third quarterly report 2013-2014 (1)

8/9/2019 Third Quarterly Report 2013-2014 (1)

1/16

REPORT FOR THE NINE MONTHS

ENDED MARCH 31, 2014


2/16


3/16

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


4/16

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: [email protected]

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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8

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)

FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2014


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


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)


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)


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




7/16

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



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


(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)


8/16

12

13

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)


9/16

14

15

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


10/16


11/16

18

19

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.


12/16


13/16

22

23

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


14/16

24 25

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


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



15/16

27

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


(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:



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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third quarterly report 2013-2014 (1)

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