| Karachi Electric Supply Company Ltd - 2010 |
|
Balance Sheet As at 30 June 1020
==========================================================================================
Note 2010 2009
(Rupees in '000)
Restated
==========================================================================================
ASSETS
Property, plant and equipment 4 141,432,310 82,193,852
Intangible asset 37,602 20,566
141,469,912 82,214,418
Long-term loans 6 75,383 92,967
Long-term deposits and prepayments 7 22,399 234,275
Due from the Government 8 158,687 476,063
141,726,381 83,017,723
CURRENT ASSETS
Current portion of amount
due from the Government 8 476,063 396,718
Stores and spares 9 4,945,239 4,696,625
Trade debts 10 29,029,574 19,114,219
Loans and advances 11 806,022 398,787
Trade deposits and prepayments 12 12,150,099 1,199,470
Other receivables 13 16,069,414 21,189,065
Derivative financial assets 14 766,453 575,000
Taxation - net 15 470,829 220,548
Cash and bank balances 16 1,189,424 1,127,644
65,903,117 48,918,076
TOTAL ASSETS 207,629,498 131,935,799
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital 17 74,966,045 52,068,169
Reserves
Capital reserves 18 509,172 509,172
Revenue reserves 19 5,372,356 5,372,356
Accumulated losses (80,812,538) (66,350,117)
Other reserve (560,147) (337,050)
(75,491,157) (60,805,639)
Total equity (325,112) (8,737,470)
ADVANCE AGAINST SUBSCRIPTION
FOR RIGHT SHARES - 8,170,638
(325,112) (566,832)
SURPLUS ON REVALUATION OF
PROPERTY,PLANT AND EQUIPMENT 20 31,826,017 484,553
31,300,905 (82,279)
LIABILITIES
NON CURRENT LIABILITIES
Long term financing 21 39,289,102 45,030,126
Liabilities against asset
subject to finance lease 22 - 287,706
Long-term deposits 23 4,040,288 3,836,994
Deferred liabilities 24 5,767,124 5,325,528
Deferred revenue 25 16,249,362 14,237,770
Specific grant from
the government 26 348,606 2,778,003
Deferred tax liability 20 17,137,086 260,913
82,831,568 71,757,040
CURRENT LIABILITIES
Trade and other payables 27 54,799,202 26,853,848
Accrued mark-up 28 4,770,125 2,325,237
Short-term borrowings 29 13,441,796 11,953,522
Short-term deposits 30 4,276,499 3,241,691
Provisions 31 12,127 15,927
Current maturity of
non-current liabilities 32 16,197,276 15,870,813
93,497,025 60,261,038
CONTINGENCIES AND COMMITMENTS 33
TOTAL EQUITY AND LIABILITIES 207,629,498 131,935,799
==========================================================================================PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2010==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
REVENUE
Sale of energy - net 34 70,508,120 58,069,074
Tariff adjustment 35 33,220,086 26,950,457
Rental of meters and equipment 208,309 204,553
103,936,515 85,224,084
EXPENDITURE
Purchase of electricity 36 (59,881,477) (44,921,109)
Consumption of fuel and oil 37 (37,180,851) (37,450,620)
(57,062,328) (82,371,729)
Expenses incurred in
generation, transmission
and distribution 38 (10,925,814) (9,484,695)
GROSS LOSS (4,051,627) (6,632,340)
Consumers services and
administrative expenses 39 (8,378,749) (5,370,456)
Other operating income 41 4,751,526 2,485,368
Other operating expenses 40 (235,002) (343,585)
(3,862,225) (3,228,673)
OPERATING LOSS (7,913,852) (9,861,013)
Finance cost 42 (6,823,638) (5,589,991)
LOSS BEFORE TAXATION (14,737,490) (15,451,004)
Taxation 43
- Current - (33,938)
- Deferred 96,274 -
96,274 (33,938)
NET LOSS FOR THE YEAR (14,641,216) (15,484,942)
==========================================================================================
==========================================================================================
(Rupees)
Restated
==========================================================================================
LOSS PER SHARE - basic 44 (0.74) (i.i8)
- diluted 44 (0.66) (0.98)
==========================================================================================Cash flow statement For the year ended 30 June 2010==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 45 6,861,934 3,209,175
Payment in respect of fatal accident 31 (3,800) (2,505)
Deferred liabilities paid 24.1 (552,638) (430,714)
Income tax paid (250,281) (22,618)
Receipts in deferred revenue 25 644,768 1,359,885
Finance cost paid (4,497,601) (1,996,604)
Interest received on bank deposits 41 338,386 101,431
Net cash generated from operating activities 2,540,768 2,218,050
CASH FLOWS FROM
INVESTING ACTIVITIES
Capital expenditure incurred (14,156,765) (21,025,903)
Proceed from disposal of fixed assets 4.1.7 151,009 72,637
Receipt from GoP - 238,031
Receipt from PSO PIRKOH 238,031 -
Long term loans 17,584 7,039
Long term deposits 227,184 (213,748)
Net cash used in investing activities (13,522,957) (20,921,944)
CASH FLOWS FROM
FINANCING ACTIVITIES
Advance against subscription of right shares 14,869,122 8,170,638
Liabilities against assets
subject to finance lease repaid (330,826) (6,497)
Payment of long term financing - net (4,946,042) -
Transaction cost incurred on right issue (141,884) -
Short term borrowing repaid / acquired - net 1,488,274 (1,093,709)
Long term financing paid - PIRKOH and PSO (97,969) (238,031)
Receipts from derivative
financial instruments - options - 89,417
Receipt from long term financing - net - 9,887,699
Receipt from Murhabha financing - net - 410,000
Security deposit from consumers 203,294 177,614
Net cash generated from financing activities 11,043,969 17,397,131
Net increase / (decrease) in
cash and cash equivalent 61,780 (1,306,763)
Cash and cash equivalent
at beginning of the year 1,127,644 2,434,407
Cash and cash equivalent at end of the yea 46 1,189,424 1,127,644
==========================================================================================Statement of Changes in Equity For the ended 30 June 2010=============================================================================================================================================================
Issued, Subscribed
and Paid-up Capital Reserves
Ordinary Redeemable Capital Revenue Accumulated *Other
shares Preference Total reserves reserve losses reserves Total Total
shares
(Rupees in '000)
=============================================================================================================================================================
Balance as at 30 June 2008 46,084,762 5,983,407 52,068,169 509,172 5,372,356 (50,865,175) (165,058) (45,148,705) 6,919,464
Total comprehensive income for
the year ended 30 June 2009
Net loss for the year - - - - - (15,484,942) - (15,484,942) (15,484,942)
Other comprehensive income
Changes in fair value of cash flow
hedges - net - - - - - - (171,992) (171,992) (171,992)
Total comprehensive income
for the year - - - - (15,484,942) (171,992) (15,656,934) (15,656,934)
Balance as at 30 June 2009 46,084,762 5,983407 52,068,169 509,172 5,372,356 (66,350,117) (337,050) (60,805,639) (8,737,470)
Total comprehensive income for
the year ended 30 June 2010
Net loss for the year - - - - - (14,641,216) - (14,641,216) (14,641,216)
Other comprehensive income
Changes in fair value of cash
flow hedges - net - - - - - - (223,097) (223,097) (223,097)
Total comprehensive income for
the year - - - - (14,641,216) (223,097) (14,864,313) (14,864,313)
Incremental depreciation / amortisation
relating to surplus on revaluation of
property, plant and equipment - net
of deferred tax - - - - - 178,795 - 178,795 178,795
Transaction with owners, recorded
directly in equity
Issuance of 6,582,788,730 ordinary
shares @ Rs. 3.5 each - net 22,897,876 - 22,897,876 - - - - - 22,897,876
Balance as at 30 June 2010 68,982,638 5,983,407 74,966,045 509,172 5,372,356 (80,812,538) (560,147) (75,491,157) (525,112)
=============================================================================================================================================================
==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Net loss for the year (14,641,216) (15,484,942)
Other comprehensive loss - Hedging reserve (223,097) (171,992)
(14,864,313) (15,656,934)
==========================================================================================Notes to the financial statements For the year ended 30 June 20101. THE COMPANY AND ITS OPERATIONS 1.1. Karachi Electric Supply Company Limited (the Company) was incorporated as a limited liability company on 13 September 1913 under the repealed Indian Companies Act, 1882 (now Companies Ordinance, 1984). The Company is listed on Karachi, Lahore and Islamabad Stock Exchanges. The Company is principally engaged in the generation, transmission and distribution of electric energy to industrial and other consumers under the Electricity Act, 1910 and Nepra Act, 1997, as amended, to its licensed areas. The registered office of the Company is situated at 6th Floor, State Life Building No. 11, Abdullah Haroon Road, Karachi. KES Power Limited (the holding company) holds 72.45 percent (30 June 2009: 71.5 percent) shares in the Company. 1.2. During the year, the Company has incurred a net loss of Rs. 14,641 million (2009: Rs. 15,485 million), resulting in accumulated losses of Rs. 80,812 million (2009: Rs. 66,350 million) as of the balance sheet date. The management of the Company is continuing with the operational and infrastructure rehabilitation program commenced after the privatization of the Company, with the objective of converting the Company into a profitable entity and has taken financial measures to support such rehabilitation program. The program includes: 1.2.1. Generation - Expansion and Rehabilitation a) During the year, second fast track power plant of total 90 MW capacity has been commissioned at Korangi. The first fast track plant of total 90 MW capacity was commissioned at SITE in June 2009. These new units are using the existing gas allocation of SITE and Korangi Gas Turbines and will almost double the generation with the same gas consumption due to higher efficiency, resulting in improved profit margin. b) During the year, the first combine cycle power plant (CCPP-l) with ISO capacity of 220 MW became fully operational including the steam turbine, having significant impact on the overall efficiency. c) The second combine cycle power plant (CCPP - II) having ISO capacity of 560 MW, is being set-up at Bin Qasim. The contract for setting up the plant was awarded in June 2008. This combine cycle plant is expected to be in operation by the end of the financial year 2011-12, having significant impact on the overall fuel efficiency. d) Overhauling of existing Bin Qasim Power Station to increase its reliability, capacity and efficiency. The main strategy is to maintain it and ensure minimal trippings / faults while enhancing its capacity upwards to its original rating and improve efficiency and reliability. 1.2.2. Transmission and Distribution Network - Expansion and Rehabilitation The management has developed a comprehensive plan focused towards the transmission and distribution network to improve reliability and reduce technical and distribution losses. This will also enhance monitoring and control of the grid and rehabilitate and expand the existing network. Proper network planning, maintenance and capital expenditure will lead to reduced outages and will prevent network damage. Some of the transmission and distribution projects already completed and in progress are constructions of new grid stations, Model Town project for revamping of distribution infrastructure, implementation of SCADA system and launching of Integrated Business Centres (IBCs). a) The management has accelerated the construction of new grid stations, augmenting transmission capacity by a total of 650 MVA and six new grid stations have been constructed and energized. b) The Model Town Project is an initiative to improve KESC's network and customer service. It is a system improvement plan which aims to increase system reliability, enhance load capacity and revamp the distribution network in Karachi in a phased and prioritized manner. The i8 towns of Karachi have been divided into four phases and the project is expected to be completed by September 2010 at an estimated cost of Rs. 2,500 million. c) The SCADA system provides up-to-date system electrical data which will help reduce losses through a systematic approach, increasing reliability, efficiency and safety of the power grid. SCADA system is fully operational across the network. d) IBCs (a model for overall reform and rehabilitation of the KESC's distribution system) in Defence, Clifton, Gulshan and Nazimabad have been launched and the management plans to roll out more such IBCs across the city to provide one-stop service to all our consumers. 1.2.3. Financial measures The financial measures which the Company has embarked upon include: A loan agreement amounting to USD 125.000 million with the International Finance Corporation (IFC), for the purpose of capital expenditure on power generation, transmission and network improvement projects was signed in 2007. Out of the total facility of USD 125.000 million, an amount of USD 85,000 million has already been disbursed to the Company. A loan agreement amounting to USD 150.000 million with the Asian Development Bank (ADB), for the purpose of capital expenditure on power generation, transmission and network improvement projects was signed in 2007. Out of the total facility of USD 150.000 million, an amount of USD 125.000 million has already been disbursed to the Company. 1.2.4. Sponsors support The Sponsors of the Company are committed to invest in the Company for its ongoing as well as future projects and also to meet its operating shortfalls. As part of the commitment, KES Power Limited (holding company), has subscribed its share of rights issues announced on 27 May 2009 and on 27 October 2009 at the rate of 31 percent and 14.5 percent, respectively at par value of Rs. 3.50 per share amounting to Rs. 14,286 million and Rs. 8,754 million, respectively. Further, KES Power Limited has also subscribed the unsubscribed minority shares. The Government of Pakistan also subscribed for its share of 25.66 percent in the rights issues. Based on the support of the holding company, actions as outlined above and future projections, the management is of the view that the Company would generate better results in the foreseeable future. 2. BASIS OF PREPARATION 2.1. Statement of compliance. These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions of, or directives issued under the Companies Ordinance, 1984 shall prevail. 2.2. Basis of preparation These financial statements have been prepared under the historical cost convention except for the following: - certain class of assets included in property, plant and equipment are stated at revalued amounts as referred to in notes 3.1.1 and 4; - the derivative financial instruments which are measured at fair value in accordance with the requirements of International Accounting Standards (IAS) - 39 "Financial Instruments: Recognition and Measurement" as referred to in notes 3.21 and 14; and - defined benefits obligations are stated at present value in accordance with the requirements of IAS - 19 "Employee Benefits", as referred to in notes 3.11 and 24. 2.3. Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates. The financial statements are presented in Pakistani Rupees, which is also the Company's functional currency. 2.4. Use of estimates and judgments The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amount of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates underlying the assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. In the process of applying the Company's accounting policies, management has made the following accounting estimates and judgments which are significant to the financial statements: 2.4.1. Property, plant and equipment The Company reviews appropriateness of the rate of depreciation, useful life and residual value used in the calculation of depreciation. Further, where applicable, an estimate of the recoverable amount of assets is made for possible impairment on an annual basis. In making these estimates, the Company uses the technical resources available with the Company. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with corresponding effects on the depreciation charge and impairment. 2.4.2. Trade debts The Company reviews its doubtful trade debts at each reporting date to assess whether provision should be recorded in the profit and loss account. In particular, judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of provision required. Such estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the provisions. 2.4.3. Stores and spares The Company reviews the net realizable value (NRV) and impairment of stores and spare parts to assess any diminution in the respective carrying values and wherever required provision for NRV / impairment is made. 2.4.4. Employees retirement benefits Certain actuarial assumptions have been adopted as disclosed in note 24 to the financial statements for valuation of present value of defined benefit obligations. Any changes in these assumptions in future years might affect unrecognized gains and losses in those years. 2.4.5. Taxation In making the estimates for income taxes currently payable by the Company, the management looks at the current income tax law and the decisions of appellate authorities on certain issues in the past. 2.4.6. Derivatives The Company has entered into a Cross Currency Swap arrangement. The calculation involves the use of estimates with regard to interest rate and foreign currency exchange rate which fluctuates with the market forces. 2.5. Changes in accounting policies Starting 1 July 2009, the Company has changed its accounting policies in the following areas: - Revised IAS 1 Presentation of Financial Statements (2007); became effective from 1 January 2009. The revised standard prohibits the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All non-owner changes in equity are required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and the statement of comprehensive income). Where entities restate or reclassify comparative information, they are required to present a restated balance sheet as at the beginning of comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The Company has opted to present two statements; a profit and loss account and a statement of comprehensive income. - IFRS 8 - Operating Segments (effective from 1 January 2009). This standard requires the Company to determine and present operating segments based on the information that is provided internally to the Company's Chief Operating Decision Maker, that is, the organisation's function which allocates resources to and assesses performance of its operating segments. Management has determined that the Company has a single reportable segment and therefore the adoption of the said IFRS has only resulted in some entity wide disclosures as described in note 53. Comparative information has been re-presented so that it is in conformity with the revised / new standards. Since the change in accounting policies only affect presentation / disclosures of financial statements, there is no impact on loss for the year and loss per share. 2.6. Other accounting developments Certain other standards, amendments to published standards and interpretations of accounting standards became effective during the year, however, they do not affect the Company's financial statements. 2.7. Standards, Interpretations and Amendments not yet effective The following standards, interpretations and amendments of approved accounting standards are effective for accounting periods beginning on or after 1 January 2010: - Improvements to IFRSs 2009 - Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued (effective for annual periods beginning on or after 1 January 2010). The amendments clarify that the required disclosures for non-current assets (or disposal groups) classified as held for sale or discontinued operations are specified in IFRS 5. These amendments are unlikely to have an impact on the Company's financial statements. - Improvements to IFRSs 2009 - Amendments to IFRS 8 Operating Segments (effective for annual periods beginning on or after 1 January 2010) - The amendments clarify that segment information with respect to total assets is required only if such information is regularly reported to the chief operating decision maker. The amendment is unlikely to have an impact on Company's financial statements. - Improvements to IFRSs 2009 - Amendments to IAS 1 Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2010). The amendments clarify that the classification of the liability component of a convertible instrument as current or non-current is not affected by terms that could, at the option of the holder of the instrument, result in settlement of the liability by the issue of equity instruments. These amendments are unlikely to have an impact on the Company's financial statements. - Improvements to IFRSs 2009 - Amendments to IAS 7 Statement of Cash Flows (effective for annual periods beginning on or after 1 January 2010). The amendments clarify that only expenditures that result in the recognition of an asset can be classified as a cash flow from investing activities. These amendments are unlikely to have a significant impact on the Company's financial statements. - Improvements to IFRSs 2009 - Amendments to IAS 17 Leases (effective for annual periods beginning on or after 1 January 2010). The IASB deleted guidance stating that a lease of land with an indefinite economic life normally is classified as an operating lease, unless at the end of the lease term title is expected to pass to the lessee. The amendments clarify that when a lease includes both the land and building elements, an entity should determine the classification of each element based on paragraphs 7 - 13 of IAS 17, taking account of the fact that land normally has an indefinite economic life. The amendment is unlikely to have an impact on Company's financial statements. - Improvements to IFRSs 2009 - Amendments to IAS 36 Impairment of Assets (effective for annual periods beginning on or after 1 January 2010). The amendments clarify that the largest unit to which goodwill should be allocated is the operating segment level as defined in IFRS 8 before applying the aggregation criteria of IFRS 8. The amendments apply prospectively. The amendment is unlikely to have any impact on the Company's financial statements. - Improvements to IFRSs 2009 - Amendments to IAS 39 Financial Instruments: Recognition and Measurement (effective for annual periods beginning on or after 1 January 2010). The amendments provide additional guidance on determining whether loan prepayment penalties result in an embedded derivative that needs to be separated; clarify that the scope exemption in IAS 39 paragraph 2(g) is restricted to forward contracts, i.e. not options, between an acquirer and a selling shareholder to buy or sell an acquiree that will result in a business combination at a future acquisition date within a reasonable period normally necessary to obtain any required approvals and to complete the transaction; and clarify that the gains or losses on a cash flow hedge should be reclassified from other comprehensive income to profit or loss during the period that the hedged forecast cash flows impact profit or loss. The amendments apply prospectively to all unexpired contracts from the date of adoption. These amendments are unlikely to have an impact on the Company's financial statements. - Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards-Additional Exemptions for First-time Adopters (effective for annual periods beginning on or after 1 January 2010). The IASB provided additional optional exemptions for first-time adopters of IFRSs that will permit entities not to reassess the determination of whether an arrangement contains a lease if the same assessment as that required by IFRIC 4 was made under previous GAAP; and allow entities in the oil and gas industry to use their previous GAAP carrying amounts as deemed cost at the date of transition for oil and gas assets. The amendment is not relevant to the Company's operations. - Amendment to IFRS 2 - Share-based Payment - Group Cash-settled Share-based Payment Transactions (effective for annual periods beginning on or after 1 January 2010). Amendment provides guidance on the accounting for share based payment transactions among group entities. The amendment is unlikely to have any impact on the Company's financial statements. - Amendments to IAS 32 Financial Instruments: Presentation - Classification of Rights Issues (effective for annual periods beginning on or after 1 January 2010). The IASB amended IAS 32 to allow rights, options or warrants to acquire a fixed number of the entity's own equity instruments for a fixed amount of any currency to be classified as equity instruments provided the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. These amendments are unlikely to have an impact on the Company's financial statements. - IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective for accounting periods beginning on or after 1 July 2010). This interpretation provides guidance on the accounting for debt for equity swaps. The amendment is not relevant to the Company's operations. - Amendment to IFRS i First-time Adoption of International Financial Reporting Standards - Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters (effective for accounting periods beginning on or after 11 July 2010). The amendment provides the same relief to first-time adopters as was given to current users of IFRSs upon adoption of the Amendments to IFRS 7. The amendment also clarifies the transitional provisions of the Amendments to IFRS 7. The amendment is not relevant to the Company's operations. - IFRIC 4 - "Determining whether an Arrangement contains a Lease" on or after 1 January 2006) and IFRIC 12- "Service Concession Arrangements" (effective for annual periods beginning on or after 1 January 2008). However, the application of these interpretations have been deferred by the Securities and Exchange Commission of Pakistan (SECP), through circular 21 of 2009 dated 22 June 2009, for all companies till 30 June 2010. The Company has availed the relaxation given by SECP. Improvements to IFRSs 2010 (effective for annual periods beginning on or after 1 July 2010). The IASB issued amendments to various standards effective. Below is a summary of the amendments that are effective for either annual periods beginning on or after 1 July 2010 or annual periods beginning on or after 1 January 2011. Improvements to IFRSs 2010 - Amendments to IFRS 3 Business Combinations (effective for accounting periods beginning on or after i July 2010). The amendments clarify that contingent consideration arising in a business combination previously accounted for in accordance with IFRS 3 (2004) that remains outstanding at the adoption date of IFRS 3 (2008) continues to be accounted for in accordance with IFRS 3 (2004); limit the accounting policy choice to measure non-controlling interests upon initial recognition at fairvalue or at the non-controlling interest's proportionate share of the acquiree's identifiable net assets to instruments that give rise to a present ownership interest and that currently entitle the holder to a share of net assets in the event of liquidation; and expand the current guidance on the attribution of the market-based measure of an acquirer's share-based payment awards issued in exchange for acquiree awards between consideration transferred and post-combination compensation cost when an acquirer is obliged to replace the acquiree's existing awards to encompass voluntarily replaced unexpired acquiree awards. These amendments are unlikely to have an impact on the Company's financial statements. Improvements to IFRSs 2010 - Amendments to IAS 27 Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 2010). The amendments clarify that the consequential amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 and IAS 31 resulting from IAS 27 (2008) should be applied prospectively, with the exception of amendments resulting from renumbering. These amendments are unlikely to have an impact on the Company's financial statements. - IAS 24 Related Party Disclosures (revised 2009) (effective for accounting periods beginning on or after i January 2011). The revised IAS 24 Related Party Disclosures amends the definition of a related party and modifies certain related party disclosure requirements for government-related entities. These amendments are unlikely to have any impact on the Company's financial statements other than increase in disclosures. Amendments to IFRIC 14 IAS 19- The Limit on a Defined Benefit Assets, Minimum Funding Requirements and their Interaction (effective for accounting periods beginning on or after 1 January 2011). These amendments remove unintended consequences arising from the treatment of prepayments where there is a minimum funding requirement. These amendments result in prepayments of contributions in certain circumstances being recognized as an asset rather than an expense. These amendments are unlikely to have an impact on the Company's financial statements. Improvements to IFRSs 2010 - IFRS 1 First-time Adoption of IFRSs (effective for accounting periods beginning on or after 1 January 2011). The amendments clarify that IAS 8 is not applicable to changes in accounting policies occurring during the period covered by an entity's first IFRS financial statements; introduce guidance for entities that publish interim financial information under IAS 34 Interim Financial Reporting and change either their accounting policies or use of the IFRS 1 exemptions during the period covered by their first IFRS financial statements; extend the scope of paragraph D8 of IFRS 1 so that an entity is permitted to use an event-driven fair value measurement as deemed cost for some or all of its assets when such revaluation occurred during the reporting periods covered by its first IFRS financial statements; and introduce an additional optional deemed cost exemption for entities to use the carrying amounts under previous GAAP as deemed cost at the date of transition to IFRSs for items of property, plant and equipment or intangible assets used in certain rate-regulated activities. The amendment is not relevant to the Company's operations. - Improvements to IFRSs 2010- IFRS 7 Financial Instruments: Disclosures (effective for accounting periods beginning on or after 1 January 2011). The amendments add an explicit statement that qualitative disclosure should be made in the contact of the quantitative disclosures to better enable users to evaluate an entity's exposure to risks arising from financial instruments. In addition, the IASB amended and removed existing disclosure requirements. These amendments would result in increase in disclosures in the financial statements of the Company. - Improvements to IFRSs 2010 - IAS-1 Presentation of Financial Statements (effective for accounting periods beginning on or after 1 January 2011). The amendments clarify that disaggregation of changes in each component of equity arising from transactions recognized in other comprehensive income is also required to be presented, but may be presented either in the statement of changes in equity or in the notes. The amendment is not likely to have an impact on Company's financial statements other than increase in disclosure. - Improvements to IFRSs 2010 - IAS 34 Interim Financial Reporting (effective for accounting periods beginning on or after 1 January 2011). The amendments add examples to the list of events or transactions that require disclosure under IAS 34 and remove references to materiality in IAS 34 that describes other minimum disclosures. The amendment is not likely to have an impact on Company's financial statements other than increase in disclosure. - Improvements to IFRSs 2010- IFRIC 13 Customer Loyalty Programmes (effective for accounting periods beginning on or after 1 January 2011). The amendments clarify that the fair value of award credits takes into account the amount of discounts or incentives that otherwise would be offered to customers that have not earned the award credits. The amendment is not relevant for the Company's operation. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented except as explained in note 2.5. 3.1. Property, plant and equipment 3.1.1. Operating fixed assets Except leasehold land, plant and machinery and transmission grid equipments, all others items of property, plant and equipment (refer note 4.1) are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Leasehold land, plant and machinery and transmission grid equipments are measured at revalued amounts, which is the fair value at the date of revaluation less accumulated depreciation and accumulated impairment losses, if any, recognized subsequent to the date of revaluation. Cost in relation to items of property, plant and equipment stated at cost represent historical costs. Stores and spares, which form part of the contract under which the project was undertaken, are also capitalized with plant and machinery. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the asset will flow to the Company and the cost of the asset can be measured reliably. The carrying amount of the replaced part is derecognised. Depreciation is charged to profit and loss account, applying the straight line method whereby costs of assets, less their residual values, is written off over their estimated useful lives at rates disclosed in note 4.1. Depreciation on additions is charged from the month in which the asset is available for use up to the month preceding the disposal. In case of extension and addition in existing units, depreciation is provided from the date of actual commissioning and in respect of material replacements and modernization, from the date of capitalization. Cost of subsequent acquisition of stores and spares under specific agreement for specific project are depreciated over the remaining economic useful life of such plant and machinery. Useful lives are determined by the management based on expected usage of asset, expected physical wear and tear, technical and commercial obsolescence, legal and similar limits on the use of assets and other similar factors. The assets' residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each reporting date. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the profit and loss account in the year the asset is derecognized. Gains and losses on disposal of assets are taken to profit and loss account. When revalued assets are sold, the relevant remaining surplus is transferred directly by the Company to its profit and loss account. Normal repairs and maintenance are charged to the profit and loss account during the financial period in which they are incurred. 3.1.2. Asset subject to finance lease Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of leased assets or, if lower, at the present value of the minimum lease payments. In calculating the present value of the minimum lease payments, the discount factor is the effective interest rate. The outstanding obligations under the lease less finance charges allocated to future periods are shown as liability. Financial charges are calculated at the interest rate implicit in the lease and are charged to the profit and loss account. Depreciation is charged to profit and loss account applying the straight-line method on a basis similar to owned assets. 3.1.3. Capital work-in-progress Capital work-in-progress is stated at cost less accumulated impairment, if any, and consists of expenditure incurred and advances made in respect of operating fixed assets in the course of their acquisition, erection, construction and installation, including salaries and wages directly attributable to capital work-in-progress, determined by the management. The assets are transferred to relevant category of operating fixed assets when they are available for use. 3.2. Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. Costs that are directly associated with identifiable software products controlled by the Company and have probable economic benefit beyond one year are recognized as intangible assets. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. In respect of additions and deletions of intangible assets during the year, amortization is charged from the month of acquisition and up to the month preceding the deletion, respectively. Intangible assets with finite lives are amortized on a straight line basis over their economic useful lives as specified in note 5.2. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. 3.3. Borrowing costs Borrowing costs are recognised in profit and loss account in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs, if any, are capitalised, during the period of time that is required to complete and prepare the asset for its intended use. 3.4. Loans, advances and deposits These are initially recognised at cost, which is the fair value of the consideration given. Subsequent to initial recognition assessment is made at each balance sheet date to determine whether there is an indication that a financial asset or group of assets may be impaired. If such indication exists, the estimated recoverable amount of that asset or group of assets is determined and any impairment loss is recognised for the difference between the recoverable amount and the carrying value. 3.5. Stores and spares These are stated at lower of moving average cost and net realizable value less impairment loss, if any, except items in transit, which are stated at cost. Provision is made for slow moving items where necessary and is recognized in the profit and loss account. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make a sale. 3.6. Trade debts and other receivables Trade debts and other receivables are stated initially at fair value and subsequently measured at amortized cost using the effective interest rate method less provision for impairment, if any. A provision for impairment is established where there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Trade debts and receivables are written off when considered irrecoverable. No provision is made for trade debts due from federal / provincial Government and local bodies, as management believes that these trade debts are not impaired and will be recovered. 3.7. Cash and cash equivalents For the purposes of cash flow statement, cash and cash equivalents comprise cash in hand, balances with banks and short term placements readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash and cash equivalents also include bank overdrafts which form an integral part of the Company's cash management. 3.8. Surplus on revaluation of fixed assets The surplus arising on revaluation of fixed assets is credited to the "Surplus on Revaluation of Fixed Assets account" shown below equity in the balance sheet in accordance with the requirements of section 235 of the Companies Ordinance, 1984. The said section was amended through the Companies (Amendment) Ordinance, 2002. The Company has adopted following accounting treatment of depreciation / amortisation on revalued assets, in accordance with Securities and Exchange Commission of Pakistan's (SECP) SRO 45(1)/2003 dated 13 January 2003 - depreciation / amortisation on assets which are revalued is determined with reference to the value assigned to such assets on revaluation and depreciation / amortisation charge for the year is taken to the profit and loss account; and - an amount equal to incremental depreciation / amortisation for the year net of deferred taxation is transferred from "Surplus on Revaluation of Fixed Assets account" to accumulated profit through Statement of Changes in Equity to record realization of surplus to the extent of the incremental depreciation / amortisation charge for the year. 3.9. Interest/ Mark-up bearing loans and borrowings All loans and borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. Loans and borrowings are subsequently stated at amortized cost with any difference between the proceeds (net of transaction cost) and the redemption value recognised in the profit and loss account over the period of the borrowing using the effective interest method. 3.10. Deferred revenue Deferred revenue represents amounts received from consumers as contribution towards the cost of supplying and laying service connections, extension of mains and street lights along with the Transfer from Specific Grants. Amortization of deferred revenue commences upon completion of related work, with 5% of completed jobs taken to the profit and loss account each year corresponding to the depreciation charge for the year (note 25). - 3.11. Employee retirement and other service benefits 3.11.1. Defined benefit plans Provisions are made to cover the obligations under defined benefit gratuity scheme, post retirement medical benefits and electricity rebate on the basis of actuarial valuation and are charged to profit and loss account. The most recent valuation was carried out as of 30 June 2010 using the "Projected Unit Credit Method". The amount recognized in the balance sheet represents the present value of defined benefit obligations as adjusted for unrecognized actuarial gains. Cumulative net unrecognized actuarial gains and losses at the end of previous year which exceed 10% of present value of the Company's obligations are amortized over the expected service of current members. (a) Defined benefit gratuity scheme The Company operates an approved unfunded defined benefit gratuity scheme for all its eligible employees. The Scheme provides for a graduated scale of benefits dependent on the length of service of the employee on terminal date, subject to the completion of minimum qualifying period of service. Gratuity is based on employees' last drawn salary. (b) Post retirement medical benefits The Company also offers post retirement medical coverage to its eligible employees and their dependents. Under the unfunded scheme all such employees and their dependents are entitled for such coverage for a period of 10 years and 5 years, respectively. (c) Electricity rebate The Company provides a rebate on their electricity bills to its eligible retired employees for the first five years of retirement. 3.11.2. Defined contributory provident fund The Company also operates an approved funded contributory provident fund for all its eligible management and non-management employees. Equal monthly contributions are made, both by the Company and the employees, to the fund at the rate of 10% of basic salary. 3.11.3. Earned leave The Company offers encashment of leaves after accumulation of maximum of 60 days for staff and allows Leave Preparatory to Retirement (LPR) to officers who have opted for encashment of leave, to the extent of 365 days before actual retirement date. 3.12. Actuarial gains and losses Actuarial gains and losses are recognised in profit and loss account when the cumulative unrecognized actuarial gains or losses exceed 10% of the defined benefit obligation. These gains or losses are recognised over the expected service of current members. 3.13. Taxation 3.13.1. Current Provision for current taxation is based on taxable income at current rates of taxation after taking into account tax credits and rebates available, if any, in accordance with the provision of the Income Tax Ordinance, 2001. It also includes any adjustment to tax payable in respect of prior years. 3.13.2. Deferred Deferred tax is recognized using balance sheet liability method, providing for temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using the tax rates enacted or substantively enacted at the balance sheet date. The Company recognizes a deferred tax asset to the extent that it is probable that taxable profits for the foreseeable future will be available against which the assets can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 3.14. Trade and other payables Trade and other payables are recognized initially at fair value plus directly attributable cost, if any, and subsequently measured at amortized cost. 3.15. Provisions A provision is recognized in the balance sheet when the Company has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are measured at the -present value of expected expenditure, discounted at a pre tax rate that reflects current market assessment of the time value of money and the risk specific to the obligation. However, provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. 3.16. Revenue recognition 3.16.1. Energy sale Revenue is recognised on supply of electricity to consumers based on meter readings at the rates notified by the Government from time to time, except for National Transmission and Despatch Company, Karachi Nuclear Power Plant and Pakistan Steel Mills Corporation (Private) Limited where tariff is applied as per agreements with these entities. 3.16.2. Tariff adjustment Tariff adjustment for variation in fuel prices and cost of power purchase, is recognized on accrual basis when -the Company qualifies to receive it. 3.16.3. Late payment surcharge Surcharge on late payment is accounted for after the due date of payment has passed. In case of Government and Local Bodies, late payment surcharge is accounted for on receipt basis. 3.16.4. Rebate on electricity duty Rebate on electricity duty is recognised at the rates specified by the Government and is recognized on electricity duty collected. 3.16.5. Meter rentals Meter rentals are recognised monthly, on the basis of specified rates for various categories of consumers. 3.16.6. Interest / Mark-up income The Company recognizes interest income / mark-up on short term deposits and interest bearing advances on time proportion basis. 3.16.7. Grant from Government Grant from the GoP is the specific grant for Financial Implementation Plan (FIP) which is recognised in profit and loss account on a systematic and rational basis over the useful life of corresponding assets. 3.17. Impairment Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. Non-Financial assets The carrying amounts of non-financial assets other than inventories and deferred tax asset, are assessed at each reporting date to ascertain whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. An impairment loss is recognized, as an expense in the profit and loss account, for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. 3.18. Foreign currencies translation The financial statements are presented in Pak Rupee, which is the Company's functional and presentation currency. Foreign currency transactions during the year are recorded at the exchange rates approximating those ruling on the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange which approximate those prevailing on the balance sheet date. Gains and losses on translation are taken to profit and loss account. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. 3.19. Financial instruments All financial assets and liabilities are initially measured at fair value, and subsequently measured at fair value or amortized cost as the case may be. The Company derecognizes the financial assets and financial liabilities when it ceases to be a party to such contractual provisions of the instruments. 3.20. Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the financial statements only when there is legally enforceable right to set-off the recognized amounts and the Company intends either to settle on a net basis or to realize the assets and to settle the liabilities simultaneously. 3.21. Derivative financial instruments and hedge accounting The Company uses derivative financial instruments to hedge its interest rate risk and foreign currency risk. Such derivative financial instruments are initially recognized at fair value on the date on which the derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are classified as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting and the ineffective portion of an effective hedge are taken to the profit and loss account. The fair value of derivative financial instruments is determined by reference to market values for similar instruments or by using discounted cash flow method. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Company will assess the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item's fair value or cash flows attributable to the hedge risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair values or cash flows and are assessed on an on going basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. Fair value hedges Fair value hedges are when hedging the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment. The change in the fair value of a hedging derivative is recognized in the profit and loss account. The change in the fair value of the hedged item attributable to the risk hedged is recorded as a part of the carrying value of the hedged item and is also recognized in the profit and loss account. If the hedge item is derecognized, the unamortized fair value is recognized immediately in the profit and loss account. Cash flow hedges Cash flow hedges are when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognized firm commitment. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the profit and loss. Amounts accumulated in equity are reclassified to the profit and loss account in the periods when the hedged item affects profit or loss account i.e. when the hedged financial income or expense is recognized or when the forecast transaction occurs. Where the hedged item is the cost of a non financial asset or non financial liability, the amounts taken to equity are transferred to the initial carrying amount of the non financial asset or liability. On an ongoing basis, the Company assesses whether each derivative continues to be highly effective in offsetting changes in the cash flows of hedged items. If and when a derivative is no longer expected to be highly effective, hedge accounting is discontinued. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the profit and loss account. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the profit and loss account. The fair values of derivative instruments used for hedging purposes are disclosed in note to these financial statements. Movements on the hedging reserve are shown in statements of changes in equity and statement of comprehensive income. Derivative instruments that are designated as, and are effective hedging instruments, are classified consistent with the classification of the underlying hedged item. The derivative instrument is separated into a current portion and non current portion only if a reliable allocation can be made. 3.22. Appropriations to reserves Appropriations to reserves are recognised in the financial statements in the period in which these are approved. 4. PROPERTY, PLANT AND EQUIPMENT ==========================================================================================
2010 2009
Note (Rupees in'000)
==========================================================================================
Operating fixed assets 4.1 120,865,072 58,971,309
Capital work-in-progress 4.2 20,567,238 23,222,543
141,432,310 82,193,852
==========================================================================================4.1. Operating fixed assets=======================================================================================================================================================================================================================
DOWN
COST/REVALUATION ACCUMULATED DEPRECIATION VALUE RATE
As at Additions/ (Disposals) Adjustments As at As at Charge Disposal Adjustments As at As at %
01 July Revaluation* 30 June 01 July for the 30 June 30 June
Note 2009 2010 2009 year 2010 2010
=======================================================================================================================================================================================================================
30 June 2010 (Rupees in '000)
Owned Assets
Land:
Leasehold land 4.1.1 1,067,600 2,448,723* - 277 3,516,600 - 280,250 - - 280,250 3,236,350 13 to 33.3
Other 4.1.2 415,862 - - (277) 415,585 - - - - - 415,585
Buildings on:
Leasehold land 56,577 622,601 - - 679,178 94 44,653 - - 44,747 634,431 2
Other land 3,322,645 347,168 - - 3,669,813 1,128,272 41,180 - - 1,169,452 2,500,361 2
Plant and machinery 4.14.1 43,089,343 12,168,228 - (125,108) 89,885,905 21,759,571 1,501,418 - (59,856) 23,201,133 66,684,772 3.3 to 20
34,753,442*
Transmission grid equipments 16,645,926 2,540,128 (9,471) - 30,467,124 7,277,529 504,305 (4,712) - 7,777,122 22,690,002 3 to 10
11,290,541*
Transmission lines 12,877,935 343,663 (2,760) - 13,218,838 5,535,154 377,358 (2,483) - 5,910,029 7,308,809 3 to 10
Distribution networks 30,741,942 1,235,092 (183,452) - 31,793,582 14,186,028 1,170,759 (159,480) - 15,197,307 16,596,275 3 to 10
Renewals of mains and services 1,457,092 5,855 - - 1,462,947 1,312,701 39,346 - - 1,352,047 110,900 20
Furniture, air-conditioners
and office equipment 502,232 61,558 (1,297) - 562,493 387,876 15,890 (1,167) - 402,599 159,894 10 to 15
Vehicles 510,376 6,583 (91,367) - 425,592 408,147 8,075 (60,107) - 356,115 69,477 15 to 20
Computers and related equipment 415,356 138,531 - - 553,887 233,483 56,523 - - 290,006 263,881 14.33-33.33
Tools and general equipment 446,449 110,955 (266) - 557,138 349,170 13,873 (240) - 362,803 194,335 10 to 15
Simulator equipment 67,713 - - - 67,713 67,713 - - - 67,713 - 14.33
111,617,048 66,073,068 (288,613) (125,108) 177,276,395 52,645,738 4,053,630 (n8,189) (59,856) 56,411,323 120,865,072
48,492,706*
17,580,362
=======================================================================================================================================================================================================================
WRITTEN
DOWN
COST/ REVALUATION ACCUMULATED DEPRECIATION VALUE RATE
As at Additions/ (Disposals) Adjustments As at As at Charge Disposal Adjustments As at As at %
01 July Revaluation* 30 June 01 July for the 30 June 30 June
2008 2009 2008 year 2009 2009
=======================================================================================================================================================================================================================
30 June 2009 (Rupees in '000)
=======================================================================================================================================================================================================================
Owned Assets
Leasehold land 371,977 745,466 - (49,843) 1,067,600 - - - - - 1,067,600 -
Other 366,019 - - 49,843 415,862 - - - - - 415,862 -
Buildings on:
Leasehold land 1,920,457 13,298 - (1,877,178) 56,577 758,799 38,294 - (796,999) 94 56,483 2
Other land 1,128,151 317,316 - 1,877,178 3,322,645 295,906 35,367 - 796,999 1,128,272 2,194,373 2
Plant and machinery 30,190,318 12,899,025 - - 43,089,343 20,915,775 843,796 - - 21,759,571 21,329,772 33 to 20
Transmission and distribution network 57,132,860 3,305,943 (8,000) (165,000) 60,265,803 25,067,305 1,942,407 (7,200) (3,800) 26,998,712 33,267,091 3 to 10
Renewals of mains and services 1,397,114 59,978 - - 1,457,092 1,281,959 30,742 - - 1,312,701 144,391 20
Furniture, air-conditioners and
office equipment 465,177 37,055 - - 502,232 377,667 10,209 - - 387,876 114,356 10 to 15
Vehicles 607,659 16,782 (113,694) (371) 510,376 460,711 28,803 (81,256) (111) 408,147 102,229 15 to 20
Computers and related equipment 327,043 88,313 - - 415,356 184,594 48,889 - - 233,483 181,873 14.33-33.33
Tools and general equipment 412,245 34,204 - - 446,449 341,986 7,184 - - 349,170 97,279 10 to 15
Simulator equipment 67,713 - - - 67,713 67,713 - - - 67,713 - 14.33
94,386,733 16,771,914 (121,694) (165,371) 111,617,048 49,752,415 2,985,691 (88,456) (3,911) 52,645,739 58,971,309
745,466*
17,517,380
=======================================================================================================================================================================================================================Additions of Rs. 16,771.914 million, as shown above, represent transfer from capital work-in-progress during the current year, as shown under capital work-in-progress in note 4.2.1.4.1.1. Leasehold land This represents leasehold lands owned by the Company which are freely transferable. 4.1.2. Other land Lands classified as other comprise properties in possession of the Company, which are not freely transferable. Lands classified as other include: ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Amenity:
- Leasehold 364,348 364,625
- Freehold 9,271 9,271
Leasehold land - owned 4.1.2.1 41,966 41,966
415,585 415,862
==========================================================================================4.1.2.1. This represents leasehold land in respect of which lease renewals are in the process.4.1.3. During the year ended 30 June 2009 and 3oJune 2010, revaluation exercises were carried out by an independent valuer, Colliers International Pakistan (Pvt) Ltd, lqbal Nanji and Company and Harvester Services (Pvt) Ltd. The fair values were determined with reference to market based evidence, based on active market prices and relevant enquiries and information as considered necessary, adjusted for any difference in nature, location or condition of the specific property and in case where market based evidence are not available or not applicable due to the specialized nature of asset, than it were based on depreciated replacement cost method. ==========================================================================================
Surplus on Cost/Written
revaluation down values
(Rupees in '000)
==========================================================================================
Leasehold land 2,448,723 277
Plant and machinery 34,753,442 30,727,998
Transmission grid equipments 11,290,541 11,399,460
48,492,706 42,127,735
==========================================================================================Had there been no revaluation, the values of specific classes of leasehold land, plant and machinery and transmission grid equipments would have been amounted to:==========================================================================================
Cost Book value
(Rupees in '000)
==========================================================================================
Leasehold land 322,413 322,413
Plant and machinery 50,802,746 30,727,998
Transmission grid equipments 19,176,583 11,399,460
70,301,742 42,449,871
==========================================================================================4.1.4.1. Certain generating units included in plant and machinery are not operative, accordingly, these have not been revalued and appearing at historical cost, less accumulated depreciation and impairment loss, if any.4.1.5. The cost of fully depreciated assets as at 30 June 2010 is Rs. 16,736 million (2009: Rs. 16,915 million). 4.1.6. Due to nature of Company's operations, certain assets included in transmission and distribution network are not in possession of the Company. In view of large number of consumers, the management considers it impracticable to disclose particulars of assets not in the possession of the Company as required under Para 5 of Part I of the Fourth Schedule to the Companies Ordinance, 1984. 4.1.7. Depreciation charge for the year has been allocated as follows:. ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Expenses incurred in
generation, transmission
and distribution 38 3,757,325 2,833,351
Consumer services and
administrative expenses 39 296,305 152,340
4,053,630 2,985,691
==========================================================================================4.1.8. The details of fixed assets disposed off are as follows:
================================================================================================================================================================
Original Accumulated Written Net sales Gain/(Loss) Mode of Particulars of
cost depreciation down value proceeds on Disposal disposal buyers
(Rupees in '000)
================================================================================================================================================================
Transmission and Distribution
Networks 75 MVA Transformer 4,000 3,600 400 8,931 8,531 Auction Muhammad Siddique Awan
20/26 MVA, 132/11 8,960 4,342 4,618 5,200 582 Auction M/s Brothers Metal
KV Transformer Works Private Limited
1500 KVA Transformer
and Switch Gears 4,721 2,344 2,377 4,557 2,180 Insurance claim -
Meters 156,517 140,865 15,652 17,772 2,120 Auction M/s Brothers Metal
Works Private Limited
Equipments - transmission 5,472 1,112 4,360 2,250 (2,110) Insurance claim -
Overhead-transmission 2,759 2,484 275 7,129 6,854 Auction M/s Universal
Meter Private Limited
Over head - distribution 13,254 11,929 1,325 27,094 25,769 Auction M/s Universal
Metal Private Limited
195,683 166,676 29,007 72,933 43,926
Tools and Genera equipments
Generator, water cooler, fridge 266 240 26 79 53 Auction M/s Muhammad Ramzan
Furniture, Airconditioners and
Office equipments
Airconditioners 1,297 1,167 130 465 335 Auction M/s Muhammad Ramzan
Vehicles
Sold to KESC - Officers
and empioyees
Suzuki Cultus ANV-482 482 434 48 319 271 As per Moula Buksh Shiekh
Company's policy
Toyota Corolla AC-7832 549 494 55 338 283 -do- Sajjad Ahmed
Suzuki Cultus ANV-481 482 434 48 319 271 -do- S.H. Haider Rizvi
Suzuki Potohar BC-2260 210 189 21 214 193 -do- Harichand Perchani
Suzuki Potohar BC-4046 436 392 44 231 187 -do- Waseem Ahmed Bablani
Suzuki Potohar BD-7152 537 484 53 332 279 -do- Aslam Khan
Suzuki Potohar BD-6879 537 484 53 332 279 -do- Mohammad Adil
Suzuki Ravi CN-1280 271 244 27 226 199 -do- Zulfiqar Hussain Amur
Suzuki Ravi CN-7862 271 224 47 283 236 -do- Sheeraz Ali
Suzuki Bolan CR-0931 319 263 56 304 248 -do- Abdul Hafeez Memon
Suzuki Mehran AHV-044 273 226 47 246 199 -do- Mohammad Tariq Khan
Suzuki Mehran AHS-271 273 226 47 246 199 -do- Syed Mohammad Younus
Suzuki Mehran APA-807 265 219 46 223 177 -do- S M Azhar Zaidi
Toyota Corolla AMA-540 879 277 602 792 190 -do- Asif Raza
Suzuki Mehran ANX-703 265 219 46 225 179 -do- M. Ilyas Mansoor
Suzuki Cultus ANW-355 482 398 84 372 288 -do- Abdul Waheed
Suzuki Mehran ANW-371 265 219 46 225 179 -do- Albert Massey
Toyota Corolla AHW-503 842 695 147 853 706 -do- M.Anwar Ali Roomi
Suzuki Mehran AHR-256 273 226 47 247 200 -do- Hassanuddin Tunio
Suzuki Mehran ANY-914 265 219 46 225 179 -do- Irshad Ali
Suzuki Cultus AQK-830 590 71 519 639 120 -do- Farqud Raza
Suzuki Cultus AQU-658 606 73 533 638 105 -do- Sameer Ul Haq Siddiqui
Suzuki Cultus AQZ-715 606 73 533 640 107 -do- Muhammad Ali
Honda Civic AQG-458 1,394 167 1,227 1,466 239 -do- Muhammad Rizwan Dalia
Toyota Corolla AQT-205 925 111 814 935 121 -do- Muhammad Amir Ghaziani
================================================================================================================================================================
Original Accumulated Written Net sales Gain/(Loss) Mode of Particulars of
cost depreciation down value proceeds on Disposal disposal buyers
(Rupees in'000)
================================================================================================================================================================
Suzuki Cultus AQ E-148 585 97 488 639 151 -do- Saad Ali Siddiqui
Honda Civic ASE-111 1,526 183 1,343 1,562 219 -do- M. Shahzad Yousuf
Honda City ARG-440 1,060 80 980 917 (63) -do- Syed Zahoor Akber
Suzuki Cultus AQG-231 585 70 515 639 124 -do- Muhammad Usman
Honda Civic ALH-573 1,227 902 325 890 565 -do- MunirHussain
Toyota Corolla Z-6075 549 494 55 138 83 -do- Slaeem Sanjar
Toyota Corolla Z-6150 549 494 55 138 83 -do- S. Ahmed Mohiuddin
Toyota Corolla AB-6244 599 539 60 151 91 -do- Mahmood Ahmed
Suzuki Potohar BC-4092 436 392 44 110 66 -do- Nazir Ahmed
Suzuki Potohar BC-0789 210 189 21 32 11 -do- Akberuddin Ahmed
Suzuki Ravi CJ-6888 175 158 17 160 143 -do- M.Azam Khan
Toyota Corolla ARA-111 1,005 256 749 980 231 -do- Abdul Qadir
Honda Civic ARE-211 1,575 260 1,315 1,400 85 -do- Mohammad MazharHussain
Honda Civic AMM-038 1,248 543 705 890 185 -do- Mohammad Ameen
Suzuki Cultus ANV-480 482 398 84 372 288 -do- MukhtarAhmed
Suzuki Mehran AHR-298 273 226 47 247 200 -do- M.Ali Qureshi
Suzuki Cultus ANV-498 483 398 85 372 287 -do- Syed Rashid Ali
Suzuki Mehran AHR-294 274 226 48 247 199 -do- Zakir Hussain
Suzuki Mehran ANZ-827 265 219 46 225 179 -do- M.Ajaz Ul Haq
Suzuki Mehran ANW-359 265 219 46 225 179 -do- Mustafa Hussain
Honda Civic AMD-777 1,227 791 436 951 515 -do- Hyder Ali
Suzuki Cultus ANV-479 483 398 85 372 287 -do- Amir Saeed Murad
Suzuki Mehran ANW-364 265 219 46 225 179 -do- Masood Ahmed
Suzuki Mehran ANW-340 265 219 46 225 179 -do- Ateeq Uzzaman Khan
Suzuki Mehran APA-577 265 219 46 225 179 -do- Muhammad Siddiq
Suzuki Mehran ANX-704 265 219 46 225 179 -do- Sirajuddin A Khan
Suzuki Mehran ANW-372 265 219 46 225 179 -do- Shamsul Arfin Qasmi
Suzuki Mehran APB-304 265 219 46 225 179 -do- Muazzam Khan
Suzuki Mehran ANW-369 265 219 46 225 179 -do- M.Waseem Ashfaque
Suzuki Ravi CN-0086 271 244 27 206 179 -do- Meraj Alam
Suzuki Ravi CR-9870 271 244 27 268 241 -do- Javed Iqbal
Suzuki Bolan CJ-8776 260 234 26 214 188 -do- AmjadAli
Toyota Corolla ANV-960 738 609 129 636 507 -do- M. lmran Sheikh
Toyota Corolla APJ-451 980 162 8i8 965 147 -do- Pervez Musani
Honda Civic AQT-065 1,551 186 1,365 1,557 192 -do- Syed Moonis Abdullah Alvi
Honda City AMJ-685 999 345 654 767 113 -do- Sajjad ZahoorSyed
Honda City AMU-348 1,036 357 679 814 135 -do- Ahmed Moosa
Toyota Corolla APY-063 1,005 166 839 966 127 -do- Syed Khalil Ahmed
Suzuki Mehran ANY-806 258 232 26 221 195 -do- Abbas Ali
Suzuki Mehran AFQ-572 258 232 26 221 195 -do- Sarwat Sultana
Suzuki-Mehran AHR-286 274 226 48 247 199 -do- Muhammad lqbal
Suzuki Mehran ANX-716 265 219 46 225 179 -do- Abdur Rashid
Suzuki Mehran ANW-348 265 219 46 225 179 -do- Allah Dino
Suzuki Cultus ANV-487 483 398 85 372 287 -do- Syed Anwer AIi
Suzuki Mehran ANW-360 265 219 46 225 179 -do- Muhammad Ismail Khan
Suzuki Cultus ANV-466 483 398 85 372 287 -do- Syed lftikharAhmed
Suzuki Mehran AHR-253 274 226 48 247 199 -do- RaeesAhmed Siddiqui
Suzuki Mehran ANW-370 265 219 46 226 180 -do- Samina Almas
Suzuki Mehran ANZ-821 265 219 46 225 179 -do- Abdul Basit
Suzuki Mehran ANY-216 265 219 46 225 179 -do- S.M.Mushtaq Ul Haq
Suzuki Mehran ANW-350 265 219 46 225 179 -do- Muhammad Vousuf
Suzuki Mehran ANW-346 265 219 46 225 179 -do- Muhammad Afzal Gafoor
Suzuki Mehran ANY-815 265 219 46 225 179 -do- Akhter Hussain Memon
Suzuki Mehran ANX-705 265 219 46 225 179 -do- Mirza Aziz Shahid
Suzuki Mehran ANX-709 265 219 46 225 179 -do- Sispai M Mulani
Suzuki Bolan CN-2430 319 287 32 264 232 -do- Jamshed Raza
================================================================================================================================================================
Original Accumulated Written Net sales Gain/(Loss) Mode of Particulars of
cost depreciation down value proceeds on Disposal disposal buyers
(Rupees in' 000)
================================================================================================================================================================
Suzuki Bolan CJ-9287 278 250 28 226 198 -do- Ramesh Kumar
Suzuki Bolan CD-2137 135 122 13 151 138 -do- Maqsood Khaliq
Suzuki Ravi CN-7540 319 263 56 317 261 -do- Mumtaz Ahmed Khan
Toyota Corolla AB-0237 577 519 58 339 281 -do- Muhammad Ashraf Memon
Toyota Corolla ANE-440 969 291 678 968 290 -do- AsifSiddiqui
Suzuki Mehran ANW-357 258 232 26 221 195 -do- Mehboob Alam
Suzuki Mehran AFQ-598 258 232 26 221 195 -do- Zeenat Ali
Suzuki Mehran AFP-680 258 232 26 221 195 -do- Nizamuddin Bhatti
Suzuki Mehran AES-638 260 234 26 221 195 -do- Zafar Hassan
Suzuki Mehran AEU-208 260 234 26 221 195 -do- Malik Dino Mahar
Suzuki Mehran ANW-366 265 219 46 225 179 -do- Dr.Zohra Rafat Anis
Suzuki Mehran AHR-295 274 226 48 247 199 -do- Ehtashamul Haque
Suzuki Cultus ANV-468 483 398 85 372 287 -do- Muhammad Qamar
Suzuki Mehran ANZ-817 265 219 46 224 178 -do- Shamim Alam
Suzuki Mehran ANW-361 265 219 46 224 178 -do- Hashmat Ali
Suzuki Mehran ANY-205 265 219 46 224 178 -do- Jamaluddin
Suzuki Mehran ANZ-815 265 219 46 224 178 -do- Ashfaq Ahmed
Suzuki Mehran ANY-215 265 219 46 224 178 -do- Gul Hassan Sheikh
Suzuki Mehran ANX-714 265 219 46 224 178 -do- Abid Latif
Suzuki Mehran AHS-267 274 226 48 247 199 -do- S.M.Sajid Ali
Suzuki Mehran ANZ-819 265 219 46 224 178 -do- Naseem Raza
Suzuki Mehran ANW-344 265 219 46 224 178 -do- Tariq Jamal
Suzuki Mehran AHR-283 274 226 48 247 199 -do- Sheikh Raza Ul Hassan
Suzuki Mehran APA-815 265 219 46 223 177 -do- Muhammad Iqbal
Suzuki Mehran AHV-612 274 226 48 247 199 -do- Javaid jamil Khan
Suzuki Mehran ANX-708 265 219 46 224 178 -do- Muhammad Amin
Suzuki Mehran AHV-043 274 226 48 247 199 -do- Gobind Ram Narwani
Suzuki Mehran APA-811 265 219 46 224 178 -do- Muhammad Usman
Suzuki Mehran ANY-213 265 219 46 225 179 -do- Muhammad Maqsood Ali
Suzuki Mehran AHR-284 274 226 48 247 199 -do- Mohsin Mohiuddin
Suzuki Mehran ANZ-825 265 219 46 224 178 -do- Gulzar Ahmed
Suzuki Mehran ANX-702 265 219 46 224 178 -do- Ashfaquddin Ahmed
Suzuki Mehran ANY-201 265 219 46 224 178 -do- Nausheen Wajid
Suzuki Mehran AHR-287 274 226 48 249 201 -do- Ubaid Akhter
Suzuki Cultus ANV-465 483 398 85 372 287 -do- M. Ubedullah Tufail
Suzuki Mehran ANW-367 265 219 46 225 179 -do- Shams Tabrez Khan
Suzuki Mehran APA-803 265 219 46 225 179 -do- Amin Ul Hasnat
Suzuki Mehran AHV-041 274 226 48 247 199 -do- Hassan Raza Abbasi
Suzuki Mehran ANZ-816 265 219 46 225 179 -do- Sohail Ahmed
Suzuki Mehran ANW-362 265 219 46 225 179 -do- Muhammad Wasim
Suzuki Cultus AHN-388 483 398 85 484 399 -do- Khalid Jamil
Suzuki Jeep BA-6252 100 90 10 126 116 -do- Deedar Ali
Suzuki Jeep BC-3979 437 392 45 231 186 -do- Sohail Hussain
Suzuki Jeep BC-4159 461 414 47 231 184 -do- Zulfiqar Ahmed Jilani
Suzuki Jeep BC-2279 211 189 22 215 193 -do- Mushtaq Ahmed
Suzuki Jeep BC-3215 211 189 22 221 199 -do- S.M.AsifAli
Suzuki Jeep BC-1074 210 189 21 214 193 -do- Inamullah Tariq
Suzuki Jeep BC-0788 210 189 21 196 175 -do- Syed Inam Mehdi
Suzuki Bolan CR-9844 319 287 32 306 274 -do- Ali Akber
Suzuki Ravi CN-0081 271 244 27 206 179 -do- Kamal Najmuddin
Suzuki Bolan CR-9842 319 287 32 305 273 -do- Mir Maqsood Rashid
Suzuki Ravi CR-9876 271 244 27 268 241 -do- Azhar Ali
Suzuki Ravi CN-0130 271 244 27 206 179 -do- Muhammad Moinuddin
Suzuki Bolan CN-7548 320 263 57 317 260 -do- Sultan Ahmed
Suzuki Bolan CN-7547 320 263 57 317 260 -do- Sheikh Umer Ahmed
Suzuki Ravi CR-2120 312 201 111 300 189 -do- Muhammad Mureed
Suzuki Bolan CR-0616 320 263 57 305 248 -do- Qazi Nisar Ahmed
================================================================================================================================================================
Original Accumulated Written Net sales Gain/(Loss) Mode of Particulars of
cost depreciation down value proceeds on Disposal disposal buyers
(Rupeesin'000)
================================================================================================================================================================
Honda Civic ARE-209 1,576 118 1,458 1,481 23 -do- Syed Abid Hussain
Honda Civic APY-037 1,557 374 1,183 1,490 307 -do- S.Arshad Masood Zahidi
Honda Civic APS-572 1,554 396 1,158 1,490 332 -do- S.Arshad Masood Zahidi
Suzuki Margalla Z-6671 325 293 32 229 197 -do- Mehmood Ahmed Khan
SuzukiMehran ANY-801 265 219 46 225 179 -do- ZafarUllah
SuzukiMehran ANY-209 265 219 46 225 179 -do- FidaHussain
Suzuki Mehran AHV-615 274 226 48 247 199 -do- Syed Haroon Rashid
Suzuki Mehran APF-840 265 219 46 225 179 -do- Ghulam Mustafa Khanzada
Suzuki Mehran AHR-297 274 226 48 247 199 -do- Asim Mukhtar
Suzuki Mehran APG-809 265 219 46 225 179 -do- Shabaz Naser
Suzuki Cultus ANV-469 483 398 85 372 287 -do- Syed Shakil Ahmed
Suzuki Mehran ANX-710 265 219 46 225 179 -do- Anwer Javed
Suzuki Mehran ANZ-830 265 219 46 225 179 -do- Hasan Tariq
Suzuki jeep BA-6270 138 124 14 151 137 -do- Muzaffar Khan
Suzuki Bolan CD-3581 136 122 14 161 147 -do- Safdar Ali
Suzuki Bolan CJ-0019 260 234 26 226 200 -do- Zahoor Ahmed
Suzuki Bolan Cj-8761 260 234 26 214 188 -do- Syed Zahid Hussain
Suzuki Bolan CN-7528 320 263 57 317 260 -do- Nayer Mukhtar Khan
Suzuki Bolan CR-1009 320 263 57 305 248 -do- Muhammad Junaid Abbasi
Suzuki Jeep BA-6258 110 99 11 136 125 -do- Syed Riaz Mahmood
Suzuki Jeep BC-3957 436 392 44 231 187 -do- Syed Muhammad Noman
Suzuki Bolan CR-0940 319 263 56 305 249 -do- Muhammad Idrees
Toyota Corolla ARB-487 980 74 906 936 30 -do- Syed Muhammad Rizvi
Suzuki Potohar BC-2281 210 189 21 32 11 -do- Syed Shabbir Hasnain
Suzuki Mehran AFQ-502 259 232 27 221 194 -do- Muhammad Aqeel Khan
Suzuki Mehran APG-310 265 218 47 225 178 -do- Muhammad Pervez Iqbal
Suzuki Mehran ANW-342 265 218 47 225 178 -do- Muhammad Baga
Suzuki Mehran ANY-807 265 218 47 225 178 -do- Faiz Muhammad Jalbani
Suzuki Mehran AHS-269 274 226 48 247 199 -do- TahirJamil Mir
Suzuki Mehran ANW-349 265 218 47 225 178 -do- Jawed Akhter
Suzuki Mehran AHV-610 274 226 48 247 199 -do- Niaz Ahmed
Suzuki Jeep BC-2278 210 189 21 214 193 -do- Irshad Ur Rahim
Suzuki Jeep BD-7151 537 484 53 335 282 -do- Syed Nayyer Hussain
Suzuki Bolan CN-7545 319 263 56 317 261 -do- Nooruddin Panhwar
Suzuki Ravi CN-7856 271 224 47 231 184 -do- ArshadAli
Suzuki Bolan CN-7538 319 263 56 317 261 -do- Muhammad Yasin Edhi
Suzuki Bolan CR-9843 319 287 32 305 273 -do- Abid Ali
Suzuki Ravi CN-2370 271 244 27 246 219 -do- Amir Ahmed
Honda Civic AQC-610 1,420 170 1,250 1,478 228 -do- Qazi Tameez Ahmed
Suzuki Bolan CJ-6119 190 171 19 29 10 -do- Barkatullah Khan
Suzuki Mehran AFP-690 258 232 26 221 195 -do- Mir FakhirAli
Suzuki Mehran APG-311 265 219 46 225 179 -do- Abdul Jabbar Dahar
Suzuki Mehran AHR-293 274 226 48 246 198 -do- Fatehullah Khan
Suzuki Mehran AHV-608 275 226 49 246 197 -do- Siraj Ahmed
Suzuki Mehran ANW-358 266 219 47 224 177 -do- Mohammad Ismail
Suzuki Mehran APA-805 266 219 47 224 177 -do- SMuhammad Abid Hassan
Suzuki Mehran ANX-701 266 219 47 224 177 -do- Waseem Farooqi
Suzuki Mehran AHV-611 276 226 50 247 197 -do- Muhammad Irfan Ghani
Suzuki Jeep BC-3792 250 225 25 230 205 -do- jamil Ur Rehman
Suzuki Jeep BC-0791 210 188 22 196 174 -do- Abdul Qudoos Memon
Suzuki Jeep BD-7194 538 443 95 372 277 -do- Mumtaz Alam Khan
Suzuki Bolan CN-7542 320 262 58 316 258 -do- Farrukh Saeed
Suzuki Bolan CJ-8822 260 233 27 226 199 -do- Hussain Akhter
Santro APC-827 559 117 442 466 24 -do- Muhammad Hayat
Toyota Corolla AHT-671 843 758 85 807 722 -do- Abdul Khaliq Shaikh
Suzuki Ravi CE-5117 57 51 6 15 9 -do- Muhammad Iqbal Khan
80,712 50,536 30,176 69,168 38,992
================================================================================================================================================================
Original Accumulated Written Net sales Gain/(Loss) Mode of Particulars of
cost depreciation down value proceeds on Disposal disposal buyers
(Rupees in'000)
================================================================================================================================================================
Others: Outside party
Suzuki Jeep BA-6266 138 124 14 145 131 Auction Imtiaz Ali
Suzuki Jeep BC-0457 190 171 19 i6o 141 -do- Abid Khokar
Suzuki Jeep BC-0783 210 189 21 145 124 Sultan Ahmed
Suzuki Jeep BA-6285 155 140 15 140 125 -do- Muhammad lariq
Suzuki Bolan CE-5217 92 83 9 140 131 -do- Sajid Mehmood
Suzuki Bolan CJ-6312 190 171 19 145 126 -do- Muhammad Saghir
Suzuki Pick-Up Cj-4395 116 104 12 151 139 Abdul Aziz
Suzuki Ravi CJ-4411 116 104 12 125 113 -do- Muhammad Alam
Suzuki Pick-Up Cj-6884 175 158 17 160 143 -do- Malik Zahoor
Suzuki Pick-Up Cj-6887 175 158 17 90 73 -do- Abdul Rasheed
Suzuki Mehran AB-2179 238 214 24 io6 82 -do- lmran Aslam
Suzuki Mehran AB-1890 213 192 21 75 54 -do- Khaliq Sharif
Suzuki Margala AB-0038 325 293 32 175 143 -do- Shujauddin
Suzuki Khayber AB-6542 304 274 30 120 90 -do- Abbas Khan
Nissan Sunny AC-78o4 527 474 53 158 105 -do- Munir Ahmed
Honda Civic AC-7833 671 604 67 280 213 -do- Zafarullah Sheikh
Suzuki Mehran U-4364 120 108 12 75 63 Haji Khan
Suzuki Jeep BA-6237 96 86 10 145 135 -do- Noman Waheed
Suzuki Jeep BA-6243 97 87 10 145 135
Suzuki Jeep BA-6248 100 90 10 145 135
Suzuki Bolan Cj-9397 260 234 26 146 120 -do- lmran Riaz
Suzuki Bolan CJ-0595 135 122 13 120 107
Suzuki Bolan Cj-0576 135 122 13 121 108
Suzuki Bolan Cj-6118 190 171 19 146 127 -
Suzuki Bolan Cj-0577 135 122 13 124 111 -do- Noman Waheed
Suzuki Bolan Cj-0594 135 122 13 124 111
Suzuki Bolan CE-5225 105 95 10 110 100
Suzuki Bolan CD-3594 135 122 13 122 109
Suzuki Bolan CE-5181 67 6o 7 100 93
Suzuki Bolan CE-5214 92 83 9 146 137 lmran Raiz
Suzuki Bolan CE-5218 92 83 9 146 137
Suzuki Bolan CJ-8762 260 234 26 148 122
Toyota Pick-Up CE-5032 118 106 12 170 158 Noman Waheed
Suzuki Mehran W-0139 170 154 16 100 84 -do- Asghar Ali
Suzuki Mehran AAD-037 248 224 24 115 91
Suzuki Khayber W-7453 179 i6o 19 118 99 -do- Hayat Khan
Suzuki Khayber AB-0495 298 267 31 118 87
Toyota Hilux CG-6415 335 300 35 300 265 -do- Noman Waheed
Mishtubishi Van CP-1588 415 374 41 170 129 -do- Saqib Aqeel
Mishtubishi Van CD-0681 440 396 44 165 121
Mishtubishi Van CJ-1556 385 347 38 170 132
Mishtubishi Van CP-0243 419 377 42 163 121
Mishtubishi Van CJ-1553 385 347 38 163 125
Mishtubishi Van EA-0467 419 378 41 164 123
Crane JT-6993 - - - 1,800 1,800 -do- Abdul Karim
9,800 8,824 976 8,094 7,118
Others: Insurance claim
Suzuki Pick-up CN-2611 271 244 27 - (27) Insurance claim -
Suzuki Pick-up CN-1285 271 244 27 - (27) Insurance claim -
Suzuki Pick-up CR-1380 313 259 54 270 216 Insurance claim -
855 747 108 270 162
Vehicles Sub Total 91,367 60,107 31,260 77,532 46,272
30 June 2010 288,613 228,190 60,423 151,009 90,585
30 June 2009 121,694 88,456 33,238 72,637 39,399
================================================================================================================================================================4.2. CAPITAL WORK-IN-PROGRESS4.2.1. The movement of CWIP during the year is as follows: ===============================================================================================================
Plant and Transmission Distribution
machinery system system Others Total
(Rupees in '000)
===============================================================================================================
Opening balance 14,374,134 6,066,602 2,417,353 364,454 23,222,543
Additions during the year:
System improvement 4,496 757,648 3,983 - 766,127
220 MW Combine Cycle 327,947 - - 327,947
Power Plant
560 MW Combine Cycle
Power Plant 5,360,543 - - - 5,360,543
80 MW Gas Turbine
Power Plant 3,072,847 - - 3,072,847
Others 535,743 1,154,047 3,010,010 735,549 5,435,349
9,301,576 1,911,695 3,013,993 735,549 14,962,813
23,675,710 7,978,297 5,431,346 1,100,003 38,185,356
Transferred to the:
Operating fixed assets 4.1 (12,888,449 (3,230,379) (1,238,275) (223,259) (17,580,362)
Intangible assets 5.1 - - - (37,756) (37,756)
(12,888,449) (3,230,379) (1,238,275) (261,015) (17,618,118)
2010 10,787,261 4,747,918 4,193,071 838,988 20,567,238
2009 14,374,134 6,066,602 2,417,353 364,454 23,222,543
===============================================================================================================5. INTANGIBLE ASSET==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Computer softwares
Cost 5.1 83,293 45,537
Amortization during the year 5.2 (45,691) (24,971)
37,602 20,566
==========================================================================================5.1. Cost==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Opening balance 4.2.1 45,537 42,675
Additions during the year 5.3 37,756 2,862
83,293 45,537
Amortization to-date
Opening balance (24,971) (10,668)
Amortization during the year 5.2.1 (20,720) (14,303)
(45,691) (24,971)
Useful Life 3 years 3 years
==========================================================================================5.2.1.==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Amortization charge for the year has
been allocated to administrative expenses 39 20,720 14,303
==========================================================================================5.3. Computer system include ERP system - SAP, antivirus and other softwares.6. LONG-TERM LOANS ======================================================================================================
Secured Unsecured
House building Festival
loans loans
Note (note 6.1) (note 6.2) 2010 2009
(Rupees in '000)
======================================================================================================
Considered good - Secured
Executives 6.6 1 258 259 348
Employees 8,953 78,830 87,783 100,171
8,954 79,088 88,042 100,519
Recoverable within one year
shown under current assets 6.2 & 11 (8,706) (3,953) (12,659) (7,552)
248 75,135 75,383 92,967
Considered doubtful
Employees 6.3 4,333 - 4,333 4,333
4,581 75,135 79,716 97,300
Provision for impairment (against
loans considered doubtful) (4,333) - (4,333) (4,333)
248 75,135 75,383 92,967
======================================================================================================6.1. House building loans, carrying mark-up @ 6% per annum (2009: 6% per annum), are recoverable over a period of sixteen years. These are secured against the equitable mortgage of relevant properties.6.2. These are non-interest bearing loans and have been granted to the employees of the Company. The Board of Directors in their meeting held on 01 February 2003 approved the deferment of the recovery of these loans in instalments and decided that the said loans would be recovered against the final settlement of the employees at the time of their retirement. The amount disclosed as recoverable within one year is receivable from employees expected to retire within one year. 6.3. These balances pertain to the ex-employees of the Company against whom legal proceedings have been initiated for the purpose of recovery. 6.4. Long-term loans have not been discounted to their present value as the financial impact thereof is not considered material by the management. 6.5. The maximum aggregate amount of loans due from the executives and employees of the Company at the end of any month during the year was Rs. 104.356 million (2009: Rs. 110.518 million). 6.6. Reconciliation of carrying amount of loans to executives: ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Balance at beginning of the year 348 656
Less: Repayments (89) (308)
Balance at end of the year 259 348
==========================================================================================7. LONG-TERM DEPOSITS AND PREPAYMENTS==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Considered good
Deposits
Rental premises 18,322 18,322
Lease deposits - 34,000
Utilities and others 4,077 2,687
Supplier 7.1 83,931 183,320
Recoverable within one year
shown under current assets 12 (83,931) (95,646)
- 87,674
7.3 22,399 142,683
Prepayments
Rental projects 7.2 51,668 170,099
Adjustable within one year
shown under current assets 12 (51,668) (78,507)
- 91,592
Considered doubtful
Rental premises 1,020 1,020
Provision for impairment (1,020) (1,020)
22,399 234,275
==========================================================================================7.1. This represents amount equivalent to USD 2,555,280 given to Aggreko International Project Limited against Power Rental Agreement dated 04 September 2008 for a period of two years for generation facilities of 50 MW located at S.l.T.E and West Wharf, Karachi. The said deposit is adjustable in equal monthly instalments of US Dollars 49,140 for each facility through issuance of credit notes from commercial operation date of the plant (i.e. 17 March 2009).7.2. This represents expenses incurred for mobilization, transportation, installation and commissioning of power plants under Rental Power Agreement. The said amount is taken to profit and loss account over the period of the said agreement. 7.3. These are non-interest bearing and are generally on terms of one to more than five years. 8. DUE FROM THE GOVERNMENT ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Amount due from the Government
of Pakistan (GoP) 8.1 634,750 872,782
Recoverable within one year
shown under current
assets (including overdue
instalments of Rs. 158.688
million (2009: Rs. 79.344 million) (476,063) (396,719)
158,687 476,063
==========================================================================================8.1. This represents amount accrued by the Company as due from the GoP to settle its liability to the Oil and Gas Companies, as discussed in detail in note 21.6. These are non-interest bearing and are receivables latest by 30 November 2011.9. STORES AND SPARES ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Stores and spares 9.2 5,554,188 5,380,348
Provision against slow moving and
obsolete stores and spares 9.1 (6o8,949) (683,723)
4,945,239 4,696,625
==========================================================================================9.1. Provision against slow moving and obsolete stores and spares==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Opening balance 683,723 739,073
Provision made during the year - -
683,723 739,073
Reversal during the year (74,774) (55,350)
608,949 683,723
==========================================================================================9.2. Included herein, stores in transit amounting to Rs. 153.118 million (2009: Rs. 270.621 million).10. TRADE DEBTS ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Considered good
Secured - against deposits
from consumers 23 724,389 661,651
Unsecured 28,305,185 18,452,568
10.1 & 10.4 29,029,574 19,114,219
Considered doubtful 10.2 15,086,761 14,271,672
44,116,335 33,385,891
Provision for impairment
(against debts considered doubtful). 10.2 (15,086,761) (14,271,672)
29,029,574 19,114,219
==========================================================================================10.1. This includes gross receivable of Rs. 15,696 million (2009: Rs. 11,376 million) due from Government and autonomous bodies.10.2. Provision for impairment (against debts considered doubtful) ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Opening balance 14,271,672 13,495,664
Provision made during the year 1,992,962 776,008
16,264,634 14,271,672
Provision written off during the year (1,177,873) -
15,086,761 14,271,672
==========================================================================================10.3. Energy sales to and purchases from NTDC, PASMIC and KANUPP are recorded through their respective accounts to facilitate recovery of energy dues by offsetting receivables against liabilities for purchase of energy.10.4. As at 30 June, the age analysis of unimpaired trade debts is as follows: ==================================================================================================================
Neither Past due but not impaired
past due
nor impaired >30 days 1-2 2-3 3-4 4 years
Total upto 1 years years years years and above
(Rupees in '000)
==================================================================================================================
2010 29,029,574 2,625,032 8,985,212 6,537,346 4,587,069 2,245,730 4,049,185
2009 19,114,219 2,686,322 6,381,330 4,642,847 2,570,529 140,761 2,692,430
==================================================================================================================11. LOANS AND ADVANCES==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Loans - secured
Considered good
Current portion of long term loans 6 12,659 7,552
Advances - unsecured
Considered good
Employees 20,044 10,379
Suppliers 11.1 773,319 380,856
793,363 391,235
Considered doubtful
Suppliers 130,340 130,340
923,703 521,575
Provision for impairment
(against advances considered doubtful) (130,340) (130,340)
11.2 793,363 391,235
806,022 398,787
==========================================================================================11.1. These represent advances to suppliers for purchase of stores and spares.11.2. These are non-interest bearing and generally on terms of 3 to 12 month. 12. TRADE DEPOSITS AND PREPAYMENTS ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Trade deposits
Deposits 12.1 & 12.2 11,899,308 937,238
Current portion of long-term deposits 7 83,931 95,646
11,983,239 1,032,884
Prepayments
Rent 642 6,013
Insurance 55,882 33,538
Others 12.3 58,668 48,528
Current portion of rental projects 7 51,668 78,507
12.4 166,860 166,586
12,150,099 1,199,470
==========================================================================================12.1. This includes Rs. 459.134 million (2009: Rs. 99.264 million), representing margins / guarantee deposits held by commercial banks against guarantees, letter of credits and other payments.12.2. This includes Rs. 11,428.292 million (2009: Rs. 829.984 million) which represents deposits under lien against letter of credits with commercial banks. It carries mark up ranging from 5% to 9% per annum (2009: 12.77% to 13.26% per annum). 12.3. Represents amount paid to O&M Solutions to provide project management services in respect of generation and transmission of electricity. 12.4. These are non-interest bearing and generally on terms of 1 to 12 month. 13. OTHER RECEIVABLES ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Considered good
Sales tax - net 13.1 4,742,230 5,715,286
Due from the Government of
Pakistan in respect of:
Sales tax on selected classes of consumers 397,274 285,884
Tariff adjustment 10,641,754 14,034,104
Interest receivable from GoP on
Demand Finance facilities 237,173 1,151,664
11,276,201 15,471,652
Insurance claim - 2,127
Others 50,983 -
13.2 16,069,414 21,189,065
Considered doubtful
Sales tax 13.1 232,050 232,050
Provision for impairment 13.1 (232,050) (232,050)
Due from a Consortium of
Suppliers of Power Plant 363,080 363,080
Provision for impairment (363,080) (363,080)
16,069,414 21,189,065
==========================================================================================13.1. This includes a sum of Rs. 185.225 million relating to the refund claims for the period from July 2006 to June 2007 and Rs. 425.234 million relating to the refund claims for the period 2000-2006, aggregating to Rs. 610.459 million, withheld by the Sales Tax Department on account of sales tax on service connection charges, sales tax on meter burnt charges, input inadmissible and some other matters. The audit observations issued by the Department in this regard have already been responded by the Company's lawyer.The management is of the view that the ultimate outcome of this matter will be decided in favour of the Company. The Company has made an aggregate provision of Rs. 232.050 million in prior years, against above refundable balance of Rs. 610.459 million. 13.2. As at 30 June 2010 receivables aggregating to Rs. 16,069.414 million (2009: Rs. 21,189.065 million) were non-interest bearing and were past due but not impaired. 14. DERIVATIVE FINANCIAL ASSETS ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Cross currency swap 766,453 575,000
==========================================================================================14.1. This represents the fair value of Cross Currency Swaps, net off loss Rs. 237.073 million (2009: Rs. 201.568 million).The Company has entered into a Cross Currency Swap with a commercial bank at the notional amount of Rs. 2,749.950 million (equivalent to USD 45 million), Rs. 4,067.500 million (equivalent to USD 50 million) and -Rs 4,697.000 million (equivalent to USD 55 million) to hedge the Company's foreign currency obligations upto USD 150 million to International Finance Corporation (IFC) and Asian Development Bank (ADB) for Principal and LIBOR interest thereon, as discussed in note 21.1 and 21.3. Pursuant to the agreements, the Company's foreign currencies obligations upto USD 150 million have been converted into the hedged PKR amount and the interest rate accruing thereon has been paid to the hedging bank at 3 month KIBOR -0.10%. The above hedging exposures to variability in cash flows due to interest / currency risks are designated as cash flow hedges by the management of the Company. 15. TAXATION � net ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Advance income tax 2,031,666 1,781,385
Provision for taxation (1,560,837) (1,560,837)
470,829 220,548
==========================================================================================16. CASH AND BANK BALANCES==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Cash in hand 12,689 3,287
Cash at banks in:
Current accounts 355,329 283,159
Deposit accounts 6.1 69,883 783,847
Collection accounts 751,523 57,351
1,176,735 1,124,357
1,189,424 1,127,644
==========================================================================================16.1. These carries mark up ranging from 5% to 12.5% per annum (2009: 5% to 6.5%per annum.17. SHARE CAPITAL ==========================================================================================================
2010 2009 2010 2009
(Number of shares) Note (Rupees in '000)
==========================================================================================================
Authorized Share Capital
25,714,285,7 14 25,714,285,714 Ordinary shares of Rs.3.5 17.1 90,000,000 90,000,000
each fully paid
2,857,142,857 2,857,142,857 Redeemable Preference 17.1 10,000,000 10,000,000
28,571,428,571 28,571,428,571 shares of Rs.3.5 each 100,000,000 100,000,000
fully paid
Issued, Subscribed and
Paid-up Capital
Issued for cash
45,371,105 45,371,105 Ordinary shares of Rs. 10 453,711 453,711
each fully paid
6,582,788,730 - Ordinary shares of Rs. 3.5 17.2 22,897,876 -
each fully paid - net -
1,714,285,713 1,714,285,713 Redeemable Preference 17.3 & 5,983,407 5,983,407
shares of Rs. 3.5 each 17.10
fully paid-net
8,342,445,548 1,759,656,818 29,334,994 6,437,118
Issued for consideration
other than cash
304,512,300 304,512,300 Ordinary shares of Rs. 10 17.4 3,045,123 3,045,123
each fully paid
1,783,456,000 1,783,456,000 Ordinary shares of Rs. 10 17.5 17,834,560 17,834,560
each fully paid
6,534,077,300 534,077,300 Ordinary shares of Rs. 10 17.6 65,340,773 65,340,773
each fully paid
4,366,782,389 4,366,782,389 Ordinary shares of Rs. 3.50 17.7 15,283,738 15,283,738
each fully paid
12,988,827,989 12,988,827,989 101,504,194 101,504,194
21,331,273,537 14,748,484,807 130,839,188 107,94,3
Issued as bonus shares
132,875,889 132,875,889 Ordinary shares of Rs.10 each 1,328,759 1,328,759
fully paid as bonus shares
21,464,149,426 14,881,360,696 17.9 132,167,947 109,270,071
- - Reduction in capital 17.8 & (57,201,902) (57,201,902)
21,464,149,426 14,881,360,696 17.9 74,966,045 52,068,169
==========================================================================================================17.1. During the year ended 30 June 2006 pursuant to a Special resolution passed in the Extra Ordinary General Meeting of the shareholders of the Company, held on 02 March 2006, the share capital of the Company was determined at Rs. 100,000 million, divided into the following categories of shares:- Ordinary share capital of Rs. 90,000 million, divided into 25,714,285,714 Ordinary shares of Rs. 3.50 each; and - Redeemable Preference share capital of Rs. 10,000 million, divided into 2,857,142,857 Redeemable Preference shares of Rs. 3.50 each. 17.2. This represents further share capital issued during the year net of transaction cost of Rs. 141.884 million. The -Company issued 6,582,788,730 ordinary shares of Rs. 3.5 each. KES Power Limited (the holding Company) had subscribed for its share of right issue and also subscribed unsubscribed minority shares. The Government of Pakistan has also subscribed for its share in the right issue. 17.3. This represents net off transaction cost of Rs. 16.592 million incurred on issue of Redeemable Preference shares. The same has not been amortised during the year, as the effect of amortisation is not considered material. These include 422,340,723 Redeemable Preference shares of Rs. 3.50 each, aggregating to Rs. 1,478.193 million, issued during the year ended 30 June 2008 against advance received in respect of these shares during the year ended 30 June 2007. These are cumulative Redeemable Preference shares, issued by way of right issue to the existing shareholders, carrying a dividend of 3 percent per financial year, to be declared on the face value of Rs. 3.50 per Redeemable Preference share and are redeemable within a period of 90 days from 7 years after 28 November 2005. The Preference shareholders are only entitled to receive Preferential Dividend and are not entitled to share in any other dividend, whether in cash or specie, entitlement or benefit, including, without limitation, right shares and bonus shares, to which the holders of Ordinary Shares may be entitled. If preferential dividend is not declared in whole or in part by the Company for any financial year, such whole or remainder amount of the Preferential Dividend shall be carried over for payment to Redeemable Preference Shareholders in the next financial year(s) and so on, until the Preferential Dividend has been paid in full, the whole or part of any preferential dividend automatically becomes cumulative to the extent that it has not been declared and paid. The cumulative preference dividend does not bear any interest or mark-up. These shares shall be redeemed by the Company at the Redemption Price on the respective redemption date from the profits of the Company as are available for distribution as dividends under the Laws of Pakistan but not from the proceeds resulting from the issuance of any new shares by the Company. The shareholders, interalia, have the right to convert these into Ordinary shares in the ratio of 3 Ordinary shares for every 4 Preference shares held, if the Company fails to redeem these shares. 17.4. During the year ended 30June 1999, the Company issued 304,512,300 Ordinary shares of Rs.10 each as a result of the conversion of overdue outstanding balance of (a) rescheduled foreign currency loan of Rs. 1,968.000 million and (b) cash development loan of Rs. 1,077.000 million, aggregating to Rs. 3,045.000 million at that date, into equity. 17.5. During the year ended 30 June 2002, the shareholders of the Company, by way of a Special resolution passed in the 89th Annual General Meeting, finalized the conversion of the Company's debt servicing liabilities, aggregating to Rs.17,834.560 million, into equity. As a result of the said resolution, the Company issue 1,783,456,000 Ordinary shares of Rs. 10 each at par. The subscription finalized in this regard was entered into on 24 January 2002. 17.6. As per the decision taken in the ECC meeting, held on 16 April 2002, which was also approved by the President of Pakistan, the Ministry of Finance conveyed through its letter, dated 27 April 2002, that all the loans of GoP and GoP guaranteed loans outstanding against KESC, aggregating to Rs. 65,340.773 million, had been converted into GoP equity. 17.7. During the year ended 30 June 2005, the shareholders of the Company, by way of a Special resolution passed in the 94th Annual General Meeting of the Company held on 02 December 2004, resolved the conversion of (a) GoP funds into equity, amounting to Rs. 6,080.738 million and (b) GoP long term loan, amounting to Rs. 9,203.000 million, aggregating to Rs.15,283.738 million into equity. As a result of the said resolution, the Company issued 4,366,782,389 Ordinary shares of Rs. 3.50 each at par. The subscription agreement in this regard was entered into on 20 December 2004 between the Company and the President of Pakistan on behalf of the GoP. 17.8. The shareholders of the Company during the year ended 30 June 2002, by way of a Special resolution, in an Extra Ordinary General Meeting, held on 27 May 2002, resolved the reduction of share capital of the Company, subsequent to the completion of the conversion of GoP and GoP guaranteed loans of Rs. 65,341 million into equity (note 17.6 above). The paid-up capital, which was lost or not represented by assets of the Company, to the extent of Rs. 6.50 per share on each of the issued Ordinary shares of the Company at such time, was reduced and a new nominal value thereof was fixed at Rs. 3.50 per share. The Company had also filed a petition in the Honourable High Court of Sindh, vide its order, dated 12 October 2002, ordered the reduction in the nominal value of share capital by Rs. 6.50 per share. The Board, of Directors, in its 115th meeting held on 26 October 2002 also approved by way of a special resolution the reduction in the nominal value of share capital, amounting to Rs. 57,201.902 million. The GoP, vide its Finance Division letter F-5(16)-CF: 1/97-98/vol 25/191 dated 31 January 2003, conveyed the sanction of the President of Pakistan to write off the GoP equity in the Company. Accordingly, the reduction in share capital of Rs. 57,201.902 million was adjusted against the accumulated losses of the Company. 17.9. As part of the process of the Company's privatization, the GoP and the new Owners agreed to inject additional equity by issuing Redeemable Preference Shares (RPS) in the aggregate value of Rs. 6,000 million. In this respect, a Subscription Agreement was executed between the President of Pakistan, on behalf of the GoP, the Company and the KES Power Limited on 14 November 2005 to issue the RPS, amounting to Rs. 6,000 million, divided into 1,714,285,714 Preference shares of Rs. 3.50 each as right to the existing Ordinary shareholders of the Company. The issue of Redeemable Preference Shares was finalized by the Board of Directors of the Company and NOC was obtained from the Securities and Exchange Commission of Pakistan, vide Letter No. EMD/Cl/16/2004-4417, dated 07 November 2005. During the year ended 30 June 2007, out of the 1,714,285,714 Preference shares, 1,291,944,992 Preference shares were allotted to the existing shareholders, aggregating to Rs. 4,509.302 million. During the year ended 30 June 2008, further 422,340,725 Preference shares were issued against advance received in respect of these shares (note 17.3). The issue of Redeemable Preference shares by way of right, offered to the minority shareholders of the Company, was under subscribed by 18.980 million shares, amounting to Rs. 66.432 million. Under the terms of the RPS Subscription Agreement, in case of under subscription, the balance of Redeemable Preference shares were required to be subscribed by the Ultimate Parent Company of the Company, KES Power Limited. The said undersubscribed shares were, thereafter, subscribed by the KES Power Limited. 17.10. The redeemable preference shares (the shares) have been treated as part of equity on the following basis: - The shares were issued under the provisions of section 86 of the Companies Ordinance, 1984 (the Ordinance) read with section 90 of the Ordinance and the Companies Share Capital (Variation in Rights and Privileges) Rules, 2000. - The financial capital of the Company and the issue of the shares were duly approved by the shareholders of the Company at the Extraordinary General Meeting held on 02 March 2006. - Return of allotment of shares was filed under section 73(1) of the Ordinance. - The Company is required to set-up a reserve for the redemption of Preference shares, under section 85 of the Ordinance, in respect of the shares redeemed which effectively makes Redeemable Preference shares a part of equity. - Dividend on the shares is appropriation of profit both under the Ordinance and the tax laws. - The requirements of the Ordinance take precedence over the requirements of International Accounting Standards. - The preference shareholders have the right to convert these shares into Ordinary shares. Further, the matter regarding the classification of Redeemable Preference share capital as either debt or equity instrument has been examined by the Institute of Chartered Accountants of Pakistan (ICAP) as a result of which the ICAP has advised the Securities and Exchange Commission of Pakistan (SECP) to make necessary amendments in the Companies Ordinance, 1984, and / or to issue a clarification in order to remove the inconsistency between the Companies Ordinance, 1984 and the International Accounting Standards. Pending the decision of the SECP in this matter, the Preference share capital has been classified as equity in these financial statements. 18. CAPITAL RESERVES ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Unclaimed fractional bonus shares money 18.1 46 46
Workmen compensation reserve 18.2 700 700
Third party liability reserve 18.3 300 300
Fire and machinery breakdown
insurance reserve 18.4 508,126 508,126
509,172 509,172
==========================================================================================18.1. Unclaimed fractional bonus shares moneyThis represents proceeds received by the Company from the sale of fractional bonus coupons for the period up to 1975, remaining unclaimed up to 30 June 1986. 18.2. Workmen compensation reserve The reserve for workmen compensation was created and maintained at Rs. 0.700 million to meet any liability that may arise in respect of compensation to workmen who, whilst on duty, meet with an accident causing partial or total disability. 18.3. Third party liability reserve This reserve has been created to meet the third party liabilities, arising due to accidents by electrocution, both fatal and non-fatal, claims for which are not accepted by the National Insurance Company, where the negligence or fault on the part of the Company is proved by the Court. 18.4. Fire and machinery breakdown insurance reserve The Company was operating a self insurance scheme in respect of its certain fixed assets and spares to cover such hazards which were potentially less likely to occur. However, commencing the year ended 30 June 1997, the Company discontinued its policy for providing the amount under self-insurance scheme. Fixed assets, which are insured under this scheme and on which claim lodged with respect to damages to such assets is not fully acknowledged by the insurer, the shortfall is charged to the said reserve. 19. REVENUE RESERVES ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
General Reserve 5,372,356 5,372,356
==========================================================================================20. SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT==========================================================================================
2010 2009
(Rupees in '000)
Restated
==========================================================================================
Balance as at 01 July 745,466 -
Surplus arising on revaluation
of leasehold land,
plant & machinery and transmission grid
equipments (2009: leasehold land) 48,492,706 745,466
49,238,172 745,466
Transferred to accumulated
losses in respect of
incremental depreciation/
amortisation charged
during the year, net of deferred tax 178,795 -
Related deferred tax liability 96,274 -
275,069 -
Surplus on revaluation as at 30 June 48,963,103 745,466
Less: Related deferred tax liability on:
Revaluation at the beginning of the year 260,913 -
Surplus arising on revaluation
of leasehold land, plant
& machinery and transmission
grid equipment 16,972,447 260,913
Incremental depreciation
charged during the year (96,274) -
17,137,086 260,913
31,826,017 484,553
==========================================================================================21. LONG-TERM FINANCING==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
From banking companies and
financial institutions - Secured
International Finance Corporation (IFC) 21.1 & 21.4 7,275,997 3,658,500
Syndicate term loan 21.2 & 21.4 7,680,000 7,883,591
Asian Development Bank 21.3 & 21.4 10,699,997 4,065,000
Term loan from a banking Company 21.5 1,137,600 2,275,200
26,793,594 17,882,291
Current maturity shown
under current liabilities 32 (3,539,255) (1,137,600)
23,254,339 16,744,691
Others - Secured
Due to Oil and Gas companies 21.6 868,188 966,156
Current maturity shown
under current liabilities 32 (709,500) (490,093)
158,688 476,063
Unsecured
GoP Loan for the electrification of Hub Ar 21.7 26,000 26,000
Gul Ahmed Energy Limited 21.9 1,515,224 -
Tapal Energy (Private) Limited 21.10 1,200,000 -
2,715,224 -
Current maturity thereof shown
under current liabilities 32 (2,210,149) -
Due to the Government and autonomous
bodies - related parties 21.8 25,083,372 41,983,372
Current maturity thereof shown
under current liabilities 32 (9,738,372) (14,200,000)
15,345,000 27,783,372
39,289,102 45,030,126
==========================================================================================21.1. This represents utilised portion amounting to USD 85 million (2009: USD 45 million) of a loan amount obtained under an agreement dated 22 March 2007, as amended by an Amendment Agreement dated May 2010 with International Finance Corporation (IFC) for 220 MW Korangi Power Generation Project and 560 MW Bin Qasim Power Generation Project, as shown in note 4.2.1. The total facility available is USD 125 million (2009: USD 125 million) with availability period upto 31 March 2012.Under the Amended Loan Agreement the loan is divide in three tranches namely Tranche A, Tranche B1 and Tranche B2.Tranche A is payable in 29 equal quarterly instalments after the expiry of 3 year grace period with first instalment due on 15 September 2010 and final instalment due on 15 September 2017. It carries interest at 3 months LIBOR +2.85% up to the project completion date and 3 months LIBOR + 2.5% thereafter and is payable quarterly in arrears from the effective date of an agreement. Tranche B1 carries interest at 3 months LIBOR + 4.25% up to the project completion date and 3 months LIBOR + 3.25% thereafter and is payable quarterly in arrears starting from 15 June 2012 with final instalment due on 15 September 2017. The undrawn Tranche B2 carries interest at 3 months LIBOR + 4.25% u to the project completion date and 3 months LIBOR + 3.75% thereafter and is payable in one full instalment principal on 15 September 2017. During the year the Company has drawn USD 40 million under the Loan Agreement. The Company pays commitment fee at the rate of 0.5% per annum quarterly in arrears on the undrawn balance of the said facility. In the event of default in payments, the Company shall pay liquidated damages at the rate of 2 percent per annum and 3 months LIBOR + 2% on the overdue principal and mark-up payment respectively. The Company has executed a Cross Currency Swap with a commercial bank to hedge the Company's foreign currency payment obligation to IFC up to USD 65 million (2009: USD 45 million) together with LIBOR interest accruing thereon (note 14.1). 21.2. This represents utilised portion of a term loan obtained under an agreement dated 23 May 2007, aggregating to Rs. 8,000 million (2009: Rs. 8,000 million), with a Syndicate of local commercial banks, for the purposes of capital expenditure for 220 MW Korangi Generation Project and 560 MW Bin Qasim Power Generation Plant, as shown in note 42.1. The said loan is available for a period of 9 years maturing on 21 May 2016, with a 3 years grace period, having an availability period of 2 years upto 21 May 2009 and is payable in 25 equal quarterly instalments after the expiry of 3 year grace period with first instalment due on 15 June 2010. It carries mark-up at the rate of 6 months KIBOR + 3% and is payable quarterly in arrears from the effective date of the agreement. 21.3. This represents utilised portion amounting to USD 125 million (2009: USD 50 million) of total available facility amounting to USD 150 million (2009: USD 150 million) under an agreement dated 4 June 2007, as amended by an Amendment Agreement dated 5 May 2010 with the Asian Development Bank (ADB) for the purposes of capital expenditure for 220 MW Korangi Power Generation Project and 560 MW Bin Qasim Power Generation Project, as shown in note 4.2.1. The financing facility having an availability period up to 31 March 2012. Under the Amended Loan Agreement the loan is divided in three tranches namely Tranche A, Tranche B1 and Tranche B2. Tranche A is payable in 29 equal quarterly instalments after the expiry of 3 year grace period with first instalment due on 15 September 2010 and final instalment due on 15 September 2017. It carries interest rate at 3 months LIBOR + 2.85% up to the project completion date and 3 months LIBOR + 2.5% thereafter and is payable quarterly in arrears from the effective date of the agreement. Tranche B1 carries interest rate at 3 months LIBOR + 4.25%upto the project completion date and 3 months LIBOR + 3.25% thereafter and is payable quarterly in arrears starting from 15 June 2012 and final instalment due on 15 September 2017. The undrawn Tranche B2 carries interest rate at 3 months LIBOR + 4.25%u p to the project completion date and 3 months LIBOR + 3.75% thereafter and is payable in one full instalment of principal on 15 September 2017. The Company pays commitment fee at the rate of 0.5% per annum quarterly in arrears on the undrawn balance of the said facility. In the event of default in payments, the Company shall pay liquidated damages at the rate of 2% per annum and 3 months LIBOR +2 % on the overdue principal and mark-up payment respectively. The Company has executed a Cross Currency Swap with a commercial bank to hedge the Company's foreign currency payment obligation to ADB up to USD 85 million (2009: USD 50 million) together with LIBOR interest accruing thereon (note 14.1). 21.4. The above facilities, discussed in notes 21.1, 21.2 and 21.3 are secured as follows: - mortgage (by deposit of title deeds) over all lands and buildings located at the Bin Qasim Plant and the Korangi Plant (including without limitation, all fixed assets relating to the Generation Expansion); - hypothecation over all movable fixed assets whether now or at any time in the future located at the Bin Qasim Plant and the Korangi Plant (including without limitation, all movable assets relating to Generation Expansion); - an exclusive hypothecation over all receivables from certain customers of the Company selected by the lenders and IFC, together with a notice to such customers; hypothecation over all receivables payable to the borrower under the project documents (other than the share purchase - agreement) together with a notice to other contracting party(ies); and - hypothecation over all receivables payable to the borrower under all insurance and reinsurance policies of all insurable assets that are subject to the security. 21.5. This represents medium term financing facility arranged by the Company from a commercial bank for the purpose of bridging the gap between the payments under Gas Supply agreement with Sui Southern Gas Company Limited (SSGCL) and receipt of inflows from sale of electricity and government subsidy. The said facility is payable in io equal quarterly instalments and carries mark-up at the rate of 3 month KIBOR + 3% by 06 April 2011. In the event of default in payments, the Company shall pay liquidated damages at the rate of 20% per annum on the overdue payment. The facility is secured against a mortgage charge over the land at S.I.T.E., Karachi. 21.6. Due to the Oil and Gas Companies � unsecured ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Pakistan State Oil Company Limited (PSO) 261,250 359,220
Pirkoh Gas Company Limited (PGCL) 606,938 606,936
868,188 966,156
Current maturity thereof,
including overdue instalments
of Rs. 392.125 million
(2009: Rs.172.718 million) (709,500) (490,093)
158,688 476,063
==========================================================================================21.6.1. During the year ended 30 June 2002, the Economic Co-ordination Committee (ECC) of the Federal Cabinet, vide case No. ECC-136/13/2001, dated 06 November 2001, considered the Summary, dated of November 2001, submitted by the Finance Division, and approved the proposal, contained in paragraph 4 of the said Summary, which stated that all dues of the Company (Principal only) to the Oil and Gas Companies as on 30 June 2001, including those under the Letter of Exchange (LoE) arrangements of 10 February 1999, aggregating to Rs. 6,672 million, would be redeemed over a period often years, including a grace period of two years, free of interest.Implementing the above decision, two formal agreements, one between the Company and the PGCL and the other between the Company and the PSO, containing the above referred terms in accordance with the ECC decision, were executed on 30 July 2003 and 25 August 2003, respectively. As per these agreements, the repayments by the Company to the Oil and Gas Companies were to be made on a quarterly basis, commencing 29 February 2004. However, at the time of the privatization of the Company, the ECC of the Federal Cabinet decided that on privatization of the Company, the Finance Division, the Government of Pakistan, would pick up the aforesaid liability of the Company. As a result, Finance Division, Government of Pakistan (GoP), issued a letter of comfort, No. F-5(24)CF.I/2004-05/1289, dated 25 November 2005, to the Company stating that the GoP would pay to the Company, for making onward payments to the PSO and the PGCL on due dates as per respective agreements. After the privatization of the Company, the sum owed by the Company to the Oil and Gas Companies is now being repaid upon the receipt of funds from the GoP. Further, Finance Division, Government of Pakistan, vide its letter No.F.5(24)CF.I/2004-05/Vol.V/1356, dated 21 December 2005, provided the decision taken in the meeting held on to November 2005 that the GoP would provide funds for the payment of these liabilities. Accordingly, a sum of Rs. 238.031 million (2009: Rs. 238.031 million) was received from the GoP during the current year. Also refer note 8.1 in respect of the amount accrued by the Company from the GoP in this regard. 21.7. During the year ended 30 June 2004, the Finance Division, GoP, vide its letter No. F-2(6)-PF.V/2003-04/785, dated 20 April 2004, released a sum of Rs. 26.00 million as cash development loan for village electrification in Hub and Winder Areas, District Lasbella. This loan is repayable in 20 years with a grace period of five years, ended on 30 June 2009, along-with mark-up chargeable at the prevailing rate for the respective years. Accordingly, the Company is in process of settlement of the said loan. 21.8. Due to the Government and autonomous bodies � unsecured ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
National transmission and dispatch
Company (NTDC) 21.8.1 20,145,000 29,745,000
Sui Southern Gas Company Limited 21.8.2 4,938,372 12,238,372
25,083,372 41,983,372
Current maturity thereof shown
under current liabilities (9,738,372) (14,200,000)
15,345,000 27,753,372
==========================================================================================21.8.1. Consequent to decisions of Economic Coordination Committee and Cabinet dated 14 October 2008 and 08 April 2009, respectively, the company and Government of Pakistan (GoP) have entered into an amendment agreement on 13 April 2009 which amend certain terms and conditions set out in an implementation agreement dated 14 November 2005.The above decisions have determined a balance of Rs. 29,746 million upto 14 October 2008 to be paid by the Company to NTDC. This amount was converted into long term loan and payment mechanism was decided and documented in the amended implementation agreement. As per the amended implementation agreement, the Company is required to pay the said amount as per payment plan agreed in ECC decision dated 14 October 2008 (i.e. the Company will pay to NTDC Rs. 4,000 million upfront and balance amount of arrears in Rs. 400 million monthly instalments) along with mark-up at 6 months Treasury Bill Rate on the net outstanding dues. Due to the reason discussed in note 33.1.2, effective from 1 July 2009 the Company has discontinued accruing interest payable to NTDC. 21.8.2. On 30 June 2009, the Company has entered into an agreement with SSGC starting from 01 July 2009 in respect of payment of outstanding balances as on 31 May 2009 amounting to Rs.12,238.372 million. Consequent to above agreement, the Company will pay Rs. 1,400.000 million, immediately and the remaining outstanding amount of Rs. 10,838.372 million over a period of eighteen months at mark-up rate higher of highest overdraft rate being paid by SSGC or highest rate at which interest is payable on gas producers bills as per agreed payment plan. In case of delay in the payment of current bills on due dates, the Company is also liable to pay interest at the rate of 3 month KIBOR (ask side) + 2.5 percent per annum for delays from due date to the month end date and in case of further delays then mark-up will be charged at the rate applicable on Rs. 10,838.372 million or at the rate 3 month KIBOR (ask side) + 2.5% which ever is higher. However, the Company has withheld payment of monthly instalment effective May 2010 on the principle that the payment was agreed based on the allocated gas supply 276 MMCFD. The reduction in gas supply, together with the delayed settlement of energy dues by Government Entities, have a direct impact on the liquidity of the company. This matter has been raised with SSGC and based on the same principle, the management is of the view that the Company is not liable and will not pay any interest on the amount payable. 21.9. During the current year the company had entered into an agreement with Gul Ahmed Energy Limited in respect of payment of outstanding balance as of 27 March 2010 amounting to Rs. 2,715.224 million. As per the agreement the company would pay equal amount of Rs. 400.00 million from April 2010 to June 2010. Thereafter the Company will pay the remaining amount in equal monthly instalment of Rs. 84.179 million each. As per the agreement, in case of delay in payment the parties right and obligation shall revert to the status before entering the agreement. 21.10. During the current year the company had entered into an agreement with Tapal Energy (Private) Limited in respect of payment of outstanding balance as of 20 October 2009 amounting to Rs. 3,000 million. As per the agreement the company would pay equal amount of Rs. 400.00 million from October 2009 to December 2009. Thereafter the Company will pay the remaining amount in equal monthly instalment of Rs. 100 million each. As per the agreement, in case of delay in payment, the Company shall pay late payment interest at the rate of State Bank of Pakistan discount rate prevailing on due date plus 2% per annum. 22. LIABILITIES AGAINST ASSET SUBJECT TO FINANCE LEASE During the year the Company has paid the entire liability outstanding under finance lease obligations. 23. LONG-TERM DEPOSITS Represent deposits from consumers, taken as a security for energy dues (note 10) and carrying interest at the rate of 5 percent per annum. Such deposits are repayable at the time when electricity connection of consumer is permanently disconnected. 24. DEFERRED LIABILITIES ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Gratuity 24.1 3,752,606 3,483,795
Post retirement medical benefits 24.1 1,536,619 1,413,739
Post retirement electricity benefits 24.1 477,899 427,994
5,707,124 5,325,528
==========================================================================================24.1. Actuarial valuation of retirement benefitsIn accordance with the requirements of IAS-19 "Employee Benefits", actuarial valuation was carried out as at 30 June 2010, using the "Projected Unit Credit Method". Provision has been made in the financial statements. to cover obligations in accordance with the actuarial recommendations. Details of significant assumptions used for the valuation and disclosures in respect of above-mentioned schemes are as follows: ==========================================================================================
2010 2009
==========================================================================================
Discount rate 13.00% 12.50%
Salary increase 10.85% 10.36%
Medical cost trend 7.62% 7.14%
Electricity price increase 7.62% 7.14%
==========================================================================================24.1.1. The amount recognized in the profit and loss account is determined as follows:===========================================================================================================
2010
Gratuity Medical Electricity Total
benefits benefits
(Rupees in '000)
===========================================================================================================
Current service cost 191,706 57,584 21,820 271,110
Interest cost 467,877 159,268 55,336 682,481
Recognised actuarial (gains) / losses 47,175 (9,293) 2,760 40,642
Expense recognized during the year 706,758 207,559 79,916 994,233
===========================================================================================================24.1.2. Movement in the liability recognized in the balance sheet is as follows:===========================================================================================================
2010
Gratuity Medical Electricity Total
benefits benefits
(Rupees in '000)
===========================================================================================================
Provision at 01 July 2009 3,483,795 1,413,739 427,994 5,325,528
Charge for the year 706,758 207,559 79,916 994,233
Benefits paid (437,947) (84,680) (30,011) (552,638)
Provision as at 30 June 2010 3,752,606 1,536,618 477,899 5,767,123
===========================================================================================================24.1.3. The amount recognized in the balance sheet is as follows:===========================================================================================================
2010
Gratuity Medical Electricity Total
benefits benefits
(Rupees in'000)
===========================================================================================================
Obligation under defined benefit plan 4,819,403 1,439,396 692,987 6,951,786
Un recognised actuarial (losses) / gains (1,066,797) 97,222 (215,088) (1,184,663)
Provision as at 30 June 2010 3,752,606 1,536,618 477,899 5,767,123
2009
===========================================================================================================24.1.4. The amount recognized in the profit and loss account is determined as follows:===========================================================================================================
2010
Gratuity Medical Electricity Total
benefits benefits
(Rupees in'000)
===========================================================================================================
Current service cost 179,815 40,106 15,297 235,218
Interest cost 533,827 165,997 53,890 753,714
Recognised actuarial (gains) / losses 118,394 699 3,161 122,254
Expense finalized during the year 832,036 206,802 72,348 1,111,186
===========================================================================================================24.1.5. Movement in the liability recorded in the balance sheet as follows:===========================================================================================================
2010
Gratuity Medical Electricity Total
benefits benefits
(Rupees in'000)
===========================================================================================================
Provision at o1 July 2008 2,980,536 1,280,319 384,201 4,645,056
Charge for the year 832,036 206,802 72,348 1,111,186
Benefits paid (328,777) (73,382) (28,555) (430,714)
Provision as at 30 June 2009 3,483,795 1,413,739 427,994 5,325,528
===========================================================================================================24.1.6. The amount recognized in the balance sheet is as follows:===========================================================================================================
2010
Gratuity Medical Electricity Total
benefits benefits
(Rupees in'000)
===========================================================================================================
Obligation under defined benefit plan 3,955,546 1,315,236 457,253 5,728,035
Un recognised actuarial (losses) / gains (471,751) 98,503 (29,259) (402,507)
Provision as at 30 June 2009 3,483,795 1,413,739 427,994 5,325,528
===========================================================================================================24.1.7. Amounts for the current and previous four years are as follows:============================================================================================================================ Comparison for Five years 2010 2009 2008 2007 2006 ============================================================================================================================ Present value of defined benefit obligation 6,951,786 5,728,035 5,897,068 4,102,677 4,846,953 Percentage of experience adjustments on plan liabilities 12% (13%) 26% (21%) 6% ============================================================================================================================24.1.8. The effect of one percent movement in assumed medical cost trend rates would have following effects 30 June 2010: ==========================================================================================
30 June 2010
Increase Decrease
(Rupees in '000)
==========================================================================================
Effect on the aggregate of current service
and interest costs 237,932 198,325
Effect on the defined benefit obligation 1,573,768 1,320,421
==========================================================================================25. DEFERRED REVENUE==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Opening balance 14,237,770 11,790,530
Additions during the year
Recoveries from consumers 25.1 644,768 1,359,886
Transfer from specific grant
from the Government of
Pakistan for Financial
Improvement Plan (FIP) 26 2,429,397 2,003,778
3,074,165 3,363,664
17,311,935 15,154,194
Amortisation for the year 41 (1,062,573) (916,424)
16,249,362 14,237,770
==========================================================================================25.1. This represents non-interest bearing recoveries from the consumers towards the cost of service connection, extension of mains and street lights.26. SPECIFIC GRANT FROM THE GOVERNMENT OF PAKISTAN (GoP) ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Opening balance 26.1 2,778,003 4,781,780
Transfer to deferred revenue 25 (2,429,397) (2,003,777)
348,606 2,778,003
==========================================================================================26.1. This represents a demand finance facility arranged by the Company under the Syndicated Finance Agreement, executed between the Company and a Consortium of local commercial banks, on 24 September 2005. Under the terms of the said agreement, the Company had acquired a demand finance facility of Rs. 3,000 million for the improvement of network and reduction in transmission and distribution losses under the Financial Improvement Plan (FIP). The rate of mark-up on the said facility was 6 month KIBOR + 0.5 to 1.0 % and shall be payable on semi- annual basis from the first disbursement date.The Government of Pakistan has irrevocably and unconditionally guaranteed the repayment of principal and mark-up accruing in respect thereof, through guarantee No. F-5 (12) BR III / 2005, dated 29 September 2006. Moreover, the Ministry of Finance has also provided an undertaking, dated oi October 2005, to repay the amount borrowed. In this respect, a letter has been issued by GoP whereby the said loan shall not be treated as the liability of the Company towards Consortium of banks. As a result thereof, the same has been recorded as a specific grant from the GoP. During the year the demand finance facility have been repaid completely. 27. TRADE AND OTHER PAYABLES ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Trade creditors
Power purchases 28,775,214 15,468,661
Fuel and gas 15,617,432 2,503,203
Others 5,344,885 4,012,422
49,737,531 21,954,286
Murabaha term finance - 1,160,000
Accrued expenses 27.1 1,639,775 1,169,959
Advances / credit balances
of consumers
Energy 27.2 248,463 208,457
Others 27.3 687,640 523,059
936,103 731,516
Other liabilities
Unclaimed and unpaid dividend 650 650
Employee related dues 118,782 137,377
Payable to Provident Fund 111,776 39,014
Electricity duty 27.4 1,668,244 1,157,978
Tax deducted at source 27.4 358,028 278,025
PTV license fee 27.4 28,293 21,937
Payable to the then Managing Agent,
PEA (Private) Limited 29,014 29,091
Others 171,006 144,015
2,485,793 1,808,087
54,799,202 26,853,848
==========================================================================================27.1. This include an aggregate sum of Rs. 447.337 million (2009: Rs. 427.511 million) representing outstanding claims / dues of property taxes, water charges, ground rent and occupancy value payable to various government authorities. In addition to the above, claims in respect of property tax, ground rent and occupancy value payable to various government authorities, aggregating to Rs. 5,553.140 million (2009: Rs. 4,161.642 million), have not been acknowledged by the Company as debts and, hence, these have been disclosed under contingencies and commitments (note 33.3.4).27.2. Represents amount due to the consumers on account of excess payments and revision of previous bills. 27.3. This include Rs. 660.025 million (2009: Rs. 475 745 million) represent general deposits received from consumers, in respect of meters, mains & lines alteration, scrap sales, etc. 27.4. Electricity duty, tax deducted at source and PTV license fee are collected by the Company from the consumers on behalf of the concerned authorities. Payments are made thereto upon receipt of these dues from the consumers after deducting company's rebate / commission thereon. 27.5. Trade Payable and other payable are non interest bearing and are generally on 30 to 6o days term and 3 to 12 months term respectively. 28. ACCRUED MARK-UP ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Accrued mark-up on:
Long term financing 21 142,633 184,966
Long term deposits received
from consumers 23 1,039,274 926,826
Borrowings relating to Financial
Improvement Plans (FIP) 26 240,205 249,161
Murabaha term financing - 28,593
Short term borrowing 29 168,957 149,068
Short term running finance 29 178,246 167,471
Financial charges on delayed
payment to suppliers 28.1 3,000,810 619,152
4,770,125 2,325,237
==========================================================================================28.1. This includes Rs. 2,381.658 million representing financial charges due to Sui Southern Gas Company Limited and Rs. 619.152 million (2009: Rs. 619.152 million) representing financial charges due to National Transmission and Dispatch Company Limited.29. SHORT-TERM BORROWINGS � Secured ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
From banking companies
Bridge term finance facility 29.1 3,431,000 3,600,000
Bills payable 29.2 3,912,194 2,816,508
Import loan facility - 18,000
7,343,194 6,434,508
Short term running finances - Secured 29.3 6,069,320 5,498,689
KES Power limited - holding company 29.4 29,282 20,325
6,098,602 5,519,014
13,441,796 11,953,522
==========================================================================================29.1. This represents a bridge term finance facility under Bridge Term Finance Agreement dated 20January 2010 and 20 April 2010, executed between the Company and a Consortium of local commercial banks to meet short term funding requirement. Under the terms of the said agreement, the Company has acquired a term finance facility of Rs. 3,600 million (2009: Rs. 3,600 million). The principal amount is repayable at maturity and carries mark-up at month KIBOR + 1% payable monthly in arrears Latest by 20 July 2010 and is secured against Standby Letters of Credits (SBLCs) amounting to USD 27 million and USD 16 million, issued in favour of the Company by the Gulf International Bank (GIB) and HSBC Bank Middle East Limited, respectively.29.2. These are payable to various local commercial banks at various dates latest by 15 October 2010 in respect of making payments to Sui Southern Gas Company Limited, Gul Ahmed Energy Limited and Tapal Energy (Private) Limited. 29.3. The Company has arranged various facilities for short term running finances from commercial banks, on mark-up basis to the extent of Rs. 5,250 million (2009: Rs. 5,350 million). This also includes excess running finance facilities from Dubai Islamic Bank (Pakistan) Limited, National Bank of Pakistan and Habib Bank Limited in respect of fuel payments. These are for a period of 3 to 6 months and carries mark-up of 3 to 6 month KIBOR plus 1.7% to 2.25%. These finances are secured against joint pari passu charge over current assets, aggregating to Rs. 28,066 million (2009: Rs. 8,133 million) and USD14.8 million (2009: USD Nil). In addition, demand promissory notes in respect of the above mentioned facilities have also been furnished by the Company. The rates of mark-up in respect of running finances ranges between 1 to 3 month KIBOR +1.75% to + 3.50% per annum (2009: 1 to 3 month KIBOR + 1.75% to + 3.50% per annum), payable quarterly. The purchase prices are repayable on various dates, latest by 27 July 2010. 29 4. During the year ended 30 June 2009 the holding Company, KES Power Limited has paid a sum of USD 0.250 million to Aggreko International Projects as deposit on behalf of the Company and also include a loan for Company use. The amount is interest free and payable on demand in foreign currency. 30. SHORT-TERM DEPOSITS ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Service connection deposits 30.1 2,468,863 2,129,374
Suppliers' security deposits 522,965 1,108,624
Earnest money / Performance bond 30.2 1,284,671 3,693
4,276,499 3,241,691
==========================================================================================30.1. These include non-interest bearing amounts contributed by consumers in respect of service connections, extension of mains and streetlights. The same is refundable if concerned work is not completed. Upon completion of work, these deposits are transferred to deferred revenue (note 25).30.2. These include non-interest bearing refundable deposits received from contractors in respect of installation of meters. 31. PROVISIONS This represent provisions in respect of contingencies relating to fatal accident cases. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Opening balance 15,927 18,432
Payment made during the (3,800) (2,505)
year against contingencies
12,127 15,927
==========================================================================================32. CURRENT MATURITY OF NON- CURRENT LIABILITIES==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Long term Financing 21 16,197,276 15,827,693
Liabilities against asset
subject to finance lease - 43,120
16,197,276 15,870,813
==========================================================================================33. CONTINGENCIES AND COMMITMENTS33.1. Contingencies 33.1.1. The Company had entered into a contract with Siemens Pakistan Engineering Limited (the Contractor) on 01 December 2005 for the operation and management (O&M) of the Company. During the year ended 30 June 2008, the Company and the Contractor ran into some disputes and a notice of termination of O&M contract was received by the Company from the contractor. While negotiation were underway to resolve the disputes , the Contactor filed a suit against the Company in respect of non-payment of O&M fees amounting to Rs. 1,987.254 million and termination charges under clause 8.3 of O&M contract of Rs. 984.000 million, aggregating to Rs. 2,971.254 million. The contractor filed another suit against the Company seeking certain deceleration on the SAP Software System installed at the Company's premises. The Company has also filed a suit against the contractor seeking damages and for return of all properties of the Company by the contractor, including keys of the SAP software. The Company has claimed damages due to failure of the Contractor to fulfil its obligation under the O&M agreement. The aggregate sum claimed by the Company on account of the above amounts to Rs. 56,985.811 million. The Company is confident that the outcome of the above cases will be decided in its favour. Accordingly, no provision has been made in these financial statements. 33.1.2. In respect of mark-up on the overdue amount payable to a major Government owned power supplier, the Company has decided to reverse the mark-up accrued from 1 July 2009 to 31 March 2010 amounting to Rs. 1,432 million (including mark-up accrued up to 31 December 2009 amounting to Rs. 1,069 million). Further, the Company has also decided to discontinue mark-up accrual on the overdue amounts of such supplier from 11 April 2010. The management is of the view that the debts have arisen due to circular debt situation caused by delayed settlement of the Company's tariff differential (subsidy) claims by Government of Pakistan (GoP) as well as delayed settlement of energy dues by certain Public Sector Consumers. 33.2. Claims not acknowledge as debts A claim, amounting to Rs. 73.161 million, was lodged by Pakistan Steel Mills Corporation (Private) Limited (PASMIC), vide its letter, number Cost/Accts/EB/2007/622, dated, 19 April 2007, in respect of right of way charges for Transmission Line passing within the premises of PASMIC. The said claim has been calculated on the basis of the minutes of the meeting held on 19 July 1994 wherein the key terms were subject to approval of the Company and PASMIC which was not duly approved. Further, as per Section 12 and Section 51 of the Electricity Act, 1910, any licensee is permitted to lay down or place electric supply lines with permission of local authority or the occupier of that land, subject to conferment of powers under Part Ill, of the Telegraph Act 1885. Moreover public utility is also barred from payment of annual rentals to any authority under the sections mentioned above and the claim is time barred. Further more, the Company was issued license from Provincial Government and all concessions and the permissions forsuci exemptions are provided in the license. Based on the above mentioned facts, the Company does not acknowledge the said claim as debt. 33.3. Others claim not acknowledged as debts 33.3.1. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Right of way charges 73,161 73,161
==========================================================================================33.3.2. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Fatal accident cases 561,733 524,021
==========================================================================================33.3.3. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Architect's fee in respect of
the Head office project 50,868 50,868
==========================================================================================33.3.4.==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Outstanding dues of property tax,
water charges, ground rent and occupancy value 5,553,140 4,161,642
==========================================================================================33.3.5. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Claim by NTDC on account of power
purchase and difference in marginal
cost and DISCO rate - 1,209,091
==========================================================================================33.3.6. The Company is party to number of cases in respect of fatal injuries and billing disputes. Based on the opinion of Company's lawyers, the management is confident that the outcome of the cases will be in favour of the Company. Accordingly, no provision has been made in respect of those cases in these financial statements33.4. Commitments 33.4.1. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Guarantees from banks 1,143,116 1,265,535
==========================================================================================33.4.2. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Contracts with respect to
Transmission and Distribution Projects 1,242,000 2,543,671
==========================================================================================33.4.3. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Outstanding Letters of Credit 2,688,206 3,386,829
==========================================================================================33.4.4. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Commitment for payment
in respect of Combined Cycle
Power Plant (220 MW) 79,825 88,527
==========================================================================================33.4.5. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Commitment for payment
in respect of 560 MW Project 9,200,684 -
==========================================================================================33.4.6==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Dividend on Preference Shares 674,516 494,516
==========================================================================================33.4.7. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
SAP Implementation Cost 106,250 330,531
==========================================================================================34. SALE OF ENERGY � net==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Residential 24,170,918 19,709,949
Commercial 12,089,731 9,779,470
Industrial 32,126,673 27,123,056
Karachi Nuclear Power Plant 28,312 31,078
National Transmission and
Dispatch Company 51,397 65,993
Pakistan Steel Mills Corporation
(Private) Limited 811,151 621,298
Others 34.1 1,229,938 738,230
70,508,120 58,069,074
==========================================================================================34.1. This includes, a sum of Rs. 1,103.763 million (2009: Rs. 604.395 million) in respect of supply of energy through street lights.35. TARIFF ADJUSTMENT ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Tariff adjustment due to
fuel and power purchase 29,453,496 26,950,457
Fuel Surcharge Adjustment 35.1 3,766,590 -
33,220,086 26,950,457
==========================================================================================35.1. During the year National Electric Power Regulatory Authority (NEPRA) has decided the matter of Fuel Price Adjustment for the months from July 2009 to March 2010 and Government of Pakistan (GoP) has notified the decision through SRO 387(I)/2010 dated 4 April 2010. As per the NEPRA's order, the monthly fuel cost and power purchase cost variation from July 2009 through March 2010 amounted to Rs. 6,388 million is adjustable against consumers monthly bills as Fuel Surcharge Adjustment (FSA) to the extent of Rs. 4,348 million and the balance of Rs. 1,448 million along with the variation in the O&M cost and Capacity Charge of IPPs and other external sources shall be adjusted separately in quarterly tariff determination.The GOP through aforesaid SRO has directed the Company to charge consumers on a monthly basis from June 2010 through December 2010 in respect of FSA amounted to Rs. 4,348 million. Accordingly, at 30 June 2010, the Company has recorded a revenue amounting to Rs. 3,766 million representing FSA receivable determined on the billing history of comparative months of 2009. A petition was filed in the High Court of Sindh against the charging of FSA to the customers. After the initial stay order, the High Court of Sindh has vacated the stay order and allowed the Company to charge the above FSA in the monthly billing as per the schedule provided in the SRO. However, the petition is pending for final hearing in the court of law. The management is of the view that the FSA represents the valid claim of the Company which is determined by the NEPRA and even in case of any adverse decision is claimable against Government Subsidy. 36. PURCHASE OF ELECTRICITY ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
National Transmission
and Despatch Company 35,951,670 26,727,950
Independent Power Producers (IPPs) 20,391,644 15,476,012
Karachi Nuclear Power Plant 3,001,028 2,187,130
Pakistan Steel Mills Corporation
(Private) Limited 537,135 530,017
59,881,477 44,921,109
==========================================================================================37. CONSUMPTION OF FUEL AND OIL==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Natural gas 22,561,915 27,104,843
Furnace and other oils 14,618,936 10,345,777
37,180,851 37,450,620
==========================================================================================38. EXPENSES INCURRED IN GENERATION, TRANSMISSION AND DISTRIBUTION=============================================================================================================
Transmission
and
Generation distribution
Note expenses expenses 2010 2009
(Rupees in '000)
=============================================================================================================
Salaries, wages and other benefits 38.1 & 38.2 958,741 3,713,941 4,672,682 4,155,429
Stores and spares 380,738 180,581 561,319 833,440
Office supplies 26,798 44,437 71,235 101,643
NEPRA license fee 6,900 20,770 27,670 43,182
Repairs and maintenance 86,694 221,601 308,295 460,586
Transport expense 65,057 300,779 365,836 359,396
Rent, rates and taxes 105,088 28,878 133,966 88,293
Depreciation 4.1.6 1,303,790 2,453,535 3,757,325 2,833,351
Interdepartmental consumption - 443,293 443,293 146,693
Reversal of provision against slow moving
and obsolete stores, spares and loose tools (15,890) (58,885) (74,775)
Operation and management fee 215,640 113,039 328,679 338,330
Others 71,123 259,166 330,289 124,352
3,204,679 7,721,135 10,925,814 9,484,695
=============================================================================================================38.1. This includes a sum of Rs. 465.457 million (2009: Rs. 658.636 million) in respect of staff retirement benefits.38.2. Free electricity benefit to employees, amounting to Rs. 130.585 million (2009: Rs. 118.131 million), has been included in salaries, wages and other benefits. 39. CONSUMERS SERVICES AND ADMINISTRATIVE EXPENSES ===============================================================================================================
Consumers Adminis
services trative and
and billing general
expenses expenses 2010 2009
Note (Rupees in '000)
===============================================================================================================
Salaries, wages and other benefits 39.1 & 39.2 2,602,636 1,662,800 4,265,436 3,338,401
Bank collection charges - 19,169 19,169 12,598
Transport cost 177,677 48,344 226,021 310,816
Depreciation 4.1.6 20,212 276,093 296,305 152,340
Amortization ah5.2.1!5.2.1 - 20,720 20,720 14,303
Repairs and maintenance 138,003 68,615 206,618 150,957
Rent, rates and taxes 44,497 52,875 97,372 113,648
Public relations and publicity 68 323,596 323,664 93,137
Legal expenses 424 37,602 38,026 21,319
Professional charges 11,168 354,132 365,300 80,210
Auditors' remuneration 39.3 - 2,355 2,355 2,306
Directors fee - 390 390 300
Provision against debts considered doubtful 1,992,962 - 1,992,962 776,008
Office supplies 47,563 80,385 127,948 126,886
Other expenses 44,270 54,990 99,260 88,686
Interdepartmental consumption 158,319 31,664 189,983 73,144
Others 471 106,749 107,220 15,397
5,238,270 3,140,479 8,378,749 5,370,456
===============================================================================================================39.1. This includes a sum of Rs. 528.775 million (2009: Rs. 444.876 million) in respect of staff retirement benefits.39.2. Free electricity benefit to employees, amounting to Rs. 79.655 million (2009: Rs. 58.385 million), has been included in salaries, wages and other benefits. 39.3. Auditors' remuneration =========================================================================================
2010 2009
(Rupees in '000)
=========================================================================================
Statutory audit, half yearly
review and Report of
compliance on Code of
Corporate Governance 2,000 2,000
Out of pocket expenses 210 157
Other certification 145 149
2,355 2,306
==========================================================================================40. OTHER OPERATING EXPENSES==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Interest on consumers deposits 193,497 190,228
loss on derivative financial
instruments - Options - 137,194
Letters of credit charges for IPP payments 39,974 14,664
Donations 40.1 1,316 1,050
Listing Fee 115 248
Others 100 201
235,002 343,585
==========================================================================================40.1. Donations do not include any donee in whom any director or his spouse has any interest.41. OTHER OPERATING INCOME ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Return on bank deposits 338,386 101,431
Late payment surcharge 1,372,319 883,760
Amortisation of deferred revenue 25 1,062,573 916,424
Rebate on electricity duty 24,120 12,003
Gain on disposal of property,
plant and equipment 90,585 39,399
Scrap sale - stores and spares 136,838 12,159
Collection charges TV licence fee 62,457 62,445
Liquidated damages recovered
from suppliers and contractors 29,388 72,210
Exchange gain - net 178,925 166,795
Rental income 134 372
Reversal of provision
against stores and spares - 55,350
Reversal of Operation
and Management Fee - 80,640
Fair value of Grid
Stations received 507,239 -
Service connection charges 619,148 -
Others 329,414 82,380
4,751,526 2,485,368
==========================================================================================42. FINANCE COSTS==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Mark-up / interest on:
Long term financing 1,820,264 1,447,503
Murabaha financing - 156,571
Short-term borrowings 551,816 668,728
Short-term running finance 716,549 745,932
3,088,629 3,018,734
Late payment surcharge on delayed
payment to creditors 21.8.2 2,747,012 2,160,004
Bank charges, guarantee commission,
commitment fee and other service charges 987,997 411,253
6,823,638 5,589,991
==========================================================================================43. TAXATION43.1. In view of taxable loss and gross loss for the year before set off of depreciation and other inadmissible expenses under Income Tax Ordinance, 2001 (the Ordinance) no provision for current income tax has been made in these financial statements. Accordingly, tax expense reconciliation with the accounting profit is not reported. 43.2. The returns of income have been filed up to and including tax year 2009 (corresponding to financial year ended 31 June 2009), while the income tax assessments have been finalized up to and including tax year 2007. The return of income for tax 2003,2008 and 2009 have been filed under the Universal Self Assessment Scheme and are deemed to be assessed under Section 120 of the Income Tax Ordinance, 2001. The Departmental appeal for the assessment year 1995-96 filed before the Honourable High Court against the order of the ITAT is pending for decision wherein the ITAT had decided the case in favour of the Company on application of section 80C. However, the Tax Department in the assessment years 1993-94 and 1994-95, in the light of the letter of the Commissioner (Legal Division), Large taxpayers Unit, Karachi dated 24 May 2006 has withdrawn its appeal filed before the Honourable High Court on application of Section 80C of the repealed Ordinance. During the year ended 30 June 2009, the Taxation Officer vide Order D.C. No. 123/183 dated 6 May 2009 passed under section 161/205 read with 152(5) of the Income Tax Ordnance, 2001 raised tax demand of Rs. 22.368 million for withholding income tax on payments of rentals of power plant to a non-resident company at the rate of 12.5% instead of 30% under section 152 of the Ordinance. The Management consider that under Article 12 of the double taxation treaty between Pakistan and UK, such rentals are subject to 12.5% and therefore, no provision in these financial statements have been made in this regard. An appeal filed before the CIT (Appeals) is pending. During the year, the tax department has revised the assessment orders for the tax year 2004 2005 2006 and 2007 raising tax demand of Rs. 51.437 million, Rs. 65.338 million, Rs. 95.150 million and Rs. 76.860 million, respectively, on account of levy of minimum tax at the rate of 0.5% of turnover on "other income" and "tariff adjustment subsidy from Government of Pakistan". Management based on the advice of its tax consultants believes that the tax demand is unjustified and not in accordance with the true interpretation of the law and the ultimate outcome will be in favour of the Company. Therefore, no provisions in these financial statements have been made. 43.3. Deferred taxation ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Deferred credits:
Accelerated tax depreciation 16,029,114 14,411,363
Deferred tax debits:
available tax losses (37,704,730) (29,916,508)
provision for gratuity and
compensated absences (2,018,493) (1,863,935)
others (5,749,287) (5,495,750)
(45,472,510) (37,276,193)
(29,443,396) (22,864,830)
==========================================================================================43.3.1. Deferred tax asset, amounting to Rs. 29,443 million (2009: Rs. 22,865 million), has not been recognized in these financial statements as the Company is of the prudent view that it is not probable that sufficient taxable profit will be available in the foreseeable future against which deductible temporary differences, unused tax losses and unused tax credits can be utilized. At the year end, the Company's tax losses amounted to Rs. 107,728 million (2009: Rs. 85,476 million).44. LOSS PER SHARE ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Loss for the year after tax (14,641,216) (15,484,942)
(Number of Shares in '000)
Weighted average number
of ordinary shares
outstanding for basic loss per share 19,749,864 13,167,075
Effect of dilution:
Convertible preference shares 1,285,714 1,285,714
Convertible shares IFC / ADB 1,300,000 1,300,000
22,335,578 15,752,789
==========================================================================================
==========================================================================================
(Rupees)
==========================================================================================
Loss per share-basic (0.74) (1.18)
Loss per share - diluted (o.66) (0.98)
==========================================================================================45. CASH GENERATED FROM OPERATIONS==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Loss before taxation (14,737,490) (15,451,004)
Adjustments for non-cash
charges and other items:
Depreciation & amortisation 4.1.6 & 5.2 4,074,350 2,999,994
Provision for deferred liabilities 24.1.1 994,233 1,111,186
Amortization of deferred revenue (1,062,573) (916,424)
Provision for debts considered doubtful - net 1,992,962 776,008
Un-realized exchange (gain) / loss - net (219,379) .
Gain on disposal of fixed assets 4.1.7 (90,585) (39,399)
Interest on consumer deposits 193,497 190,228
Reversal of Operation and Management fee - (80,640)
Reversal of provision against stores and spares (74,774) (55,350)
Finance costs 5,470,287 3,018,734
Return on bank deposits (338,386) (101,431)
Loss on derivative financial
instruments - options - 137,194
Working capital changes 45.1 10,659,792 11,620,079
6,861,934 3,209,175
==========================================================================================45.1. Working capital changes==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
(Increase)/ decrease in current assets
Stores and spares (173,840) 89,003
Trade debts (11,908,317) (7,474,433)
Loans and advances (407,235) (117,010)
Trade deposits and prepayments (10,950,629) (1,172,474)
Other receivables 5,119,651 (12,850,494)
Derivative financial assets - (167,396)
(18,320,370) (21,692,804)
Increase / (decrease) in current liabilities
Trade and other payables 27,945,354 33,002,134
Short-term deposits 1,034,808 310,749
10,659,792 11,620,079
==========================================================================================46. CASH AND CASH EQUIVALENTS==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Cash and bank balances 1,189,424 1,127,644
==========================================================================================47. REMUNERATION OF MANAGING DIRECTOR, DIRECTORS AND EXECUTIVES================================================================================================================
2010 Chief 2009
Chief Executive
Executive Directors Executives Officer / Directors Executives
Officer Managing
Director
(Rupees in '000)
================================================================================================================
Directors' fee - 390 - - 300 -
Managerial remuneration 12,337 - 646,023 11,484 - 307,087
House rent / accommodation 4,516 - 181,799 9,163 - 87,552
Retirement benefit - - 79,047 941 - 19,456
16,853 390 906,869 21,588 300 414,095
Number of persons 2 11 311 2 11 140
================================================================================================================47.1. The Executives and Chief Executive Officer of the Company are provided medical facility. Chief Executive officer is / was also provided with car facility and accommodation. Included is the remuneration of chief executive officer who worked part of the year.48. TRANSMISSION AND DISTRIBUTION LOSSES 48.1. The transmission and distribution losses were 34.89% (June 2009:35.85%). The trend of transmission and distribution losses over the years is as follows: ======================================================== 2000-2001 36.81% 2001-2002 41.11% 2002-2003 40.78% 2003-2004 37.84% 2004-2005 34.23% 2005-2006 34.43% 2006-2007 34.23% 2007-2008 34.12% 2008-2009 35.85% 2009-2010 34.89% ========================================================48.2. One of the factors attributable to these losses is the theft of electricity, which cannot be billed as it is subject to identification, which has directly affected the profitability of the Company. No consideration has been given to units over billed in prior years and corrected during the year in the determination of transmission and distribution losses percentage as disclosed in paragraph 48.1 above. 49. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICES Financial risk factors The Company finances its operations through equity, borrowings and management of working capital with a view to maintaining an appropriate mix between various sources of finance to minimize risk. Taken as a whole, the Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. Monitoring and controlling risks is primarily set up to be performed based on limits established by the internal controls set on different activities of the Company by the Board of Directors through specific directives and constitutive documents. These controls and limits reflect the business strategy and market environment of the Company as well as the level of the risk that the Company is willing to accept. The Company finance and treasury departments oversee the management of these risks reflecting changes in market conditions and also the Company's risk taking activities providing assurance that these activities are governed by appropriate policies and procedures and that the financial risk are identified, measured and managed in accordance with the Company policies and risk appetite. The Company's principal financial liabilities other than derivatives, comprise bank loans and overdrafts, trade payables and etc. The main purpose of these financial liabilities is to raise finance for company's operations. The company has various financial assets such as trade receivables, cash, short term deposits and etc, which arise directly from its operations. The Company also entered into derivative transaction, primarily cross currency and interest rate swap contracts. The purpose is to manage currency risk from Company's operation and it source of finance. It is the Company policy that no trading in derivatives for speculative purposes shall be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below: 49.1. Market risk Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market interest rates or the market price of securities due to a change in credit rating of the issuer or the instrument, change in market sentiments, speculative activities, supply and demand of securities and liquidity in the market. Market risk comprises of three types of risk: currency risk, interest rate risk and other price risk. 49.1.1. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Foreign Currency risk arises mainly where receivables and payables exist due to transactions entered into foreign currencies. The Company is exposed to foreign currency risk on purchase and borrowings that are entered in a currency other than Pak Rupees. As the Company imports items of operating fixed assets and stores and spares for generation plants accordingly it is exposed to currency risk, primarily with respect to liabilities denominated in US Dollars. ===================================================================================================================================
30 June 2010
===================================================================================================================================
PKR USD EUR GBP AED *Others Off-Balance
(Rupees in '000) Sheet USD
Non Current Assets
Long term deposits 83,931 982,200 - - - - -
Loans and Advances 254,967 2,433,392 95,248 15,634 107,271 709,827 -
Current Assets
Derivative financial assets 766,453 - - - - - 150,000,000
Trade deposits and prepayments 4,355,715 51,003,686 - - - -
Cash and bank balances - - - - - -
5,461,066 54,419,278 395,248 15,634 107,271 709,827 150,000,000
Non-Current Liabilities
Long term financing (17,976,000) (21o,000,000) - - - - -
Current Liabilities
Short-term borrowings (20,325) (25o,000) - - - - -
Accrued mark-up on loans (10,096) (117,946) - - - - -
(18,006,421) (210,367,946) - - - - -
Gross balance sheet exposure (12,545,355) (155,948,668) 395,248 15,634 107,271 709,827 150,000,000
=================================================================================================================================== * Other Currencies include CHF HKD JPY and SGD.===================================================================================================================================
30 June 2009
PKR USD EUR GBP AED *Others Off-Balance
(Rupees in '000) Sheet USD
===================================================================================================================================
Non-Current Assets
Long term deposits 183,322 2,260,440 - - - - -
Loans and Advances 380,856 4,696,128 - - - - -
Current Assets
Derivative financial assets 575,000 - - - - - 3,332,510
Trade deposits and prepayments - - - - - - -
Cash and bank balances 305,909 3,772 - - - -
1,445,087 6,960,340 - - - - 3,332,510
Non-Current Liabilities
Long term financing (7,723,500) (95,000,000) - - - - -
Current Liabilities
Short-term borrowings (20,325) (250,000) - - - - -
(7,743,825) (95,250,000) - - - - -
Gross balance sheet exposure (6,298,738) (88,289,660) - - - - 3,332,510
=================================================================================================================================== Significant exchange rates applied during the year were as follows:===================================================================================
Average Rate for the year Spot Rate as at 30 June 2010
2010 2009 2010 2009
(Rupees) (Rupees)
===================================================================================
Rupees per
EURO 114.54 107.90 104.58 114.82
USD 84.35 78.70 85.60 81.30
GBP 129.10 125.69 128.66 135.38
JPY 1.08 0.80 0.97 0.85
SGD 59.85 53.67 61.13 56.12
=================================================================================== Sensitivity analysisA five percent strengthening / (weakening) of the Rupee against Foreign Currency as at 30 June 2010 would have increased / (decreased) equity and profit and loss account by Rs. 899 million (2009: Rs.386 million) and Rs 273 million. (2009: Rs. 53 million). This analysis assumes that all other variables, in particular interest rates, remaining constant. The analysis is performed on the same basis for 2009. 49.1.2. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's interest rate risk arises from long term financing and short term borrowing facilities for financing its generation, transmission and distribution projects and meeting working capital requirements at variable rates. The Company manages these mismatches through risk management strategies where significant changes in gap position can be adjusted. The Company has hedged its interest rate risk on long-term financing through cross currency and interest rate swaps. At the reporting date the interest rate profile of Company's interest-bearing financial instruments was: ==========================================================================================
Carrying amount
2010 2009
(Rupees in '000)
==========================================================================================
Fixed rate instruments
Financial assets 11,510,999 1,250,276
Financial liabilities (4,040,288) (3,836,994)
Variable rate instruments
Financial assets 766,453 575,000
Financial liabilities (68,928,174) (72,854,461)
(68,161,721) (72,279,461)
========================================================================================== Fair value sensitivity analysis for fixed rate instrumentsThe company does not account for and fixed rate financial assets and liabilities at fair value through profit and loss. There fore a change in interest rates at the reporting date would not effect profit and loss account. Cash Flow sensitivity analysis for variable rate instruments If Kibor / Libor had been 1% higher. lower with all other variables held constant, the profit after tax for the year would have been higher/ lower by Rs. 682 million (2009: Rs. 723 million). 49.1.3. Other Price Risk Other Price Risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market prices such as equity price risk. Equity price risk is the risk arising from uncertainties about future value of investments securities. As at balance sheet date, the Company is not exposed to equity price risk. 49.2. Credit Risk Credit risk represents the accounting loss that would be recognised at the reporting date if counter-parties failed completely to perform as contracted. Financial instruments that potentially subject the Company to concentration of credit risk are trade debts. Out of the total financial assets of Rs. 58,536 million (2009: Rs. 42,958 million), the financial assets which are subject to credit risk amounted to Rs. 25,847 million (2009: Rs. 10,038 million). The Company's electricity is sold to industrial and residential consumers and government organizations. Due to large number and diversity of its consumer base, concentration of credit risk with respect to trade debts is limited. Further, the Company manages its credit risk by obtaining security deposit from the consumers. ====================================================================================================
2010 2009
Assets Maximum Assets Maximum
and liabilities exposure and liabilities exposure
(Rupees in '000)
====================================================================================================
Long term loans 75,383 75,383 92,967 92,967
Long term deposits and prepayments 22,399 22,399 234,275 142,683
Trade debts 29,029,574 12,609,185 19,114,219 7,738,219
Trade deposits and prepayments 12,150,099 11,899,308 1,199,470 937,238
Other receivables 16,069,414 50,983 21,189,065 -
Cash and bank balances 1,189,424 1,189,424 1,127,644 1,127,644
58,536,293 25,846,682 42,957,640 10,038,751
====================================================================================================Differences in the balances as per balance sheet and maximum exposures were due to the fact that other receivables of Rs 15,650 million (2009: Rs. 21,211 million) which mainly comprises of Sales Tax of Rs. 4,611 million (2009: Rs. 5,715 million) and Tariff Adjustment amounting to Rs. 10,383 million (2009: Rs. 4,034 million). Further trade debts includes due from Government and autonomous bodies (refer note 10.1).Impairment losses The aging of trade debtors and long term loans as at the balance sheet date was: ===============================================================================
2010 2009
Gross Impairment Gross Impairment
(Rupees in 000')
===============================================================================
Upto 1 year 11,622,934 - 8,785,908 -
1 to 2 years 7,187,412 650,066 5,428,376 614,768
2 to 3 years 5,609,470 1,022,401 4,236,617 966,886
3 to 4 years 3,561,164 1,315,434 2,689,611 1,244,008
Over 4 years 16,148,046 12,103,193 12,345,899 11,450,342
44,129,026 15,091,094 33,486,411 14,276,004
===============================================================================49.2.1. The credit quality of the receivables can be assessed with reference to the historical performance with no or some defaults in recent history, however, no loses. The credit quality of Company's bank balances can be assessed with reference to external credit rating as follows:==========================================================================================
Rating
Bank Rating agency Short-term Long-term
==========================================================================================
Public sector commercial banks
First Women Bank Limited PACRA A2 BBB+
National Bank of Pakistan JCR-VIS A-1 + AAA
The Bank of Khyber JCR-VIS A-3 BBB+
PACRA A2 BBB+
The Bank of Punjab PACRA A1+ AA-
SME Bank Limited JCR-VIS A-3 BBB
Zarai Taraqiati Bank Limited JCR-VIS A-I+ AAA
Private sector commercial banks
Allied Bank Limited PACRA Al + AA
Arif Habib Bank Limited JCR-VIS A-2 A
Askari Bank Limited PACRA Al + AA
Atlas Bank Limited PACRA A2 A -
Bank Alfalah Limited PACRA A1+ AA
Bank Al-Habib Limited PACRA A1+ AA+
Faysal Bank Limited JCR-VIS A-1+ AA
PACRA A1+ AA
Habib Bank Limited JCR-VIS A-1+ AA+
Habib Metropolitan Bank Limited PACRA Al + AA+
JS Bank Limited PACRA Al A
KASB Bank Limited PACRA A2 A
MCB Bank Limited PACRA Al + AA-
My bank Limited PACRA A2 A-
NlB Bank Limited PACRA A1+ AA
Royal Bank of Scotland Limited PACRA A1+ AA
Silkbank Limited JCR-VIS A-3 A -
Soneri Bank Limited PACRA Al + AA -
Standard Chartered Bank (Pakistan) Limited PACRA Al+ AAA
United Bank Limited JCR-VIS A-l+ AA+
Foreign Banks Operating In Pakistan
Al-Baraka Islamic Bank JCR-VIS A-1 A
Standard & Poor's A-1 A+
Bank of Tokyo-Mitsubishi Moody's P-1 Aa2
UFJ Limited Fitch F l A
Standard&Poor's A-l+ AA-
Barclays Bank PLC Moody's P-1 Aa3
Fitch Fl+ AA-
Standard & Poor's A-1 A+
Citibank N.A. Moody's P-1 Al
Fitch F l+ A+
Standard & Poor's A-1 A+
Deutsche Bank AG Moody's P-1 Aa3
Fitch F 1+ AA-
HSBC Bank Middle East Limited Moody's P-i Aa3
Fitch F 1+ AA-
Oman International Bank SAOG JCR-VlS A-2 BBB
Development Financial Institutions
Dawood Islamic Bank Limited JCR-VlS A-3 BBB+
Dubai Islamic Bank (Pakistan) Limited JCR-VlS A-i A
Emirates Global Islamic Bank PACRA A2 A -
Meezan Bank Limited JCR-VlS A-i AA-
Micro Finance Banks
Network Micro Finance Bank Limited PACRA A2 BBB+
==========================================================================================49.3. Liquidity riskLiquidity risk is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due. Liquidity risk arises because of the possibility that the Company could be required to pay its liabilities earlier than expected or difficulty in raising funds to meet commitments associated with financial liabilities as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The following are the contractual maturities of financial liabilities, including interest payments: =============================================================================================================================================
2010
Carrying Contractual Six Month Six to twelve One to Five More than
amount cash flows or less months years five years
(Rupees in '000)
=============================================================================================================================================
Non-Derivative
Financial liabilities
Long term financing 55,486,378 (70,178,613) (11,609,722) (8,526,827) (35,446,095) (14,595,967)
Liabilities against asset subject to
finance lease - - - - -
Long-term deposits 4,040,288 (4,040,288) - - - (4,040,288)
Trade and other payables 54,799,202 (34,799,202) (34,799,202) - - -
Accrued mark-up 4,770,125 (4,770,125) (361,084) (3,379,792) (829,249)
Short-term borrowings 13,441,796 (13,441,796) (10,010,796) (3,431,000) - -
Short-term deposits 4,276,499 (4,276,499) (4,276,499) - - -
136,814,288 (151,506,523) (81,257,303) (15,337,619) (35,446,095) (19,465,504)
=============================================================================================================================================
2009
Carrying Contractual Six Month Six to twelve Two to Five More than
amount cash flows or less, months years five years
Rupees in '000
=============================================================================================================================================
Non-Derivative
Financial liabilities
Long term financing 60,900,939 (60,900,939) (9,269,357) (6,601,456) (41,776,987) (3,253,139)
Liabilities against asset subject
to finance lease 287,706 (287,706) (21,560) (266,146) - -
Long-term deposits 3,836,994 (3,836,994) - - - (3,836,994)
Trade and other payables 26,853,848 (26,853,848) (26,853,848) - - -
Accrued mark-up 2,325,237 2,325,237 (1,581,504) 743,733 - -
Short-term borrowings 11,953,522 (11,953,522) (11,565,467) (388,055) - -
Short-term deposits 3,241,691 (3,241,691) (3,241,691) - - -
109,399,937 (104,749,463) (52,533,427) (7,999,390) (41,776,987) (7,090,133)
=============================================================================================================================================The contractual cash flows relating to the above financial liabilities have been determined on the basis of mark-up rates effective as at 30 June (and includes both principal and interest payable thereon). The rates of mark-up have been disclosed in notes 21 to these financial statements.49.4. Fair value of Financial Instruments Fair value is the amount for which an asset could be exchanged, or a liability can be settled, between knowledgeable willing parties in an arm's length transaction. The carrying amounts of all the financial instruments reflected in these financial statements approximate to their fair value. 49.5. Hedging activities and derivates The Company uses foreign currency denominated borrowings to manage some of its transactions exposures. These carry cross currency swaps which are designated as cash flow hedge and are dealt in accordance with IAS 39 "Financial Instruments: Recognition and Measurement". Such derivatives qualify for hedge accounting (note 3.21). Cash Flow Hedges As at 30 June 2010, the Company held cross currency swaps with a commercial bank, designated as cash flow hedges of expected future interest payments and principal repayments of loan from foreign lenders. The cross currency swaps are being used to hedge the interest / currency risk in respect of long- term financing as stated in notes 21.1 and 21.3 to these financial statements. ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Cross Currency Swaps
Fair value 14 766,453 575,000
==========================================================================================The critical terms of the interest rate swaps have been negotiated to match the terms of the aforesaid financial liability. There were no highly probable transactions for which hedge accounting has been claimed that have not occurred and no significant element of hedge ineffectiveness requiring recognition in the profit and loss account. The critical terms of the cross currency swap contracts have been negotiated to match the terms of the aforementioned financial liability (note 14).49.6. Capital management The primary objective of the Company's capital management is to ensure that it maintains healthy capital ratios in order to support its business sustain future development of the business and maximize shareholders value. The Company closely monitors the return on capital along with the level of distributions to ordinary shareholders. No changes were made in the objectives, policies or processes during the year ended 30 June 2010. The Company manages its capital structure and makes adjustment to it in the light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. During the year, the Company has issued right shares amounting to Rs.23,040 million (notes 1.2.4). The Company monitors capital using a debt equity ratio, which is net debt divided by total capital plus net debt. Equity comprises of share capital, capital and revenue reserves. During the year, the Company's strategy was to maintain leveraged gearing. The gearing ratios as at 30 June 2010 and 30 June 2009 were as follows: ==========================================================================================
Note 2010 2009
(Rupees in '000)
==========================================================================================
Long term financing 21 39,289,102 45,030,126
Liabilities against asset
subject to finance lease 22 - 287,706
Long-term deposits 23 4,040,288 3,836,994
Trade and other payables 27 54,799,202 26,853,848
Accrued mark-up 28 4,770,125 2,325,237
Short-term borrowings 29 13,441,796 11,953,522
Short-term deposits 30 4,276,499 3,241,691
Current maturity of
non-current liabilities 31 16,197,276 15,870,813
Total Debt 136,814,288 109,399,937
Less: Cash and bank balance 16 (1,189,424) (1,127,644)
Net debt 135,624,864 108,272,293
Total Equity (325,112) (8,737,470)
Total Capital 135,099,752 99,534,823
Gearing ratio (excluding
advance against
subscription for right share) (1.00) (1.09)
Advance against subscription
for right shares - 8,170,638
Gearing ratio
(excluding advance against
subscription for right issue) (1.00) (1.01)
==========================================================================================The Company finances its operations through equity, borrowings and management of working capital with a view to maintaining an appropriate mix between various sources of finance to minimise risk. The management of the Company is continuing with operational and infrastructure rehabilitation program with the objective of converting the Company into profitable entity and has taken financial measures to support such rehabilitation program (note 1.2).49.7. Collateral The Company has pledged certain assets and securities in order to fulfil the collateral requirements for various financing facilities. The counter parties have an obligation to return the securities to the Company. Further, the Company did not hold collateral of any sort at 30 June 2010 and 30 June 2009 except otherwise disclosed in respective notes to these financial statements. The fair value and terms and conditions associated with the use of these collateral and securities given and hold by the Company are disclosed in respective notes to these financial statements. 50. TRANSACTIONS / BALANCES WITH RELATED PARTIES Related parties of the Company comprise associates, directors, key management personnel and retirement benefit plans. Amounts due from and to related parties, amounts due from executives and remuneration of the Chairman, Chief Executive and Executives are disclosed below. Details of transactions / balances with related parties except those under the terms of employment were as follows: 50.1. KESP Power Limited, Parent company ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Advance against subscription for right shares - 8,170,638
Short term Loan payable 29,2S2 20,325
Finance cost 14,127 56,770
Accrued mark-up payable 70,897 56,770
==========================================================================================50.2. National Transmission and DespatchCompany, a major supplier ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Sales 51,397 31,078
Purchases 35,951,670 26,727,950
Finance cost - 619,152
Amount payable included in creditors 21,359,205 8,394,059
Amount payable included
in long term financing 20,145,000 29,745,000
==========================================================================================50.3. Pakistan State Oil Company Limited, a major supplier==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Purchases 14,618,936 10,345,777
Late payment surcharge 119,768 62,213
Advance given - 70,462
Amount payable included in creditors 1,328,841 348,757
Amount payable included
in long-term financing - 359,220
==========================================================================================50.4. Sui Southern Gas Company Limited, a major supplier==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Purchases 22,561,915 27,104,843
Finance cost 2,381,659 1,684,214
Amount payable included in creditors 14,288,591 3,554,631
Amount payable included
in long-term financing - 12,238,372
Amount payable included in current
maturity of non-current liabilities 4,938,372 -
==========================================================================================50.5. GuI Ahmed Energy Limited, a major supplier==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Purchases 7,121,964 5,839,382
Late payment surcharge 272,619 187,685
Amount payable included in creditors 1,637,840 3,007,546
Amount payable included
in long-term financing 1,515,223 -
==========================================================================================50.6. Tapal Energy (Private) Limited==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Purchases 7,525,438 6,768,821
Late payment surcharge 156,833 227,976
Amount payable included in creditors 1,322,633 3,005,931
Amount payable included in long-term financing 1,200,000 -
==========================================================================================50.7. ==========================================================================================
2010 2009
(Rupees in '000)
==========================================================================================
Contribution to Provident Fund 381,014 283,402
==========================================================================================51. CAPACITY AND PRODUCTIONThe total derated available capacity was 1,596 MW (2009: 1,611 MW). The actual production during the year was 7,964.073 KWH (2009: 8,262.115 KWH). The actual production is lower as the power generating plant and machinery are normally operated at 60% load as compared to the installed capacity which is also subject to variations in day and night time peak demand. Further, no production is possible when any unit is under major over hauling and repairs. 52. RECLASSIFICATION / RESTATEMENT Certain prior year's figures have been reclassified / restated, consequent upon certain changes in current year's presentation for more appropriate comparison. However, there are no material reclassifications / restatement to report except for interest receivable from GOP on demand finance facilities of Rs. 237.173 million (2009: Rs. 1,151.664 million) previously netted off under specific grant from the government has been re-classified and shown under other receivables. Further, deferred tax liability has been recorded during the year in respect of revaluation surplus amounting to Rs. 260.913 million (refer note 20). 53. OPERATING SEGMENT These financial statements have been prepared on the basis of a single reportable segment which is consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments. The internal reporting provided to the chief operating decision-maker relating to the Company's assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of approved accounting standards as applicable in Pakistan. There were no change in the reportable segments during the year. The Company is domiciled in Pakistan. The Company's revenue is generated substantially from the sale of electric energy to industrial and other consumers under the Electric Act, 1910 and Nepra Act, as amended, to its licensed areas. All non-current assets of the Company at 30 June 2010 are located in Pakistan. 54. BENAZIR EMPLOYEES STOCK OPTION SCHEME (BESOS) The Federal Cabinet approved "Benazir Employees Stock Option Scheme (BESOS)" on 5 August 2009 for empowerment of employees of State Owned Entities through transfer of 12% of Government of Pakistan share holding. According to scheme, 12% shares owned by GoP are required to be transferred to an employees Trust to be registered. The Company's name is also included in the scheme for implementation of BESOS launched on 14 August 2009. The Company was privatized in 2005 in accordance with Share Purchase Agreement dated 14 November 2005 and GoP holds only 25.66% share holding of the Company, accordingly, the management has communicated to the GoP that the Scheme does not apply to the Company as it has been privatized. Pending resolution of such uncertainty, the cost of such scheme has not been accounted for in these financial statements. 55. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on 26 August 2010 by the Board of Directors of the Company. 56. GENERAL All figures have been rounded off to the nearest thousand rupees. |