TABLE OF CONTENTS

Industry The Company 1. History 2. Management Profile 3. Authorized Share 4. Subscribed & paid up Capital 5. Pattern of Shareholding 6. Main Products 7. Accounting Policies & Practices 8. Past Performance Common Size Analysis 1. Horizontal 2. Vertical Ratio Analysis 1. Liquidity Ratio 2. Activity Ratio 3. Debt Analysis 4. Profitability Ratio Classification 1. Balance Sheet Items 2. Profit & Loss Items Comprehensive Report Conclusion Recommendations/Suggestions Projected Statements For The Next Year Reference

Economic impact of tobacco industry in Pakistan Tobacco industry contributions are significant and widespread. The tobacco Industry in Pakistan makes a significant contribution to all sectors of the economy, from farming through manufacturing to retailing. The industry is also a major purchaser of supplies from other industries.

Its contribution characteristics

Tobacco industry characteristics Employees over 1.0 million people. Generates over Rs.27.5 billions values added. Adds Rs. 15.17 billion to tax revenue. Contribution to GDP Growing of Tobacco Manufacturing of cigarette Rs. 2.877 billions. Rs. 5.0 billions.

Distribution & retailing of product of tobacco product 4.733 billions. Taxes over Excise duty Cigarette industry Cement industry 20% 13% 11% 3% 53% 15.170 billions.

Sugar industry Cotton industry Others

60 50 40 30 20 10 0

53

20

13 3 Cotton Industry

11

Sugar Industry

Cigarette Industry

Taxation raised from tobacco industry activities is nearly enough to finance the countrys federal budget on social and community service. Manufacturing of Cigarette is a high value added product and 72% of the retail price is accounted for tax.

Cigarette industry Portfolio in Pakistan

The Cigarette industry of Pakistan is one of the major industries of the company. The industry is mainly based upon domestic tobacco. Some tobacco is imported from USA and Brazil for building purposes. On average that in PAKISTAN TOBACCO COMPANY has the operational capacity of 70% of the installed capacity. There are many registered companies in Pakistan for manufacturing Cigarettes. But the following 5 public limited companies account for almost 90% by the value of total cigarettes business. These companies are named as: PAKISTAN Tobacco Company. Lakson Tobacco Company. Premier Tobacco Company. Khyber Tobacco Company. Souvenier Tobacco Company. PTC uses tobacco both from locally manufactured and imported also. Locally these items are used.

Cement Industry

Others

Tobacco Aluminum foil Filter Rods Shells/Cup Labels/HL Cartons End Labels Sliders/Lock labels Water proof papers Wrappers Casings Containers Adhesive Gummed Tape

These Items are imported from other countries: Tobacco Aluminum Cigarettes Acetate Filter Tow Viscose film Tipping Paper Adhesive Tear off Ribbon

Pakistan is amongst the top 12 tobacco growing countries of the world. Both Virginia and Rustica type tobacco are grown here. These types of leave are used in Cigarette manufacturing. Fluid Cured

Sun-Cured Air-Cured Pit-Cured Heavily fermented rustica

About 97% of the Cigarettes, manufactured in Pakistan, used locally. Domestic consumption of cigarettes is influenced by the consumption of tobacco in other forms such as biri, hukka and neswar. There are lots of restrictions or constraints on cigarettes industry such as: Heavily taxed industry. Promotion of product faced high charges. Sales tax Discouraging private investors Price increase discourage Reduces demand beyond a certain point Small profit margin

History of PTC
PTC has its head- office situated in Saudi Pak Tower, Islamabad, and the two factories in Jhelum and Akhora. PTC is the member of British American Tobacco, which is the second largest tobacco Company of the world with a world over 15% and annual shipment of more than 800 billion cigarettes. PTC has won A grade in MRP-ll. PTC Certified also. PTC got established in 1947, as the first MNC of Pakistan and took over its business from imperial tobacco company India. PTC Pioneered the cultivation of Virginia tobacco and the manufacture of cigarette in Pakistan in 1947.

PTC had printing facilities at Akora Khattak and Jhelum, which produced the cigarettes packets used By the company. Now all printing activities done by packages limited Lahore. PTC was established as a private limited company in 1947, but was converted into a public limited company in 1955. PTC provides educational information for growing quality tobacco to farmers in different areas in Pakistan. PTC sold 21.4 billion cigarettes, which is estimated 37.6% of total market share in 2003. PTC annual growth rate in sale volume is 14% in 2003 as compared to 2002 Restructuring cost incurred in 2003 is Rs.770 million including other expenses. Major events in year 2000 were the successful completion of the $40 million right issue PTC gives 72% of its total budget to the government as tax. Government has taken encouraging step by reduction in tax from 17% to 6%. PTC accumulated losses for the period 1995-2003 is now about 1.68 billion. During the same period, PTC generated Government revenue in excess of 53 billion in form of duties and taxes. PTC provides bestow services to society, community (recently flood in Rawalpindi). PTC provides on job training and seminars to their employees. PTC fulfils its social responsibility by providing industrial home and computer education to the Children of their employees. PTC provides easy way to survive hard life by establishing fair price shop where necessities of life Available at equitable prices. PTC has the history of responsible operations in Pakistan and have always believed that

MANAGEMENT PROFILE
BOARD OF DIRECTORS
MR. ASLAM KHALIQ Chairman Mr. William Toh Ah Wah Managing Director & CEO MR. MOBASHER RAZA Finance Director MR. FAZAL GHAFFOR Marketing Director MR. FEROZE AHMAD IT Director MR. AHMAD ZEB Production Director FATEHALI WALIMUHAMMAD VELLANI (Non-Executive Director) ALI KULI KHAN Lt. Gen (Retd.) Non-Executive Director) KUNWAR IDRIS (Non-Executive Director) ISTAQBAL MEHDI (Non-Executive Director) MAUEEN AFZAL (Non-Executive Director)

BANAKERS
ABN AMRO BANK AMERICAN EXPRESS BANK UNION BANK CITIBANK N.A. HABIB BANK HONG KONG & SHANGHAI BANKING CORP. MUSLIM COMNMERCIAL BANK NATIONAL BANK OF PAKISTAN STANDARD CHARTED BANK

AUDITORS
A.F.FERGUSON & Co. Chartered Accountants

REGISTERED OFFICE
EVACUEE TRUST COMPLEX AGHA KHAN ROAD, SECTOR F-5/1 P.O.Box 2549 ISLAMABAD-44000 Telephone:(051) 2278376, 2278377

SHARE REGISTRAR
FERGUSON ASSOCIATES (Pvt) Ltd State Life Building 1-A I.I. Cundrigar Road, Karachi.

AUTHORIZED SHARE
Pakistan Tobacco Company Limited is incorporated in Pakistan and is listed on the three stock exchanges of Pakistan with an authorize capital of 300,000,000 ordinary shares of Rs. 10 each

ISSUED, SUBSCRIBED AND PAID-UP CAPITAL

During the year 2005 the company paid capital is 255,493,800 ordinary share of Rs. 10 each.

PATTEREN OF SHARE HOLDING PARTICULAR

Associate Companies Undertaking and Related Parties NIT and ICP Directors, CEO, and their spouse and minor children Executives Public Sector companies and corporations Banks, Development Finance Institutions, on-Banking Finance Institutions, Insurance companies, Mudarba and Mutual Funds Others Individuals Totals 986,513

NO. OF SHARES.
241,843,423 4,597,595 60,797 200

2,297,164 687,088 5,021,012 255,493,792

Associated Companies, Undertaking and Related Parties No. Of Share

British American Tobacco (investment) Limited Rothmans International NIT and ICP Investment Corporation of Pakistan National Bank of Pakistan, Trustee Deptt. 19,155 4,578,440 241,045,141 798,282

Directors, CEO and their spouse and minor Children

Aslam Khaliq Kunwar Idris 08 65

Ali Kuli Khan khattak Brendan James Brady Moeen Afzal Fatehali Walimuhammad vellani

100 500 2124 58000

Executives
Naveed Aftab Ahmad 200

Shareholders holding 10% or more voting interest

British American Tobacco (Investment) Limited 241,045,141

BRANDS OF PAKISTAN TOBBACO COMPANY

Gold Leaf (20, 10).

Gold Leaf (lights). Gold Leaf (PNS). Gold Flake (Soft Cup). Gold Flake (HL). Gold Flake (20,50 packs)

Wills Kings (20, 10 packs).

Wills (Navy Cut). Capstan (PNS). Capstan international (20, 10, 50packs). Embassy. Benson & Hedges

THE COMPANY AND ITS OPERATIONS

Pakistan Tobacco Company Limited is incorporated in Pakistan and is listed on the three stock exchanges of Pakistan. It is engaged in the manufacture and sale of cigarettes. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. BASIS OF ACCOUNTING
These accounts have been prepared under the historical cost convention and in accordance with the requirements of the companies ordinance,1984 and international Accounting Standards as applicable in Pakistan.

2. TAXATION
Provision for current taxation is based on taxable income on current rates of taxation after taking into account tax rebates and tax credit available or based on 0.5% of turnover less related excise duty and sales tax, whichever is higher. Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credit can be utilized.

3. RETIREMENT BENEFITS
The company operates i) Approved funded pension scheme for management and certain grades of business support officers and gratuity scheme for all employees. Actuarial valuation of these schemes is carried out each year and the latest valuation was carried out as at December 31, 2003. The details of the valuation are summarized in note 28. The actuarial gains/losses are fully recognized in the year in which they arise. ii) Approved contributory provident fund for all employees for which contributions are charged to the income for the year. An amount of Rs. 25.476 million (2002: 21.684 million) has been charged to the profit and loss account during the year in respect of this scheme.

4. TANGIBLE FIXED ASSETS

These are stated at cost less accumulated depreciation except freehold land, capital work in process and items in transit, which are stated at cost. Depreciation is charged to profit and loss account using the straight-line method at the following rates: Freehold buildings, leasehold land and buildings

And private railway sidings 3% Plant and machinery 7% Air conditioners included in plant and machinery 25% Office and household machinery and equipment 20% to 25% Furniture and fittings 10% to 20% Vehicles 25% Repairs and maintenance costs are charged to profit and loss account in the year in which they are incurred. Major renewals and improvements are capitalized. Profits and losses on disposal of fixed assets are taken to profit and loss account.

6.STOCK
These are stated at the lower of net realizable value of and moving average cost. Items in transit are valued at cost comprising invoice values plus other charges paid thereon. Net realizable value signifies the estimated selling price in the ordinary course of business less cost of completion and costs necessarily to be incurred to make the sale

7. STORES and SPARES

These are valued at moving average cost less allowance for the obsolete items. Items in transit are valued at cost comprising invoice value and other charges paid thereon.

8. FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are recorded in the books at the rates of exchange prevailing on the date of transaction. Assets and liabilities in foreign currencies are stated in rupees at the rates of exchange ruling on the balance sheet date or at rates of exchange fixed under contractual arrangements, where lower. All exchange differences are included in the profit and loss account

9. REVENUE RECOGNITION
Sales are recorded on dispatch of goods to customers.

10. BORROWING COST

All borrowing costs are expensed as incurred.

12.FOREIGN CURRENCY TRANSECTIONS

Transactions in foreign currencies are recorded in the books at the rates of exchange prevailing on the date of the transaction. Assets and liabilities of foreign currencies are stated in rupees at the rates of exchange ruling on the balance sheet date. All exchange differences are included in the profit and loss account.

13.RELATED PARTY TRANSACTIONS

All transactions with related parties are conducted on an arms length basis using pricing methods, as admissible. The prices agreed between associated companies for sales of material and manufactured goods are based on normal commercial practices, which would obtain between independent businesses. Intra Group charges for sale and purchase of goods and services and royalties are also based on the principles of normal commercial practice between independent businesses.

14.FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognized when the company becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are initially recognized at cost, which is the fair value of the consideration given and received. These are subsequently measured at fair value, amortized cost or cost, as the case may be.

15.CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash in hand, cash with banks and short-term finances under mark-up arrangements with banks.

PAKISTAN TOBACCO COMPANY LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED SEPTEMBER30
Particulars TURNOVER 2001 19,879,79 5 17,896,36 6 1,983,429 2002 20,555,50 0 18,050,67 4 2,504,674 2003 22,572,24 7 19,700,70 6 2,871,541 2004 22,039,48 8 18,556,86 7 3,482,621 2005 26,511,738

Less cost of sale

21,982,134

Gross profit

4,529,604

Less. Marketing expenses -983,747 Less. Administration expenses -356,362 Operating profit Add. Other income Less. Other expenses Less. Financial charges -241,151 Loss/Profit. Before tax Taxation. Current- for the year Loss/Profit. After Taxation -1,517 309,638 293,614 390,812 760,145 352,187 -195,566 729,941 -91,955 614,695 -36,542 1,056,039 -45,351 2,082,064 643,320 6,632 -381,151 952,062 11,863 -418,776 1,010,268 6,717 -595,637 1,444,628 14,590 -573,285 2,377,663 34,417 -1,171,613 -1,442,497 -1,442,356 -1,578,656

-56,614

-38,418

-310,335

-366,637

-284,665

353,704

420,303

321,081

665,227

1,321,919

(Loss) per share

1.38

1.65

1.26

2.6

5.17

PAKISTAN TOBACCO COMPANY BALANCE SHEET FOR THE YEAR ENDED DECEMBER 31,
PARTICULARS Tangible Fixed Assets 2001 2,815,06 8 2002 3,013,21 2 2003 3,410,88 8 2004 3,564,40 7 2005 3,798,190

Deferred Income Tax

149,077

-------

------

-------

------

Investment in Subsidiary company

5,000

5,000

5,000

5,000

5,000

Long Term Loans

9,310

9,996

16,481

16,324

17,782

Long Term Deposit and Repayments

21,128

14,898

6,934

4,433

11,365

Total Fixed Assets

2,999,58 3

3,043,10 6

3,439,30 3

3,590,16 4

3,832,337

Stocks

3,322,75 3

3,219,54 1

3,227,50 3

3,074,05 2

3,780,931

Stores and Spares

140,813

147,177

127,381

121,464

125,232

Trade Debts

48,710

93,086

145,749

12,486

2,894

Loans and Advances

32,725

21,701

62,826

32,273

32,676

Prepayments and other Receivables

144,363

113,902

247,925

155,129

136,778

Cash and Bank Balance

69,063

31,894

48,069

39,197

57,605

Total Current Assets

3,758,42 7 6,758,01 0 1,869,30 0

3,627,30 1 6,670,40 7 1,858,50 3

3,859,45 3 7,298,75 6 2,284,00 1

3,434,60 1 7,024,76 5 2,140,88 8

4,136,116

Total Assets

7,968,453

Creditors, Accrued and other Liabilities

3,203,704

Short Term Finances

1,747,11 5

1,129,37 4

1,335,53 9

996,579

400,662

Current Portion and Long Term Loans

200,000

370,000

200,000

Dividend Payable

---------

204,395

---------

Proposed Dividend Total Current Liabilities

--------3,816,41 5

--------3,562,27 2

255,494 4,075,03 4

3,137,46 7

3,604,366

Finance By Share Capital Authorized capital 300,000,000 ordinary share of Rs. 10 each Issued, Subscribe and paid up capital

3,000,00 0 2,554,93 8

3,000,00 0 2,554,93 8

3,000,00 0 2,554,93 8

3,000,00 0 2,554,93 8

3,000,000

2,554,938

Revenue Reserve

---------

---------

---------

707885

1084476

Unappropriated Profit/Loss

16,657

232,565

258,152

232,565

258,152

Shareholder Equity

2,571,59 5

2,787,50 3

2,853,09 0

3,262,82 3

3,639,414

Long Term Loans

370,000

200,000

---------

200,000

---------

Deferred Taxation Total Shareholders Equity

---------

120,632

370,632

624,475

724,673

2,941,59 5

3,108,13 5

3,223,72 2

3,887,29 8

4,364,087

Total Liabilities and Shareholder Equity

6,758,01 0

6,670,40 7

7,298,75 6

9,807,87 4

10,903,122

COMMON SIZE ANALYSIS

Common size analysis expresses in percentages. The use of percentages is preferable to the use of absolute amounts. Two type of analysis are performed in the purpose. VERTICLE ANALYSIS HORIONTAL ANALYSIS In both these type we analyze firms past five years financial statements quantitatively as well as qualitatively wit each and every aspects. VERTICAL ANALYSIS In this type of analysis we compare the amount of each financial statements items with a base amount select from the same year HORIZONTAL ANALYSIS In this type of common size analysis we compare each amount with a base year amount selected for a base year. As already mentioned that in a vertical analysis we compare each amount with a base year selected from the same year. In the vertical analysis of income statement of my company Pakistan Tobacco Company we select the base amount of Sale of that particular year. In case of balance sheet we select the amount of Total Assets as a base year.

PAKISTAN TOBACCO COMPANY VERTICAL ANALYSIS OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON DEC, 31
Particulars TURNOVER Less cost of sale Gross profit 2001 100% 90.02% 9.98% 2002 100% 87.81% 12.19% 2003 100% 87.28% 12.72% 2004 100% 84.20% 15.80% 2005 100% 82.91% 17.09%

Less. Marketing expenses

4.95%

5.70%

6.39%

6.54%

5.95%

Less. Administration expenses Operating profit Add. Other income

1.79 3.24% 0.03%

1.85% 4.63% 0.06%

1.85% 4.48% 0.02%

2.70% 6.55% 0.07%

2.16% 8.97% 0.13%

Less. Other expenses Less. Financial charges Loss/Profit. Before tax Taxation Loss/Profit. After Taxation

0.29% 1.21% 1.77% 0.01% 1.78%

0.19% 0.95% 3.55% 1.51% 2.04%

1.37% 0.40% 2.73% 1.30% 1.43%

1.66% 0.17% 4.79% 1.77% 3.02%

1.07% 0.17% 7.85% 2.87% 4.99%

COST OF GOODS SOLD

92.00% 90.00% 88.00% 86.00% 84.00% 82.00% 80.00% 78.00% 2001 2002 2003 2004 2005 Series2

GROSS PROFIT
18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2001 2002 2003 2004 2005

Series2

OPERATING PROFIT
9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2001 2002 2003 2004 2005

Series2

NET PROFIT

5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2001 2002 2003 2004 2005 Series2

PAKISTAN TOBACCO COMPANY VERTICAL ANALYSIS OF BALANCE SHEET FOR THE YEAR ENDED ON DECEMBER 31,
PARTICULARS Tangible Fixed Assets Deferred Income Tax Investment in Subsidiary company Long Term Loans Long Term Deposit and Repayments Total Fixed Assets Current Assets Stocks Stores and Spares Trade Debts Loans and Advances Prepayments and other Receivables Cash and Bank 2001 41.66% 2.21% 0.07% 2002 45.17% ----0.07% 2003 46.73% -----0.07% 2004 50.74% ----0.07% 2005 47.67% -----0.06%

0.14% 0.31%

0.15% 0.22%

0.23% 0.1

0.23% 0.06%

0.22% 0.14%

44.39%

45.61%

47.13%

51.11%

48.09%

49.17% 2.08% 0.72% 0.48% 2.14%

48.27% 2.21% 1.40% 0.33% 1.71%

44.22% 1.75% 2% 0.86% 3.38%

43.76% 1.75% 0.18% 0.46% 2.21%

47.45% 1.73% 0.04% 0.41% 1.72%

1.02%

0.48%

0.66%

0.56%

0.72%

Balance Total Current Assets Total Assets Current Liabilities Creditors, Accrued and other Liabilities Short Term Finances Current Portion and Long Term Loans Dividend Payable Proposed Dividend Total Liabilities Current 56.47% 53.40% 55.83% 31.99% 33.06% 55.61% 100% 27.66% 54.40% 100% 27.86% 52.87% 100% 31.29% 48.89% 100% 21.83% 51.91% 100% 29.38%

25.85% 2.96% ----------

16.93% 5.55% 3.06% -----

18.30% 2.74% ----3.50%

10.16%

3.67%

Finance By Share Capital Authorized capital 300,000,000 ordinary share of Rs. 10 each Issued, Subscribe and paid up capital 37.80% 38.30% 35% 26.05% 23.43%

Long Term Loans Deferred Taxation Total Shareholders Equity Total Liabilities and Shareholder Equity

5.47 ----43.52% 100%

3% 1.81% 46.59% 100%

-----5.08% 44.16% 100% 6.37% 39.63% 100% 6.65% 40.03% 100%

VERTICAL ANALYSIS OF BALANCE SHEET In vertical analysis of balance sheet we compare each amount with the total assets of the particular year. Through this analysis we analyze whether company utilize its resources effectively and efficiently or not. This analysis is based on qualitatively as well as quantitatively. TOTAL FIXED ASSETS

52.00% 50.00% 48.00% 46.00% 44.00% 42.00% 40.00% 2001 2002 2003 2004 2005 Series2

TOTAL CURRENT ASSETS

56.00% 54.00% 52.00% 50.00% 48.00% 46.00% 44.00% 2001 2002 2003 2004 2005 Series2

TOTAL CURRENT LIABILITIES

60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2001 2002 2003 2004 2005 Series2

 TOTAL EQUITY
48.00% 46.00% 44.00% 42.00% 40.00% 38.00% 36.00% 2001 2002 2003 2004 2005 Series2

HORIZONTAL ANLYSIS
There are two methods for doing horizontal analysis of the financial statements of any company. Fixed base method Change base method As I already described that the horizontal analysis tells the companys performance, how the management efficiently utilizes the firms resources (in case of profit & loss) and the sources of and obligations of the form that whether these are increasing or decreasing (in case of balance sheet) Fixed base method In case of fixed base method we select a base amount of a year and than compare all the amounts of other year with that one without changing it. Change base method Under this method we compare only two years by taking one year as base. This base will change in the next year. I am using the fixed base method for my analysis by taking the 1999 as the base year and compare all the next years performance with this year.

PAKISTAN TOBACCO COMPANY HORIZONTAL ANALYSIS OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON DECEMBER 31
Particulars TURNOVER 2001 19,879,79 5 17,896,36 6 1,983,429 2002 103.40% 2003 113.54% 2004 110.86% 2005 133.36%

Less cost of sale

100.86%

110.08%

103.69%

122.83%

Gross profit

126.28%

144.78%

175.59%

228.37%

Less. Marketing expenses -983,747 Less. Administration expenses -356,362 Operating profit Add. Other income Less. Other expenses 643,320 6,632 106.96% 147.99% 178.88% 117.51% 157.04% 101.28% 167.14% 224.56% 219.99% 160.87% 369.59% 518.95% 119.10% 146.63% 146.62% 160.47%

-56,614

67.86%

548.16%

647.61%

502.82%

Less. Financial charges -241,151 Loss/Profit. Before tax Taxation. Current- for the year -1,517 20411.21 % 118.83% 19354.91 % 90.78% 25762.16 % 188.07% 50108.44% 352,187 81.10% 207.26% 38.13% 174.54% 15.15% 299.85% 18.81% 591.18%

Loss/Profit. After Taxation

353,704

198.72%

HORIZONATAL ANALYSIS OF PROFIT AND LOSS ACCOUNT SALES

140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 2001 2002 2003 2004 2005 Series2

COST OF GOODS SOLD

140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 2001 2002 2003 2004 2005 Series2

GROSS PROFIT
250.00% 200.00% 150.00% 100.00% 50.00% 0.00% 2001 2002 2003 2004 2005 Series2

OPERATING PROFIT
400.00% 350.00% 300.00% 250.00% 200.00% 150.00% 100.00% 50.00% 0.00% 2001 2002 2003 2004 2005 Series2

PROFIT BEFORE TAXATION

600.00% 500.00% 400.00% 300.00% 200.00% 100.00% 0.00% 2001 2002 2003 2004 2005 Series2

PROFIT AFTER TAXATION

200.00% 150.00% 100.00% 50.00% 0.00% 2001 2002 2003 2004 2005

Series2

PAKISTAN TOBACCO COMPANY HORIZONTAL ANALYSIS OF BALANCE SHEET FOR THE YEAR ENDED ON DECEMBER 31,
PARTICULARS 2001 2002 2003 2004 2005

Tangible Fixed Assets

100.00%

107.04%

121.17%

126.62%

134.92%

Deferred Income Tax

100.00%

------

-------

------

Investment in Subsidiary company

100.00%

100.00%

100.00%

100.00%

100.00%

Long Term Loans

100.00%

107.37%

177.02%

175.34%

191.00%

Long Term Deposit and Repayments

100.00%

70.51%

32.82%

20.98%

53.79%

Total Fixed Assets

100.00%

101.45%

114.66%

119.69%

127.76%

Stocks

100.00%

96.89%

97.13%

92.52%

113.79%

Stores and Spares

100.00%

104.52%

90.46%

86.26%

88.93%

Trade Debts

100.00%

191.10%

299.22%

25.63%

5.94%

Loans and Advances

100.00%

66.31%

191.98%

98.62%

99.85%

Prepayments and other Receivables

100.00%

78.90%

171.74%

107.46%

94.75%

Cash and Bank Balance

100.00%

46.18%

69.60%

56.76%

83.41%

Total Current Assets

100.00%

96.51%

102.69%

91.38%

110.05%

Total Assets

100.00%

98.70%

108.00%

103.95%

117.91%

Creditors, Accrued and other Liabilities

100.00%

99.42%

122.18%

114.53%

171.39%

Short Term Finances

100.00%

64.64%

76.44%

57.04%

22.93%

Current Portion and Long Term Loans

100.00%

185.00%

100.00%

0.00%

0.00%

Dividend Payable

---------

---------

Proposed Dividend Total Current Liabilities

--------100.00%

93.34%

106.78%

82.21%

94.44%

Finance By Share Capital

Authorized capital 300,000,000 ordinary share of Rs. 10 each 100.00% 100.00% 100.00% 100.00% 100.00%

Issued, Subscribe and paid up capital

100.00%

100.00%

100.00%

100.00%

100.00%

Revenue Reserve

---------

Unappropriated Profit/Loss

100.00%

1396.20%

1549.81%

1396.20%

1549.81%

Shareholder Equity

100.00%

108.40%

110.95%

126.88%

141.52%

Long Term Loans

100.00%

54.05%

54.05%

Deferred Taxation Total Shareholders Equity

---------

100.00% Total Liabilities and Shareholder Equity 100.00%

105.66% 98.70%

109.59% 108.00%

132.15% 145.13%

148.36% 161.34%

HORIZONTAL ANALYSIS OF BALANCE SHEET

TANGIBLE FIXED ASSETS
140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 2001 2002 2003 2004 2005 Series2

 TOTAL CURRENT ASSETS

120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 2001 2002 2003 2004 2005 Series2

TOTAL CURRENT LIABILITY

120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 2001 2002 2003 2004 2005 Series2

TOTAL LAIBILITY AND SHAREOLDER EQUITY

180.00% 160.00% 140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 2001 2002 2003 2004 2005

Series2

RATIO ANALYSIS
Ratio analysis applied for describing the financial feasibility of a firm. To calculate the ratio is not much difficult as to interpret these calculations. For interpreting such calculations there are two types of analysis, which can be performed; Cross Sectional Analysis Time Series Analysis In time series analysis we compare the calculated ratios of a specific company with the relevant industry average or with its major competitor. In time series analysis we compare the ratios of that particular company with its past years.

The analysis of Pakistan Tobacco Company that I had performed is time series analysis because up to my struggle I cannot obtain the proper information about the industry average of Tobacco Industry. Under ratio analysis I analyze the Pakistan Tobacco Company In the following prospects;

GRROSS PROFIT G.P/SALE OPERATING PROFIT Operating profit/Sale NET PROFIT Net Profit/Sale CURRENT RATIO Current Assets/Current Liability INVENTORY TURNOVER RATIO CGS/Average Inventory AVERAGE AGE OF INVENTORY 360/Inventory Turnover ACID TEST RATIO C.A.Inventory/Current Liability A/R TURNOVER RATIO Credit Sale/Average A/R A/P TURNOVER RATIO Credit purchase/Average A/P APP 360/A/P Turnover WORKING CAPITAL Current AssetsCurrent Liability CASH RATIO Cash + Mkt. Securities/Current Liability FIXED ASSETS TURNOVER Net Sale/Net Fixed Assets TOTAL ASSETS TURNOVER Net Sale/Total Asset DEBT RATIO Total Debt/Total Assets INTEREST COVERAGE RATIO EBIT/Interest Expenses

Financial Ratios
PARTICULARS GROSS ROFIT OPERATING PROFIT NET PROFIT/LOSS CURRENT RATIO 2001 10% 3.24% 1.78% 1 2002 12.20% 4.63% 2.04% 1 2003 12.70% 4.48% 1.42% 1 2004 15.00% 6.50% 3.00% 1 2005 14.00% 8.00% 4.90% 1

INVENTORY TURNOVER RATIO 5.2 AVE. AGE OF INV. ACID TEST RATIO A/R TURNOVER RATIO A/P TURNOVER RATIO AVE. PAYMENT PERIOD CASH RATIO FIXED ASSET TURNOVER TOTAL ASSETS TURNOVER DEBT RATIO INTEREST COVERAGE MARKET VALUE /SHARE DEBT TO EQUITY RATIO BREAK UP VALUE PRICE EARNING RATIO DIVIDEND PER SHARE EARNING OR LOSS PER SHARE AFTER TAX 69.23 0.03 657.9 5.85 62 0.018 7.1 2.9 0.62 2.5 10.5 0.9 10.07 7.6 ----1.38 66.67 0.03 289.93 4.9 73 0.028 6.8 3.1 0.58 4.7 23.8 0.6 10.91 14.5 1.65 1.65 5.4 61.01 0.04 189 2.11 170 0.011 6.6 3.1 0.61 7.7 27 0.5 12.17 21.4 1.26 1.26 7.1 3.6 29.9 61.5 0.3 12.77 23.6 2 2.6 8.1 3.8 46.9 68.5 0.3 14.24 13.3 3.7 5.17 5.9 7 6.1

GROSS PROFIT
16% 14% 12% 10% 8% 6% 4% 2% 0% 2001 2002 2003 2004 2005 Series2

OPERATING PROFIT

8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2001 2002 2003 2004 2005 Series2

NET PROFIT
5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2001 2002 2003 2004 2005 Series2

CURRENT RATIO
1 0.8 0.6 0.4 0.2 0 2001 2002 2003 2004 2005 Series2

INVENTORY TURNOVER RATIO

7 6 5 4 3 2 1 0 2001 2002 2003 2004 2005 Series2

ACID TEST RATIO

0.04 0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 2001 2002 2003 2004 2005 Series2

ACCOUNT RECEIVABLE TURNOVER

ACCOUNT PAYABLE TURNOVER

 FIXED ASSETS TURNOVER

9 8 7 6 5 4 3 2 1 0 2001 2002 2003 2004 2005

Series2

TOTAL ASSETS TURNOVER

4 3.5 3 2.5 2 1.5 1 0.5 0 2001 2002 2003 2004 2005 Series2

INTEREST COVERAGE RATIO

50 40 30 20 10 0 2001 2002 2003 2004 2005 Series2

MARKET VALUE PER SHARE

70 60 50 40 30 20 10 0 2001 2002 2003 2004 2005 Series2

DEBT TO EQUITY RATIO

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2001 2002 2003 2004 2005

Series2

DIVIDEND PER SHARE

4 3.5 3 2.5 2 1.5 1 0.5 0 2001 2002 2003 2004 2005 Series2

EARNING OR LOSS PER SHARE AFTER TAX

6 5 4 3 2 1 0 2001 2002 2003 2004 2005 Series2