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KPMG Taseer Hadi & Co

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KPMG Taseer Hadi & Co. as the Auditors of the Company for the year 2019, subject to Shareholders' approval at the next AGM to be held on April 09, 2019. Holding Company Through its wholly owned subsidiary Conopco Inc., USA, Unilever N.V., Netherlands, has a holding of 76.5% of the shares in UPFL, and is the Company's ultimate parent company. Subsequent Events No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year and the date of this report. Reserve Appropriations Share Capital Total Issued, subscribed and paid up capital Reserves Capital Revenue Share Special General Un- Premium appropriated Profit (Rupees in thousand) 61,576 24,630 628 138 94,498 181,470 Balance as at January 01. 2018 Total comprehensive income for the year ended 31 December 2018 - Profit for the year ended December 31, 2018 - Other comprehensive income for the year ended December 31, 2018 1.731,570 1,731,570 27 27 1.731,597 (646,550) 1.731,597 (646,550) (280,278) (280,278) First Interim dividend for the year ended December 31, 2018 @ Rs. 105 per share Second Interim dividend for the year ended December 31, 2018 @ Rs. 44 per share Third Interim dividend for the year ended December 31, 2018 @ Rs. 55 per share Issue of right shares Balance as at December 31, 2018 (350,347) (350,347) 2,123 1.271.869 1,273,992 63,699 1,296,499 628 138 548,920 1.909,884 Statement of Financial Position Horizontal Analysis for 6 years 6 IRs. in thousand 2018. 18 V.17 Rs. 56 2017 17 Vs. 16 Rs 4 2016 16 Vs.15 201515 Vs.14 Rs. 9 Rs. 9 2014 14 Vs.13 Ra 2013 13 V.12 Ro 4 EQUITY AND LIABILITIES Capital and reserves Share capital Reserves 63,699 3.45 1,846,195 1,439.85 1,909,854 95245 61,376 119.894 181470 61,376 1,743342 1.804,918 193.12) 189.93) 61,376 7.811,619,010 7.53 1,670,394 85.96 61275 721 822 783398 124.02 114.27 61.376 388.133 449,729 74.19 124.511 Non-current liabilities Staff retirement benets Deferred taxation 14,000 141,00 155,590 49.81 30.521 127.001 9.343 202.783 213,130 281.12 14.43) 11.191 2,452 136.911 213,342 10.30 219.494 12 24 3.691 214.951 220,544 313.70 93.88 96.90 1 369 110.870 112239 162_371 3.04 0.28 4.320 107.594 111.922 10.32 4.39 4.61 Current liabilities Trade and other payables Provisions Accrued interest/mark-up Taxation-net Sales tax payable Short term borrowings 2,869,577 53,536 33,391 15.00! 3.018467 111.741 60459 48529 2.289 24.49 5.27 100.00 2424,690 37.423 3.24 2,348,313 31.90 37,939 100.000 1,119 16.76] 74.09 47.82 2,518.817 21.791 737 46.75 36.69 112.261 [100.00 1,716,400 4149 15,942 112.33 863 13.30 6,160 147.31) - 100.00 25,161 161.221 1,764333 3843 2,326,186 13.99 938,994 3,871,490 5,939,72 1100.00 21,193 60.851 382,741 5.68 3,686,348 45.53 4.080.948 181.60 100.00 41.92 11.1.6) 115,182 135.97 48,812 (100.000 81.576 2,597,483 3.13 2,318,053 4,618,099 4.55 4,417.293 100.00 182.13 12.031 27.43 28.950 2,570,313 3,465,932 15.06 43.49 49.00 ASSETS Non-current assets Property, plant and equipment Intangible assets Long term loans and advances Long term deposit and prepayment Staff retirement benefits 39.69 14.41) 13.10 75.79 37.13 2,783,549 81.639 1.992,974 81.637 13.203 2,084,856 BI 637 12.302 2.605 218 2,040,339 81637 187.41) 37.749 100.00 1,803,992 81.637 19.859 1,020.414 81 637 18.338 11,338 11142 13.791 7.34 [100.000 17.441 114.141 100.00 2,900 [100.00 13.36 1,776 1,905 260 151.91 69.91 700 1.121.314 179.521 48.14 2,279,504 37.92 2.087.816 1.00 2,139,723 14.29) 2.181.400 22.483 49,055 963,034 509,000 13.107 38.39 33.446 14.44 1,007,742 16.07 438,767 7.50 12.184 12.90 3.12 45.32 148.94 Current assets Stores and spares Stock in trade Trade dents Loans and advances Trade deposits and short term prepayments Other receivables Taxation-net Cash and bank balances Sales tax refundable 31.429 958,171 301.929 23.854 39.79 10.12 44.42 37.21 959.296 209,054 13.180 112.461 12.98 231 3.3a 25.682 840.037 204 351 15.33 42.91 11.79 [4.67 22.229 594.100 182,797 16,863 30.89 120.831 20.11 32.98 16,077 30,484 49.212 24.26 173.481 19.843 34,938 47,136 263,569 1,114,616 62,225 156.32) 143.65 455 24 220.76 100.00 84,366 19,345 47323 347.358 14.20 98.88 186.09) 149.99) 74,049 10.815 341.659 694799 45.58 164.96 19.36) 17.11 30.868 376,951 39332 (15.95 40.33 116.84 332.95 [100.00 60.067 31.901 173.843 137.024 42.690 22.06 161.36 100.00 131.71] 1.36 283.754 3606 40.34 100.00 3,059,468 5,938,772 53.50 45.53 1.999,132 4080,543 118.20 (11.63 2.436,693 4.518,005 7.93 4.55 2,237,368 4,417,293 1,560,692 3,465.932 29.33 49.00 1,204.872 2,326,186 3.30) 15.99 21.43 "This includes Unclaimed & Unpaid dividends Statement of Financial Position Analysis - Equity & Liabilities 2018 2012 2016 Equity Non-current Liability Current Liability 2015 2014 2013 500 1,000 1,500 2,000 3,000 3,300 4,000 4,300 3,000 6,000 2,300 Rs.in Million Statement of Financial Position Vertical Analysis for 6 years Rs. in thousand) 2017 2018 Rs. 2016 56 2015 94 2014 % 2012 9 % R: Rs Rs. Rs. EQUITY AND LIABILITIES Capital and reserves Share capital Reserves 13.99 1,845,185 1.909.884 1.02 01.09 32.16 61,376 119.994 181.470 1.31 61.376 2.94 1,743,342 4.43 1,804.018 1.33 61,576 35.79 1,517,018 39.00 1,490,094 139 36.61 38.00 61.376 721 822 783.398 1.77 20.83 22.60 61,976 388,133 449,729 2.54 16.69 19.33 Non-current liabilities Staff retirement benefits Deferred taxation 14.000 161,590 355,590 0.24 2.38 2.62 9345 203,785 213.130 0.23 4.99 3.22 213.242 215.694 0.03 4.62 4.67 5,691 214,990 220,644 0.13 4.89 3.00 1.369 110.870 112.239 0.04 3.20 3.34 4,328 107,594 111,922 0.19 4.62 4.81 Current liabilities 2.867,599 53.536 13.391 48.25 0.90 0.23 3,013,467 60.699 2.288 73.96 149 0.06 2,434,678 37.622 32.50 2,348,313 1.26 33,933 1,119 33.16 0.85 0.02 2,313.819 21,791 757 72.69 0.63 0.02 Trade and other payables Provisions Accrued interest/mark-up Taxation-net Sales tax payable Short term borrowings 1,716,409 13,942 363 6,160 73.79 0.69 0.04 0.26 115,182 1.11 938,994 3,873.498 5,938,992 15.81 65.22 21,193 583,741 3,684348 4,080.948 0.32 14.30 90.33 100.00 2.49 48,812 81,676 36.25 2,318,098 100.00 4,417,293 2,397 488 4,618,093 1.85 37.00 100.00 33.990 2,370313 3,465,952 0.84 74.16 100.00 23,161 1,764,335 2326,186 1.08 75.86 100.00 100.00 ASSETS Non-current assets 46.19 Property, plant and equipment Intangible assets Long term loans and advances Long term deposit and prepayment Staff retirement benefits 2.783,549 31.639 11.338 2.900 1.85 46.87 1.32 0.19 UDS 1,992,974 81.437 13.203 48.84 2.00 0.32 2,084,856 21.627 12.302 2.500 45.15 2,040,339 1.77 21,837 0.23 37,749 0.03 1,803,992 81.437 17.850 52.05 2.36 0.32 1,020,414 31,637 18,338 43.86 3.31 0.80 0.85 0.04 0.03 1,776 1.905,260 2,979,504 703 1.121,314 48.48 2,087,816 SL. 18 2,181,400 47.24 2,139,723 48.89 48.20 49.055 963.034 509 280 12.107 0.83 16.22 8.58 0.22 Current assets Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Taxation-net Cash and bank balances Sales tax refundable 33.446 1,007,742 431767 12.184 0.82 24.69 10.73 0.30 31429 938.171 301.929 23 B64 0.68 20.75 6.54 0.32 22,493 999,276 209,064 13,180 0.31 21.72 4.73 25.682 549.037 204331 16.077 0.74 24.30 3.90 22,229 394,105 182,797 16,865 0.96 25.34 7.86 0.34 0.46 0.73 74 49 10.315 49,212 19,843 2.12 0.84 36.938 47,136 263,869 1.114,816 62.225 3,059 460 5.938,992 0.62 0.29 4.46 18.77 1.05 51.52 100.00 84366 19,346 47.323 347,358 2.07 0.47 1.17 8.32 1.60 0.23 7.40 13.04 341.159 594,779 30,484 30,868 376,961 393,292 1.14 60.067 0.71 31.901 3.33 173.843 13.43 137 024 42.690 31.11 1,580.092 100.00 3,465,952 1.73 1.30 3.02 3.93 1.23 43.03 100.00 283,734 36,067 1,204,872 2.326,186 12.20 1.50 51.80 100.00 L 1,992.132 4,000,948 48.84 2,436693 100.00 4,618,098 32.96 2,237,568 100.00 4,417,293 . Statement of Financial Position Analysis - Assets 2018 2017 2016 Year Property, plant and equipment Other Non-current assets Current assets 2013 2014 2013 300 1,000 1,300 2.000 3,000 3.300 4,000 4,500 3.000 6,000 2.300 Rs.in Million Profit or Loss Account and Other Comprehensive Income Horizontal Analysis for 6 years 2018 Rs. 19 Vs.17 % 2017 Rs 17 V8.16 46 2016 Rs. 16 Vs.15 16 2015 Rs 15 V3.14 2014 Rs. 14 Vs.13 % IRs.in thousandl 2013 13 V..12 Rs 16 Sales 11,698,430 10.73 10,745,260 13.50 9.466,836 10.45 8,571,097 10.07 7,787,059 11.90 6,956,846 18.73 Oost of sales 16,539,088) 10.61 15.911.696] 12 29 15,264,6211 11.10 14.736,8041 7.04 14,426,989) 9.27 (4,051,3021 11.59 5,359,342 10.88 4,833,564 15.02 4,202,215 9.65 3,832,293 14.05 3,360,070 15.56 2.907,544 30.36 12.682.658) 1.26 12,649,320] 18.35 12,238,606) 14.56 11.954,022) 35.13 11.445,9781 17.10 [1,234,866) 24.25 Gross profit Distribution cost Administrative expenses Other operating expenses 1315,3921 4.17 (302.756] 95.15 (155,1371 0.54 (154.2981 4.011 (160,740) 2.73 (156,472) 5.09 1142,016) 3.26 (137,533) 8.65 1126,5871 0.97 1125,3721 11.45] (127,212) 9.80 [115,857) 42.48 Other income 342,115 66.72 202,771 65.49 120,343 16.64 103,174 19.16) 113,582 56.56 72,549 11.72 Profit from operations 2,561,391 31.57 1,946,726 8.02 1,802,226 5.90 1,701,775 12.18) 1.739,722 18.12 1.472.898 36.35 Finance costs (69.6751 167.77 (26.0201 (24.51) (34.470) 14.49) 136,090 (27.52] 149,793) 450.62 19.043) 12.11 Profit before taxation 2,491,716 29.73 1,920,706 8.65 1,767,756 6.13 1,665,685 (1.43) 1,689,929 15.44 1.463,855 36.53 760,146 34.53 (565,033) 14.92 1491,6691 13.40 1433,5571 (16.321 [518,106) 12.85 [459.100) 33.77 Taxation Profit after taxation 1.731,570 27.73 1,355,673 6.24 1,276,089 3.57 1,232,128 5.15 1.171.821 16.63 1,004,755 37.83 27 (100.541 [4.9921 [427.34 1.525 (134.49) 14.421 (538.591 1,008 (185.79) [1,175) (230.85) other comprehensive income/loss) Totalcomprehensive income 1,731,597 28.20 1,350,681 5.72 1,277,614 4.07 1,227,707 4.68 1,172,829 16.86 1,003,580 37.50 Vertical Analysis for 6 years Rs. in thousand 2018 2017 2016 2015 2014 2013 Rs. Rs. % % Rs. 96 Ra 1 Rs R Rs. Sales 11,898,430 100.00 10.745.260 100.00 9,466,836 100.00 8,571,097 100.00 7.787,059 100.00 6,958,846 100.00 Oost of sales 16,639,088) 154.96) (5.911,696) (55.02 15,264,621] 155.61) 14.738.804 (56.291 14426,989 156,85 14,051,302) 58.22 Gross profit 5,359,342 45.04 4,833,564 44.98 4,202,215 4439 3,832.293 4471 3,360,070 43.15 2,907,544 41.78 12,682,6581 122.55) 12.649,320 (24.66) 12,238,606) 23.651 11,954,0221 [22.80 (1.445.978) (18.57) 11.234,866) (17.75 (315,3921 12.65) 1302.756 12.82 1155,137) 11.641 (154.298 [1.80 1160,740) (2.061 (156,472) 12.25 1142,0161 11.191 (137,533) 11.26 [126,587) 11.34 1125,372) (1.46) [127,212) (1.631 1115,857) 11.66] Distribution cost Administrative expenses Other operating expenses Other income Profit from operations Finance costs 342,115 2.88 202771 1.89 120,343 1.27 103.174 1.20 113,582 1.46 72,549 1.04 2.561,391 21.53 1,946,726 18.12 1,802,228 19.04 1,701,775 19.85 1,739,722 22.34 1.472,898 21.17 169,6751 (0.591 126,0201 10.24 34,470) (0.36) 36,090) (0.42 149,7931 (0.641 19,043 10.13) Profit before taxation 2,491,716 20.94 1.920,706 17.67 1,767,758 18.67 1,665.685 19.43 1,689,929 21.70 1,463,855 21.04 Taxation 1760,146] 16.391 (565,0031 15.261 1491,669) 15.19) 1433,5571 15.06) 1518,108) (6.651 [459,1001 16.60) Profit after taxation 1,731,570 14.55 1,355,673 12.62 1,276,089 13.48 1,232,128 1458 1,171,821 15.05 1,004,755 14.44 27 0.00 14992 10.05 1,525 0.02 14,421) (0.05) 1,006 0.01 11,175) 10.02 Other comprehensive income/lossi Total comprehensive income 1.731,597 14.55 1,350,681 12.57 1,277,614 13.50 1,227,707 1432 1,172829 15.06 1,003,580 14.42 Pattern of Shareholding As at December 31, 2018 Number of Shareholders Shareholdings' Slab Total Shares Held to to to to to to to to ? ? ? ? 680 101 19 15 4 2 2 2 3 2 1 1 1 1 3 1 1 1 1 841 1 101 501 1,001 5,001 10,001 25,001 35,001 45,001 50,001 60,001 65,001 75,001 80,001 95,001 115,001 125,001 135,001 4,875,001 to to to 100 500 1,000 5,000 10,000 15,000 30,000 40,000 50,000 55,000 65,000 70,000 80,000 85,000 100,000 120,000 130,000 140,000 4,880,000 20,487 19,256 11,692 29,148 24,617 25,158 59,751 75,084 145,816 108,096 63,796 69,500 78,524 80,344 296,058 117,786 129,028 139,515 4,876,294 6,369,950 to to to to to to ? ? ?? to to Categories of Shareholders Number of Shareholders Number of Shares Held Percentage 1 4,876,294 76.55 12 396,970 6.23 2 64 0.00 Associated Companies, undertakings and related parties Directors, CEO and their spouse(s) and minor children Public Sector Companies and Corporations Banks, development finance institutions, non-banking finance companies, insurance companies, takaful, modarabas and pension funds General Public a. Local b. Foreign Foreign Companies Others Totals 2 1,107 0.02 806 6 1,093,438 9 17.17 0.00 2 239 0.00 10 1,829 0.03 841 6,369,950 100.00 Shareholders holding 5% or more Shares Held Percentage CONOPCO, INC. 4,876,294 76.55 Pattern of Shareholding Additional Information As at December 31, 2018 Information on shareholding required under reporting framework of Code of Corporate Governance is as follows: Shareholders' Category Number of Number of Shareholders Shares Held il 1 4,876,294 il Associated Companies, undertakings and related parties (name-wise details) CONOPCO, INC Directors, CEO and their spousels and minor children Mr. Kamran Y. Mirza Ms. Shazia Syed Mr. Sohail Hanif Baig Ms. Farheen Salman Amir Mr. Zulfikar Monnoo Mr. Mohammad Adil Monnoo Mr. Kamal Monnoo Mr. Badaruddin F. Vellani Mr. Ali Tariq Mr. Khalid Mansoor Ms. Amna Monnoo D/o Mr. Zulfikar Monnoo Mrs. Sarwat Zulfikar W/o Mr. Zulfikar Monnoo 1 1 1 1.823 1 1 159.173 112.184 118,034 104 1 1 30 5,617 1 Til Public Sector Companies and Corporations NO 64 2. 1,107 in Banks. Development Finance Institutions, Non-Banking Finance Companies, Insurance Companies, Takaful, Modarabas and Pension Funds W Shareholders holding 5% or more voting rights (name-wise details) CONOPCO Inc. 1 4,876.294 Dealings in Shares by Directors, Executives, and their spouses and minor children During January 01, 2018 to December 31, 2018 S.No. Name Acquired during the year -N mint in on 1. 2. 3 4. 5 Mr. Zulfikar Monnoo Mr. Mohammad Adil Monnoo Mr. Kamal Monnoo Mrs. Sarwat Zulfikar W/o Mr. Zulfikar Monnoo Mr. Kamran Y. Mirza Mr. Badaruddin F. Vellani Ms. Amna Monnoo D/o Mr. Zulfikar Monnoo 5,345 15,938 3,974 187 63 4 1 7. Statement of Financial Position As at December 31, 2018 Note 2018 2017 Rupees in thousand ASSETS Non-current assets 6 7 1,992,974 81,637 Property, plant and equipment Intangible assets Long term deposit and prepayment Long term loans and advances 2,783,549 81,637 2,980 11,338 2,879,504 8 13,205 2,087,816 Current assets Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Sales tax refundable Taxation - net Cash and bank balances 9 10 11 12 13 14 49,055 963,034 509,288 13,107 36,938 47,136 62,225 263,869 1,114,816 3,059,468 35,446 1,007,742 438,767 12,184 84,566 19,346 15 47.523 347,558 1.993,132 Total assets 5,938,972 4,080,948 Statement of Financial Position As at December 31, 2018 Note 2018 2017 (Rupees in thousand) EQUITY AND LIABILITIES Share capital and reserves Share capital Reserves 16 17 63,699 1,846,185 1,909,884 61,576 119,894 181,470 LIABILITIES Non-current liabilities Staff retirement benefits Deferred taxation 18 19 14,000 141,590 155,590 9,345 203,785 213,130 Current liabilities 20 Trade and other payables Unpaid dividend Unclaimed dividend Provisions Accrued interest / mark up Sales tax payable Short term borrowings 2,835,390 21,310 10,877 53,536 13,391 21 2,773,124 172,685 72,658 60,659 2,288 21,193 583,741 3,686,348 3,899,478 22 938,994 3,873,498 4,029,088 Total liabilities Total equity and liabilities 5,938,972 4,080,948 Contingency and commitments 23 The annexed notes 1 to 43 form an integral part of these financial statements. Statement Profit or Loss and Other Comprehensive Income For the year ended December 31, 2018 Note 2018 2017 - (Rupees in thousand) Sales 24 11,898,430 10,745,260 Cost of sales 25 16,539,088) (5,911,696) Gross profit 5,359,342 4,833,564 26 (2,682,6581 (2,649,320) 27 (315,392) (302,756) Distribution cost Administrative expenses Other operating expenses Other income 28 (142,016) [137,533) 202,771 29 342,115 2,561,391 1,946,726 Finance costs 30 169,675) (26,020) Profit before taxation 2.491,716 1,920,706 Taxation 31 1760,146) (565,033) Profit after taxation 1,731,570 1,355,673 Other comprehensive income: Items that will not be reclassified to Profit or Loss Gain /(Loss) on remeasurements of post employment defined benefit obligations Impact of deferred tax Items that may be subsequently reclassified to Profit or Loss Total comprehensive income 38 (111 27 17,132) 2,140 14.992] 1,731,597 1,350,681 Basic and diluted earnings per share (Rupees) 32 274.48 218.55* The annexed notes 1 to 43 form an integral part of these financial statements. * EPS for prior year is restated for effect of right issue Statement of Cash Flows For the year ended December 31, 2018 2018 2017 (Rupees in thousand) Cash flows from operating activities Profit before taxation 2,491,716 1,920,706 164,417 Adjustments for non-cash charges and other items Depreciation Gain on disposal of property, plant and equipment Provision for staff retirement benefits Provision for impairment of fixed assets Mark-up on short term borrowings Return on savings accounts 169,067 (460) 4,694 89,800 54,278 16,537) 310,842 2,802,558 3,052 22,167 14,263 (17,611) 186,288 2,106,994 Effect on cash flows due to working capital changes Decrease / Increase) in current assets Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Sales tax refundable Other receivables (13,6091 44,708 170,521) (923) 47,628 183,418) (27,790) (103,925) 14,017) 149,571) [136,838) 11,680 (10,517) (8,531) (197,794) Increase / Decrease) in current liabilities Trade and other payables Provisions Sales tax payable 62,266 17,123) 357,240 3,036 193,989) 266,287 2,175,487 55,143 2,753,776 Cash generated from operations (carried forward) Statement of Cash Flows For the year ended December 31, 2018 Note 2018 2017 - (Rupees in thousand) Cash generated from operations (brought forward) 2,753,776 2,175,487 143,175) (1,038,698) Mark-up paid Income tax paid Staff retirement benefits - contributions paid Long term deposit and prepayment Decrease/ Increasel in long term loans Net cash from operating activities (11,975) (278,214) (3,291) 2,605 (903) 1,883,709 12,980) 1,867 1,670,790 Cash flows from investing activities 194,702) Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Return received on savings accounts (1,049,4421 460 6,537 17,611 Net cash used in investing activities (1,042,445) (77,091) Cash flows from financing activities Proceeds from issue of right shares Dividends paid 1,273,992 (1,490,332) (216,3401 412,005 12,737,580) (2,737,580) 1930,962) Net increase / Idecrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year (236,183) 694,779 Cash and cash equivalents at end of the year 40 175,822 (236,183) The annexed notes 1 to 43 form an integral part of these financial statements. Statement of Changes in Equity For the year ended December 31, 2018 TOTAL SHARE CAPITAL RESERVES REVENUE CAPITAL SUD TOTAL Special Issued Share subscribed and Premium paid up capital General Unappropriated Profit (Rupees in thousand) 61,576 24.630 628 138 1.717.946 1,743,342 1.804,918 Balance as at January 1, 2017 Transactions with owners of the Company Final dividend for the year ended December 31, 2016 0 Rs. 278 per share First interim dividend for the year ended December 31, 2017 0 R5 122 per share 11.711,8181 11.711,818) (1.711,818) [751,2291 1751,2291 1751,229) Second Interim dividend for the year ended December 31, 2017 Rs 50 per share (307,8811 (307,8811 (307,881) [203,2011 1203,2011 203,201) Third Interim dividend for the year ended December 31, 2017 to Rs 33 per share Total comprehensive income for the year ended December 31, 2017 1,355,673 1,355,673 1,355,673 - Profit for the year ended December 31, 2017 Other comprehensive income for the year ended December 31, 2017 . 14.9921 14.9921 14.992) ! ! 1,350,681 1,350,681 1,350,681 61,576 24,630 628 138 94 498 119.894 181.470 1646,550) 1646,550 1646,550) 1280,278! 1280,2781 (280,278) Balance as at December 31, 2017 Transactions with owners of the Company First interim dividend for the year ended December 31, 2018 0 Rs 105 per share Second Interim dividend for the year ended December 31, 2018 0 Rs 44 per share Third Interim dividend for the year ended December 31, 2018 Rs 55 per share Issue of right shares (Note 16) Total comprehensive income for the year ended December 31, 2018 -Profit for the year ended December 31, 2018 - Other comprehensive income for the year ended December 31, 2018 1350,347) 1350,347) (350,347) 2,123 1,271,869 1,271,869 1,273.992 - ! 1.731.570 1,731,570 1.731,570 - 27 27 27 - - - 1,731,597 1,731,597 1.731,597 Balance as at December 31, 2018 63,699 1,296,499 628 138 548.920 1,846,185 1.909,884 The annexed notes 1 to 43 form an integral part of these financial statements. 6.2 Capital Work in Progress - at cost 2018 2017 [Rupees in thousand Plant and machinery 852,387 86,465 Civil works 172,179 Advances to suppliers 30,818 1,545 1,055,384 88,010 6.3 Particulars of immovable asset of the Company are as follows Location Address Usage of immovable Covered property area (sq.ft Foods Factory 52KM, Multan Road, Phool Nagar, Manufacturing Plant 717300 sq.feet Tehsil Pattoki, District Kasur, Lahore 7. INTANGIBLE ASSETS Gross carrying value basis 2018 2017 (Rupees in thousand) Cost - Goodwill - Agreement in restraint of trade - Trademark 94,578 139,661 20,000 254,239 (172,6021 81,637 94,578 139,661 20,000 254,239 (172,602) 81,637 Accumulated amortization and impairment Net book value The above represents amount paid for the acquisition of Glaxose-D in 1999 to Glaxo Wellcome Pakistan Limited Inow GlaxoSmithKline Pakistan Limited). The management has assessed the useful life of the intangible as indefinite, since it is expected that the underlying brand, Glaxose-D, will operate in the market for an indefinite period of time. For impairment testing, the estimated recoverable amount has been determined using the discounted cash flows for a period of five years. Key assumptions used in estimation of recoverable amount includes profit forecasts (based on both internal and external market information and past performance) and discount rate. The discount rate used is 10.03% (2017: 7.5%), a pre-tax measure based on government bonds rate. The valuation exceeds the carrying amount sufficiently such that a reasonably possible change to key assumptions is unlikely to result in an impairment of Glaxose-D. LONG TERM LOANS AND ADVANCES - considered good Note 2018 2017 (Rupees in thousand Executives 17,309 20,003 Recoverable within one year 15,971) 16,798) 11,338 13,205 8. 8.1 12 8.1 2018 2017 (Rupees in thousand) Reconciliation of carrying amount of loans to executives: - Opening balances - Disbursements - Repayments 20,003 9,692 (12,3861 17,309 17,549 12.755 (10,301) 20,003 9. 8.2 Loans to employees have been provided to facilitate purchase of houses and vehicles in accordance with the Company's policy which are repayable over a period of five years and are interest free. 8.3 The maximum aggregate amount of loans due from executives at the end of any month during the year was Rs. 21.08 million (2017: Rs. 22.91 million). 2018 2017 STORES AND SPARES (Rupees in thousand! Stores 13,092 26,844 Spares (including in transit Rs. 1.01 million; 2017: Rs.0.76 million) 38,943 10,842 52,035 37,686 Provision for obsolescence 12,980) (2,240) 49,055 35,446 9.1 Stores and spares of Rs. Nit (2017: Rs. Nil) were written off during the year. 2018 2017 (Rupees in thousand) 10. STOCK IN TRADE Raw and packing materials (including in transit Rs. 72.23 million; 2017: Rs. 102.12 million) Provision for obsolescence 606,776 [40,510) 566,266 560,142 (38,642] 521,500 Work in process Finished goods Provision for obsolescence 25,021 431,146 (59,3991 371,747 25,997 484,589 (24,344) 460,245 963,034 1,007,742 10.1 Stock in trade includes Rs.787.74 million (2017: Rs. 460.95 million) held with third parties. 10.2 The Company made a provision of Rs. 101.996 million (2017: Rs. 62.65 million) for obsolescence and has written off inventory of Rs. 65.07 million (2017: Rs. 65.59 million) by utilizing the provision during the year. Note 2018 2017 (Rupees in thousand 11. TRADE DEBTS Trade debts Less: Allowance for impairment of trade debts 11.1 536,952 127,664) 509,288 463,471 (24,704) 438,767 11.1 The Company has charged a provision of Rs. 2.96 million (2017: Rs. 0.90 million) and has not written off any debtors during the year 2017: Nil). 11.2 As of December 31, 2018, trade debts of Rs. 16.09 million (2017: Rs. 126.30 million) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The age analysis of these trade debts is as follows: Note 2018 2017 (Rupees in thousand) Up to 3 months More than 3 months to not later than 6 months More than 6 months 9,272 6,823 16,095 112,516 8,206 5,579 126,301 12. . LOANS AND ADVANCES - considered good 8 5,971 6,798 Current portion of loans to executives Advances to: -executives - other employees - suppliers and others 12.1 864 331 5,941 7,136 13,107 864 155 4,367 5,386 12,184 12.1 The advances to executives are given to meet business expenses and are settled as and when the expenses are incurred. Further, the Company provides advance house rent to its employees. Note 2018 2017 [Rupees in thousand 13. TRADE DEPOSITS AND SHORT TERM PREPAYMENTS Trade deposits Prepayments Prepaid rent 13.1 5,491 28,505 2,942 36,938 8,529 73,326 2,711 84,566 18.2 Plan assets held in trust are governed by local regulations which mainly includes Trust Act, 1882. Companies Act, 2017, Income Tax Rules, 2002, Employees Contributory Funds (Investment in Listed Securities) Regulations, 2018 and Rules under the Trust deed of the Plan. Responsibility for governance of the Plan, including investment decisions and contribution schedules, lies with the Board of Trustees. The Company appoints the trustees and all trustees are employees of the Company 18.3 The latest actuarial valuation of the Fund as at December 31, 2018 was carried out using the Projected Unit Credit Method'. Details of the Fund as per the actuarial valuation are as follows: Note 2018 2017 Funded Gratuity (Rupees in thousand) 18.4 Financial Position reconciliation 18.5 Present value of defined benefit obligation at December 31 Fair value of plan assets at December 31 (40,098) (35,158) 18.6 26,098 25,813 Deficit (14,000) 19,345) 18.5 Movement in the present value of defined benefit obligation 35,158 Balances as at January 1 Benefits paid by the plan Current service costs Interest cost Remeasurement on obligation Balance as at December 31 3,925 2,900 11,885) 40,098 26,269 11,244) 2,985 2,116 5,032 35,158 18.6 25,813 Movement in the fair value of plan assets Fair value of plan assets at January 1 Contributions paid into the plan Benefits paid by the plan Interest income Remeasurement on plan assets Fair value of plan assets at December 31 2,131 11,846) 26,098 23,817 3,291 11,244) 2,049 12,100) 25,813 2018 2017 Funded Gratuity (Rupees in thousand 18.7 Expense recognised in statement of profit or loss Current service costs Net interest cost Expense recognised in statement of profit or loss 3,925 769 2,985 67 4,694 3,052 18.8 Remeasurements recognised in Other Comprehensive Income Experience loss/ Igain) Remeasurement of fair value of plan assets Remeasurements 5,032 11,885) 1,846 (39) 2,100 7,132 18.9 9,345 4,694 Net recognised liability Net liability at January 1 Charge for the year Contribution made during the year to the Fund Remeasurements recognised in Other Comprehensive Income Recognised liability/lasset) as at December 31 2,452 3,052 (3,291) 1391 7,132 14,000 9,345 18.10 Plan assets comprise of following: Government Bonds National Savings Shares Cash at bank Due to the Company Total as at December 31 4,812 11,295 6,330 4,905 11,244 26,098 12,050 8,201 6,544 262 (1,244] 25,813 18.11 Actuarial assumptions Discount rate at December 31 Future salary increases Future pension increases 13.25% 11.25% 0.00% 8.25% 6.25% 0.00% 18.12 Mortality was assumed to be 70% of the EFU[61-66) Table. 18.13 In case of the funded plan, the Company ensures that the investment positions are managed within an asset-Liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the Retirement benefit plan. Within this framework, the Company's ALM objective is to match assets to the retirement benefit obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency. The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the Retirement benefit plan obligations. The Company has not changed the processes used to manage its risks from previous periods. The Company does not use derivatives to manage its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2018 consists of national savings and shares. The Company believes that national saving and shares offer the best returns over the long term with an acceptable level of risk. 18.14 The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the reporting date. The Company's contribution to the gratuity fund in 2019 is expected to amount to Rs: 6.00 million The actuary conducts separate valuations for calculating contribution rates and the Company contributes to the gratuity funds according to the actuary's advice. Expense of the defined benefit plan is calculated by the actuary Figures in this note are based on the latest actuarial valuation carried out as at December 31, 2018 18.15 Sensitivity analysis for actuarial assumptions The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is: Impact on defined benefit obligation Change in Increase in Decrease in assumption assumption assumption (Percentagel (Rupees in thousand) Discount rate at December 31 1.00% 14,541) 5,371 Future salary increases 1.00% 5,424 14,654 There is no significant change in the obligation if life expectancy increases by 1 year. The sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension Liability recognized within the statement of financial position. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period. 18.16 The expected return on plan assets is based on the market expectations and depends upon the asset portfolio of the Fund, at the beginning of the period, for returns over the entire life of related obligation. 18.17 The Company's contributions towards the Rafhan Best Foods Superannuation Fund and Rafhan Best Foods Limited Employees Gratuity Fund for the year ended December 31, 2018 amounted to Rs. Nil (2017: Rs. 3.29 million). 18.18 The weighted average duration of the defined benefit obligation is 14.2 years. Expected maturity analysis of undiscounted retirement benefit plans: Less than Between Between Over Total a year 1-2 years 2-5 years 5 years At December 31, 2018 (Rupees in thousand) Retirement benefit plans 1,861 7,162 24,311 33,536 202 18.19 The Company also operates a couple of defined contribution plans which receive fixed contributions. The expense recognised in the current year in relation to these contributions was Rs. 19.743 million (2017: Rs. 20.579 million). Note 19. DEFERRED TAXATION 2018 2017 [Rupees in thousand) Credit balance arising in respect of: - accelerated tax depreciation allowance -amortisation of intangible assets 182,850 19,268 202.118 237,656 22,965 260,621 Debit balance arising in respect of: - provision for stock in trade - allowance for impairment of trade debts - provision for restructuring - provision for staff retirement benefits - other provisions 127,199) 17,9991 (3,397) (3,720) (18,213) 160,528) 141,590 (18,905) 16,949) (7,980) (4,039) (18,963) 156,836) 203,785 20. TRADE AND OTHER PAYABLES 20.1 Creditors Bills payable Accrued liabilities Royalty and technology fee Advances from customers Withholding tax Workers' Welfare Fund Payable to Employee Retirement Benefit funds Liability for share-based compensation Payable to provident and contributory pension fund Others 599,622 474,633 1,067,891 548,595 52,214 6,304 72,894 4,128 2,045 1,730 5,334 2,835,390 562,170 231,912 1,349,228 374,503 153,823 35,059 55,958 5,011 20.2 20.3 434 5,026 2,773,124 20.1 Bills payable represents inland Letters of credit under vendor financing arrangements which includes interest cost as per Company's negotiated rates. 2018 2017 (Rupees in thousand) 20.2 Workers' Welfare Fund Balance as at January 1 Charge for the year 55,958 50,881 106,839 (33,945) 72,894 53,347 34,241 87,588 (31,630) 55,958 Payment during the year Balance as at December 31 20.3 The Company has a buy 3 get 1 free share plan, which gives eligible employees an opportunity to invest in Unilever PLC shares. After a holding period of 3 years, the Company will award 1 free share for every 3 shares bought. During the current year, 425 shares were awarded which are outstanding as at December 31, 2018. Share price 2018 Unilever PLC £41.09 20.4 Amounts due to related parties included in trade and other payables are as follows: Note 2018 (Rupees in thousand 2017 20,084 Holding company Other related parties 21. PROVISIONS 237,088 403,373 382,186 Sindh Infrastructure Cess Restructuring 21.1 21.2 40,684 12,852 53,536 32,293 28,366 60,659 21.1 Sindh Infrastructure Cess Balance as at January 1 Charge for the year Balance as at December 31 32,293 8,391 40,684 25,417 6,876 32,293 28,366 21.2 Restructuring Balance as at January 1 Provision during the year Payments during the year Balance as at December 31 (15,514) 12,852 32,206 7,078 (10,918) 28,366 22. SHORT TERM BORROWINGS Running finance under mark-up arrangements - secured The facilities for running finance available from various banks amount to Rs. 2.68 billion (2017: Rs. 1.33 billion). The rates of mark-up range between 1-month KIBOR to 3-month KIBOR +0.15% per annum (2017: 1-month KIBOR to 3-month KIBOR +0.15% per annum). The arrangements are secured by way of hypothecation over the Company's current assets amounting to Rs. 1.00 billion (2017: Rs. 1.00 billion). The facilities for opening letters of credit and guarantees as at December 31, 2018 amounted to Rs. 5.12 billion (2017: Rs. 3.28 billion) of which the amount that remained unutilized at year end was Rs. 4.26 billion (2017: Rs.2.67 billion). 23. CONTINGENCY AND COMMITMENTS 23.1 Contingency There were no contingencies as at 31 December 2018. 23.2 Commitments Aggregate commitments outstanding for capital expenditure as at December 31, 2018 amounted to Rs. 653.1 million (2017: Rs. 35.6 million). 2018 2017 (Rupees in thousand) 24. SALES Gross sales Sales tax 15,790,887 12,059,010) 13,731,877 11,833,447) 11,898,430 14,305,269 11,832,344) 12,472,925 11,727,665) 10,745,260 Returns, rebates and allowances 24.1 The Company analyses its net revenue by the following product groups: Products used by end consumers Products used by entities 9,702,293 2,196,137 11,898,430 8,726,020 2,019,240 10,745,260 24.2 Sales to domestic customers in Pakistan are 95.9% (2017: 94.7%) and to customers outside Pakistan are 4.1% (2017: 5.3%) of the revenue during the year. Note 2018 2017 (Rupees in thousand) 25. COST OF SALES Raw and packing materials consumed Manufacturing charges paid to third party Stores and spares consumed Staff costs Utilities Depreciation Provision for impairment of fixed assets Repairs and maintenance Rent, rates and taxes Travelling and entertainment Insurance Stationery and office expenses Other expenses Charges by related party 5,111,060 61,131 35,109 431,519 132,712 164,672 90,160 29,776 17,772 4,384 12,028 2,147 6,243 116,586 6,215,299 4,842,698 65,176 17,292 402,847 120.792 160,142 22,167 51,952 16,728 5,369 4,422 2,421 8,007 108,061 5,828,074 25.1 Opening work in process Closing work in process Cost of goods manufactured Opening stock of finished goods Purchase of finished goods Closing stock of finished goods 25,997 125,021 6,216,275 460,245 234,315 (371,747) 6,539,088 26,409 (25,997) 5,828,486 431,777 111,678 (460,245) 5,911,696 25.1 This represents amount charged to the Company for certain management and other services received from its associated undertaking - Unilever Pakistan Limited. Note 2018 2017 (Rupees in thousand) DISTRIBUTION COST 26. 26.1 Staff costs Advertisement and sales promotion Outward freight and handling Royalty, technology fee and related duties Travelling and entertainment Depreciation Repairs and maintenance Stationery and office expenses Other expenses Charges by related party 147,019 1,392,789 313,021 506,663 20,973 3,550 3,765 1,591 16,765 276,502 2,682,658 157,910 1,444,484 237,103 498,034 20,156 3,453 1,540 1,119 9,795 275,726 2,649,320 26.2 26.1 This includes amount payable to Conopco Inc. (Holding Company) and Unilever Plc (Associated Company). 26.2 This represents amount charged to the Company for certain management and other services received from its associated undertaking - Unilever Pakistan Limited. Note 2017 (Rupees in thousand) 27. ADMINISTRATIVE EXPENSES 2018 8,308 822 614 27.1 Staff costs Depreciation Travelling and entertainment Auditors' remuneration Allowance for impairment of trade debts Legal and professional charges Other expenses Charges by related party 7,814 845 7,146 2,561 2,960 12,161 2,132 279,773 315,392 272 1,885 903 9,567 1,670 278,987 302,756 27.3 27.1 Auditors' remuneration 1,000 Annual audit fee Half yearly review Certifications for regulatory purposes Out of pocket expenses 1,000 300 1,000 261 2,561 300 415 170 1,885 27.2 This includes donation of Rs. Nil (2017: Rs.0.37 million. 27.3 This represents amount charged to the Company for certain management and other services received from its associated undertaking - Unilever Pakistan Limited. Note 28. OTHER OPERATING EXPENSES 2018 2017 (Rupees in thousand) Workers' Profits Participation Fund Workers' Welfare Fund 14.1 20.2 91,135 50,881 142,016 103,292 34,241 137,533 Note 2018 2017 (Rupees in thousandl 29. 6,537 17,611 32,734 OTHER INCOME Income from financial assets Return on savings accounts Income from non-financial assets Scrap sales Gain on disposal of property, plant and equipment Reversal of provision for impairment of fixed assets Others Service fee Exchange gain Others 37,169 460 360 37,989 32,734 29.1 89,529 195,549 12,511 342,115 101,737 1,072 49,617 202,771 29.1 This includes amount charged by the Company for certain management and other services rendered to its associated undertaking - Unilever Pakistan Limited, in accordance with the Service Agreement between the two companies. 2018 2017 (Rupees in thousand) 30. FINANCE COSTS Mark-up on short term borrowings Bank charges 54,278 15,397 69,675 14,263 11,757 26,020 31. TAXATION - charge Current year: -Current tax -Deferred tax 761,588 162,206) 699,382 513,374 (7,317) 506,057 Prior year: -Current tax 60,764 760,146 58,976 565,033 31.1 Reconciliation between tax expense and accounting profit: 2018 2017 (Rupees in thousand 2,491,716 1.920,706 576,212 (7,920) 160,833) Accounting profit before tax Tax at the applicable tax rate of 29% (2017: 30%) Tax effect of credits Tax effect of final tax Tax effect of change in tax rate Tax effect of super tax Tax effect of prior years Others Tax expense for the year 722,598 16,551) (42,796) (27,608) 51,176 60,764 2,563 760,146 58,976 (1,402) 565,033 31.2 The current year tax provision on taxable income is at 29% (2017: 30%). Finance Act 2018 enacted gradual reduction in the corporate tax rates for companies from 29% (current tax rate) to 25% over a period of five years. The Company computes current tax expense based on the generally accepted interpretation of the tax laws to ensure that the sufficient provision for the purpose of taxation is available. According to management, the tax provision made in the financial statements is sufficient. A comparison of last three years of income tax provision with income tax as per assesment is presented below: 2016 2015 (Rupees in thousandl Income tax provision for the year 550,437 529,624 351,793 2017 Income tax as per assessment 546,888 528,287 351,793 The above provisions are inclusive of prior year tax charge booked in subsequent years, if any. Moreover, the amounts are also inclusive of super tax paid under protest for respective years. 2018 2017 (Rupees in thousand) 32. BASIC AND DILUTED EARNINGS PER SHARE Profit after taxation attributable to ordinary shareholders 1,731,570 1,355,673 Weighted average number of shares in issue during the year (Number in thousand) 6,309 6,203 [Rupees) 274.48 Basic earnings per share (restated) 218.55 There is no dilutive effect on the basic earnings per share of the Company. 33. RELATED PARTY DISCLOSURES The related parties comprise of the holding company, its group companies, directors and their close family members, associated undertakings, key management personnel and retirement benefit funds. The Company in the normal course of business carries out transactions with various related parties. Details of transactions with related parties, other than those which have been specifically disclosed elsewhere are as follows: 2018 Nature of transactions 2017 (Rupees in thousand) 33.1 Relationship with the Company il Holding company Royalty 3,963 219,679 i Associated companies 502,700 2,116,816 38,391 235,345 1,907,940 156,740 Royalty and technology fee Purchase of goods Sale of goods Fee for receiving of services from related parties Fee for providing of services to related parties 672,861 663,262 89,529 101,737 iii) Staff retirement funds 20,267 20,377 3,291 Contribution to Defined contribution plans - Defined benefit plans Settlement on behalf of: - Defined contribution plans - Defined benefit plans 108 ivl Key management personnel Salaries and other short-term employee benefits 15,262 9,767 33.2 The following are the related parties with whom the Company had entered into transaction or have arrangement / agreement in place Name of the Related Party Basis of association Aggregate % of Shareholding 4.26% Rafhan Maize Products Co. Limited Associated Company due to common directorship Particulars of Common director(s) Mr. Zulfiqar Monnoo and Mr. Mian Mohammad Adil Monnoo The related party status of outstanding balances as at December 31, 2018 is included in other receivables and trade and other payables respectively. These are settled in ordinary course of business. 34. REMUNERATION OF DIRECTORS, CHIEF EXECUTIVE AND EXECUTIVES The aggregate amounts charged in the financial statements of the year for remuneration including all benefits to directors, chief executive and executives of the Company are as follows: Executive Directors Chief Executive Executives Note 2018 2017 2018 2017 2018 2017 (Rupees in thousand Managerial remuneration and allowances 5,508 3,974 4,354 3,209 96,535 94,457 Retirement benefits 34.2 13,791 13,766 Other long term benefits 1,266 254 Medical expenses 2,052 1,926 Other expenses 2,534 3,811 Share based compensation 2,045 5,508 3,974 4,354 3,209 118,223 114,214 Number of persons 2 2 1 39 45 - . In addition to this, a lump sum amount of Rs. 17.61 million (2017: Rs. 22.90 million) on account of variable pay has been accounted for in financial statements for the current year payable in 2019 after verification of target achievement. Out of the variable pay recognized for 2017 and 2016 following payments were made: Paid in 2018 Paid in 2017 relating to relating to 2017 2016 (Rupees in thousand) Executive Directors Chief Executive Executives Other employees 1,714 3,686 21,782 792 27,974 765 1,819 17,051 265 19,900 Aggregate amount charged in these financial statements for the year for fee to seven non-executive directors was Rs. 3.83 million (2017: six non-executive directors Rs. 2.35 million). Certain executives of the Company are also provided with the Company maintained cars. In respect of full time working Director, Chief Executive and Company Secretary, the Company is charged monthly by an associated undertaking (Unilever Pakistan Limited) on agreed basis. WEIGHTED AVERAGE COST OF CAPITAL 1. Prepare an excel spreadsheet that will: i. Compute a firm's weighted average cost of capital. ii. Determine how much financing will come from the various component sources. iii. Split common equity into internal and external components and adjust the weighted average cost of capital of various levels of internal equity availability. iv. How can the Capital Asset Pricing Model (CAPM) be used to estimate the cost of capital for a real investment decision? (hint: Rp+ B(Rm - Rp)]. 2. You will need the following input cells: i. Par value of bonds ii. Coupon rate paid by bonds iii. Time to maturity of bonds iv. Price of bonds v. Preferred stock dividend (DP) vi. Preferred stock price (PP) vii. Preferred stock flotation costs (FP) viii. Current common stock dividend (Do) ix. Common stock price (Po) X. Common stock growth rate (g) xi. Common stock flotation cost (Fs) xii. Tax rate (t) xiii. Total amount of financing needed xiv. Internal equity available xv. Capital structure (debt, preferred stock and common stock)