| National Refinery Ltd - 2005 |
======================================================================================== BALANCE SHEET AS AT 30 JUNE 2005 ======================================================================================== 30 June 30 June 2005 2004 Re-stated Notes (Rupees in '000) ======================================================================================== ASSETS NON-CURRENT ASSETS: Property, plant and equipment 3 1,511,276 1,281,469 Intangible assets 4 21,255 - Capital work-in-progress 5 610,306 301,558 Deferred taxation 6 375,683 321,685 Long term investments 7 - - Long term loans and deposits 8 64,406 64,386 CURRENT ASSETS: Stores, spares and chemicals 9 719,385 703,998 Stock-in-trade 10 3,205,874 3,639,869 Trade debts 11 1,654,027 2,406,093 Loans and advances 12 22,087 30,047 Deposits and prepayments 13 235,026 357,962 Other receivables 14 2,168,938 6,061,599 Cash and bank balances 15 7,844,153 1,714,841 5,849,490 14,914,409 Total assets 8,432,416 16,883,507 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES: Share Capital Authorised 100,000,000 (2004: 100,000,000) Ordinary shares of Rs 10 each 1,000,000 1,000,000 Issued, subscribed and paid-up 16 666,388 666,388 Reserves 17 6,033,538 4,912,614 6,699,926 5,579,002 NON-CURRENT LIABILITIES: Deferred liability 18 - 182,891 CURRENT LIABILITIES: Short term running finances 19 - 259,676 Creditors and accrued liabilities 20 8,902,921 9,027,983 Provisions and other liabilities 21 1,607,950 1,352,507 Provision for taxation - net 22 1,195,868 460,396 Unclaimed dividend 25,751 21,052 1,732,490 11,121,614 Contingencies and commitments 23 Total equity and liabilities 8,432,416 16,883,507 ======================================================================================== ======================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE, 2005 ======================================================================================== Notes 30 June 30 June 2005 2004 (Rupees in '000) ======================================================================================== Gross sales 24 9,141,470 46,265,658 Duties, taxes and levies 25 8,400,621 5,865,798 0,740,849 40,399,860 NET SALES: Cost of sales 26 6,904,890 37,443,321 Gross profit 3,835,959 2,956,539 Administrative, selling and general expenses 27 661,884 366,853 Operating profit 3,174,075 2,589,686 Other income 28 420,862 629,079 Other charges 29 287,071 435,660 Financial charges 30 13,204 18,584 300,275 454,244 Profit before taxation 3,294,662 2,764,521 Taxation 31 1,174,156 915,016 Net profit for the year 2,120,506 1,849,505 (Rupees) Basic earnings per share 32 31.82 27.75 ======================================================================================== ======================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE, 2005 ======================================================================================== Note 30 June 30 June 2005 2004 (Rupees in '000) ======================================================================================== CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations 33 9,303,036 4,077,630 Financial charges paid (8,967) (21 ,1 59) Income tax paid (492,682) (279,015) Gratuity paid (9,650) (9,737) Post retirement medical benefit paid (420,091) (7,287) Pension fund contribution (436,256) - Return / interest received on loans to employees 493 369 Net cash flow from operating activities 7,935,883 3,760,801 CASH FLOWS FROM INVESTING ACTIVITIES: Fixed capital expenditure (729,014) (316,483) Proceed on disposal of fixed assets 1,511 3,592 Long term loans, advance and deposits (20) 34,613 Return / Interest received on bank deposits 175,511 103,794 Net cash used in investing activities (552,012) (174,484) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (994,883) (660,701) Net increase in cash and cash equivalents 6,388,988 2,925,616 Cash and cash equivalents at the beginning of the year 1,455,165 (1,470,451) Cash and cash equivalents at the end of the year 34 7,844,153 1,455,165 ======================================================================================== ==================================================================================================================================================
STATEMENT OF CHANGES IN EQUITY For the year ended June 30, 2005
==================================================================================================================================================
Share capital Capital reserves Revenue reserves Special reserve Total
Issued, Capital Exchange General Unappropriated
subscribed compensation equalisation reserve profit
and paid-up reserves reserve
(Rupees in '000)
==================================================================================================================================================
Balance at July 1, 2003
as previously reported 666,388 10142 4,117 2,611,000 769 603,678 3,896,094
Effect of change in accounting
policy with respect to dividend
declared after the balance sheet date - - - - 499,791 - 499,791
Balance at July 1, 2003 as restated 666,388 10,142 4,117 2,611,000 500,560 603,678 4,395,885
Profit after taxation for the
year ended June 30, 2004 - - - - 1,849,505 - 1,849,505
Transfer to special reserve - - - - (532,206) 532,206 -
Transfer to general reserve - - 484,000 (484,000) - -
Final dividend of 2003 @ 75 percent - - - - (499,791) - (499,791)
Interim dividend of 2004 (c) 25 percent - - - (166,597) - (166,597)
Proposed dividend of 2004
(c) 100 percent - - - (666,388) - (666,388)
Balance at June 30, 2004
as previously reported 666,388 10,142 4,117 3,095,000 1,083 1,135,884 4,912,614
Effect of change in accounting
policy with respect to dividend
declared after the balance sheet date - - - - 666,388 - 666,388
Balance at June 30, 2004 as restated 666,388 10,142 4,117 3,095,000 667,471 1,135,884 5,579,002
Profit after taxation for the
year ended 30 June 2005 - - - - 2,120,506 - 2,120,506
Transfer to special reserve - - - - (731,856) 731,856 -
Transfer to general reserve - - - 556,700 (556,700) - -
Final dividend of 2004 (c) 100 percent - - - (666,388) - (666,388)
Interim dividend of 2005 @ 50 percent - - - (333,194) - (333,194)
Balance at June 30, 2005 666,388 10,142 4,117 3,651,700 499,839 1,867,740 6,699,926
==================================================================================================================================================NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June, 20051. THE COMPANY AND ITS OPERATIONS National Refinery Limited (the company) was incorporated in Pakistan on 19 August 1963 as a public limited company. It is currently engaged in the manufacturing, production and sale of large range of petroleum products. The shares of the Company are listed on the Karachi, Lahore and Islamabad Stock Exchanges. The refinery complex of the Company comprises of three refineries, consisting of two lube refineries, commissioned in 1966 and 1985, and a fuel refinery added to the complex in 1977. The registered office of the Company is situated at 7-B, Korangi Industrial Zone, Karachi, Pakistan. In order to provide incentives to oil refineries to operate on self financing basis without any subsidy, the Government of Pakistan (GoP), with effect from 1 July 2002, abolished the requirement of a minimum 10 percent rate of return guarantee on the paid up capital, as provided for under the previous import parity formula, and placed the company along with other refineries on the tariff protection formula, directing the refineries to transfer to a special reserve from their net profit after tax attributable to the fuel refineries an amount in excess of 50 percent of their paid-up capital in order to off set against any future loss or to make investment for expansion or up-gradation of refineries (note 17.3). The company has been privatised and the management handed over to the new owner (Attock Oil Group) on July 7, 2005. 2. SIGNIFICANT ACCOUNTING POLICIES 2.1. BASIS OF PREPARATION These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence. 2.2. ACCOUNTING CONVENTION These financial statements have been prepared under the historical cost convention. 2.3. CHANGE IN ACCOUNTING POLICY The Company has changed its accounting policy during the year whereby dividend is now recognised as a liability in the period in which it is declared. The change was considered necessary due to revision of Fourth Schedule to the Companies Ordinance, 1984, whereby the requirement of IAS - 10, "Events after the balance sheet date" are now applicable. The comparative statements for the year 2004 has been restated to confirm to the changes in policy. The effect of change is the decrease in appropriation for the final dividend proposed for the year 2004 amounting to Rs 666.388 million. Opening unappropriated profit for the year 2004 has been increased by Rs 499.791 million, which is the amount of final dividend for the year 2003. 2.4. PROPERTY, PLANT AND EQUIPMENT These are stated at cost less accumulated depreciation and impairment, if any. Depreciation is charged to the profit and loss account applying the straight-line method whereby the cost of the asset is written off over its estimated useful life. The rates used are stated in note 3 to the financial statements. Depreciation on additions is charged for the full month in which an asset is put to use and on deletions up to the month immediately preceding the deletion. The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of tangible fixed assets is the greater of net selling price and value in use. Maintenance and normal repairs are charged to the profit and loss account as and when incurred. Major renewals and improvements are capitalised and the assets so replaced, if any, are retired. Gains and losses on disposal of assets, if any, are taken to the profit and loss account. Intangible assets Expenditure incurred to acquire software licences is capitalised as intangible assets and stated at cost less accumulated amortisation and impairment loss, if any. Intangible assets are amortised using the straight line method over a period of three years or license period whichever is lower. Where the carrying amount of an asset exceed its estimated recoverable amount it is written down immediately to its recoverable amount. 2.5. CAPITAL WORK-IN-PROGRESS Capital work-in-progress is stated at cost. It consists of expenditure incurred and advances made in respect of tangible and intangible assets in the course of their construction and installation. Transfers are made to relevant fixed assets category as and when assets are available for use. 2.6. INVESTMENTS Management determines the appropriate classification of its investment at the time of purchase and these are initially recognised at cost, being the fair value of the consideration given including the acquisition cost. Investment securities, which are intended to be held for an undefined period of time but may be sold in response to the need for liquidity are classified as available for sale. All investments are initially recognized at cost, being the fair value of the consideration given. Subsequent to initial recognition, for investments traded in active market, fair value is determined by reference to quoted market price and the investments for which a quoted market price is not available, or the fair values cannot be reasonably calculated, are measured at cost, subject to a review for impairment at each balance sheet date. Investment in unquoted securities are recorded at cost. However, an assessment is made at each balance sheet date to determine whether there is objective evidence that an investment may be impaired. If such evidence exists, the estimated recoverable amount of the investment is determined and any impairment loss is recognised for the difference between the recoverable amount and the carrying amount. Gain or loss arising on disposal during the year is taken to profit and loss account. 2.7. STORES, SPARES AND CHEMICALS Stores, spares and chemicals excluding items in transit are valued at lower of moving average cost and net realisable value. Provision is made for slow moving and obsolete items. Net realisable value signifies the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Items in transit are valued at cost comprising invoice values plus other charges incurred thereon accumulated to the balance sheet date. 2.8. STOCK-IN-TRADE Stock of crude oil is valued at lower of cost, determined on a first-in-first out (FIFO) basis, and net realizable value. Crude oil in transit is valued at cost comprising invoice values plus other charges incurred thereon accumulated to the balance sheet date. Stocks of semi-finished and finished products are valued at lower of cost, determined on a weighted average basis, and net realisable value. Cost in relation to semi-finished and finished products represents cost of crude oil and an appropriate allocation of manufacturing overheads. Cost in respect of semi-finished items is adjusted to an appropriate stage of processing. Net realisable value signifies the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. 2.9. TRADE DEBTS AND OTHER RECEIVABLES These are recognised and carried at original invoice amount less an allowance for uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Debts considered irrecoverable are written-off. 2.10. CASH AND CASH EQUIVALENTS Cash in hand and at banks, short-term bank deposits and short-term running finances, if any, are carried at cost. For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in bank, net of short-term running finances that are highly liquid in nature and are readily convertible into known amounts of cash, which are subject to insignificant risks of changes in value. 2.11. STAFF RETIREMENT BENEFITS (a) Defined contribution plan The company operates an approved contributory provident fund for all employees. Equal monthly contributions are made, both by the company and the employees, to the fund at the rate of 10% of basic salary. (b) Defined benefit plans The company operates the following schemes: (i) funded pension scheme, known as 'State Petroleum Refining and Petrochemical Corporation (Private) Limited (PERAC) Managerial and Supervisory Staff Pension Fund' for permanent, regular and full time managerial and supervisory staff of the Company and other associated / related companies. This scheme is managed by the company through a Fund established out of contributions from the participating companies and is based on actuarial valuation. The most recent valuation in this regard was carried out as at 30 June 2005, using the Projected Unit Credit Method for valuation of the scheme. (ii) funded gratuity scheme for its non management permanent employees. Provision is made annually, to cover obligations under the scheme, by way of a charge to profit and loss account, calculated in accordance with the actuarial valuation. The most recent valuation in this regard was carried out as at 30 June 2005, using the Projected Unit Credit Method. (iii) during the year, the Company modified the medical scheme and has now instituted a funded medical scheme in place of unfunded scheme, covering its management employees who are eligible for pension on normal or early retirement and to their widows on death of employee in service or after retirement if they are entitled for pension. Benefits are provided annually by way of a charge to profit and loss account to cover obligations based on actuarial valuation. The most recent valuation in this regard was carried out as on 30 June 2005, using the Projected Unit Credit Method. Past service cost is recognized immediately to the extent that the benefits are already vested. For non-vested benefits past service cost is amortised on straight line basis over the average period until the amended benefits become vested. Amounts recognized in the balance sheet represents the present value of defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, if any, and as reduced by the fair value of plan assets. Any assets resulting from the calculation is limited to the unrecognised actuarial losses and unrecognised past service cost plus the present value of available refunds and reduction in future contribution to the plan. 2.12. ACTUARIAL GAINS AND LOSSES Actuarial gains and losses are recognized as income or expense when the cumulative unrecognized actuarial gains or losses for each individual plan exceeds 10% of the higher of (a) the defined benefit obligation and (b) the fair value of plan assets. These gains or losses are recognized over the expected average remaining working lives of the employees participating in the plan. 2.13. COMPENSATED ABSENCES The Company accounts for these benefit on the basis of actuarial valuation. The most recent valuation in this regard was carried out as on 30 June 2005 using project unit credit method. 2.14. CREDITORS, ACCRUED AND OTHER LIABILITIES Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the company. 2.15. PROVISIONS Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. 2.16. TAXATION (a) Current The Company falls under the final tax regime under Sections 154 and 169 of the Income Tax Ordinance, 2001, to the extent of direct export sales. Provision for tax on other income and local sales is based on taxable income at the rates applicable for the current tax year, after considering the rebates and tax credits available, if any. The tax charge as calculated above is compared with turnover tax under Section 113 of the Income Tax Ordinance, 2001, and whichever is higher is provided in the financial statements. (b) Deferred Deferred tax is recognised, proportionate to local sales using the liability method, on all temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. 2.17. REVENUE RECOGNITION Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Specific revenue recognition criteria is as follows: (a) Local sales are recorded on the basis of products delivered to the tanks of marketing companies and customers. (b) Export sales are recorded on the basis of products delivered to tankers and shipped to customers. (c) Handling and storage income, pipelines charges recovered, scrap sales and rental incomes are recognised on an accrual basis. (d) Return / Interest on bank deposits and advances to employees are recognised on an accrual basis. (e) Interest income resulting from overdue balances, if any, included in trade debts and markup on long term loan are accounted for on receipt basis due to uncertainty associated with its realisation. 2.18. RELATED PARTY TRANSACTIONS The transactions between the Company and related parties are carried out on an arm's length basis and the relevant rates are determined in accordance with the Comparable Uncontrolled Price Method. 2.19. FOREIGN CURRENCY TRANSLATION Transactions in foreign currencies are translated into reporting currency at the rates of exchange prevailing on the date of transactions. Monetary assets and liabilities denominated in foreign currencies are translated into reporting currency equivalents using year-end spot foreign exchange rates. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. Exchange differences on foreign currency translations are included in income currently. 2.20. FINANCIAL INSTRUMENTS All the financial assets and financial liabilities are recognised at the time when the Company becomes a party to the contractual provisions of the instrument. All the financial assets are derecognised at the time when the company loses control of the contractual rights that comprise the financial assets. All financial liabilities are derecognised at the time when they are extinguished that is, when the obligation specified in the contract is discharged, cancelled, or expires. Any gains or losses on derecognition of the financial assets and financial liabilities are taken to profit and loss account currently. 2.21. OFF SETTING OF FINANCIAL ASSETS AND LIABILITIES A financial asset and a financial liability are offset and the net amount is reported in the balance sheet if the company has a legally enforceable right to set-off the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. 3. PROPERTY, PLANT AND EQUIPMENT ========================================================================================================================================================================================================
Written
Cost Rate Accumulated depreciation down value
As at 01 Additions/ (Disposals) As at 30 (%) As at 01 For the year (on As at 30 As at 30
Description July 2004 transfer June 2005 July 2004 / transfer disposals) June 2005 June 2005
Notes (Rupees in '000) (Rupees in '000)
========================================================================================================================================================================================================
Tangible
Leasehold land 3.1 & 3.2 60,035 - - 60,035 1 8,009 601 - 8,610 51,425
Building on leasehold land 83,323 206,001 - 289,324 5 50,372 6,330 - 56,702 232,622
Oil terminal 261,704 3,504 - 265,208 5 & 8 128,621 10,247 - 138,868 126,340
Processing plant and
storage tanks 3,631,965 109,499 - 3,741,464 5 & 7 3,269,741 53,828 - 3,323,569 417,895
Power generation plant 726,275 - - 726,275 7 244,760 50,839 - 295,599 430,676
Pipelines 112,960 8,685 - 121,645 8 109,067 862 - 109,929 11,716
Water power and other utilities 771,877 15,897 - 787,774 6 640,033 14,769 - 654,802 132,972
Vehicles 55,441 5,744 (2,025) 59,160 20 33,071 8,031 (1,381) 39,721 19,439
Furniture and fixtures 13,013 5,136 - 18,149 7.5 9,176 594 - 9,770 8,379
Computers and other
related accessories 36,138 10,742 - 46,880 33.33 29,711 4,728 - 34,439 12,441
Office and other equipments 155,981 23,177 (1,100) 178,058 5 to 15 104,682 6,768 (763) 110,687 67,371
30 June 2005 5,908,712 388,385 (3,125) 6,293,972 4,627,243 157,597 (2,144) 4,782,696 1,511,276
30 June 2004 5,820,514 92,792 (4,594) 5,908,712 4,483,060 148,209 (4,026) 4,627,243 1,281,469
========================================================================================================================================================================================================3.1. LEASEHOLD LAND INCLUDES LAND SUBLEASED TO THE FOLLOWING LESSEES� Pak-Hy Oils (Private) Limited � Caltex Oil (Pakistan) Limited � Shell Gas LPG (Pakistan) Limited � Foundation Gas Company Limited � Pakistan State Oil Company Limited � PERAC Research & Development Foundation � Petroleum Packages Limited � Anoud Power Generation Limited The value of each of the above is immaterial. 3.2. Including in the above is Land measuring 997.56 square yard, the title of which is being disputed by an individual claiming to be the right full owner of the said piece of Land. The High Court of Sindh in an appeal filed against order of Single Bench has decided the case in favour of the claimant. The company as a matter of prudence has made provision of rent and cost of land in accordance with the directives of the said order. However, the company has filled an appeal in the Supreme Court of Pakistan against the said order of the High Court of Sindh. 3.3. DEPRECIATION FOR THE YEAR HAS BEEN ALLOCATED AS FOLLOWS ========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
Cost of sales 26 141,752 134,304
Administrative, selling and general expenses 27 15,845 13,905
157,597 148,209
========================================================================================3.4. During the year, the following amounts have been transferred from capital work-in-progress to operating fixed assets:========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Buildings on leasehold land 200,611 172
Oil terminal 3,504 4,444
Processing plant and storage tanks 86,724 5,887
Power generation plant - 12,748
Pipelines 8,155 698
Water power and other utilities 15,897 15,446
Vehicles - 3,756
Furniture and fixtures 4,054 -
Computer and related accessories 31,881 -
Office and other equipment 19,326 9,178
370,152 52,329
========================================================================================3.5. THE FOLLOWING ASSETS WERE DISPOSED OFF DURING THE YEAR==================================================================================================================
Cost Accumulated Written Sale Mode of Particulars of
Depreciation down value proceeds disposal buyers
(Rupees in '000)
==================================================================================================================
Vehicle 455 - 455 455 Company policy Mir Ilyasuddin
(Ex- Employee)
Vehicle 822 795 27 468 Company policy Mr. Riaz Khaliq
(Ex- Employee)
Vehicle 748 586 162 383 Company policy Col. (R) M. Amjad
(Ex- Employee)
2,025 1,381 644 1,306
OFFICE AND OTHER EQUIPMENTS:
Punching machine 266 90 176 25 Trade in M/s Teledata
Equipments-written down
value below Rs 50,000 834 673 161 180 Various Various
1,100 763 337 205
30 June 2005 3,125 2,144 981 1,511
30 June 2004 4,594 4,026 568 3,592
==================================================================================================================4. INTANGIBLE ASSETS==================================================================================================================================================================
Cost Rate Accumulated amortisation Balance as
As at 01 Additions! (Disposals) As at 30 (%) As at 01 For the year on As at 30 at 30
July 2004 transfer June 2005 July 2004 / transfer ( disposals) June 2005 June 2005
(Rupees in '000) (Rupees in '000)
==================================================================================================================================================================
SAP software - 31,881 - 31,881 33.33 - 10,626 - 10,626 21,255
30 June 2005 - 31,881 - 31,881 - 10,626 . 10,626 21,255
30June2004 - - - - - - - - -
==================================================================================================================================================================5. CAPITAL WORK-IN-PROGRESS============================================================================
30 June Additions / 30 June
2005 (transfers) 2004
(Rupees in '000)
============================================================================
Property, plant and equipments
Lube revamp project
Advances to contractors
- considered good 9,017 4,770 4,247
Fee and technical studies 60,657 19,351 41,306
Material cost 369,950 369,357 593
Other related expenditure 1,863 527 1,336
441,487 394,005 47,482
Other projects 162,080 259,451 235,902
(333,273)
Advances to other contractors / suppliers -
considered good 6,739 6,739 4,998
(4,998)
INTANGIBLE ASSETS:
SAP software - 18,705 13,176
(31,881)
610,306 678,900 301,558
(370,152)
============================================================================6. DEFERRED TAXATION========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
DEFERRED TAX DEBITS ARISING FROM:
PROVISIONS IN RESPECT OF:
Slow moving stores, spares and chemicals 173,923 177,130
Duties and taxes 281,300 193,408
Long term investments 3,280 3,356
Bad debts 607 619
Retirement benefits 40,327 56,574
Legal cases 11,138 -
Liabilities offered for tax 114,528 113,587
625,103 544,674
Deferred tax credit arising on
Differences between written down values and
tax bases of fixed assets (249,420) (222,989)
375,683 321,685
========================================================================================7. LONG TERM INVESTMENTS========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Unlisted - available for sale
Anoud Power Generation Limited 10,800 10,800
1,080,000 (2004: 1,080,000) Ordinary shares of Rs 10 each
[Equity held 9.09 percent (2004: 9.09 percent),
Chief Executive: Tasveer A. Jumani
Break-up value of each ordinary share of Rs 10: Rs. 6.17
(2004: Rs 5.81) per ordinary share based on the latest audited
financial statements available for the year ended 30 June 2
Fuel Pipelines Limited - 50
The SECP vide the letter No N-5884/COM/2005/23914 dated
June 10, 2005 dissolved M/s Fuel Pipelines Limited U/s 439
of the Companies Ordinance, 1984. Consequently the
investment has been written off. 10,800 10,850
Impairment in the value of investment in unlisted securities (10,800) (10,850)
========================================================================================8. LONG TERM LOANS AND DEPOSITS========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
LOANS - CONSIDERED GOOD
SECURED:
- Executives 10,338 12,241
- Employees 50,018 44,290
8.1 60,356 56,531
Less: Recoverable within one year
shown under current assets:
- Executives 3,276 3,454
- Employees 9,568 7,909
12,844 11,363
47,512 45,168
UNSECURED:
- Executives 2,434 2,404
- Employees 6,817 7,617
8.2 9,251 10,021
Less: Recoverable within one year
shown under current assets:
- Executives 729 612
- Employees 1,740 1,326
12 2,469 1,938
6,782 8,083
8.3 54,294 53,251
DEPOSITS:
- Utilities 7,938 7,969
- Others 2,174 3,166
10,112 11,135
64,406 64,386
Others 22,488 21,576
54,294 53,251
========================================================================================8.1. The secured loans to executives and employees are for the purchase of motorcars and house building.These are granted in accordance with the terms of their employment and are recoverable in monthly instalments over a period, ranging between 5 and 10 (2004: 5 and 10) years. Motorcar loans carry interest at the rates, ranging between 0 percent and 7 percent (2004: 0 percent and 7 percent) per annum and are secured against respective vehicles purchased whereas house building loans carry interest, ranging between 0 percent and 5 percent (2004: 0 percent and 5 percent) per annum and are secured against the title documents of property purchased by the employees. The maximum aggregate amount due from executives in respect of secured loans at the end of any month during the year was Rs 13.331 (2004: Rs 13.344) million. 8.2. The unsecured loans to executives and employees are either personal loans or given for the purchase of furniture and motorcycles. These are granted in accordance with the terms of their employment and are recoverable in monthly installments over a period, ranging between 4 and 12 (2004: 4 and 12) years and are interest free. The maximum aggregate amount due from executives in respect of unsecured loans at the end of any month during the year was Rs 2.568 (2004: Rs 3.119) million. 8.3. These loans have not been discounted to their present values as the financial impact is not material. 9. STORES, SPARES AND CHEMICALS ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
IN HAND:
Stores 246,163 391,513
Spares 914,805 753,126
Chemicals 78,541 49,823
In transit (stores and spares) 52,500 82,160
1,292,009 1,276,622
Provision for slow moving and obsolete stores,
spares and chemicals (572,624) (572,624)
719,385 703,998
========================================================================================Due to the nature of the inventory of the company, stores and spares held for capital expenditure purposes cannot be separately identified.10. STOCK-IN-TRADE ========================================================================================
30 June 30 June
2005 2004
Note (Rupees in '000)
========================================================================================
CRUDE OIL:
- In tanks 1,399,085 1,227,576
- In transit 605,520 853,920
2,004,605 2,081,496
Semi finished products 836,593 712,461
Finished products 10.1 364,676 845,912
3,205,874 3,639,869
========================================================================================10.1. Finished products carried at net realisable value amounted to Rs 3.655 (2004: Rs 5.728) million at the end of the year.11. TRADE DEBTS - UNSECURED ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Considered good 1,654,027 2,406,093
Considered doubtful 2,000 2,000
1,656,027 2,408,093
Provision against debts considered doubtful (2,000) (2,000)
1,654,027 2,406,093
========================================================================================12. LOANS AND ADVANCES========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
LOANS - CONSIDERED GOOD:
Current portion of long term loans
SECURED:
- Executives 3,276 3,454
- Employees 9,568 7,909
8 12,844 11,363
UNSECURED:
- Executives 729 612
- Employees 1,740 1,326
8 2,469 1,938
Short term loans to employees - unsecured, interest free 1,249 2,457
ADVANCES:
- Executives 874 50
- Employees 748 -
- Suppliers 3,903 14,239
5,525 14,289
22,087 30,047
========================================================================================12.1. The maximum aggregate amount due from executives in respect of short term loans at the end of any month during the year was Rs 0.455 (2004: Rs 0.106) million.12.2. The maximum aggregate amount due from executives in respect of advances at the end of any month during the year was Rs 0.419 (2004: Rs 0.597) million. 13. DEPOSITS AND PREPAYMENTS ========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
DEPOSITS:
Development surcharge 14,717 35,775
Excise duty 60,087 282,203
Margin against letters of credit and guarantee 7,052 431
Deposit to Sui Southern Gas Company Limited (SSGC) 36,609 -
Miscellaneous 1,612 445
120,077 318,854
PREPAYMENTS:
Rent - 90
Insurance 5,925 23,859
Pension Fund 20,339 11,931
Workers' Profit Participation Fund 21.3 52,792 -
Employees' Retirement Medical Fund 37 31,779 -
Miscellaneous 4,114 3,228
114,949 39,108
235,026 357,962
========================================================================================14. OTHER RECEIVABLES - CONSIDERED GOOD========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
CONSIDERED GOOD
DUE FROM:
- Government of Pakistan 14.1 87,443 4,414,000
- Pakistan State Oil Company Limited (PSO) - 78
- Pakistan Refinery Limited (PRL) 14.2 1,453,038 439,014
- Pak Arab Refinery Limited (PARCO) - related party 14.2 475,464 448,316
- Oil & Gas Development Company Limited - related party - 321,498
Return accrued on bank deposits 23,402 8,574
Claims receivable 820 4,168
Sales tax 128,537 424,319
Miscellaneous 234 1,632
2,168,938 6,061,599
========================================================================================14.1. This represents the price differential claim from Government of Pakistan.14.2. This represents the excess of amount due in respect of purchase of Crude Oil, freight and other charges paid by the Company on behalf of PRL and PARCO. 15. CASH AND BANK BALANCES ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
In hand 525 525
WITH BANKS:
- on current accounts 675,156 886,311
- on savings accounts 1,753,860 762,739
- on local currency deposit accounts 5,399,228 50,277
- on foreign currency deposit accounts 15,384 14,989
7,843,628 1,714,316
7,844,153 1,714,841
========================================================================================16. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL==========================================================================================
Number of shares 30 June 30 June
2005 2004 2005 2004
(Rupees in '000)
==========================================================================================
59,450,417 59,450,417 Ordinary shares of Rs 10 each 594,504 594,504
fully paid in cash
6,469,963 6,469,963 Ordinary shares of Rs 10 each 64,700 64,700
fully paid for consideration
other than cash
718,420 718,420 Ordinary shares of Rs 10 each 7,184 7,184
issued as fully paid bonus shares
66,638,800 66,638,800 666,388 666,388
==========================================================================================17. RESERVES========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
CAPITAL RESERVES:
Capital compensation reserves 17.1 10,142 10,142
Exchange equalisation reserve 4,117 4,117
14,259 14,259
REVENUE RESERVES:
General reserve 17.2 3,651,700 3,095,000
Unappropriated profit 499,839 667,471
4,151,539 3,762,471
Special reserve 17.3 1,867,740 1,135,884
6,033,538 4,912,614
========================================================================================17.1. Capital compensation reserves include net amounts for (a) premature termination of crude oil sales, bareboat charter-party and technical assistance agreements (b) design defects and terminated service agreements and (c) termination of bareboat charter-party and affreightment agreements.17.2. GENERAL RESERVE ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Balance at the beginning of the year 3,095,000 2,611,000
Appropriation during the year 556,700 484,000
3,651,700 3,095,000
========================================================================================17.3. This represents amount set aside as a special reserve, as a result of the directive of the government to divert net profit after tax above 50 percent of paid-up capital to offset against any future loss or to make investment for expansion or up gradation of refineries (note 1).18. DEFERRED LIABILITY ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Post retirement medical benefits - 182,891
========================================================================================During the year the Company constituted a funded scheme for Post Retirement Medical Benefits and contribution to the fund was made for full liability determined in accordance with the actuarial advice.19. SHORT TERM RUNNING FINANCES The facilities for short term running finances available from various banks amounted to Rs 3,093 (2004: Rs 2,693) million at the end of the current year. The rates of mark-up in respect of running finances range between 3% and 9.5% (2004: 3% and 4.5%) per annum, payable quarterly. The facilities are secured against pari passu charge on stock of crude oil, hypothecation of stock of crude oil and petroleum products, book debts and mortgage over land, building and machinery of the company. The purchase prices are repayable on various dates, latest by 31 December 2005. 20. CREDITORS AND ACCRUED LIABILITIES ========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
CREDITORS:
Government of Pakistan 410,637 4,587,119
OTHER TRADE CREDITORS:
- related parties 20.1 1,013,646 4,756
- others 20.2 6,752,955 3,709,686
7,766,601 3,714,442
8,177,238 8,301,561
ACCRUED LIABILITIES
MARK-UP ON:
- secured short term running finances - 1,080
- unsecured customs duty - overdue 310,264 310,264
310,264 311,344
Accrued expenses 415,419 415,078
8,902,921 9,027,983
========================================================================================20.1. INCLUDED HEREIN ARE THE FOLLOWING RELATED PARTIES========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Pakistan Petroleum Limited 16,206 -
Oil and Gas Development Company Limited (OGDCL) 941,988 -
KSB Pumps Company Limited 7 25
PERAC Research and Development Foundation 763 49
BOC Pakistan Limited - 94
Anoud Power Generation (Private) Limited 6,421 -
Government Holding (Private) Limited 48,261 4,588
1,013,646 4,756
========================================================================================20.2. Included herein is a sum of Rs 280.905 (2004: Rs 280.905) million recorded by the company on account of invoices raised by certain suppliers during the year ended June 30, 2002 in respect of discounts availed by the company in prior years on the purchase of crude oil.21. PROVISIONS AND OTHER LIABILITIES ========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
PROVISIONS AND OTHER LIABILITIES
PROVISIONS:
Duties and taxes 21.1 625,248 625,248
Staff benefits 21.2 - 2,851
Others 105,254 48,582
730,502 676,681
OTHER LIABILITIES:
Retention money 48,832 14,751
Deposits from contractors 21,123 24,712
Advances from customers 561,605 458,336
Workers' Profit Participation Fund 21.3 - 53,763
Workers' Welfare Fund 107,448 104,351
Employees' Gratuity Fund 37 - 3,650
Employees' Pension Fund 37 132,773 11,264
Income tax deducted at source 321 2,173
Miscellaneous 5,346 2,826
877,448 675,826
1,607,950 1,352,507
========================================================================================21.1. THESE REPRESENT PROVISIONS FOR========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
Sales tax and additional sales tax 21.1.1 410,034 410,034
Claim by the Government 21.1.2 165,214 165,214
Sales tax, central excise duty and penalties 21.1.3 50,000 50,000
625,248 625,248
========================================================================================21.1.1. Subsequent to a show cause notice served to the company by the Collectorate of Customs, Sales Tax and Central Excise (Adjudication) during the year ended June 30, 2002 and, as a result of an Order passed by the above mentioned authority during 2004, the company was ordered to pay this sum, comprising of sales tax, additional tax and penalties, in respect of subsidy on petroleum products received from Government of Pakistan, against which the company filed an appeal before the Customs, Excise and Sales Tax Appellate Tribunal. The same is currently pending therewith.21.1.2. This represents amount claimed by the Government, alleging that the company had been allowed excess refund in prior years on account of Import Parity Formula. The company has taken up this matter with the Government and is contesting the same. 21.1.3. This represents provision made by the company in respect of Sales Tax, Central Excise Duty and penalties, aggregating to Rs 50.000 million, determined by the Collectorate of Customs, Sales Tax and Central Excise (Adjudication) in respect of goods sold by the company without deduction of Sales Tax and Central Excise Duties. 21.2. Provisions utilised and written back during the year amounted to Rs 2.851 million. 21.3. WORKERS' PROFIT PARTICIPATION FUND ========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
Balance at the beginning of the year 53,763 19,052
Allocation for the year 29 177,208 148,763
230,791 167,815
Interest on funds utilised in the company's business 30 6,766 1,449
237,737 169,264
Less: amount paid to the Trustees of the Fund 290,529 115,501
Balance at the end of the year (52,792) 53,763
========================================================================================22. PROVISION FOR TAXATION - NET========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Provision for taxation / (Advance income tax) 1,294,709 485,030
Income tax refundable (98,841) (24,634)
1,195,868 460,396
========================================================================================23. CONTINGENCIES AND COMMITMENTSContingencies 23.1. A customer of the Company invoked arbitration proceedings against the Company on account of a dispute resulting from the alleged contamination of certain cargo sold by the company. The customer and the Company have appointed their respective arbitrators with no statement of claim filed to date by the customer. Accordingly, the amount of claim cannot be determined at present. 23.2. THE FOLLOWING RELATE TO TAXATION (a) In the year 2004, the Assessing Officer had revised the income tax liability in respect of assessment year 2000-2001 by passing an Order under Section 221 of the Repealed Income Tax Ordinance, 1979, and levied a surcharge, amounting to Rs 17.224 million, thus reducing the income tax refundable from Rs 126.497 million to Rs 109.273 million. The treatment of Assessing Officer was confirmed by CIT(A). The company has filed an appeal in this regard before ITAT, which is currently pending a final decision. (b) The company had filed an appeal with the CIT(A) for the assessment year 2001-2002 in respect of various disallowances made by the Assessing Officer, out of which Rs 33.422 million still remain disallowed, for which the Company is in appeal with the said authority. 23.3. Outstanding counter guarantees at the end of the year amounted to Rs 218.305 (2004: Rs 2,267.750) million. 23.4. Claims not acknowledged as debt amounted to Rs 61.084 (2004: Rs 168.388) million at the end of the current year. Commitments 23.5. Contracts signed in respect of capital expenditure but not executed until the end of the year are as follows: ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
CURRENCY:
US Dollars 46,899 137,310
Euro 24,635 105,734
Japanese Yen 9,454 -
Pak Rupees 160,973 127,151
241,961 370,195
========================================================================================23.6. Outstanding letters of credit at the end of the year amounted to Rs 7,828.894 (2004: Rs 3,361.429) million.24. GROSS SALES ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Local 0,000,277 41,511,232
Export 9,141,193 4,754,426
9,141,470 46,265,658
========================================================================================25. DUTIES, TAXES AND LEVIES========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Development surcharge 280,038 98,929
Sales tax 8,065,522 5,716,798
Custom duty, wharfage and other levies 55,061 50,071
8,400,621 5,865,798
========================================================================================26. COST OF SALES========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
Opening stock of semi-finished
and finished products 1,558,373 1,461,229
Crude oil, naphtha and drums consumed 26.1 3,564,158 35,451,393
Stores, spares and chemicals consumed 332,044 118,524
Provision for slow moving and obsolete stores,
spares and chemicals - 14,517
Salaries, wages and staff benefits 26.2 1,134,472 615,081
Staff transport and canteen 58,897 53,438
Fuel and power 710,802 693,773
Rent, rates and taxes 26,845 30,903
Insurance 49,463 41,725
Health, safety, environment and related cost 54,478 20,075
Repairs and maintenance 437,474 351,245
Depreciation 3.3 141,752 134,304
Professional charges 25,147 3,775
Pipeline charges 2,527 2,594
Miscellaneous 9,727 9,118
6,547,786 37,540,465
8,106,159 39,001,694
Closing stock of semi-finished and finished products ,201,269) (1,558,373)
56,904,890 37,443,321
========================================================================================26.1. CRUDE OIL, NAPHTHA AND DRUMS CONSUMED========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
CRUDE OIL AND NAPHTHA:
- Opening stock 1,227,576 1,221,431
- Purchases 53,371,286 35,206,098
- Closing stock 1,399,085) (1,227,576)
53,199,777 35,199,953
Drums consumed 364,381 251,440
53,564,158 35,451,393
========================================================================================26.2. Included herein is a sum of Rs 527.886 (2004: Rs 81.584) million in respect of staff retirement benefits including past service cost.27. ADMINISTRATIVE, SELLING AND GENERAL EXPENSES ========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
Salaries and staff benefits 27.1 470,951 195,216
Staff transport and canteen 24,603 22,771
Rent, rates and taxes 1,895 1,049
Depreciation 3.3 15,845 13,905
Amortisation of intangible assets 10,626 -
Legal and professional charges 4,635 4,971
Printing and stationery 9,605 9,119
Repairs and maintenance 19,038 19,989
Telephone and communication 8,755 10,123
Electricity 8,042 7,334
Insurance 3,171 4,224
Health, safety, environment and related cost 46,490 46,126
Training and Seminar 4,098 5,623
Postage, telegrams and periodicals 2,928 2,279
Subscriptions 3,813 3,303
Selling expenses 12,072 9,854
Sanitation and gardening 6,765 5,814
Miscellaneous 8,552 5,153
661,884 366,853
========================================================================================27.1. Included herein is a sum of Rs 264.814 (2004: Rs 40.634) million in respect of staff retirement benefits including past service cost.28. OTHER INCOME ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Handling and storage income 124,685 90,458
RETURN / INTEREST / MARK-UP ON:
- Bank deposits 190,339 68,121
- Long term loan to State Petroleum Refining and
Petrochemical Corporation (Private) Limited - 35,864
- Secured loans to employees 493 369
Exchange gain - net 72,823 3,645
Provisions and liabilities no more payable or
required, written back 5,363 194,330
Refund of sales tax - 188,986
Gain on sale of fixed assets 530 3,024
Proceeds from sale of scrap and empties 18,042 34,010
Pipeline charges recovered 1,836 2,995
Rental income 4,514 1,882
Tender fees 585 605
Transportation claim recovered - 3,427
Miscellaneous 1,652 1,363
420,862 629,079
========================================================================================29. OTHER CHARGES========================================================================================
30 June 30 June
2005 2004
Notes (Rupees in '000)
========================================================================================
OTHER CHARGES:
Refund claimed by the Government 21.1 - 165,214
Provision for duties and taxes 21.1 - 50,000
Others 36,672 -
36,672 215,214
Workers' welfare fund 65,514 60,531
Workers' profit participation fund 21.3 177,208 148,763
Donations 29.1 4,859 10,125
Auditors' remuneration 29.2 530 548
Professional charges 146 40
Directors fee and related expenses 2,142 439
287,071 435,660
========================================================================================29.1. Donations include Rs 2.8 Million to M/s Greenstar Marketing (Private) Limited, whose Managing Director was the Chairman of the company Board as at June 30, 2005.29.2. AUDITORS' REMUNERATION ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Audit fee 300 300
Special reports and certifications 150 150
Out-of-pocket expenses 80 98
530 548
========================================================================================30. FINANCIAL CHARGES========================================================================================
30 June 30 June
2005 2004
Note (Rupees in '000)
========================================================================================
MARK-UP ON SECURED:
short term running finances 561 6,449
short term export refinances 1,404 5,581
1,965 12,030
INTEREST ON:
Workers' profit participation fund 21.3 6,766 1,449
Guarantee commission and service charges 1,628 1,053
Bank charges 2,845 4,052
13,204 18,584
========================================================================================31. TAXATION========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Current 1,279,891 982,393
Prior (51,737) -
Deferred (53,998) (67,377)
31.11,174,156 915,016
========================================================================================The return of income tax of the Company have been filed up to and including tax year 2004 corresponding to the income year ended June 30, 2004.31.1. RELATIONSHIP BETWEEN INCOME TAX EXPENSE AND ACCOUNTING PROFIT ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Profit before taxation 3,294,662 2,764,521
Tax at the applicable tax rate of 35% (2004: 35%) 1,153,132 967,582
Tax effect of expenses that are admissible /
inadmissible in determining taxable profit 232,948 74,606
Effect of tax on exports under Final Tax Regime (106,189) (59,795)
1,279,891 982,393
Effect of change in prior years' tax (51,737) -
Tax effect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes (53,998) (67,377)
1,174,156 915,016
========================================================================================32. BASIC EARNINGS PER SHARE========================================================================================
30 June 30 June
2005 2004
========================================================================================
There is no dilutive effect on the
basic earnings per share the company, which is based on:
Profit after taxation (Rupees in thousands) 2,120,506 1,849,505
Weighted average number of ordinary shares (in thousands) 66,639 66,639
Basic earnings per share (Rupees) 31.82 27.75
========================================================================================33. CASH GENERATED FROM OPERATIONS========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Profit before taxation 3,294,662 2,764,521
ADJUSTMENT FOR NON CASH CHARGES AND OTHER ITEMS:
Depreciation and amortisation 168,223 148,209
Financial charges 13,204 18,584
Provision for gratuity 6,000 3,650
Provision for medical 205,421 61,921
Provision for pension 557,765 -
Return / interest on bank deposits
and secured loans to employees (190,832) (104,354)
Gain on sale of fixed assets (530) (3,024)
Provisions and liabilities no more
payable or required, written back (5,363) (194,330)
Provision for slow moving stores, spares and chemicals - 14,517
Profit before working capital changes 4,048,550 2,709,694
WORKING CAPITAL CHANGES
(INCREASE)/DECREASE IN CURRENT ASSETS:
Store, spares and chemicals (15,387) (286,718)
Stock-in-trade 433,995 (837,798)
Trade debts 752,066 (928,434)
Loans and advances 7,960 (7,635)
Deposits and short term prepayments 154,715 (289,411)
Other receivables 3,907,489 (829,305)
(DECREASE)/INCREASE IN CURRENT LIABILITIES:
Creditors and accrued liabilities (124,137) 4,088,071
Provisions and other liabilities 137,785 459,166
Cash generated from operations 9,303,036 4,077,630
========================================================================================34. CASH AND CASH EQUIVALENTS========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Cash and bank balances 7,844,153 1,714,841
Short term running finances - (259,676)
7,844,153 1,455,165
========================================================================================35. UNAVAILED CREDIT FACILITIES========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Short term finances 3,093,000 2,433,324
Letters of credit 6,503,276 4,343,061
Letters of guarantee 1,678,695 1,635,155
========================================================================================36. NUMBER OF EMPLOYEES========================================================================================
2005 2004
========================================================================================
Number of employees at the year's end 913 943
========================================================================================37. STAFF RETIREMENT BENEFITS================================================================================================
30 June, 2005
Notes Funded
Pension Gratuity Medical
================================================================================================
PRINCIPAL ACTUARIAL ASSUMPTIONS:
The future contribution rate for
pension fund is 20% per
annum of basic salary. Actuarial
assumptions used in the
valuation are as follows:
Rate of discount 9 % p.a 9 % p.a 9 % p.a
Expected rate of increment
of salary / increase in cost 8 % p.a 9 % p.a 6 % p.a
Expected rate of return on assets 9 % p.a 9 % p.a 9 % p.a
Expected retirement age 60 years 60 years 60 years
(Rupees in '000)
RECONCILIATION OF PAYABLE
TO DEFINED BENEFIT PLANS
Present value of defined benefit obligations 1,751,423 46,087 431,233
Fair value of any plan assets (1,625,638) (44,644) (408,587)
Funded status 125,785 1,443 22,646
(Receivable) / Payable from / to Pension Fund (30,114) 30,114 -
Unrecognised net actuarial gains / (loss) 37,102 (31,585) (12,777)
Unrecognised transitional obligation - - (41,648)
Funded obligation shown under
other liabilities / other
(assets) in respect of Pension
Fund and Medical Fund respectively 132,773 (28) (31,779)
MOVEMENT IN PAYABLE TO
DEFINED BENEFIT PLANS:
Opening balance 11,264 3,650 182,891
TOTAL CHARGE RECOGNISED DURING THE YEAR:
- Annual charge recognised 34,222 5,972 69,457
- Past service cost in respect of employees
eligible for promotion 38 132,773 - 41,817
- Prior service cost in respect of promotees
and / or previous deficit 38 390,770 - 94,147
557,765 5,972 205,421
Contribution paid to the fund (436,256) (9,650) (408,587)
Benefits directly paid to
the retirees from the company - - (11,504)
Closing balance 132,773 (28) (31,779)
CHARGE FOR DEFINED BENEFIT PLANS:
Current service cost 32,856 4,249 6,957
Interest cost 79,257 6,829 20,852
Expected return on plan assets (77,891) (5,495) -
Amortisation of actuarial (gain) / loss - 389 -
Amortisation of transitional obligation - - 41,648
34,222 5,972 69,457
================================================================================================
===============================================================================================================================
30 June, 2004
Funded Unfunded
Pension Gratuity Medical
===============================================================================================================================
PRINCIPAL ACTUARIAL ASSUMPTIONS:
The future contribution rate for pension fund is 20% per
annum of basic salary. Important actuarial assumptions
used in the valuation are as follows:
Rate of discount 8% p.a. 8% p.a. 8% p.a.
Expected rate of increment of salary / increase in cost 7% p.a. 8% p.a. 5% p.a.
Expected rate of return on assets 8% p.a. 8% p.a. -
Expected retirement age 60 Years 60 Years 60 Years
(Rupees in '000)
RECONCILIATION OF PAYABLE TO DEFINED BENEFIT PLANS:
Present value of defined benefit obligations 947,788 84,412 261,525
Fair value of any plan assets (934,542) (66,875) -
Un recognised plan assets / unfunded actuarial liability 13,246 17,537 261,525
Net actuarial (loss) / gains not recognised (1,982) (13,887) 4,661
Transition obligation not recognised - - (83,295)
11,264 3,650 182,891
Funded obligations shown under other liabilities (11,264) (3,650) -
- - 182,891
MOVEMENT IN PAYABLE TO DEFINED BENEFIT PLANS:
Opening balance - - 128,257
Charge for the year 34,940 3,650 61,921
Payments made during the year - - (7,287)
Contribution payable to the fund (23,676) - -
Closing balance 11,264 3,650 182,891
CHARGE FOR DEFINED BENEFIT PLANS:
Current service cost 32,217 3,467 6,350
Interest cost 50,309 4,067 13,924
Expected return on assets (47,586) (3,884) -
Amortisation of transitional obligation - - 41,647
34,940 3,650 61,921
===============================================================================================================================38. POST RETIREMENT BENEFITSDuring the year ended June 30, 2005, the Company has recognised a liability of Rs 523.543 million and Rs 135.964 million (refer note 37) in respect of pension and post retirement medical benefits (the benefits) for certain categories of non-management group employees. The CBA during the year ended 30 June 1998 and subsequently under an agreement dated May 4, 2005 had recommended for the benefits to certain categories of non-management group employees on the basis of a predetermined criteria. The management based on the recommendations has provided the benefits to such retired non-management group employees fulfilling the criteria. This practice has established a constructive obligation of the Company towards such existing non-management group employees those fulfil the criteria. The charge for benefits determined on the basis of actuarial valuation dated 30 June 2005 has been recognised in the current period. Restated pro forma information (disclosed in note 38.1) for year ended June 30, 2005 and June 30, 2004 is presented as if the charge has been recognised in the respective accounting period in accordance with the allowed alternative treatment specified in lAS 8 "Net Profit or Loss for the Period. Fundamental Errors and Changes in Accounting Policies". 38.1. RESTATED PRO-FORMA INFORMATION ===================================================================================
30 June 30 June 30 June 30 June
2005 2004 2005 2004
Restated
(Rupees in '000)
===================================================================================
Gross sales 69,141,470 46,265,658 69,141,470 46,265,658
Duties, taxes and levies 8,400,621 5,865,798 8,400,621 5,865,798
Net sales 60,740,849 40,399,860 60,740,849 40,399,860
Cost of sales 56,904,890 37,443,321 56,598,495 37,504,927
GROSS PROFIT 3,835,959 2,956,539 4,142,354 2,894,933
Administrative, selling and
general expenses 661,884 366,853 508,687 397,656
Operating profit 3,174,075 2,589,686 3,633,667 2,497,277
Other income 420,862 629,079 420,862 629,079
Other charges 287,071 435,660 287,071 435,660
Financial charges 13,204 18,584 13,204 18,584
300,275 454,244 300,275 454,244
Profit before taxation 3,294,662 2,764,521 3,754,254 2,672,112
TAXATION:
- Current 1,279,891 982,393 1,381,910 961,880
- Prior (51,737) - (51,737) -
- Deferred (53,998) (67,377) (156,017) (46,864)
1,174,156 915,016 1,174,156 915,016
Net profit for the year 2,120,506 1,849,505 2,580,098 1,757,096
===================================================================================39. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES============================================================================================================
30 June, 2005 30 June, 2004
Chief Chief
Executive Directors Executives Executive Directors Executives
(Rupees in '000)
============================================================================================================
Managerial remuneration 5,213 - 76,782 4,137 - 444,768
Company's contribution to
provident and pension funds 919 - 15,261 703 - 41,537
House rent 900 - 18,177 628 - 103,398
Conveyance 195 - 9,327 163 - 64,354
Leave benefits 316 - 4,983 319 - 21,740
Others - 2,142 - - 439 -
7,543 2,142 124,530 5,950 439 675,797
Number of persons 1 10 63 1 9 772
============================================================================================================39.1. The Chief Executive and some of the executives of the Company are also provided with free use of company's cars, residential equipments and medical benefits in accordance with their terms of service.39.2. These include fees paid to non-executive directors of Rs 0.260 (2004: Rs 0.043) million. 39.3. The number of executives has been reduced due to revision in the definition of executive in the Fourth Schedule to the Companies Ordinance, 1984. 40. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 40.1. FINANCIAL ASSETS AND LIABILITIES ============================================================================================================================================
Effective Interest/markup bearing Non interest/markup bearing Total
yield / Maturity Maturity Sub-total Maturity Maturity Sub-total 30 June
mark-up upto after upto after 2005
rate % one year one year one year one year
(Rupees in '000)
============================================================================================================================================
30 June 2005
FINANCIAL ASSETS:
Loans 4.05 3,113 18,172 21,285 13,449 36,122 49,571 70,856
Deposits - - - 59,990 10,112 70,102 70,102
Trade debts - - - 1,654,027 - 1,654,027 1,654,027
Other receivables - - - 2,040,401 - 2,040,401 2,040,401
Cash and bank balances 1 - 8.5 7,168,015 - 7,168,015 676,138 - 676,138 7,844,153
7,171,128 18,172 7,189,300 4,444,005 46,234 4,490,239 11,679,539
FINANCIAL LIABILITIES:
Creditors and accrued liabilities - - - 8,592,657 - 8,592,657 8,592,657
Provisions and other liabilities - - - 111,973 - 111,973 111,973
Unclaimed dividend - - - 25,751 - 25,751 25,751
- - - 8,730,381 - 8,730,381 8,730,381
============================================================================================================================================
============================================================================================================================================
Effective Interest/markup bearing Non interest/markup bearing Total
yield / Maturity Maturity Sub-total Maturity Maturity Sub-total 30 June
mark-up upto after upto after 2004
rate % one year one year one year one year
(Rupees in '000)
============================================================================================================================================
30 June 2004
FINANCIAL ASSETS:
Loans 4.05 6,832 35,724 42,556 8,927 17,527 26,454 69,010
Deposits - - - 36,651 11,135 47,786 47,786
Trade debts - - - 2,406,093 - 2,406,093 2,406,093
Other receivables - - - 5,633,975 - 5,633,975 5,633,975
Cash and bank balances 0.75-4 828,005 - 828,005 886,836 - 886,836 1,714,841
834,837 35,724 870,561 8,972,482 28,662 9,001,144 9,871,705
FINANCIAL LIABILITIES:
Short term running finances 3- 4.5 259,676 - 259,676 - - - 259,676
Creditors and accrued liabilities - - - 8,663,142 - 8,663,142 8,663,142
Provisions and other liabilities - - - 45,140 - 45,140 45,140
Unclaimed dividend - - - 21,052 - 21,052 21,052
259,676 - 259,676 8,729,334 - 8,729,334 8,989,010
============================================================================================================================================40.2. YIELD / MARK-UP RATE RISKYield / mark-up rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market yield / mark-up rates. Sensitivity to yield / mark-up rate risk arises from mismatches of financial assets and liabilities that mature or reprice in a given period. The company manages these mismatches through risk management strategies where significant changes in gap position can be adjusted. 40.3. CREDIT RISK AND CONCENTRATION OF CREDIT RISK Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific counterparties and continually assessing the credit worthiness of counterparties. Concentrations of credit risk arise when a number of counterparties are engaged in similar business activities or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of the Company's performance to developments affecting a particular industry. The company is exposed to credit risk on long-term investment, loans, advances, deposits, trade debts and other receivables. The company seeks to minimise the credit risk exposure through dealings with customers considered credit worthy and obtaining securities where applicable. Details of composition of long-term investment, loans, advances, deposits, trade debts and other receivables portfolios and their concentrations are given below: ==================================================================================================
30 June, 2005 30 June, 2004
Loans Trade Other Loans Trade Other
and debts receivables and debts receivables
deposits deposits
(Rupees in '000)
==================================================================================================
Fuel and energy - 1,442,690 1,928,502 - 1,420,800 1,208,906
Financial - - 23,402 - - 8,574
Government - 211,116 87,443 - 342,827 4,414,000
Others 140,958 221 1,054 116,795 642,466 2,495
140,958 1,654,027 2,040,401 116,795 2,406,093 5,633,975
==================================================================================================40.4. LIQUIDITY RISKLiquidity risk reflects the company's inability in raising funds to meet commitments. Management closely monitors the Company's liquidity and cash flow position. This includes maintenance of balance sheet liquidity ratios, debtors and creditors concentration both in terms of the over all funding mix and avoidance of undue reliance on large individual customer. 40.5. FOREIGN EXCHANGE RISK MANAGEMENT Foreign currency risk arises mainly where receivables and payables exist due to transactions with foreign undertakings. In appropriate cases, the management takes out forward contracts to mitigate the risk. As at June 30, 2005, the total foreign currency risk exposure was Rs 4,722 (2004: Rs 3,021) million in respect of liabilities. 40.6. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arms length transaction. The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values. 41. SEGMENT INFORMATION The company's operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The fuel segment is a diverse supplier of fuel products and offers gasoline, diesel oils, kerosene and furnace oil. The lube segment provides different types of lube base oils, asphalt, wax free oil and other petroleum products for different sectors of the economy. The company accounts for intersegment sales and transfers on the basis of cost. The following tables present revenue and profit information regarding business segments for the year ended June 30, 2005 and June 30, 2004 and certain asset and liability information regarding business segments at June 30, 2005 and June 30, 2004. ==============================================================================================================
Fuel Lube Total
30 June 30 June 30 June 30 June 30 June 30 June
2005 2004 2005 2004 2005 2004
Re-stated Re-stated Re-stated
(Rupees in '000)
==============================================================================================================
SEGMENT REVENUE
SALES TO EXTERNAL CUSTOMERS:
- local 38,542,131 24,981,952 13,135,817 10,725,413 51,677,948 35,707,365
- export 8,767,071 4,692,495 295,830 - 9,062,901 4,692,495
Inter segment sales 8,744,927 7,258,592 - - 8,744,927 7,258,592
Elimination of inter segment sales - - - - (8,744,927)(7,258,592)
Net sales 56,054,129 36,933,039 13,431,647 10,725,413 60,740,849 40,399,860
Segment net profit after tax 846,442 646,792 1,274,064 1,202,713 2,120,506 1,849,505
Segment assets 9,357,750 11,640,674 6,556,146 3,534,223 15,913,896 15,174,897
Unallocated assets - - - - 2,518,520 1,708,610
Total Assets 9,357,750 11,640,674 6,556,146 3,534,223 18,432,416 16,883,507
Segment liabilities 8,772,104 9,201,423 1,713,669 1,622,477 10,485,773 10,823,900
Unallocated liabilities - - - - 1,246,717 480,605
Total liabilities 8,772,104 9,201,423 1,713,669 1,622,477 11,732,490 11,304,505
OTHER SEGMENT INFORMATION:
Capital expenditure 29,014 1,934 111,889 5,500 140,903 7,434
Unallocated capital expenditure - - - - 247,482 85,358
388,385 92,792
Depreciation and Amortisation 56,075 27,118 112,148 10,758 168,223 37,876
Unallocated depreciation - - - - - 110,333
168,223 148,209
Non-cash expenses
other than depreciation 90,421 21,857 140,841 258,928 231,262 280,785
==============================================================================================================42. TRANSACTIONS WITH RELATED PARTIESThe company has related party relationships with its associated companies, subsidiary companies, directors and executive officers. Associated undertakings The term "associated undertakings" has been deemed not to include those companies in which the Federal Government holds directly or indirectly over 20 percent of shares. Related parties The company has the following related party relationships by virtue of nomination of directors by Government of Pakistan (GoP) on the boards of the Company. State Petroleum Refining and Petrochemical Corporation (Private) Limited (PERAC) ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Long term loan recovered - 45,000
Interest on long term loan received - 35,864
Expenses incurred on behalf of PERAC 500 516
Dividends 153,293 102,195
======================================================================================== Pak Arab Refinery Company Limited (PARCO)The Company shares crude oil purchases with PARCO. Under this arrangement crude oil delivered to PARCO during the year amounted to Rs 11,189.298 (2004: Rs 8,980.585) million and it also received crude oil from PARCO in an aggregate amount of Rs 12,645.470 (2004: Rs 8,587.599) million. ========================================================================================
30 June 30 June
2005 2004
(Rupees in '000)
========================================================================================
Oil and Gas Development Company Limited (OGDCL):
Purchase of crude oil 5,431,895 1,598,628
Purchase of naphtha 1,752,879 1,167,955
Handling and storage income 118,536 106,372
KSB Pumps Company Limited:
Purchases in respect of various stores and spares 269 247
BOC Pakistan Limited:
Purchases in respect of various stores and spares 8,058 1,420
Pakistan Cables Limited:
Payments in respect of various purchases 158 950
Pakistan State Oil Company Limited:
Purchase of lubricants - 19,330
Sale of products 7,143,311 23,534,719
Duties and taxes paid 200,402 203,877
PERAC Research and Development Foundation:
Purchases of water treatment chemicals 13,458 13,758
International Industries Limited:
Purchases of various stores 735 250
Government Holding (Private) Limited:
Purchase of local crude oil 374,076 176,488
Islamic Development Bank - Jeddah:
Dividend paid 150,000 96,000
Payment on account of travelling expenses 1,141 -
Petroleum Institute of Pakistan:
Professional fees 348 731
Anoud Power Generation Limited:
Purchase of electricity 179,026 206,178
Sale of products 130,239 238,921
Pakistan Petroleum Limited:
Purchase of local crude oil 115,386 28,236
Greenstar Social Marketing:
Donation made 2,800 -
New Jubilee Insurance:
Employees car insurance 19 37
Sui Southern Gas Company Limited:
Purchase of natural gas 323,567 262,720
========================================================================================Attock Oil Group has established related party relationship with the Company by virtue of successfully bidding and acquiring of 51 percent controlling interest in National Refinery Limited.The Attock Oil Group paid 25 percent of the price to the Privatisation Commission in June 2005 the transaction was completed by July 7, 2005. Therefore, Attock Oil Group has not been included above. 43. CAPACITY AND ACTUAL PERFORMANCE =================================================================================================
Annual
designed Actual throughput for
throughput the year ended 30 June
capacity 2005 2004
(In Metric Tons)
=================================================================================================
Fuel section - throughput of crude oil 2,710,500 2,741,947 2,609,212
Lube section - throughput of reduced crude oil 620,486 697,851 707,131
=================================================================================================The throughput was increased due to high demand.44. NON ADJUSTING EVENTS AFTER BALANCE SHEET DATE The Board of Directors in their meeting held on September 5, 2005 have proposed a final dividend of Rs 7.5 per share (2004: Rs 10 per share) amounting to Rs 499.791 (2004: Rs 666.388) million in addition to interim dividend of Rs 5 per share (2004: Rs 2.5 per share) amounting to Rs 333.194 million declared and paid during the year. 45. DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on September 5, 2005 by the Board of Directors of the company. 46. GENERAL Figures have been rounded-off to thhe nearest thousand of rupees. |