different countries use different methodologies to calculate the solvency ratio,
and have different requirements.

Debt to total assets ratio measures the percentage of total assets that creditors
provide. A metric used to measure a company's financial risk by determining how
much of the company's assets have been financed by debt. If the ratio is less than
one, most of the company's assets are financed through equity. If the ratio is greater
than one, most of the company's assets are financed through debt. Calculated by
adding short-term and long-term debt and then dividing by the company's total
assets.

The average value of Times interest earned of PTC is approximately 2.8 for previous
six years. IT PROVIDES COMPANYS ABILITY TO MEET interest payments as they come
due. Times interest earned (TIE) or interest coverage ratio is a measure of a
company's ability to honour its debt payments. The times interest earned lets the
creditor understand whether or not a company has sufficient income to cover its
interest payments requirements. It is calculated by taking a company's earnings
before interest and taxes (EBIT) and dividing it by the total interest payable on bonds
and other contractual debt.

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