apl annual report 2012
TRANSCRIPT
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1 Attock Petroleum Limited
Annual Report 2012
Financial Highlights 2
Our Vision 4
Our Mission 5
Business Review
Core Values 6
Corporate Strategy 7
Quality Policy Statement 9
Code of Conduct 10
Environment, Health & Safety Policy 15
Chairman’s Review 18
Governance
Board of Directors 20
Board Committees and Corporate
Information 21
Board & Management Committees and
their Terms of Reference 22
Awards and Achievements 24
Calendar of Major Events 25
Directors’ Report 26
Pattern of Shareholding 42
Review Report on Statement of
Compliance with the Code of Corporate
Governance 46
Statement of Compliance with the Code of
Corporate Governance 47
Financial Analysis
Six Years at a Glance 50
Vertical Analysis 54
Horizontal Analysis 56
Statement of Value Added 58
Financial Statements
Auditor’s Report to the Members 59
Balance Sheet 60
Prot and Loss Account 62
Statement of Comprehensive Income 63
Cash Flow Statement 64
Statement of Changes in Equity 65
Notes to and forming part of the Financial
Statements 66
Annual General Meeting
Notice of Annual General Meeting 96
Glossary 99
Proxy Form
Contents
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2 Attock Petroleum Limited
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Gross ProtNet Sales Revenue
Financial Highlights
Operating Prot
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Prot Afer Tax Earnings Per Share Cash Dividend
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To become a world class, professionally managed, fully
integrated, customer focused, Oil Marketing Company,offering Value added quality and environment friendly
products and services to its customers in Pakistan and
beyond.
Our Vision
Liberty Filling Station, Lahore
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To continuously provide quality and environment friendly
petroleum products and related services to industrial,commercial and retail consumers, and exceeding their
expectations through reliability, economy and quality of
products and services. We are committed to beneting
the community and ensuring the creation of a safe,
responsible and innovative environment geared to
client satisfaction, end user gratication, employees’
motivation and shareholders value.
Our Mission
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Core Values
Ethical Principles and Moral Values
We promote a commitment to the highest moral values and ethical principles, demanding bothpersonal and professional dedication towardsthe realization of these values and principles.
Commitment and Cooperation
Two core fundamentals for the successof any business are complete employeecommitment and cooperation. At APL wefoster an environment of solid teamwork andprofessionalism to ensure that our employeesengage in both personal and professionaldevelopment.
Environment Consciousness
We believe that it is our responsibilityto safeguard our natural resources for
future generations and actively engage inenvironment friendly practices, policies andmanagement techniques.
Corporate Social Citizenship
We strongly believe in the promotion of societal well-being and awareness within onescommunity, actively engaging in activities andinitiatives to meet this objective.
Maximum Stakeholder Return
Through our streamlined business processesand commitment to total quality managementwe seek to ensure maximum companyperformance and rewards for shareholdersand stakeholders alike.
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CorporateStrategy
To enable APL to attain new heights of success through investment in humancapital, implementation of lean productionmethods and a commitment to Total Qualityand Environment Management, we plan, withthe help of Almighty Allah, to further expandour existing retail network and penetrateuntapped markets with pro-active measuresand effective planning, implementation and
execution.
Our objective is to successfully deliverpremium quality products and services,which will translate into maximum customersatisfaction. Beyond the technical excellenceof our products, we intend to set an examplein all dimensions of our entrepreneurialactivities. We see ourselves committed to theself-dened models of economic, social andecological responsibility, which means notonly economic success but also conscientiousinteraction with our employees, people and
the environment.
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Quality Van at Rawalpindi Bulk Oil Terminal (RBT)Quality Assurance Unit to ensure delivery of premium quality products to customers
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Quality PolicyStatement
To further enhance its commitment towards
Quality, APL management has set the following
quality objectives:
1 The primary objective of the Quality Management
System is to ensure conformance to product
specications of all goods shipped to customers.
2 Clearly identify and understand our internal
and external customers stated and hidden
needs, to develop a way of working to meet
and exceed the expectations of customers.
3 Provide condence to management, our
employees, clients, and stakeholders that therequirements for quality are being fullled
and maintained and that quality improvementis continuously taking place.
4 To develop measurement techniques to gaugeperformance for improving effectiveness of ourservices, operations and quality management
system.
5 Fulll all quality system requirements stated in
our Quality Manual, including the requirements
of ISO 9001:2000.
6 To be a trustworthy and leading oil marketingorganization for providing consistent high
quality products and services in the market.
With this vision we want to create a culture of
continuous quality improvement at APL.
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Attock Petroleum Limited has committed itself
to conduct its business in an honest, ethical
and legal manner. The Company wants to be
seen as a role model in the community by its
conduct and business practices. All this dependson the Company’s personnel, as they are the
ones who are at the forefront of Company’s
affairs with the outside world. Every member
of the Company has to be familiar with his / her
obligations in this regard and has to conducthim / her accordingly.
This statement in general is in accordance withCompany goals and principles that must be
interpreted and applied within the framework
of laws and customs in which the Company
operates. This code will be obligatory for each
director and employee to adhere to.
1. Respect, Honesty andIntegrity
Directors and employees are expected
to exercise honesty, objectivity and due
diligence in the performance of their
duties and responsibilities. They are also
directed to perform their work with due
professionalism.
2. Compliance with Laws,Rules and Regulations
The Company is committed to comply, and
take all reasonable actions for compliance,with all applicable laws, rules and regulations
of state or local jurisdiction in which the
Company conducts business. Every director
and employee, no matter what position heor she holds, is responsible for ensuring
compliance with applicable laws.
3. Full and Fair Disclosure
Directors and employees are expected to help
the Company in making full, fair, accurate,timely, and understandable disclosure, incompliance with all applicable laws and
regulations, in all reports and documentsthat the Company les with, furnishes to
or otherwise submits to, any governmentalauthorities in the applicable jurisdiction,
and in all other public communications
made by the Company. Employees or
directors who have complaints or concernsregarding accounting, nancial reporting,internal accounting control or auditing
matters are expected to report such
complaints or concerns in accordance
with the procedures established by theCompany’s Board of Directors.
4. Prevent Conflict of Interest
Directors and employees, irrespective of
their function, grade or standing, must
avoid conict of interest situations between
their direct or indirect (including membersof immediate family) personal interests
and the interest of the Company.
Employees must notify their directsupervisor of any actual or potential conict
of interest situation and obtain a written
ruling as to their individual case. In case
of directors, such ruling can only be givenby the Board, and will be disclosed to the
shareholders.
5. Trading in Company Shares
Trading by directors and employees in
the Company shares is possible only
in accordance with the more detailed
guidelines issued from time to time by
corporate management in accordance
with applicable laws.
6. Inside Information
Directors and employees may become
aware of information about Company thathas not been made public. The use of suchnon-public or “inside” information about
the Company other than in the normal
performance of one’s work, profession
or position is unethical and may also bea violation of law.
Directors and employees becoming aware
Code of Conduct
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of information which might be price sensitivewith respect to the Company’s shares have
to make sure that such information is treatedstrictly condentially and not disclosed to
any colleagues or to third parties other
than on a strict need-to-know basis.
Potentially price sensitive information
pertaining to shares must be brought promptly
to the attention of the management, who willdeliberate on the need for public disclosure.Only the Management will decide on such
disclosure. In case of doubt, seek contact
with the CFO.
7. Media Relations andDisclosures
To protect commercially sensitive information,
nancial details released to the media shouldnever exceed the level of detail provided
in quarterly and annual reports or ofcialstatements issued at the presentation of thesegures. As regards topics such as nancial
performance, acquisitions, divestments,
joint ventures and major investments,no information should be released to the
press without prior consultation with the
Management. Employees should not make
statements that might make third parties
capable of “insider trading” on the stock
market.
8. Corporate OpportunitiesDirectors and Employees are expected not to:
a) take personal use of opportunities
that are discovered through the use
of Company property, information or
position.
b) use Company property, information,
or position for personal gains.
Directors and employees are expected toput aside their personal interests in favor
of the Company interests.
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9. Competition and FairDealing
The Company seeks to outperform its
competition fairly and honestly. Stealingproprietary information, possessing tradesecret information that was obtained withoutthe owner’s consent, or inducing such
disclosures by past or present employees
of other companies is prohibited. Eachdirector and employee is expected to dealfairly with Company’s customers, suppliers,competitors, and other employees. No
one is to take unfair advantage of anyone
through manipulation, abuse of privilegedinformation, or any other unfair practice.
The Company is committed to selling itsproducts and services honestly and will
not pursue any activity that requires to
act unlawfully or in violation of this Code.
Bribes, kickbacks, and other improper
payments shall not be made on behalf of the Company in connection with any of
its businesses. However, tip, gratuity orhospitality may be offered if such act is
customary and is not illegal under applicablelaw. Any commission payment should be justied by a clear and traceable service
rendered to the Company. The remunerationof agents, distributors and commissionerscannot exceed normal business rates andpractices. All such expenses should be
reported and recorded in the Company’sbooks of account.
10. Equal EmploymentOpportunity
The Company believes in providing equal
opportunity to everyone around. The
Company laws in this regard have to
be complied with and no discrimination
upon race, religion, age, national origin,
gender, or disability is acceptable. No
harassment or discrimination of any kindwill be tolerated; directors and employeesneed to adhere standards with regard to
child labor and forced labor.
11. Work Environment
All employees are to be treated with
respect. The Company is highly committedto providing its employees and directors
with a safe, healthy and open work environment, free from harassment,
intimidation, or personal behavior not
conducive to a productive work climate. In
response the Company expects consummateemployee allegiance to the Company and
due diligence in his job.
The Company also encourages constructivereasonable criticism by the employees of
the management and its policies. Such anatmosphere can only be encouraged in anenvironment free from any prospects of
retaliation due to the expression of honestopinion.
12. Protect Health, Safety andSecurity
The Company intends to provide each
director and employee with a safe work
environment and comply with all applicable
health and safety laws. Employees and
directors should avoid violence andthreatening behavior and report to work
in fair condition to perform their duties.
13. Record Keeping
The Company is committed to compliance
with all applicable laws and regulations thatrequire the Company to maintain proper
records and accounts which accurately andfairly reect the Company’s transactions.
It is essential that all transactions be
recorded and described truthfully, timely
and accurately on the Company’s books. Nofalse, articial or misleading transactions
or entries shall be reected or made in the
books or records of the Company for any
reason.Records must always be retained or
destroyed according to the Company’s
record retention policies.
Code of Conduct
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14. Protection of Privacy andConfidentiality
All directors and employees, both during
and after their employment, must respect
the exclusivity and trade secrets of the
Company, its customers, suppliers and othercolleagues and may not disclose any such
information unless the individual or rm
owning the information properly authorizesthe release or disclosure.
All the Company’s assets (processes, data,
designs, etc) are considered as certied
information of the Company. Any disclosurewill be considered as grounds, not only for
termination of services/employment, but
also for criminal prosecution, legal action
or other legal remedies available during
or after employment with the Company to
recover the damages and losses sustained.
15. Protection and Proper use of Company Assets / Data
Each director and employee is expected to
be the guardian of the Company’s assets
and should ensure its efcient use. Theft,
carelessness and waste have a direct and
negative impact on the Company’s protability.
All the Company assets should be used for
legitimate business purposes only.
The use, directly or indirectly, of Companyfunds for political contributions to any
organization or to any candidate for public
ofce is strictly prohibited.
Corporate funds and assets will be utilized
solely for lawful and proper purposes in
line with the Company’s objectives.
16. Gift Receiving
Directors and employees will not accept
gifts or favors from existing or potential
customers, vendors or anyone doing orseeking to do business with the Company.
However, this does not preclude giving or
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receiving gifts or entertainment which arecustomary and proper in the circumstances,
provided that no obligation could be, or beperceived to be, expected in connection
with the gifts or entertainment.
17. Communication
All communications, whether internal or
external, should be accurate, forthrightand where ever required, condential.
The Company is committed to conduct
business in an open and honest manner
and provide open communication channelsthat encourage candid dialogue relative toemployee concerns. The Company stronglybelieves in a clean desk policy, and expectsits employees to adhere to it not only for
neatness but also security purposes.
18. Employee Retention
High quality employee’s attraction and
retention is very important. The Company willoffer competitive packages to the deservingcandidates. The Company strongly believesin personnel development and employee-
training programs are arranged regularly.
19. Internet use / InformationTechnology
As a general rule, all Information Technology
related resources and facilities are provided
only for internal use and/or business-relatedmatters. Information Technology facilitieswhich have been provided to employees
should never be used for personal gain
or prot, should not be misused during
work time, and remain the property of theCompany. Disclosure or dissemination of
condential or proprietary information
regarding the Company, its products, or itscustomers outside the ofcial communication
structures is strictly prohibited.
20. Compliance with BusinessTravel Policies
The safety of employees while on a businesstrip is of vital importance to the Company.The Company encourages the traveler
and his/her supervisor to exercise good
judgment when determining whether travel
to a high-risk area is necessary and is for
the Company’s business purposes.
It is not permitted to combine business
trips with a vacation or to take along
spouse, relative or friend without the priorwritten authorization from Management.
21. Compliance
It is the responsibility of each director and
employee to comply with this code. Failure todo so will result in appropriate disciplinary
action, including possible warning issuance,suspension, and termination of employment,legal action and reimbursement to the
Company for any losses or damages resultingfrom such violation. Compliance also includes
the responsibility to promptly report any
apparent violation of the provisions of this
code.
Any person meeting with difculties in
the application of this code should refer
to the management.
Code of Conduct
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Environment, Health &Safety Policy
Attock Petroleum Limited’s overriding objectiveis to ensure that none of our activities harm
our employees, the public or the environment.
In order to achieve this objective…
We embrace a comprehensive policy on the
Environment, Safety and Health that includes:-
1. We consider that none of our activities are
more important than health and safety of any individual or protection of environment.
2. As a minimum we will comply with all relevantlegislation and any other requirements to
which we subscribe.
3. We will encourage a pro-active safety cultureand ensure that each employee is trained,
experienced and competent to perform his
or her duties.
4. We will strive to remove all causes of accidents and events and to minimize the
consequences of such if they occur.
5. We will ensure that all our operations are
performed, and seen to be performed safely.
6. We will strive to continually improve
performances in all areas of EHS performance
and priorities on the basis of risk.
7. We will apply our EHS policy, standards,
objectives and targets to our Retail Outlets,
Distributors, Dealers and Contractors.
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Model Filling Station, F-11, Islamabad
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It gives me immense pleasure to welcome you
to the 17th Annual General Meeting of the
Company and to present Company’s annual
report and audited nancial statements for the year ended June 30, 2012.
I welcome the newly elected Board and recentlyappointed various Board Committees and hopethat with their in-depth knowledge and vast
relevant experience, Company will not only
continue its momentum and pace of growth
but will also lead to the new horizons. I would
also like to place on record my appreciation of
the contributions made by the outgoing Board
and Board Committees.
Our management and key decision makers starting
with our CEO under the guidance of the Board
maintained the focus, the commitment and the
determination. Your Company performed well
against tough scal challenges and unstable
economy of the Country, which continued to suffer
from the consequences of a number of factors
like increased prices of petroleum products,
un-resolved problem of mounting circular debt,power and gas shortages and unstable law and
order situation. These economic conditions
forced annual oil industry trade for petroleumproducts to decline by 4% from 20.334 million
M. Tons to 19.437 million M. Tons during the
year under review. Ban on export of petroleum
products during the year not only adversely
impacted the protability of the Company and
the industry as a whole but also deprived the
Country of the valuable foreign exchange.
Despite all the challenges, your Company managed
to increase its overall market share to 9.1%
from 7.9% of last year due to its targeted and
pro-active marketing strategy. This is reectionof our commitment and focus on operational
excellence, nancial discipline, risk management
and principles of good corporate governance.
Based on the foregoing analysis, your Companyrecorded sales revenue of Rs. 152,843 million
(2010-11: Rs. 109,395 million) and prot aftertax of Rs. 4,120 million (2010-11: Rs. 4,257
million) translated into earnings per share of
Rs. 59.61 (2010-11: Rs. 61.58). The Company’sfundamentals remained strong. We increased our
cash ows from operations, provided attractivereturn to the shareholders and maintained a
strong balance sheet.
We believe corporate social responsibility and
sustainability are integrated business platformsthat build long-term shareholders value. These
platforms foster innovation, drive operationalefciency, improve environmental performanceand strengthen our employees’ relationships
with our customers, suppliers and communities.
Chairman’s Review
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From a strategic standpoint, in the years to
come, we will be critically focused on consumer-driven innovation in services and products
as the primary driver of organic growth. We
believe that directions of the Board with strong vision will position your Company to deliver
consistent above-average returns over the longterm, driven by sustainable protable growth.
As we move forward, you will see us creating aCompany with a broader and stronger agenda
for growth. We will be better positioned to
compete based on our strengths and better
equipped to respond to the evolving needs of
our consumers.
I wish to place on record my appreciation and
gratitude for the support received from Ministryof Petroleum & Natural Resources, Oil and Gas
Regulatory Authority and other Government
organizations and business partners.
In conclusion, I want to assure you that we arecommitted to making our investors’ interests
our foremost priority. I rmly believe that APL ison the right track to translate its achievements
into equally outstanding performance for its
stakeholders.
Dr. Ghaith R. PharaonChairman
Dubai, UAE.
September 15, 2012
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Board of Directors
Dr. Ghaith R. PharaonChairmanNon Executive Director
Mr. Shuaib A. Malik Chief Executive Ofcer &
Alternate Director toDr. Ghaith R. PharaonExecutive Director
Mr. M. Adil Khattak Non Executive Director
Mr. Abdus SattarIndependent Non ExecutiveDirector
Mr. Iqbal A. Khwaja Alternate Director toMr. Laith G. PharaonNon Executive Director
Mr. Babar Bashir NawazNon Executive Director
Mr. Rehmat Ullah BardaieCompany Secretary &
Alternate Director toMr. Wael G. PharaonExecutive Director
Mr. Laith G. PharaonNon Executive Director
Mr. Wael G. PharaonNon Executive Director
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Board Committees andCorporate Information
Audit Committee
Mr. Abdus Sattar
Chairman
Mr. Babar Bashir Nawaz
Mr. Iqbal A. Khwaja
Human Resource andRemuneration Committee
Mr. Babar Bashir Nawaz
Chairman
Mr. M. Adil Khattak
Mr. Shuaib A. Malik
Auditors
A. F. Ferguson & Co.
Chartered Accountants
Registered Office
Attock House, Morgah
Rawalpindi, Pakistan.
Legal Advisor
Ali Sibtain Fazli Associates
Mall Mansion, 30-The Mall, Lahore.
Share Registrar
THK Associates (Pvt.) Limited
Ground Floor, State Life Building-3
Dr. Ziauddin Ahmed Road, Karachi.
Tel: +92-21-111-000-322
Fax: +92-21-35655595
Bankers
Allied Bank Limited
Faysal Bank Limited
Habib Bank Limited
JS Bank Limited
National Bank of Pakistan
Standard Chartered Bank
The Bank of Khyber
The Bank of Punjab
The Bank of Tokyo Mitsubishi
United Bank Limited
Correspondence Address
Attock House, Morgah
Rawalpindi, Pakistan.
Tel: +92-51-5127250-55
Fax: +92-51-5127272
Email: [email protected]
Website: www.apl.com.pk
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The management is committed to follow the
principles of good Corporate Governance and
being a responsible corporate entity it believes intransparency of system for effective monitoringand to enhance governance process. Keeping in
view the requirements of new Code of Corporate
Governance issued on 10th
April, 2012 the Boardhas revised the terms of reference of Audit
Committee and established Human Resource
and Remuneration Committee. The following
Board Committees have been formed to assist
the Board in fullling its responsibilities.
Audit Committee
The Audit Committee reviews the nancial and
internal reporting processes, the system of
internal control, management of risk and the
internal and external audit processes. The AuditCommittee ensures that the Company has a
sound system of internal nancial and operational
controls. It assists the Board in discharge of its
duciary responsibilities. The Audit Committeereviews the periodical statement of the Companybefore their respective presentation to the
Board and ensures implementation of relevant
controls for the integrity of the information.
The Committee recommends to the Board of
Directors the appointment of external auditorsand discusses major observations with the
external auditors arising from interim review
and nal audit. In doing so, Committee also
reviews the management letter issued by the
external auditors and management’s response
thereto. The Committee also goes through the
legal matters which may signicantly impact the
nancial statements and ensure compliance withrelevant statutory requirements. Besides this,
monitoring compliance with the best practices
of corporate governance, investigating any
violations thereof and ensuring coordinationbetween internal and external auditors are alsothe main responsibilities of the Audit Committee.
Board & ManagementCommittees and their
Terms of Reference
Board Committees
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Human Resource and RemunerationCommittee
The Board has established Human Resource
and Remuneration Committee which is
responsible for recommending human resourcemanagement policies. The Committee is also
responsible for recommending the selection,
evaluation, compensation (including retirement
benets) of key management personnel and forconsideration and approval on recommendationsof Chief Executive Ofcer on such matters for
key management positions who report directly
to Chief Executive Ofcer.
Budget Committee
The Committee comprises of three directors
and their responsibility is to assist the Board in
formulating the annual budget and forecasts andreviewing analysis of actual performance with
those budgeted/forecasted. The Committee alsokeeps an eye on the developments and trends
in the industry to assist the Board in planning
for future capital intensive investments and
growth of the Company.
Share Transfer Committee
The Committee consists of three directors and
is responsible for dealing with matters relating
to the shares of the Company like transfers,
issuance of new shares and related legal and
regulatory requirements.
Management Committees
Executive Committee
Consist of all departmental heads and chaired
by the CEO, they meet regularly to coordinate
the activities, accomplishments and otherpertinent issues.
Information Technology
CommitteeResponsible for automation of process and system
in line with latest technology and developments.
Budget Committee
Reviews and recommends the annual budget
proposals and discusses deviations with the
departmental heads.
Retail Outlet DevelopmentCommittee
Responsible for recommending proposals for
setting up retail outlets and reviewing progress.
Pricing Committee
Reviews and recommends the pricing of deregulated products on regular intervals.
Safety And Technical Committee
Reviews and monitors, the safety, health and
environment matters for safe operations and
better environment and matters relating to
technological problems and operational risks
affecting the business.
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Awards and Achievements
Best Corporate Report Award-20092nd Position in Fuel and Energy Sector
Jointly organised by the Institute of Chartered Accountants of Pakistan and the
Institute of Cost and Management Accountants of Pakistan.
Top Companies Award- 2009 Amongst Top Twenty Five Companies
Organised by Karachi Stock Exchange.
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Calendar of Major Events
July 25, 2011: Applied Cathodic Protection system for pigable pipeline from PARCOto APL Terminal at Machike
January 04, 2012: Entered into Agreement with vendor for Construction of CalibrationGantries at Machike & Karachi Bulk Oil Terminals
January 25, 2012: Commissioned two tanks at Machike Bulk Oil
Terminal enhancing storage capacity by 10,000
M. Tons
February 28, 2012: Secured HSD and PMG supplies contract of Pakistan Air Force for the nancial year 2012-13
March 15, 2012: Installed oating screen in PMG tank at MachikeBulk Oil Terminal to minimize the product losses and to save environment
March 30, 2012: APL’s market share in the bunker segment for Furnace Fuel Oil reachedmore than 61%, making it number one (01)
March 31, 2012: Lahore Flagship outlet commissioned – Liberty
Filling Station
April 06, 2012: Commenced HSD supplies to the sheries segment
April 14, 2012: Commissioning of First Multi-Fuel retail outlet in Joint Venture with Askari Welfare Trust
April 26, 2012: Commissioned 350th retail outlet of the Company
April 30, 2012: Secured Jet Fuel (JP-1) supplies contract of Pakistan Army for nancial year 2012-13
May 15, 2012: Commissioned three tanks of total 11,000 M. Tons storage capacity
at Rawalpindi Bulk Oil Terminal
May 15, 2012: Entered into agreement with vendor for installation of Smart Signage(LED Lit) at retail outlets thereby decreasing the electricity consumption
May 30, 2012: Upgraded ow metering system thereby increasing operationalefciency at Rawalpindi Bulk Oil Terminal
June 16, 2012: Entered into blending agreement with a new,better blending plant for production of higherquality lubricants
June 30, 2012: Highest number of outlets commissioned since1999; a total of 44 outlets were commissioned
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Directors’ ReportThe Board of Directors of Attock Petroleum
Limited (APL) is pleased to present the annual
report on the performance and progress of the
Company together with the audited nancial
statements of the Company for the year ended
June 30, 2012.
NATURE OF BUSINESS
APL commenced its operations in 1998 as an
Oil Marketing Company (OMC) and is engaged
in the downstream petroleum sector’s businesswith main objective to distribute petroleum
products in the market. Major products marketedare Furnace Oil (FO), High Speed Diesel (HSD),Premier Motor Gasoline (PMG), Asphalt, Kerosene
Oil, Light Diesel Oil and Lubricants. The Oil
industry operates under the regulations framed
by the Government of Pakistan (GoP) throughMinistry of Petroleum and Natural Resources
(MP&NR) and Oil and Gas Regulatory Authority(OGRA). OGRA regulates prices of some of the
petroleum products whereas prices of other
products are deregulated and announced by theCompany as per its own internal mechanism.
MARKET AND INDUSTRY REVIEW
Global
Economy around the world has been underpressure during the year under review. Recession
has only compounded problems and made
the situation unstable for investors around
the world. Industries have also been facing
quite turbulence in the context of ever rising
macro-economic risks. The recovery is gaining
strength but unfortunately several geo-politicaland macro-economic risks continue to strike theemerging market economies. Policymakers arestruggling to nd ways to manage the present
economic challenges while preparing their
economies to perform well in an increasingly
complex global landscape.
DomesticThe year under review was quite challenging
for the Country too and it has also been not
far from the predicament and therefore faced
high unemployment rate, high security risks,
serious energy constraints, low investment andsevere economic conditions. Gross Domestic
Product (GDP) growth has been stuck at alevel, which is half of the level of Pakistan’s
long-term trend potential and is lower than
what would be required for sustained increasesin employment and income and a reduction
in poverty. Notwithstanding above Pakistan
has been able to withstand the pressures and
improve its performance in some key areas andthe economy is now showing signs of modest
recovery.
Industry OverviewTotal industry trade of oil products was 19.4million M. Tons which is 4% less than last year.
The decrease was due to restriction on export
of petroleum products to Afghanistan and less
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consumption of fuel by Power sector due to its
inability to settle the dues on time. On the otherhand, sale of PMG has shown sharp increase
due to excessive Compressed Natural Gas (CNG)load shedding and use in generators.
MANAGEMENTS OBJECTIVES AND STRATEGIES
The ultimate objectives of the Company’smanagement are to come upto the expectations
of all the stakeholders and adopt a balanced
approach in this regard, which is also reected
precisely in the corporate strategy and the
core values. The priorities for action are set
and reviewed at regular intervals to grab the
available opportunities and minimise the risks andthreats arising due to change in the internal andexternal environment. Consequently, decisions
are taken to implement the change managementkeeping in view long term perspective.
FINANCIAL PERFORMANCE
For the year 2011-12, the Company reported
net sales revenue of Rs. 152,843 million,representing 40% increase over last year
(2010-11: Rs. 109,395 million). This was result
of higher international oil prices in rst three
quarters of the year and increase in volume
sold. However, price decrease in last quarter of the year, stiff competition and ban on export of
petroleum products to Afghanistan during the
year led to the decrease in the protability of
the Company. Accordingly, the Company earnedprot after tax of Rs. 4,120 million (2010-11:
Rs. 4,257 million) and earnings per share of
Rs. 59.61 (2010-11: Rs. 61.58).
Rs. in MillionProt before taxation 5,647
Less: Provision for taxation 1,527Prot after taxation 4,120 Add: un-appropriated prot as at July 1, 2011 10,828Prot available for appropriation 14,948 Appropriations during the year: Transfer to special reserve by associated companies 27Final cash dividend for the year 2010-11 @ 300% (Rs. 30/-per share of Rs. 10/- each) 2,074Interim cash dividend for the year 2011-12 @ 175% (Rs. 17.50per share of Rs. 10/- each) 1,210
3,311Balance as at June 30, 2012 11,637
Subsequent Effects:Final cash dividend for the year 2011-12 @ 325% (Rs. 32.50per share of Rs. 10/- each) 2,246
9,391
Financial results and appropriations for the year ended June 30, 2012 have been summarized below:
Price Trend Analysis
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DividendThe directors have recommended a nal cash
dividend @ 325% (Rs. 32.50 per share of Rs.
10/- each). This is in addition to interim cash
dividend @ 175% (Rs. 17.50 per share of Rs.
10/- each) already declared and paid to the
shareholders thereby making a total of 500%
for the year 2011-12.
Contribution towards the EconomyThe Company contributed Rs. 31,899 million
towards national ex-chequer in the form of
taxes and levies and earned precious foreign
exchange of US$ 58 million through export of
products. The Company is providing premier
quality petroleum products even in remote areasparticularly the northern areas and interior
Sindh through its network of retail outlets and
distributors contributing to the development of
the local labour force thus promoting employment,
technical know-how and improving the earningcapacities of the residents.
Significant changes in financialpositionTotal assets increased by Rs. 6,051 million
compared with June 30, 2011, to Rs. 30,531
million and total liabilities increased by Rs. 5,214million, to Rs. 18,148 million. Non current assets
increased by 235 million to Rs. 2,468 million,
representing expenditure on enhancement of
storage capacities and construction of retail
outlets. Net current assets increased by Rs. 694
million, to Rs. 10,328 million due to cash inowfrom the operations. Trade debts increased
by Rs. 6,054 million representing increase in
receivable balance from Power Producers owingto circular debts issue and also contributed
corresponding increase in trade payables.
Cash flowThe Company generated cash from operating
activities amounting to Rs. 4,214 millionand used Rs. 3,435 million in investing and
nancing activities. At the end of the year, the
Company had cash and cash equivalents of Rs.
6,814 million and is well positioned to meet its
future commitments and development plans.
The management does not envisage any future
nancial problem in a year ahead.
MARKETING AND OPERATIONSREVIEW
For a successful business, it is important that
the sales and marketing play a pivotal role. Themain objectives revolve around understanding
the customers and their needs, the future trends,
competitor activities, legislation amendments
and a multitude of other uncertain variables.
The aggressive approach of the sales and
marketing department enabled your Company toincrease its aggregate market share from 7.9%
to 9.1%. This has only been possible by criticallyanalyzing the risks, sharing inter-departmentalknowledge-base and taking strategic decisions.
APL due to its aggressive and exceptional
marketing strategies entailing expansion of
network has successfully managed to increase itssales volume for PMG and HSD which increasedby 34% and 36% respectively. Consequently,
APL’s market share also increased from 6.0%
to 6.6% for PMG and from 7.6% to 10.5% for
HSD. In FO, APL sales decreased by 3.2% as
total industry sales declined by 7.7% due to
circular debt issue.
Directors’ Report
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Efcient supply planning, access to better
infrastructure and larger storages; enabled your
Company to take on some of the largest client
organizations within Pakistan this year. After a
successful rst year and winning the contract for
Pakistan Army supplies for the second consecutive year, APL, based on its reputation of reliability and
premium quality products was able to convince
two diesel-based power plants to rely on us for
all their petroleum needs for power generation.Subsequently, we were also able to win a contractfor HSD and PMG supplies to Pakistan Air Force.
Moreover, your Company also penetrated its
HSD supplies in the industrial sector. The well
coordinated utilization of resources, careful
analysis of market behaviours, competitive
pricing and seamless product supplies; all acted
as catalyst which has resulted in your Company’s
ever growing market share.
The Company recognizes the importance of
improving and expanding infrastructure for
sustaining economic development and gaining
the competitive edge. So despite stiff investment
conditions in the Country, your Company has
managed to endure several projects and invest
in this sector signicantly. By virtue of terminal-
revamping project, APL has further enhanced
its storage capacity by 1.5 times totalling upto
approx 36,000 M. Tons and also has hospitality
arrangements for storage upto the extent of 16,000M. Tons. This is mainly to cater the ever rising
needs originated as a result of the expansion of our retail network, being the preferred suppliers
in the defence and industrial sectors due to our
reliability, the future fuels requirements and the
over-all growth in your Company’s market share.
During this year, your Company witnessed the
highest number of retail outlet development in a
year; a staggering 44 outlets were commissioned as
a result of the untiring efforts of the management.By the end of the year under review, APL was
successfully managing a network of 362 retail
outlets across the country.
The development of infrastructure, enhancementin storage capacities and increase in retail network Source: Oil Companies Advisory Committee (OCAC)
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has ultimately augmented operations throughputsignicantly over last year. Calibration facilitywas also established and made operative at
Machike Bulk Oil Terminal. Furthermore, it isthe Company’s goal to ensure quality of the
product delivered to its customers and in thisregard, the quality assurance laboratory at
Machike Bulk Oil Terminal is being upgradedand is expected to be fully operational by rsthalf of 2012-13. Conducting all activities in
light of the Health, Safety and EnvironmentStandards and adoption of Best-BusinessPractices have also been emphasized over theperiod under review.
RISK MANAGEMENT
Volatility in International Oil Prices and
regulatory risk: Oil prices are directly affectedby its global supply and demand. Factors thatinuence demand and supply include economicconditions, operational issues, natural disasters,weather, political instability and conicts or
actions by major oil-exporting countries. In
addition to this, GoP also controls oil prices
through implementation and adjustment of levies, duties and subsidies. Prices are thekey drivers of an OMC’s protability. Higher
prices translate into increased revenues and
vice versa. Further, imposition / enhancementof duties, taxes, other levies and revision in
pricing formula of products remain a possibility.
The Company continues to focus on efcientmix of products maintaining sustainability andgenerating growth. GoP has demonstrated a
strong commitment and taken a number of stepsto deregulate the Oil and Gas sector in linewith the overall vision of a liberalized economy.
Geo-political and Security Risk: Developmentin politics, laws and regulations can affect ouroperations. Potential developments include importand export restrictions, international conicts,wars, civil unrest, unfavourable law and ordersituation that threaten the safe operations of
the Company. The operations of the Companyare dependent on timely availability of thepetroleum products provided by the reneries.Reneries, in turn, are dependent upon the
availability of crude oil from the gulf region,except for Attock Renery Limited, which usesindigenous crude oil. Political instability in the
region is a risk that may cause a disruptionin the supply of petroleum products thereby
affecting Company operations negatively.
In order to mitigate this risk and ensuresmooth supplies of petroleum products, theCompany enjoys the support of reneriesunder proper agreements.
Intense Competition: The Company operates ina very challenging business environment andfaces competition to access market, services and
human resources. The domestic oil market isbecoming more competitive by each passing daydue to new entrants and changing operationaldynamics. Lately, the oil sector has been thefocus of deregulatory reforms that have beenundertaken by the GoP which inturn paved theway for erce competition compelling OMCs
to adopt better marketing practices in order
to retain market share.
The Company is a member of the only fullyintegrated group in Pakistan with upstream and
downstream operations. With aggressive retailoutlets rollout plan and increased marketingefforts, the Company’s management is wellplaced to compete effectively in this increasinglycompetitive industry.
Directors’ Report
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Human Resource: The Company’s key human
resources are essential for the smooth functioning
of its operations. Loss of personnel or our
inability to attract quality human resources
could affect our operational performance and
growth strategy.
The Company offers a variety of compensation
packages in line with the market and enabling
environment ensuring retention of quality manpower.
Health, Safety and Environment: The Company issubject to various local, national and international
laws and regulations relating to health, safety
and the environment. Compromising on these
laws and regulations could result in increased
costs of compliance as well as penalties for
non-compliance.
The Company has an effective and comprehensive
Health, Safety and Environment policy andrelated practices ensuring full commitment fromall employees and contractual workers towards
the preservation of environment and propagationof health and safety procedures to mitigate this
risk and support safe and secure execution of
all critical operating activities.
Information technology failures: The Company
maintains a central database environment whereonline transactions are entered in real time. An
automated procedure generates a daily data
backup at midnight. Further, incremental andmonthly backups are generated and maintainedon hard drives and data tapes. An offsite backupmechanism is also in place as an additional
measure to safeguard data integrity.
CORPORATE GOVERNANCE
The Company is fully compliant with the Code of Corporate Governance as per the requirements
of the Listing Regulations. Specic statements
are being given hereunder:
1) The nancial statements, prepared by the
management, present its state of affairs
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Quality Filling Station, H-8, Islamabad
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fairly, the result of its operations, cash
ows and changes in equity.
2) Proper books of account have been maintained.
3) Appropriate accounting policies have been
consistently applied in preparation of nancialstatements and accounting estimates are
based on reasonable and prudent judgment.
4) International Financial Reporting Standards,
as applicable in Pakistan, have been followed
in preparation of nancial statements.
5) The system of internal control is sound in
design and has been effectively implemented
and monitored.
6) There are no signicant doubts upon theCompany’s ability to continue as a going
concern.
7) Signicant deviations from the last year’s
operating results have been disclosed in
this Report.
8) Key operating and nancial data of last six
years in summarized form is annexed with
the Report.
9) All major Government levies in the normalcourse of business, payable as at June 30,
2012, have been cleared subsequent to the year-end.
10) The Company does not envisage corporate
restructuring or discontinuation of its
operations in the foreseeable future.
11) The value of investments in employeeretirement funds based on the latest audited
accounts as of June 30, 2012 are as follows:Employees’ Gratuity fund Rs. 10.748 millionEmployees’ Provident fund Rs. 8.220 million
12) The total number of Company’s shareholdersas at June 30, 2012 was 2,360. The patternof shareholding as at June 30, 2012 alongwith necessary disclosures as requiredunder the Code of Corporate Governanceis annexed.
A separate statement of compliance signed bythe Chief Executive Ofcer is included in this Annual Report.
Board of Directors structure, itsCommittees and meetings
On completion of statutory terms of three years,the election of directors was held on March5, 2012 and new directors assumed ofceseffective March 10, 2012. The new Boardcomprises of the Chairman, Chief ExecutiveOfcer and ve non-executive directors of whomone is independent director. The newly elected
Board possesses necessary skills, competence,knowledge and experience to deal with variousbusiness issues. The Chairman of the Board isa non-executive director.
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During the year, the Board of Directors met vetimes for review and consideration of signicantand routine matters including those referred toit by Board committees. The number of meetingsattended by each director during the year is
shown below:
Overseas directors attended the meetings eitherin person or through alternate directors
1 Dr. Ghaith R. Pharaon, Mr. Laith G. Pharaon,Mr. Wael G. Pharaon, Mr. Shuaib A. Malik,
Mr. M. Adil Khattak and Mr. Babar Bashir
Nawaz were re-elected.
2 Mr. Abdus Sattar was elected in place of
Mr. Munaf Ibrahim.
Audit Committee
The Audit Committee was re-constituted by thenewly elected Board of Directors. The Committee
consists of three members comprising of non-executive directors including the Chairman
having relevant expertise and experience. The
Chairman of the committee is an independent
director. The Audit Committee met four times
during the year and these meetings were held
prior to the Board meetings. Attendance by
each member is as follows.
Sr. Name Number of Number of No. meetings meetings
attended eligible
to attend1 Dr. Ghaith R. Pharaon 5 52 Mr. Laith G. Pharaon 5 53 Mr. Wael G. Pharaon 5 54 Mr. Shuaib A. Malik 5 55 Mr. M. Adil Khattak 5 56 Mr. Babar Bashir Nawaz 5 57 Mr. Munaf Ibrahim 3 38 Mr. Abdus Sattar 2 2
Sr. Name Number of Number of No. meetings meetings
attended eligibleto attend
1 Mr. Abdus Sattar 1 12 Mr. Babar Bashir Nawaz 4 43 Mr. M. Adil Khattak 3 34 Mr. Iqbal A. Khwaja 4 4
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Human Resource and RemunerationCommittee
The Board has established Human Resource
and Remuneration Committee comprising of
two non-executive directors and Chief ExecutiveOfcer in June 2012.
CORPORATE SUSTAINABILITY
Training, Human Resource and Organizational
Development: Continuous human resource
development on both technical and behaviouralskills result in highly trained work force which
ultimately is a promise of not only higherproductivity levels but also helps in keeping
the staff turn over to lowest possible stages.
The Company continuously strives to create
systems and for developing a conducive
environment through training and development,which promote professional capabilities
enabling employees to deliver optimum
results. Moreover Company comes across at
human assets/ employees with honesty and
equality and by offering good pay and benets,
continuous training and development. This
will ensure and effectively achieve not only a
number of performance related gains, but also
increase Company’s productivity, protability
and competitive advantage, thus achieving a
stronger economic performance.
Corporate Social Responsibility: The Company
remains steadfast in its role to promote corporate
social activities and has always desired to play a
proactive role for social welfare and development
of human capital.
Through the APL Employees Welfare Trust
(Trust), the Company awards educational
scholarships to employees’ children based on
nancial need and academic excellence. The
Trust also provides health and other welfare
assistance to the needy staff members. Further,in order to pass on the benet of success we
have set up number of outlets in the rural and
deprived areas to provide employment and
improving quality of life of the local populace.
Health, Safety and Environment Consciousnessand protection measure: Our goal is an accidentand injury free workplace, with awless safe
work practices and conditions throughout our
operations. APL considers safety, security,
health and environmental compliance issues
extremely important. Company management
systems provide a framework for setting targets,measuring performance and reporting results,
thus employing these systems to achieve continual
improvement in our overall health and safety
performance.
The Company makes appropriate training
instruction and supervision for personnel to
enable them to attain the knowledge and skill
levels necessary to perform their work incidentfree and maintaining appropriate contingency
arrangements and continually monitoring,
reviewing and improving HSE performanceso that our activities can continue without
interruption.
Directors’ Report
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Energy Conservation: The Company has taken
number of steps to optimise energy consumption
at its various locations across the country by
introducing energy efcient processes like installing
LEDs (Light Emitting Diodes) in signages at retail
outlets. Before taking this step, a single pylon usedto consume 1978W (2KW) of electricity which is
now reduced to 700W (0.7KW) only. Similarly, one
spreader consumed 440W of electricity which has
now been reduced to 36W only.
In addition, Variable Speed Drive System has beenintroduced and functioning properly at Machike
Bulk Oil Terminal which is saving around 40%-
60% of energy.
Furthermore, employees are encouraged throughon-going awareness programmes to conserve
the use of electricity, gas and water. Emphasis is
also made on minimum use of paper (for printing
purposes) unless really needed, sharing of resources
and other similar green-activities.
AUDITORS
The present auditors Messrs A. F. Ferguson and Co.,Chartered Accountants, retire and offer themselvesfor reappointment. The Board has recommended
for the re-appointment of the retiring auditors for
the year ending June 30, 2013, as suggested by
the audit committee.
FUTURE PLANS AND PROJECTSConsidering the exponential growth of your Company,
the team is consistently generating breakthrough
ideas and emphasizes on out-of-the-box proactive
thinking which is the only probable direction
towards a stable and successful business growth
and thus, ensure compatibility with the future.
Your Company is currently undergoing a number
of daunting tasks and up-gradations, in order to
be one-step ahead of the unforeseen. Our historic
growth patterns necessitate continuous improvementsin all facets of the business operations. Some of
the major projects currently under progress are
as follows:
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• Finalization of land procurement plans forerecting state-of-the-art Bulk Oil Terminals
at strategic locations of Mehmood Kot -Multan, Gatti - Faisalabad and Shikarpur.
• To ensure quality of products; a quality
laboratory at Rawalpindi Bulk Oil Terminal
shall be established to guarantee theright-product and also enhance customer’s
satisfaction.
• Commissioning of the calibration facility
at our Karachi Bulk Oil Terminal to ensurecorrectness of measurements and quantity.
• Enter into the high-street distributionchannel for its lubricants division in order
to penetrate further into new businesssegments.
• Further upgradation of our vehicle and eet
management systems; resulting in bettercontrols and optimum performance of all
carriages and higher safety and healthstandards.
• Further upgradation of our ERP system toincorporate better controls and real-time
reports for management’s review anddecision-making.
• Upgradation of all retail outlets (over the
next few years) towards the Green Signage
Program (the smart and energy efcientL.E.D based lighting systems) to ensure itscontribution towards a better and greenerenvironment for the community. The new
Green Signage Systems will result in energy-savings upto almost 70% as compared to
conventional lighting systems.
• Striving for continuous improvements in
everything that we do, the Company also
intends to upgrade its terminals even further.In this regard, Automated Tank Gauges (ATG)on all its storage tanks will be undertaken;resulting in real-time accurate measurements/data for all products. Enhancement of storagefacilities in-line with the forecasted demandin the future shall enable smooth supplies
to our valuable clientele. Introduction of
the Variable Speed Drive Systems to furtherreduce electricity consumption are all littlesteps towards achieving higher efciencies
in all operational activities.
ACKNOWLEDGEMENT
We would like to take this opportunity to
express our deep appreciation and gratitudeto our esteemed shareholders, Government
of Pakistan and regulatory bodies for their
continuing cordial relationship and candid
support towards the Company’s progress.
The Board also appreciates the dedication,
commitment and contributions of employees,
customers and other stakeholders. The results
of your Company are a reection of the trust
and condence placed by all stakeholders in
the Company.
On behalf of the Board
Shuaib A. Malik
Chief Executive
Dubai, UAE.
September 15, 2012
Directors’ Report
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41 Attock Petroleum Limited
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42 Attock Petroleum Limited
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Sr. Number of Having Shares Shares Held PercentageNumber Shareholders From To
1 374 1 100 13,750 0.022 435 101 500 112,323 0.163 1,116 501 1,000 937,973 1.364 264 1,001 5,000 614,190 0.895 53 5,001 10,000 389,497 0.566 20 10,001 15,000 240,481 0.357 13 15,001 20,000 234,528 0.34
8 11 20,001 25,000 239,120 0.359 4 25,001 30,000 111,587 0.16
10 7 30,001 35,000 232,474 0.3411 5 35,001 40,000 183,624 0.2712 2 40,001 45,000 86,399 0.1213 8 45,001 50,000 378,801 0.5514 3 50,001 55,000 159,529 0.2315 3 55,001 60,000 172,501 0.2516 2 60,001 65,000 124,109 0.1817 2 65,001 70,000 136,956 0.2018 1 75,001 80,000 75,456 0.1119 2 90,001 95,000 182,513 0.2620 1 95,001 100,000 99,000 0.14
21 2 110,001 115,000 228,016 0.3322 1 115,001 120,000 118,542 0.1723 2 125,001 130,000 251,840 0.3624 2 130,001 135,000 264,994 0.3825 1 140,001 145,000 145,000 0.2126 2 145,001 150,000 297,875 0.4327 3 170,001 175,000 524,246 0.7628 1 195,001 200,000 197,117 0.2929 1 210,001 215,000 215,000 0.3130 1 220,001 225,000 224,031 0.3231 1 230,001 235,000 231,958 0.3432 1 245,001 250,000 248,400 0.3633 1 265,001 270,000 268,779 0.3934 1 305,001 310,000 308,500 0.45
35 1 530,001 535,000 532,000 0.7736 1 545,001 550,000 547,551 0.7937 1 570,001 575,000 575,000 0.8338 1 645,001 650,000 648,662 0.9439 1 740,001 745,000 741,050 1.0740 1 810,001 815,000 810,179 1.1741 1 925,001 930,000 926,917 1.3442 1 1,355,001 1,360,000 1,359,126 1.9743 1 1,520,001 1,525,000 1,520,640 2.2044 1 4,610,001 4,615,000 4,612,351 6.6745 1 4,850,001 4,855,000 4,850,496 7.0246 1 4,860,001 4,865,000 4,863,348 7.0447 1 15,120,001 15,125,000 15,120,115 21.88
48 1 23,760,001 23,765,000 23,763,456 34.38
2,360 69,120,000 100.00
Pattern of Shareholding As on June 30, 2012
Corporate Universal Identification Number: 0035831
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Categories of Shareholders As on June 30, 2012
Sr. Categories Number of Shares Percentage
No. Shareholders Held
1 DIRECTORS, CHIEF EXECUTIVE OFFICER, 9 4,688,736 6.78THEIR SPOUSES & MINOR CHILDREN
2 ASSOCIATED COMPANIES, UNDERTAKINGS 5 50,118,055 72.51 AND RELATED PARTIES
3 NATIONAL INVESTMENT TRUST & INDUSTRIAL 1 114,616 0.17CORPORATION OF PAKISTAN
4 BANKS, DEVELOPMENT FINANCE INSTITUTIONS, 11 3,122,779 4.52NON-BANKING FINANCIAL INSTITUTIONS
5 INSURANCE COMPANIES 7 2,177,399 3.15
6 MODARABAS & MUTUAL FUNDS 31 2,061,848 2.98
7 FOREIGN COMPANIES 8 1,197,882 1.73
8 TRUSTS AND FUNDS 53 1,052,690 1.52
9 JOINT STOCK COMPANIES 63 875,132 1.27
10 GENERAL PUBLIC (LOCAL) 2,143 3,674,367 5.32
11 GENERAL PUBLIC (FOREIGN) 29 36,496 0.05
12 SHAREHOLDERS HOLDING 10% OR MORE SHARES 2 38,883,571 56.26
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44 Attock Petroleum Limited
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Categories Number of Shares
Shareholders Held
ASSOCIATED COMPANIES, UNDERTAKINGS
AND RELATED PARTIES
Pharaon Investment Group Limited Holding s.a.l. 1 23,763,456
Attock Renery Limited 1 15,120,115
Attock Petroleum Limited Employees Welfare Trust 1 4,863,348
Pakistan Oilelds Limited 1 4,850,496The Attock Oil Company Limited 1 1,520,640
5 50,118,055
MUTUAL FUNDS
CDC - Trustee PICIC Growth Fund 1 547,551
CDC - Trustee PICIC Investment Fund 1 268,779
CDC - Trustee HBL Stock Fund 1 231,958
CDC - Trustee PICIC Energy Fund 1 174,740
CDC - Trustee Pakistan Stock Market Fund 1 174,506
CDC - Trustee MCB Dynamic Stock Fund 1 118,542
CDC - Trustee Pakistan Premier Fund 1 92,293CDC - Trustee Meezan Islamic Fund 1 69,366
CDC - Trustee Pak Strategic Alloc. Fund 1 56,384
CDC - Trustee Pakistan Capital Market Fund 1 56,117
CDC - Trustee IGI Stock Fund 1 50,800
CDC - Trustee HBL Islamic Stock Fund 1 43,599
CDC - Trustee Al Meezan Mutual Fund 1 23,500
CDC - Trustee HBL Multi - Asset Fund 1 20,000
CDC - Trustee NIT-Equity Market Opportunity Fund 1 19,950
CDC - Trustee Meezan Tahaffuz Pension Fund 1 19,000
CDC - Trustee ABL Stock Fund 1 17,897
CDC - Trustee Meezan Capital Protected Fund 1 14,000
CDC - Trustee Lakson Equity Fund 1 13,292
CDC - Trustee Nafa Stock Fund 1 13,242
CDC - Trustee KSE Meezan Index Fund 1 11,900
Trustee - Pakistan Pension Fund - Equity Sub Fund 1 6,096
CDC - Trustee HBL IPF Equity Sub Fund 1 4,700
CDC - Trustee AKD Index Tracker Fund 1 4,050
CDC - Trustee HBL PF Equity Sub Fund 1 3,085
CDC - Trustee JS Islamic Pension Savings Fund-Equity Account 1 2,000
CDC - Trustee Askari Equity Fund 1 1,221
MC FSL - Trustee JS KSE-30 Index Fund 1 1,163
CDC - Trustee Nafa Multi Asset Fund 1 808
CDC - Trustee Nafa Islamic Multi Asset Fund 1 50
30 2,060,589
Pattern of Shareholding
Information Required UnderCode of Corporate Governance
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45 Attock Petroleum Limited
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B u s i n e
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Categories Number of Shares
Shareholders Held
DIRECTORS, THEIR SPOUSES AND MINOR CHILDREN
Dr. Ghaith R. Pharaon 1 1
Mr. Laith G. Pharaon 1 1
Mr. Wael G. Pharaon 1 1
Mr. Shuaib A. Malik 1 4,612,351
Mr. Abdus Sattar 1 500
Mr. Babar Bashir Nawaz 1 1
Mr. M. Adil Khattak 1 29,377
Mr. Iqbal A. Khwaja 1 11,080
Mr. Rehmat Ullah Bardaie 1 35,424
9 4,688,736
EXECUTIVES 5 54,832
PUBLIC SECTOR COMPANIES AND CORPORATIONS 2 363,016
BANKS, DEVELOPMENT FINANCE INSTITUTIONS,
NON-BANKING FINANCIAL INSTITUTIONS, INSURANCE COMPANIES, TAKAFUL, MODARABAS
AND PENSION FUNDS 33 5,632,284
SHAREHOLDERS HOLDING 5% OR MORE
VOTING RIGHTS
Pharaon Investment Group Limited Holding s.a.l. 1 23,763,456
Attock Renery Limited 1 15,120,115
Attock Petroleum Limited Employees Welfare Trust 1 4,863,348
Pakistan Oilelds Limited 1 4,850,496
Mr. Shuaib A. Malik 1 4,612,351
5 53,209,766
Trade in shares by Directors, Executives* and their spouses and minor children during 2011-12.
Name Number of Shares Number of Shares
Purchased Sold
Mr. Shuaib A. Malik NIL 36,001
Mr. Iqbal A. Khwaja 1,000 NIL
*“EXECUTIVE means Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,Head of Internal Audit, Company Secretary and other employees of the Company who are drawingan annual basic salary of Rupees 500,000 or more.”
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46 Attock Petroleum Limited
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We have reviewed the Statement of Compliance with the best practices contained in the Code of
Corporate Governance prepared by the Board of Directors of Attock Petroleum Limited, to complywith the Listing Regulations of the Karachi Stock Exchange Limited where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance (the Code) is that of
the Board of Directors of the Company. Our responsibility is to review, to the extent where such
compliance can be objectively veried, whether the Statement of Compliance reects the status
of the Company’s compliance with the provisions of the Code and report if it does not. A review
is limited primarily to inquiries of the Company personnel and review of various documents
prepared by the Company to comply with the Code.
As part of our audit of nancial statements we are required to obtain an understanding of the
accounting and internal control systems sufcient to plan the audit and develop an effective
audit approach. We are not required to consider whether the Board’s statement on internal
control covers all risks and controls, or to form an opinion on the effectiveness of such internal
controls, the Company’s corporate governance procedures and risks.
Further, the Code requires the company to place before the audit committee, and upon
recommendation of the audit committee, before the board of directors for their review and
approval related party transactions distinguishing between transactions carried out on terms
equivalent to those that prevail in arm’s length transactions and transactions which are not
executed at arm’s length price recording proper justication for using such alternate pricing
mechanism. We are only required and have ensured compliance of requirement to the extent
of approval of related party transactions by the board of directors upon recommendation of the
audit committee. We have not carried out any procedures to determine whether the related party
transactions were undertaken at arm’s length price or not.
Based on our review, nothing has come to our attention which causes us to believe that the
Statement of Compliance does not appropriately reect the Company’s compliance, in all materialrespects, with the best practices contained in the Code of Corporate Governance as applicable
to the Company for the year ended June 30, 2012.
Chartered AccountantslslamabadSeptember 15, 2012
Engagement partner: M. lmtiaz Aslam
A. F. FERGUSON & CO., Chartered Accountants, a member rm of the PwC network PIA Building, 3rd Floor, 49 Blue Area, Fazl-ul-Haq Road, P.O. Box 3021, Islamabad-44000, Pakistan
Tel: +92 (51) 2273457-6o/ 2870045-8; Fax: +92 (51) 2277924; < www.pwc.com/pk>
Karachi: State Life Building No. 1-C, I.I. Chundrigar Road, P.O. Box 4716, Karachi-74000, Pakistan; Tel: +92 (21) 32426682-5/32426711-5; Fax: +92 (21) 32415007
Lahore: 23-C, Aziz Avenue, Canal Bank, Gulberg V, P.O. Box 39, Lahore-54660, Pakistan; Tel: +92 (42) 35715864-71; Fax: +92 (42) 35715872
Kabul: House No. 1, Street No. 3, Darulaman Road, Ayoub Khan Meina, Opposite Ayoub Khan Mosque, Kabul, Afghanistan; Tel: +93 (779) 315320, +93 (799) 315320
A. F. FERGUSON & CO.
Review Report to the Members on Statement of Compliance with bestpractices of Code of Corporate Governance
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47 Attock Petroleum Limited
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B u s i n e
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Statement of Compliancewith the Code of Corporate Governance for the Year Ended
June 30, 2012
This statement is being presented to comply with the Code of Corporate Governance (the Code)contained in regulation No. 35 xl of the Listing Regulations of the Karachi Stock Exchange
for the purpose of establishing a framework of good governance, whereby a listed company ismanaged in compliance with the best practices of corporate governance.
The Company has applied the principles contained in the Code in the following manner:
1. The Company encourages representation of independent non-executive directors and directorsrepresenting minority interests on its Board of Directors. At present the Board includes:
Category Names
• Independent Director* Mr. Abdus Sattar
• Non Executive Directors Dr. Ghaith R. PharaonMr. Laith G. PharaonMr. Wael G. PharaonMr. Babar Bashir NawazMr. M. Adil Khattak Mr. Iqbal A. Khwaja (Alternate Director)
• Executive Directors Mr. Shuaib A. Malik
Mr. Rehmat Ullah Bardaie (Alternate Director)
*The independent director meets the criteria of independence under clause i (b) of the Code 2002 since the present
Board was elected in March 2012, prior to issuance of the revised Code in April 2012. The Code 2012 requires
atleast one independent director as per the denition of independent director, which would be applicable from
next election of directors.
2. The directors have conrmed that none of them is serving as a director on more than sevenlisted companies.
3. All the resident directors of the Company are registered as taxpayers and none of them hasdefaulted in payment of any loan to a banking company, a Development Finance Institutionor a Non-Banking Financial Institution, or being a member of a stock exchange, has beendeclared as a defaulter by that stock exchange.
4. No casual vacancy occurred in the Board during the year.
5. The Company has prepared a ‘Code of Conduct’ and has ensured that appropriate stepshave been taken to disseminate it throughout the Company along with its supporting policiesand procedures.
6. The Board has developed vision and mission statements, overall corporate strategy andsignicant policies of the Company. A complete record of particulars of signicant policiesalong with the dates on which they were approved or amended has been maintained.
7. All the powers of the Board have been duly exercised and decisions on material transactions,including appointment and determination of remuneration and terms and conditions of employment of the Chief Executive Ofcer, other executive and non-executive directors,have been taken by the Board.
8. The meetings of the Board were presided over by the Chairman and in his absence, by adirector elected by the Board for this purpose and the Board met at least once in everyquarter. Written notices of Board meetings, along with agenda and working papers, werecirculated at least seven days before the meetings. The minutes of the meetings wereappropriately recorded and circulated.
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9. Most of the Directors meet the exemption requirements of the Directors’ training programand one of the Directors completed this program during the year 2010-11. No such programwas arranged during 2011-12.
10. The Board has approved appointment of Chief Financial Ofcer, Company Secretary and Headof Internal Audit, including their remuneration and terms and conditions of employment.
11. The Directors’ Report for the year has been prepared in compliance with the requirementsof the Code and fully describes the salient matters required to be disclosed.
12. The nancial statements of the Company were duly endorsed by Chief Executive Ofcerand Chief Financial Ofcer before approval of the Board.
13. The directors, Chief Executive Ofcer and executives do not hold any interest in the sharesof the Company other than that disclosed in the pattern of shareholding.
14. The Company has complied with all the corporate and nancial reporting requirements of the Code.
15. The Board has formed an Audit Committee. It comprises three members of whom all arenon-executive directors and the chairman of the committee is an independent director.
16. The meetings of the Audit Committee were held at least once every quarter prior to approvalof the interim and nal results of the Company as required by the Code. The terms of reference of the Committee have been formed and advised to the Committee for compliance.
17. The Board has formed a Human Resource and Remuneration Committee. It comprises of three members, of whom two members including the Chairman are non-executive directors.
18. The Board has set up an effective internal audit function.
19. The statutory auditors of the Company have conrmed that they have been given a satisfactoryrating under the quality control review program of the Institute of Chartered Accountantsof Pakistan, that they or any of the partners of the rm, their spouses and minor childrendo not hold shares of the Company and that the rm and all its partners are in compliancewith International Federation of Accountants (IFAC) guidelines on code of ethics as adoptedby the Institute of Chartered Accountants of Pakistan.
20. The statutory auditors or the persons associated with them have not been appointed toprovide other services except in accordance with the Listing Regulations and the auditorshave conrmed that they have observed IFAC guidelines in this regard.
21. The ‘closed period’, prior to the announcement of interim/nal results, and business decisions,which may materially affect the market price of Company’s securities, was determined and
intimated to directors, employees and stock exchange.
22. Material/price sensitive information has been disseminated among all market participantsat once through stock exchange.
23. We conrm that all other material principles enshrined in the Code have been complied with.
Shuaib A. Malik
Chief Executive
Dubai, UAE.
September 15, 2012
Statement of Compliance
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Six Years at a Glance
2012 2011 2010 2009 2008 2007
Prot & Loss Summary
Net sales Rs thousand 152,843,437 109,394,725 82,791,918 61,863,152 53,242,330 44,130,536
Gross prot Rs thousand 4,587,853 4,714,218 3,759,884 3,292,350 2,748,401 2,044,971
Operating prot Rs thousand 6,357,819 6,081,834 4,587,928 3,659,248 3,358,954 2,181,509
Prot before tax Rs thousand 5,646,740 6,017,511 4,846,309 4,280,419 3,529,552 2,435,606
Prot after tax Rs thousand 4,120,315 4,256,511 3,594,309 3,082,419 2,641,552 1,728,606
Prot before interest, taxes, depreciation Rs thousand 5,822,179 6,162,575 4,973,607 4,363,053 3,606,739 2,499,034
and amortization (EBITDA)
2012 2011 2010 2009 2008 2007
Balance Sheet Summary
Share capital Rs thousand 691,200 691,200 576,000 576,000 480,000 400,000Reserves Rs thousand 11,692,123 10,855,008 8,660,577 6,506,268 5,055,849 3,054,297Shareholders’ equity Rs thousand 12,383,323 11,546,208 9,236,577 7,082,268 5,535,849 3 ,454,297Non- current liabilities Rs thousand 412,729 320,316 288,908 251,538 135,137 126,821Current assets Rs thousand 28,062,795 22,247,396 19,429,233 16,408,160 13,881,634 7,995,195Current liabilities Rs thousand 17,735,089 12,613,827 11,917,167 10,938,626 9,842,350 5,402,649Net current assets Rs thousand 10,327,706 9,633,569 7,512,066 5,469,534 4,039,284 2,592,546Property, plant and equipment Rs thousand 1,601,576 1,374,767 1,217,217 1,130,875 922,621 601,326Other non-current assets Rs thousand 866,770 858,188 796,202 733,397 709,081 387,246
Capital expenditure during the year Rs thousand 402,248 308,200 215,396 293,032 399,198 144,324Total assets Rs thousand 30,531,141 24,480,351 21,442,652 18,272,432 15,513,336 8,983,767Total liabilities Rs thousand 18,147,818 12,934,143 12,206,075 11,190,164 9 ,977,487 5,529,470
Equity in 2012 increased by 7% over 2011 represented by prot retained in the business. Net current assets increased by 7% due to cash inows from operations. Non-currentassets increased by 17% representing expenditure on enhancement of storage capacities and construction of retail outlets. Current assets increased by 26% representingincrease in receivable balance from Power Producers owing to circular debts issue and also contributed corresponding increase in current liabilities.
Net sales revenue in 2012 increased by 40% from 2011 due to increase in average prices of products and volume sold. Protability decreased by 3% as compared to 2011due to price decrease in last quarter, stiff competition and ban on export of petroleum products to Afghanistan during 2011-12.
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51 Attock Petroleum Limited
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B u s i n e
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2012 2011 2010 2009 2008 2007
Cash Flow Summary
Cash ows of operating activities Rs thousand 4,213,709 (2,668,549) 3,358,779 1,999,307 2,995,311 2,110,251
Cash ows of investing activities Rs thousand (155,887) 966,107 318,114 849,611 (386,025) (5,165)
Cash ows of nancing activities Rs thousand (3,278,768) (1,944,108) (1,437,573) (1,533,404) (559,115) (319,305)
Effect of exchange rate changes Rs thousand 4,470 1,903 623 1,505 911 124
Net change in cash and cash equivalents Rs thousand 783,524 (3,644,647) 2,239,943 1,317,019 2,051,082 1,785,905
Cash & cash equivalents at end of the year Rs thousand 6,813,730 6,030,206 9,674,853 7,434,910 6,117,891 4,066,809
In 2012, these ratios are less as compared to last year due to decrease in protability despite increase in sales revenue.
In 2012, the Company generated net cash and cash equivalents of Rs. 783 million due to increase in cash collection from the customers. At the end of the year, the Companyhad cash and cash equivalents of Rs. 6,814 million.
2012 2011 2010 2009 2008 2007
Protability and Operating Ratios
Gross prot % 3.00 4.31 4.54 5.32 5.16 4.63Net prot to sales % 2.70 3.89 4.34 4.98 4.96 3.92EBITDA margin to sales % 3.81 5.63 6.01 7.05 6.77 5.66Operating leverage % (15.51) 75.21 39.08 131.39 217.53 312.51Return on equity % 34.44 40.96 44.05 48.86 58.77 62.86Return on capital employed % 34.44 40.96 44.05 48.86 58.77 62.86
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In 2012, these ratios are low compared to last year due to increase in current assets and current liabilities resulting from increasing circular debt issue. However these arestill on higher side as compared to industry average and represent Company’s strong ability to meet its short term obligations. Cash ow from operations to sales is positivein 2012 due to cash generation from operations.
Six Years at a Glance
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B u s i n e
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2012 2011 2010 2009 2008 2007
Investment / Market Ratios
Basic and diluted EPS Rs 59.61 61.58 62.40 53.51 55.03 43.22Basic and diluted EPS (restated) Rs 59.61 61.58 52.00 44.60 38.22 25.01Price earning Times 7.96 6.08 4.63 5.94 7.86 11.60Dividend yield % 11.98 12.08 8.61 9.16 3.85 3.51Dividend payout % 83.88 67.39 48.08 46.72 36.34 32.40Dividend cover Times 1.19 1.48 2.08 2.14 2.75 3.09Cash dividends Rs thousand 3,456,000 2,868,480 1,728,000 1,440,000 960,000 560,000Cash dividend per share Rs 50.00 41.50 30.00 25.00 20.00 14.00Bonus shares issued Rs thousand - - 115,200 - 96,000 80,000Bonus per share % - - 20.00 - 20.00 20.00Break-up value per share Rs 179.16 167.05 160.36 122.96 115.33 86.36Market value per share
Year end Rs 474 374 289 318 432 501Highest (during the year) Rs 478 401 405 432 634 501Lowest (during the year) Rs 316 281 275 130 404 295
2012 2011 2010 2009 2008 2007
Capital Structure Ratios
Financial leverage - - - - - -Weighted average cost of debt - - - - - -Debt to equity 0:100 0:100 0:100 0:100 0:100 0:100Interest cover - - - - - -
Market Share % 9.10 7.90 7.00 6.60 6.50 7.00(Source: OCAC)
Represent enhanced return rate to shareholders through dividend and appreciation in shares value.
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2012 2011
Rs. (‘000) % Rs. (‘000) %
Balance Sheet Items
Property, Plant and Equipment 1,601,576 5.3 1,374,767 5.6
Other Non-Current Assets 866,770 2.8 858,188 3.5
Current Assets 28,062,795 91.9 22,247,396 90.9
Total Assets 30,531,141 100.0 24,480,351 100.0
Shareholders’ Equity 12,383,323 40.6 11,546,208 47.2
Non- Current Liabilities 412,729 1.4 320,316 1.3
Current Liabilities 17,735,089 58.0 12,613,827 51.5
Total Shareholders’ Equity & Liabilities 30,531,141 100.0 24,480,351 100.0
Prot & Loss Items
Net Sales 152,843,437 100.0 109,394,725 100.0
Cost of Products Sold 148,255,584 97.0 104,680,507 95.7
Gross Prot 4,587,853 3.0 4,714,218 4.3
Operating Prot 6,357,819 4.2 6,081,834 5.6
Prot Before Taxation 5,646,740 3.7 6,017,511 5.5
Prot for the Year 4,120,315 2.7 4,256,511 3.9
Vertical Analysis
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s s
R evi ew
F i n an ci al
A n al y s i s
F i n an ci a
l
S t a t em en
t s
A nn u al G en er al
M e e t i n g
G ov er n an c e
2010 2009 2008 2007
Rs. (‘000) % Rs. (‘000) % Rs. (‘000) % Rs. (‘000) %
1,217,217 5.7 1,130,875 6.2 922,621 5.9 601,326 6.7
796,202 3.7 733,397 4.0 709,081 4.6 387,246 4.3
19,429,233 90.6 16,408,160 89.8 13,881,634 89.5 7,995,195 89.0
21,442,652 100.0 18,272,432 100.0 15,513,336 100.0 8,983,767 100.0
9,236,577 43.1 7,082,268 38.8 5,535,849 35.7 3,454,297 38.5
288,908 1.3 251,538 1.4 135,137 0.9 126,821 1.4
11,917,167 55.6 10,938,626 59.9 9,842,350 63.4 5,402,649 60.1
21,442,652 100.0 18,272,432 100.0 15,513,336 100.0 8,983,767 100.0
82,791,918 100.0 61,863,152 100.0 53,242,330 100.0 44,130,536 100.0
79,032,034 95.5 58,570,802 94.7 50,493,929 94.8 42,085,565 95.4
3,759,884 4.5 3,292,350 5.3 2,748,104 5.2 2,044,971 4.6
4,587,928 5.5 3,659,248 5.9 3,358,954 6.3 2,181,509 4.9
4,846,309 5.9 4,280,419 6.9 3,529,552 6.6 2,435,606 5.5
3,594,309 4.3 3,082,419 5.0 2,641,552 5.0 1,728,606 3.9
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56 Attock Petroleum Limited
Annual Report 2012
Horizontal Analysis
2012 2011
Rs. (‘000) % Rs. (‘000) %
Balance Sheet Items
Property, Plant and Equipment 1,601,576 16.5 1,374,767 12.9
Other Non-Current Assets 866,770 1.0 858,188 7.8
Current Assets 28,062,795 26.1 22,247,396 14.5
Total Assets 30,531,141 24.7 24,480,351 14.2
Shareholders’ Equity 12,383,323 7.3 11,546,208 25.0
Non-Current Liabilities 412,729 28.9 320,316 10.9
Current Liabilities 17,735,089 40.6 12,613,827 5.8
Total Shareholders’ Equity & Liabilities 30,531,141 24.7 24,480,351 14.2
Prot & Loss Items
Net Sales 152,843,437 39.7 109,394,725 32.1
Cost of Products Sold 148,255,584 41.6 104,680,507 32.5
Gross Prot 4,587,853 (2.7) 4,714,218 25.4
Operating Prot 6,357,819 4.5 6,081,834 32.6
Prot Before Taxation 5,646,740 (6.2) 6,017,511 24.2
Prot for the Year 4,120,315 (3.2) 4,256,511 18.4
In 2012, Property, plant and equipment increased by 17% representing expenditure on enhancementof bulk oil storage capacities and construction of retail outlets. Current assets increased by 26%
due to increase in receivable resulting from increasing circular debts. This also contributed to
corresponding increase in current liabilities. Shareholder’s equity increased by 7% represented
by prot retained in the business.
Net sales revenue in 2012 increased by 40% from 2011 due to increase in average prices of
products and volume sold. Protability decreased by 3% as compared to 2011 due to price
decrease in last quarter, stiff competition and ban on export of petroleum products to Afghanistan
during 2011-12.
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57 Attock Petroleum Limited
Annual Report 2012
B u s i n e
s s
R evi ew
F i n an ci al
A n al y s i s
F i n an ci a
l
S t a t em en
t s
A nn u al G en er al
M e e t i n g
G ov er n an c e
2010 2009 2008 2007
Rs. (‘000) % Rs. (‘000) % Rs. (‘000) % Rs. (‘000) %
1,217,217 7.6 1,130,875 22.6 922,621 53.4 601,326 15.4
796,202 8.6 733,397 3.4 709,081 83.1 387,246 9.6
19,429,233 18.4 16,408,160 18.2 13,881,634 73.6 7,995,195 39.6
21,442,652 17.3 18,272,432 17.8 15,513,336 72.7 8,983,767 36.1
9,236,577 30.4 7,082,268 27.9 5,535,849 60.3 3,454,297 68.9
288,908 14.9 251,538 86.1 135,137 6.6 126,821 (2.2)
11,917,167 8.9 10,938,626 11.1 9,842,350 82.2 5,402,649 22.0
21,442,652 17.3 18,272,432 17.8 15,513,336 72.7 8,983,767 36.1
82,791,918 33.8 61,863,152 16.2 53,242,330 20.6 44,130,536 8.1
79,032,034 34.9 58,570,802 16.0 50,493,929 20.0 42,085,565 7.8
3,759,884 14.2 3,292,350 19.8 2,748,104 34.4 2,044,971 12.9
4,587,928 25.4 3,659,248 8.9 3,358,954 54.0 2,181,509 13.9
4,846,309 13.2 4,280,419 21.3 3,529,552 44.9 2,435,606 25.2
3,594,309 16.6 3,082,419 16.7 2,641,552 52.8 1,728,606 24.1
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58 Attock Petroleum Limited
Annual Report 2012
2012 2011Rs. (‘000) % Rs. (‘000) %
Gross revenue and other income 180,387,692 130,071,946
Cost of sales and operating expenses (143,900,491) (101,763,526)
Total value added 36,487,201 28,308,420
DISTRIBUTION
Employee remuneration: 292,670 0.80 210,134 0.74
Government as:
Company taxation 1,526,425 4.18 1,761,000 6.22
Sales tax and levies 29,956,387 82.10 21,497,450 75.94
WPPF & WWF 415,965 1.14 437,706 1.55
Shareholders as:
Dividends 3,456,000 9.47 2,868,480 10.13
Society as:Donation - - 555 0.00
Providers of nance as:
Financial charges - - - -
Retained in business:
Depreciation 175,439 0.48 145,064 0.51
Net earnings 664,315 1.82 1,388,031 4.90
36,487,201 100.00 28,308,420 100.00
Statement of Value Added
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59 Attock Petroleum Limited
Annual Report 2012
B u s i n e s s
R evi ew
F i n an ci al
A n al y s i s
F i n an ci a
l
S t a t em en
t s
A nn u al G en er al
M e e t i n g
G ov er n an c e
We have audited the annexed balance sheet of Attock Petroleum Limited as at June 30, 2012 and therelated prot and loss account, statement of comprehensive income, cash ow statement and statementof changes in equity together with the notes forming part thereof, for the year then ended and we statethat we have obtained all the information and explanations which, to the best of our knowledge and belief,were necessary for the purposes of our audit.
lt is the responsibility of the Company’s management to establish and maintain a system of internal control,and prepare and present the above said statements in conformity with the approved accounting standardsand the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion onthese statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the above saidstatements are free of any material misstatement. An audit includes examining on a test basis, evidencesupporting the amounts and disclosures in the above said statements. An audit also includes assessingthe accounting policies and signicant estimates made by management, as well as, evaluating the overallpresentation of the above said statements. We believe that our audit provides a reasonable basis for ouropinion and, after due verication, we report that:
(a) in our opinion, proper books of account have been kept by the Company as required by the CompaniesOrdinance, 1984;
(b) in our opinion
(i) the balance sheet and prot and loss account together with the notes thereon have been drawnup in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied;
(ii) the expenditure incurred during the year was for the purpose of the Company’s business; and
(iii) the business conducted, investments made and the expenditure incurred during the year werein accordance with the objects of the Company;
(c) in our opinion and to the best of our information and according to the explanations given to us, thebalance sheet, prot and loss account, statement of comprehensive income, cash ow statement andstatement of changes in equity together with the notes forming part thereof conform with approvedaccounting standards as applicable in Pakistan, and, give the information required by the CompaniesOrdinance, 1984, in the manner so required and respectively give a true and fair view of the stateof the Company’s affairs as at June 30, 2012 and of the prot, total comprehensive income, its cashows and changes in equity for the year then ended; and
(d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980),was deducted by the Company and deposited in the Central Zakat Fund established under section 7of that Ordinance.
Chartered AccountantslslamabadSeptember 15, 2012
Engagement partner: M. lmtiaz Aslam
A. F. FERGUSON & CO.
Auditor’s Report to the Members
A. F. FERGUSON & CO., Chartered Accountants, a member rm of the PwC network
PIA Building, 3rd Floor, 49 Blue Area, Fazl-ul-Haq Road, P.O. Box 3021, Islamabad-44000, PakistanTel: +92 (51) 2273457-6o/ 2870045-8; Fax: +92 (51) 2277924; < www.pwc.com/pk>
Karachi: State Life Building No. 1-C, I.I. Chundrigar Road, P.O. Box 4716, Karachi-74000, Pakistan; Tel: +92 (21) 32426682-5/32426711-5; Fax: +92 (21) 32415007
Lahore: 23-C, Aziz Avenue, Canal Bank, Gulberg V, P.O. Box 39, Lahore-54660, Pakistan; Tel: +92 (42) 35715864-71; Fax: +92 (42) 35715872
Kabul: House No. 1, Street No. 3, Darulaman Road, Ayoub Khan Meina, Opposite Ayoub Khan Mosque, Kabul, Afghanistan; Tel: +93 (779) 315320, +93 (799) 315320
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60 Attock Petroleum Limited
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Note 2012 2011
Rupees (‘000)
SHARE CAPITAL AND RESERVES
Authorised capital 6 1,500,000 1,500,000
Issued, subscribed and paid up capital 6 691,200 691,200
Reserves
Special reserves 7 54,864 27,407
Revenue reserve
Unappropriated profit 11,637,259 10,827,601
12,383,323 11,546,208
NON CURRENT LIABILITIES
Long term deposits 8 245,729 209,316
Deferred income tax liability 9 167,000 111,000
412,729 320,316
CURRENT LIABILITIES
Trade and other payables 10 17,666,747 12,073,287
Provision for income tax 68,342 540,540
17,735,089 12,613,827
CONTINGENCIES AND COMMITMENTS 11
30,531,141 24,480,351
Balance Sheet As at June 30, 2012
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B u s i n e s s
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F i n an ci al
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t s
A nn u al G en er al
M e e t i n g
G ov er n an c e
Note 2012 2011
Rupees (‘000)
NON CURRENT ASSETS
Property, plant and equipment 12 1,601,576 1,374,767
Long term investments in associated companies 13 856,037 842,957
Long term prepayments 14 10,733 15,231
CURRENT ASSETS
Stores and spares 15,620 9,729
Stock in trade 15 4,165,895 5,246,705
Trade debts 16 15,351,310 9,297,292
Advances, deposits, prepayments
and other receivables 17 843,072 1,459,703
Short term investments 18 873,168 1,015,930
Cash and bank balances 19 6,813,730 5,218,037
28,062,795 22,247,396
30,531,141 24,480,351
The annexed notes 1 to 37 form an integral part of these financial statements.
Shuaib A. Malik Chief Executive
Abdus SattarDirector
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62 Attock Petroleum Limited
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Note 2012 2011
Rupees (‘000)
Sales 20 176,812,437 127,036,966
Sales tax (23,969,000) (17,642,241)
NET SALES 152,843,437 109,394,725
Cost of products sold 21 (148,255,584) (104,680,507)
GROSS PROFIT 4,587,853 4,714,218
Other operating income 22 2,659,322 1,978,931
Operating expenses 23 (889,356) (611,315)
OPERATING PROFIT 6,357,819 6,081,834
Finance cost 24 (1,211,047) (682,666)
Income on bank deposits and short term investments 25 889,427 962,838
Share of prot of associated companies 13 26,506 93,211
Other charges 26 (415,965) (437,706)
PROFIT BEFORE TAXATION 5,646,740 6,017,511
Provision for taxation 27 (1,526,425) (1,761,000)
PROFIT FOR THE YEAR 4,120,315 4,256,511
Earnings per share - Basic and diluted (Rupees) 28 59.61 61.58
The annexed notes 1 to 37 form an integral part of these nancial statements.
Profit and Loss AccountFor the year ended June 30, 2012
Shuaib A. Malik Chief Executive
Abdus SattarDirector
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63 Attock Petroleum Limited
Annual Report 2012
B u s i n e s s
R evi ew
F i n an ci al
A n al y s i s
F i n an ci a
l
S t a t em en
t s
A nn u al G en er al
M e e t i n g
G ov er n an c e
2012 2011
Rupees (‘000)
PROFIT FOR THE YEAR 4,120,315 4,256,511
Other comprehensive income - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4,120,315 4,256,511
The annexed notes 1 to 37 form an integral part of these nancial statements.
Statement of Comprehensive IncomeFor the year ended June 30, 2012
Shuaib A. Malik Chief Executive
Abdus SattarDirector
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64 Attock Petroleum Limited
Annual Report 2012
Note 2012 2011
Rupees (‘000)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers 149,782,129 109,434,933
Price differential claims received from Government 19,110 -
Payments for purchase of products and operating expenses (143,332,420) (110,141,454)
Other charges paid (348,900) (409,866)
Long term deposits received 36,413 30,408Income tax paid (1,942,623) (1,582,570)
Cash flow from operating activities 4,213,709 (2,668,549)
CASH FLOW FROM INVESTING ACTIVITIES
Addition to property, plant and equipment (402,248) (308,200)
Proceeds from sale of property, plant and equipment 477 6,786
Long term investments in associated companies (11,578) -
Short term investments (296,331) 317,588
Income received on bank deposits and short term investments 528,789 933,940
Dividend received from associated companies 25,004 15,993
Cash flow from investing activities (155,887) 966,107
CASH FLOW FROM FINANCING ACTIVITIES
Dividends paid (3,278,768) (1,944,108)
Cash used in financing activities (3,278,768) (1,944,108)
Effect of exchange rate changes 4,470 1,903
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 783,524 (3,644,647)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 6,030,206 9,674,853
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 29 6,813,730 6,030,206
The annexed notes 1 to 37 form an integral part of these financial statements.
Cash Flow StatementFor the year ended June 30, 2012
Shuaib A. Malik Chief Executive
Abdus SattarDirector
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65 Attock Petroleum Limited
Annual Report 2012
B u s i n e s s
R evi ew
F i n an ci al
A n al y s i s
F i n an ci a
l
S t a t em en
t s
A nn u al G en er al
M e e t i n g
G ov er n an c e
Share capital Special Unappropriated Total reserves profit
Rupees (‘000)
BALANCE AS AT JUNE 30, 2010 576,000 17,043 8,643,534 9,236,577
Total comprehensive income for the year - - 4,256,511 4,256,511
Transferred to special reserves by
associated companies - 10,364 (10,364) -
Transaction with owners:
Bonus shares @ 20% relating to
the year ended June 30, 2010 115,200 - (115,200) -
Final dividend @ 200% relating
to year ended June 30, 2010 - - (1,152,000) (1,152,000)
Interim dividend @ 115% relating
to year ended June 30, 2011 - - (794,880) (794,880)
Total transactions with owners 115,200 - (2,062,080) (1,946,880)
BALANCE AS AT JUNE 30, 2011 691,200 27,407 10,827,601 11,546,208
Total comprehensive income for the year - - 4,120,315 4,120,315
Transferred to special reserves by
associated companies - 27,457 (27,457) -
Transaction with owners:
Final dividend @ 300% relating
to year ended June 30, 2011 - - (2,073,600) (2,073,600)
Interim dividend @ 175% relating
to year ended June 30, 2012 - - (1,209,600) (1,209,600)
Total transactions with owners - - (3,283,200) (3,283,200)
BALANCE AS AT JUNE 30, 2012 691,200 54,864 11,637,259 12,383,323
The annexed notes 1 to 37 form an integral part of these financial statements.
Statement of Changesin EquityFor the year ended June 30, 2012
Shuaib A. Malik Chief Executive
Abdus SattarDirector
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66 Attock Petroleum Limited
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Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
1. LEGAL STATUS AND OPERATIONS
Attock Petroleum Limited (the Company) was incorporated in Pakistan as a public limited
company on December 3, 1995 and it commenced its operations in 1998. The Company
was listed on Karachi Stock Exchange on March 7, 2005. The registered office of the
Company is situated at Attock House, Morgah, Rawalpindi, Pakistan. The Company is
domiciled in Rawalpindi. The principal activity of the Company is procurement, storage
and marketing of petroleum and related products. Pharaon Investment Group Limited
Holding s.a.l holds 34.38% (2011: 34.38%) shares of the Company.
2. STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance with approved accounting
standards as applicable in Pakistan. Approved accounting standards comprise of such
International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board as are notified under the Companies Ordinance, 1984, provisions of and
directives issued under the Companies Ordinance, 1984. In case requirements differ, the
provisions or directives of the Companies Ordinance, 1984 shall prevail.
3. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
Standards, amendments and interpretations to existing standards that are not yet
effective and have not been early adopted by the Company:
Effective date (annual
reporting periods beginning
on or after)
IFRS 7 Financial instruments: Disclosures (Amendments) January 1, 2013
IAS 1 Presentation of financial statements (Amendments) July 1, 2012
& January 1, 2013
IAS 12 Income Taxes (Amendments) January 1, 2012
IAS 16 Property, Plant and Equipment (Amendments) January 1, 2013
IAS 19 Employee benefits (Amendments) January 1, 2013
IAS 27 Separate Financial Statements (Revised) January 1, 2013
IAS 28 Investments in Associates and Joint Venture (Revised) January 1, 2013
IAS 32 Financial instruments: Presentation (Amendments) January 1, 2013
& 2014
IAS 34 Interim Financial Reporting (Amendments) January 1, 2013
IFRIC 20Stripping costs in the production phase of a surface mine January 1, 2013
The management anticipate that, except for the effects on the financial statementsof amendments to IAS 19 “Employee Benefits”, the adoption of the above standards,
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A nn u al G en er al
M e e t i n g
G ov er n an c e
amendments and interpretations in future periods, will have no material impact on
the financial statements other than in presentation / disclosures. The application of
the amendments to IAS 19 would result in the recognition of cumulative unrecognized
actuarial gains / losses in other comprehensive income in the period of initial application,
which cannot be presently quantified on the date of the statement of financial position.
Further, the following new standards have been issued by the International Accounting
Standards Board (IASB), which are yet to be notified by the Securities and Exchange
Commission of Pakistan, for the purpose of their applicability in Pakistan:
Effective date (annual
periods beginning on or after)
IFRS 1 First-time adoption of International
Financial Reporting Standards July 1, 2009
IFRS 9 Financial instruments January 1, 2015
IFRS 10 Consolidated financial statements January 1, 2013
IFRS 11 Joint arrangements January 1, 2013
IFRS 12 Disclosure of interests in other entities January 1, 2013
IFRS 13 Fair value measurement January 1, 2013
The following interpretations issued by the IASB have been waived of by SECP effective January 16, 2012:
IFRIC 4 Determining whether an arrangement contains lease
IFRIC 12 Service concession arrangements
4. SIGNIFICANT ACCOUNTING POLICIES
4.1 Basis of measurement
These financial statements have been prepared under the historical cost convention
except as otherwise disclosed in the respective accounting policies notes.
4.2 Staff retirement benefits
Effective July 01, 2011, the Company operates following staff retirement benefit funds:
i) Approved defined benefit funded gratuity plan for all eligible employees. Actuarial
valuation is conducted periodically using the “Projected Unit Credit Method” and the
latest valuation was carried out as at June 30, 2012. The details of the valuation are given
in note 31. Past service cost in respect of vested benefits is recognised immediately as an
expense whereas past service cost related to non-vested benefits is recognised as expense
on a straight-line basis over the average period until such benefits become vested. Netactuarial gains and losses are recognised over the expected remaining service life of the
employees.
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68 Attock Petroleum Limited
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Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
ii) Approved contributory provident fund for all employees for which contributions of
Rs 4,185 thousand (2011: Rs Nil) are charged to income for the year.
4.3 Operating segments
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision-maker. The chief operating decision-maker,
who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes strategic decision.
The management has determined that the Company has a single reportable segment as
the Board of Directors views the Company’s operations as one reportable segment.
4.4 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary
economic environment in which the Company operates. The financial statements are
presented in Pakistani Rupees, which is the Company’s functional currency.
4.5 Foreign currency transactions and translations
Transactions in foreign currencies are converted into Rupees at the rates of exchangeruling on the date of the transaction. All assets and liabilities denominated in foreign
currencies are translated into functional currency at exchange rate prevailing at the
balance sheet date. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary items at year-end exchange rates,
are charged to income for the year.
4.6 Trade and other payables
Liabilities for creditors and other amounts payable are carried at cost which is the fair
value of the consideration to be paid in the future for the goods and/or services received
whether or not billed to the Company.
4.7 Provisions
Provisions are recognised when the Company has a legal or constructive obligation as a
result of past events, when it is probable that an outflow of resources will be required to
settle the obligation and a reliable estimate of the amount can be made.
4.8 Dividend distribution
Final dividend distributions to the Company’s shareholders are recognised as a liability in
the financial statements in the period in which the dividends are approved by the Company’sshareholders at the Annual General Meeting, while interim dividend distributions are
recognised in the period in which the dividends are declared by the Board of Directors.
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A n al y s i s
F i n an ci a
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A nn u al G en er al
M e e t i n g
G ov er n an c e
4.9 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and
impairment loss, if any, except for freehold land and capital work in progress which are
stated at cost.
Depreciation is charged to income on the straight line method to write off the cost of
an asset over its estimated useful life at the rates specified in note 12.1. Depreciation
on additions is charged from the month in which the asset is available for use and on
disposals upto the preceding month of disposal.
Maintenance and normal repairs are charged to income as and when incurred. Major
renewals and improvements are capitalised and the assets so replaced, if any, are retired.
Gains and losses on disposal of assets are included in income.
4.10 Impairment of non-financial assets
Assets that have an indefinite useful life, for example land, are not subject to depreciation
and are tested annually for impairment. Assets that are subject to depreciation are
reviewed for impairment at each balance sheet date, or wherever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairmentloss is recognised for the amount for which the assets’ carrying amount exceeds its
recoverable amount. An asset’s recoverable amount is the higher of its fair value less
costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels, for which there are separately identifiable cash flows. Non-
financial assets that suffered an impairment, are reviewed for possible reversal of the
impairment at each balance sheet date. Reversals of the impairment loss are restricted
to the extent that asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss
has been recognised. An impairment loss or reversal of impairment loss is recognised in
income for the year.
4.11 Investments in associated companies
Investments in associated companies are accounted for using the equity method. Under
this method the investments are stated at cost plus the Company’s equity in undistributed
earnings and losses after acquisition, less any impairment in the value of individual
investment.
Unrealised gains on transactions between the Company and its associate are eliminated
to the extent of the Company’s interest in the associate.
4.12 Stores and spares
These are stated at moving average cost less any provision for obsolete and slow moving
items.
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Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
4.13 Stock in trade
Stock in trade is valued at the lower of cost, calculated on a first-in first-out basis, and net
realisable value. Charges such as excise duty and similar levies incurred on unsold stock
of products are added to the value of the stock and carried forward.
Net realisable value signifies the sale price in the ordinary course of business less costs
necessary to make the sale.
4.14 Financial instruments
Financial assets and liabilities are recognised when the Company becomes a party to
the contractual provisions of the instrument and de-recognised when the Company
loses control of the contractual rights that comprise the financial assets and in case of
financial liabilities when the obligation specified in the contract is discharged, cancelled
or expired. All financial assets and liabilities are initially recognised at fair value plus
transaction costs for all financial assets and liabilities not carried at fair value through
profit or loss. Financial assets and liabilities carried at fair value through profit or loss
are initially recognised at fair value, and transaction costs are charged to income for the
year. These are subsequently measured at fair value, amortised cost or cost, as the case
may be. Any gain or loss on derecognition of financial assets and financial liabilities isincluded in income for the year.
4.15 Financial Assets
The Company classifies its financial assets in the following categories: investments at
fair value through profit or loss, held-to-maturity investments, loans and receivables and
available for sale financial assets. The classification depends on the purpose for which
the financial assets were acquired. Management determines the classification of its
financial assets at initial recognition. Regular purchases and sales of financial assets are
recognised on the trade date - the date on which the Company commits to purchase or
sell the asset.
4.15.1 Investment at fair value through profit or loss
Investments classified as investments at fair value through profit or loss are initially
measured at cost being fair value of consideration given. At subsequent dates these
investments are measured at fair value with any resulting gains or losses charged directly
to income. The fair value of such investments is determined on the basis of prevailing
market prices. The Company’s investments at fair value through profit or loss comprise
“Short term investment in mutual funds”.
4.15.2 Held-to-maturity investments
Investments with fixed payments and maturity that the Company has the intent and
ability to hold to maturity are classified as held-to-maturity investments and are carried
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at amortised cost less impairment losses. The Company’s held to maturity investments
comprise “Short term deposits” and “Short term investments”.
4.15.3 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are included in current assets,
except for maturities greater than 12 months after the balance sheet date. These are
classified as non-current assets. The Company’s loans and receivables comprise “Trade
debts”, “Advances, deposits and other receivables” and “Cash and bank balances” in the
balance sheet. Loans and receivables are carried at amortized cost using the effective
interest method.
4.15.4 Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this
category or not classified in any of the other categories. They are included in non-current
assets unless management intends to dispose of the investment within 12 months of the
balance sheet date.
Available-for-sale investments are initially recognised at cost and carried at fair value atthe balance sheet date. Fair value of a quoted investment is determined in relation to its
market value (current bid prices) at the balance sheet date. If the market for a financial
asset is not active (and for unlisted securities), the Company establishes fair value by
using valuation techniques. Adjustment arising from remeasurement of investment to
fair value is recorded in other comprehensive income and taken to income on disposal of
investment or when the investment is determined to be impaired.
4.16 Impairment
The Company assesses at the end of each reporting period whether there is objective
evidence that a financial asset or group of financial assets is impaired. A financial assetor a group of financial assets is impaired and impairment losses are incurred only if there
is objective evidence of impairment as a result of one or more events that occurred after
the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or group of financial
assets that can be reliably estimated.
4.17 Offsetting
Financial assets and liabilities are offset and the net amount is reported in the balance
sheet if the Company has a legally enforceable right to set off the recognised amounts
and the Company intends to settle on a net basis or realise the asset and settle theliability simultaneously.
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Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
4.18 Trade debts
Trade debts are recognised initially at fair value and subsequently measured at cost less
provision for doubtful debts. A provision for doubtful debts is established when there is
objective evidence that Company will not be able to collect all amounts due according
to the original terms of the trade debts. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial reorganisation, and default
of delinquency in payments are considered indicators that the trade debt is doubtful. The
provision for doubtful debts is charged to income for the year. When the trade debt is
uncollectible, it is written off against the provision. Subsequent recoveries of amountspreviously written off are credited to the income.
4.19 Cash and cash equivalents
For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand,
bank balances and highly liquid short term investments with original maturities of three
months or less, that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value.
4.20 Revenue recognition
Sales are recorded on dispatch of goods to customers.
Commission and handling income is recognised on shipment of products.
Income on bank deposits and short term investments is recognised on time proportion
basis using the effective yield method.
Income on investments in associated companies is recognised using the equity method.
Under this method, the Company’s share of post-acquisition profit or loss of the associated
companies is charged to income, and its share of post-acquisition movements in reserves
is recognised in reserves. Dividend distribution by the associated companies is adjusted
against the carrying amount of the investment.
Gains or losses resulting from re-measurement of investments at fair value through profit
or loss are charged to income.
4.21 Operating lease
Lease in which significant portion of risk and reward of ownership are retained by the
lessor are classified as operating leases. Payment made under operating leases are
charged to income on straight line basis over the period of lease.
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4.22 Taxation
Provision for current taxation is based on taxable income at the current rates of tax.
Deferred income tax is accounted for using the balance sheet liability method in respect
of all temporary differences arising between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that future taxable
profits will be available against which the deductible temporary differences can beutilized. Deferred tax is calculated at the rates that are expected to apply to the period
when the differences reverse based on the tax rates that have been enacted. Deferred tax
is charged or credited to income except to the extent that it relates to items recognised
in other comprehensive income or directly in the equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with the approved accounting
standards requires the use of certain accounting estimates. It also requires management
to exercise its judgment in the process of applying the Company’s accounting policies. Theareas involving a higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the financial statements, are as follows:
i) Estimate of recoverable amount of investments in associated companies - note 13;
ii) Provision for taxation - note 27
iii) Estimated useful life of property, plant and equipment - note 12.1; and
iv) Staff retirement benefits - note 31
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Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
2012 2011
Rupees (‘000)
6. SHARE CAPITAL
AUTHORISED CAPITAL
150,000,000 ordinary shares of Rs 10 each
(2011: 150,000,000 ordinary shares of Rs 10 each) 1,500,000 1,500,000
ISSUED, SUBSCRIBED AND PAID UP CAPITAL
Shares issued for cash
5,000,000 ordinary shares of Rs 10 each
(2011: 5,000,000 ordinary shares of Rs 10 each) 50,000 50,000
Shares issued as fully paid bonus shares
64,120,000 (2011: 64,120,000) ordinary shares 641,200 641,200
69,120,000 (2011: 69,120,000)
ordinary shares of Rs 10 each 691,200 691,200
The associated company Attock Refinery Limited held 15,120,115 (2011: 15,120,115)
ordinary shares at the year end.
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7. SPECIAL RESERVES
Special reserves includes Rs 52,608 thousand (2011: Rs 25,340 thousand) for expansion
and modernisation and Rs 2,256 thousand (2011: Rs 2,067 thousand) on account of
maintenance reserve. Reserve for expansion and modernisation represents the Company’s
share of amount set aside as a special reserve by National Refinery Limited and Attock
Refinery Limited, as a result of the directive of the Government to divert net profit after
tax (if any) from refinery operations above 50 percent of paid-up capital as at July 1, 2002
to offset against any future loss or to make investment for expansion or up gradation of
refineries. Maintenance reserve represents amount retained by Attock Gen Limited (anassociate of Attock Refinery Limited) to pay for major maintenance expenses in terms
of the Power Purchase Agreement. The amount transferred to special reserve is not
available for distribution to the shareholders.
8. LONG TERM DEPOSITS
These represent interest free security deposits received from distributors, retailers and
contractors and are refundable on cancellation of respective contracts or termination of
related services.
2012 2011
Rupees (‘000)
9. DEFERRED INCOME TAX LIABILITY
Deferred tax liability arising due to
accelerated tax depreciation 198,000 143,000
Deferred tax asset arising in respect
of certain provisions (31,000) (32,000)
167,000 111,000
10. TRADE AND OTHER PAYABLES
Creditors 9,855 90,051
Due to related parties (unsecured) - note 10.1 14,800,352 9,594,695
Accrued liabilities 1,050,290 1,053,416
Advance from customers 1,504,526 1,170,019
Retention money 54,910 35,629
Worker’s welfare fund 231,064 118,159
Unclaimed dividend 15,750 11,31817,666,747 12,073,287
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Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
2012 2011
Rupees (‘000)
10.1 Due to related parties:
National Refinery Limited 1,459,779 2,356,045
Attock Refinery Limited 13,306,444 7,221,552
Pakistan Oilfields Limited 15,561 15,946
The Attock Oil Company Limited 15,796 1,010
Attock Cement Pakistan Limited - 142
APL Employees provident fund 2,772 -14,800,352 9,594,695
11. CONTINGENCIES AND COMMITMENTS
11.1 CONTINGENCIES
(i) Tax contingency related to proration of expenses
against local and export sales for prior years,
as per show cause notices of tax department.
The Company has filed its response against
the show cause notice and no further actionhas yet been taken by the department. 850,348 883,709
(ii) Corporate guarantees and indemnity bonds issued
by the Company to the Commissioner Inland
Revenue, Islamabad. 2,013,101 2,433,157
(iii) Guarantees issued by bank on behalf of the Company 78,304 40,745
11.2 COMMITMENTS
(i) Capital expenditure commitments 323,371 286,471
(ii) Commitments for rentals of assets under operating
lease agreements as at June 30, 2012 amounting to
Rs 1,381,421 thousand (2011: Rs 859,732 thousand)
payable as follows:
Not later than one year 65,572 35,028
Later than one year and not later than five years 311,458 186,616
Later than five years 1,004,391 638,088
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2012 2011
Rupees (‘000)
12. PROPERTY, PLANT AND EQUIPMENT
Operating assets - note 12.1 1,342,228 1,038,290
Capital work in progress - note 12.2 259,348 336,477
1,601,576 1,374,767
12.1 Operating assets
Freehold land Buildings on Pipelines, Equipment - Electrical and Furniture, Computer and Motor Total
Freehold Lease hold pumps, tanks signage fire fighting fixture and auxiliary vehicles
land land and meters equipment equipment equipment
Rupees (‘000)
As at July 1, 2010
Cost 192,444 136,887 111,669 528,109 330,199 64,220 13,718 23,155 72,526 1,472,927
Accumulated depreciation - (8,706) (21,223) (179,246) (155,768) (21,451) (6,447) (12,671) (47,673) (453,185)
Net book value 192,444 128,181 90,446 348,863 174,431 42,769 7,271 10,484 24,853 1,019,742
Year ended June 30, 2011
Opening net book value 192,444 128,181 90,446 348,863 174,431 42,769 7,271 10,484 24,853 1,019,742
Additions - - 1,511 59,836 75,939 10,298 4,231 5,873 11,510 169,198
Disposals
Cost - - - (5,935) (4,456) (52) (503) (2,908) (1,935) (15,789)
Depreciation - - - 1,938 3,739 - 503 2,853 1,170 10,203
- - - (3,997) (717) (52) - (55) (765) (5,586)
Depreciation charge - (6,844) (5,647) (51,099) (58,039) (6,269) (1,345) (4,426) (11,395) (145,064)
Closing net book value 192,444 121,337 86,310 353,603 191,614 46,746 10,157 11,876 24,203 1,038,290
As at July 1, 2011
Cost 192,444 136,887 113,180 582,010 401,682 74,466 17,446 26,120 82,101 1,626,336
Accumulated depreciation - (15,550) (26,870) (228,407) (210,068) (27,720) (7,289) (14,244) (57,898) (588,046)
Net book value 192,444 121,337 86,310 353,603 191,614 46,746 10,157 11,876 24,203 1,038,290
Year ended June 30, 2012
Opening net book value 192,444 121,337 86,310 353,603 191,614 46,746 10,157 11,876 24,203 1,038,290
Additions - - 50,283 293,865 104,889 13,812 1,190 2,914 12,424 479,377
Disposals
Cost - - - - (454) - - - (1,481) (1,935)
Depreciation - - - - 454 - - - 1,481 1,935
- - - - - - - - - -
Depreciation charge - (8,208) (5,659) (66,000) (71,245) (7,332) (1,643) (4,223) (11,129) (175,439)
Closing net book value 192,444 113,129 130,934 581,468 225,258 53,226 9,704 10,567 25,498 1,342,228
As at June 30, 2012
Cost 192,444 136,887 163,463 875,875 506,117 88,278 18,636 29,034 93,044 2,103,778
Accumulated depreciation - (23,758) (32,529) (294,407) (280,859) (35,052) (8,932) (18,467) (67,546) (761,550)
Net book value 192,444 113,129 130,934 581,468 225,258 53,226 9,704 10,567 25,498 1,342,228
Annual rate of
Depreciation (%) - 5 5 10 20 10 10 20 20
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12.2 Capital work in progress
Civil works Pipelines, Advances to Total
pumps, tanks contractors
and equipment
Rupees (‘000)
As at July 1, 2010 4,447 149,998 43,030 197,475
Additions during the year 36,420 206,501 53,349 296,270
Transfers during the year (3,172) (139,715) (14,381) (157,268)
Balance as at June 30, 2011 37,695 216,784 81,998 336,477
As at July 1, 2011 37,695 216,784 81,998 336,477 Additions during the year 31,161 384,666 46,571 462,398
Transfers during the year (50,283) (415,810) (73,434) (539,527)
Balance as at June 30, 2012 18,573 185,640 55,135 259,348
12.3 Cost of Property, plant and equipment held by dealers of retail outlets of the Company
are as follows:
2012 2011
Rupees (‘000)
Pipelines, pumps, tanks and meters 269,091 199,777
Equipment - signage 495,547 391,586
Buildings 120,248 88,671Electric and fire fighting equipment 12,699 2,002
Due to large number of dealers it is impracticable to disclose the name of each person
having possession of these assets, as required under Paragraph 5 of Part 1 of the 4th
Schedule to the Companies Ordinance, 1984.
12.4 Property, plant and equipment disposals:
All the items of property, plant and equipment disposed during the year had net book
value below Rs 50,000.
2012 2011
Rupees (‘000)
13. LONG TERM INVESTMENTS IN ASSOCIATED COMPANIES
Balance at beginning of the year 842,957 765,739
Investment in associated company 11,578 -
Share of profit of associated companies 76,966 110,260
Impairment loss related to investment in
National Refinery Limited (50,460) (17,049)
26,506 93,211Dividend from associated companies (25,004) (15,993)
Balance at end of the year 856,037 842,957
Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
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13.1 Share of profit of associated companies is based on the unaudited financial statements
for the nine months ended March 31, 2012 (2011: unaudited financial statements for the
nine months ended March 31, 2011) since the audited financial statements for the year
ended June 30, 2012 are not presently available.
13.2 The Company’s interest in associated companies is as follows:
2012 2011
Rupees (‘000)
National Refinery Limited - Quoted
799,666 (2011:799,666) fully paid ordinary shares
including 133,278 (2011: 133,278) bonus shares of
Rs 10 each; Cost Rs 321,865 thousand
(2011: Rs 321,865 thousand);
Quoted market value as at June 30, 2012:
Rs 185,035 thousand
(2011: Rs 281,690 thousand) - note 13.5 502,577 483,712
Attock Refinery Limited - Quoted
1,432,000 (2011: 1,332,000) fully paid ordinary shares
of Rs 10 each including 222,000 (2011: 222,000)
bonus shares of Rs 10 each;
Cost Rs 310,502 thousand (2011: Rs 298,924 thousand);
Quoted market value as at June 30, 2012:
Rs 175,950 thousand (2011: Rs 163,476 thousand)
- note 13.6 452,798 409,127
Attock Information Technology Services
(Private) Limited - Unquoted
450,000 (2011: 450,000) fully paid ordinary
shares of Rs 10 each; Cost Rs 4,500 thousand
(2011: Rs 4,500 thousand);
Value based on net assets as at March 31, 2012 Rs 9,004 thousand (2011: Rs 8,000 thousand) 9,004 8,000
Carrying value on equity method 964,379 900,839
Less: Impairment loss - National Refinery Limited (108,342) (57,882)
856,037 842,957
All associated companies are incorporated in Pakistan.
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Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
13.3 The Company’s share in assets, liabilities, revenues and profit of associated companies
based on the most recent available financial statements is as follows:
Assets Liabilities Revenues Profit Holding
after tax
Rupees (‘000) %
March 31, 2012
National Refinery Limited 632,911 385,199 1,681,995 38,857 1.00
Attock Refinery Limited 1,584,987 1,102,694 2,404,893 37,105 1.68
Attock Information TechnologyServices (Private) Limited 9,444 440 4,022 1,004 10.00
2,227,342 1,488,333 4,090,910 76,966
March 31, 2011
National Refinery Limited 582,883 354,037 1,418,474 61,638 1.00
Attock Refinery Limited 1,335,189 1,040,103 1,673,235 47,514 1.56
Attock Information Technology
Services (Private) Limited 8,334 334 3,839 1,108 10.00
1,926,406 1,394,474 3,095,548 110,260
13.4 Although the Company has less than 20 percent shareholding in National Refinery Limited,
Attock Refinery Limited and Attock Information Technology Services (Private) Limited,these companies have been treated as associates since the Company has representation
on their Board of Directors.
13.5 The value of investment in National Refinery Limited as at June 30, 2012 is based on a
valuation analysis carried out by an external investment advisor engaged by the Company.
The recoverable amount has been estimated based on a value in use calculation. These
calculations have been made on discounted cash flow based valuation methodology which
assumes an average gross profit margin of 5.15% (2011: 6.5%), terminal growth rate of
3.5% (2011: 4%) and capital asset pricing model based discount rate of 20.13% (2011: 20%).
13.6 Based on a valuation analysis carried out by the Company, the recoverable amount of investment in Attock Refinery Limited exceeds its carrying amount. The recoverable
amount has been estimated based on a value in use calculation. These calculations have
been made on discounted cash flow based valuation methodology which assumes gross
profit margin of 1.79% (2011: 2.16%), terminal growth rate of 3.5% (2011: 4%) and
capital asset pricing model based discount rate of 20.13% (2011: 20%).
2012 2011
Rupees (‘000)
14 LONG TERM PREPAYMENTS
Prepaid rent 16,099 30,463
Less: Shown under current assets - note 17 (5,366) (15,232)
10,733 15,231
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15. STOCK IN TRADE
Petroleum products - note 15.1 and 15.2 4,164,559 5,243,724
Packing material 1,336 2,981
4,165,895 5,246,705
15.1 It includes the Company’s share of pipeline stock amounting to Rs 2,196,602 thousand
(2011: Rs 2,225,212 thousand) and Rs 1,039,752 thousand (2011: Rs 1,208,695 thousand)held by Pak-Arab Pipeline Company Limited and Pak Arab Refinery Limited respectively.
15.2 This includes items costing Rs 4,255,358 thousand (2011: Nil) which have been valued
at net realisable value amounting to Rs 3,973,151 thousand (2011: Nil) as a result
of decline in the selling prices of certain petroleum products with effect from July
01, 2012.
2012 2011
Rupees (‘000)
16. TRADE DEBTS Considered good
Secured 1,226,681 1,076,616
Unsecured
Due from related parties - note 16.1 13,191,027 6,377,899
Others 933,602 1,842,777
14,124,629 8,220,676
15,351,310 9,297,292
Considered doubtful - unsecured 31,000 31,000
Provision for doubtful debts (31,000) (31,000)
- -
15,351,310 9,297,292
16.1 Due from related parties
Attock Gen Limited 13,148,890 6,352,555
Pakistan Oilfields Limited 29,264 10,501
Attock Cement Pakistan Limited 12,082 14,141
Attock Refinery Limited 791 702
13,191,027 6,377,899
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Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
2012 2011
Rupees (‘000)
17. ADVANCES, DEPOSITS, PREPAYMENTS AND
OTHER RECEIVABLES
Advances - considered good
Suppliers 303,522 532,970
Employees against expenses
Executives 101 279
Other employees 1,072 1,119
1,173 1,398
304,695 534,368
Trade deposits and short-term prepayments
Trade deposits 8,530 5,868
Short-term prepayments 32,551 27,247
41,081 33,115
Current account balances with statutory authorities
in respect of:
Sales tax 40,155 54,727
Federal excise duty and petroleum levy 17,749 17,788
57,904 72,515
Accrued income on bank deposits 20,184 32,622
Other receivables
Price differential claim receivable from the Government 28,528 47,638
Receivable from oil marketing companies under freight pool 339,918 736,788
Claims receivable - 332
Due from related parties - unsecured
APL Gratuity fund 2,690 -
Attock Information Technology Services (Pvt.) Ltd. 936 1,044
Attock Cement Pakistan Limited 196 -Workers’ profit participation fund - note 17.1 46,940 1,100
Others - 181
419,208 787,083
843,072 1,459,703
17.1 Workers’ profit participation fund
Balance at beginning of the year 1,100 7,060
Amount allocated for the year - note 26 (303,060) (318,900)
Amount paid to Fund’s trustees 348,900 312,940
Balance at end of the year 46,940 1,100
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2012 2011
Rupees (‘000)
18. SHORT TERM INVESTMENTS
Held to maturity investment in treasury bills -
at amortized cost - Note 18.1
Upto three months - 812,169
Later than three months but not later than six months - 203,761
Later than six months but not later than one year 545,503 -
545,503 1,015,930
Investment in mutual funds at fair value
through profit or loss - Note 18.2 327,665 -
873,168 1,015,930
18.1 Balance of short term investment in treasury bills earned interest at weighted average
rate of 12.31% per annum (2011: Rs 12.74% per annum).
2012 2011
Rupees (‘000)
18.2 Units of opened ended mutual funds
NAFA Government Securities Liquid Fund10,859,607 (2011: Nil) units 109,164 -
Askari Sovereign Cash Fund
540,564 (2011: Nil) units 54,633 -
UBL Liquidity plus Fund
1,089,360 (2011: Nil) units 109,320 -
Meezan Sovereign Fund
1,060,017 (2011: Nil) units 54,548 -
327,665 -
19. CASH AND BANK BALANCES
Cash in hand 1,947 1,570
Bank balances
On short term deposits 5,500,000 3,717,000
On interest/mark-up bearing saving accounts
(includes US $ 103 thousand; 2011: US $ 103 thousand) 958,719 826,999
On current accounts
(includes US $ 189 thousand; 2011: US $ 2,274 thousand) 353,064 672,468
6,811,783 5,216,467
6,813,730 5,218,037
19.1 Short term deposits of Rs 81,014 thousand (2011: Rs 68,515 thousand) were under lien
with banks against letters of guarantees and letters of credits.
19.2 Balances in short term deposits and saving accounts earned interest/mark-up at weighted
average rate of 11.05% per annum (2011: 11.07% per annum).
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2012 2011
Rupees (‘000)20. SALES
Local sales 172,144,825 120,724,804Export sales 5,181,795 6,597,087Gross sales 177,326,620 127,321,891Rebates/discount (514,183) (284,925)
176,812,437 127,036,966
21. COST OF PRODUCTS SOLD
Opening stock 5,246,705 993,282Purchase of petroleum products and packing material 141,187,387 105,078,721Excise duty 30,579 90,762Petroleum levy 5,956,808 3,764,447
147,174,774 108,933,930Closing stock (4,165,895) (5,246,705)
148,255,584 104,680,507
22. OTHER OPERATING INCOME
Commission and handling income 1,315,211 1,160,868
Mark-up on late payments 1,307,359 707,536Exchange gain - 82,098Tender and joining fee 9,458 6,956Gain on sale of property, plant and equipment 477 1,200Hospitality income 8,011 3,805Other income 18,806 16,468
2,659,322 1,978,931
23. OPERATING EXPENSES
Salaries and benefits 292,670 210,134Rent, taxes and other fees - note 23.1 171,746 78,474
Travelling and staff transport 24,405 20,713Repairs and maintenance 59,558 42,961Donations - note 23.2 - 555 Advertising and publicity 8,008 6,337Printing and stationery 12,214 11,416Electricity, gas and water 16,262 11,766Insurance 27,442 23,292Communication 7,815 7,333Legal and professional charges 7,935 13,949Subscription and fees 1,176 1,459Transportation 8,405 6,860 Auditor’s remuneration - note 23.3 2,774 3,001Exchange loss 21,168 -Depreciation - note 12.1 175,439 145,064Trade debts written-off during the year 642 -
Others 51,697 28,001
889,356 611,315
Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
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23.1 Rent, taxes and other fees include Rs 79,364 thousand (2011: Rs 51,706 thousand) paid
under operating lease agreements.
23.2 No director or his spouse had any interest in the donations made by the Company.
2012 2011
Rupees (‘000)
23.3 Auditor’s remuneration
Annual audit 1,100 1,000
Review of half yearly financial statements,
audit of staff funds and special certifications 422 358
Tax services 1,002 1,460
Out of pocket expenses 250 183
2,774 3,001
24. FINANCE COST
Bank charges 15,798 20,822
Late payment charges 1,195,249 661,844
1,211,047 682,666
25. INCOME ON BANK DEPOSITS AND
SHORT TERM INVESTMENTS
Income on bank deposits 781,468 873,993
Income from short term investments measured at
amortised cost 80,294 88,845
Gain on re-measurement of fair value of open ended
mutual fund units 27,665 -
889,427 962,838
26. OTHER CHARGES
Workers’ profit participation fund 303,060 318,900
Workers’ welfare fund 112,905 118,806
415,965 437,706
27. PROVISION FOR TAXATION
Current tax - For the year 1,574,000 1,760,000
- For prior years (103,575) -
1,470,425 1,760,000
Deferred 56,000 1,000
1,526,425 1,761,000
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2012 2011
% %
27.1 Reconciliation of tax charge for the year
Applicable tax rate 35.00 35.00
Effect of surcharge - 2.11
Tax effect of income taxed under final tax regime (6.55) (7.33)
Tax effect of income exempt from tax (0.17) -
Tax effect of share of profit of associated companies
taxed on the basis of dividend income (0.12) (0.52)
Others (1.13) -
Average effective tax rate charged to income 27.03 29.26
28. EARNINGS PER SHARE
Profit for the year (Rupees in thousand) 4,120,315 4,256,511
Weighted average number of ordinary shares
in issue during the year (in thousand) 69,120 69,120
Basic and diluted earnings per share (Rupees) 59.61 61.58
2012 2011
Rupees (‘000)
29. CASH AND CASH EQUIVALENTS
Cash and bank balances 6,813,730 5,218,037
Short term investments - 812,169
6,813,730 6,030,206
Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
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30. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
30.1 Financial assets and liabilities
Loans and Held to Fair value TotalReceivables maturity through profit
June 30, 2012 investments or lossRupees (‘000)
Financial Assets
Maturity up to one year
Trade debts 15,351,310 - - 15,351,310 Advance, deposits andother receivables 419,394 - - 419,394Short term investments - 545,503 327,665 873,168Cash and bank balances 1,313,730 5,500,000 - 6,813,730
17,084,434 6,045,503 327,665 23,457,602
Other financialliabilities Total
Rupees (‘000) Financial Liabilities
Maturity up to one year
Trade and other payables 16,162,221 16,162,221Maturity after one yearLong term deposits 245,729 245,729
16,407,950 16,407,950
Loans and Held to Fair value TotalReceivables maturity through profit
June 30, 2011 investments or lossRupees (‘000)
Financial Assets
Maturity up to one yearTrade debts 9,297,292 - - 9,297,292
Advance, deposits andother receivables 777,935 - - 777,935Short term investments - 1,015,930 - 1,015,930Cash and bank balances 1,501,037 3,717,000 - 5,218,037
11,576,264 4,732,930 - 16,309,194
Other financialliabilities Total
Rupees (‘000)Financial Liabilities
Maturity up to one year
Trade and other payables 10,903,268 10,903,268
Maturity after one yearLong term deposits 209,316 209,316
11,112,584 11,112,584
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30.2 Credit quality of financial assets
The credit quality of the Company’s financial assets have been assessed below by reference
to external credit ratings of counterparties determined by The Pakistan Credit Rating
Agency Limited (PACRA) and JCR-VIS Credit Rating Company Limited (JCR-VIS). The
counterparties for which external credit ratings were not available have been assessed
by reference to internal credit rating determined based on their historical information for
any defaults in meeting obligations.
2012 2011
Balance Balance
Rating Rupees (‘000)
Trade debts
Counterparties with external credit rating A1+ 791 702
Counterparties without external credit rating
Secured against bank guarantee 1,226,681 1,076,616
Due from related parties 13,190,236 6,377,197
Others 933,602 1,842,77715,351,310 9,297,292
Advances, deposits and other receivables
Counterparties without external credit rating 419,394 777,935
Short term investments
Counterparties with external credit rating AA+ 273,117 -
AA 54,548 -
Counterparties without external credit rating 545,503 1,015,930
873,168 1,015,930Bank balances
A1+ 6,202,453 5,098,629
A1 500,015 -
A2 109,315 117,838
6,811,783 5,216,467
30.3 FINANCIAL RISK MANAGEMENT
30.3.1 Financial risk factors
The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk, interest rate risk and price risk). The Company’s
overall risk management policy focuses on the unpredictability of financial markets and
seeks to minimize potential adverse effects on the Company’s financial performance.
Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
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(a) Credit risk
Credit risk represents the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation.
The Company’s credit risk is primarily attributable to its trade debts and balances at
banks. Credit sales are primarily to related parties. The credit risk on liquid funds is
limited because counter parties are banks with reasonably high credit ratings.
As of June 30, 2012, trade debts of Rs 11,412,635 thousand (2011: Rs 6,679,135 thousand)
were past due but not impaired. The ageing analysis of these trade receivables is as
follows:
2012 2011
Rupees (‘000)
Up to 3 months 4,213,108 4,669,825
3 to 6 months 4,575,912 1,938,455
6 to 9 months 2,551,980 18,488
Above 9 months 71,635 52,367
11,412,635 6,679,135
(b) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations
associated with financial liabilities.
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents.
The table below analyses the Company’s financial liabilities into relevant maturity
groupings based on the remaining period at the balance sheet date to the maturity date.
The amounts disclosed in the table are undiscounted cash flows.
Less than Above
1 year 1 year
Rupees (‘000)
At June 30, 2012
Long term deposits - 245,729
Trade and other payables 16,162,221 -
At June 30, 2011
Long term deposits - 209,316
Trade and other payables 10,903,268 -
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(c) Market risk
(i) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. Currency risk arises mainly
from future commercial transactions or receivables and payables that exist due to
transactions in foreign currencies.
Financial assets include Rs 27,218 thousand (2011: Rs 201,142 thousand) which were
subject to currency risk.
A 10% strengthening of the functional currency against USD at June 30 would have decreased
profit and loss by Rs 2,722 thousand (2011: Rs 20,114 thousand). A 10% weakening of the
functional currency against USD at June 30 would have had the equal but opposite effect
of these amounts. The analysis assumes that all other variables remain constant.
(ii) Interest rate risk
Interest rate risk represents the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates.
The Company has no long term interest bearing financial assets and liabilities whose fair
value or future cash flows will fluctuate because of changes in market interest rates.
Financial assets include balances of Rs 20,480,777 thousand (2011: Rs 11,794,623
thousand) which are subject to interest rate risk. Applicable interest rates for financial
assets have been indicated in respective notes.
If interest rates had been 1% higher/lower with all other variables held constant, profit after
tax for the year would have been Rs 157,026 thousand (2011: Rs 94,773 thousand) higher/
lower, mainly as a result of higher/lower interest income from these financial assets.
(iii) Other price risk
Price risk represents the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices (other than those arising
from interest rate risk or currency risk), whether those changes are caused by factors
specific to the individual financial instrument or its issuer, or factors affecting all similar
financial instruments traded in the market.
At the year end the Company is not exposed to price risk since there are no financial
instruments, whose fair value or future cash flows will fluctuate because of changes inmarket prices.
Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
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30.3.2 Capital risk management
The Company’s objectives when managing capital are to ensure the Company’s ability not
only to continue as a going concern but also to meet its requirements for expansion and
enhancement of its business, maximize return of shareholders and optimize benefits for other
stakeholders to maintain an optimal capital structure and to reduce the cost of capital.
In order to achieve the above objectives, the Company may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares through bonus or
right issue or sell assets to reduce debts or raise debts, if required.
Since inception the gearing ratio of the Company is nil and the Company has financed all
its projects and business expansions through only equity financing and never resorted to
debt financing.
30.4 Fair value of financial assets and liabilities
The carrying value of financial assets and liabilities approximate their fair value.
31. STAFF RETIREMENT BENEFITS
The latest acturial valuation of the defined benefit plan was conducted as at June 30,
2012 using the projected unit credit method. Details of the defined benefit plan are:
2012
Rupees (‘000)
31.1 The amounts recognised in the balance sheet:
Present value of defined benefit obligations 13,552
Fair value of plan assets (10,748)
Net liability 2,804
Unrecognised actuarial gains 826Unrecognised past service cost (6,320)
Asset recognised in the balance sheet (2,690)
31.2 The amounts recognised in the balance sheet are as follows:
Balance as at July 01, -
Expense recognised in profit and loss account (8,058)
Contributions made during the year 10,748
Balance as at June 30, 2,690
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2012
Rupees (‘000)
31.3 The amounts recognised in profit and loss account are as follows:
Current service cost 2,125
Interest cost 1,505
Past service cost 4,428
Expense recognised in profit and loss account 8,058
31.4 Changes in the present value of defined benefit obligation are as follows:
Present value of defined obligation as at July 01, -
Interest cost 1,505
Current service cost 2,125
Past service cost 10,748
Acturial gain on obligation (826)
Present value of defined obligation as at June 30, 13,552
31.5 Changes in fair value of plan assets are as follows:
Fair value of plan assets as at July 01, -
Contributions during the year 10,748
Fair value of plan assets as at June 30, 10,748
During the year 2012-13 the Company expects to contribute Rs 3,482 thousand to its
defined benefit gratuity plan.
31.6 Plan assets consist of balance held with bank on interest/mark-up bearing saving account.
31.7 Significant acturial assumptions at the balance sheet date are as follows:
Discount rate 13.25%
Expected rate of return on plan assets 13.25%
Expected rate of increase in salaries 11%
2012
Rupees (‘000)
31.8 Deficit as at the year end is as follows:
Present value of defined benefit obligation 13,552
Fair value of plan assets (10,748)
Deficit 2,804
31.9 Salaries, wages and benefits as appearing in note 23 include
amounts in respect of the following:
Provident fund 4,185
Gratuity fund 8,058
12,243
Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
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32. TRANSACTIONS WITH RELATED PARTIES
Aggregate transactions with related parties, other than remuneration to the chief
executive, directors and executives of the Company under their terms of employment
disclosed in note-33, were as follows:
2012 2011
Rupees (‘000)
Associated companies
Attock Refinery Limited
Purchase of petroleum products 41,517,038 34,360,461Purchase of services 77,791 63,487
Late payment charges 1,195,249 661,841
Sale of petroleum products 9,781 9,038
Commission and handling income 330,485 290,812
National Refinery Limited
Purchase of petroleum products 75,131,368 48,834,829
Purchase of services 16,743 2,513
Sale of petroleum products 17,491 19,127
Handling income 984,727 870,057
Attock Gen Limited
Purchase of services - 184
Sale of petroleum products 18,048,609 13,589,943Mark-up earned on late payments 1,294,629 689,174
Pakistan Oilfields Limited
Purchase of petroleum products 220,469 174,169
Purchase of services 6,709 6,078
Sale of petroleum products 662,392 472,405
Sale of services 254 181
The Attock Oil Company Limited
Purchase of services 40,566 21,383
Sale of services 2,704 -
Attock Cement Pakistan Limited
Purchase of services 4,123 3,510Sale of petroleum products 253,972 217,737
Sale of services 949 -
Attock Information Technology Services
(Private) Limited
Sale of services 4,558 3,708
Attock Hospital (Private) Limited
Purchase of medical services 2,035 1,173
Other related parties
Contribution to staff retirement benefits plans
APL Employees provident fund 4,185 - APL Gratuity fund 8,058 -
Contribution to Workers’ profit participation fund 303,060 318,900
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33. SEGMENT REPORTING
33.1 As described in note 1 to these financial statements the Company markets petroleum
products. Revenue from external customers for products of the Company are as follows:
2012 2011
Rupees (‘000)
Product
High Speed Diesel 83,295,518 51,747,347
Furnace Fuel Oil 48,301,129 38,391,772
Premier Motor Gasoline 22,384,651 13,793,937
Bitumen 13,428,862 12,428,392
Others 9,402,277 10,675,518
176,812,437 127,036,966
33.2 Revenues of Rs 18,048,609 thousand (2011: Rs 13,589,943 thousand) are derived from a
single external customer.
34. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
Chief Executive Director Executives 2012 2011 2012 2011 2012 2011
Rupees (‘000)
Managerial remuneration 8,158 5,865 2,596 2,006 27,154 16,201
Bonus 13,344 8,934 4,010 2,656 15,298 9,419
Company’s contribution
to provident, pension
and gratuity funds 2,139 1,533 1,526 - 3,286 1,131
Housing and utilities 3,574 2,638 1,042 876 11,595 6,668
Other perquisites and
benefits 1,347 1,089 1,667 1,498 7,499 4,231Leave passage 716 650 223 193 450 338
29,278 20,709 11,064 7,229 65,282 37,988
No. of person(s) 1 1 1 1 23 15
Notes to and forming part of the Financial StatementsFor the year ended June 30, 2012
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34.1 The above includes amounts charged by an associated company for share of chief
executive’s and one director’s remuneration as approved by the Board of Directors of
the Company. Executives were also provided with use of Company maintained cars and
medical facilities as per Company policy.
34.2 In addition, four non-executive directors of the Company were paid meeting fee
aggregating Rs 2,012 thousand (2011: Rs 1,929 thousand).
35. CAPACITY AND PRODUCTION
Considering the nature of the Company’s business, the information regarding capacity
has no relevance.
36. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE
The Board of Directors in its meeting held on September 15, 2012 have proposed a
final dividend for the year ended June 30, 2012 @ Rs. 32.50 per share, amounting to
Rs. 2,246,400 thousand for approval of the members in the Annual General Meeting to
be held on October 17, 2012.
37. DATE OF AUTHORISATION
These financial statements were authorised for issue by the Board of Directors of the
Company on September 15, 2012.
Shuaib A. Malik Chief Executive
Abdus SattarDirector
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Notice of the Annual GeneralMeeting
Notice is hereby given that the 17th Annual
General Meeting (being 28th General Meeting)
of the Company will be held at Morgah Club,
Morgah, Rawalpindi, on October 17, 2012 at
10:00 a.m. to transact the following business:
ORDINARY BUSINESS
1. To receive, consider and adopt the audited
nancial statements of the Company together
with Directors’ and Auditor’s Reports for
the year ended June 30, 2012.
2. To approve a nal cash dividend of 325%
i.e. Rs. 32.50 per share of Rs. 10/- each, as
recommended by the Board of Directors
in addition to the interim dividend of Rs.
17.50 per share i.e. 175% already paid to
the shareholders, thus making a total of Rs.
50/- per share i.e. 500% for the year ended June 30, 2012.
3. To appoint auditors for the year ending June
30, 2013 and to x their remuneration.
BY ORDER OF THE BOARD
Rehmat Ullah Bardaie
Company Secretary
Registered Ofce:
Attock House, Morgah
Rawalpindi
September 26, 2012
NOTES:
PARTICIPATION IN THE ANNUALMEETING:
A member entitled to attend and vote at the
meeting is entitled to appoint any other person/
representative as his/her proxy to attend and
vote. Proxies in order to be effective must be
received at the Registered Ofce of the Company
duly stamped and signed not less than 48 hours
before the meeting.
CDC Account Holders will further have to follow
the under mentioned guidelines as laid down in
Circular 1 dated January 26, 2000 issued by the
Securities & Exchange Commission of Pakistan.
A. FOR ATTENDING THE MEETING:
i. In case of individuals, the account holders
or sub-account holders and/or the persons
whose securities are in group account and
their registration details are uploaded as
per the regulations, shall authenticate
their identity by showing their original
Computerized National Identity Card (CNIC)
or original passport at the time of attending
the meeting.
ii. In case of corporate entities, the Board of
Directors’ resolution/power of attorney with
specimen signature of the nominees shall
be produced (unless it has been provided
earlier) at the time of the meeting.
B. FOR APPOINTING PROXIES:
i. In case of individuals, the account holders
or sub-account holders and/or the persons
whose securities are in group account and
their registration details are uploaded as
per the regulations, shall submit the proxy
form as per the above requirements.
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ii. The proxy form shall be witnessed by two
persons whose names, addresses and CNIC
numbers shall be mentioned on the form.
iii. Attested copies of CNIC or the passport of
the benecial owners and the proxy shall
be furnished with the proxy form.
iv. The proxies shall produce their original
CNIC or original passport at the time of
meeting.
v. In case of corporate entities, the Board
of Directors resolution/power of attorney
with specimen signature of the person
nominated to represent and vote on behalf
of the corporate entity, shall be submitted
(unless it has been provided earlier) along
with proxy form to the Company.
Members who may be seeking exemption
from deduction of income-tax or are eligible
for deduction at a reduce rate are requested
to submit a valid tax certicate or necessary
documentary evidence as the case may be.
Members desiring non-deduction of zakat are
also requested to submit a declaration for non-
deduction of zakat. Necessary advice in either
case must be submitted within not more than
15 days from the date of dividend entitlement.
CLOSURE OF SHARE TRANSFER BOOKS:
The Share Transfer Books of the Company will
remain closed and no transfer of shares will
be accepted for registration from October 10,
2012 to October 17, 2012 (both days inclusive).
Transfers received in order at the ofce of the
Company’s Share Registrar, THK Associates
(Private) Limited, Ground Floor, State LifeBuilding-3, Dr. Ziauddin Ahmed Road, Karachi
at the close of business on October 09, 2012
will be treated in time for the purpose of
payment of nal cash dividend if approved by
the Shareholders.
CHANGE IN ADDRESS:
Members are requested to promptly notify any
change of address to the Company’s Share
Registrar.
STATEMENT UNDER SECTION160(1)(b) OF THE COMPANIESORDINANCE, 1984
STATEMENT UNDER SRO 865 (1)/2000 DATED
DECEMBER 6, 2000.
In the AGM held on September 27, 2007
shareholders approved investment in following
Associated Companies:
National Renery Limited (NRL)
Attock Renery Limited (ARL)
Pakistan Oilelds Limited (POL)
Attock Cement Pakistan Limited (ACPL)
Except for ARL, no investment has been made
in any other associated concern.
1. Reasons for not having investment
madeDue to change in the Government policies,
mounting circular debt and less than
satisfactory growth and improvement in GDP
and macro economic indicators respectively.
2. Major change in financial positionof investee companies since thedate of last resolution
Changes in nancial position are as follows:
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98 Attock Petroleum Limited
Annual Report 2012
i. Earnings per share (restated):
Name of the
Company
Year ended
June 30, 2007
Year ended
June 30, 2011
Nine Months ended
March 31, 2012*
Rs. Per Share
NRL 52.56 82.14 27.05
ARL 8.78 25.63 30.62
POL 25.11 45.72 39.44
ACPL 9.18 7.90 10.14
ii. Break-up value per share:
Name of the
Company
March 31, 2007
June 30, 2011 March 31, 2012*
Rs. Per Share
NRL 164.21 308.00 309.77
ARL 90.62 146.07 173.19
POL 92.30 141.30 138.37
ACPL 44.52 66.96 70.10
* The above gures are based on latest available nancial statements.
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99 Attock Petroleum Limited
Annual Report 2012
B u s i n e
s s
R evi ew
F i n an ci al
A n al y s i s
F i n an ci a
l
S t a t em en
t s
A nn u al G en er al
M e e t i n g
G ov er n an c e
ACPL Attock Cement Pakistan Limited
AGM Annual General Meeting
APL Attock Petroleum Limited
ARL Attock Renery Limited
ATG Automated Tank Gauge
BPPL(MKTG) Byco Petroleum Pakistan Limited (Marketing)
BTCPL Bakri Trading Company Pakistan Limited
CDC Central Depository Company of Pakistan
CEO Chief Executive OfcerCFO Chief Financial Ofcer
CNIC Computerized National Identity Card
CNG Compressed Natural Gas
CPL Chevron Pakistan Limited
EBITDA Earnings before Interest, Taxes, Depreciation and Amortization
EHS Environment, Health & Safety
EPS Earnings Per Share
ERP Enterprise Resource Planning
FO Furnace Oil
GDP Gross Domestic Product
GoP Government of PakistanHSD High Speed Diesel
HSE Health, Safety and Environment
IFAC International Federation of Accountants
KPK Khyber Pakhtunkhwa
KW Kilo Watt
LED Light Emitting Diode
M.TON Metric Ton
MP & NR Ministry of Petroleum & Natural Resources
NRL National Renery Limited
OCAC Oil Companies Advisory Committee
OGRA Oil and Gas Regulatory Authority
OMC Oil Marketing Company
OOTCL Overseas Oil Trading Company Pakistan
PARCO Pak-Arab Renery Company
PMG Premier Motor Gasoline
POL Pakistan Oilelds Limited
PSOCL Pakistan State Oil Company Limited
Pvt. Private
Rs. Rupees
SPL Shell Pakistan Limited
TPPL Total-Parco Pakistan Limited
UAE United Arab Emirates
US$ United States DollarWPPF Workers’ Prot Participation Fund
WWF Workers Welfare Fund
Glossary
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FORM OF PROXY17th Annual General MeetingAOCK PEROLEUM LIMIED
I/We M/s o being
a member(s) o Attock Petroleum Limited and holding ordinary shares as per
Share Register Folio No. CDC Participant I.D. No.
CNIC No./Passport No. hereby appoint
o or ailing him/her o
as my/our proxy to vote and act or me/our behal at the 17th Annual General Meeting o the
Company to be held on October 17, 2012 at 10:00 a.m. at Morgah Club, Morgah, Rawalpindi
and at any adjournment thereo.
Dated this day o 2012 Signature o Proxy
Witnesses:
1. Signature 2. Signature
Name Name
Address Address
CNIC/Passport No. CNIC/Passport No.
Important:
1. Tis Proxy Form, duly completed and signed, must be received at the Registered Ofce o the
Company at Attock House, Morgah, Rawalpindi not less than 48 hours beore the time o holding
the meeting.
2. For CDC Account Holders / Corporate Entities
In addition to the above the ollowing requirements have to be met.
I. Attested copies o CNIC or the passport o the shareholders and the proxy shall be provided
with the proxy orm.
II. Te proxy shall produce his/her original CNIC or original passport at the time o the meeting.
III. In case o a corporate entity, the Board o Directors resolution / power o attorney with specimen
signature shall be submitted along with proxy orm to the Company.
Five Rupees
Revenue StampSignature o Shareholder(Te signature should agree with thespecimen registered with the Company)
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The Secretary,
Attock Petroleum Limited Attock House, Morgah
Rawalpindi, Pakistan.