kohinoor h-yearly 2009.pdfkohinoor energy limited 07 as at december 31, 2009 (un-audited) director...

01

KOHINOORE NE RG Y L IM ITE D

Kohinoor Energy Limited

Contents

Corporate Information 03

Directors’ Review 04

Auditors’ Review Report to the Members 05

Balance Sheet 06

Condensed Interim Profit and Loss Account 08

Condensed Interim Statement of Comprehensive Income 09

Condensed Interim Cash Flow Statement 10

Condensed Interim Statement of Changes in Equity 11

Notes to the Interim Financial Information 12

02 Half Yearly Report December 2009

03Kohinoor Energy Limited

CORPORATE INFORMATION

Board of Directors

Mr. M. Naseem SaigolChairman

Mr. Muneki UdakaChief Executive Officer

Mr. Hiroshige UgaMr. Shinichi UshijimaSheikh Muhammad ShakeelMr. Ghazanfar Ali Zaidi

Nominee ofTomen Power (Singapore) Pte. Limited

Mr. Ghazanfar Ali KhanNominee of Wartsila Finland Oy

Company SecretaryMr. Muhammad Asif

Audit CommitteeMr. Hiroshige Uga

ChairmanSheikh Muhammad ShakeelMr. Ghazanfar Ali Khan

ManagementMr. Muneki Udaka

Chief Executive OfficerSheikh Muhammad Shakeel

Chief Operating OfficerMr. Ghazanfar Ali Zaidi

General Manager TechnicalMr. Muhammad Ashraf

Chief Financial Officer

AuditorsA. F. Ferguson & Co.Chartered Accountants

Bankers

Standard Chartered Bank [Pakistan] LimitedBank Alfalah LimitedFaysal Bank LimitedMCB Bank LimitedDeutsche BankRoyal Bank of Scotland

Registered Office1404, 14th Floor, Green Trust Tower,Blue AreaIslamabad, Pakistan.Tel : +92-51-2828941Fax : +92-51-2273858

Project/Head OfficeNear Tablighi Ijtima,Raiwind Bypass,Lahore, Pakistan.UAN : +92-42-111-111-535Tel : +92-42-35392317Fax : +92-42-35393415-7

Shares RegistrarM/s. Corplink (Pvt) Ltd.Wings Arcade, 1-K, Commercial, Model TownLahore, Pakistan.Tel: +92 42 35839182, 35887262, 35916719Fax: +92 42 35869037

Lahore Office17-Aziz Avenue, Unit # 4, Canal Bank,Gulberg V, Lahore, Pakistan.Tel : +92-42-35717861-2Fax : +92-42-35715090

Websitewww.kel.com.pk

04

Directors’ Review

for and on behalf of the Board

Muneki UdakaChief Executive

LahoreFebruary 10, 2010

Half Yearly Report December 2009

The Board takes pleasure to present you the review report on financial and operational performance andinterim accounts of the Company for the 2nd quarter and half-year ended December 31, 2009, duly reviewedby the statutory auditors of the Company.

The Company owns, operates and maintains a 124 MW furnace oil fired power plant with a gross capacity of131.44 MW. We report that the power plant running at 83.88% capacity factor has generated 459,198 MWHof electricity during the half year ended December 31, 2009 as compare to the generation of 453,058 MWHat a capacity factor of 83.43% during the corresponding six months of the previous financial year 2008-09.

We report that the turnover of the Company for the 2nd quarter of the current financial year remained atRs. 2.43 billion as compare to Rs. 2.17 billion in the corresponding quarter of the previous financial year andin aggregate the turnover for the half year under review remained at Rs. 4.55 billion comparing to Rs. 5.14billion in the six months of the first half of the FY 2008-09. During the half year under review the Companyposted a net profit after tax of Rs. 436 million demonstrating the earnings per share (EPS) of Rs 2.57 as compareto Rs 482 million with an EPS of Rs 2.85 posted in the first half of the FY 2008-09.

We pleasurably report that consequent to strengthening of our in house technical team we have revised thescope of the maintenance agreement with the maintenance contractor. In terms of the new arrangement,major maintenance of the DG sets will be carried out by the maintenance contractor and the rest of the workwill be performed by our in-house maintenance team. As a result of the new arrangement your Company hasmade substantial saving from maintenance cost. The saving from maintenance cost and increased fuel efficiency,have played vital role in reducing the impact on profits of the Company consequent to decline in pre-structuredpower tariff.

It’s a matter of pleasure to inform you that the Board of Directors in its meeting held on February 10, 2010 hasdeclared an interim dividend for the financial year 2009-10 at the rate of 10% (i.e. Re.1.00 per share) for whichthe date of entitlement has been fixed as March 04, 2010.

After surpassing the accumulated 52,000 running hours, one major overhauling under 8k maintenance programwas carried out during the current period as compare to the maintenance of two engines performed duringthe corresponding period of the previous financial year of 2008-2009. All the maintenance cost and timeschedules remained under budgeted parameters. We also take pleasure in reporting that consequent to thecorrective and preventive maintenance approach the overall health of the power complex is very good andthe power plant is running very smoothly and reliably.

The Board acknowledges and appreciates the continued support being provided by the financial institutions,WAPDA, PSO, Wartsila and other suppliers as well as the valued shareholders of the Company and recognizestheir persistent confidence in KEL and its management. The Board also acknowledges the efforts of theexecutives and staff members of the Company and for their diligence and dedication and teamwork towardsensuring the smooth and safe operations of the power plant.


AUDITORS’ REPORT TO THE MEMBERS ON REVIEW OFINTERIM FINANCIAL INFORMATIONIntroduction

We have reviewed the accompanying condensed interim balance sheet of Kohinoor Energy Limited as atDecember 31, 2009 and the related condensed interim profit and loss account, condensed interim statementof comprehensive income, condensed interim cash flow statement and condensed interim statement ofchanges in equity for the half year then ended (here-in-after referred to as the interim financial information).Management is responsible for the preparation and presentation of this interim financial information inaccordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Ourresponsibility is to express our conclusion on this interim financial information based on our review. Thefigures of the condensed interim profit and loss account for the quarters ended December 31, 2008 and 2009have not been reviewed, as we are required to review only the cumulative figures for the half year endedDecember 31, 2009.

Scope of Review

We conducted our review in accordance with international standards on review engagement 2410, “Reviewof Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interimfinancial information consists of making inquiries, primarily of persons responsible for financial and accountingmatters, and applying analytical and other review procedures. A review is substantially less in scope than anaudit conducted in accordance with international standards on auditing and consequently does not enableus to obtain assurance that we would become aware of all significant matters that might be identified in anaudit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanyinginterim financial information as of and for the half year ended December 31, 2009 is not prepared, in allmaterial respects, in accordance with approved accounting standards as applicable in Pakistan for interimfinancial reporting.

Imran Farooq MianPartner

LahoreFebruary 10, 2010

06

December June31, 2009 30, 2009

Note (Rupees in thousand)

BALANCE SHEET

Chief Executive

EQUITY AND LIABILITIES

CAPITAL AND RESERVES

Authorised capital

170,000,000 (June 30, 2009: 170,000,000) ordinary

shares of Rs 10 each 1,700,000 1,700,000

Issued, subscribed and paid up capital

169,458,614 (June 30, 2009: 169,458,614) ordinary

shares of Rs 10 each 1,694,586 1,694,586

Unappropriated profit 5,274,909 5,008,754

6,969,495 6,703,340

NON-CURRENT LIABILITIES

Staff retirement benefits 11,694 9,672

CURRENT LIABILITIES

Trade and other payables 156,288 107,098

Accrued finance cost – 69

Provision for taxation 113,474 100,929

269,762 208,096

CONTINGENCIES AND COMMITMENTS 4

7,250,951 6,921,108

The annexed notes 1 to 12 form an integral part of this condensed interim financial information.


Kohinoor Energy Limited 07

AS AT DECEMBER 31, 2009(Un-Audited)

Director



ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 5 4,228,029 4,357,803

Capital work-in-progress – 5,627

Intangible assets 4,217 3,658

Long term loans, advances and deposits 12,385 9,209

4,244,631 4,376,297

CURRENT ASSETS

Stores, spares and loose tools 422,110 366,072

Stock-in-trade 295,552 311,234

Trade debts 1,557,873 963,309

Loans, advances, deposits, prepayments

and other receivables 388,812 240,122

Cash and bank balances 341,973 664,074

3,006,320 2,544,811

7,250,951 6,921,108

08

Chief Executive

CONDENSED INTERIM PROFIT AND LOSS ACCOUNTFOR THE QUARTER AND HALF YEAR ENDED DECEMBER 31, 2009 (Un-Audited)

Director

Note Quarter ended Half year endedDecember 31, December 31, December 31, December 31,

2009 2008 2009 2008(Rupees in thousand)

Sales 2,427,527 2,173,252 4,547,849 5,139,978

Cost of sales 6 (2,140,260) (1,871,030) (4,042,383) (4,538,348)

Gross profit 287,267 302,222 505,466 601,630

Administration and general expenses (46,623) (43,850) (89,803) (86,059)

Other operating income 12,799 6,787 33,610 11,773

Profit from operations 253,443 265,159 449,273 527,344

Finance costs (933) (20,283) (2,298) (44,261)

Profit before tax 252,510 244,876 446,975 483,083

Taxation (4,442) (542) (11,361) (800)

Profit for the period 248,068 244,334 435,614 482,283

Earnings per share - basic and diluted Rupees 1.46 1.44 2.57 2.85




Note Quarter ended Half year endedDecember 31, December 31, December 31, December 31,


Profit after taxation 248,068 244,334 435,614 482,283

Other comprehensive income – – – –

Total comprehensive income for the period 248,068 244,334 435,614 482,283


CONDENSED INTERIM STATEMENT OFCOMPREHENSIVE INCOMEFOR THE QUARTER AND HALF YEAR ENDED DECEMBER 31, 2009 (UN-AUDITED)

Chief Executive Director

CONDENSED INTERIM CASH FLOW STATEMENTFOR THE HALF YEAR ENDED DECEMBER 31, 2009 (Un-Audited)


July 1 to December 312009 2008


Cash flows from operating activities

Cash (used in)/generated from operations 8 (167,097) 1,187,042Staff retirement benefits paid (3,923) (12,634)Finance cost paid (127) (55,470)Taxes paid (8,064) (2,019)

Net cash (used in)/from operations (179,211) 1,116,919

Cash flows from investing activities

Purchase of property, plant and equipment (7,247) (21,108)Income on bank deposits received 28,557 1,526Net (increase)/decrease in long term loans, advances and deposits (3,176) 2,593Proceeds from sale of property, plant and equipment 7,585 4,610

Net cash from/(used in) investing activities 25,719 (12,379)

Cash flows from financing activities

Repayment of long term loans (net) – (108,097)Dividend paid (168,609) (168,014)

Net cash used in financing activities (168,609) (276,111)

Net (decrease)/increase in cash and cash equivalents (322,101) 828,429Cash and cash equivalents at beginning of the period 664,074 (331,310)

Cash and cash equivalents at the end of the period 9 341,973 497,119




CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITYFOR THE HALF YEAR ENDED DECEMBER 31, 2009 (Un-Audited)


Un-appro- Share priated

capital profit Total(Rupees in thousand)

Balance as on July 1, 2008 1,694,586 4,866,263 6,560,849

Final dividend for the year ended June 30, 2008 at the rate ofRe 1.00 per share - (169,459) (169,459)

Profit for the period - 482,283 482,283

Balance as on December 31, 2008 1,694,586 5,179,087 6,873,673

Interim dividend for the year ended June 30, 2009 at the rate ofRs. 2.00 per share - (338,918) (338,918)

Interim dividend for the year ended June 30, 2009 at the rate ofRs. 1.50 per share - (254,188) (254,188)


Balance as on June 30, 2009 1,694,586 5,008,754 6,703,340

Final dividend for the year ended June 30, 2009 at the rate ofRe 1.00 per share - (169,459) (169,459)


Balance as on December 31, 2009 1,694,586 5,274,909 6,969,495


12

SELECTED NOTES TO THE INTERIM FINANCIAL INFORMATIONFOR THE QUARTER AND HALF YEAR ENDED DECEMBER 31, 2009 (Un-Audited)

1. Basis of preparation

This condensed interim financial information is unaudited and has been prepared and is being submitted to the members in accordance with section 245 of the Companies Ordinance, 1984 and International AccountingStandard (IAS) 34 - 'Interim Financial Reporting' and the Listing Regulations of the Karachi, Lahore and IslamabadStock Exchanges. The figures for the half year ended December 31, 2009 have, however, been subjected to limited scope review by the auditors as required by the Code of Corporate Governance. This condensed interimfinancial information does not include all the information required for annual financial statements and thereforeshould be read in conjunction with the annual financial statements for the year ended June 30, 2009.

2. Significant Accounting Policies

2.1. The accounting policies adopted for the preparation of this condensed interim financial information are the same as those applied in the preparation of preceding annual published financial statements of the Companyfor the year ended June 30, 2009.

2.2. The following amendments and interpretations to existing standards have been published and are mandatoryfor the company’s accounting periods beginning on or after their respective effective dates:

- IAS 1 (Revised),'Presentation of Financial Statements' is effective for accounting periods beginning on or afterJuly 01, 2009. The revised standard prohibits the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All 'non-owner changes in equity' are required to be shown in performance statement. Companies can choose whether to present one performance statement (the statement of comprehensive income) or two statements (profit and loss account and statement of comprehensive income).

The company has preferred to present two statements; a profit and loss account and a statement of comprehensive income. The interim financial information has been prepared under revised disclosure requirements.

- Certain amendments to IAS 23 'Borrowing Costs' were published that are effective for accounting periods beginning on or after July 01, 2009. Adoption of these amendments require the company to capitalise the borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (onethat takes substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing these borrowing costs has been removed. Its adoption has no impact on the company's financial statements.

3. The provision for taxation for the half year ended December 31, 2009 has been made on an estimated basis.

4. Contingencies and commitments

4.1 Contingencies

The Company has issued following guarantees in favour of:

(i) Water and Power Development Authority (WAPDA) on account of liquidated damages, in case the Companyfails to make available electricity to WAPDA on its request, amounting to Rs 215 million (June 30, 2009: Rs 215 million).

(ii) Sui Northern Gas Pipelines Limited on account of payment of dues against gas sales etc., amounting to Rs 4.25 million (June 30, 2009: Rs 4.25 million).



4.2 Commitments in respect of

(i) Letters of credit other than capital expenditure Rs 19.43 million (June 30, 2009: Rs 5.66 million).(ii) The amount of future payments under non-cancellable operating leases and the period in which these

payments will become due are as follows:


(Rupees in thousand)

Not later than one year 3,796 1,538Later than one year and not later than five years 1,955 –

5,751 1,538

5. Property, plant and equipment

Opening book value 4,357,803 4,537,937Add:Additions during the period - note 5.1 6,303 12,350

Transfer from capital work-in-progress 5,627 57,660

Exchange loss on foreign currency loans – 10,124

4,369,733 4,618,071Less:Disposals during the period (at book value) - note 5.2 4,991 3,761

Depreciation charged during the period 136,713 256,507

141,704 260,268

4,228,029 4,357,803

5.1 Additions during the period

Buildings on freehold land – 1,384Plant and machinery – 1,181Office appliances and equipment 31 61Electric appliances and equipment 343 1,348Computers 407 654Vehicles 5,522 7,722

6,303 12,3505.2 Disposals during the period

Vehicles 4,991 3,761

14

Quarter ended Half year endedDecember 31, December 31, December 31, December 31,


6 Cost of sales

Raw material consumed 1,958,648 1,702,224 3,687,705 4,177,212Salaries, wages and benefits 24,966 21,561 45,651 38,301Fee for Produce of Energy (FPE) 9,248 25,355 13,329 49,617Stores and spares consumed 58,796 38,016 116,434 116,278Depreciation/amortisation 68,478 64,768 132,302 123,992Insurance 14,344 9,849 29,445 18,486Travelling, conveyance and entertainment 2,054 3,268 4,089 3,441Repairs and maintenance 805 2,333 7,910 4,114Communication charges 486 535 893 1,171Electricity consumed in-house 203 525 383 970Rent, rates and taxes 75 192 131 272Miscellaneous 2,157 2,404 4,111 4,494

2,140,260 1,871,030 4,042,383 4,538,348

July 1 to December 312009 2008(Rupees in thousand)

7. Related party transactions

Purchase of goods and services 515 168Interest expense – 1,043Loan repayment – 25,795Key management personnel compensation 55,677 36,470Expense charged in respect of staff retirement benefit plan 5,945 5,752


(Rupees in thousand)Period end balances

Payable to related parties – 44Receivable from related parties 250 294




July 1 to December 312009 2008(Rupees in thousand)

8. Cash generated from operations

Profit before tax 446,975 483,083Adjustments for:

Depreciation/amortisation 137,098 129,383Gain on disposal of property, plant and equipment (2,594) (850)Income on bank deposits (25,884) (1,838)Staff retirement benefits accrued 5,945 9,945Amounts written off – 286Finance costs 58 44,261

Profit before working capital changes 561,598 664,270

Effect on cash flow due to working capital changesIncrease in stores, spares and loose tools (56,038) (9,982)Decrease/(increase)in stock-in-trade 15,682 (7,751)(Increase)/decrease in trade debts (594,564) 653,874Increase in loans, advances, deposits, prepaymentsand other receivables (151,363) (162,237)Increase in trade and other payables 57,588 48,868

(728,695) 522,772

(167,097) 1,187,042

December December31, 2009 31, 2008

(Rupees in thousand)9. Cash and cash equivalents

Cash and bank balances 341,973 497,129Finances under mark-up arrangements - secured – (10)

341,973 497,119

10. Date of authorization for issue

This condensed interim financial information was authorised for issue on February 10, 2010 by the Board of Directors of the Company.

11. Events after the balance sheet date

The Board of directors have declared an interim dividend of Re. 1 per share amounting to Rs. 169.459 millionat their meeting held on February 10, 2010. This condensed interim financial information does not reflect thisdividend payable.

12. Corresponding figures

Corresponding figures have been re-arranged, wherever necessary, for the purposes of comparison. However,no significant re-arrangements have been made.


KOHINOORE NE RG Y L IM ITE D

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