Financial Analysis 2010

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Fina Fi nanci cia al Analysis Bala Bal anc nce e Sheet Sheet VERTIC VER TICAL AL A NALYSIS

2010

2009

2008

2007

2006

2005

2004

3 1..1 07 0% % 0.16% 0.06% 0.00% 4.3 .39 9%

4 1..6 40 0% % 0.26% 0.05% 3.28% 9.6 .60 0%

5 2..9 15 3% % 0.38% 0.06% 0.32% 8.8 .84 4%

10 4..8 09 0% % 0.84% 0.09% 0.54% 16.3 .36 6%

10 4..9 64 7% % 0.99% 0.11% 0.58% 17.2 .29 9%

15 4..7 48 3% % 1.47% 0.20% 0.24% 22.1 .13 3%

18 4..2 45 0% % 2.15% 0.17% 0.44% 25.4 .40 0%

Stores, spares and loose tools Stock-in-trade  Tra  T rad de debts Loans and advances Deposits and short term prepayments Oth Ot her receivables  Ta  T axation - ne net Shor t Term Investments C ash and bank balances

0.06% 28.97% 58.1 .10 0% 0.20% 0.18% 7.20% 0.0 .02 2% 0.00% 0.88%

0.07% 26.53% 52.4 .48 8% 0.27% 0.36% 8.35% 0.4 .46 6% 0.00% 1.88%

0.09% 49.06% 26.6 .67 7% 0.31% 0.32% 12.34% 0.0 .00 0% 0.00% 2.37%

0.17% 39.55% 18.2 .20 0% 0.49% 2.12% 21.08% 0.0 .00 0% 0.00% 2.04%

0.18% 40.14% 16.7 .70 0% 0.39% 1.84% 20.75% 0.0 .00 0% 0.00% 2.71%

0.25% 39.35% 12.9 .98 8% 0.41% 1.39% 19.80% 0.0 .00 0% 0.02% 3.67%

0.45% 35.30% 14.0 .01 1% 0.33% 2.34% 17.16% 1.2 .20 0% 0.07% 3.73%

 Tota  T otal Curre Curren nt Ass Asse ets

95.6 .61 1%

90.4 .40 0%

91.1 .16 6%

83.6 .64 4%

82.7 .71 1%

77.8 .87 7%

74.6 .60 0%

PrL oopn eg r ttye , rpm lanin t vaensdtm ee qn utip sment Long term loans, advances and receivables Long term deposits and prepayments  prepayments  Deferred tax  Tota  T otal Non-Curre Non-Curren nt Ass Asse ets C urren urrentt A ssets

Net Assets in Bangladesh  Total As  Tota Ass sets

100.0 .00 0% 100.0 .00 0% 100.0 .00 0% 100.0 .00 0% 100.0 .00 0% 100.0 .00 0% 100.0 .00 0%

EQUITY A ND LIABILITIES Share C apital Reser ves  Tota  T otal Sh Share reh hold olde ers Equity

0.85% 13.66% 14.5 .51 1%

1.12% 12.49% 13.6 .60 0%

1.35% 23.01% 24.3 .36 6%

2.29% 25.72% 28.0 .02 2%

2.44% 27.22% 29.6 .66 6%

3.28% 30.26% 33.5 .54 4%

4.04% 32.38% 36.4 .42 2%

Long term deposits Retirement and other service benefits  benefits   Tota  T otal Lon Long te term rm Liabilit ilitie ies s  Tra  T rad de and oth othe er payable les s Provisions Accrued interest / mark-up Shor t term borrowings  Ta  T axes payable  Tota  T otal Curre Curren nt Lia Liabilit ilitie ies s

0.47% 0.93% 1.4 .40 0% 77.1 .15 5% 0.34% 0.16% 6.44% 0.0 .00 0% 84.0 .09 9% 100%

0.56% 1.09% 1.6 .65 5% 71.7 .78 8% 0.45% 0.36% 12.16% 0.0 .00 0% 84.7 .75 5% 100%

0.66% 1.24% 1.9 .90 0% 63.7 .78 8% 0.57% 0.17% 8.65% 0.5 .57 7% 73.7 .74 4% 100%

1.03% 2.20% 3.2 .23 3% 55.4 .44 4% 0.92% 0.18% 12.13% 0.0 .09 9% 68.7 .76 6% 100%

1.06% 2.22% 3.2 .28 8% 52.4 .47 7% 1.11% 0.17% 10.90% 2.4 .42 2% 67.0 .06 6% 100%

1.29% 2.53% 3.8 .82 2% 49.3 .30 0% 1.44% 0.12% 9.20% 2.5 .57 7% 62.6 .64 4% 100%

1.45% 2.41% 3.8 .86 6% 47.9 .99 9% 0.00% 0.07% 11.66% 0.0 .00 0% 59.7 .72 2% 100%

HORIZONTAL ANALYSIS

2010

2009

2008

2007

2006

2005

2004

Proper ty, plant and equipment  Total Non-Curre  Tota Non-Curren nt Ass Asse ets Stock-in-trade  Tra  T rad de debts O ther receivables C ash and bank balances  Tota  T otal Curre Curren nt Ass Asse ets  Tota  T otal As Ass sets Share C apital Reser ves  Tota  T otal Sh Share reh hold olde ers Equity  Tota  T otal Lon Long te term rm Liabilit ilitie ies s  Tra  T rad de and oth othe er payable les s

83% 82% 391% 1978% 200% 112% 611% 477% 100% 201% 190% 173% 767%

91% 137% 272% 1355% 176% 182% 438% 362% 100% 140% 135% 154% 541%

98% 104% 417% 571% 215% 191% 366% 300% 100% 213% 200% 147% 398%

105% 113% 197% 229% 216% 96% 198% 176% 100% 140% 136% 147% 204%

99% 113% 188% 197% 200% 120% 183% 165% 100% 139% 135% 140% 181%

107% 107% 137% 114% 142% 121% 129% 123% 100% 115% 114% 122% 127%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

672% 477%

513% 362%

370% 300%

203% 176%

186% 165%

129% 123%

100% 100%

 Total Cu  Tota Curre rren nt Lia Liabilit ilitie ies s  Tota  T otal Eq Equity & Liabilit ilitie ies s

62

 

Fina Fi nanci ncia al Analysi sis s Pro Pr ofi fitt and Los Loss Accoun ccountt VERTICAL ANALYSIS

Sales Sales Tax IFEM/Levies

2010

2009

2008

2007

2006

2005

2004

100%

100%

100%

100%

100%

100%

100%

13.52% 13.54% 12.73% 12.75% 12.63% 12.87% 12.98% 1.81%

1.28%

2.35%

2.17%

2.76%

3.39%

4.23%

N et sales

84.67% 85.18% 84.92% 85.07% 84.61% 83.74% 82.78%

C os ost of products sold

81.35% 84.76% 79.77% 82.09% 79.73% 78.32% 78.07% 3.33%

0.42%

5.15%

2.98%

4.88%

5.42%

4.71%

0.0 .07 7%

0.0 .07 7%

0.0 .06 6%

0.0 .09 9%

0.1 .10 0%

0.1 .12 2%

0.1 .13 3%

Administrative & Marketing Expenses Depreciation

0.59% 0.13%

0.71% 0.17%

0.76% 0.20%

0.91% 0.28%

0.97% 0.31%

1.27% 0.39%

1.36% 0.41%

O th ther operating expenses

0.28%

0.56%

0.57%

0.18%

0.70%

0.42%

0.26%

1.07%

1.50%

1.59%

1.46%

2.08%

2.20%

2.16%

-2.25%

1.09%

-3.56%

-1.52%

-2.80%

-3.21%

-2.55%

O th ther / O th ther O pe perating income

0.86%

0.31%

0.29%

1.93%

0.40%

0.55%

0.76%

Profit / (Loss) fr from Op Ope erations

3.12%

-0.78%

3.85%

1.93%

3.20%

3.68%

3.31%

Finance cost

1.13%

0.87%

0.23%

0.28%

0.25%

0.15%

0.10%

Share of Profit of Associates

0.06%

0.06%

0.05%

0.08%

0.29%

0.09%

0.00%

Profit / (Loss) before taxation

2.05%

-1.58%

3.67%

1.73%

3.24%

3.62%

3.21%

-1.0 -1 .02 2%

0.6 .65 5%

1.2 .26 6%

0.5 .59 9%

1.1 .10 0%

1.3 .39 9%

1.0 .05 5%

1.03% 1.

-0.93%

2.41%

1.14%

2.13%

2.23%

2.16%

Gross Profit O perating C os osts ts  Tra  T ran nsporta ortation tion

Total Operating Costs

 Ta  T axation Net Profit / (Loss)  (Loss) 

63

 

Fin Fi nanci ncia al Analysi sis s Profi Pr ofitt and Lo Los ss Accoun ccountt HORIZONTA L ANALYSIS ANALYSIS 2010

2009

2008

2007

2006

2005

2004

Sales

450%

369%

299%

211%

181%

130%

100%

Sales Tax

468%

384%

293%

207%

176%

129%

100%

IFEM/Levies

192%

111%

166%

108%

118%

104%

100%

400%

317%

262%

183%

162%

123%

100%

N et sales

460%

379%

307%

216%

185%

132%

100%

C ost of products sold

468%

400%

305%

221%

184%

130%

100%

Gross Profit

317%

33%

327%

133%

187%

150%

100%

241%

196%

129%

141%

140%

120%

100%

Administrative & Marketing expenses Depreciation

195% 149%

193% 151%

167% 147%

141% 144%

129% 137%

121% 124%

100% 100%

O ther operating expenses

468%

774%

650%

146%

477%

209%

100%

223%

256%

220%

142%

174%

132%

100%

398%

-157%

418%

126%

199%

164%

100%

O ther / O ther O perating Income

510%

150%

115%

115%

94%

80%

100%

Profit / (Loss) from operations

424%

-86%

348%

123%

175%

145%

100%

5227%

3296%

723%

613%

468%

196%

100%

279%

-189%

337%

108%

166%

143%

100%

Share of Profit of Associates

233%

204%

133%

149%

468%

100%

0%

Profit / (Loss) be before taxation

287%

-181%

341%

114%

182%

147%

100%

435%

-22 -2 27%

357%

119%

190%

172%

100%

215%

-159%

334%

111%

179%

134%

100%

4,957,702

( 4,828,554)

4,116,415

3,715,768

1,702,598

5,307,821

1,571,278

87,504

(2,889)

( 172,926)

(707,953)

(173,687)

( 1,219,568)

( 1,667,293)

N et et c as ash ( ou out flo w) w) i nf nflo w fr fr om om fifinancing ac act ivit ies

( 1,944,209)

511,790

( 9,716,130)

( 1,589,821)

4,035,619

( 3,087,422)

( 725,302)

C as ash & cash equ ivalent s at end o f t he year

(8,409,328) ( 11,510,325)

( 7,190,672)

( 1,418,031)

2,836,025

( 191,669)

( 1,192,500)

Operating Costs  Tra  T ran nsporta ortatio tion n

T otal Ope O perating rating C os osts ts

Finance cost

 Ta  T axation Net Profit / (Loss)  (Loss)  Summary of Cash Flow Statement N et et ca cash in inflo w / (o (o ut ut flo w) w) frfr om om op oper at at ing act ivit ie ies N et et cash inflo w / (o ut ut flo w ) fr o m invest ing act ivit ies

64

 

Statement of Compliance with the Code of Corporate Governance  This statement is bein  This ing g pre res sented to comply wit ith h the Cod Code e of Corp Corpor ora ate Go Gov vern rna ance contain ine ed in th the e li lis sti tin ng regulations of Karachi, Lahore and Islamabad Stock Exchanges for the purpose of establishing a framework of  good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.  The  Th e Company has appli lie ed the principles contain ine ed in the Cod Code e in the foll llo owin ing g manner: 1.

   

Under sectio section n 5 of the Marke keting ting of Petroleu Petroleum m Pro Produc ducts ts (Fede (Federral Contro C ontrol) l) Act, 197 1974 (theAct Act), ), the Fed Federa erall Government too took k ove over the management of of the the Compa Company and the Act have effect not notwit withstan hstanding anything conta cont ained in the the Com Co mpa panies nies A ct, 1913 1913 (now C ompanies Or O rdinance, 198 1984) 4) or any ot other her la l aw for the time being being in force. force.A nine member Boa Boarrd of Management (BOM) (BO M) including a Managing Dir Director (MD (MD)) is appoi pointed nted by the Federal Governme Government to run the operations operations of the the Com Company. Under Section Section 6 of theAct, the administration and management of the Company is vested in MD of the Company and the MD shall exercise and perform all the powers and functions of the Board of Directors of the Company. Furthermore, provisions relating to the Board's affairs are governed through Board of Management Regulations, 1974 appro pprove ved d by the Federal Government.The 'C 'Code ode of Cor orpor pora ate Governance' (t (the he Code) pro prom mulgated by the Securi curiti ties es and Exchange Commissio ission n of Pakist kista an (SEC (SECP) P) has laid down cer certain tain cr crit iteri erion on for the electi election, on, functioning and responsibilities of the Board of Directors. However, the said criterion of the Code are not considered applicable to the extent of overriding provisions of the Marketing of Petroleum Products (Federal Cont ontrrol ol)) Act, Act, 1974, 1974, and Board Board of Management Reg Regulati ulations, ons, 1974.

2.

The members of BOM BOM have confirm confirmed that none of them is ser serving as a dir director ector in mor more e than ten listed companies, including this Company.

3.

All the members of the the BOM are register istered ed as taxpayers and none of themhas defa defaulted in payment of any loan lo an to a banki nking ng company, a DFI or an N BFI or or,, being a member of a sto tock ck exchange, has been declared as a defaulter by that stock exchange.

4.

Two casual vacancies occurr occurred in the BOM BOM on Decem December 31, 2009 and January 08, 2010 respectively, which were fill filled ed on March 06, 201 2010 0 by the Federa Federal Gover Governm nment.The ex-chairm ex-chairman of the the Compa Company tender tendered ed his resignati tion on which was announced in the follo following wing BOM BOM meeting held on on Octo October ber 23, 200 2009. 9.

5.

The Com Company has prepared a'Statement of Ethics Ethics and Business Pra Practi ctices', ces',which has been signed by emplo ploye yees of the Compa C ompany.

6.

The BO BO M has developed a vision/mission statem statemen ent, t, overall corpor cor pora ate stra strateg tegy y and sign signifi ifica cant policies policies of the Company. A complete record of particulars of significant policies, approved or amended, has been maintained.

7.

All the powers of the BOM BOM have been duly duly exercised and decisions on mater terial ial tra tr ansactio ctions ns ha have been take ken n by the BOM BOM except for appoint ppointm ment and and deter determ minatio ination n of rem remuneratio uneration n and term terms and conditio conditions ns of  employment of the MD which is the function of the Federal Government under section 6(1) & (3) of the Marketing of Petroleum Products (Federal Control) Act, 1974. Therefore, the requirement of the Code that Board should approve the appointment and remuneration of the MD has not been considered applicable to the extent of overriding provisions of the Marketing of Petroleum Products (Federal Control) Act, 1974.

8.

Out of the the to total tal meetings of BOM, BOM, two meeting etings s were were presided ove overr by the ex-chairma ex-chairman and the rem rema aining six meetings were chair ired ed by the BOM BOM member mutually selected selected by the members presen present at the meeti ting ng.  The  Th e BOM met at least once in every quarter.Writ Writte ten noti tic ces of the BOM meeti tin ngs, alo lon ng wit ith h agenda were circulated cir culated at least seven days befor fore e the meeti ting ngs.The minutes of of the the meetings were appro ppropr priately iately recor recorded ded and were pla placed for appro pprova val of of BOM BO M in in subsequent meeti ting ngs. 65

 

Statement of Compliance with the Code of Corporate Governance 9.

The BO BOM M arranged an orien orientation tation course for its its directors directors duri during ng the year to to app apprrise themof their duties and responsibilities.

10.. The BOM 10 BOM has approved the appoint ppointm ment of Comp ompa any Secretar ecretary y during during the yea year.There was no change in the positions positions of Hea Head of Interna Internal Audit and Chief Financia nciall Officer O fficer (C (CFO FO)) during during the year. 11.. The dir 11 director ectors' s' report report for this yea year has been prepa prepared red in complianc compliance e with the requir irem ements of the Code Code and fully describes the salient matters required to be disclosed. 12.. The financial statemen 12 ents ts of the Com Compa pany we were re duly endor endorse sed by MD and CFO be befor fore e approval of the the BOM. 13.. The dir 13 director ectors, s, MD and executives do not hold hold any interest in the the shares of the the Com Company ot other her tha than that disclosed in the pattern of shareholding. 14.. The Company has comp 14 complilied ed wit with h all the corpor corporate and financia nciall repor reporti ting ng requir requirem ements of the Code. Code. 15.. The BO 15 BO M has has form formed an audit com commit ittee. tee. It comp comprrises of 3 members, all of whom are non-executive directors. 16.. The mee 16 eeti ting ngs of the audit commit ittee tee were held at at lea least once ev ever ery y qua quarter pri prior or to approval of of interim interim and final results of the Company and as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance. 17.. The BOM 17 BOM has sett-up up an effectiv effective e internal internal audit functio function. n. 18. The statuto tatutorry audito uditorrs of the the Comp Company have confi confirrmed that they theyhave been given asati tisfa sfacto ctorry rating ratingunder the quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan. 19.. The statutor 19 tatutory y audito uditorrs or the the persons ass ssoci ocia ated with them have not been appointed to provide provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 20.. The related party tra 20 tr ansacti ctions ons have bee een n rev reviewed and approved by by the BOM BOM and placed befor fore e the Audit Committee of the Company in accordance with the listing regulations of the stock exchanges. 21.. We confirm 21 confirm that all ot other her mater terial ial principles principles contained contained in the Code Code have bee been n complied with.

Irfan K. Qureshi Managing Director

Karachi arachi::August 6, 2010

66

 

Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance We have reviewed the Statement of Complianc C ompliance e with with the best best pra practi ctices ces contained contained in the Code Code of Cor C orpor pora ate Governance prepared by the Board Board of Management of Pakistan Pakistan State Oil O il Company Li Lim mit ited ed to com comply with with the Listi Li sting ng Regulati ulations ons of of Ka Karachi, Isla Islamabad and Lahore Lahore Stock Excha Exchanges, where the the Compa Company is listed. listed.  The re  The res sponsib ibil ilit ity y for compli lia ance wit ith h the Cod Code e of Cor Corp por ora ate Go Gov vern rna ance is that of the Board of Management of the the Com Company. Our responsibi onsibilility ty is to review,to the extent where where such compli plia ance can be obj objecti ective vely verifi ified, ed, whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of  the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company perso personnel nnel and review of various various documents prepa prepared by the Compa Company to comply with with the Code. Code. As part of our audit of financial statements we are required to obtain an understanding of the accounting and inter int erna nal contr control ol systems suffici sufficient ent to plan the audit and develo elop p an effective audit appro pproa ach.We are not requir equired ed to consider whether the Board's statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks. Further, Fur ther, Listing Listing Regulati ulations ons of the the Sto tock ck Exchanges where the Compa Company is list listed, ed, requir equire e the Compa Company to place before the Board of Management for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price recording proper justification for using such alternate pricing mechanism. Further, all such transactions are also required to be separately placed before the audit committee. We are only required and have ensured compliance of requirement to the extent of approval of  related party transactions by the Board of Management and placement of such transactions before the audit comm com mit ittee. tee.We hav have not carried out out any procedures to determine whether whether the related related party tr transacti ctions ons were under taken at arm's length price or not. Based on our review, nothing has come to our attention which causes us to believe that the Statement of  Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained in the Code of Corporate Governance, except that certain clauses of Code of Corporate Governance are considered inapplicable due to overriding provisions of Marketing of Petroleum Products (Federal Control) Act, 1974 applicable to the Company, as more fully explained in the Statement of Compliance with the Code of Corporate Governance.

KPMG Tase seer er Hadi & Co. Co. Chartered Accountants Accountants Moham Mo hammad Mahmood Hussa Hussain

M.Yousu Yousuff Adil Adil Saleem & Co. Co. Chartered Accountants Accountants Mushta Mus htaq Ali Hir ira ani

Karachi:August 6, 2010

67

 

Auditors’ Re Rep port to to th the e Me Mem mbers For the year ended June 30, 2010 We have audit dited ed the annexed balance sheet of of Pakistan Pakistan State Oil Oil Company Li Lim mit ited ed (“the (“the Compa Company”) as at 30  Ju  J une 2010 and the re rela lated pro roffit and lo los ss account,statement of compre reh hensive in inc come, cash flo low w statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the the responsibili responsibility ty of of the Compa C ompany’s management to to establish establish and maint inta ain a system of inter interna nal contr control ol,, and prepare and present the above said statements in conformity with the approved accounting standards and the requir irem ements of the Compa Companies Or Ordinance, 19 1984. 84.Our responsibil onsibilit ity y is to express an opinion opinion on on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan.  The  Th ese standard rds s re req quir ire e that we plan and perf rfor orm m th the e audit to obtain re rea asonable assurance about whether th the above said statements are free free of any mater aterial ial misst isstatem atement.An audit incl includes udes examini ining ng, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accountiing pol account polic iciies and significant significant estim estimates made by management, as well as, evaluating the overall overall presentati presentation on of the above said statements.We believe that our audit pro provides vides a reasona reasonable basis for for our opini opinion on and, after due verification, we report that: a)

in our opini opinion, on, proper books of account account have been kept kept by the Comp Compa any as required by the Comp Compa anies Ordinance,198 1984; 4;

b)

in ou ourr opin opinio ion n: i) the balance she sheet et and profit profit and loss account tog together with with the notes notes ther thereon have bee been n drawn up in confor conform mit ity y with the the Com Companies Or Ordinance, 198 1984, 4, and are in agreement with with the the boo ooks ks of account and are further in accordance with accounting policies consistently applied, except for the changes as descr cribed ibed in note 2.5 with which we concur; concur; iiii)) the expenditur nditure e incurred incurred dur during the year was for the purpose of the the Com Company’s busines business; and iiiii) i) the business conducted, investments made and the expenditur expenditure e incurred incurr ed dur uring ing the year were were in accordance with the objects of the Company;

c)

in our opinio opinion n and to the best of our infor inform mati tion on and accor ccording ding to the the explanati tions ons given to us, the balan lance ce sheet, profit and loss account, statement of comprehensive income, cash flow statement and statement of  changes in equity together with the notes forming part thereof conform with approved accounting standards as appli pplicab cable in in Pakistan and give the infor inform matio ation n requir required by the Compa Companies Or O rdinance, 1984, in the the manner so requir required ed and respectively respectively give a tr true ue and fair view of the the state of the Compa Company’s affair ffairs s as at 30 June 2010 and of the profit, total comprehensive income, cash flows and changes in equity for the year then ended; and

d) in our opinion, no Zakat was de dedu ductible ctible at at source unde derr the Zaka Zakat and and Ushr Ordina O rdinance nce,, 19 1980 80 (X (XVII VIIII of 1980). W it ithout hout qualilifying fying our opini opinion, on, we dr dra aw att ttention ention to: to: n

Not ote e 12.2 to the fina financial statements. statements.The Compa Company considers the the overdue balance of Rs. 22,676 22,676 milillilion on fr from cert certa ain power generati eneration compa nies asbeen goo ood dmdebts forethe reasons rea given in the afor forem em entioned entio ned not ote. e. Aom ccordingly ccor dingly , no provision provisi on for for on impa irm ir ment has ade there ther against in the in financial fina statem statem ents. The ultima ultima te outcome of the matter cannot presently be determined;

68

 

n

N ot otes es 15.1, 15.2 and 15.5 to the fina financial ncial sta statemen tements. ts.The Compa Company considers considers the aggregate amount of  Rs. 7,419 million due from the Government of Pakistan as good debts for the reasons given in the aforementi tioned oned notes. notes.The ultima ultimate outco outcom me of the the matter atters s cannot pr prese esentl ntly y be deter term mined; and

n

Not ote e 25.1.2 25.1.2 to the the financial statements.The Hig High Cour Courtt of of Sindh decided the pending appeals of of the Income Income  Ta  T ax De Dep partment for assessment years 1996 – 97 97 and 1997 – 98 98 again ins st th the Company, re res sult ltin ing g in a tax lilia abil bilit ity y of Rs. Rs.95 958 8 milillilion on on on the Comp C ompany.The Comp Company filed a petitio petition n for leave to appeal wit with h the Supreme Court of Pakistan against the aforementioned decision, which was granted by the Supreme Court of Pakistan and suspended the operatio operation n of the the impugned judgment of the the Hig High Cour Courtt of of Sindh.The ultim ultimate outcom outcome of the matter cannot presently be determined and no provision for the liability has been made in the financial statements.  The fin  The ina ancial statements of the Company for the year ended 30 June 2009 were audit ite ed byA. A.F F. Ferguson & Co., Chartered Chartered Accountants and and KPMG KPMG Taseer Hadi & Co., Co., Chartered Chartered Accountants who had also modified modified their report by emphasis of matter paragraphs on those financial statements, vide their reports dated 12 August 2009 in respect respect of of matt tter ers s disclosed disclosed in in notes notes 12.2, 15.1, 15.2,15.5 and 25.1.2 to the annexed fina financial statements.

KPMG Taseer Hadi & Co. Chartered Accountants Mohammad Mahmood Hussain

M.Yousuf Adil Saleem & Co. Chartered Accountants Mushtaq Ali Hirani

Karachi arachi::August 6, 2010

69

 

Ballanc Ba nce e Sheet Sheet  Ass at June 30  A 30,, 201 2010 0 2010 ASSETS Non-current assets Propert rty y, plant and equipment Intangibles Long terminvestments Long term loans, advances and receivables Long term deposits and prepayments Deferred tax

Note

2009

 (Rupees in ‘000)

4 5 6 7 8 9

6,375,233 36,250 2,019,270 317,889 125,951 8,874,593

6,987,025 68,872 2,153,514 405,780 83,655 5,033,273 14,732,119

C urrent assets Stores, spare part rts s and loose tools Stock-in-trade  Tra  T rade debts Loans and advances Deposits and short termprepayments Othe Oth er re rec ceivables

10 11 12 13 14 15

113,863 58,598,668 117,501,074 409,987 40 367,378 14,557,542

112,143 40,698,209 80,509,830 418,015 551,803 12,806,779

 T  Ta axsa tion on Ca hti a nd-bnaentk balances

16

1,74 76 8,,5 08 50 6 193,3 ,37 73,1 ,14 48

2,7 80 89 3,,6 12 17 8 138,6 ,68 89,5 ,52 24

17  

202,2 ,24 47,7 ,74 41

153,4 ,42 21,6 ,64 43

18 19

1,715,190 27,620,868 29,336,058

1,715,190 19,155,595 20,870,785

20 21

948,476 94 1,887,751 2,836,227

854,718 1,673,020 2,527,738

22 23

156,035,716 688,512 330,213 13,021,015 170,0 ,07 75,4 ,45 56

110,123,702 688,512 556,380 18,654,526 130,0 ,02 23,1 ,12 20

202,2 ,24 47,7 ,74 41

153,4 ,42 21,6 ,64 43

Net assets in Bangladesh  T otal asse sets ts EQUITY AND LIABILITIES Equity Share capital Reserves

Non-c on-current urrent liab liabilities ilities Long term deposits Retirement and other service benefits C urrent liabilities  Trade and ot  Tra oth her pa payables Provisions Acc Ac cru rue ed in inte tere res st / markrk-u up Short term borr rro owings

T otal equity equity and liabilit ilities ies C ontingen ontingencies cies and commi commitments tments

24

  25

 The  Th e annexed not ote es 1 to 44 for orm m an integral part of these fin ina ancial statements.

Irfan K. Qureshi Managing Director 70

Nazim F. Haji C hairman

 

Pro Pr ofi fitt and Lo Loss Acc cco ount For the year ended June 30, 2010 2010 Note Sales - net of tr trad ade discounts discounts and allllowances owances amount ounting ing   to Rs. 1,059,363 thousand (2009: Rs. 130,068 thousand) Less: - Sales ta tax x - Inland freight equaliza lization tion margin Net sales

2009

 (Rupees in ‘000) 877,173,254

719,282,176

(118, 8,56 563,5 ,577 77) (15,8 ,851 51,7 ,726 26) (134,4 (13 4,415 15,30 ,303) 3) 742,757,951

(97,3 ,38 86, 6,72 723) (9,19 (9, 199, 9,86 864) (106,5 (10 6,586 86,58 ,587) 7) 612,695,589

Cost of products sold Gross profit

26

 (71 (713,5 3,591 91,70 ,707) 29,166,244

(609,685 (609,6 85,47 ,478) 8) 3,010,111

Other operating income

27

1,479,054

1,451,666

28 29 30 4.1 5 31

 (631,849) (4,0 (4 ,055,238)  (1 (1,1 ,125,8 ,89 91) (1,137,637) (44,752) (2,416,518) (9,4 (9 ,41 11,8 ,88 85) 21,233,413  6,095,348 (9,882,010) 17,446,751 516,401 516 ,401 17,963,152

(513,673) (3,9 (3 ,960,953) (1,1 (1 ,15 51,7 ,79 93) (1,141,698) (52,615) (3,994,389) (10 (1 0,8 ,81 15,1 ,12 21) (6,353,344) 776,686 (6,232,056) (11,808,714) 451,850 451 ,850 (11,356,864)

(8,913,556) 9,049,596

4,658,329 (6,698,535)

Operating costs  Tra  T ransport orta ati tion on costs Distrib Dis tribu utio tion n and mark rke eting expenses Admini inistr stra ati tive ve expenses Depreciation Amortisation Othe Oth er operati tin ng expenses Profit / (loss) from operations Other income Finance costs

32 33

Share of pro profi fitt of associates Profit / (loss) before taxation  taxation   Taxati  Ta tion on Profit / (loss) for the year

34

(Rupees) Earnings / (loss) per share - basic and diluted

35

52.76

(39.05)

 The  Th e annexed not ote es 1 to 44 form an in inte tegral part of these financial statements.

Irfan K. Q ureshi Managing Director

Nazim F. Haji C hairman 71

 

Statemen entt of Co Compr preh ehen ensi siv ve Inco Incom me For the year ended June 30, 2010 2010

2009

 (Rupees in ‘000) Profit / (loss) for the year

9,049,596

(6,698,535)

(70,751)

(387,965)

985 (69,766)

(6,188) (394,153)

Other comprehensiv nsive e income Unrealised loss due to change in fair value of other long-term investments Unrealised gain / (loss) due to change in fair values of  associates' investments

 To  T otal compre reh hensive income for the year

8,979,830

(7,092,688)

 The  Th e annexed not ote es 1 to 44 for orm m an integral part of these fin ina ancial statements.

Irfan K. Qureshi Managing Director

72

Nazim F. Haji C hairman

 

Statemen entt of Cha C hanges in Equ Equiity For the year ended June 30, 2010 Share capital

C apital reserve

Unrealised gain / (loss) on revaluation revaluatio n of

C ompany's share of unrealised

long term investment available for

gain / (loss) on associates' investments

G eneral reserve

U nappropriated profit// profit (accumulated (accum ulated

T otal

loss)

sale

(Rupees in ‘000)

Balance Bal ance as at June June 30, 2008 T otal comprehensive income for the year Loss for the year

1,715,190

3,373

-

-

938,623

-

(2,248)

16,139,968

-

-

12,170,148

30,965,054

(6,698,535)

(6,698,535)

Unrealised loss due to change in fair value of long-term investment Unrealised loss due to change in fair value of associates' investments  

-

-

(387,965)

-

-

-

-

(387,965)

(6,188) (6,188)

-

(6,698,535)

(6,188) (7,092,688)

T ransactions with owners Distribution Final dividend for the year ended  June 30, 2008 @ Rs Rs. 12.5 per sh share

-

-

-

-

-

(2,143,986)

(2,143,986)

-

-

-

-

(857,595) (85 (8 57,595)

(2,1 (2 ,143,986)

(857,595) (3,001,581)

-

-

-

-

10,000,000

(10,000,000)

(8,436)

25,282,373

(6,672,373)

20,870,785

9,049,596 9,

9,049,596

1st interim dividend for the year ended  June 30, 2009 @ Rs Rs. 5 per share

Others  Transfer to  Tra to general re reserv rve e Balance Bal ance as at June June 30, 2009

1,715 15,19 ,190

3,373

550,658

-

(387,965)

-

T otal comprehensive income for the year Profit for the year Unrealised gain due to Unrea to change in fair fair value of long-term investment Unrea Unr ealised gain due to to change in fair fair value of associates' investments

-

-

-

-

-

-

-

-

-

-

-

(70,751)

-

-

(70,751)

985 985

-

9,049,596

985 8,979,830

-

-

(514,557)

(514,557)

1,862,6 ,66 66

29,336, 6,0 058

-

(70,751)

T ransactions with owners Distribution 1st interim dividend for the year ended  June 30, 2010 @ Rs Rs. 3 per share Balance Bal ance as at June June 30, 2010

1,715,190

3,3 3, 373

479,907

(7,4 (7 ,45 51)

25,2 ,28 82,373

 The  Th e annexed not ote es 1 to 44 forman in inte tegral part of th the ese financial statements.

IM rfaan naK gi.nQ gu Drie rs eh citor

NazC im Ha an ji haFir.m

73

 

Cash Fl Flo ow St Statemen entt For the year ended June 30, 2010 2010 Note

CA SH GENERATED FROM CAS FROM OPERAT OPERATING ING AC TIVITIES Cash generated from operations Decrease in long-term loans, advances and receivables Incre In crea ase in lon long g-te -term rm depos osits its and pre rep payments Increase in long-term deposits  Ta  T axes paid Financ nce e cos costs ts paid Payment against provisions Retire Re tirem ment benefits paid Net cash generated from from / (used in) operating operating acti ctiviti vities es

36

2009

 (Rupees in ‘000)

10,978,588 87,891 (42 (4 2,2 ,29 96) 93,758 (3,217,236) (2,46 (2, 464,2 ,238 38) (47 (4 78,7 ,76 65)  4,957,702

(162,072) 71,965 (4,5 (4 ,55 57) 20,120 (1,403,937) (2,82 (2, 825, 5,87 871) (37,604) (48 (4 86,5 ,59 98) (4,,828,554) (4

(5 42 6,1 ,83 00 2)) (12 (1 ,13

(6(1 78 17 (15 5,,9 ,98 82 5))

 5,567 640,869 87,504

20,167 671,101 (2,889)

(1,427,452)  (5 (51 16,757) (1,9 (1 ,94 44,2 ,20 09) 3,100 3,1 00,99 ,997  (1 (11 1,510,3 ,32 25)  (8 (8,4 ,40 09,3 ,32 28)

3,472,487 (2,9 (2 ,960,697) 511,7 ,79 90 (4,319 (4,3 19,65 ,653) (7,1 (7 ,190,672) (11 (1 1,5 ,51 10,3 ,32 25)

CAS CA SH FLOW S FR FROM OM INVESTIN INVESTING G ACTIVITIES AC TIVITIES P urrcha cha rta op tle y, palsasnettsand equipment Purch Pu as se es so off p inta in ne grib ible Proceeds from disposal of operating assets Divid ide end re rec ceived Net cash generated from / (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Repayment of) / proceeds from short-term finances Dividend paid Net cash (u (us sed in) / genera rate ted d from fin fina anc ncing ingactivities Net increase / (dec (decrea rease se) in cash and cash eq equiva uivalents Cash and cash equivalents equivalents at beginni inning ng of the year Cash and cash equivalent equivalents s at end of the year

37

 The  Th e annexed not ote es 1 to 44 for orm m an integral part of these fin ina ancial statements.

Irfan K. Qureshi Managing Director

74

Nazim F. Haji C hairman

 

Notes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

1.

LEGA LE GAL L STATUS AND NATU NATUR RE OF BUS USIINE NES SS

1.1

Pakistan State Oil O il Comp ompa any Limited ("the ("the Comp Compa any ny") ") is is a public com company incorpor incorpora ated in Pakistan under the repe repealed Comp Companies Act, Act, 1913 (now Comp C ompanies Or Ordinance, 1984) and listed listed on the the Ka Karachi, Lahor ore e and Isla Islamabad stock stock exchanges. The The reg register istered ed office office of the Comp Company is located located at PSO House, Khayaban-e-Iqbal, Clifton, Karachi. The principal activities of the Company are procurement, storage and marketing of petroleum and related products. It also blends and markets various kinds of lubricating oils.

1.2

 The Board of Management nomin  The ina ated by the Federal Go Gov vern rnm ment under se secti tion on 7 of the Mark rke eti tin ng of Petroleum Products (Federal Control) Act, 1974 ("the Act") manages the affairs of the Company.  The  Th e pro rov visio ion ns of the Ac Actt shall have effect not otw wit ith hstanding anything contained in the Companies Ac Act, t, 1913 (now Compa Companies Or Ordinance, 1984) or any other law for the tim time being in force force or any agreement, contract, Memorandum or Articles of Association of the Company.

2.

BAS ASIIS OF PREPAR ARAT ATIION

2.1

Statement of of compliance  These financial statements have been pre  The rep pare red d in accord rda ance wit ith h the appro rov ved accounting standard rds s as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notifi not ified ed under the the Com Companies Or Ordinance, 1984, pr provisi ovisions ons of and directi directives vesissued under the Compa Companies Ordinance, 1984. In case requirem requirements differ iffer,, the provisions provisions or dir directives ectives of the Com Companies Or Ordinance, 1984 have been followed.

2.2

Basis of measure rem ment  These financial statements have been pre  The rep pare red d on the basis of ‘histo tori ric cal cost’ conventi tion on, except for certain 'Available for sale' investments which have been recognised at fair value and recognition of  certain staff retirement benefits at present value.

2.3

Fun Fu ncti tion onal an and pre pres senta tati tion on curre rren ncy  These fin  The ina ancial statements are pre res sented in Pakistan Rupees whic ich h is als lso o the Company's functi tion onal currency.

2.4

C riti ritica cal acc accou oun nting estim tima ate tes s and ju judgeme men nts  The pre  The rep parati tion on of fin ina ancial statements in conformit ity y wit ith h appro rov ved accounti tin ng standard rds s re req quires management to to make esti tim mates, assumpti ptions ons and use judgements tha that affect the applicatio application n of pol polici icies es and repor reported ted amount ounts s of assets and liab liabililit ities ies and incom income and expenses. Estim Estimates, assumpti ptions ons and  judgments are conti tin nuall lly y evaluated and are based on histor oric ical experi rie ence and ot oth her facto tors rs,, including reasonable expectations expectations of future future events. Revisions Revisions to accounting esti stim mates are recog recognised prospe prospecti ctively vely commencing from the period of revision. Areas where judgements and estimates made by the management that that may have a signifi significant cant risk risk of of mater ateriial adj djustments ustments to the finan financi cial al statements in the the subsequent year are as fol follo lows: ws: 75

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

2.5

-

Residual values values and useful lives of property, property, plant and and equ equipm ipmen entt (note 3.1). 3.1).

-

Usefu Use full liv lives of intangible assets (note 3.2 .2). ).

-

Provision Pr ovision for im impair irm men entt of tra trade de debts bts and other rec receiva eivables (note 3.7). 3.7).

-

Provision for for im impa pair irm ment of non-financ ncia iall assets (note 3.9 .9). ).

-

Provision for retirem r etirement and and othe otherr service be bene nefits (note (note 3.1 3.11). 1).

-

Taxa Ta xation (n (note ote 3.15).

(Amounts in Rs.‘000)

Changes in accou ccountin nting g policie policies s and dis disclos closuresasa result of adoption of new and amen mende ded d accounting standards Starti ting ng Jul July y 1,200 2009, 9, the Compa C ompany has changed its its account ccounting ing polici policies es in the the follo following wing areas: -

IAS 1 (Revised), 'Presentation of financial statem IAS statements' (effec (effecti tive ve fr from om January 1, 2009 09). ). The The revised standard prohibits the presentation of items of income and expenses (i.e. non owner changes in equity) in in the statement of changes in equit ity, y, requir requiring ing nonon-owner owner changes in equit ity y to be prese presented separately from owner changes in equity. All non-owner changes in equity are required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and the stateme statement of of comprehensive income). Where W here entiti entities es restate or reclassify compa comparati tive ve inforrmati info tion, on, they they are requir required ed to prese present a resta restated balance sheet asat the the beginni inning ngof com comparati tive ve period in addition to the current requirement to present balance sheet at the end of current period and comparative period. The Company has preferred to present two statements; a profit and loss loss account (i (income ncome stateme statement) and statement of of comprehensive incom income. Compa Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation / disclosure of the financials statement, there is no impact on earnings per share.

-

IFRS 8 ‘O ‘Operating perating segments’ also became effective from from Janu Janua ary 1, 2009 2009 which requires requires an entit entity y to determine and present operating segments based on the information that is provided internally to the Com Compa pany's Chief Chief Ope Operrati ting ngDecision Maker Maker (C (CO ODM DM)) tha that is, the Com Compa pany's functio function n which allllocates ocates resources resour ces to and asse ssesse sses s per perfor form mance of its its opera operati ting ng segments. Cur Currrently, the the management has determ determined tha that the the Compa Company has a single repor reportable table segment and therefo thereforre the adoption of the said IFRS has only resulted in some entity wide disclosures as given in note 38 to these financial statements.

-

IA S 23 (A IAS (Am mendment), ‘Borr ‘Borrowi owing ng costs’ beca became effective from from January 1, 200 2009. 9. The amend endm ment requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as of the cost asset. option immediately expensingwith thosethe borrowing costs cost s ha s been be enpart removed. TheofCompa Cthat ompa ny’s The accounting accounti ngofpol policy icy is is in compliance the IAS 23 IAS (Amendment) and therefore, there will be no effect on the financial statements.

76

 

(Amounts in Rs.‘000)

2.6

Othe Oth er ac accounting developments  -

The Com ompa pany has applied Impro proving ving Disclosur isclosures es about Financia Financiall Ins Instr trum uments (A (Am mend endm ments to IFRS 7), issued in March 2009, that require enhanced disclosures about fair value measurements and liquidity liquidity risk in resp respect of financia financiall instrum instr uments.  The amendments re  The req quire th tha at fa fair va valu lue e measure rem ment dis disc clo los sure res s use a th thre ree e-l -le evel fa fair va valu lue e hierarchy that reflects the significance of the inputs used in measuring fair values of financial instruments. Specific disclosures are required when fair value measurements are categorised as Level 3 (signif ificant icant unobserva unobservable inputs) in in the fair value hiera hierarchy. The amendments requir require e that any significant transfers between Level 1 and Level 2 of the fair value hierarchy be disclosed separately, distinguishing between transfers into and out of each level. Furthermore, changes in valuation techniques from one period to another, including the reasons therefore, are required to be disclosed for each class of financial instruments. Further, the definition of liquidity risk has been amended and it is now defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.  The amendments re  The req quir ire e disclosure of a maturi ritty analysis for non-deri riv vati tiv ve and deri riv vative financial liabilities, but contractual maturities are required to be disclosed for derivative financial liabilities only when contractual maturities are essential for an understanding of the timing of cash flows. For issued financial guarantee contracts, the amendments require the maximum amount of the guarantee to be disclosed in the earliest period in which the guarantee could be called.  These amendments to the IF  The IFR RS 7 have only re res sult lte ed in in inc cre rea ase in certain disclo los sure res s as given in note 39. Apart from above certain other standards, amendments to published standards and interpret inter preta ati tions ons of accounting sta standa ndards became effecti effective ve duri during ng the yea year, however however, they they did n o t effect the the Compa Company's financial statements.

2.7

Sta St andards, inte interpre rpreta tatio tion ns an and ame amend ndme men nts not not yet yet ef effective  The fol  The ollo low win ing g standard rds s, in inte terp rpre reta tati tion ons s and amendments of approved accou oun nti tin ng standard rds s are effective for accounting periods beginning on or after January 1, 2010.  

Amend endm ments to IFRS IFRS 2 Sh Sha are-ba e-based sed Pa Paym yment – Gr Group oup Ca Cash-se sh-sett ttled led Sha Share-ba e-base sed d Paym Payment Transacti ctions ons (effecti ctive ve for annual periods periods beginning on or after Ja January 1, 201 010). 0). The IASB IASB amended IFRS 2 to require an entity receiving goods or services (receiving entity) in either an equity-settled or a cash-settled share-based payment transaction to account for the transaction in its separate or individual financial statements. Until the above amendment, there was no specific guidance on the attribution of cash-settled share based payments to the entity receiving goods or services where the entity had no obligation to 77

 

Notes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

settle the transaction. Therefore there was diversity in practice for cash-settled share based payment transactions. The amended IFRS would be applicable to the Company's financial statements from from the financial year start starting ing from from Jul July y 1, 1, 2010. 2010. O n Aug August 14, 2009, 2009, the the Government Government of Pakistan Pakistan has launched a scheme call called ed Benazi zirr Employees’ Stock Optio ption n Scheme (‘BESOS’) (‘BESOS’) for the employees of state owned enti titi ties es including Pakistan State Oil Oil Company Li Lim mit ited. ed. Under the scheme a Trust has been form formed and 12%of  the shares held held by the Ministry Ministr y of Petrol Petroleum eum & Na Natur tura al Resources Resources have been tr tra ansferred to the Trust. The eligible employees have been allotted units of the trust, based on the length of the the service till till August 14, 2009. On On cessa cessati tion on of the emplo ploym yment each emplo ploye yee e will will be required to surrender the units for cash payment from the fund equivalent to market value of the the shares. Under the scheme eligible employees will not be enti titl tled ed to get the the benefit unless they have served served five mor ore e yea years from from the date of of enforcem enforcement of BESOS except for for cert certa ain exceptiona exceptio nal rea reasons for early separati tion on fr from om the company as mentio entioned ned in the Trust deed.  The  Th e eli elig gible emplo loy yees wi will be be entit itle led to 50%o %off the dividend and the re rem maining 50%d %div ividend will be transferred to Central Revolving Fund of the Privatization Commission who would settle the surrendered units of the Trust on behalf of GoP. Since the matt tter er affected a large number of of State Owned Owned Enter Enterpri prises ses (SO Es), the Compa C ompany alo long ngwit with h certain other SO SOEs Es has requested the Insti titute tute of Cha C harter tered ed Accountants of Pakistan (IC (I CAP) to to cla clarify the accounting accounting and reporti reporting ng imp implilica cati tions ons for BESO S. The Com Compa pany ny's 's management has not yet quantified the impact of this scheme on the financial statements. However, in view of vesting conditions under the scheme, the charge for the current year is estimated not to be material. -

Amendm Amend men ents ts to IA IAS S 32: 32: Cla Class ssifica ificatio tion n of Rig Rights Issue Issues s (effec (effective tive for pe perriod beginnin inning g on or after February 1, 2010 2010). Under the amendment to IA IAS S 32 rights, options options and warrants–o nts–otherwi therwise se meeting the definition of equity instruments in IAS 32.11 – issued to acquire a fixed number of an entity’s own non-derivative equity instruments for a fixed amount in any currency are classified as equity instruments, provided the offer is made pro-rata to all existing owners of  the same class of the entity’s own non-derivative equity instruments.

-

IFRIC 19: Extinguishing Financ ncia iall Lia Liabiliti bilities es with with Equity Equity Instruments (effective for ann nnua ual pe peri riods ods beginning after July 1, 2010). IFRIC 19 clarifies the liabilityon byor issuing its own equity instruments tothe theaccounting creditor. when an entity extinguish

78

-

Internationa Internatio nal Accoun Accounting ting Standard (IAS (IAS) 24 (r (rev evised ised): ): Related Party Disclosures (effe (effective ctive for annual period beginning on or after January 1, 2011). The amendments to IAS 24 simplify the disclosure requirements for entities that are controlled, jointly controlled or significantly influenced by a government (referr (referred ed to as government-r ent-rela elated entities) entities) and clarify the the definit finitio ion n of a related party.

-

Amendmen Amendm ents ts to IFRIC IFRIC 14 IA IAS S 19 – The Limit on a Defined Benefit Assets, Assets, Minimum Minimum Fun Funding ding Requirements and their Interaction (effective for annual periods beginning on or after January 1, 2011). IFRIC IFRIC 14 IA IAS S 19 –The Limit on on aDefined Benefit Asset, Mini Minim mumFundingRequir Requirem ements and their Interaction has been amended to remedy an unintended consequence of IFRIC 14 where entiti entities es are in some circum circumstances not permitt permitted ed to recognise prepayments of minimum funding contributions, as an asset.

-

The Internati tiona onal Accounting AccountingStandards Board made certain amen endm dmen ents ts to existing standards as part of its second and third annual improvements project. The effective dates for these amendments vary by standa standards.

 

(Amounts in Rs.‘000)

3.

SUM UMM MAR ARY Y OF SIGNI GNIF FICANT ACCOUNTI ACCOUNTING NG POLI OLICIE CIES S  The princip  The ipa al accou oun nti tin ng pol olic icie ies appli lie ed in the pre rep parati tion on of th the ese fin ina ancial statements are set out below. belo w. These These pol polic icies ies have been consi consistent stently ly appli pplied ed to all the the years presented, unless otherwi otherwise se stated.

3.1

Pro Pr opert rty y, plant and equipme men nt  These are state  The ted d at cos costt le less accumulate ted d depre rec ciati tion on and accumulate ted d impairment los loss ses, if any, except freehold land and capital work-in-progress, which are stated at cost less impairment losses, if  any. Cost in relation to certain fixed assets, including capital work-in-progress, signifies historical cost and financial charges on borrowings for financing the projects until such projects are completed or become operational. Depreciation is charged to profit and loss account using straight-line method so as to write off the historical costisofcharged the assets over estimated useful lives at the ratesfor given note Depreciation on additions from thetheir month in which the asset is available useinand on4.1. disposals up to the preceding preceding mont onth h of disposa disposal. Assets residual values, useful live lives and depreciati eciation on ra rates are reviewed, and adjust djusted, ed, if appropr appropriate iate at each balance sheet date. An asset’s carr carrying ying amount is wri wr itt tten en down immediately to it its s recove recoverrable amount if the asset’s asset’s ca carrrying amount is greater than its estim estimated recoverable amount ount.. Subsequent costs costs are included in the assets’ carrying amount or or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item item wil willl flo flow w to the Compa Company and the cost of of the item item can be measured reli relia ably.The carrying amount of the replaced part is derecognised. Maintenance and normal repairs are charged to profit and loss account. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is is recogn recognised as an incom income or expense.

3.2

Inta In tan ngib ible le assets - com comp pute ter r sof oftw twa are res s An intangibl ible e asset is is recognised if it it is is probable that the the future economic benefit efits s that are att ttrributable to the asset will flow to the enterprise and that the cost of such asset can also be measured reliably. Generally, costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. However, costs that are directly associated with identifiable software and have probable economic benefits exceeding one year, are recognised as an intangible asset. Direct costs include the purchase cost of software and related overhead cost. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried carr ied at cost cost less less accumulated amor orti tisa sati tion on and accumulated im impair irm ment losses, losses, if any, thereon. Expenditure which enhances or extends the performance of computer software beyond its original specification and useful life is recognised as a capital improvement and added to the original cost of  the software. Intangibl Inta ible e asset is is amor orti tised sed from from the mont onth h when such asset is is availila able for for use on stra straight-l ight-line ine basis over its useful economic life. 79

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 3.3

(Amounts in Rs.‘000)

Financial in instruments Finan Fi nanci cial al assets

 The Company classif  The ifie ies s it its s fin ina ancial assets in th the e fol ollo low win ing g categor orie ies s: at fair valu lue e th thro rou ugh prof rofit it or loss, loans and receivables, available for sale and held to maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of  its financial assets at initial recognition. a) Financial asse assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets. There were no financial assets held for trading at the balance sheet date. b) Loans and receivables Loans and receiva Loa receivables are non-derivative non-derivative financial assets with with fixed fixed or deter determ minable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve months after the balance sheet date, which which are cla classified as non-curr non-current assets. Loan Lo ans and receiva receivables comprise comprise tr trade debts, loans, loans, advances, deposits, deposits, other other receivable and cash and bank balances in in the the balance sheet. c) Ava Available ilable-for -for-sa -sale financial ass assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends intends to dispose of of the the investments withi within n twelve twelve mont onths hs from from the balance sheet date. d) Held to matu turity rity Financial assets with fixed or determinable payments and fixed maturity, where management has intention and ability to hold till maturity are classified as held to maturity. All financial assets are recog recognised at the the time when the Compa Company becomes a party to the contr contractual provisions of the instrument. Regular way purchases and sales of investments are recognised on trade-date - the date on which the Company commits to purchase or sell the asset. Financial assets are initi initia alllly y recog recognised at fair value plus tra transacti ction on costs costs except for financial assets at fair value throug through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and tra transacti ction on costs costs are expensed in the the profit profit and loss loss account. Financial assets are derecogn derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the Company has tra transferred substantially all the risks risks and rewa rewards of ownership. ownership. Ava Availila able-fo ble-forr-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loa Lo ans and receiva receivables and heldld-to to-ma -matur turit ity y investments are carried at amor orti tised sed cost usingthe effective effective interest rate method. 80

 

(Amounts in Rs.‘000)

Changes in the fair value of securit ities ies classifi ified ed as availila able-fo ble-forr-sale are recog recognised in other other com compr prehe ehensive incom inco me. Inve Investments in in associates are accounted for for using the equit uity y method as explained in note note 3.4. W hen securi securiti ties es classified classified as availila able-fo ble-forr-sale are sold or or impair ired, ed, the accum accumulated fair value adjustments recognised in other comprehensive income are included in the profit and loss account as a reclassification adjustment. Interest on available-for-sale securities calculated using the effective interest method is recognised in the profit and loss account. Dividends on available-for-sale equity instruments are recognised in the profit and loss account when the Company’s right to receive payments is is established. established.  The fair valu  The lue es of quot ote ed in inv vestments are based on curre rren nt pric rice es. If the mark rke et for a fin ina ancial asset is not acti ctive ve (and for unli unlisted sted securit ities), ies), the the Compa Company measures the inve investments at cost less impair irm ment in value, if any.  The Company assesses at each balance sheet date whether th  The there is objecti tiv ve evid ide ence that a financial asset or a group of financial assets is is impair ired. ed. If any such evidence exists for for availila ableble-for for-sale -sale financial assets, the cumulati ulative ve loss that had been recogn recognised in in other other comprehensive comprehensive income shall be reclass reclassifi ified ed from equity to profit and loss account as a reclassification adjustment. Impairment losses recognised in the profit and loss account on equity instruments classified as available-for-sale are not reversed through the profit and loss account. Impairment testing of trade and other receivables is described in note 3.7. Financial liabilities

All financial liabili liabiliti ties es are recog recognised at the tim time when the Comp Company becomes a party to the contra contr actual provisions of the instrument. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expir expired. ed. Where W here an an existing financia nciall liabili liability ty is repla replaced ced by by another fr from om the sa same lender lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of  a new liability, and the difference in respective carrying amounts is recognised in the profit and loss account. 3.4

Inv In vestm tme ent in in associates Associates are all entities over which the Company has significant influence but not control, generally represe epresented nted by a shareholding of 20%to 20% to 50 50% % of the the vot voting ing rig rights. Inv Investm estments in associates associates are accounted for using the equity method of accounting and are initially recognised at cost.  The  Th e Company’s share of it its s assoc ocia iates’ post acquis isit itio ion n prof rofit its s or lo los sses is re rec cognised in pro roffit and loss account and its share in post acquisit loss uisitio ion n of other other com compr prehen ehensive income is recogn recognised in Compa Company's other ot her com compr prehens ehensive incom income. Cum Cumulati ulative ve post acquisitio acquisition n movements are adjust djusted ed against the the carrying value of the inve investme stments. nts. When W hen the Compa Company’s share of losses losses in associate equals or or exceeds it its s 81

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

interest in the associate including any other long term unsecured receivable, the Company does not recognise future losses, unless it has incurred obligations or made payments on behalf of the associate. Gain on on tra transacti ctions ons between the Comp Compa any and its its associates are eliminated to the the extent of the Company’s int inter erest est in the associ socia ates. 3.5

Sto tore res s, spare part rts s and lo loo ose to tools  These are valu  The lue ed at low lowe er of of movin ing g avera rag ge cost and net re rea ali lis sable valu lue e. Cos Costt com comprises in inv voi oic ce value and other dir direct ect costs but excludes bor borrrowi owing ng costs. Obsolete O bsolete and used used items items are recorded recor ded at nil value. Provision is made for slow moving items where necessary and is recognised in the profit and loss account. N et rea realilisa sable value is the the estima estimated selling selling pr price ice in in the ordinary ordinary course course of business less estima estimated costs co sts necessary to to make a sale.

3.6

Stock-in-trade Stock in tra tr ade is valued at the the lower of of average cost or cost on fir first-i st-in-fir n-first-o st-out ut (FIFO (FIFO)) basis, and net net realisable value. The cost formula is dependent on the nature of the stock categories but the same formula is applied to all items of a similar nature. Cost comprise invoice value, charges like excise, custom duties and other similar levies and other direct costs. Obsolete item items are recor recorded ded at nil nil value. value. Provisio Provision n is ma made for slow movingstocks where necessary and recognised in profit profit and loss account. Net N et rea realilisa sable value is the estimated selling selling pr price ice in the the ordinary course of business less estimated costs necessary to make a sale.

3.7

Trad Tra de debts and oth the er rec receiv iva able les s  Trad  Tra de debts and ot oth her rec receivable les s are state ted d in init itia iall lly y at fa fair va valu lue e and subsequentl tly y measure red d at amortised cost using the effective interest method less provision for impairment, if any. A provision for impairment of trade debts and other receivable is established where there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Trade debts and receivable are written off when considered irrecoverable. Exchange gains or lo losse sses arising in resp respect of of tr trade and other other receivables in for foreign curr currencyare added to their respective carrying amounts.

3.8

Cas Ca sh and cash equivalents Cash and cash equivalents incl include ude cash in hand, with with banks banks on curr cur rent and deposit account ccounts s and and running fi finan nance under markk-up up arrangements. Running Running fi finan nance under markk-up up arrangements is shown in current liabilities on the balance sheet.

3.9

Impa Imp airm irme ent of non-f -fin ina anci cia al assets  The  Th e carry rryin ing amounts of the Company’s assets are re rev viewed at each balance sheet date to determine

82

 

(Amounts in Rs.‘000)

whether there is any indication of impairment loss. If any such indication exists, the asset’s recoverable amount is estimated in order to determine the extent of the impairment loss, if any. An impairment loss lo ss is recog recognised for the amount by which the the assets carrying amount exceeds it its s recoverable recoverable amount ount..  The  Th e re rec cov ove era rab ble amou oun nt is th the e higher of an asset’ t’s s fair va valu lue e le les ss cos ostt to sell and valu lue e in use. Impairment losses are charged to profit and loss account. 3.10

Share capital Ordinar dinary y shares are classified as equity and are recor recorded at their their face value.

3.11

Retire Re tireme men nt an and oth othe er se serv rvic ice e benefits

3.11.1

Pen Pe nsio ion n funds  The Company op  The ope era rate tes s approv rove ed fu funded de defin ine ed be benefit pe pensio ion n sc schemes separa rate tely ly for bot both h management and nonnon-management employees. employees. The The schemes provi provide de pension pension based on on the employees’ employees’ last drawn salary. Pensions are payable for life and thereafter to surviving spouses and/or dependent children. Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit and loss account. The most recent valuations were carried out as of June 30, 2010 using the "Projected Unit Credit Method".  The amount re  The rec cognised in the balance sheet re rep pre res sents the pre res sent value of defined benefit obli lig gatio ion ns as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs and as reduced by the fair value of of the the plan assets. Cumulative net unrecog unrecognised actuari ctuaria al gains and losse losses at the the end of prev previo ious us year which exceed 10% of the greater of the present value of the Company's pension obligations and the fair value of plan assets at tha that date are amor orti tised sed over the the expected average rem remaini ining ng wor worki king ng lilives ves of the the emplo ployee yees.

3.11.2

Gratu Gra tuit ity y fu fund  The Co  The Com mpany also operates an appro rov ved funded defined benefit gratuit ity y scheme for all it its s permanent emplo ployee yees. The The Scheme provides provides for for a graduated scale of benefit efits s dependent on the the length of of service service of the employee on terminal date, subject to the completion of minimum qualifying period of service. Gratuity is based on employees' last drawn salary. Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit and loss account. The most recent valuation was carried out as of   Jun  Ju ne 30, 2010 usin ing g the "Pro roje jected Un Unit it Cre Cred dit Method od"".  The amount re  The rec cognised in the balance sheet re rep pre res sents the pre res sent value of defined benefit obli lig gatio ion ns as adjusted for for unr unrecognised ecognised actuarial actuarial gains and losses losses and as reduced by the fair value of of plan assets. Cumulative net unrecog unrecognised actuari ctuaria al gains and losse losses at the the end of prev previo ious us year which exceed 10% of the greater of the present value of the Company's gratuity obligations and the fair value of plan assets at tha that date are amor orti tised sed over the the expected average rem remaini ining ng wor worki king ng lilives ves of the the emplo ployee yees. 83

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 3.11.3

(Amounts in Rs.‘000)

Medic ica al  The Company also pro  The rov vid ide es post re reti tire rem ment medic ica al benefit its s to it its s permanent emplo loy yees except for those tho se management emplo loyee yees who joi joined ned the Compa Company after Jul July y 1, 2001. Under Under the unfunded scheme all such employees and their spouses are entitled to the benefits. Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit and loss account. The most recent valuation was carried out as of June 30, 2010 using the "Projected Unit Credit Method".  The amount re  The rec cognised in the balance sheet re rep pre res sents the pre res sent value of defined benefit obli lig gati tion ons as adjusted for unr unrecognised ecognised actuar ctuarial ial gains and lo losses sses. Cum Cumulati ulative ve net unrecognised unrecognised actuar ctuarial ial gains and losses losses at the the end end of previous pr evious year which exceed 10% 10% of the the present value of of the Compa C ompany's obligations at that date are amortised over the expected average remaining working lives of the employees.

3.11.4

Prov Pro vid ide ent fu fund  The Co  The Com mpany also operates an appro rov ved funded contri rib buto tory ry pro rov vident fund for it its management and non-m nonmanagement emplo loyees yees. Equal mont onthly hly contr contribut ibutio ions ns are made bot both h by the Compa Company and the employee at the rate of 8.33%per annum of the basic salary. In addition, employees have the option to contribute at the rate of 16.66%per annum, however, the Company's contribution remains 8.33%.

3.12

Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss account over the period of borrowings using the effective interest rate method. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer the settlement of the liability for at least twelve months after the balance sheet date. Exchange gains and losses arising in respect of borrowings in foreign currency are added in the carrying amount of  the borrowing.

3.13

Trade and ot oth her pa payable les s  These are stated init  The itia iall lly y at fair value and subsequentl tly y measure red d at amort rtis ised cost using the effective interest rate method. Exchange gains and losses arising in respect of liabilities in foreign currency are added to the carrying amount of the respective liability.

3.14

Provisions Provisions are recognised when the Company has a legal or constructive obligation as a result of a past event, and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate.

84

 

(Amounts in Rs.‘000)

3.15

T axation

3.15.1

Curr Cu rre ent Provision for current taxation is based on the taxable income for the year determined in accordance with the prevailing law for taxation on income. The charge for current tax is calculated using prevailing tax rates. The charge for current tax also includes adjustments for prior years or otherwise considered necessary for such years.

3.15.2

Defferr De rre ed Deferred tax is accounted for using the balance sheet liability method on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are generally recognised for all taxable temporary differences including on investments in associates and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilised. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit and loss account except to the extent it relates to items recognised directly in equity / other comprehensive income in which case it is also recognised in equity / other comprehensive income.

3.16

Foreig Fore ign curre curren ncy tra tran nsacti ction ons s and trans transla latio tion n  The fin  The ina ancial sta state tem ments are pre res sente ted d in Pakis ista tan Rupees whic ich h is th the e Company’s functi tion ona al and presentation currency. Transactions in foreign currencies are accounted for in Pakistan Rupees at daily average rates. Monetary assets and liabilities in foreign currencies are translated into Pakistan Rupees at the ra r ates of of exchange preva prevaililing ing at the balance sheet date. Exchange gains and losses losses from from the settlement of foreign currency transactions and translation of monetary assets and liabilities at the balance sheet date rates are included in profit and loss account.

3.17

Offset ettin ting g of of fin fina ancial asset ets s and liab liabiliti ilities es 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 recognized amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

3.18

Revenue re rec cogniti tio on Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, and is recognised on the following basis: -

Sales are recor ecorded ded when the sign signifi ifica cant nt risks and rewards of owner ownership ship of the goo oods ds have passed to the customers which coincide with the dispatch of goods to the customers. 85

 

Notes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

3.19

(Amounts in Rs.‘000)

-

Dividend income on equit equity y investmen tmentt is recognised when the Com Company's rig right to receive receive the dividend is established.

-

Handli ndling ng, stor stora age and ot other her services services inco incom me and retur eturn n on deposits is recognized on accr ccrua ual basis.

Borr rro owing 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 case such costs are capitalised as part of the cost of that asset. Borrowing costs eligible for capitalisation are determined using effective interest method.

3.20

Divid Div ide end an and approp ropria riatio tion n to to res reserv rve es Dividend and appropriation to reserves are recognised in the financial statements in the period in which these are approved.

3.21

Earn rniing per share  The Company pre  The res sents basic and dil ilu uted earn rnin ing gs per sh share (EPS) data for it its s or ord din ina ary share res s. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted ave verrage number of of ordinar or dinary y sha shares outstanding dur during ing the period. period. Dilut Diluted ed EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

4.

PROP OPE ERTY TY,, PLAN ANT T AND AND EQU QUIIPMENT Note O perating assets Capital work in progress

86

4.1 4.3

2010

2009

5,730,383 644,850 6,375,233

6,288,524 698,501 6,987,025

 

4.1.1 Ser Service vice and filli filling ng stati stations ons include include cost of of Rs. 7,097,85 7,097,858 8 (2009: Rs. 6,790,85 6,790,857) 7) incurr incur red by the Compa Company on underground storage tanks, dispensing units and other equipment, and construction and related work. It also includes includes cost incurr incurred on moder odernisatio nisation n and deve develo lopm pment under under the "New "N ew Vi Visio sion n Scheme" on approximately 1,795 (2009: 1698) out of the total 3,626 (2009: 3,383) retail filling station of dealers. In view of large number of dealers, the management considers it impracticable to disclose particulars of assets not in the the possessio ion n of the the Comp Company as required required under the the Fourth Fourth Schedule to the Comp Companies Or Ordinance, 1984. 4.2

 The de deta tails ils of op opera eratin ting g ass sse ets di disspos posed ed off du during ring th the e year are are as fo follow llowss: C ost ost A ccu ccum ul ulated depreciation Vehicles

Plant and machinery

Mode of  disposal

Particulars of buyers

1,005

335

670

737 C om ompany policy

A mjad Per va vaiz Janjua Employee Plott D16, Plo D 16, Blo Block ck B, N ava vall Housing Scheme Zamzama Link Road Clifton Karachi

690

495

195

207 C ompany Policy

Sajjad Sajj ad A .K .K.. Sha Shanani nani Ex-employee N awani Tehsil Dist. D ist. Bhakkar Bhakkar

651

532

119

130 C ompan ompanyy Policy

A bu K hursheed M. A rif  Ex-employee 16 Sunny Side Villa, Bleak House Road, Civil Lines, Karachi Cantt.

727

213

514

562 C ompan ompanyy Policy

D r. N azir A bba bbass Zaidi Employee A-183 Block 1. Gulshan-e-Iqbal, Karachi

727

223

504

562 C ompan ompanyy Policy

Ir fanuddin Irfa nuddin Q idwai Ex-employee A-195 Block L, North N azima azimabad, bad, K arachi M/ss.Ab M/ Abd dul Ha Ham meed & Co Co.. (At Kara Karach chii Airport) Air port) Shop # 1 Erum Mansion, Ramswami Ramswa mi Tower, BF BF Caberal Road, Karachi

4,092

3,857

235

43 Tender

466

320

146 14

116 Tender

M/s. Sultan P/S Badah Larkana Road, Larkana

452

312

140

116 Tende derr

M/s. Q azi P/ M/s. P/S S In Ind dus H/W K MM-413 413/414 /414 AT N asiraba sirabad d Sukkur

11,994

11,940

54

3,094

 Ye  Y ear ended 30 June 2010 20,804

18,227 2,577

5,567

 Ye  Y ear ended 30 June 2009 54,739

51,370 3,369

20,167

Service and filling stations

Items having book book value of less than Rupees fifty thousand each

88

N et Sale book  proceeds value

 

4.3

Cap Ca pital work in pro rog gre res ss

Note

Service and filling stations  Tanks and pipeli  Ta lin nes Plant and machinery Furniture, fittings and equipment Advances to suppliers and contractors for tanks, pipelines and storage development projects Capital stores

5.

5.2

6.

2009

173,390 217,083 31,099 5,313

205,883 154,784 81,418 658

18,806 199,159 644,850

9,914 245,844 698,501

68,872 12,130 (44,752)

105,502 15,985 (52,615)

Balance at end of the year

36,250

68,872

Gross carrying value Cost Accumulated amortisation Net book value

269,584 (233,334) 36,250

257,454 (188,582) 68,872

INTANGIB INTAN GIBLE LES S - co computer so software res s Net carrying value Balance at beginning of the year Additions at cost Amortisation charge for the year

5.1

2010

5.2

Computer softwares include ERP System - SAP, anti nti-vi -virrus soft softwa wares and other office office related related softwares.  The  Th e cost is being amort ortis ised over aperi riod od of 3 to 5 years rs..

LON ONG G-TE TER RM INV NVE ESTM TME ENT NTS S Available-for-sale, in related parties In a quoted company - at fair value 2010 - Pakistan Refinery Limited Equity held 18%(2009: 18%)

2009

495,005

565,756

864,000 1,359,005

864,000 1,429,756

606,465

677,647

53,800 660,265 2,019,270

46,111 723,758 2,153,514

In an unquoted company - at cost - Pak-Arab Pipeline Company Limited Equity held 12%(2009: 12%) Investments in associates - in unquoted compan companies - note note 6.1 - As Asia iaPetro role leum Limited (AP APL L), Equity held 49%( %(2 2009: 49%) - Pak Pak Grea Grease Manufactur cturing ing Compa Company (Pr (Private) ivate) Limited (PGMCL), Equity held 22%(2009: 22%)

89

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 6.1

Inv In vestment in in associates Number of shares 2010 2009 46,058,600 46,058,600 686,192 686,192

6.1.1

(Amounts in Rs.‘000)

Face value Name of the company per share (Rupees) 10 10

Asia Petroleum Limited Pak Grease Manufacturing C ompa ompany ny (Priva (Pri vate) te) Limited

2009

606,465

677,647

53,800 660,265

46,111 723,758

723,758

883,376

516,259

451,584

516,1 44 02 1 985 (580,879) 660,265

451,2 86 56 0 (6,188) (605,280) 723,758

Mov Mo vem emen ent of inv investme tmen nts in in as assoc ocia iate tes s Balance at beginning of the year Share of profits - current year - adjustment for last year profits based on audited financial statements Unrealised gain / (loss) on associates' investments Dividends received Balance at end of the year

6.1.2

2010

 The summarised fin  The ina ancial infor orm mati tion on of the assoc ocia iates over wh whic ich h the Company exerc rcis ises signif ific ica ant influence, based on the financial statements for the year ended June 30, 2010, is as follows: 2010 APL  Tota  Tot al assets  Tot  T ota al li lia abil ilit itie ies Revenues Profit after tax

90

1,984,035 746,353 1,833,421 1,029,664

2009 PGMCL 267,264 22,720 190,806 53,286

APL

PGMCL

2,184,563 801,581 1,747,780 897,708

236,235 26,112 195,936 53,819

 

(Amounts in Rs.‘000)

7.

LONGLON G-TE TER RM LOA LOANS NS,, AD ADV VANCE ANCES S AND RECE CEIIVAB ABLE LES S Note Loans - considered good Executives Employees

7.1,7.2&7.4 7.2

2010

2009

24,519 177,885 202,404 (59,858) 142,546

42,811 113,144 155,955 (50,670) 105,285

Current portion shown under current assets

13

Advances - considered good Employees

7.3

470

470

Receivables Due from Karachi Electric Supply Corporation (KESC) - considered good Current portion shown under current assets

7.5 15

228,594 (163,281) 65,313

326,563 (130,625) 195,938

109,560 8,143 117,703 (8,143) 109,560 317,889

104,087 8,143 112,230 (8,143) 104,087 405,780

42,811 3,071 (21,363) 24,519

31,877 29,159 (18,225) 42,811

Others - considered good - considered doubtful Provision for impairment 7.1

Reco Re con ncil cilia iatio tion n of ca carryi rryin ng amount of loans to exe xecu cutiv tives es: Balance at beginning of the year Add: Disbursements / transfers Less: Repayments / amortisation Balance at end of the year

7.2        7.3  

7.6

 The  Th ese re rep pre res sent in inte tere res st fre ree e lo loa ans to executi tiv ves and emplo loy yees for purc rch hase of mot otor or cars rs,, mot otor or cycles, house building, buil marr arriag um rahcycles and ot other s, inred accordan accor with C ny’H s ouse polic pol icy ybuil . Lo Loans ans for purchas e of mding, otor ot or ca rs aiag nde,m otor ot or arhers, e secu agadan instce thewi rth espthe ective ecti veompa assets. building ding loans lo ans and cer certain tain categor ory y of management lo loans ans are secur secured ed against out outstanding standing balance of pr provi ovident dent fund and gratui tuity ty,, whereas whereas all ot other her lo loa ans are unsecured. unsecured. These lo loa ans are recove recoverrable in in mont onthly hly installments ove overr a peri period od of two to six years.  These re  The rep pre res sent in inte tere res st fre ree e advances again ins st housing assistance given to emplo loy yees once in serv rvic ice e life for purchase and construction of residential property in accordance with the Company’s policy. These advances are secured against respecti ctive ve asset and are recoverable in four to fi five ve years and are adjusted against the monthly house rent allowance of the respective employee.

7.4  

 The maximum aggre  The reg gate amount outstandin ing g at th the e end of any month during th the e year in in re res spect of  loans lo ans to executi executives ves was Rs. 36,102 (2009: Rs. 45,776).

7.5  

In a meeting of Econom Economic CoC o-or ordinatio dination n Comm Commit ittee tee (ECC (ECC) on Novem N ovember 11, 2001 cha chair ired ed by the Finance Mi Minist nister, er, Government of Pakistan (G (GoP oP), ), the Company was advised to tr trea eat the out outstanding standing trade debt from KESC as a long term receivable, recoverable over a period of 10 years, including two years grace per periiod. Acco ccorrdi ding ngly, an agreement was signed between the Compa Company and KESC KESC under which the amount due is to be paid by KESC in quarter terly ly install installm ments over a peri period od of 10 ye yea ars, including incl uding a two years grace per perio iod, d, fr free ee of int inter erest, est, which commenced on Febr Februa uary 2004. In case of  delayed payment, KESC is lilia able to pay a markk-up up at State Bank of Pakistan’s (SBP) disco discount unt rate plus 2%per 2% per annumon the the installm installment due. In the the event any two installments, installments, whether consecuti consecutive ve or not remain over due, KESC is liable liable to to pay an addit ditio iona nal sum as liquidated liquidated damages.

     

91

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 7.6

(Amounts in Rs.‘000)

As at June 30, 2010, balances aggregati ating ng to Rs. 8,143 (2009:Rs. 8,143) were were impaired impaired and provided provided for. fo r. The T he ageing of these these balances is as under: under: Note 2010 2009 More than 6 months

8.

8,143

56,443 99,296 (29,788) 69,508 125,951

53,189 50,507 (20,041) 30,466 83,655

LON ONG G-TE TER RM DEPOS OSIITS AN AND D PREPAYMENTS - Considered good Long-term deposits Prepaid rentals Less: Current portion shown under current assets

9.

8,143

14

DEFERRED T AX Debit balance arising in respect of: Provision for: - retirement benefits - doubtful trade debts - doubtful receivables - impairment of stores and spare parts - excise, taxes and other duties - impairment of stocks-in-trade Unutilised tax losses Minimum tax O thers Credit balance arising in respect of accelerated tax depreciation, amortisation and investments in associates

314,299 836,088 271,746 8,535 25,492 7,510 4,376,390 65,157 5,905,217

-

(871,944) 5,033,273

9.1

Section Secti on 113 of the Income IncomeTax Or O rdinance, 2001 has been amended through through FinanceAct ct,, 2010 whereby

     

the minimum tax rate has been increased from 0.5 percent to 1 percent of the annual turnover with effect from fr om July 1, 201 2010. 0. In view view of this this amendment, the Compa Company does not expect to realilize ze the tempor temp ora ary differ difference ences s in futur future, e, accor ccordingly dingly deferr deferred ed tax asse ssett amounti ounting ng to Rs. 2,86 2,869,33 9,333 3 has not been recognized in these fi fina nancial statements.The management alo long ngwit with h ot other her oi oill marketi arketing ngcompanies is pursuing the matter with the taxation authorities for withdrawal of minimum tax on oil marketing companies. com

10.

STORE TORES S, SPAR ARE E PAR ARTS TS AND LOOSE LOOSE TOO TOOLS LS Note Stores Spare parts and loose tools Less: Provision for impairment

10.1

10.1

2010 129,953 8,295 138,248 (24,385) 113,863

2009 128,336 8,192 136,528 (24,385) 112,143

24,385

22,000

24,385

2,385 24,385

T he mov moveme ement nt in in prov provis ision ion during the ye yea ar is as fo follow llows s: Balance at beginning of the year A dd: duri recognised in other other op eraCtiha ngrg eed xpeduring nseng s the year and recognised Balance at end of the year

92

-

31

 

(Amounts in Rs.‘000)

11.

STO TOCK CK--IN-TR TRAD ADE E Note Petroleum and other products (gross) Less: Stock held on behalf of third parties

11.1 & 11.2 11.3

Less: Provision for slow moving products - lubricants In pipeline system of Pak-Arab Pipeline Company Limited and Pak-Arab Refinery Limited Add: Charges incurred thereon

11.1

2010

2009

32,259,921 (1,227,998) 31,031,923

29,253,203 (644,732) 28,608,471

(21,456) 31,010,467

(21,456) 28,587,015

20,986,177 51,996,644 6,602,024 58,598,668

10,227,321 38,814,336 1,883,873 40,698,209

Includes Incl udes stock-instock- in-tr tra ansit amount ounting ing to Rs. 17,532 17,532,327 (2009: Rs. 13,396 13,396,164) and stocks stocks held by: 2010 Pakistan Refinery Limited - related party Shell Pakistan Limited Byco Petroleum Pakistan Limited (Formerly Bosicor Pakistan Limited)

2009

107,529 131,855 56,985 296,369

107,529 97,871 5,236 210,636

11.2

Incl ncludes udes stock stock valued at net reali ealisa sabl ble e value amounti mounting ng to Rs. 317,262 (2009: Rs. 252,036).

11.3

Represents stocks held in trust on behalf of third parties, net of storage, handling and other charges amount ountiing to Rs. 23,730 (2009: Rs. 23,730) recover recoverable able therea thereagainst.

12.

T RADE DEBTS Considered good - Due from Government agencies and autonomous bodies - Secured 12.1 - Unsecured

- Due from other customers - Secured - Unsecured

Considered doubtful  Tra  T rade debt - gro ros ss Provision for impairment  Tra  T rade debt - net

12.1 & 12.2 12.2

12.4 & 12.5

2010

2009

35,267,722 4,012,420 39,280,142

16,050,990 7,460,813 23,511,803

8,135,195 70,085,737 78,220,932 117,501,074 2,630,792 120,131,866 (2,630,792) 117,501,074

6,008,823 50,989,204 56,998,027 80,509,830 2,388,823 82,898,653 (2,388,823) 80,509,830

93

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

12.1  Th  The ese debts are secure red d by way of lett tte ers of cre red dit and bank guarantees. 12.2  Th  The e re rec ceivable fro rom m Hu Hub b Pow owe er Company Limit ite ed (H (HUB UBCO) CO) and Ko Kott Ad Add du Pow owe er Company Li Lim mit ite ed (KA (K APC PCO O) as at June June 30, 2010 aggregated to Rs. 71,635,025 (2009: Rs. 50,799,628), whi which ch includes includes overdue overdue amount ounts s of Rs. 22,675,79 22,675,792 2 (2009: Rs. 17,963,67 17,963,673).The Compa Company does not consi consider der the overdue overdue balance receivable of of Rs. 22,675,7 22,675,792 92 as doubtful, doubtful, as this this has been largely accumulated due to exist existing ing circular circular debt situa sit uati tion. on. The Compa Company, based on measures being undertaken by the Gover Governm nment of of Pakistan Pakistan (G (GoP oP)) in in this reg regard is confiden confidentt of rea realilizing zing the entir entire e afor aforem ementioned rece receiva ivables in due course. Accor ccording dingly, the Company whil while e esti tim mati ting ngthe provisio provision n for impair irm ment on the the basis of ove overdue analysis has not consider considered ed the afor forem ementio entioned ned receivable balance of HU HUBC BCO O and KAPC KAPCO O, which would have incr increa eased the provision provision as at June 30, 2010 by Rs. 2,267,579 (2009: (2009:Rs.876,599). 12.3  Th  The e Company consid ide ers only those re rec ceivable as past due whic ich h are over 3 month ths s ol old d fro rom m due date te.. As at June 30, 2010, trade trade debts aggregati ating ng to Rs. Rs. 23,532,621 (2009: Rs. 10,306,331) were were past due but not impair ired. ed.These rela relate to vario ious us customers including includingIndependent Power Proj Projects ects (IPPs) (IPPs) andGovernment agencies and auto utonomous nomous bodi odies es for which there there is no or som some e recent histor history y of default default..Thes hese e tra trade debts are outstanding for 3 to 6 months. 12.4 As at June 30, 2010,trade debts aggregating Rs. 3,434,772 (2009: Rs. 4,487,071) were were deemed to to have been impaired, of which Rs. 2,630,792 (2009: Rs. 2,388,823) were considered doubtful and provided for. The individually impaired debts relate to various customers including Government agencies and autonomous bodies which are facing difficult economic situations. The ageing of these trade debts is as follows: Note 3 to 6 months More than 6 months

12.5

94

2009

7,322 3,427,450 3,434,772

76,048 4,411,023 4,487,071

2,388,823

1,911,478

241,969 2,630,792

477,345 2,388,823

Oil & Gas Development Corporation Limited Pakistan International Airlines Corporation National Logistic Cell Pakistan Steel Mills Corporation Limited Water and Power Development Authority Pakistan Railways Heavy IndustriesTaxila Director General Industrial Procurement and Services Sui Southern Gas Company Limited Kot Addu Power Company Limited Pakistan National Shipping Corporation Karachi Port Trust

197,700 867,138 351,696 78,892 37,322,403 381,274 29,343 153,048 994 23,085,360 66,116 3,347

400,668 2,679,252 269,284 62,081 19,946,952 570,898 27,515 98,495 15,556,628 92,986 15,131

Civil Aviation Authority Frontier Works Organisation

896 4,903 62,543,110

181 13,408 39,733,479

 The  Th e movement in pro rov visio ion n during the year is is as fol ollo low ws: Balance at beginning of the year Charged during during the year and recog recognised in other operating expenses Balance at end of the year

12.6

2010

31

Amounts due from related parties, included in trade debts, are as follows:

 

(Amounts in Rs.‘000)

13. LO LOA ANS AN AND ADVA DVAN NC ES - un unsecu cured red,, con consid ide ered goo ood d Loans to executives and employees - Current portion of long-term loans including Rs. 12,805 (2009: Rs. 14,505) to executives - Short-term loans

Note

Advances to suppliers Advances for Company owned filling stations

13.1

7

2010 59,858 8,757 68,615 95,539 245,833 409,987

2009 50,670 3,147 53,817 116,987 247,211 418,015

13.1

Includes Incl udes Rs.Nil (2009: Rs. 3,155) to to Pa Pakist kista an Refinery Refinery Lim Limit ited, ed,a related party, against purchase of LPG LPG..

14.

DEP DE POS OSITS ITS AND SHOR SHORT T TER T ERM M PREP EPAYM AYMENTS ENTS Deposits Duty and development surcharge Prepayments Rentals and others Current portion of long-term prepaid rentals

Note

8

2010

2009

261,672

480,578

75,918 29,788 105,706 367,378

51,184 20,041 71,225 551,803

95

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 15.

(Amounts in Rs.‘000)

OTHER OT HER RECEI ECEIVAB VABLE LES S - un unsecure red d Due from Government of Pakistan (GoP) on account of: - Price differential claims - on imports (net of related liabilities) - on imports (net of related liabilities) of motor gasoline - on certain POL products - on ethanol E-10 fuel - on account of supply of furnace oil to KESC at Natural Gas prices - Wa Water and Power Power Dev Developm elopmen entt Authori Authority ty (WAPDA) receivables - Freight equalisation (net of recoveries)

Note

2010

2009

15.1

1,465,406

1,465,406

15.2 15.3

3,048,802 1,117,202 8,927

1,043,967 4,825,241 -

15.4

2,818,527

15.5

3,407,357 46,521 11,912,742

3,407,357 46,521 10,788,492

268,018 1,032,342 13,213,102

267,718 729,946 11,786,156

(501,730) (83,112) (584,842) 12,628,260 163,281 176,500 99,745 (99,745) 732,087

(501,730) (83,112) (584,842) 11,201,314 130,625 115,286 99,745 (99,745) 445,167

857,414 91,829 949,243 (91,829) 857,414 14,557,542

914,387 91,829 1,006,216 (91,829) 914,387 12,806,779

- Excise, Petroleum Development Levy (PDL) and custom duty - Sales tax refundable Less: Provision for impairment - Price differential claims on imports - Others

15.8 15.8 & 15.1

Current portion of long-term receivable from KESC Handling and hospitality charges Product claims - Insurance and other - considered doubtful Less: Provision for impairment

7

Receivables from oil marketing companies

96

Others - considered good - considered doubtful

15.6

Less: Provision for impairment

15.8

-

 

(Amounts in Rs.‘000)

15.1 Import price differential aggregating to Rs. 1,465,406 (2009: Rs. 1,465,406). In 2002, unde nderr an arrangement with with the Ministr Ministry y of Petrol Petroleum eumand Na Natur tura al Resources (MoP & NR), NR), GoP GoP, the Company carried out an independent verification and reconciliation of price differential claims amounting to Rs. 4,270,406 due from the GoP and outstanding since 1991. Based on the exercise, the Company recognised the resulti resulting ng net difference difference in its its financial statements.Thro hroug ugh its its letter letter No. N o. 3(386)/2002 dated August 7, 2002 the GoP confirmed that the report on independent verification will provide reasonable level of comfort to the authenticity and accuracy of outstanding import price differential claims and accordi accor ding ngly, against balance claime claimed, commenced repa repayment thr through ough a pr priici cing ng mechanism for whi which ch a notif not ific icatio ation n was issued. Such repa repayments amount ounted ed to Rs. 2,805,000 were up to December 31,2003. Since then no further amounts have been received and the notification for the pricing mechanism also expired on Decembe December 31, 2004.

   

However, thr throug ough h its its letter letter N o. F.1(21)-C .1(21)-CF F.II .III/ I/200 2005-386 dated March 3, 20 2007 07 the GoP - Finan Finance ce Division Division intima int imated that it has been decided that these pr price ice differ differential ential claims wil willl be paid after confir confirmati tion on of the reconcil econciled ed claim by the MoP & NR NR and requested requested MoP & NR NR to to confir confirm m the agreed amount paya payable at the earlilies est.A comprehe prehensiv nsive reconcil reconciliatio iation n exerci rcise se was carried out with the MoP & NR, base sed d on which a net amount of Rs. 963,676 was determined as receivable. Accordingly a provision Rs. 501,730 (2009: Rs. 501,730) is carried in the financial statements against the balance. During the current year, MoP & NR NR vide its its letter letter No. PL-7(4)/200 PL-7(4)/2009 dated March 26, 26, 201 010, 0, requested GoP – Finan Finance ce division division to make allocation amounting to Rs. 963,676 in respect of the above mentioned claim in the budget for Fiscal year 2010-2011for payment to the Company. The Company is actively pursuing the matter for the recovery with wit h the MoP & NR N R and Ministr Ministry y of Finance (Mo (MoF), F), GoP and considers tha that the the balance amount will will be recovered in due course.

15.2 Import price differential on motor gasoline aggregating to Rs. 3,048,802 (2009: Rs. 1,043,967).

 

 

 

 These re  The rep pre res sent pric rice e dif ifffere ren nti tia al claims on account of import of mot otor or gasol olin ine e by th the e Company, bein ing g the difference difference between their landed costs and the ex-refiner ex-refinery y prices prices announced by Oil and Gas Regulator ulatory y Author uthorit ity y (OG (O GRA RA). ). In 2007, 2007, the Compa Company as well well as other oi oill marketing companies were asked in the the meeting chair ired ed by Dir irector ector General Oil to imp impor ortt mot otor or gasoli soline ne to mee eett the incr increa easing lo loca cal demand. Accor ccording dingly ly,, oi oill marketing comp compa anies approache pproached d the MoP & NR NR - GoP G oP with with a pro proposa posall for for pr prici icing ng mechanism whereby end consumer pric price e of mot otor or gasol oline ine was pr propo oposed sed to be fixed fixed at weig weighted average of ex-refinery (import parity) price and landed cost of imported product. Although no response was received fro from m the MoP & NR - GoP, GoP, the Comp ompa any alo long ng wit with h another oil oil marketing Company conti continue nued to import motor gasoline on behalf of the industry being confident that price differential on motor gasoline, will be settled as per previous practice i.e. based on the differential between ex-refinery and import cost at the the time of fili filing ng of cargo with with Customs, Customs,as impor orts ts were being made on MoP & NR NR - GoP’s GoP’s instructi instruction. on.  The Oil Co  The Com mpaniesAd Adv visory Co Com mmittee (OCAC) appro roa ached the MoP & NR thro rou ugh it its s letter Import rts s/495 dated Ma May 11,2009 reque requesti sting ng an expeditio expeditious us settlem settlement of of these these claims.Fur Further, ther, the Compa Company alo long ng with other other affected oil oil marketi arketing ngcompanies havealso appr proached oached MoP & NR NR thro throug ugh letter letter dated July July 23,2009 requesting requesting for an early sett ttlem lement of these claims. Upon instructio instruction n by GoP thro throug ugh letter letter PL-3 PL-3 (458)/2009-Pt dated O cto ctober ber 02, 20 2009 09,, the Com Compa pany ny ca carrried out an independen independentt audit of of such PDC claim claims s for the perrio pe iod d fro from m October 1, 1, 20 2007 07 to Decem December 31 31,, 20 2009 09 and su subm bmit itted ted repor reports ts to Director Dir ector Gener General - O ilil..  A meeti eeting ng of sub commit ittee tee of the ECC ECC was held on Ma May 14, 201 2010 0 in which which the MoF MoF agreed to process process the PDC cla claims ims of motor gasoline subject to to provision provision of the the deta detailils s from MoP & NR N R of the moto otorr gasoline supply supp ly and and demand in the period period of of claim. Fur Further, ther, dur during ing the year MoP & NR NR vide its its letter letter N o. PL-7(4)/2009 dated March 26, 2010, requested GoP – Finance division to make allocation amounting to Rs. 3,500,00 3,500,000 0 in respect respect of abovementi entioned oned claim claim in the the budget for for Fi Fisca scal year 2010-2011 for payment to the Compa Company. Pending related notific notifica ati tion on by MoP & NR NR and settlem settlement thereof thereof by MoF, the Compa Company alo long ng wit with h ot other her oil marketing companies and O CAC conti continue nues to follo follow w up up thi this s matt tter er with with Mini Ministr stry y of finance and is confident to recover this amount in full. 97

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

15.3 Price Pr ice Differenti Di fferentia al Claims C laims (PD (PDC C ) relating relating to certain cer tain POL PO L products pro ducts aggregati ting ng Rs. 1,11 1,117,20 7,202 2 (2009: Rs. 4,825,241).

     

 Thisrepresents the balance of pri  This ric ce differential claims (PDC) due fro rom mGo GoP P, net of recovery of Rs. 3,710,510 during dur ing the year (2009 (2009:: 39,1 39,108,0 08,000). 00). These T hese claims have arisen on the the instructi instructions ons of MoP & NR NR for for keeping the consumer prices prices of certain PO POL L pro roducts ducts sta stable. ble.The balance outst outsta anding at year end is wit withhe hheld ld by the GoP sub subject ject to finalilisa sati tion on of the repor eportt on indepen independent dent verifi ifica cati tion on of these claim claims. s.The Company tog to gether wit with h ot other her oi oill marketing companies is acti ctive vely pursuing the matt tter er wit with h the GoP for the recovery of the balance amount and is confident to recover the amount in full.

15.4 Pr Price ice differentia differenti al cla claim on account of supply supply of furna furnace ce oil to t o KES K ESC C at N atur tura al Ga G as prices prices..

       

Duri uring ng the year, the Comp Company received a dir irective ective from MoP & NR NR through through letter NG( G(1)-7(58)09 1)-7(58)09-L -LS(V S(Vol 1) dated Novem N ovember 26, 20 2009 09 in which the Comp Compa any wa was s directed directed to supply furnace oil to Karachi Electric Electr ic Supply Su pply Compa Company (KES (KESC) at the the prices prices equiva equivalent to natur tura al gas prices prices plus applicable duties duties and taxes taxes underr the N atur unde tura al Gas Lo Loa ad Man Mana agement Pr Proga ogamme (N (NG GLMP LMP)) for W int inter er 200 2009-2010 9-2010.. As per thi this s arrangement the differ differential ential cost between the natur tura al gas and fur furna nace oi oill woul would d be bor borne ne by GoP and reim eimbursed bursed dir directly ectly to the Comp ompa any by Mi Ministr nistry y of Finan Finance. ce.The Comp ompa any wa was s again dir directed ected by Go GoP P in May 2010 to supply furnace oil to KESC at natural gas prices. Accordingly furnace oil was provided to KESC due to which pr price ice differ differential ential claim of Rs.4,618,52 8,527 7 arised out of which Rs. 1,800,000 were received from MoF in June 2010. The Company is actively pursuing this matter with GoP and is confident to recover the balance amount in full in due course.

15.5 Price Price differential differential be betwee tween n the products Low Sulphur Sulphur Furnace Oil Oil (LSFO (LSFO)) and High Sulph ulphur ur Furna Furnace ce Oil Oil   (HSFO (H SFO)) aggregati ating ng Rs. 3,407,357 (2009: Rs. 3,407,357).

       

In 1996,thr through ough a decisio ecision n taken at a meeting of the Privatisatio Pr ivatisation n Comm Commissio ission, n, and Finance Divi ivision, sion, GoP GoP the Company was advised to supply LSFO to Kot Addu Power Project at the HSFO price and WAPDA was advised to absor bsorb b the pr price ice differ differential ential between the two products. In accor ccorda dance wit with h the decision of ECC dated dated November 4, 2003, the Company wa was s allllowed owed to recover this amount throug through a pr prici icing ng mechanism after recovery recovery of the amount outst outsta anding against it its s claim claims s for import import pri price ce differ differential ential aggreg ega ati ting ng to Rs. 1,46 1,465,40 5,406, 6, referr eferred ed in not note e 15.1 15.1,, the not notifi ifica cati tion on for which expir expired ed on December 31, 2004 2004..Alt lthough hough no recover recovery y has been made on this this account, account, the Compa C ompany co conti ntinues nues to follo fol low w up the matt tter er wit with h MoP & NR. N R. In 2005, 2005, the Compa Company submit itted ted an independ independent ent repor reportt on on the verifi ifica cati tion on of the the above claim to MoP & NR, N R, upon their requ equest. est. In 2006, 2006, a jo joint int reconcil r econciliatio iation n exerci exercise se was carried out with WAPDA as per the decision taken in a meeting held on May 19, 2006 under the Cha hair irm manship of Addit dditio iona nal Finance Finance Se Secr cretar etary y (G (GoP) oP) and the final reconcil econciliati iation on stateme statements were were subm sub mit itted ted to MoF and WA WAPDA PDA.. Subs ubsequ equently ently,, on Febr Februa uary 3, 2007 the Compa Company andWAPDA agreed upon the final rece receiva ivable ble balance of Rs. 3,407,357. Fur Further, ther, the GO GO P – Finance Division Division thro throug ugh its its letter letter No. F.1(21).1(21)-C CF.I .IIII/ I/2005 2005-385 dated March March 3, 200 2007 7 intima intimated tha that the the amount of Rs. Rs. 3,407,357 will will be paid to the Compa Company dur during ing financial year 200 2007-2008 7-2008 and necessary provi provisio sion n in this this respe respect wil willl be made by GoP in the the budget for for fi fina nancial year 200 2007-2008. 7-2008.The Compa Company throug through its its letter letter da dated ted May 20, 20, 200 2008 8 requested the GoP to arrange the payment of the agreed amount before the end of the budget year 2007 20 07-2008 -2008, to which GoP GoP did not not resp respond.The Comp ompa any again requested GoP thr through ough lett letter ers s dated September 29, 200 2008 8 and Apr prilil 22,2009 for an early settlem settlement. Dur uring ing the year, Mo MoF F through through letter letter No. F.5.C .5.CF F.I.I/1997/1997-98-607 98-607 dated August 4, 2009 ackno cknowl wledg edged and agreed to pay this this amount to to the the Compa Company. Further, Fur ther, duri during ng the current curr ent yea year MoP & NR NR vide its its letter letter N o. PlPl-7(4)/2009 7(4)/2009 da dated ted March 26, 26, 20 2010, 10, requested GoP – Finance division to make an allocation amounting to Rs. 3,470,000 in respect of above menti entioned oned cla claim of the the Compa Company in the budget for for Fi Fisca scal year 201 2010-2011 0-2011 for payment to to the Compa C ompany.  The  Th e Company con cons sid ide ers tha that the the ab above amou oun nt will will be rec recovere red d in fu full in du due cou cours rse e of tim time.

15.6 Includes Includes Rs. 13,251 (2009: (2009: Rs. 8,901) from fromAsia Petrol Petroleum eum Li Lim mit ited, ed, a related party party, on account of of facilit facilities ies charges. 98

 

(Amounts in Rs.‘000)

15.7

As at June June 30, 2010 receiva receivables aggregati ating ng Rs.10,747,879 (2009: Rs.9,647,471) were were past due but not impair ired. ed.The ageing of these these receivables is is as follo follows: ws: Note Up to 3 months 3 to 6 months More than 6 months

15.8

2,849,705 1,044,343 6,853,831 10,747,879

2009 752,234 281,403 8,613,834 9,647,471

As at June 30, 2010 receivables receivables aggregating to Rs. 1,703,501 (2009: Rs. 1,703,501) were were deemed to be impair ired, ed, being outsta outstanding for mor ore e tha than six mont onths, hs, and hence provisio provision n was made there there against amount ountiing to Rs. 776,416 (2009: Rs. 776,416).  The  Th e movement in pro rov visio ion n for impair irm ment is as fol ollo low ws: Balance at beginning of the year Add: Charged during during the year and recog recognised in other operating expenses Less: Rever ersa sal dur during ing the year and recogn recognised in in other income Balance at end of the year

16.

2010

Note

2010 776,416

2009 794,350

32

-

776,416

(17,934) 776,416

7,778

7,577

1,627,650 142,628 1,770,278 1,778,056

2,518,097 357,444 2,875,541 2,883,118

CAS CA SH AN AND D BAN ANK K BAL ALAN ANCE CES S Cash in hand Cash at bank on: - current accounts - deposit accounts

16.1 16.2

16.1

Incl Includes udes Rs. 783,63 2 (2009:Rs. 761,083) kept in in a separate bank account in in respect of of securi security deposits deposits received from the customers.

16.2

Balances wi with th other other banks carry carr y mark ark--up ran ranging fr from om Re. 0.03 to Re. 0.32 (2009:Re. 0.14 to Re. 0.27) per Rs. 1,000 per day.

17.

NET NE T ASS ASSETS IN BANG BANGL LAD ADE ESH Prop rope erty, plant and equip ipm ment - at cos ostt Less:Accumulated depreciation Capital work in progress Debtors Long-term loans relating to assets in Bangladesh Less: Provision for impairment

Note

2010

2009

46,968 (16,056) 30,912 809 869 (4,001) 28,589

46,968 (16,056) 30,912 809 869 (4,001) 28,589

(28,589) -

(28,589) -

 The Company has no contr  The trol ol over th these assets and has maintained in it its s re rec cord the posit itio ion n as it was in 1971.

99

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 18.

(Amounts in Rs.‘000)

SHARE CA CAP PITA TAL L 2010 2009 (Num (N umber of of shares)

Note

2010

2009

2,0 ,00 00,0 ,00 00

2,0 ,00 00,0 ,00 00

30,000

30,000

76,945

76,945

1,608,245 1,715,190

1,608,245 1,715,190

Authorised capital 200,0 ,00 00,0 ,00 00 200,0 ,00 00,0 ,00 00 Ordin rdina ary shares of Rs Rs.. 10 each Issued, subscribed and paid-up capital 3,0 ,00 00,0 ,00 00

3,0 ,00 00,0 ,00 00 Ordin rdina ary shares of Rs. 10 ea each   issued for cash 7,6 ,69 94,4 ,46 69 7,6 ,69 94,4 ,46 69 Ordin rdina ary shares of Rs. 10 ea each   issued against shares of the   amalgamated companies 160,8 16 0,824 24,43 ,432 2 160,8 0,824 24,43 ,432 Ordi rdina nary sh sha ares of Rs. Rs. 10 each   issued as bonus shares 171,518,901 171,518,901

19.

RESERVES Capital reserve Unrealised gain on revaluation of long-term   investments available for sale Company's share of unrea unrealilised sed loss on   investments of associates Revenue reserve reserve - General - Unappropriated profit/ (accumulated loss)

19.1

20.

19.1

3,373

3,373

479,907

550,658

(7,451)

(8,436)

25,282,373 1,862,666 27,1 ,14 45,039

25,282,373 (6,672,373) 18,610,000

27,6 ,62 20,868

19,155,595

 This re  This rep pre res sents surp rplu lus arising on vesti tin ng of net assets of Esso Oil Mark rke eti tin ng business in Pakistan under the the Esso Under Undertakings takings (Vesti esting ng) Act, Act, 197 1976. 6.

LONG ONG--TE TER RM DEPOS OSIITS Dealers Equipment Cartage contractors

Note 20.1 20.2

2010 436,579 171,705 340,192 948,476

2009 404,460 170,763 279,495 854,718

20.1

 These re  The rep pre res sent intere res stt-ffre ree e deposit its s fro rom m custo tom mers against LPG equipment.Th The e deposit its s are refundable on return of equipment.

20.2

 The  Th ese represent deposits fro rom mcontractors against the cart rta age contracts for transport rta atio ion n of petro role leum products. The deposits are refundable on cancellation of these contracts. Interest is payable on the deposits deposit s at saving bank account ra rate of of Na N ati tional onal Bank of Pakista Pakistan after deducting 2%service 2%service charge, effectiive Jul effect July y 1,2002.

100

 

(Amounts in Rs.‘000)

21.

RETI ETIR REM EME ENT AND OTHER SERVICE BENE ENEF FITS Gratuity Pension Medical benefits Compensated absences

21.1 21.1.1

Reconciliation of obligations as at year end

Fair value o f plan assets U nr nreco gnised actuar ial lo ss U nreco gnised past ser vice co st N et et liability at end o f the year

2009

21.1 21.1 21.1

579,093 305,565 853,918 149,175 1,887,751

605,815 169,208 741,483 156,514 1,673,020

Gratuity fund 2010 2009

1,876,748  (786,686) 1,090, 1,0 90,062 062 (510,969) -  579,093

Pension funds 2010 2009

Medical be benefits 2010 2009

1,733,699 3,792,807 3,357,693 1,049,374 946,408 (584,996) (2,543,128) (2,374,013) 1,148,7033 1,249, 1,148,70 1,249,679 679 983,68 983 ,6800 1,0 1,049, 49,374 374 946 946,40 ,4088 (542,888) (912,589) (776,862) (195,456) (204,925) (31,525) (37,610) -  605,815 305,565  169, 16 9,20 2088 853,91 853, 9188 741, 741,48 4833

Mo vement in liability liability N et et liability at beginning o f the year C har ge fo r the year C on ontr ibutio ns dur ing the year Benefits paid dur ing the year N et et liability at end o f the year

21.1.3

2010

 The  Th e detail ils s of emplo loy yee re reti tire rem ment and ot oth her serv rvic ice e benefit obli lig gati tion ons are as fol ollo low ws:

Present value of defined benefit obligations

21.1.2

Note

605,815 273,278 (300,000) -  579,093

672,838 232,977 (300,000) 605,815

169,208 272,070 (135,713) -  305,565

127,214 166,742 (124,748) 169,208

741,483 148,148 -  (35,71 (35, 713) 3) 853,918

1,733,699 1,327,265 102,349 97,925 214,441 161,098 (146,779) (51,501) (26,962) 198,912

3,357,693 115,276 418,940 (147,335) 48,233

2,823,151 95,553 337,876 (121,248) 222,361

1,876,748

3,792,807

3,357,693 1,049,374

657,475 119,947 (35, (3 5,93 939) 9) 741,483

Movem ent in defi defined ned benefit obligations obligations Present value of defined benefit obligations at

beginning o f the year Ser vice co st Inter est co st Benefits paid dur ing the year A ctuar ial (gain) / lo ss

946,408 782,049 26,660 22,961 114,136 93,674 (35,713) (35,939) (2,117) 83,663

Present value of defined benefit obligation at

end o f the year 21.1.4

1,733,699

946,408

Mo vem vement ent in fair value of plan assets assets Fair value of plan assets at beginning of the year

Expected retur n o n plan assets C o ntr ibutio ns made by the C o mpany Benefits paid dur ing the year A ctuar ial gain / (lo ss) Fair value of plan assets at end of the year

584,996 68,147 300,000 (146,779) (19,678) 786,686

323,600 2,374,013 39,253 297,638 300,000 135,713 (51,501) (147,335) (26,356) (116,901) 584,996 2,543,128

2,317,725 289,419 124,748 (121,248) (236,631) 2,374,013

-

101

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

21.1.5  The  T he principa principal assum assumptions ptions used used in the actua ctuarial rial val valua uations tions carr carried ied out as as of June 30, 2010, usin usingg the the ‘Projected Unit C redit’ method, are as as follows: follow s:

Gratuity fund 2010

Pension funds

2009

2010

Medical benefits

2009

D iscount r ate 12.75% 12.50% 12.75% 12.50% Expected per annum rate of  return on plan assets 12.75% 12.50% 12.75% 12.50% Expected per annum rate of  increase in future salaries 12.25% 12.00% 12.25% 12.00% Future per annum rate of  increase in medical costs Indexation of pension 6.25% 6.00% Expected mo mor tality ra r ate PMA /PFA PMA /PFA PMA /PFA PMA /PFA 80 morta ortalility ty 80 morta ortalility ty 80 morta ortalility ty 80 morta ortalility ty Expected withdrawal rate

tAabglee dependent

tAabglee dependent

tAabglee dependent

tAabglee dependent

287,929

63,617

C ompensated absences

2010

2009

2010

2009

12.75%

12.50%

12.75%

12.50%

-

-

-

-

-

-

12.25%

12.00%

9.25% 9.00% PMA /PFA PMA /PFA PMA /PFA PMA /PFA 80 morta ortalility ty 80 morta ortalility ty 80 morta ortalility ty 80 morta ortalility ty tAabglee dependent

tAabglee dependent

tAabglee dependent

tAabglee dependent

21.1 .1.6 .6 Actua ctuall return on plan plan assets 68,845 13,206 21.1.7

Plan Pl an ass assets ets com compri prises ses of the follo following: wing: 2010 Amount %age Equity Debts O thers

2009 Amou oun nt

274,925 2,662,632 392,257

8% 40,611 80% 1,604,146 12% 1,314,252

3,329,814

2,959,009

%age 1% 54% 45%

21.1.8 Pl Plan an assets incl include ude the Compa Company’s ordi ordina nary shares with with a fair value of of Rs. 73,657 73,657 (2009: (2009: Rs. 40,611). 40,611). 21.1.9  The expected 21.1.9  expected retur return n on plan assets was deter determ mined by consi consider dering ing the expected returns retur ns availila able   on the assets underlying the curr current ent inve investm stment ent pol policy icy.. Expected yields on fixed int interest erest inve investm stments ents   are based on gross redempti ption on yields as at the balance sheet date. Expected retur eturn n on equit equity y investments reflect long-term real rates of return experienced in the market. 21.1.10 Expected contributions to post employment benefit plans for the year ending June 30, 2011 are 21.1.10 Expected Rs. 632,423 (2010: Rs. 441,784) 441,784)..

102

 

(Amounts in Rs.‘000)

21.1.1 21 .1.11 1 C ompari omparison son for five yea years: rs:

Present value of defined benefit ob obligatio ion n Fair value of plan ass ssets ets Deficit Experience adjustments: Loss / (gain) on plan liabilities (Loss) / gain on plan assets

22.

2010

2009

2008

(6,718,929) 3,329 3,3 29,81 ,814 4 (3,389,115)

(6,037,800) 2,959 2,9 59,009 ,009 (3,078,791)

(4,932,465) 2,641 2,6 41,32 ,325 5 (2,291,140)

19,148

198,912

(50,488)

232,294

289,839 28

(9,011)

(262,987)

55,873

43,964

71,785

2006

(4,550,375) (3,812,320) 2,014,0 4,033 33 1,688,375 (2,536,342) (2,123,945)

TRAD TR ADE E AN AND D OTHE OTHER R PAY AYAB ABL LES Note Creditors for: Purchase of oil - local - foreign

22.1

Others Accrued liabilities Inland Freight Equalisation Margin Mechanism (IFEM) Due to oil marketing companies and refineries Advances - from customers - against equipment

22.1&22.2

 Taxes and ot  Ta oth her govern rnm ment dues - Excise, taxes and other duties - O ctroi - Income tax deducted at source Workers' Profits Participation Fund Workers' Welfare Fund Short term deposits - interest free Unclaimed dividends Others

22.1

2007

22.3 22.4

2010

2009

81,450,943 42,035,529 123,486,472 682,387 124,168,859 16,227,244 1,279,527 911,299

63,981,349 32,626,897 96,608,246 402,071 97,010,317 7,114,995 1,163,092 586,537

6,088,074 19,125 6,107,199

1,621,955 18,146 1,640,101

4,908,870 31,452 81,741 5,022,063 964,721 366,596 300,212 642,157 45,839 156,0 ,03 35,7 ,71 16

1,491,561 31,452 44,107 1,567,120 351,482 644,357 45,701 110,1 ,12 23,7 ,70 02

Incl ncludes udes Rs. 13,189,694 (2009: Rs. 10,432,338) payabl ble e to Pakist Pakistan an Refi Refiner nery y Limited, Limited, a relat elated ed party.

103

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

Includes following amounts due to related parties in respect of pipeline charges:

22.2

Note Pak-Arab Pipeline Company Limited Asia Petroleum Limited

22.3

2010

2009

155,100 123,584 278,684

230,401 89,018 319,419

-  964,721 964,721 -  964,721

1,132,598 1,132,598 (1,132,598) -

W or ork kers rs'' Pro Proffit its s Parti rtici cip pati tion on Fu Fun nd Balance at beginning of the year Add:Allocation for the year

31

Less: Payments during the year Balance at end of the year

 The  Th ese se securit rity y depos osit its s are non non in inte tere res st be bearin ring g and are re rep payable on te term rmin ina ati tion on of con ontra tract.

22.4

23.

PROVISIONS

2010

Balance at beginning of the year Less: Payments there against Balance at end of the year

688,512 688,512

2009 726,116 (37,604) 688,512

 These re  The rep pre res sent pro prov vis isio ion ns for ce certain le leg gal cla claims again ins st the the Company ra rais ise ed by th the e re reg gulato tory ry autho uthorrit ities. ies.The outcom outcome of these these legal cla claims will not give rise rise to any significant loss loss beyond those those provided for.

24.

SHOR HORT-TER T-TERM M BOR ORR ROW OWINGS INGS - secure red d

 

Short-term finances Finances under mark-up arrangements

Note 24.1 & 24.2

2010 2,833,631

2009 4,261,083

24.1 & 24.3

10,187,384 13,021,015

14,393,443 18,654,526

24.1

 The to  The tota tal ou outstandin ing g balance is again ins st th the facil ilit itie ies s aggre reg gati tin ng Rs. 33,443,600 (2009:Rs. 29,021,100) available from various banks. These facilities will expire on various dates by March 19, 2013 and are secured by way of flo floating ating charge on Company’s all present and future future assets, except land and building, building, and hypothecation of Company's moveable assets, stocks and receivables.

24.2

 The rate of mark up for these facil  The ilit itie ies ranges fro rom m Re. 0.03 to Re. 0.37 (2009: Re. 0.03 to Re. 0.40) per Rs. 1,000 per day.

24.3

 The rate of mark up for these facil  The ilit itie ies ranges fro rom m Re. 0.36 to Re. 0.41 (2009: Re. 0.41 to Re. 0.45) per Rs. 1,000 1,000 per day, net of pro prom mpt payment reba rebates.These facil cilit ities ies are renewa r enewable subject subject to to payment of  of  repurchase price on specified dates.

25.

CONTINGE CONTIN GENCI NCIE ES AND COM COMM MITM TME ENTS

25.1

Con Co ntingencies  The  Th e Company has con onti tin ngent lia liabil ilit itie ies s in re res spect of of le leg gal cla claims in th the e or ord din ina ary cou ours rse e of busin ine ess.

104

 

(Amounts in Rs.‘000)

25.1.1

Claims against the the Compa Company not acknowl acknowledg edged as debts amount to Rs. 5,672,877 (2009:Rs. 5,303,257), including claims by refineries for delayed payment charges.

25.1.2

In the assessment years 1996-97 and 1997-98, the taxation authorities applied presumptive tax on the Company to the value of petroleum products imported by the Company on behalf of GoP by treating the Compa C ompany as the im impor porter ter of such products.The IncomeTax Appella Appellate Tribunal (I (ITAT TAT)) cancelled the order of the assessing officer, and as a consequence of the order of the ITAT, an amount of  Rs.958 Rs. 958,152 ,152 beca becam me refunda refundable to to the Compa C ompany, which was adjusted against the ta tax liabil liabilit ity y of the subsequent years. The The depart artm ment had fi filed led an appeal with with the the Hig High Cour Courtt of of Sindh against the aforesa aforesaid decision decisio n of the ITAT, ITAT, which was adjudi djudica cated against the Compa C ompany.The Compa Company filed filed petitio petition n for leave to appeal wit with h the Supreme Cour Courtt of of Pakistan against the aforem aforementio entioned ned decision, which was granted by the Supreme Court of Pakistan through its order dated March 7, 2007 also suspending the operation of the impugned judgment of the High Court of Sindh.  The  Th e management of the Company main inta tains th tha at th the e Company was mere rely ly acti tin ng as a handli lin ng agent on behalf of of GoP GoP, which was in fact the importer importer of the the product oducts. s. Hence, the ultima ultimate liab liabililit ity y, if any, i s recoverable from from GoP, for which the the man ana agement is in com communicati unication on with with the MoP MoP & N R. Based on the the mer eriits of of the the above case, the Compa Company’s management believes believes that the the ulti ultimate decision decision will be in its favour and therefore, no provision has been made in this respect in these financial statements.

25.1.3

In the the yea year 200 2005, 5, a demand was raised by the Col Collect lector or of Customs, Sales Tax and Centr Central al Excise Excise (Adjudication) in respect of sales tax, central excise duty and petroleum development levy aggregating Rs. 165,781 incl inclusive usive of additional additional sales tax and centr centra al excise excise duty on exports expor ts of PO PO L products products to to Afghanistan during during the perio period d August 2002 to November 2003.The demand was ra raised on on the the gro rounds unds that the export consignments were not verified by the Pakistan Embassy / Consulate in Afghanistan as required under Export Policy and Procedures 2000. It is the Company’s contention that this requirement was in suspension as in the aforesaid period the Pakistan Embassy / Consulate was not fully functional. This condition of suspension was removed only on July 22, 2004 through Export Policy O rder 200 2004 4 when the Pa Pakist kista an Emba Embassy / Consulate C onsulate became fully fully functional functional in in Afghanistan. Besides the issue of verificatio verification, n, it is also the Comp Company’s contenti contention on that export export of of POL POL products products to Afghanistan can be verified from the relevant documents and therefore, the demand is unwarranted.  The Co  The Com mpany has fil ile ed an appeal against the above ord rde er before theAp App pell lla ateTri rib bunal and also re refferr rre ed the matter for resolution in the Alternate Dispute Resolution Committee (ADRC) under section secti on 47-A 47-A of the Sales Tax Act, Act, 1990. 1990.Thr hrough ough its its recomm recommendati tion on dated Decem December 26, 2006, the ADRC has rejected the application filed by the Company. Subsequently, through its order dated June 16,2007 the CBR CBR accepted the recomm recommendati tions ons of the the ADRC RC..The Compa Company is now contesti contesting ng the matt tter er before the Appellate Tri Tribun buna al. Based Based on leg legal advisor dvisors s opinion, opinion, the Comp C ompa any is confident confident tha that the ultimate outcome of the matter would be in its favour and therefore no provision has been made in this respect in these financial statements.

105

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

25.1.4  Th  The e Company re rec ceived demands for tax years 2004 to 2008, fro rom m the taxati tion on author orit itie ies aggre reg gati tin ng to Rs. 823,227 in respect of tax not withheld on incentives paid to dealers operating retail outlets. As per the taxation authorities, such payments were in the nature of prizes on sales promotion to dealers and hence subject to to withhol withholding ding of ta tax @ 20 20% %under section 156 of the the IncomeTax Or Ordinance (ITO), (ITO ), 2001.The Compa Company based on the the advice of of its its tax tax consultant, consultant, has paid an amount of Rs. Rs. 321,993 ther there e against under the ‘Tax Arr Arrears Sett ttlemen lement Incent Incentive ive Scheme (TASIS) (TA SIS) 2008’, 2008’, while while trea treati ting ng the same as recoverable from dealers, on the contention that incentives to dealers attract tax @ 10%under section 156 A of the ITO I TO,, 2001. 2001.Therefo hereforre, the Compa C ompany has filed filed an appeal against the demands under

           

section 156 of the ITO, ITO, 20 2001 01,, wit with h the Comm Commissio issioner ner of of Incom IncomeTax (CIT (C IT)) (Appe (A ppeals) and also a peti titi tion on in the High Court of Sindh for the stay thereof. The High Court of Sindh in its order, dated January 13, 200 2009 9 granted the sta stay y to the Company wit with h dir directi ections ons to deposit Rs. 200 200,000 ,000 in addit dditio ion n to payment of Rs. 321,993 earlilier er made by the Company, wi with th the taxati taxation on autho thorrit ities ies against such demands nds.. Fur Further, ther, the High Cour ourtt of Sindh dir directed ected CIT (Appeals) to hear the appeal on January 20 20,, 2009 and pass an order order wi withi thin n 20 days of hearing hearing of the appeal. The CIT CIT (A (Appea ppeals) passed an order order on Febr Februa uary 13, 2009 against the Company.The IncomeTax Appell ppella ate Tr Tribunal ibunal (I (ITAT TAT)) on the appeal filed against CIT (A filed (Appe ppea als) or order, der, set aside and remanded the ca case se to taxati tion on offi officer cer for fr fresh esh consider consi dera ati tion on which has been subsequently adjudi djudicated cated against the Company by the taxatio taxation n off officer icer vide order or der dated Februa February 15, 15, 2010 2010.The Compa Company has now filed filed an appeal befor before e the Comm C ommissio issioner ner of Inland Inland Revenue (A (Appea ppeals) against the the afor foresa esaid decisio decision n of the the taxati tion on offi officer cer on March 25, 201 2010. 0.  The  Th e appeal is is pendin ing g befor ore e th the e Commis iss sio ion ner of of In Inla land Revenue (A (Ap ppeals ls)). The The Company based on the merits of the case and on advice of its tax consultant is confident that the matter will ultimately be decided in its favour and therefore no provision has been made for the differential amount. Further, the Compa Further, Company int intends ends to recove ecoverr the entire entir e afor forem ementio entioned ned tax tax of Rs. Rs. 321 321,993 ,993 fr from om the dealers, included in other receivables (note 15), out of which Rs. 38,000 have been already recovered from fr om such dealer lers s till till June 30,2010.Accor ccordingly dingly no provisi provision on has been made against remaini ining ng receivable of Rs. 483,993 in these financial statements.

25.1.5

 

106

 The  Th e Go Gov vern rnm ment of Sindh thro rou ugh Sindh FinanceAc Actt, 1994 pro rov vided for imposit itio ion n of an infrastr tru ucture fee for development and maintenance of infrastructure on the goods entering or leaving the Province through thr ough air or sea at prescr prescribed ibed rates rates..The levy was challlleng enged by the Compa Company alo long ng wit with h other other companies in the High Court of Sindh through civil suits which were dismissed by the single judge of the High High Cour Courtt of of Sindh thr through ough it its s decisio decision n in Octo October ber 2003. O n appe ppea al filed filed there there against, the High Court of Sindh has held through an order passed in September 2008 that the levy as imposed through thr ough Sindh Finance Act ct,, 1994 and amended tim time to ti tim me was not valilid d till till December 28, 2006 2006,, however, thereafter on account of an amendment in in the Sindh Fina Finance (Am (Amendment) Ordinance, 2006, it had become valilid d and is payable by the theAppellants.The Compa Company, alo long ng with ot other her companies, filed filed an appe ppea al in the Supreme Cour ourtt of Pakistan Pakistan against the afor forem ementio entioned ned or order der of the High Cour ourtt of Sindh. Sindh. T he Supreme Supreme Cour Co urtt passed passed an an inter interim im order or der on Jan J anua uarr y 22, 22, 200 2009 9 and and further fur ther hearing heari ng stand adjo adjour urned. ned. Based on the views of its its legal adviso isorrs, the management beli believ eves that the matt tter er wil willl ult ultima imately be decided in the Company’s favour. Fur Further, ther, the amount of possible obl obliga igati tion, on, if any, cannot be determined with sufficient reliability.

 

(Amounts in Rs.‘000)

25.1.6

During the current year, the Deputy Commissioner Inland Revenue (DCIR), Federal Board of Revenue (FBR) thr throug ough his Or Order D.C D.C No. 02/141 dated May 31, 31,20 2010 10 passed under section 122 of the Incom Income  Tax or  Ta ord din ina ance, 2001 amended th the e deemed assessed vers rsio ion n of in inc come tax re retu turn rn of th the e Company for tax year 200 2006 6 and and made certain certain additio additions ns and and disallowances disallowances , consequen consequentl tly y a tax tax demand of  Rs. 383,946 383,946 was crea created vide the the abovem abovementi entioned oned or order. The Compa Company has filed filed an appeal on on  Ju  J une 21, 2010 again ins st th the e said ord orde er bef before Commis iss sio ion ner Inla Inland Re Revenue (Ap (App peals ls). ). Furth rthe er an an applicatio pplication n for for recti rectification fication am amounti ounting ng to Rs. 94,0 94,068 68 has been been filed with with DC DCIR in in respect of certain certain recti ectifi ficatio cation n issues. Based on the views views of its its tax tax advisor dvisors, s, the management believ believes that the matt tter er willl ult wil ultima imatel tely y be decided in the the Compa Company’s favour.Accor ccordingly dingly, no provisi provision on has been made in these these financial statements.

25.1.7

During the curr During current ent yea year, theAdditio dditiona nal Com omm missioner Inland Reven enue ue (ACIR) (AC IR) FBR throug through his Or Order D.C No. 06/068 dated June June 30, 2010 passed under secti section on 122(5A) 122(5A) of of the Income IncomeTax Or O rdinance, 2001 amended the deemed assessed ver ersio sion n of inco incom me tax retur return n of the Compa C ompany for tax year 200 2004 4 and made cer certain tain additio additions ns and disa disallllowances, owances, consequentl consequently y a tax demand of Rs. 219,086 was crea created vide vide the abovementio entioned ned order. order.The Compa Company is in the the process of fill filling ing an appeal and rectifi rectificatio cation n appli pplica cati tion on in respect of certain matters against the said order. Based on the views of its tax advisors, the management believes believes that the matt tter er wil willl ult ultima imately be decided in in the the Compa Company’s favour.Accor ccordingly dingly, no provision has been made in these financial statements.

25.1.8

Dur uring ing the current curr ent year a sa sales ta tax or order-i der-in-o n-orriginal No. 01/2001 dated March 30, 201 2010 0 was was issued by DCIR - FBR in respect of sales tax audit of Company for tax year 2006-2007. Under the said order, a demand of of Rs. Rs. 883,864 was ra raised on on account of cer certain tain tr transacti ctions. ons.A demand of of the the Rs. 512,172 in respect r espect of of default surc surcharge harge has also been raised. raised.The Compa Company filed filed an appeal against the the said order before Commissioner Inland Revenue (Appeals) decision of which is pending. The Company based on its tax advisors opinion is confident that the decision of the appeal will be in its favour and accordingly, no provision has been made in these financial statements.

25.2

Com Co mmitments

25.2.1

Commitments in respect of capital expenditure contracted for but not as yet incurred is as follows: 2010 Property, plant and equipment Intangibles

25.2.2

510,430 51,974 562,404

2009 384,741 49,887 434,628

Letters of credit and bank guarantees outstanding as at June 30, 2010 amount to Rs. 7,367,317 (2009: Rs. 3,731,075).

107

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 26.

(Amounts in Rs.‘000)

COST COS T OF OF PROD ODUCTS UCTS SOL OLD D 2010

Opening stock  Cost Charges thereon

38,835,792 1,883,873 40,719,665

61,298,786 1,082,737 62,381,523

C ost of products available

678,478,384 53,013,782 731,4 ,49 92,1 ,16 66 772,2 ,21 11,8 ,83 31

526,558,634 61,464,986 588,0 ,02 23,6 ,62 20 650,4 ,40 05,1 ,14 43

Les ess: s: C losing stock  Cost

(52,018,100)

(38,835,792)

(6,6 (6 ,602,024) (58,6 (58 ,62 20,1 ,12 24) 713,591,707

(1,8 (1 ,883,873) (40,7 (40 ,71 19,6 ,66 65) 609,685,478

Add: Purchases during the year Cost Charges thereon

Charges thereon

27.

381,577 380,829 26,129 636,449 54,070 1,479,054

384,751 385,863 26,948 609,952 44,152 1,451,666

9,547,028

9,482,779

(15,851,726) 3,841,696 (12,010,030) 3,094,851 (8,9 (8 ,91 15,179) 631,849

(9,199,864) 835,398 (8,364,466) (604,640) (8,9 (8 ,969,1 ,10 06) 513,673

TRAN TR ANS SPOR ORTA TATI TION ON COS COSTS TS Cost incurred during the year Realised against IFEM Less: Refinery share Receivable from other Oil marketing companies / adjustments

108

 

OTHE OTH ER OP OPE ERATI ATING NG INCO NCOM ME Commission and handling services Income from CNG operations Income from retail outlets - net Handling, storage and other recoveries Income from non fuel retail business

28.

2009

 

(Amounts in Rs.‘000)

29.

DIS DI STR TRIB IBUTION UTION AND MAR ARK KETING EXP EXPENS ENSES ES Salaries, wages and benefits Security and other services Rent, rates and taxes Repairs and maintenance Insurance  Tra  T ravell llin ing g and of offfic ice e tr tra ansport Printing and stationery Communication Utilities Storage and technical services Sales promotion and advertisement Cards related costs

Note

2010

2009

30.1

2,414,167 71,290 274,935 545,238 87,375 107,989 22,824 23,638 159,754 90,053 167,465 84,722

2,070,788 49,317 381,626 596,548 127,893 105,234 19,364 21,785 123,989 79,335 310,861 70,352

5,788 4,055,238

3,861 3,960,953

786,004 13,803 5,793 58,673 65,843 27,557 10,542 22,019

801,145 14,442 4,952 58,988 67,479 32,689 14,609 22,187

39,447 32,412 25,800 7,659

27,858 15,614 20,986 10,094

Others

30.

ADMIINI ADM NIS STR TRATIV ATIVE E EXP XPE ENS NSE ES Salaries, wages and benefits Securit rity y and ot oth her serv rvic ice es Rent, rates and taxes Repairs and maintenance Insurance  Tra  T ravell llin ing g and of offfic ice e tr tra ansport Pri rin nting and statio ion nery Com Co mmunication Utilities Sto tora rage and technic ica al serv rvic ice es Legal and professional Auditors' remuneration Contribution towards expenses of  Board of Management - O il Donations Fee and subscription

30.1

30.4

30.5

4,520 23,833 1,986 1,125,891

4,030 49,826 6,894 1,151,793

109

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 30.1

(Amounts in Rs.‘000)

Salar laries, ies, wages and benefit efits s include the the followi following ng in respe respect of of employee retir retirement and other other service service benefits: 2010

Service cost Interest cost Expected return on plan assets Recognition of actuarial gains Recognition of past service cost

2009

Gratuity fund

Pension funds

Medical benefits

Total

102,349 214,441

115,276 418,940

26,660 114,136

244,285 747,517

(68,147)

(297,638)

-

24,635

29,407

-

6,085

273,278

272,070

216,439 592,648

(365,785) (328,672)

7,352 148,148

61,394

33,166

6,085

6,085

693,496

519,666

In addition, salaries, wages and benefits also include Rs. 53,593 (2009: Rs. 51,736) and Rs. 27,903 (2009:Rs. 65,804) in respe respect of of Compa Company's contr contribut ibutio ion n towards towards provident provident funds and staff compensated absences. 30.2

 The  Th e effects of a 1%movement in the assumed medic ica al cost trend rate are as fol ollo low ws: 2010

Effect on on the aggregate of of curr current service cost and interest cost Effect on the defined benefit obligation for medical benefits 30.3

2009

Incre rea ase

Decrease

Increase

Decrease

25,873

20,249

29,233

18,921

176,971

139,302 

181,140

119,228

Remu Re mun neratio tion n of Ma Managin ing g Directo Director r and Exe Execu cutiv tives es

30.3.1  The  The aggre reg gate amount for th the year in in re res spect of re rem munerati tio on and benefit its s to the Managing Di Dire rec cto torr and Executives are as follows: 2010 2009 Manag Man agin ingg Exe Execu cuti tivves Ma Mannaging Exe xeccuti tivves Director Director Managerial remuneration including performance bonus 12,750 463,867 11,510 11 364,861 Retirement benefits 1,279 23,177 215 18,167 Housing and utilities 4,920 159,342 3,152 122,465 Leave fare 546 36,339 36 1,102 27,516 Number, including including those who worked part of the year 110

19,4 ,49 95

682,7 68 ,72 25

15,9 ,97 79

533,0 ,00 09

1

325 

3

265

 

(Amounts in Rs.‘000)

30.3.2  Th  The e amount charged in re res spect of fee to eight non-executi tiv ve dir ire ecto tors rs aggre reg gated to Rs. 1,565 (2009: Rs. 975). 30.3.3

30.4

In addition, addition, the the Managing Dir irector ector and cer certain Executives are provided provided with free free use of Compa Company maintained cars. Further, the Managing Director and Executives are also entitled to avail medical faciliti facili ties es and other other benefits benefits as per the Compa Company pol olicy. icy. The The Compa Company, based on actuar ctuarial ial valuati luations, ons, has also charged amounts in respect of retirement benefits for above mentioned employees which are included in note 30.1. Aud Au dit ito ors' re rem munera rati tio on 2010 KPMG KPM  Taseer Fee for the: - audit of annual financial statements - review of half yearly financial statements  Tax serv rvic ice es Certification of claims, audit of retirement funds and other advisory services O ut of pocket expenses  

30.5 30 .5

Hadi & Co.

2009

M. Yo You usuf To Tottal Adil Ad il Saleem & Co.

KPMG KPM Taseer

A. F. Ferguson

Hadi & Co.

& Co.

Tottal To

2,420

2,420

4,840

2,420

2,420

4,840

880 -

880 -

1,760 -

880 -

880 1,170

1,760 1,170

170 395 3,865

100 394 3,794

270 789 7,659

165 424 3,889

777 958 6,205

942 1,382 10,094

The ManagingDi Dirrec ector tor and his spou spouse se do not have any interest in any any don donee ees to which which dona donations were made.

31.

OTHER OTHE R OP OPE ERATI ATING NG EXP EXPE ENS NSE ES N ote W orkers' Profits Participation Fund W orkers' W elfare Fund Exchange loss - net Property, plant and equipment written-off Capital stores written-off Provision against - doubtful trade debts - doubtful other receivable - stores and spares

2010

2009

22.3

964,721 366,596 791,083 3 3,,508,030 18,380 6,629

12.5

241,969 477,345 33,769 2,385 2,416 2,4 16,51 ,518 3,994 94,38 ,389

10.1

111

 

Notes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 32.

(Amounts in Rs.‘000)

OTH THE ER INCO COM ME Note Gain on dis isp pos osa al of op ope era ratin ting assets Dividends Inte In tere res st and marku rkup p on bank depos osits its Mark-up and delayed payment charges Liabili Liab ilities ties wri written tten back Reversal of provision for impairment Penalties and other recoveries Scrap sales Others

32.1

32.1 32.2 15.8

33.

FINANCE CO COS STS

56,821 9,000 65,821

2010

2009

1,8 ,89 99,5 ,51 19 7,9 ,98 82,4 ,49 91 9,882,010

2,9 ,95 53,4 ,42 27 3,2 ,27 78,6 ,62 29 6,232,056

3,905,704 (25,421) 5,0 ,03 33,2 ,27 73 8,913,556

201,536 (233,929) (4,6 (4 ,62 25,9 ,93 36) (4,,658,329) (4

T AX AT ION Current - for the year - for prior years Defe Def erred - fo forr th the e year  

34.1

59,990 -  59,990

 This  Th is re rep pre res sents mark rk-u -up p on account of delayed payments by the custo tom mers re rec cognised on re rea ali lis sati tion on.

Mark-u rk-up p on short-term borrowings Other mark-up and bank ch cha arg rge es

34.

2009 16,798 65,821 126,862 445,065 31,026 17,934 57,637 7,530 8,013 776,686

Represents dividends from the following related parties: Pak-Arab Pipeline Company Limited Pakistan Refinery Limited

32.2

2010 2,990 59,990 50,409 5,890,553 -  -  70,473 4,191 16,742 6,095,348

Relations Rela tionship be betwe tween en ac accou countin nting g prof profit it / (loss) and and tax exp expen ens se  The re  The rela lati tion onship betw twe een tax expense and accounti tin ng pro roffit has not been pre res sented in these financial statements as the total income falls under minimum / presumptive tax regime of the Income Tax Ordinance, 2001.

112

 

(Amounts in Rs.‘000)

35.

EAR ARNI NINGS NGS / (LOS LOSS S) PER SHAR HARE E Note

2010

2009

 There is no dil  The ilu uti tiv ve effect on th the e basic earn rnin ings per share of the the Compan Company, whi which ch is based on: Profit / (los (loss s) for the year

9,0 ,04 49,5 ,59 96

(6,6 (6 ,69 98,5 ,53 35)

(Num (N umber of of shares)  

Weighted average number of or Weig ordinar dinary y shares in issue during the year

171,518,901

171,518,901

(Rupees) Earni rnin ngs / (lo (los ss) per share - basic and dilu ilute ted d

36.

52.7 .76 6

(39 (3 9.0 .05 5)

17,9 ,963 63,1 ,152 52

(11,3 ,356 56,8 ,864 64)

1,137,6 ,63 37 44,752

1,141,698 52,615

241,969 -  18,380 - 

477,345 2,385 6,629

CASH GE CASH GENE NER RATE ATED D FROM OPERATIONS Profit / (loss (loss)) before ta taxa xation Adjustments for non-cash charges and other items: Dep De pre rec ciation Amortisation Provision against: - dou oub btf tfu ul trade debts - stores and spare parts Property, plant and equipment written-off Capital stores written-off Liabilities written back Reversal of provisi provision on for imp impa air irm ment Retire Re tirem ment and oth othe er servic rvice es benefits acc ccrue rued d Profit Prof it on dis isp pos osa al of op ope era ratin ting g assets Share of profit of associates Dividend income Fin Fi nance cos osts ts Working capital ch cha anges

36.1

-  -  693,4 ,49 96 (2,9 (2 ,99 90) (516,401) (59,990) 9,882,0 ,01 10 11,438,863 (18 (1 8,4 ,42 23,4 ,42 27) 10,978,588

(31,026) (17,934) 585,4 ,47 70 (16 (1 6,7 ,79 98) (451,850) (65,821) 6,232,056 7,914,769 3,2 ,28 80,0 ,02 23 (162,072)

113

 

Notes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010 36.1

(Amounts in Rs.‘000)

Work Wor king capit ita al ch changes 2010

2009

(Increase) / decrease in current assets

 

37.

- Sto tore res s, spare parts and lo loos ose e to tool ols s - Stock-in-trade - Tra Trade de de debts bts - Lo Loans ans and advances - Deposit eposits s and shor shortt ter term m pr prepa epayments - O th the er re rec ceiv iva able les s Increase / (decrease) in current liabilities - Trade and othe otherr payable bles s

(1,720) (1,7 (17,900,459) (37,23 (37 ,233,2 3,213 13)) 8,028 184,425 184 ,425 (1,7 (1 ,750,7 ,76 63)

1,286 21,661,858 (47,08 (47 ,082,4 2,447 47)) (21,795) (150,370) 2,892,9 ,94 45

38,2 ,270 70,2 ,275 75 (18 (1 8,423,427)

25,9 ,978 78,5 ,546 46 3,280,023

CAS CA SH AND AND CAS CASH H EQU EQUIIVAL ALE ENT NTS S Cash and cash equivalent lents s comprise comprise the follo followi wing ng it item ems included included in the the balance sheet: N ote - Cash and bank balances - Finances under mark-up arrangements

38.

16 24

2010 1,778,056 (10,187,384) (8,4 (8 ,40 09,3 ,32 28)

2009 2,883,118 (14,393,443) (11 (1 1,5 ,51 10,3 ,32 25)

OPE OP ERATI ATING NG SE SEGMENT NTS S  The  Th e financial statements have been pre rep pare red d on the basis of a single re rep port orta able segment. Sales from from fuel product products s and others others represents represents 99.62%(2009:99.26%) of of total total rev revenueof the Compa Company respectively. 97.42%(2009:98.38 98.38% %) out out of of total total sales of the the Compa Company relates to custo custom mer ers s in Pakista Pakistan. All nonnon-cur currrent assets of the the Compa Company as at June June 30, 2010 are loca located in in Pakistan.  The Co  The Com mpany sells it its s pro rod ducts to dealers rs,, govern rnm ment agencies and auto ton nomous bodies, independent power projects and other corporate customers. Sales to three major customers of the Company is around aro und Rs. 304,828,443 during during the year ended June June 30, 2010 (2009:Rs. 220,633,561).

114

 

(Amounts in Rs.‘000)

39.

FINANCI NANCIAL AL INS INSTR TRUM UME ENTS BY CATEGOR CATEGORY  Y  Financial assets as per balance sheet

Available for sale - Lon Long g-term in inv vestments Loans and receivables - Long-term loans, advances and receivables - Long-t -te erm deposits - Trade debts - Loans and advances - O ther rec rece eiv iva ables - Cash and bank bala lanc nces es

2010

2009

1,3 ,35 59,0 ,00 05

1,4 ,42 29,7 ,75 56

317,889 56,443 117,501,074 68,615 13,2 ,29 93,7 ,77 73 1,7 ,77 78,0 ,05 56 133,015,850

405,780 53,189 80,509,830 53,817 11,8 ,84 45,7 ,70 06 2,8 ,88 83,1 ,11 18 95,751,440

948,476 142,2 14 2,295 95,47 ,472 330,213 13,0 ,02 21,0 ,01 15 156,5 ,59 95,1 ,17 76

854,718 105,7 10 5,753 53,38 ,389 556,380 55 18,6 ,65 54,5 ,52 26 125,8 ,81 19,0 ,01 13

Financial liabilities as per balance sheet Financial liabilities measured at amortised cost - Lo Lon ng-t -te erm deposit its s - Tra Trade de and other payables - Ac Acc cru rue ed in inte tere res st / markrk-u up - Short term borr orrowin owing gs

39.1

Fair Fa ir value lues s of financ ncia iall as assets and lia liabil bilities ities (a) Fair Fair value is the amount for for which an asse ssett could could be exchanged, or a lilia abil bilit ity y sett settled, led, between knowledg knowl edgeable will willing ing parti ties es in an arms length tr transacti ction. on.  The ca  The carry rryin ing g valu lue es of of all fin fina ancial as assets and lia liabil ilit itie ies s relf lfe ecte ted d in in th the fin fina ancial sta state tem ments approximate their fair values except for investment in Pak Arab Pipeline Company Limited held at cost. (b) Fair value es estima timatio tion n  The Company has adopted the amendment to IF  The IFR RS 7 for financial instruments that are measure red d in the balance sheet at fair value. This amendment requires fair value measurement disclosures using following three level fair value hierarchy that reflects the significance of the inputs used in measuring fair values of financial instruments. - Lev Level1: el1: Q uoted prices (una (unadjus djusted) ted) in active active marke kets ts for iden identi tica call asse assets ts or li lia abili bilities. ties. - Level 2: Inputs other than quoted pr prices included included wit within hin Level 1 that are obser observa vable for the the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). The Company has no items to report in this level. - Level 3:Inputs for the asset or lilia abili bility ty that are not based on observable market data (unobser erva vable inputs).  The Com  The C ompany ha has only only one one inv investment carrie rried d at at fair valu lue e am amou oun ntin ting g to Rs. Rs. 49 495,0 ,00 05 (2009:Rs. 565,756) which which is is valued under level 1 valuati luation on metho ethod. d.There have been no movements in or out of the lev level1ca el1categor tegory y during during the year.The Compa Company does not have any investm investment in in level 2 or level 3 categor tegory y. 115

 

Notes to the Fin Financi cia al Statements For the year ended June 30, 2010 40.

(Amounts in Rs.‘000)

FINANCIAL RIS RISK K MANAGEM MANAGEMENT ENT OBJECTIV OBJECTIVE ES AND POLICIES

40.1

Fin Fi nancial ri ris sk facto tors rs  The Company’s acti  The tiv vit itie ies expose it to a variety of fin ina ancial risks: mark rke et risk (in inc clu lud din ing g curre rren ncy risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company’s overall risk management progr program amme focuses focuses on having cost effect effectiive fundi funding ng as wel welll as to manage fi financial nancial risk to minimize earnings volatility and provide maximum return to shareholders. Risk management is is carried carried out out by the Compa Company’s finance and trea treasur sury y department under pol polici icies es appro pprove ved by the Board of Ma Management - Oilil.. (a)) Ma (a Market rket risk  risk  Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market interest interest ra rates, for foreign eign exchange rate or the equity prices prices due to a change in credit credit ra r ati ting ng of the issuer or the instrument, change in market sentiments, speculative activities, supply and demand of securiti securities es and liquidit liquidity y in the the market.The Comp Company is exposed to curr currency ency risk, interest interest rate risk and other price risk (equity price risk). (i) Curre Curren ncy risk  Curr urrenc ency y risk risk is the risk risk that the the fa fair ir value or future cash flo flows ws of a financial instrum instrument will fluctua fluct uate because of cha chang nges in for foreign exchange ra rates. The Compa Company impor imports ts petr petrol oleum eum products (including chemicals) and is exposed to currency risk, primarily with respect to foreign creditors for purchase of oil denominated in US Dollars amounting to US$ 491,644 (2009: US$ 399,986) equivalent to Rs. 42,035,529 (2009: Rs. 32,626,897).  The  Th e avera rag ge ra rate tes s applie lied d durin ring g th the e year is Rs Rs.. 84.22 /US /US$ $ (2 (20 009: Rs. 80.3 .33 3 / US$) and the spot rate as at June 30, 2010 was Rs.85.50 / US$ (2009:Rs. 81.57/U .57/US$). S$).  The Company manages it  The its s curre rren ncy ris risk k by clo los se mon onit itori orin ng of curre rren ncy mark rke ets ts.. As per central centr al bank regulati tions, ons, the Compa Company cannot hedge it its s currency currency risk exposure. exposure. At June 30, 2010 2010,, if the the Pakista Pakistan Rupee had weakened/str weakened/streng engthened by 5%ag 5%against the US US Dollar with all other variables held constant, post-tax profit for the year would have been lower/higher by Rs. 1,366,155 (2009: Rs. 1,060,374), mainly as a result of foreign exchange losses/gains on translation of US Dollar-denominated trade payables. (ii) Inte Interes rest ra rate risk  risk  Interest rate risk is the risk that the fair value or future cash flows of a financial instrument willl fluct wil fluctua uate because of cha changes in market inter interest est ra rates.As the Compa C ompany has no sig signifi nifica cant fixed inter interest-beari est-bearing ng assets, the Compa C ompany’s income and opera operati ting ng cash flows flows are substanti ntia alllly y independent of of changes in market inter interest est ra rates.  The Company’s intere  The res st rate risk arises fro rom m short ort-t -te erm lo loa ans and ru run nnin ing g fin ina ance facil ilit itie ies s.  The  Th ese are benchmark rke ed to variable rate tes s whic ich h expose the Company to cash flo low w in inte tere res st rate risk.

116

 

(Amounts in Rs.‘000)

 The  Th e Co Com mpany analyses it its s interest rate exposure on a re reg gular basis by monit ito ori rin ng existi tin ng facil ilit itie ies against prevailing market interest rates and taking into account various other financing options available. At June June 30, 20 2010 10,, if interest interest ra rates on Comp C ompa any’s borr borrowings ha had been been 1%hig 1%higher her / lo lower wer with with all other variables held constant, post tax profit for the year would have been lower / higher by Rs. 84,637 84,637 (2009: loss for for the year woul would d have been higher / lo lower wer by Rs. 121,254) mainly as a result of higher/lower interest exposure on variable rate borrowings. (iii) Equity price risk  Equity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not materially exposed to equity securities price risk as the majority of its investments are in non-listed securities. At June 30, 2010, equity prices of the listed equity investments of the Company would had been 10%higher / lower with all other variables held constant, other comprehensive income for the year woul would d have been higher / lo lower wer by Rs.49,500 (2009:Rs. 56,575 56,575). (b)) C red (b redit it risk  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, without taking into account the fair value of  any collateral. Concentration of credit risk arises when a number of counter parties 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 economics, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of the Company's perfor perf orm mance to developments affecti ffecting ng a parti ticular cular industr industry y. Credit risk arises from deposits with banks and financial institutions, trade debts, loans, advances, deposits and other receivables. The credit risk on liquid fund is limited because the counter parties are banks with reasonably high credit rating. The maximum exposure to credit risk before any credit cr edit enhancement is is equal to the carrying carr ying amount of financial assets as disclosed disclosed in note note 39. Out Out of the the total total financial financial assets of of Rs. 134,443,091 (2009: Rs. 97,181,196), the financial financial assets exposed exposed to cr credit edit risk amount to Rs. 133,07 133,076,308 (2009: Rs. 95,743 5,743,863). ,863). Signifi nifica cant concentr concentra ati tion on of of credit credit risks on amounts due from fromGovernment agencies and auto utonomous nomous bodies amounting to Rs. 43,737,401 (2009: Rs. 25,821,112). Credit risk on private sector other than retail sales is is covered to the maxi xim mum possibl possible e extent thro throug ugh legalllly y binding contracts. contracts.The Company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific customers and continuing assessment of credit worthiness of customers. Sales to dealers are settled in cash or using short term financial instruments. However, some of the Company’s tra tr ade debts are secured by way of lett letter ers s of cr credit and bank guarantees. 117

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

 The  Th e Company monit itor ors s th the e cre red dit quali lity ty of it its s fin ina ancial assets wit ith h re reffere ren nce to histo toric rica al perf rform ormance of such andir ava arble ext erna na credit edit rati ting ngs.The carrying values of of fina financial assets which which are neither neither past dueasse nortsimpa ired edilila a e aexter s unde rl: cr 2010 Long te Long term rm loans, advances and rec rece eiv iva able les s Long term deposits  Tra  T rade debts Loans and advances Othe Oth er re rec ceivable les s Bank balances

317,8 ,88 89 56,443 97,143,154 68,615 1,581,763 1,770,2 ,27 78 100,938,142

2009 405,7 ,78 80 53,189 68,105,251 53,817 1,234,559 2,8 ,87 75,541 72,728,137

 The cre  The red dit quali lity ty of re rec ceivable les s can be assessed wit ith h re reffere ren nce to th the eir his isto toric rica al perf rfor orm mance wit ith h no or some default lts s in recent recent histor history y, however, no losses. losses.The credit credit qualility ty of of Compa C ompany’s bank balances can be assessed with reference to external credit ratings as follows: Bank 

(c)) (c

Rating agency

Rating Short term Lon Lo ng term

National Bank of Pakistan Standard Chartered Bank (Pakistan) Limited United Bank Limited Habib Bank Limited MCB Bank Limited Allied Bank Limited  The  Th e Royal Bank of Scotl tla and Limit ite ed Askari Bank Limited Bank Alfalah Limited Bank AL Habib Limited

JCR-VIS PACRA JCR-VIS JCR-VIS PACRA PACRA PACR ACRA A PACRA PACRA PACRA

A1+ A1+ A1+ A1+ A1+ A1+ A1+ A1 + A1+ A1+ A1+

AAA AAA AA+ AA+ AA+ AA AA AA AA AA+

F siabl B Haayb MaentkroLpim oliitte ad n Bank Limited Meezan Bank Li Lim mit ited ed HSBC Bank Middle East Limited Deutsche Bank AG Citibank N.A  JS Bank Limit ite ed Bank Islami Pakistan Limited Samba Bank Limited NIB Bank Limited

JPC VA IS AR C-R JCR-V JC R-VIS IS Moody's S&P S&P PACR ACRA A PACRA JCR-VIS PACRA

A A1 1+ + A1 P1 A1 A1 A1 A1 A1 A1+

AAAA+ AAAa3 A+ A+ A+ A A A AA-

Liquidit ity y ri ris sk  Liquidity risk represents the risk that the Company will encounter difficulties in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Prudent

  

118

lifunding liquidi quidity tythr risk man ag emqua entte implies impli es maof intaining int ainingit sufficient suffic ient hities. an dD mue arketable securiti securi es, avabusinesses ililab abililit ity y of  through ough an ade amount comm itted ted cr credit editcas facil cilit ies. to dynam ic naties, ture tur ethe of the the Compa Company maint inta ains flexibi flexibilility ty in in funding by maintaining commit itted ted credit credit lilines nes availila able.

 

(Amounts in Rs.‘000)

 The  Th e Company’s li liq quid idit ity y management involves pro roje jecti tin ng cash flo low ws and consid ide eri rin ng the level of liquid liquid assets plans. necessary to meet these,moni onito torring balance sheet liliquidit quidity y ratios ratios and maint inta aini ining ng debt financing  The foll  The llo owing are the contr tra actual maturi riti tie es of financial li lia abil ilit itie ies, including esti tim mated intere res st payments: 2010 Carry Ca rryin ing g Contra Con tractu tua al Matu turity rity Matu turity rity amount cash flow up to one after year one year Financial Finan cial liabilities liabilities Lon Lo ng-term depos osits its 948,476 (94 (9 48,476)  (948,476)  Tra  T rade and ot oth her pa payables 142,295,610 (142,295,610) (142,295,610) Accrued interest / mark-up 330,213 (330,213) (330,213) Short te term rm borrowings 2,8 ,83 33,6 ,63 31 (2,8 (2 ,85 53,2 ,28 83)  (2,833,631) Finances under mark-up arrangements 10,187,384  (10,187,384)  (10,187,384) 156,5 ,59 95,314 (1 (15 56,614,966) (1 (15 55,646,8 ,83 38) (9 (94 48,476)

Financial liabilities Financial liabilities Lon Lo ng-t -te erm deposit its s  Tra  T rade and ot oth her pa payables Acc Ac cru rue ed interest / mark rk-u -up p Short te term rm borr orrow owin ing gs Finances under mark-up arrangements 40.2

Carryin Carry ing g amount

2009 Contractu Contra tua al Matu turity rity cash flow up to one year

Matu turity rity after one year

854,718 105,753,389 556,380 4,261,083

(854,718) (85 (105,753,389) (105,753,389) (556,380) (556,380) (4,303,689) (4,261,083)

(854,718) (8 -

14,393,443 125, 5,81 819, 9,0 013

(14,393,443) (14,393,443) (125, 5,86 861, 1,61 619) (124, 4,96 964, 4,29 295)

(854 (85 4,7 ,718 18)

Capit Cap ita al risk manageme men nt  The Company’s objecti  The tiv ves when managing capit ita al are to safeguard the Company’s abil ilit ity y to conti tin nue as a going concern in order to provide adequate returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Company is not subject to any externally imposed capital requirements.  The Company manages it  The its s capit ita al stru struc ctu ture re and makes adju jus stment to to it it in in th the e li lig ght of of changes in economic conditi conditions. ons.To maint inta ain or adjust the capit ita al str structur ucture, e, the Comp Company may adjust the dividend dividend payment to shareholders or issue new shares. Dur uring ing the year, the Compa C ompany’s strateg str ategy was to maint intain ain lev lever erag aged geari aring ng.The gearing ratio ratios s as at  June 30, 2010 and 2009 were as fol ollo low ws: 2010 2009  Tot  T ota al Bor orro row win ing gs 13,021,015 18,654,526 Less:Cash and bank bala lanc nces es (1,77 (1, 778, 8,05 056) (2,88 (2, 883, 3,11 118) Net debt 11,242,959 15,771,408  Tot  T ota al equit ity y 29,336,058 20,870,785  Tot  T ota al capit ita al 40,579,017 36,642,193 Gearing ratio

27.71%

43.00% 119

 

N otes to the Fi Fin nanci cia al Statements For the year ended June 30, 2010

(Amounts in Rs.‘000)

 The  Th e Company finances it its s operati tion ons thro rou ugh equit ity y, borro rrow wings and management of wor ork kin ing g capit ita al wit ith h a view to maintaining an appropriate mix between various sources of finance to minimise risk. Consistent with with other other com companies in the industry industry, the Comp Compa any monit onitor ors s the capit pita al on on the basis of the the gearing ratio. ratio.This ra rati tio o is is calcul lcula ated as net debt divided by tota total capital. Net Net debt is is calcul lcula ated as to total tal borrrow bor owings ings less cash and bank balances.Tot Total al capital capital is calculated calculated as equity equity as shown in in balance sheet and plus net debt.

41. TRANS TRANSAC AC TIONS W ITH REL ELAT AT ED PAR PARTIE TIES S  Transa  Trans action ctionss with with rela related ted pa parties rties du during ring the yea ear, r, othe otherr than than those those whi which ch ha havve bee been n dis disclos closed ed el else sewhe where re in the these se financial statements, are as follows: Name of related party and  and  relationship with with the Com C ompany pany  

Nature of transactions  transactions 

Associates - Pak Gr Grea ease se Manu Manufa facturing cturing C ompa ompany ny Purchases Purchases   (Pr (Priva ivate) te) Limit Limited ed D ividend received - A sia Petr Petroleum oleum Limit Limited ed Income Inco me (facility charge charges) s) Rental income   D ividend received Pipelin Pi peline e charges O ther services Retirement Retir ement benefit funds funds - Pensio ion n Funds Contri Con trib buti tion onss - Gra Gratu tuit ityy Fund Benefit itss paid on behalf of th the e fund Con Co ntri rib butions - Pro rovvident Funds Contr Con triibuti tion onss O ther related parties parties - Pa Pakis kista tan n Ref Refine inery ry Lim Limited ited - Pa Pakk Arab Pip Pipel elin ine e Comp Compa any Lim Limite ited d

Purchase Purcha sess D ividend received Pipel Pip elin ine e ch cha arg rges es Divvidend received Di

Profit oriented state - controlled  controlled  Purc Purch hases   entities - various vario us Sale less  Trans  Tra nsporta portation tion ch cha arg rges es U titility charges Rental charges Inssura In ran nce pre rem mium paid Key manag m anagement ement personne personnell 

120

Remuneration including Remuner performance bonus Retirement benefits H ousing and utilities Leave fare

2010

2009

106,744 106,744 5,146 183,342 5,261 575,732 1,810,010 2,520 2,5 20

155,217 155,21 7 6,519 185,356 185,35 6 4,685 598,761 598,76 1 1,823,858 -

135,713 146,779 300,000 53,593

124,748 51,501 300,000 51,736

29,0 29 ,067 67,6 ,651 51 4,30 4, 301, 1,96 969 9 59,990

29,0 29 ,092 92,9 ,945 45 9,000 4,28 4, 285, 5,12 128 8 56,821

77,615,774 244,004,784 163, 16 3,41 415 5 112,882 133,227 637,387

87,066,177 175,215,057 216, 21 6,11 114 4 89,936 22,181 862,669

25,466 1,932 9,228 1,054

20,657 572 5,511 1,996

 

(Amounts in Rs.‘000)

41.1

 The rel rela ate ted d pa party rty sta tatu tuss of ou outs tsta tand ndin ing g rec rece eiv iva abl bles es and payabl ble e as at June June 30 30,, 20 2010 10 are in incl clud ude ed in res respe pect ctiv ive e no note tess to the financial statements.

42.

NON -ADJ ADJUS USTING TING EVE EVENTS NTS AF AFTER TER THE BALANCE BALANCE SHEE SHEET T DATE  The Board of Management in  The in it its s meeti tin ng held on Au Aug gust 6, 6, 2010 pro rop pos ose ed a fin ina al div divid ide end of Rs. 5 (2009:Nilil)) per share for the year ended June 30, 2010, amount ounting ing to Rs. 857,595 (2009:Nilil)) for for appro pprova val of the members at the Annual General Meeting to be held on September 29, 2010. These financial statements do not reflect these appropriations and the proposed dividend payable.

43.

G EN ERA L  The  Th e figure res s have been ro rou unded of offf to neare res st thousand Rupees unless ot oth herw rwis ise stated.

44.

DATE OF AUTHO AUTHOR RIS ISATION ATION FOR FOR IS ISS SUE  These fin  The ina ancial statements were author oris ised for issue on Au Aug gust 6, 2010 by the Board of Management - Oil O il of the Com Compa pany.

Irfan K. Q ureshi Managing Director

Nazim F. Haji C hairman

121

 

Attendance at Board Meetings For the year ended June 30, 2010 Names

T otal No. of

Number of Meetings

Board meetings *

attended

Mr. Sardar MuhammadYasin Malik

2

2

Mr. Muhammad Ejaz Chaudhary

2

2

Mr. Iskander Mohammed Khan

2

0

Mr. MuhammedYousaf Q amar Hussain Siddiqui

2

2

Mr. Istaqbal Mehdi

2

0

Mr.Arshad Said

2

2

Mr. Haji Amin Pardesi

2

0

Mr. Sabar Hussain

6

6

Mr. Irfan K. Qureshi

8

8

Mr. Malik Naseem Hussain Lawbar

6

6

Mr. Hammayun Jogezai

6

6

Mr. Mahmood Akhtar

6

5

Mr. Pervaiz A. Khan

6

1

Mr. Osman Saifullah Khan

6

3

Mr. Nazim F. Haji

4

4

Dr.Abid Q. Suleri

4

3

* Held duri during ng the peri period od the concerned Dir irector ector was on the Boa Boarrd ** PSO is governed governed by by Marketing of Petrol Petr oleum eum Pr Products oducts (Federal Contr C ontrol ol)) Act, 1974 1974,, whereby the Feder Federal Government has constituted a Board of Management whose members are nominated by the Government.

122

 

Shareholders’ Categories as at June 30, 2010 NO. OF N o. O F SHAR HARES ES HOLDER HOLDERS S SHAR HARES ES IN DIVIDUALS

%

12,595

19,587,152

11.42

IN SURAN C E C O MPAN IES

18

14,439,852

8.42

PUBLIC SEC TO R C O MPAN IES

19

41,791,173

24.37

FIN AN C IAL IN ST ITUT IO N S AN D BAN KS

43

6,565,503

3.83

MO DARABA C O MPAN IES & MUT UAL FUN DS

64

33,928,368

19.78

FEDERAL GOVERN MEN T

1

38,505,565

22.45

SEC URITIES AN D EX C HAN GE C O MMISSIO N

1

2

0.00

173 246

6,175,305 10,525,981

3.60 6.14

13,160

171,518,901

100.00

O F PAK PAKIS ISTAN TAN FO REIGN IN VESTO RS OT HERS T O T AL

123

 

Shareholders’ Categories as at June 30, 2010 NO . O F SHAR HARE ES HOL HOLDE DER RS

NO . O F SHAR HARE ES

%

A ss ssociat ociated ed C ompanies ompanies,, Undertakings Undertakings and rel related ated Parties Government of Pakistan GO P' P's Indirect Holding:- PSO CL CL Employee Empowerment Trust

1 1

38,505,565 5,250,759

22.45 3.06

2 2 1

94,367 26,317,527 848,691

0.06 15.34 0.49

1

1

0.00

312

70,388,859

41.04

12594

19,587,151

11.42

246

10,525,981

6.14

NIT ICP N ational Investment Trust N BP BP, Tru rus stee Depart rtm ment Investment C orporation of Pakistan C EO EO,, Directors Directors and and their their Spouse Spouse and and Minor Childe C hildern rn Irfhan Khalil Q ureshi Public Sector Companies & Corporations Banks, Ba nks, DFIs N BFIs, Insurance Comp Compan anies, ies,

 

Modarbas, Mutual Funds and other O rgnizations  

Individuals O thers T O T AL

124

13,160

171,518,901 100.00

 

Pattern of Shareholdings as at June 30, 2010 No. of  Shareholders

From

Having Shares

To

Shares H eld

Percentage

4899

1

100

150094

0.0875

3093

101

500

863062

0.5032

1653

501

1000

1284464

0.7489

2450

1001

5000

5533878

3.2264

494

5001

10000

3506730

2.0445

179

10001

15000

2249531

1.3115

111

15001

20000

1973871

1.1508

50

20001

25000

1128419

0.6579

25

25001

30000

692226

0.4036

16

30001

35000

517528

0.3017

14

35001

40000

532330

0.3104

12

40001

45000

506777

0.2955

13

45001

50000

632589

0.3688

11

50001

55000

579992

0.3382

12

55001

60000

702033

0.4093

9

60001

65000

567372

0.3308

11

65001

70000

750611

0.4376

8

70001

75000

584714

0.3409

3

75001

80000

239330

0.1395

2

80001

85000

161868

0.0944

6

85001

90000

525527

0.3064

1

90001

95000

94400

0.0550

6

95001

100000

593930

0.3463

2

100001

105000

203610

0.1187

2 3

105001 120001

110000 125000

216357 365550

0.1261 0.2131

3

125001

130000

381700

0.2225

4

130001

135000

532894

0.3107

3

135001

140000

412900

0.2407

1

145001

150000

150000

0.0875

1

150001

155000

150401

0.0877

2

155001

160000

317725

0.1852

2

160001

165000

325985

0.1901

125

 

Pattern of Shareholdings as at June 30, 2010 No. of 

126

Having Shares

To

Shares H eld

165001

170000

339500

0.1979

1

170001

175000

173378

0.1011

3

175001

180000

532176

0.3103

1

180001

185000

180863

0.1054

2

190001

195000

383600

0.2236

4

195001

200000

797816

0.4651

1

205001

210000

205578

0.1199

2

215001

220000

435080

0.2537

2

225001

230000

457591

0.2668

1

235001

240000

236438

0.1378

1

240001

245000

243100

0.1417

1

245001

250000

249800

0.1456

1

285001

290000

285500

0.1665

1

300001

305000

303579

0.1770

1

305001

310000

310000

0.1807

1

315001

320000

319262

0.1861

1

320001

325000

323925

0.1889

1

335001

340000

339577

0.1980

1

375001

380000

378700

0.2208

1

395001

400000

395350

0.2305

1

405001

410000

407494

0.2376

1

410001

415000

413608

0.2411

1

435001

440000

435900

0.2541

1

445001

450000

448236

0.2613

1 1

450001 490001

455000 495000

454200 491049

0.2648 0.2863

1

575001

580000

577043

0.3364

1

620001

625000

622660

0.3630

1

650001

655000

651823

0.3800

1

685001

690000

686000

0.4000

1

700001

705000

703799

0.4103

1

750001

755000

750349

0.4375

1

760001

765000

762246

0.4444

Shareholders 2

From

Percentage

 

Pattern of Shareholdings as at June 30, 2010 No. of 

From

Having Shares

To

Shares H eld

Percentage

Shareholders 1

765001

770000

768292

0.4479

1

845001

850000

848691

0.4948

1

880001

885000

883000

0.5148

1

915001

920000

919367

0.5360

1

1085001

1090000

1089900

0.6354

1

1675001

1680000

1678946

0.9789

1

2115001

2120000

2120000

1.2360

1

2370001

2375000

2371181

1.3825

1

3210001

3215000

3213479

1.8735

1

3735001

3740000

3738731

2.1798

1

5250001

5255000

5250759

3.0613

1

9130001

9135000

9132448

5.3245

1

9995001

10000000

9997584

5.8289

1

10975001

10980000

10975800

6.3992

1

12285001

12290000

12287592

7.1640

1

26010001

26015000

26013948

15.1668

1

38505001

38510000

38505565

22.4498

CompanyTotal

171518901

100.0000

13160

127

 

Paki kis stan State O il Company Limited Pa Thirty- Fourth Annual General Meeting 2010 FORM OF PROXY  PROX Y  I/We of  A member of PAKISTAN STATE OIL COMPANY LIMITED and holder of  O rdina rdinarry Shares as per per Registered Folio N o. /C /CDC DC Partici ticipa pant’ nt’s s ID andAccount No. N o.

SubAccount N o. hereby appoint of  or failing him of  who is also a member of PAKISTAN STATE OIL COMPANY LIMITED vide Registered Folio No. /CDC Participant’s ID and Account No. As my/our proxy to vote for me/us and on my/our behalf at the Thirty-Fourth Annual General Meeting of the Company to be held on onWednesday, September 29, 2010 and at any adjo adjour urnme nment ther thereof eof..

Signed by me/us this

day of

2010.

Signed by the said

Important:  This  Th is for orm m of Pro rox xy duly completed must be deposit ite ed at the Company’s Registere red d Of Offfic ice e, PSO Hou House, Khayaban-e-Iqbal, Clifton, Karachi not later than 48 hours before the time of holding the meeting.

A pro proxy xy should also be a Sharehol eholder der of of the Compa Company.

for Office use Five Rupees Revenue Stam Stamps

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