| Pakistan Refinery Ltd - 2009 |
|
Balance Sheet as at June 30, 2009
=====================================================================================
Note 2009 2008
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(Rupees in thousand)
=====================================================================================
ASSETS
Non-current assets
Property, plant and equipment 4 2,336,063 975,774
Intangible assets 5 6,739 14,091
Investment in associate 6 57,280 58,238
Long-term loans and advances 7 16,466 13,588
Long-term deposits 14,012 14,012
Deferred taxation 8 978,215 -
Retirement benefit obligations-prepayments 9 4,161 9,520
3,412,936 1,085,223
Current assets
Stores, spares and chemicals 10 239,794 233,425
Stock-in-trade 11 8,367,282 9,102,109
Trade debts 12 14,431,063 9,465,925
Loans and advances 13 14,383 18,795
Accrued mark-up 14 13,160 47
Trade deposits and short-term prepayments 15 8,542 48,844
Other receivables 16 1,969,604 983,076
Tax refunds due from government-sales tax 17 200,248 188,152
Investments - 365
Cash and bank balances 18 3,909,833 2,646,115
29,153,909 22,686,853
Total assets 32,566,845 23,772,076
EQUITY
Share capital 19 350,000 350,000
Reserves 14,921 69,829
Special reserve 20 1,814,421 6,386,076
2,179,342 6,805,905
LIABILITIES
Non-current liabilities
Retirement benefit obligations 9 4,372 7,078
Deferred taxation 8 - 40,042
4,372 47,120
Current liabilities
Trade and other payables 21 25,377,179 15,904,758
Short-term borrowing 22 4,105,936 -
Accrued mark-up - 77,558
Taxation-provision less payments 900,016 936,735
30,383,131 16,919,051
Total liabilities 30,387,503 16,966,171
Contingencies and commitments 23
Total equity and liabilities 32,566,845 23,772,076
=====================================================================================Profit and Loss Account for the year ended June 30, 2009=====================================================================================
Note 2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Sales 24 76,861,057 95,564,006
Cost of sales 25 (79,874,195) (90,789,072)
Gross (loss) / profit (3,013,138) 4,774,934
Distribution cost 25 (120,841) (129,400)
Administrative expenses 25 (164,668) (698,143)
Other operating expenses 26 (3,127) (252,177)
Other income 27 263,172 147,995
Operating (loss) / profit (3,038,602) 3,843,209
Finance cost 28 (2,477,467) (613,313)
Share of income of associate 14,671 24,722
(Loss) / profit before taxation (5,501,398) 3,254,618
Taxation-credit / (charge) 29 929,743 (1,143,874)
(Loss) / profit after taxation (4,571,655) 2,110,744
(Loss) / earning per share 30 (Rs 130.62) Rs 60.31
=====================================================================================Cash Flow Statement for the year ended June 30, 2009=====================================================================================
Note 2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
CASH FLOW FROM OPERATING ACTIVITIES
Cash (used in) / generated from operations 35 (877,803) 1,595,463
Mark-up paid (371,877) (5,627)
Income tax paid (122,591) (474,147)
(Contribution to) / receipts from defined
benefit retirement plans (22,056) 8,210
Increase in long-term loans and advances (2,878) (2,645)
Increase in long-term deposits - (11,125)
Net cash (used in) / generated from operating
activities (1,397,205) 1,110,129
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,492,946) (189,458)
Proceeds from sale of property, plant and
equipment 4,028 571
Profit on deposits 189,806 118,692
Dividend received 8,079 8,504
Net cash used in investing activities (1,291,033) (61,691)
CASH FLOW FROM FINANCING ACTIVITIES
Short-term borrowing 3,997,071 -
Dividend paid (45,115) (100,600)
Net cash generated from / (used in) financing
activities 3,951,956 (100,600)
Net increase in cash and cash equivalents 1,263,718 947,838
Cash and cash equivalents at the beginning of the year 2,646,115 1,698,277
Cash and cash equivalents at the end of the year 36 3,909,833 2,646,115
=====================================================================================Statement of Changes in Equity for the year ended June 30, 2009===========================================================================================================================
SHARE RESERVES SPECIAL TOTAL
CAPITAL CAPITAL REVENUE FAIR RESERVE
Exchange General Unappropriated VALUE
Equalisation Reserve Profit RESERVE
Reserve
===========================================================================================================================
(Rupees in thousand)
===========================================================================================================================
Balance as at June 30, 2007 300,000 897 1,050 119,698 8,106 4,375,332 4,805,083
Final dividend for the year ended
June 30, 2007 @ Rs 3.33 per share - - - (100,000) - - (100,000)
Issue of 1 bonus share for every 6
shares held 50,000 - - (50,000) - - -
Net profit for the year 2008 - - - 2,110,744 - - 2,110,744
Change in fair value of available
for sale investment of associate
net of deferred tax - - - - (9,922) - (9,922)
Transferred to Special Reserve - - - (2,010,744) - 2,010,744 -
Balance as at June 30, 2008 350,000 897 1,050 69,698 (1,816) 6,386,076 6,805,905
Final dividend for the year ended
June 30, 2008 @ Rs 1.42 per share - - - (50,000) - - (50,000)
Net loss for the year 2009 - - - (4,571,655) - - (4,571,655)
Change in fair value of available
for sale investment of associate
net of deferred tax - - - - (4,908) - (4,908)
Transferred to Special Reserve - - - 4,571,655 - (4,571,655) -
Balance as at June 30, 2009 350,000 897 1,050 19,698 (6,724) 1,814,421 2,179,342
===========================================================================================================================Notes to and Forming Part of the Financial Statements for the year ended June 30, 20091. THE COMPANY AND ITS OPERATIONS Pakistan Refinery Limited was incorporated in Pakistan as a public limited Company in May 1960 and is quoted on Karachi and Lahore Stock Exchanges The registered office of the Company is at Korangi Creek Road, Karachi The Company is engaged in the production and sale of petroleum products. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of these financial statements are set out below: 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 the Companies Ordinance, 1984. Approved accounting standards comprise of such International Financial Reporting Standards as have been 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 from the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives have been followed. Amendment to published standard that became effective in the current year and is relevant i. IFRS 7-'Financial Instruments: Disclosures' is mandatory for Company's accounting periods beginning on or after April 28, 2008 Adoption of the standard only impacts the format and extent of disclosures presented in the financial statements and do not have any impact on the classification and valuation of the Company's financial instruments. ii. IFRIC 14 'IAS 19-The limit on a defined benefit asset, minimum funding requirements and their interaction' was issued in July 2007 and is effective for the periods beginning from or after January 1, 2008 This interpretation provides general guidance on the extent to which pension surplus may be recognised as an asset. Standards, interpretations and amendments to published approved accounting standards that are considered relevant, but not yet effective Following amendments to existing standards and interpretations have been published that are mandatory for accounting periods beginning on the dates mentioned below: i. IAS 1-'Presentation of Financial Statements' effective for the periods beginning from or after January 1, 2009 The amendments to the standard mandate various disclosures and presentation of transactions with owners in statement of changes in equity and with non-owners in the Comprehensive Income Statement. ii. IAS 23 (Amendment)-'Borrowing Cost' effective for the periods beginning from or after January 1, 2009, requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of cost of that asset. Adoption of the above amendments, standard and interpretation does not have any effect on the amounts recognised in these financial statements. Interpretations to published approved accounting standards that are not yet effective and are not considered relevant ========================================================================== i. IFRS 3-'Business Combinations' Effective from July 1, 2009 ii. IFRS 4-'Insurance Contracts' Effective from January 1, 2009 iii. IFRIC 4-'Determining whether an Arrangement contains a Lease' Effective from July 1, 2010 iv. IFRIC 12-'Service Concession Arrangements' Effective from July 1, 2010 v. IFRIC 15-'Agreements for the Construction of Real Estate' Effective from January 1, 2009 vi. IFRIC 16-'Hedges of a Net Investment in a Foreign Operation' Effective from October 1, 2008 ==========================================================================2.2. Overall valuation policy These financial statements have been prepared under the historical cost convention except as stated below in the respective policy notes. 2.3. Property, plant and equipment These are stated at cost less accumulated depreciation and impairment except capital work-in-progress which is stated at cost. Depreciation is charged to income by applying the straight-line method whereby the cost less residual value, if not insignificant, of an asset is written off over its estimated useful life to the Company Full month's depreciation is charged in the month of acquisition and no depreciation is charged in the month of disposal Cost of leasehold land is amortised over the period of lease. Assets' residual values and useful lives are reviewed and adjusted if expectations significantly differ from previous estimates, at each balance sheet date. Company accounts for impairment, where indications exist, by reducing asset's carrying values to the recoverable amount. Maintenance and normal repairs are charged to income as and when incurred Renewals and improvements are capitalised and assets so replaced, if any, are retired. Gains and losses on disposal of property, plant and equipment are included in income currently. 2.4. Intangible assets An intangible asset is recognised if it is probable that future economic benefits attributable to the asset will flow to the Company and cost of such asset can be measured reliably. Intangibles acquired by the Company are stated at cost less accumulated amortisation and impairment Costs associated with developing or maintaining computer software programmes are recognised as an expense when incurred. However, costs that are directly associated with identifiable and unique software products controlled by the Company and that have probable economic benefits exceeding their cost and beyond one year, are recognised as intangible assets. Amortisation is charged to income by applying the straight-line method whereby the cost less residual value, if not insignificant, of an asset is written off over its estimated useful life to the Company. Full month's amortisation is charged in the month of acquisition and no amortisation is charged in the month of disposal. Company accounts for impairment, where indications exist, by reducing asset's carrying amount to the recoverable amount. 2.5. Investment in associate Investment in associate is accounted for using equity method of accounting and is initially recognised at cost The Company's share in its associate post-acquisition profits or losses is recognised in the income statement and its share in post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment When the Company's share of loss in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. 2.6. Taxation 2.6.1. Current The charge for current taxation is based on taxable income at the current rates of taxation after taking into account tax credits and rebates available, if any. 2.6.2. Deferred Deferred tax is accounted for using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax asset is recognised to the extent it is probable that future taxable profits will be available against which the temporary differences can be utilised. 2.7. Stores, spares and chemicals These are valued at cost, determined using weighted average method, less provision for obsolescence Items in transit are valued at cost comprising invoice value plus other charges incurred thereon. 2.8. Stock-in-trade Stock of crude oil is valued at lower of cost determined using "first-in, first-out" method and net realisable value except crude oil in transit which is valued at cost. Finished products are valued at lower of cost, determined using "first-in, first-out" method, and net realisable value Cost in relation to finished products represents cost of crude oil and appropriate manufacturing overheads. Net realisable value is the estimated selling price in the ordinary course of business, less costs of completion and costs necessarily to be incurred to make the sale. 2.9. Trade and other debts Trade and other debts are carried at the fair value of consideration to be received against goods and services Provision is made in respect of doubtful debts, if any. 2.10. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, with banks on current, savings and deposit accounts, running finance under mark-up arrangements and short-term finance. 2.11. Trade and other payables Trade and other payables are carried at the fair value of the consideration to be paid for goods and services. 2.12. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred Subsequently the borrowings are measured at amortised cost using the effective interest method. 2.13. Borrowing costs Borrowing costs are recognised as an expense in the period in which these are incurred except where such costs are directly attributable to the acquisition, construction or production of a qualifying asset in which such costs are capitalised as part of the cost of that asset. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent these are regarded as an adjustment to borrowing costs. 2.14. Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate of the amount can be made. 2.15. Retirement benefits The Company operates recognised Provident, Gratuity and Pension Funds for all its eligible employees The Provident Fund is a defined contribution plan All others are defined benefit plans. Actuarial valuations of defined benefit plans are carried out on periodical basis using the projected unit credit method and the latest valuations were carried out as at June 30, 2009. Actuarial gain / loss is recognised over a period of 11 years for the management staff Gratuity and Pension Funds and 17 years for non-management staff Gratuity and Pension Funds, if it exceeds the 10% corridor limit in the prior period The unrecognised past service cost is recognised over its vesting period. 2.16. Foreign currency translation These financial statements are presented in Pak Rupees which is also the functional currency of the Company. Transactions in foreign currencies are converted into Rupees at the rates of exchange prevailing on the date of the transactions Monetary assets and liabilities in foreign currencies are translated into Rupees at rates prevailing at the balance sheet date Gains and losses are recognised in the profit and loss account. 2.17. Financial instruments All financial assets and liabilities are recognised at the time when the Company becomes a party to the contractual provisions of the instrument. Any gains and losses on derecognition of financial assets and liabilities are taken to income currently. 2.18. Revenue recognition (a) Local sales are recorded on the basis of products pumped in oil marketing companies' tanks. (b) Export sales are recorded on the basis of products shipped to customers. (c) The prices of refinery products are notified by the Oil & Gas Regulatory Authority (OGRA) which are primarily based on import parity pricing formula. However, in order to enable certain refineries including the Company to operate on a self financing basis, the Government effective from July 1, 2002 had introduced a tariff protection formula under which deemed duty is built into the import parity based prices of some of the products Under this formula, any profit after taxation above 50% of the paid-up capital as it was on July 1, 2002 (Rs 200 million), is required to be transferred to a "Special Reserve" to offset any future losses or to make investment for expansion or upgradation of the respective refineries. (d) Dividend is recognised when the right of receipt is established. (e) Income on bank deposits is recognised on accrual basis. (f) Handling and storage income, pipeline charges, scrap sales, insurance commission and rental incomes are recognised on an accrual basis. 2.19. Government grants Government grants related to costs are deferred and recognised in the income statement as a deduction from the related expense over the period necessary to match them with the costs that they are intended to compensate. 2.20. Dividend Dividend distribution to the Company's shareholders is recognised as a liability in the Company's financial statements in the period in which the dividend is approved. 3. CRITICAL ACCOUNTING ESTIMATES, JUDGEMENTS AND POLICIES The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are; provision for income tax and provision for post employment benefits. The Company recognises provision for income tax based on best current estimates However, where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax provision in the period in which such determination is made. Significant estimates relating to deferred taxation and post employment benefits are disclosed in note 8 and note 9 respectively. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management believes that the change in outcome of estimates would not have a material effect on the amounts disclosed in the financial statements. No critical judgement has been used in applying the accounting policies. 4. PROPERTY, PLANT & EQUIPMENT =====================================================================================
2009 2008
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(Rupees in thousand)
=====================================================================================
Operating assets-note 4.1 954,988 776,372
Capital work-in-progress-note 4.2 1,381,075 199,402
2,336,063 975,774
=====================================================================================4.1. Operating assets=======================================================================================================================================================================================
TANGIBLE
Leasehold Buildings Processing Korangi Keamari Pipelines Steam Power Water Equipment Fire Vehicles TOTAL
land and on plant tank farm terminal generation generation, treatment including fighting and other
improvements leasehold plant transmission and cooling furniture and tele- automotive
thereon land and system commu- equipment
distribution nication
systems
=======================================================================================================================================================================================
(Rupees in thousand)
=======================================================================================================================================================================================
Net carrying value basis
Year ended June 30, 2009
Opening net book value (NBV) 2,147 47,244 328,547 42,972 44,780 59,208 12,774 47,782 27,329 125,855 24,445 13,289 776,372
Additions (at cost) - 23,152 29,075 128,414 44,543 24,124 12,820 1,041 5,025 33,984 6,718 2,377 311,273
Disposals (at NBV) - - - - - - - - - (290) - (1,554) (1,844)
Depreciation charge (39) (6,387) (53,925) (12,454) (3,243) (10,113) (3,323) (5,981) (5,217) (23,801) (1,431) (4,899) (130,813)
Closing net book value 2,108 64,009 303,697 158,932 86,080 73,219 22,271 42,842 27,137 135,748 29,732 9,213 954,988
Gross carrying value basis
At June 30, 2009
Cost 3,939 100,303 812,259 288,697 150,683 139,496 57,198 72,408 65,285 345,349 45,580 49,938 2,131,135
Accumulated depreciation (1,831) (36,294) (508,562) (129,765) (64,603) (66,277) (34,927) (29,566) (38,148) (209,601) (15,848) (40,725) (1,176,147)
Net book value 2,108 64,009 303,697 158,932 86,080 73,219 22,271 42,842 27,137 135,748 29,732 9,213 954,988
Net carrying value basis
Year ended June 30, 2008
Opening net book value (NBV) 2,186 34,036 383,363 52,254 38,519 51,740 16,211 42,822 32,602 117,243 22,997 11,868 805,841
Additions (at cost) - 17,843 19,776 1,218 9,269 15,276 - 10,109 - 31,233 3,310 6,856 114,890
Disposals (at NBV) - - - - - - - - - (528) - - (528)
Depreciation charge (39) (4,635) (74,592) (10,500) (3,008) (7,808) (3,437) (5,149) (5,273) (22,093) (1,862) (5,435) (143,831)
Closing net book value 2,147 47,244 328,547 42,972 44,780 59,208 12,774 47,782 27,329 125,855 24,445 13,289 776,372
Gross carrying value basis
At June 30, 2008
Cost 3,939 77,151 783,475 160,283 106,156 115,372 44,378 71,367 60,300 315,510 38,862 52,424 1,829,217
Accumulated depreciation (1,792) (29,907) (454,928) (117,311) (61,376) (56,164) (31,604) (23,585) (32,971) (189,655) (14,417) (39,135) (1,052,845)
Net book value 2,147 47,244 328,547 42,972 44,780 59,208 12,774 47,782 27,329 125,855 24,445 13,289 776,372
Depreciation rate
% per annum 1 5 to 20 10 to 33 10 5 to 10 10 10 10 10 10 to 33 5 to 10 25
=======================================================================================================================================================================================4.1.1. Details of disposals of operating assets are as follows:=======================================================================================================
Description Cost Accumulated Book Sale Mode of Particulars of
Depreciation Value Proceeds disposal purchaser
=======================================================================================================
(Rupees in thousand)
=======================================================================================================
Net book value exceeding
Rs 50,000 each:
Vehicle 691 (432) 259 259 Negotiation Fawad Hussain
Executive
" 691 (432) 259 259 Negotiation Muhammad Akram
Executive
" 691 (432) 259 259 Negotiation Sami-ur-Rehman
Executive
" 691 (432) 259 259 Negotiation Syed Abdul Qadir
Executive
" 691 (432) 259 259 Negotiation Syed Azeemuddin
Executive
" 691 (432) 259 259 Negotiation Zeeshan Mirza
Equipment including Executive
furniture 154 (103) 51 51 Negotiation K.M Nauman
Ex-executive
4,300 (2,695) 1,605 1,605
Items having net book value not exceeding Rs 50,000 each:
Equipment including
furniture 3,991 (3,752) 239 390
Water treatment and
cooling system 40 (40) - 5
Processing plant 291 (291) - 355
Keamari terminal 16 (16) - 36
Vehicles and other
automotive equipment 717 (717) - 1,637
5,055 (4,816) 239 2,423
9,355 (7,511) 1,844 4,028
=======================================================================================================4.2. Capital work-in-progress-at cost=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Refinery upgrade project-note 4.2.1 1,292,468 -
Buildings 6,690 16,316
Processing plant 11,002 13,680
Korangi tank farm 21,567 92,068
Keamari terminal - 10,135
Pipelines 2,445 3,790
Power generation, transmission and distribution 2,000 7,081
Water treatment and cooling system 25,681 16,257
Equipments 3,967 11,691
Fire fighting and telecommunication systems 15,255 27,502
Vehicles and other automotive equipment - 882
1,381,075 199,402
=====================================================================================4.2.1. This represents cost associated with front end designing and models in relation to upgradation of Refinery.5. INTANGIBLE ASSETS-COMPUTER SOFTWARE =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Net carrying value basis
Opening net book value (NBV) 14,091 21,443
Amortisation charge (7,352) (7,352)
Closing net book value 6,739 14,091
Gross carrying value basis Cost 33,834 33,834
Accumulated amortisation (27,095) (19,743)
Net book value 6,739 14,091
=====================================================================================Amortisation is charged at the rate of 33.33% per annum.6. INVESTMENT IN ASSOCIATE =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Pak Grease Manufacturing Company (Private)
Limited-850,401 fully paid ordinary shares-note 6.1 57,280 58,238
=====================================================================================6.1. The Company holds 27.26% (2008: 27.26%) of the investee's total equity These have been accounted for on equity method.=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Opening balance 58,238 54,077
Share of income for the year 14,671 24,722
Change in fair value of available for sale investment (7,550) (12,057)
Dividend received (8,079) (8,504)
57,280 58,238
=====================================================================================6.2. Summarised results of the Company's associate (2009: unaudited) are as follows:=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Total assets 236,235 229,658
Total liabilities 26,112 15,828
Revenue 195,936 161,944
Profit after tax 53,819 90,689
=====================================================================================7. LONG-TERM LOANS AND ADVANCES - secured and considered good=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
To executives 7,029 6,982
To other employees 20,696 16,911
27,725 23,893
Recoverable within one year-note 13
Executives (3,593) (3,506)
Other employees (7,666) (6,799)
(11,259) (10,305)
16,466 13,588
===================================================================================== Reconciliation of carrying amount of loans to executives:=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Opening balance 6,982 6,120
Promotion to executive 1,025 318
Disbursements 4,895 9,254
Recoveries (5,873) (8,710)
7,029 6,982
=====================================================================================The maximum amount due from executives at the end of any month during the year was Rs 9.23 million (2008: Rs 9.35 million).The loans and advances to all eligible employees are given in accordance with the Company's policy for payment of house rent, to defray personal expenditure and for purchase of motor vehicles. These carry interest ranging from 1% to 4% per annum and are repayable over a period of three to six years. 8. DEFERRED TAXATION =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Debit balances arising in respect of:
-tax loss-note 8.1 1,056,670 -
-provision for slow moving stores, spares and chemicals 10,470 9,320
-old outstanding liabilities offered for tax 31,082 28,951
1,098,222 38,271
Credit balances arising in respect of:
-accelerated tax depreciation (100,262) (58,232)
-investment in associate accounted for
using equity method (19,745) (20,081)
(120,007) (78,313)
978,215 (40,042)
=====================================================================================8.1. Deferred tax debit balance of Rs 1.82 billion (2008: Nil) in relation to tax loss has been recognised to the extent of Rs 1.06 billion which is expected to be realised in future.9. RETIREMENT BENEFITS 9.1. Expense / (income) recognised during the year ================================================================================================================================================
PENSION FUNDS GRATUITY FUNDS
================================================================================================================================================
Management Non-Management Management Non-Management
2009 2008 2009 2008 2009 2008 2009 2008
================================================================================================================================================
(Rupees in thousand)
================================================================================================================================================
Current service cost 17,495 16,821 919 677 3,119 2,914 549 449
Interest cost 62,738 45,312 2,833 2,061 6,217 4,855 945 631
Expected return on plan assets (57,203) (45,739) (902) (779) (7,123) (5,553) (4,125) (3,129)
Amortisation of past service cost 145 145 543 543 - - - -
Net actuarial loss / (gain) recognised - - 266 203 - - (802) (935)
23,175 16,539 3,659 2,705 2,213 2,216 (3,433) (2,984)
Amount (reversed) / not recognised as
an asset - - - - (4,338) 3,324 3,433 2,984
23,175 16,539 3,659 2,705 (2,125) 5,540 - -
================================================================================================================================================9.2. Balance sheet reconciliation================================================================================================================================================
PENSION FUNDS GRATUITY FUNDS
================================================================================================================================================
Management Non-Management Management Non-Management
2009 2008 2009 2008 2009 2008 2009 2008
================================================================================================================================================
(Rupees in thousand)
================================================================================================================================================
Prepayment / (liability) as at July 1 1,079 34,649 (7,078) (4,373) 8,441 5,160 - -
(Expense) / income recognised
during the year (23,175) (16,539) (3,659) (2,705) 2,125 (5,540) - -
Payments made by the fund
to the Company (2,972) (17,031) - - (14,753) - - -
Payment made by the Company on
behalf of the fund 23,134 - - - 8,348 3,118 - -
Employer contributions - - 8,299 - - 5,703 - -
(Liability) / prepayment as at June 30 (1,934) 1,079 (2,438) (7,078) 4,161 8,441 - -
================================================================================================================================================9.3. (Liability) / prepayment as at June 30================================================================================================================================================
PENSION FUNDS GRATUITY FUNDS
================================================================================================================================================
Management Non-Management Management Non-Management
2009 2008 2009 2008 2009 2008 2009 2008
================================================================================================================================================
(Rupees in thousand)
================================================================================================================================================
Present value of obligations
to members (601,537) (523,037) (25,055) (23,622) (62,271) (53,564) (8,883) (7,654)
Obligation to Company - - - - - - (2,071) (2,071)
Fair value of plan assets 453,122 477,166 14,631 7,326 66,575 61,565 42,043 34,425
Funded status (148,415) (45,871) (10,424) (16,296) 4,304 8,001 31,089 24,700
Unrecognised net actuarial loss / (gain) 145,178 45,502 5,127 5,816 (143) 4,778 (16,829) (13,873)
Unrecognised past service cost 1,303 1,448 2,859 3,402 - - - -
Amount not recognised as an asset - - - - - (4,338) (14,260) (10,827)
(Liability) / prepayment as at June 30 (1,934) 1,079 (2,438) (7,078) 4,161 8,441 - -
Actual return / (loss) on plan assets 5,546 68,237 (52) 533 21,228 5,820 7,618 3,100
================================================================================================================================================9.4. Movement in defined benefit obligation================================================================================================================================================
PENSION FUNDS GRATUITY FUNDS
================================================================================================================================================
Management Non-Management Management Non-Management
2009 2008 2009 2008 2009 2008 2009 2008
================================================================================================================================================
(Rupees in thousand)
================================================================================================================================================
Beginning of the year 523,037 451,412 23,622 20,769 53,564 48,544 7,654 6,120
Current service cost 17,495 16,821 919 677 3,119 2,914 549 449
Interest cost 62,738 45,312 2,833 2,061 6,217 4,855 945 631
Actuarial losses / (gains) 48,019 39,972 (1,377) 1,062 9,184 6,198 (265) 454
Actual benefits paid by the fund during
the year (26,618) (30,480) (942) (947) (1,465) (8,947) - -
Payment made by the Company on
behalf of the fund (23,134) - - - (8,348) - - -
End of the year 601,537 523,037 25,055 23,622 62,271 53,564 8,883 7,654
================================================================================================================================================9.5. Movement in the fair value of plan assets================================================================================================================================================
PENSION FUNDS GRATUITY FUNDS
================================================================================================================================================
Management Non-Management Management Non-Management
2009 2008 2009 2008 2009 2008 2009 2008
================================================================================================================================================
(Rupees in thousand)
================================================================================================================================================
Beginning of the year 477,166 456,440 7,326 7,740 61,565 55,871 34,425 31,325
Expected return on plan assets 57,203 45,739 902 779 7,123 5,553 4,125 3,129
Employer contributions - - 8,299 - - 5,703 - -
Payments made by the fund
to the Company (2,972) (17,031) - - (14,753) - - -
Actual benefits paid by the fund during
the year (26,618) (30,480) (942) (947) (1,465) (5,829) - -
Asset (loss) / gain (51,657) 22,498 (954) (246) 14,105 267 3,493 (29)
End of the year 453,122 477,166 14,631 7,326 66,575 61,565 42,043 34,425
================================================================================================================================================9.6. The principal actuarial assumptions used were as follows:=====================================================================================
2009 2008
=====================================================================================
Discount rate 12% 12%
Expected return on plan assets 12% 12%
Future salary increases 12% 12%
Future pension increases 7% 7%
=====================================================================================9.7. Comparison for five years======================================================================================================
2009 2008 2007 2006 2005
======================================================================================================
(Rupees in thousand)
======================================================================================================
MANAGEMENT PENSION FUND
Present value of defined benefit obligation (601,537) (523,037) (451,412) (424,303) (377,061)
Fair value of plan assets 453,122 477,166 456,440 421,475 351,129
Surplus / (deficit) (148,415) (45,871) 5,028 (2,828) (25,932)
Experience loss on obligation 48,019 39,972 1,750 11,722 44,420
Experience (loss) / gain on plan assets (51,657) 22,498 (2,408) 8,474 35,602
NON-MANAGEMENT PENSION FUND
Present value of defined benefit obligation (25,055) (23,622) (20,769) (24,634) (20,709)
Fair value of plan assets 14,631 7,326 7,740 3,301 4,095
Deficit (10,424) (16,296) (13,029) (21,333) (16,614)
Experience (gain) / loss on obligation (1,377) 1,062 (5,951) 2,472 3,335
Experience (loss) / gain on plan assets (954) (246) (118) (189) (164)
MANAGEMENT GRATUITY FUND
Present value of defined benefit obligation ( 62,271) (53,564) (48,544) (48,401) (39,985)
Obligation to Company - - - - (8,162)
Fair value of plan assets 66,575 61,565 55,871 48,165 39,695
Surplus / (deficit) 4,304 8,001 7,327 (236) (8,452)
Experience (gain) / loss on obligation 9,184 6,198 (240) 3,729 4,856
Experience gain on plan assets 14,105 267 3,816 4,424 3,230
NON-MANAGEMENT GRATUITY FUND
Present value of defined benefit obligation (8,883) (7,654) (6,120) (8,283) (5,954)
Obligation to Company (2,071) (2,071) (2,071) (2,071) (2,071)
Fair value of plan assets 42,043 34,425 31,325 25,654 21,427
Surplus 31,089 24,700 23,134 15,300 13,402
Experience (gain) / loss on obligation (265) 454 (3,454) 1,326 (56)
Experience gain / (loss) on plan assets 3,493 (29) 3,467 2,361 1,892
======================================================================================================9.8. Plan assets comprise of the following:======================================================================================================
PENSION FUNDS GRATUITY FUNDS
======================================================================================================
Non- Non-
Management Management Management Management
======================================================================================================
2009 2008 2009 2008 2009 2008 2009 2008
======================================================================================================
Equity 36.9% 47.5% 18.4% 40.5% 15.6% 15.0% 12.5% 19.8%
Debt 55.4% 50.1% 0.0% 0.0% 46.6% 78.7% 78.7% 70.2%
Others 7.7% 2.4% 81.6% 59.5% 37.8% 6.3% 8.8% 10.0%
100% 100% 100% 100% 100% 100% 100% 100%
====================================================================================================== The average life expectancy of a pensioner retiring at age 60 on the balance sheet date is as follows:=====================================================================================
2009 2008
=====================================================================================
Years
=====================================================================================
Male 16.8 16.8
Female 21.2 21.2
===================================================================================== The average life expectancy of a pensioner retiring at age 60, 20 years after the balance sheet date is as follows:=====================================================================================
2009 2008
=====================================================================================
Years
=====================================================================================
Male 17.8 17.8
Female 21.7 21.7
=====================================================================================9.9. During the year, Company recognised Rs 10.68 million (2008: Rs 9.99 million) as contribution for employees' Provident Fund.9.10. The expected contributions to the plans for the coming year are as follows: =====================================================================================
Non-
Management Management
=====================================================================================
(Rupees in thousand)
=====================================================================================
Pension funds 21,338 1,361
Gratuity funds 3,489 -
=====================================================================================9.11. Information in note 9 is based on actuarial advice.10. STORES, SPARES AND CHEMICALS =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Stores 31,239 29,769
Spares 226,788 218,569
Chemicals 15,997 16,050
274,024 264,388
Provision for slow moving stores, spares and chemicals (34,230) (30,963)
239,794 233,425
=====================================================================================11. STOCK-IN-TRADE=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Raw material
Crude oil [including in transit Rs 2.91 billion
(2008: Rs 912.8 million)] 5,779,415 6,589,352
Finished products 2,587,867 2,512,757
8,367,282 9,102,109
=====================================================================================11.1. As at June 30, 2009, stock of raw material has been written down by Rs 111.37 million (2008: Nil) to arrive at its net realisable value.12. TRADE DEBTS-considered good =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Due from related parties-note 12.1 14,020,299 6,777,026
Others 410,764 2,688,899
14,431,063 9,465,925
=====================================================================================12.1. These represent receivables from Pakistan State Oil Company Limited, Shell Pakistan Limited and Chevron Pakistan Limited, and are in the normal course of business.12.2. The age analysis of trade debts past due is as follows: =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Up to 3 months 4,646,646 3,074,499
3 to 6 months 5,882,137 150
More than 6 months 910,976 117,321
=====================================================================================13. LOANS AND ADVANCES-considered good=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Loans and advances recoverable within one year-note 7
Executives 3,593 3,506
Other employees 7,666 6,799
11,259 10,305
Advances for supplies and services 3,124 8,490
14,383 18,795
=====================================================================================14. ACCRUED MARK-UPThis represents mark-up accrued on term deposits. 15. TRADE DEPOSITS AND SHORT-TERM PREPAYMENTS =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Trade deposits 794 914
Short-term prepayments 7,748 47,930
8,542 48,844
=====================================================================================16. OTHER RECEIVABLES=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Receivable from related parties
Non-management staff gratuity fund 2,071 2,071
Provident Fund - 2,900
Receivable from refineries-note 16.1 1,952,585 961,896
Insurance commission receivable 1,322 14,543
Workers' profits participation fund-note 21.5 6,262 -
Due from executives 5,656 -
Others [including Rs 1.02 million
(2008: Rs 1.02 million) receivable from related parties 1,708 1,666
1,969,604 983,076
=====================================================================================16.1. This represents amount due from refineries in respect of sharing of crude oil, freight and other charges paid by the Company on their behalf.17. TAX REFUNDS DUE FROM GOVERNMENT-SALES TAX =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Refundable from Government 1,095,058 1,310,150
Payable to Government (894,810) (1,121,998)
200,248 188,152
=====================================================================================The Federal Government, through S.R.O 1164(I)/2007 dated November 30, 2007 has directed that sales tax shall be charged at the rate of zero percent on Petroleum Crude Oil Sales tax refund due from Government represents the refunds due prior to November 30, 2007.18. CASH AND BANK BALANCES =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
With banks on
-current accounts 7,626 1,881,055
-term deposits 3,210,423 189,695
-savings accounts
(including foreign currency account
Rs 581 thousand [2008: Rs 3.54 million]) 691,493 570,100
Cash and cheques in hand 291 5,265
3,909,833 2,646,115
=====================================================================================As at June 30, 2009 the effective rates of mark-up on savings accounts and term deposits range from 5% to 13% p.a (2008: 6% to 9% p.a.) Maturity of term deposits ranges from 3 days to 89 days (2008: 7 days to 89 days).19. SHARE CAPITAL ===========================================================================
2009 2008
===========================================================================
(Rupees in thousand)
===========================================================================
Authorised
40,000,000 'A' ordinary shares of Rs.10 each 400,000 400,000
60,000,000 'B' ordinary shares of Rs.10 each 600,000 600,000
1,000,000 1,000,000
Issued, susubscribed and paid-up
ordinary shares of Rs 10 each
2,400,000 'A' ordinary shares fully paid in cash 24,000 24,000
3,600,000 'B' ordinary shares fully paid in cash 36,000 36,000
6,000,000 60,000 60,000
11,600,000 'A' ordinary shares issued as fully paid
bonus shares 116,000 116,000
17,400,000 'B' ordinary shares issued as fully paid
bonus shares 174,000 174,000
29,000,000 290,000 290,000
35,000,000 350,000 350,000
===========================================================================19.1. Reconciliation of number of ordinary shares outstanding=====================================================================================
2009 2008
=====================================================================================
Number of shares
=====================================================================================
(In thousand)
=====================================================================================
At the beginning of the year 35,000 30,000
Issue of 1 bonus share for every 6 shares held - 5,000
At the end of the year 35,000 35,000
=====================================================================================19.2. As at June 30, 2009 and 2008, associated undertakings held 21,012,250 ordinary shares of Rs.10 each.20. SPECIAL RESERVE This represents the reserve created under the Ministry of Petroleum and Natural Resources' (the Ministry) directive making the new tariff protection formula applicable to the Company, as described in note 2.18 (c) This amount is not available for distribution to shareholders. The Ministry through its directive further clarified that the refineries can distribute dividend out of net profit after tax up to a maximum of 50% of the paid-up share capital of the Company as at the date of applicability of the tariff protection formula i.e July 1, 2002 and the remaining amount should be transferred to the Special Reserve. 21. TRADE AND OTHER PAYABLES =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Creditors-note 21.1 and 21.2 21,774,657 13,177,426
Accrued liabilities 274,075 207,657
Advances from Customers-note 21.1 17,798 7,452
Payable to the Government-note 21.3 and 21.4 3,162,365 2,340,889
Retention money 5,507 4,245
Workers' profits participation fund-note 21.5 - 23,381
Workers' welfare fund 116,005 117,035
Unclaimed dividend 23,256 18,371
Tax deducted at source 36 988
Management staff provident fund 811 -
Others 2,669 7,314
25,377,179 15,904,758
=====================================================================================21.1. Related party balances =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Creditors } note 21.1.1 4,302,745 2,468,750
Advances from customers 8,805 3,211
=====================================================================================21.1.1. These include payables to Oil and Gas Development Company Limited, and advances from Pakistan State Oil Company Limited, Shell Gas LPG (Pakistan) Limited, Hascombe Storage Limited and Chevron Pakistan Limited.21.2. This amount includes Rs 1.27 billion (2008: Rs 1.41 billion) payable to Oil Exploration and Production Companies (E&Ps) in respect of local crude supplies exceeding the maximum slab rates for calculation of discount to GoP as provided in the respective Crude Oil Sale and Purchase Agreements (COSAs). The amount is subject to adjustment upon finalisation of respective Supplemental Agreements and COSAs. 21.3. This includes Rs 1.09 billion (2008: Rs 1.25 billion) payable in respect of local crude supplies exceeding the maximum slab rates for calculation of discount to GoP as provided in the respective Crude Oil Sale and Purchase Agreements (COSAs). The amount is subject to adjustment upon finalisation of respective Supplemental Agreements and COSAs. 21.4. The balance is net of Rs 257.76 million (2008: Rs 410.92 million) receivable from the Government of Pakistan in respect of price differential claims Such claims resulted from restricting the ex-refinery prices charged by the Company to the oil marketing companies on instructions from the MoP & NR. 21.5. WORKERS' PROFITS PARTICIPATION FUND =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Payable / (receivable) as at July 1 23,381 (2,915)
Allocation for the year - 171,296
Interest on funds utilised in Company's business 357 -
23,738 168,381
Amount paid (30,000) (145,000)
(Receivable) / payable as at June 30 (6,262) 23,381
=====================================================================================22. SHORT-TERM BORROWING-secured=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
4,105,936 -
=====================================================================================During the year, the Company obtained short term loan from Eco Trade and Development Bank amounting to US dollars 50 million for the import of crude oil from Iran.The loan was disbursed in 3 tranches between January to April 2009 repayable in one year from the date of respective disbursement. The borrowing is secured by way of a ranking charge over all the present and future receivables of the Company and an irrevocable letter of guarantee issued by the Government of Pakistan The loan carries mark up at the rate of 6 months LIBOR plus 1.85% The applicable LIBOR interest rate as at June 30, 2009 was 1.11%. 22.1. Running finance under mark-up arrangements The running finance facilities available under mark-up arrangements from various banks amounted to Rs 7.05 billion (2008: Rs 9.05 billion). The arrangements are secured by way of hypothecation over stock of crude oil and finished products and trade debts of the Company. The rates of mark-up range between 13.86% to 16.54% per annum as at June 30, 2009 (2008: 9.23% to 13.88% per annum) The purchase prices are payable by May 2011. 22.2. Unutilised credit facility The facility for opening letters of credit and guarantees as at June 30, 2009 amounted to Rs 25.50 billion (2008: Rs 18.89 billion) of which the amount remaining unutilised at year end was Rs 12.88 billion (2008: Rs 14.53 billion). 23. CONTINGENCIES AND COMMITMENTS 23.1. Contingencies. a) The Company has raised claims aggregating Rs 1.77 billion (2008: Rs 363.64 million) on certain oil marketing companies (OMCs) under the respective sale and purchase of product agreements in respect of interest on late payments from them against receivables. These claims, however, have not been recognised in these financial statements as these have not been acknowledged by the OMCs. b) Claims against the Company not acknowledged as debts, including late payment surcharges amount to Rs 168.27 million (2008: Rs 32.30 million). c) Bank guarantees of Rs 193 million (2008: Rs 369.36 million) were issued in favour of third parties. 23.2. Commitments a) Aggregate commitments outstanding for capital expenditure as at June 30, 2009 amounted to approximately Rs 3.25 million (2008: Rs 33.2 million). b) Commitments for rentals under lease agreements amounted to Rs 33.46 million (2008: Rs 38.47 million), payable as follows: =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Not later than 1 year 10,760 11,901
Later than 1 year but not later than 5 years 22,704 26,573
33,464 38,474
=====================================================================================24. SALES=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Gross sales-note 24.1 and 24.2 97,007,960 107,300,775
Less:
-Sales tax (11,825,516) (10,811,924)
-Excise duty and development levy / surcharge (8,321,387) (924,845)
76,861,057 95,564,006
=====================================================================================24.1. These include price differential claims from the Government amounting to Rs 117.15 million (2008: Rs 514.78 million).24.2. Sales pertaining to the year are based on prices notified by OGRA which are subject to policy clarification from the Federal Government Any subsequent adjustment arising therefrom shall be accounted for as and when the said policy is finalised. 25. OPERATING COSTS ===============================================================================================================================
Administrative
===============================================================================================================================
Cost of sales Distribution cost expenses Total
===============================================================================================================================
2009 2008 2009 2008 2009 2008 2009 2008
===============================================================================================================================
(Rupees in thousand)
===============================================================================================================================
Crude oil consumed-note 25.1 79,048,218 90,576,801 - - - - 79,048,218 90,576,801
Stores, spares and chemicals 87,443 106,127 - - - - 87,443 106,127
Consultancy 5,684 4,228 - - 336 - 6,020 4,228
Fuel, power and water 260,217 249,723 7,169 6,401 1,189 1,640 268,575 257,764
Salaries and wages 250,075 218,626 24,605 14,774 80,320 76,357 355,000 309,757
Retirement benefits 27,185 25,320 2,967 2,204 5,237 7,252 35,389 34,776
Repairs and maintenance 60,980 60,611 9,804 12,457 499 1,796 71,283 74,864
Insurance 29,036 33,017 9,967 12,655 5,454 3,519 44,457 49,191
Staff transport 14,267 12,384 2,211 1,838 5,753 4,449 22,231 18,671
Lease rentals 6,211 6,090 298 168 6,100 4,617 12,609 10,875
Depreciation 105,906 120,066 14,036 11,815 10,871 11,950 130,813 143,831
Traveling and entertainment 4,860 15,471 726 1,206 5,617 10,858 11,203 27,535
Subscription 5,207 4,569 4,365 3,604 2,204 2,252 11,776 10,425
Security expenses 9,282 7,372 5,780 4,414 2,487 828 17,549 12,614
Rent, rates and taxes 20,238 13,457 33,670 43,262 - - 53,908 56,719
Transportation and
handling charges - - 4,063 13,846 - - 4,063 13,846
Amortisation of intangible 7,352 7,352 - - - - 7,352 7,352
Publicity - - - - 1,705 2,561 1,705 2,561
Printing and stationery - - - - 3,534 4,680 3,534 4,680
Computer related and software
license expenses - - - - 10,037 7,144 10,037 7,144
Communication - - - - 5,494 6,660 5,494 6,660
Directors' fee - - - - 416 408 416 408
Legal and professional
charges - - - - 4,051 5,639 4,051 5,639
Auditors' remuneration-note 25.2 - - - - 2,629 3,120 2,629 3,120
Refinery upgradation studies - - - - - 516,889 - 516,889
Other expenses 7,144 12,712 1,180 756 10,735 25,524 19,059 38,992
79,949,305 91,473,926 120,841 129,400 164,668 698,143 80,234,814 92,301,469
Opening stock of finished
products 2,512,757 1,827,903
Closing stock of finished
products (2,587,867) (2,512,757)
79,874,195 90,789,072
===============================================================================================================================25.1. Cost of crude oil consumed in respect of non-finalised Crude Oil Sale and Purchase Agreements (COSAs) has been recorded in line with notifications of the Ministry of Petroleum & Natural Resources.25.2. Auditors' remuneration =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Audit fee 1,100 600
Taxation services 313 625
Limited review, special reports and certifications
and audit of staff retirement funds 880 1,630
Out of pocket expenses 336 265
2,629 3,120
=====================================================================================26. OTHER OPERATING EXPENSES=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Donations-note 26.1 3,127 8,110
Workers' profits participation fund - 171,296
Workers' welfare fund - 72,771
3,127 252,177
=====================================================================================26.1. None of the directors or their spouses had any interest in the donees.27. OTHER INCOME =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Income from financial assets
Profit on savings and term deposit accounts 202,919 111,013
Gain on redemption of open ended mutual fund units - 8,586
Gain on re-measurement of fair value
of open ended mutual fund units - 11
Others
Rent of equipment, storage and handling charges
[including Rs 2.28 million (2008: Rs 2.61 million)
from related parties 10,741 12,026
Insurance commission 4,598 14,643
Sale of scrap 36,735 643
Gain on disposal of property, plant and equipment 2,184 43
Others 5,995 1,030
263,172 147,995
=====================================================================================28. FINANCE COST=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Mark-up on running finance under mark-up arrangements 293,962 81,196
Mark-up on short term borrowing 49,519 -
Interest on amounts withheld against purchases of crude oil 267,772 167,908
Interest on delayed payments 4,138 -
Exchange loss 1,859,791 360,266
Interest on workers' profits participation fund 357 -
Bank charges 1,928 3,943
2,477,467 613,313
=====================================================================================29. TAXATION=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Current-for the year 85,872 1,153,180
Deferred (1,015,615) (9,306)
(929,743) 1,143,874
=====================================================================================29.1. Relationship between tax expense and accounting (loss) / profit=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Accounting (loss) / profit (5,501,398) 3,254,618
Tax at the applicable tax rate of 35% (1,925,489) 1,139,116
Deferred tax not recognised-note 8.1 762,510 -
Expenses not deductible for tax purposes 26,291 43,628
Effect of applicability of final tax 206,946 (35,861)
Income not subject to tax (1) (3,009)
(929,743) 1,143,874
=====================================================================================30. (LOSS) / EARNING PER SHARE=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
(Loss) / profit after taxation attributable to
ordinary shareholders (4,571,655) 2,110,744
Number of ordinary shares outstanding at the
end of the year (in thousand) 35,000 35,000
Basic (loss) / earning per share (Rs 130.62) Rs 60.31
=====================================================================================There were no dilutive potential ordinary shares in issue as at June 30, 2008 and 2009.31. REMUNERATION OF DIRECTORS, CHIEF EXECUTIVE AND EXECUTIVES The aggregate amounts of remuneration including all benefits to Directors, Chief Executive and Executives of the Company are as follows: ====================================================================================
2009 2008
====================================================================================
Directors Chief Executive Directors Chief Executive
Executive Executive
====================================================================================
(Rupees in thousand)
====================================================================================
Fees 416 - - 408 - -
Managerial
remuneration - 4,774 62,700 - 3,625 44,982
Leave encashment - - 1,337 - 1,820 915
Bonus - 2,642 19,434 - 2,094 9,810
Ex-gratia allowance - - 3,236 - 1,457 -
Honorarium 600 - - 600 - -
Retirement benefits - - 19,120 - 789 9,623
Housing - 1,770 26,661 - 1,631 17,920
Utilites - 393 5,925 - 362 4,156
Leave passage - - 7,820 - 1,135 5,004
Club expenses - 139 951 - 1,048 5,224
Others 36 206 11,421 36 436 13,015
36 2,508 52,778 36 4,612 45,319
1,052 9,924 158,605 1,044 14,397 110,649
Number of persons 10 1 55 10 2 42
====================================================================================A Director, the Chief Executive and certain executives are provided with free use of Company maintained cars and household equipments.32. TRANSACTIONS WITH RELATED PARTIES ========================================================================================
2009 2008
========================================================================================
(Rupees in thousand)
========================================================================================
Relationship Nature of transaction
(a) Associated companies Dividend received 8,079 8,504
Sale of goods 64,556,001 75,959,940
Services rendered 2,283 2,608
Purchase of goods 15,322,872 27,921,379
(b) Entity where a Director of the Company is a key management
personnel Sale of goods 627,968 -
(c) Entities whose Directors and that of the Company have been
appointed by the same person(s) Services received 1,254,092 505,756
(d) Key management employees'
compensation Salaries and other short-
term employee benefits 35,760 39,171
Post employment benefits 4,334 2,884
========================================================================================Sale of certain products is transacted at prices fixed by the Oil & Gas Regulatory Authority Other transactions with related parties are carried out on commercially negotiated terms.The status of outstanding balances in respect of related parties as at June 30, 2009 is included in trade debts, other receivables and trade and other payables. 33. CAPACITY AND ACTUAL PERFORMANCE Against the designed nominal annual capacity of 2,133,705 metric tons, the actual throughput during the year was 1,888,326 metric tons (2008: 2,123,145 metric tons). 34. FINANCIAL INSTRUMENTS 34.1. Financial assets and liabilities =============================================================================================================
Interest / Mark-up bearing Non-interest / mark-up bearing Total
=============================================================================================================
Maturity Maturity after Total Maturity Maturity after Total
up to one one year up to one yea one year
year
=============================================================================================================
(Rupees in thousand)
=============================================================================================================
FINANCIAL ASSETS
Loans and receivables
Loans to employees 9,207 14,142 23,349 2,052 2,324 4,376 27,725
Deposits - - - 794 14,012 14,806 14,806
Trade debts - - - 14,431,063 - 14,431,063 14,431,063
Accrued mark-up - - - 13,160 - 13,160 13,160
Other receivables - - - 1,963,342 - 1,963,342 1,963,342
Cash and bank
balances 3,901,916 - 3,901,916 7,917 - 7,917 3,909,833
2009 3,911,123 14,142 3,925,265 16,418,328 16,336 16,434,664 20,359,929
2008 3,118,412 13,533 3,131,945 9,988,335 14,067 10,002,402 13,134,347
FINANCIAL LIABILITIES
At amortised cost
Trade and other
payables 3,106,156 - 3,106,156 22,151,502 - 22,151,502 25,257,658
Short term borrowing 4,105,936 - 4,105,936 - - - 4,105,936
2009 7,212,092 - 7,212,092 22,151,502 - 22,151,502 29,363,594
2008 3,185,629 - 3,185,629 12,647,831 - 12,647,831 15,833,460
=============================================================================================================34.2. Financial risk management objectives and policiesCapital Risk Management The Company's objectives when managing capital are to safeguard the Company's ability to continue as going concern in order to provide returns for shareholders and benefit for other stakeholders. However, as also mentioned in note- 2.18 (c), the Company operates under tariff protection formula whereby profits after tax in excess of 50% of the paid up capital as of July 1, 2002 are diverted to special reserve. The capital structure of the Company is equity based with no financing through long term borrowings Company has availed short-term borrowing for working capital purposes only. (i).Concentration of credit risk Credit risk represents the accounting loss that would be recognised at the reporting date if counterparties failed to perform as contracted The financial assets that are subject to credit risk amounted to Rs 20.32 billion (2008: Rs 13.09 billion). The Company monitors its exposure to credit risk on an ongoing basis at various levels The Company believes that it is not exposed to any major credit risk as it operates in an essential products industry and its customers are organisations with good credit history. The carrying amounts of financial assets which are neither past due nor impaired are as under: =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Loans to employees 27,725 23,893
Deposits 14,806 14,926
Trade debts 2,991,304 6,273,955
Accrued mark-up 13,160 47
Other receivables 1,963,342 983,076
Investments - 365
Cash and bank balances 3,909,833 2,646,115
8,920,170 9,942,377
===================================================================================== (ii).Liquidity RiskThe Company manages liquidity risk by maintaining sufficient cash balances and the availability of financing through banking arrangements. (iii).Foreign exchange risk Foreign currency risk arises mainly when receivables and payables exist due to transactions in foreign currencies primarily with respect to the US Dollar Amounts exposed to such risk included in creditors are Rs 15.54 billion (2008: Rs 5.23 billion) and short term borrowing is Rs 4.11 billion (2008: Nil). The Company manages its currency risk by close monitoring of currency markets As per central bank regulations, the Company cannot hedge its currency risk exposure against procurement of crude oil. At June 30, 2009, if the Pakistan Rupee had weakened / strengthened by 5% against the foreign currencies with all other variables held constant, loss / profit after taxation for the year would have been higher / lower by Rs 638.44 million (2008: Rs 125.26 million) respectively, mainly as a result of foreign exchange losses / gains on translation of foreign currency creditors and short term borrowing. (iv).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 is exposed to cash flow interest rate risk on its short term borrowing which is repriced at a maximum period of 180 days Hence the management believes that the Company is not materially exposed to interest rate changes. At June 30, 2009, if LIBOR interest rate on short term borrowing had been 100 basis points higher / lower with all other variables held constant, loss / profit after taxation for the year would have been higher / lower by Rs 26.43 million (2008: Nil) respectively, mainly as a result of higher / lower interest exposure on variable rate borrowing. (v).Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values. 35. CASH FLOW FROM OPERATING ACTIVITIES =====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
(Loss) / profit before taxation (5,501,398) 3,254,618
Adjustments for non-cash charges and other items
Depreciation / amortisation 138,165 151,183
Share of income of associate (14,671) (24,722)
Gain on disposal of property,
plant and equipment (2,184) (43)
Profit on deposits (202,919) (111,013)
Mark-up expense 615,748 249,104
Provision for slow moving stores and spares 3,267 5,947
Exchange loss on short term borrowing 59,346 -
Unrealised gain on revaluation of investments at
fair value through profit and loss - (11)
Provision for defined benefit retirement plans 24,709 24,784
621,461 295,229
Working capital changes-note 35.1 4,002,134 (1,954,384)
Cash (used in) / generated from operations (877,803) 1,595,463
=====================================================================================35.1. Working capital changes=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
(Increase) / decrease in current assets
Stores, spares and chemicals (9,636) (10,001)
Stock-in-trade 734,827 (3,994,328)
Trade debts (4,965,138) (4,676,163)
Loans and advances 4,412 3,644
Trade deposits and short-term prepayments 40,302 247
Other receivables (986,528) (967,185)
Tax refunds due from
Government-sales tax (12,096) 1,288,154
Investments 365 201,415
(5,193,492) (8,154,217)
Increase in trade and other payables 9,195,626 6,199,833
4,002,134 (1,954,384)
=====================================================================================36. CASH AND CASH EQUIVALENTS=====================================================================================
2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Cash and bank balances 3,909,833 2,646,115
=====================================================================================/hjs137. CORRESPONDING FIGURESCorresponding figures have been re-arranged wherever necessary for purposes of more appropriate disclosure as follows: =============================================================================
Note Reclassification from Note Reclassification to (Rupees in
component component thousand)
=============================================================================
12 Trade debts 16 Other receivables 961,896
25 Cost of sales 28 Finance cost 443,168
27 Other income 28 Finance cost 82,902
=============================================================================38. DATE OF AUTHORISATIONThese financial statements were authorised for issue on August 19, 2009 by the Board of Directors of the Company. |