third quarterly report 2013-2014 (1)
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REPORT FOR THE NINE MONTHS
ENDED MARCH 31, 2014
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We are committed to leadership in the energy market through competitiveadvantage in providing the highest quality petroleum products and servicesto our customers, based on:
Professionally trained, high-quality, motivated workforce that works asa team in an environment which recognizes and rewards performance,innovation and creativity and provides for personal growth and
development.
Lowest-cost operations and assured access to long-term and cost-effective supply sources.
Sustained growth in earnings in real terms.
Highly ethical, safe, environment-friendly and socially responsible businesspractices.
Mission
To excel in deli vering value to customers as an innovative and dynamicenergy company that gets to the future first.
Vision
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4 5
COMPANY INFORMATIONBOARD OF MANAGEMENT
Mr. Mujahid EshaiChairman
Mr. Amjad Parvez JanjuaManaging Director
Mr. Muhammad Naeem MalikMember
Mr. Muhammad AzamMember
Dr. Mirza Ikhtiar BaigMember
Mr. Malik Naseem Hussain LawbarMember
Mr. Ahsan BashirMember
Raja Hameed Ahmed SaleemMember
Mr. Wazir Ali KhojaMember
COMPANY SECRETARYMs. Ayesha Afzal
AUDITORSKPMG Taseer Hadi & Co.Chartered Accountants
M. Yousuf Adil Saleem & Co.Chartered Accountants
REGISTRAR OFFICETHK Associates (Pvt.) Ltd.Ground Floor, State Life BuildingNo. 3 Dr. Ziauddin Ahmed Road,Karachi.
Phone: 021-35689021Fax: 021-35655595
BANKERS
Allied Bank Limited
Askari Bank LimitedBank Al-Falah Limited
Bank Al-Habib Limited
Bank Islami Pakistan Limited
Citibank N.A
Deutsche Bank AG
Faysal Bank Limited
Habib Metropolitan Bank Limited
Habib Bank Limited
JS Bank Limited
Meezan Bank Limited
MCB Bank Limited
National Bank of Pakistan
NIB Bank LimitedSamba Bank Limited
Standard Chartered Bank (Pakistan)
Limited
The HSBC Bank Middle East Limited
United Bank Limited
REGISTERED OFFICE
Pakistan State Oil Company Limited
PSO House
Khayaban-e-Iqbal, Clifton,
Karachi - 75600, Pakistan.
UAN: (92-21) 111-111-PSO (776)
Fax: (92-21) 9920-3721
Taaluq Careline: 0800-03000
E-mail: taaluq@psopk.com
Website: www.psopk.com
REPORT TO SHAREHOLDERS
The Board of Management (BoM) of Pakistan State Oil Company Limited(PSOCL) has reviewed the performance of the Company for the nine monthsperiod ended March 31, 2014 and is pleased to present its report thereon.
In the period under review, PSO's sales revenue crossed the trillion turnovermark and stood at Rs 1.02 t rillion as compared to Rs 930 billion duringSame Period Last Year (SPLY), representing a growth of 10%. The Company'safter tax earnings increased to Rs 19.4 billion as compared to Rs 9.4 billionduring SPLY. These all time high nine monthly after tax earnings surpassedthe after tax earnings of Rs 12.6 billion during the ent ire financial year 2013by 54%. While maintaining the overall market leadership position (with 73%share in black oil market and 53% in white oil market), the Companyregistered a growth of 4% in sales of liquid fuels as compared to SPLY.
Devaluation of Pak Rupee against US dollar by 6.5% in the first half offinancial year 20 14 was followed by an appreciation of 7% in the thirdquarter, resulting in a net exchange loss of Rs 1.2 billion in the nine monthsunder review. Recovery of interest from power sector producers and interestearned on PIBs contributed positively to the bottom line although it causedan increase in finance cost by 23%.
Due to liquidity issues faced by the Company caused by outstandingreceivables, mainly from power sector customers, the Board has decidedto defer the dividends at this stage.
The Board appreciated the contributions of the management team andworkforce towards impressive performance of the Company. In view of theincreasing receivables from the power sector customers, the BoM directedthe management to continue working closely with the concerned governmentdepartments and customers for timely realization of due payments. Themanagement thanked the members of the Board for their direction andsupport and assured continued efforts to maximize value for the stakeholders.
Amjad Parvez JanjuaManaging Director
Karachi: April 28, 2014
Muhammad Naeem MalikMember - BoM
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CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2014
Amjad Parvez JanjuaManaging Director
Muhammad Naee m MalikMember - BoM
The annexed notes 1 to 24 form an integral part of this condensed interim financial information.
Profit for the period
Other comprehensive income
Items that will not be reclassified to profit
or loss
Share of unrealised gain due to change in
fair value of available for sale investments
in associates
Remeasurement of po st employement
benefit plans
Less: tax thereon
Reversal of deferred tax asset recognised
on actuarial losses and past service cost
on its realisation
Current tax benefit on actuarial losses and
past service cost
Items that may be reclassified subsequently
to profit or loss
Unrealised (loss)/gain due to change in fair
value of other long-term available for sale
investments
Less: deferred tax thereon
Total comprehensive income for the period
Nine months period ended
March 31,2014
March 31,2013
(Restated)(Rupees in 000)
Quarter e nded
March 31,2014
March 31,2013
(Rupees in 000)
9,376,647
5,707
228,042
(77,534)150,508
-
-
-
247,849
-
247,849
9,780,711
3,600,423
(385)
(1,153,000)
392,020(760,980)
-
-
-
398,204
45,353
443,557
3,282,615
3,062,857
1,654
-
--
-
-
-
173,193
-
173,193
3,237,704
CONDENSED INTERIM S TATEMENT OF CHANGES IN EQUITY (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2014
Capital Reserves
Sharecapital
Surplus onvesting ofnet assets
Unrealisedgain / (loss)on
remeasure-ment of long
terminvestment
available forsale
Company'sshare of
unrealisedgain/(loss)on
remeasurement
ofavailable forsale
investment inassociates
Revenue Reserves
Generalreserve
Unappro-priatedprofit
Total
---------------------------------------------------------------(Rupees in 00 0)-------------------------------------------------------------------------------
9
The annexed notes 1 to 24 form an integral part of this condensed interim financial information.
Balance asat July 1, 2012(Audited) aspreviously reportedEffect of change in accounting policy due
to application of IAS 19 (Revised) -(See note 3.1.1)Acturial losses and past service costLess: deferred ta x thereon
Balance asat July 1, 2012(Restated)
Total comprehensive income for the nine monthsperiodProf it for the nine m onths period ended March 31,
2013 as reported earlierEf fect of change in accounting policy resulting in reversal
of previously amortized actuarial losses and past servicecost (note 3.1)
Less: deferred ta x thereon
Prof it for the nine m onths period ended March 31, 2013(Restated)
Other comprehensive incomeUnrealised gain due to change in fa ir value of long-term
available for sa le investmentsShare of unrealised gain due to change in fa ir value of
available for sa le investments in a ssocia tesGain on remeasurement of retirement a nd other service
benef its (See note 3.1.2)
Less: deferred ta x thereon
Transaction with the ownersFinal dividend for the year ended June 30, 2012 @ Rs.2.5per shareBonus shares for the year ended June 30, 2012 @ 20%Interim dividend for the year ended June 30, 2013 @Rs. 2.5 per shareBonus shares for the year ended June 30, 2013 @ 20%Balance asat March 31, 2013(restated)
Total comprehensive income for the three monthsperiodProf it for the three month s period ended
June 30, 2013 (reported)Ef fect of change in accounting policy resulting in
reversal of previously ammortized acturia l lossesand past service cost (note 3.1)
Less: deferred ta x thereon
Prof it for the three month s period ended June 30,2013 (restated)
Other Comprehensive IncomeUnrealised gain due to change in fa ir value of
long term a vailable for sa le investments-netof deferred tax
Share of unrealized gain due to change in fa irvalue of available for sa le investment in associa te
Gain on remeasurement of retirement and other
service ben ef its (See note 3.1.2)Less: deferred ta x thereon
Balance asat June 30, 2013(restated)
Total comprehensive income for the nine monthsperiodProf it for the nine m onths period ended March 31, 2014
Other Comprehensive IncomeUnrealised loss due to change in fa ir value of long term
investments-net of deferred taxShare of unrealized gain due to change in fa ir
value of available for sa le investment in associa tesGain on remeasurement of retirement and other
service ben ef its (See note 3.1.2)Current tax on remeasurement of retirement and
other service benef its (See not e 3.1.3)
Reversal of deferred tax asset recognised onacturia l losses and past service cost on its realisa tion
Current tax benef it on a cturia l losses and pastservice cost (See note 3.1.3)
Transaction with the ownersFinal dividend for the year ended June 30, 2013 @ Rs. 2.5
per shareInterim dividend for the year ended June 30, 2014 @ Rs.
4 per shareBonus shares for the year ended June 30, 2014 @ 10%Balance asat March 31, 2014
1,715,190
---
1,715,190
-
--
-
-
-
-
-
--
-343,037
-411,645
2,469,872
-
---
-
-
-
----
2,469,872
-
-
-
-
-
-
---
-
-
246,9872,716,859
49,959,908
(2,463,130)837,465
(1,625,665)48,334,243
9,316,771
90,721(30,845)59,876
9,376,647
247,849
5,707
228,042
(77,534)150,508404,064
9,780,711
(428,797)-
(514,557)-
57,171,600
3,241,174
30,241(10,283)19,958
3,261,132
58,813
736
228,042(77,534)150,508
3,471,18960,642,789
19,399,845
(1,171,069)
1,132
(1,048,723)
356,566(692,157)
(608,653)
608,653 (1,862,094)
17,537,751
(617,468)
(987,949)
-76,575,123
22,610,693
(2,463,130)837,465
(1,625,665)20,985,028
9,316,771
90,721(30,845)59,876
9,376,647
-
-
228,042
(77,534)150,508150,508
9,527,155
(428,797)(343,037)
(514,557)(411,645)
28,814,147
3,241,174
30,241(10,283)19,958
3,261,132
-
-
228,042(77,534)150,508
3,411,64032,225,787
19,399,845
-
-
(1,048,723)
356,566(692,157)
(608,653)
608,653(692,157)
18,707,688
(617,468)
(987,949)
(246,987)49,081,071
25,282,373
---
25,282,373
-
--
-
-
-
-
-
--
--
--
25,282,373
-
--
-
-
-
-
----
25,282,373
-
-
-
-
-
-
---
-
-
-25,282,373
1,431
---
1,431
-
--
-
-
5707
-
-
5707 5707
--
--
7,138
-
---
-
-
736
---
7367,874
-
-
1,132
-
-
-
-1,1321,132
-
-
-9,006
346,848
---
346,848
-
--
-
247,849
-
-
-
247,849247,849
--
--
594,697
-
---
-
58,813
-
---
58,813653,510
-
(1,171,069)
-
-
-
-
-(1,171,069)
(1,171,069)
-
-
-(517,559)
3,373
---
3,373
-
--
-
-
-
-
-
--
--
--3,373
-
--
-
-
-
-
----
3,373
-
-
-
-
-
-
---
-
-
-3,373
19,399,845
1,132
(1,048,723)
356,566(692,157)
(608,653)
608,653
-
(2,031,096)
860,027
(1,171,069)
17,537,751
Amjad Parvez JanjuaManaging Director
Muhammad Naee m MalikMember - BoM
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3,604,622
828
7,388
208,556
(5,009,061)
(3,927,172)
(501,913)
(5,616,752)
(462,998)
(7,914)
13,927
643,139
186,154
6,347,550
(724,055)
5,623,495
192,897
(18,116,141)
(17,923,244)
1
11
Amjad Parvez JanjuaManaging Director
Muhammad Naee m MalikMember - BoM
CONDENS ED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2014
CASH (USED IN)/GENERATED FROM OPERATING
ACTIVITIES
Cash (used in)/genera ted from o perations
Decrease in long-term loans, advances and
receivables
(Increase)/Decrease in long -term depo sits and
prepayments
Increase in long-term deposits
Taxe s paid
Finance costs paid
Retirement b enefits paid
Net cash (used in)/ generated from operatingactivities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant a nd eq uipment
Purchase of intang ibles - computer softw are
Proceeds from disposal of property, plant a nd
equipment
Dividends received
Net cash (used in) /generated from investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term finances obtained d uring the period-
net of repayment
Dividends paid
Net cash generated from financing activities
Net (decrease)/increase in cash a nd cash eq uivalents
Cash and cash equivalents at beg inning of the
period
Cash and cash equivalents at end of the period
19
20
March 31,2014
Nine months period ende d
March 31,2013
(Rupees in 000)
1. LEGAL STATUS AND NATURE OF BUSINESS1.1 Pakistan State Oil Company Limited ("the Company") is a public company
incorporated in Pakistan in 1976 under the repealed Companies Act, 1913(now Companies Ordinance, 1984) and listed o n the Karachi, Lahore andIslamabad Stock Exchanges. The registered office of the Company is locatedat PSO House, Khayaban-e-Iqbal, Clifton, Karachi. The principal activities ofthe Company are procurement, storage and marketing of petroleum andrelated products. It also blends and markets various kinds of lubricating oils.
1.2 The Board of Management - Oil nominated by the Federal Government undersection 7 of the Market ing of Petroleum Products (Federal Control) Act, 1974("the Act") manages the affairs of the Company. The provisions of the Actshall have effect notwithstanding anything contained in the Companies Act,1913 (now Companies Ordinance, 1984) or any other law for the t ime beingin force or any agreement, contract, Memorandum or Articles of Associationof the Company.
2 . B AS IS O F P REP ARATIO N2.1 This condensed interim financial information has been prepared in accordance
with the requirements of the International Accounting Standard (IAS) - 34"Interim Financial Reporting" and provisions of and direct ives issued underthe Companies Ordinance, 1984. In case where requirement s differ, theprovisions of or d irectives issued unde r the Companies Ordinance, 1984have been followed.
2.2 This condensed interim financial information is presented in Pakistan Rupeeswhich is also the Company's functional currency and all financial informationpresented has been rounded off to the nearest thousand rupees unlessotherwise stated.
2.3 This condensed interim financial information is un-audited and should beread in conjunction with the audited annual financial statements of theCompany for the year ended June 30, 2013. This condensed interim financialinformation is being submitted to the shareholders as required by the listingregulations of Karachi, Lahore and Islamabad Stock Exchanges and section
245 of the Companies Ordinance, 1984.
3 . ACCOUNTIN G P OLICIES3.1 The accounting policies and method of computation adopted for the
preparation of this condensed interim financial information are the same asthose applied in the preparation of the Company's annual audited financialstatements for the year ended June 30 , 2013 except as described b elow.
IAS 19 (revised) - 'Employee Benef its' effec tive for annual periods beginningon or after January 1, 2013 amends the accounting for employee benefi ts.The standard requires immediate recognition of past service cost in the profitand loss account and also replaces the interest cost on the defined benefitobligation and the expected return on plan assets with a net interest costbased on the net defined benefit asset or liability and the discount rate,measured at the beginning of the year.
Further, a new term "remeasurements" has been introd uced. This is made
up of actuarial gains and losses, the difference b etween actual investmentreturns and the return implied by the net interest cost. The standard requires"remeasurements" to be recognised in the Balance Sheet immediately, witha charge or credit to be recorded in Statement of Comprehensive Income
NOTES TO THE C ONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 20 14
Note
The annexed notes 1 to 24 form an integral part of this condensed interim financial information.
(87,235,511)
19,554
(32,073)
34,704
(10,922,650)
(2,997,108)
(1,541,004)
(102,674,088)
(773,507)
(25,527)
6,616
520,555
(271,863)
68,357,998
(755,760)
67,602,238
(35,343,713)
3,523,233
(31,820,480)
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in the periods in which they occur.
Following the appli cation of IAS 19 (Revised) - 'Employee Bene fits', theCompany's policy for staff retirement benefits in respect of remeasurements
and past service costs is amended as follows:
- The amount arising as a result of remeasurements are recognised in theBalance Sheet immediately, with a charge or credit to Other ComprehensiveIncome (OCI) in the periods in which they occur.
- Past sevice costs are recognized immediately in the profit and loss accountin the period in which t hese arise.
The change in accounting policy has been accounted for retrospectively inaccordance with the requirements of IAS 8 'Accounting Policies, Changesin Accounting Estimates and Errors' and corresponding figures have beenrestated.
3.1.1 The Company's condensed interim financial information is affected by the'remeasurements and past service costs' relating to prior years. Thereconciliation, considering effects of change in accounting policy, have been
summarised belo w:
3.1.2 The change in accounting policy has resulted in decrease in total
comprehensive income by Rs. 659 ,037 thousand (March 31, 2013: Rs. 210,383
thousand) the details of which are as follows:
3.1.3 Based on advice of the tax advisors, the Company will claim the cumulative
actuarial losses net and past service costs relating to approved retirement
benefit plans as allowable tax expense for the ye ar ended June 30, 20 14
resulting in reductio n in tax liability of Rs. 965,219 thousand.
3.2 In June 2011, the Securities & Exchange Commission of Pakistan on receiving
representations from some of entities covered under the Scheme and after
having consulted the Institute of Chartered Accountants of Pakistan granted
exemption to such entities from the application of IFRS 2 to the Scheme.
There has been no change in status of Benazir Employee Stock Option
Scheme ("the Scheme") as stated in note 2.6 to the audited financial statements
for the year ended June 30, 2013.
Had the exemption not been granted, the staff costs of the Company for the
nine months period would have been higher by Rs. 156,928 thousand, profit
before taxation would have been lower by Rs. 156,928 t housand, retained
earnings wo uld have been l ower b y Rs. 1,177,189 thousand, earning per
share would have been lower by Rs. 0.58 per share and reserves would
have been higher by Rs. 1,177,189 thousand.
4. ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of this condensed interim financial information in conformity
with the approved accounting standards requires management to make
estimates, assumptions and use judgments that affect the application of
policies and reported amounts of assets and liabilities and income and
expenses. Estimates, assumptions and judgments are continually evaluated
and are based on historical experience and other factors, including reasonable
expectations of future events. However, actual results may differ from these
estimation. Revisions to accounting estimates are recognised prospectively
Impact on comprehensive income
Profit and loss account
Benefit/reversal of a mortisation of actuarial losses and pa st
service cost as a result o f a doption of IAS 19 (Revised)
from:
- administrative e xpenses
- distribution and marketing e xpenses
Less: tax effect thereo n
Increase in profit for t he period
Other comprehensive income
Recognition of gains on remeasurement of retirement and
other service benefits during the period
Less: tax effect thereo n
(Decrease)/Increase in tota l comprehensive income
for the period
Increase in earnings per share (Rupees)
12,546
37,636
(17,062)
33,120
(1,048,723)
356,566
(692,157)
(659,037)
0.12
22,680
68,041
(30,845)
59,876
228,042
(77,534)
150,508
210,384
0.22
Nine Months Period Ended
March 31,
2014
March 31,
2013(Rupees in 000)
2,518,502
2,443,775
19,3552,463,130
4,981,632
2,385,137
2,443,775(456,084)
1,987,691
19,355
(120,961)
4,271,222
Balance as at June 30, 2012 as previously reported
Recognition of previously unrecognised cumulativeactuarial losses and past service cost as a result ofadoption of IAS 19 (Revised):
(i) recognition of cumulative unrecognised actuariallosses at June 30 , 2012 in OCI
(ii) recognition of cumulative unrecognised pastservice cost at June 30, 2012 in unappropriatedprofit
Balance as at June 30, 20 12 - as restated
Balance as at June 3 0, 20 13 as previously reported
Recognition of previously unrecognised cumulativeactuarial losses and past service cost as a result ofadoption of IAS 19 (Revised):
(i) recognition of cumulative unrecognisedactuarial losses/(gains) in OCI
-as at June 30, 2012-for the year ended Jun e 30, 2013
(ii) recognition of cumulative unrecognised pastservice costs at June 30, 2 012 in un-appropriated profit
Reversal of actuarial losses and past service costsamortised during th e year ended June 30, 2013
as a result of adop tion of IAS 19 (Revised)
Balance as at June 3 0, 20 13 - restated
Retirement andother service
benefits
Deferred Tax UnappropriatedProfit
1,292,316
830,884
6,581837,465
2,129,781
2,650,805
830,884(155,069)675,815
6,581
(41,127)
3,292,074
22,610,693
(1,612,891)
(12,774)(1,625,665)
20,985,028
33,470,602
(1,612,891)301,015
(1,311,876)
(12,774)
79,834
32,225,786
(Rupees in 000)
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commencing from the period of revision.
Judgments and estimates made by management in the preparation of this
condensed interim financial information are the same as those that were
applied to the audited annual financial statements as at and for the year
ended June 30 , 2013.
5. FINANCIAL RISK MANAGEMENT
The financial risk management objectives and policies are consistent with
those disclosed in the annual financial statements of the Company as at and
for the year ended June 30 , 2013.
6. PROPERTY, PLANT AND EQUIPMENT
6.1 Additions and disposals to operating assets during the period are as follows:
Buildings on leasehold la nd
Tanks an d pipelines
Plant and machinery
Service and filling sta tions
Vehicles and o ther rolling stock
Furniture and fittings
Office equipment
Gas cylinders /regulat ors
10,487
61,478
40,409
94,525
155,626
24,105
20,786
1,429
408,845
38,419
41,694
67,156
149,648
106,865
3,835
16,155
-
423,772
42
135
29
142
3,479
9
57
-
3,893
-
-
57
231
128
7,971
69
3
8,459
(Rupees in 000)
Additions (Un-audited)(at cost)
Disposals (Un-audited)(at net book value)
March 31,2013
March 31,2014
March 31,2013
March 31,2014
The above disposals represented assets costing Rs. 48,434 thousand (March
31, 2013: Rs. 43,784 thousand) and were d isposed off fo r Rs. 6,616 thousand
(March 31, 2013: Rs. 13,927 thousand).
7. INTANGIBLES
Additions made during the period amounted to Rs. 25,527 thousand (March
31, 2013: Rs. 7,914 thousand).
8 LONG TERM INVESTMENTS - AVAILABLE FOR SALE
This includes investment in Pakistan Investment Bonds (PIBs) made in June
2013 out of proceeds received against partial settlement of circular debt. As
at March 31, 2014, the carrying value [net of amor tization of Rs. 396,779
thousand (June 30, 2 013: Rs. 2,857 thousand)] and fair value o f the PIBs were
Rs. 45,742,406 and Rs. 43,448,844 respectively. Thus, an unrealized loss on
remeasurement to fair value of Rs. 2,293,562 thousand was recognized as
at March 31, 2014. During the current period , these PIBs were collateralizedwith various bank against borrowing facility of upto Rs. 40,000,000 thousand
(with 10% margin).
UnauditedMarch 31,
2014
AuditedJune 30,
2013(Restated)
(Rupees in 000)
Deductible temporary differences in respect of:
Provision f or:
- retirement benefits
- doubt ful t rade debts
- doubtful receivables
- impairment of stores and spare part s
- excise, taxes and other d uties
- impairment o f stocks-in-trade
- tax amortization
Liabilities offered for ta xation
Unrealized loss due to change in fair value of long
term available for sale securities (AFS)
Others
Taxable temporary differences in respect of:
- accelerated t ax depreciation
- investments in associates accounte d for u sing equity
method
- Unrealized gain due to change in fair value of long-term
AFS securities
649,232
863,220
445,723
8,291
24,763
7,295
561
3,387,349
779,811
2,769
6,169,014
(419,639)
(39,027)
-
(458,666)
5,710,348
1,160,103
945,177
393,259
8,291
24,763
7,295
404
1,390,787
-
2,769
3,932,848
(535,743)
(24,815)
(80,215)
(640,773)
3,292,075
10 . TRADE DEBTS UnauditedMarch 31,
2014
AuditedJune 30,
2013(Rupees in 000)
Considered good
Due from Government agencies and autonomous bodies
- Secured
- Unsecured
Due from ot her customers
- Secured
- Unsecured
Trade debts - considered go od
Trade d ebts - considered d oubtf ul
Trad e deb ts - gro ss
Less: Provision for impairment
Trad e deb ts - net
33,987
107,208,221
107,242,208
1,330,726
66,535,800
67,866,526
175,108,734
2,538,881
177,647,615
(2,538,881)
175,108,734
35,218
39,541,599
39,576,817
1,324,035
35,695,342
37,019,377
76,596,194
2,779,934
79,376,128
(2,779,934)
76,596,194
10.1
10.1
10.2 &10.4
10.3
Notes
The net change of Rs. 2,418,273 thousand (March 31, 2013: Rs. 1,067,433) in the deferred tax asset
balance for the period has been recognized as under:
- Profit and loss account
- Other comprehensive income - investment in AFS securities- Other comprehensive income - remeasurement of post
employement benefits
2,166,899
860,027
(608,653)
2,418,273
1,067,433
-
-
1,067,433
UnauditedMarch 31,
2014
UnauditedMarch 31,
2013
(Rupees in 000)
9. DEFERRED TAX
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13. SHORT TERM BORROWINGS - SECURED
Short-term finances
Finances under mark-up arrangements
83,923,584
36,453,805
120,377,389
15,565,586
1,704,095
17,269,681
UnauditedMarch 31,
2014
AuditedJune 30,
2013
(Rupees in 000)
13.1, 13.2 &13.3
13.1 &13.4
Notes
31, 2004. Although no recovery has been made on this account, the Companycontinues to follow up the matter with MoP & NR. In 2005, the Companysubmitted an independent report on the verification of the above claim toMoP&NR, upon their request. In 2006, a joint reconciliation exercise wascarried out with WAPDA as per the decision taken in a meeting held on May19, 200 6 under the Chairmanship of Additi onal Finance Secretary (GoP)and the f inal reconc iliatio n statements we re submitt ed to MoF andWAPDA. Subsequently, on February 3, 2007 the Company and WAPDAagreed upon the final receivable balance of Rs. 3,407,357 thousand. MoP &NR vide its l ette r No. PL-7(4)/20 12-13 dated March 0 1, 2013 has requestedthe MoF to make a provision of the said amount in the Federal Budget 2 013-2014. During the cur rent per iod, MoP & NR vide it s letter No . PL-7(4)/2012-13 dated Septemb er 23, 20 13 requeste d Ministr y of Water and Power,Government of Pakistan (MoW&P) to take up the matter with MoF to settlethis long outstanding issue. The Company vide its lett er No. PDC/96/13/001dated December 19, 2013 requested the MoW&P for placing the request withMoF to include thi s claim in the Federal Budget 2014-2015 and the Companyis confident to recover the amount in full in due course of time as said isbeing consistently followed up by t he management.
11.4 Price differential claim on account of supply of furnace oil to KEL at Natural
Gas prices aggregating to Rs.3,908,581thousand (June 30, 2013: Rs. 3,908,581thousand)
The Company received a directive from MoP&NR through letter NG(1)-7(58)09-
LS(Vol-1) dated November 26, 20 09 in which the Company was directed to
supply furnace oil to K-Electric Limited (KEL) (formerly Karachi Electric Supply
Company Limited) at the prices equivalent to natural gas prices plus applicable
duties and taxes under the Natural Gas Load Management Program (NGLMP)
for Winter 200 9-2010. As per this arrangement the differential cost between
the natural gas and furnace oil would be borne by GoP and reimbursed
directly to the Company by Ministry of Finance. The Company was again
directed by GoP in May 2010 to supply furnace oil to KEL at natural gas prices.
Accordingly, furnace oil was provided to KEL due to which resulted in price
differential claim of Rs. 5,708,581 thousand out of which Rs. 1,800 ,000thousand were received fro m MoF in June 2 010.
The Ministry of Water & Power vide its letter date d December 24, 2012
requested MoF to settle the above mentioned claims at the earliest. The
MoP&NR vide its letter No. DOM-3(17)/2013 dated April 19, 2013 has also
requested MoF to process the claim of PSO at the earliest. During the period,
the Company vide i ts letter No . PDC/96/13/001d ated December 19, 2013
requested the MoW&P for placing the request with MoF to include this claim
in the Federal Budget 2014-2015. During the current period , MoW&P vide its
letter dated March 26, 2014 requested the MoF for inclusion of said claim in
the Federal Budget 20 14-15 and the Company is confide nt to recover the
amount in full from GoP in due course of time.
11.5 Includes Rs. NIL (June 30, 2013: Rs. 34,323 thousand) receivable from Asia
Petroleum Limited, a related party, on account of facilities charge.
11.6 As at March 31, 2014, other receivables aggregating Rs. 1,310,950 thousand(June 30, 2013: 1,156,645 thousand) were deemed to be impaired and hence
provision of the same amount was made thereagainst.
13.1 The total outstanding balance is against the facilities aggregating Rs. 134,728,711thousand (June 30, 2013: Rs. 43,485,000 thousand) available from variousbanks. These facilities are secured by way of floating / pari passu charge onCompanys stocks and receivables wheresoever located in Pakistan andTrust Receipts.
13.2 Includes foreign currency (FE-25) borrowings of US$ 408,725 thousandequivalent to Rs. 40,044,817 thousand (June 30, 20 13: Nil) payable to variousbanks by the Company. The Company has obtained FE-25 facilitiesaggregating US$ 628,041thousand equivalent to Rs. 62,966,546 thousandduring the period on directives and assurance of the GoP communicatedvide lette r dated November 27, 2013 that it will bear additi onal cost andforeign exchange losses suffered by the Company on these borrowings.These borrowings are secured against the Trust Receipts.
These foreign currency borrowings have various maturity dates upto June18, 20 14 and carry mark-up rates ranging from LIBOR plus 3% to LIBOR plus5% per annum.
13.3 The rate of mark up for these facilities (other than on the foreign currencyborrowings mentioned in note 13.2) ranges from Re. 0.03 to Re. 0.31(June30, 20 13: Re. 0.03 to Re. 0.27) per Rs. 1,000 per day.
13.4 The rate of mark up for these facilities ranges from Re. 0.29 to Re. 0.34 (June30, 20 13: Re. 0.28 to Re. 0.33) per Rs. 1,000 per day, net of promp t paymentrebates. These facilities are renewable subject to payment of repurchaseprice on specified dates.
14. CONTINGENCIES AND COMMITMENTS
14 .1 Contingenc iesThe Company has contingent liabilities in respect of legal claims in theordinary course of business.
14.1.1 Claims against the Company not acknowledg ed as debts amounts to Rs.
12,588,765 thousand (June 30 , 2013: Rs. 15,280,622 thousand). This includesclaim amounting t o Rs.10,662,090 thousand (June 30, 2013: Rs. 13,684,734thousand) for delayed payment charges on the understanding that this amountwill be payable only when the Company will fully realize interest due from
12. TRADE AND OTHER PAYABLES
12.1 This includes amounts payable in respect of purchase of oil from local andforeign suppli ers aggregating Rs.105,45 1,004 thousand (June 30, 2013: Rs.138,194,325 thousand).
12.2 Includes Rs. 12,807,764 thousand (June 30, 2013 : Rs. 4,277,628 thousand)due to related parties.
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Rs. 2,293,495 thousand. The Company has filed an appeal against that orderbefore the CIR (Appeals) which is pending for hearing. Based on the viewsof tax advisors of the Company, the management believes that the matterswill ultimately be decided in the favour of the Company. Accordingly, noprovision has been made in this respect in this condensed interim financialinformation.
14.1.9 ACIR through his order d ated January 28, 2014 made certain additions anddisallowances in r espect of tax year 20 13 and raised tax demand of Rs.802,678 thousand. The Company has filed an appeal against that orderbefore the CIR (Appeals) which is pending for hearing. Based on the viewsof tax advisors of the Company, the management believes that the matterswill ultimately be decided in the favour of the Company. Accordingly, noprovision has been made in this respect in t his condensed interim financialinformation.
14.1.10 A sales tax order-i n-orig inal No. 01/20 10 dated March 30, 2010 was issuedby DCIR, FBR in respect of sales tax audit of the Company for the tax years200 4-2007. Under the said order, a demand of Rs. 883,864 thousand wasraised on account of certain transactions and default surcharge of Rs. 512,172thousand was imposed. The ATIR decided the case in favour of the Company.
However, the tax department has filed an appeal against the aforesaiddecision of ATIR in the High Court of Sindh which is pending for hearing.Based on the views of tax advisors of the Company, the management believesthat the matters will ultimately be decided in the favour of the Company.Accordingly, no provision has been made for the said matters in this condensedinterim financial information.
14.1.11 A sales t ax order-in-original No.01/2011dated June 30, 2011was issued bythe DCIR, FBR in respect of sales tax audit of the Company for tax year 2008.Under the said order, a demand of Rs. 643,759 thousand was raised onaccount of ce rtain matters and penalty of Rs. 32,188 thousand was imposed.The Company filed an appeal against the said order before the CIR (Appeals)which has been decided in favor of the Company through order No .11of 2012dated September 27, 2012. The department has filed an appeal against thesaid order before the ATIR which is pending for adjudication. Based on theview of tax advisors of the Company, the management believes that the
matter will ultimatlely be decided i n the Company's favour. Accordingly, noprovision has been made for the said amount in this condensed interimfinancial information.
14.1.12 An Order was passed by Assistant Commissioner (IR) - Enforcement andCollectio n Division against the Company on January 22, 2011in which ademand was raised in respect of input sales tax claimed amounting to Rs.650,446 thousand. The demand also included default surcharge (to becalculated at the time of final payment) and penalty of Rs. 32,522 t housandat the rate of 5% of sales tax. The demand was created on the grounds thatthe Company failed to make payments to the supplier in respect of thesepurchases through banking channels within 180 days of the issuance of salestax invoice as required under sec tion 73(2) of the Sales Act, 1990 . TheCompany is now contesting the case at ATIR which is pending for adjudication.Further, the Company has obtained stay from High Court of Sindh againstthe said demand. Based on the views of tax advisors of the Company, the
management believes that the matter will ultimately be decided in theCompanys favour. Accordingly, no provision has been made for theaformentioned demand in this condensed interim financial information.
14.1.13 A sales tax order-in-o riginal No. 01/2012 dated January 16, 2013 was issuedby DCIR, FBR in respect of delayed payment of sales tax due in sales t axreturn f or March 20 11. Under the said order, a demand of Rs. 437,305thousand has been raised which comprised default surcharge of Rs. 82,265thousand and penalty of Rs. 355,040 thousand on late payment. The Companythen filed an appeal against the said order before CIR (Appeals) which wasdecided against the Company. The Company filed an appeal against theaforesaid order o f CIR (Appeals) before ATIR vide order dated September13, 2013 which upheld the imp osition of default surcharge however vacatedpenalty imposed for de novo consideration before adjudication authority.The Company has filed an appeal before the High Court of Sindh againstimposition of default surcharge which is pending for hearing. Based on theviews of tax advisors of the Company, the management believes that thematter will ultimately be decided i n the favour of the Company. Accordingly,no provision has been made in this respect in this condensed interim financialinformation.
14.1.14 In the year 2 005, a demand was raised by t he Collector of Customs, SalesTax and Central Excise (Adjudication) in respect of sales tax, central exciseduty and petro leum development l evy aggregating to Rs. 165,781thousandinclusive of additional sales tax and central excise duty on exports of POL
products to Afghanistan during the period August 200 2 to November 200 3.The demand was raised on the grounds t hat the export consignments werenot verified by the Pakistan Embassy / Consulate in Afghanistan as requiredunder Export Policy and Procedures, 2000 . It is the Companys contentionthat this requirement was in suspension as in the aforesaid period the PakistanEmbassy / Consulate was not fully functio nal. This condition of suspensionwas removed only on July 22, 2004 through Export Policy Order, 2004 whenthe Pakistan Embassy / Consulate became fully functional in Afghanistan.Besides the issue of verification, it is also the Companys contention thatexport of POL products to Afghanistan can be verified from the relevantdocuments and therefore, the demand is unwarranted.
The Company had been contesting t he matter before honorable ATIR whohas remanded the case back to adjudication officer vide its order datedFebruary 06 , 2012. Based on the view of t ax advisors, the Company isconfident that the ultimate outcome of the matter would be in i ts favour and
therefore no provision has been made in this respect in this CondensedInterim financial information.
14.1.15 The Government of Sindh through Sindh Finance Act, 1994 imposedinfrastructure fee for development and maintenance of i nfrastructure ongoods entering or leaving the Province through air or sea at prescribedrates. The Company is contesting the levy along with other companies in theHigh Court of Sindh. Through the interim order passed on May 31, 2011theHigh Court has ordered that for every consignment cleared after December28, 2006 , 50% of the value of infrastructure fee should be paid in cash anda bank guarantee for the remaining amount should be submitted until thefinal order is passed. On the directive of the Directorate of Excise andTaxation (Taxes-III), up to March 31, 2014, the management has deposi tedRs. 61,294 thousand in cash and provided bank guarantee amounting toRs.61,294 thousand wi th the Excise and Taxation Department. Based on theviews of its legal advisors, the management believes that the matter will
ultimately be decided in the Companys favour. Total amount of possibleobligation, if any, cannot be determined with sufficient reliability. Accordingly,no provision has been made against infrastructure fee in this condensed
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interim financial information.
14 .2 Commitments
14.2.1 Commitments in respect of capital expenditurecontracted for but not yet incurred i s as follows:
- Property, plant and equipment
- Intangibles
1,338,677
44,893
1,383,570
971,329
14,486
985,815
UnauditedMarch 31,
2014
AuditedJune 30,
2013
(Rupees in 000)
14.2.2 Letters of credit and bank guarantees outst anding as at March 31, 2014amounted to Rs. 13,999,700 thousand (June 30 , 2013: Rs. 10,046 ,727 thousand).
15 . O THER INCO ME
Included therein is an amount of Rs. 12,216,343 thousand (March 31, 2013:Rs. 1,933,148 tho usand) representing d elayed p ayment mark-up receivedduring the per iod from various customers and pro fit of Rs. 3,373,786 thousand(March 31, 2013: Nil) on Pakistan Investment Bonds (PIBs).
16. Other Operating Expenses
Included therein are foreign exchange loss (net), contribution to workers'profits participation fund and workers' welfare fund amounting to Rs. 1,182,075thousand (March 31, 2013: Rs. 1,330,874 thousand), Rs. 1,552,153 thousand(March 31, 2013: Rs. 725,458 thousand) and Rs. 672,404 thousand (March 31,2013: Rs. 345,969 thousand) respectively.
17. TAXATION
18. EARNIN GS P ER SHARE
18.1 Basic
Current
- for the period
- for prior period
Deferred - for the period
5,811,994
(115,062)
(1,067,433)
4,629,499
March 31,2014
(Rupees in 000)
March 31,2013
(Restated)
3,074,476
-
(1,137,842)
1,936,634
2,237,417
-
(623,412)
1,614,005
March 31,2014
(Rupees in 000)
March 31,2013
(Restated)
Profit after taxation attributable
to ordinary shareholders
Weighted average number of
ordinary share s in issue during
the period (2013:Restated )
Earnings per share in rupees
(2013:Restated)
19,399,845
271,685,939
71.41
9,376,647
271,685,939
34.51
(Rupees in 000)
UnauditedNine months period ended
March 31,2014
March 31,2013
(Restated)
(Rupees in 000)
UnauditedQuarter e nded
March 31,2014
March 31,2013
(Restated)
3,062,857
271,685,939
11.27
3,600,423
271,685,939
13.25
18 .2 Di luted
There is no dilutive effect on the basic earnings per share of the Companyas there were no convertible potential ordinary shares in issue as at March31, 2014 and March 31, 2013.
19. CASH (USED IN)/GENERATED FROM OPERATIONS
Un-audited
March 31,2014
March 31,2013
(Rupees in 000)
2,965,922
(20,889,166)
(17,923,244)
4,633,325
(36,453,805)
(31,820,480)
Cash and bank ba lances
Finance under mark-up arrangements
Note
13
20. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise of the following items included in thebalance sheet:
Number of shares for prior period has been adjusted for the effect of bonusshares issued during the intervening period till March 31, 2014.
12,037,017
(28,292)
(2,166,899)
9,841,826
19.1
UnauditedNine months period ended
Profit before taxation
Adjustment for:
Depreciation and amortization
Amortization of premium on p urchase of PIBs
(Reversal) /provision aga inst doubtful trad e debts
Retirement and other services benefits accrued
Gain on disposal of operating assets
Share of profit from associates
Dividend income
Finance costs
Working capital changes
Cash (used in)/genera ted f rom opera tions
Working capital changes
(Increase) / d ecrease in current assets:
- Stores, spare parts and loose tools
- Stock in trade
- Trad e deb ts
- Loans and advances
- Deposits and short-term prepayment s
- Mark-up/intere st receivab le
- Other receivables
Decrease in current liabilities:
- Trade a nd other pa yables
14,006,146
880,462
-
6,734
786,191
(7,666)
(477,695)
(221,750)
6,038,536
7,004,812
(17,406,336)
3,604,622
(10,959)
(5,001,732)
73,836,847
19,811
1,736,254
-
(3,621,403)
(84,365,153)
(17,406,335)
March 31,2014
March 31,2013
Restated
(Rupees in 000)
29,241,671
796,111
396,779
(241,053)
690,504
(2,723)
(423,174)
(236,656)
7,413,401
8,393,189
(124,870,371)
(87,235,511)
(21,117)
(5,176,124)
(98,271,487)
(17,257)
689,419
1,270,667
6,740,062
(30,084,534)
(124,870,371)
19.1
Note
UnauditedQuarter e nded
UnauditedNine months period ended
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35,877
6,862
164,571
3,941
414,527
1,666,955
231,340
200,000
75,391
19,573,450
-
299,980
2,719,222
221,750
96,332
-
6,600
13,059
98,530,951
682,348
210,227,832
638,999
103,720
61,551
1,112,171
70,001
1,505,742
356,233
82,398
190,189
4,367
-
56,924
7,548
158,671
-
276,351
1,586,707
827,958
548,085
77,978
17,757,993
17,955
12,830
2,442,476
218,701
138,763
3,373,786
7,950
16,884
122,206,706
4,281,225
268,556,534
87,290
135,640
12,743
747,330
92,680
2,516,733
279,744
3,123,837
181,972
5,306
2,811
March 31,2014
March 31,2013
UnauditedNine months period ended
(Rupees in 000)
Nature of transaction
Purchases
Dividend received
Income (facility cha rges)
Rental income
Dividend received
Pipeline charge s
Contributions
Contributions
Contributions
Purchases
Dividend received
Other expense
Pipeline charge s
Dividend received
Dividend adjusted against
price differential claim
Income from PIBs
Contribut ion tow ards
expenses of BOM
Dividend
Purchases
Freight charges
Sales
Transportat ion charges
Utility charges
Rental charges
Insurance premium pa id
Dividend pa id
Other income received
Pipeline cha rges
Other expense
Managerial RemunerationContribution to retirement benefits
Vehicles having book va lue of
Rs. 2.811 million tra nsferred und er
employee car scheme (Sale proceeds)
Name of the related party
and relationship with the
Company
Associates
- Pak Grease Manufacturing
Company(Private) Limited
- Asia Petroleum Limited
Retirement benefit funds
- Pension Funds
- Gratuity Fund
- Provident Funds
Other related parties
- Pakistan Refinery Limited
- Pak Arab Pipeline Company
Limited
- Government of Pakistan
- Board of mana gement - Oil
- Benazir Employees Stock
Option Scheme
State - controlled entities -
various
Key management personnel
21. TRANSACTIONS WITH RELATED PARTIES
Related parties comprise of associated companies, retirement benefit funds,state owned / controlled entities, common directorship companies, Governmentof Pakistan and key management personnel.
Details of transactions with the related parties during t he period, other thandislosed elsewhere in the condensed interim financial information, are asfollows:
26
21.1 The related party status of outstanding receivables and payables as at March
31, 2014 are included in respective notes to the condensed interim financial
information.
21.2 Contributions to staff retirement benefit funds are in accordance with the
terms of t he service rules. Remuneration of key management personnel arein accordance with the terms of the employment / appointment. Other
transactions with the related parties are carried out at agreed terms.
22.Operating segments
22. OPERATING SEGMENTS
This condensed interim financial information has been prepared on the basis
of a single reportable segment.
Sales from fue l prod ucts and ot hers represent 99% and 1% (March 31, 2013:
99% and 1%) of total revenue of the Company respectively.
Total sales of the Company relating to customers in Pakistan was 98.4%
during the nine months period ended March 31, 2014 (March 31, 2013: 98.3%).
"All non-current assets of the Company as at March 31, 2014 are located in
Pakistan.
Sales to three major customers of the Company is around 32% during thenine mo nths period ended March 31, 2014 (March 31, 2013: 30%).
23. CORRESPONDING FIGURES
Corresponding figures have been rearranged and reclassified, wherever
necessary, for the purposes of comparison and to reflect the substance of
the transactions . No significant rearrangements or reclassifications were
made in the condensed interim fi nancial information except the following:
Amjad Parvez JanjuaManaging Director
Muhammad Naee m MalikMember - BoM
24. DATE OF AUTHORISATION FOR ISSUE
The condensed interim financial information was authorised for issue on
April 28, 20 14 by the Board of Management - Oil of the Company.
From To
Description Reclasssified (Rupees in 000 )
Distribution andmarketing expenses
Administrativeexpenses
Cost of products sold
Reclassifications made dueto amendments in FourthSchedule, CompaniesOrdinance, 1984:
- Depreciation andamortization
Exchange losses
Depreciation andamortization
Depreciation andamortization
Other operating expenses
822,377
58,085
1,188,929
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