REPORT FOR THE NINE MONTHS ENDED MARCH 31, 2014Amjad Parvez Janjua Managing Director Muhammad Naeem...

REPORT FOR THE NINE MONTHS

ENDED MARCH 31, 2014

We are committed to leadership in the energy market through competitiveadvantage in providing the highest quality petroleum products and servicesto our customers, based on:

Professionally trained, high-quality, motivated workforce that works asa team in an environment which recognizes and rewards performance,innovation and creativity and provides for personal growth anddevelopment.

Lowest-cost operations and assured access to long-term and cost-effective supply sources.

Sustained growth in earnings in real terms.

Highly ethical, safe, environment-friendly and socially responsible businesspractices.

Mission

To excel in delivering value to customers as an innovative and dynamicenergy company that gets to the future first.

Vision

04 05

COMPANY INFORMATIONBOARD OF MANAGEMENTMr. Mujahid EshaiChairman

Mr. Amjad Parvez JanjuaManaging Director

Mr. Muhammad Naeem MalikMember

Mr. Muhammad AzamMember

Dr. Mirza Ikhtiar BaigMember

Mr. Malik Naseem Hussain LawbarMember

Mr. Ahsan BashirMember

Raja Hameed Ahmed SaleemMember

Mr. Wazir Ali KhojaMember

COMPANY SECRETARYMs. Ayesha Afzal

AUDITORSKPMG Taseer Hadi & Co.Chartered Accountants

M. Yousuf Adil Saleem & Co.Chartered Accountants

REGISTRAR OFFICETHK Associates (Pvt.) Ltd.Ground Floor, State Life BuildingNo. 3 Dr. Ziauddin Ahmed Road,Karachi.Phone: 021-35689021Fax: 021-35655595

BANKERS

Allied Bank Limited

Askari Bank Limited

Bank Al-Falah Limited

Bank Al-Habib Limited

Bank Islami Pakistan Limited

Citibank N.A

Deutsche Bank AG

Faysal Bank Limited

Habib Metropolitan Bank Limited

Habib Bank Limited

JS Bank Limited

Meezan Bank Limited

MCB Bank Limited

National Bank of Pakistan

NIB Bank Limited

Samba Bank Limited

Standard Chartered Bank (Pakistan)

Limited

The HSBC Bank Middle East Limited

United Bank Limited

REGISTERED OFFICEPakistan State Oil Company Limited

PSO House

Khayaban-e-Iqbal, Clifton,

Karachi - 75600, Pakistan.

UAN: (92-21) 111-111-PSO (776)

Fax: (92-21) 9920-3721

Ta’aluq Careline: 0800-03000

E-mail: [email protected]

Website: www.psopk.com

REPORT TO SHAREHOLDERS

The Board of Management (BoM) of Pakistan State Oil Company Limited(PSOCL) has reviewed the performance of the Company for the nine monthsperiod ended March 31, 2014 and is pleased to present its report thereon.

In the period under review, PSO's sales revenue crossed the trillion turnovermark and stood at Rs 1.02 trillion as compared to Rs 930 billion duringSame Period Last Year (SPLY), representing a growth of 10%. The Company'safter tax earnings increased to Rs 19.4 billion as compared to Rs 9.4 billionduring SPLY. These all time high nine monthly after tax earnings surpassedthe after tax earnings of Rs 12.6 billion during the entire financial year 2013by 54%. While maintaining the overall market leadership position (with 73%share in black oil market and 53% in white oil market), the Companyregistered a growth of 4% in sales of liquid fuels as compared to SPLY.

Devaluation of Pak Rupee against US dollar by 6.5% in the first half offinancial year 2014 was followed by an appreciation of 7% in the thirdquarter, resulting in a net exchange loss of Rs 1.2 billion in the nine monthsunder review. Recovery of interest from power sector producers and interestearned on PIBs contributed positively to the bottom line although it causedan increase in finance cost by 23%.

Due to liquidity issues faced by the Company caused by outstandingreceivables, mainly from power sector customers, the Board has decidedto defer the dividends at this stage.

The Board appreciated the contributions of the management team andworkforce towards impressive performance of the Company. In view of theincreasing receivables from the power sector customers, the BoM directedthe management to continue working closely with the concerned governmentdepartments and customers for timely realization of due payments. Themanagement thanked the members of the Board for their direction andsupport and assured continued efforts to maximize value for the stakeholders.

Amjad Parvez JanjuaManaging Director

Karachi: April 28, 2014

Muhammad Naeem MalikMember - BoM

5,510,142 43,723

45,965,696 360,659 145,166

5,710,348 57,735,734

159,892 111,265,172 175,108,734

507,863 1,716,199

980,623 19,830,886

4,465,465 4,633,325

318,668,159 -

376,403,893

2,716,859 73,858,264 76,575,123

1,377,167 4,469,445 5,846,612

171,456,427 688,512

1,459,830 120,377,389 293,982,158 376,403,893

06 07

CONDENSED INTERIM BALANCE SHEETAS AT MARCH 31, 2014

CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2014

The annexed notes 1 to 24 form an integral part of this condensed interim financial information.

5,524,767 30,068

48,253,164 380,213 113,093

3,292,075 57,593,380

138,775 106,089,048

76,596,194 490,606

2,405,618 2,251,290

26,570,948 4,586,321 5,227,328

224,356,128 -

281,949,508

2,469,872 58,172,917 60,642,789

1,342,463 4,271,222 5,613,685

197,302,571 688,512 432,270

17,269,681 215,693,034 281,949,508

678

9

10

11

12

13

14

Un-audited March 31,

2014

Audited June 30,

2013

(Restated)

(Rupees in ‘000)





Note


ASSETS

Non-current assets

Property, plant and equipment

Intangibles

Long term investments

Long term loans, advances and receivables

Long term deposits and prepayments

Deferred tax

Current Assets

Stores, spare parts and loose tools

Stock-in-trade

Trade debts

Loans and advances

Deposits and short term prepayments

Markup / interest receivable on investments

Other receivables

Taxation -net

Cash and bank balances

Net Assets in Bangladesh

Total Assets

EQUITY AND LIABILITIES

Equity

Share capital

Reserves

Non-current liabilities

Long term deposits

Retirement and other service benefits

Current liabilities

Trade and other payables

Provisions

Accrued interest / mark-up on short term borrowings

Short term borrowings

Total equity and liabilities

Contingencies and commitments

Note

15

16

17

18

Nine months period ended

March 31,2014

March 31,2013

(Restated)

(Rupees in ‘000)

Quarter ended

March 31,2014

March 31,2013

(Restated)

(Rupees in ‘000)

(Rupees)Restated

(Rupees)Restated

1,023,265,947

(148,846,453) (12,962,307)

(161,808,760) 861,457,187

(831,914,308) 29,542,879

17,565,463

(6,172,782) (1,383,777) (3,319,886)

(10,876,445) 36,231,897

(7,413,401) 28,818,496

423,175 29,241,671 (9,841,826) 19,399,845

71.41

930,406,017

(127,733,281) (11,724,342)(139,457,623) 790,948,394(765,274,364) 25,674,030

3,976,179

(5,937,004) (1,350,497) (2,795,721)

(10,083,222) 19,566,987

(6,038,536) 13,528,451

477,695 14,006,146 (4,629,499) 9,376,647

34.51

296,306,084

(43,085,146) (3,675,592)

(46,760,738) 249,545,346

(243,054,157) 6,491,189

2,897,967

(2,107,167) (485,031) 740,835

(1,851,363) 7,537,793

(2,140,556) 5,397,237

139,820 5,537,057

(1,936,634) 3,600,423

13.25

300,873,199

(41,211,294) (3,551,601)

(44,762,895) 256,110,304(247,348,195)

8,762,109

641,804

(2,043,580) (389,680) (885,804)

(3,319,064) 6,084,849

(1,559,248) 4,525,601

151,261 4,676,862

(1,614,005) 3,062,857

11.27

Sales - net of trade discount and allowances

amounting to Rs. 652,293 thousand

(March 31, 2013: 849,723 thousand)

Less:

- Sales tax

- Inland freight equalization margin

Net sales

Cost of products sold

Gross profit

Other income

Operating costs:

Distribution and marketing expenses

Administrative expenses

Other operating expenses

Profit from operations

Finance costs

Share of profit of associates

Profit before taxation

Taxation

Profit for the period

Earnings per share - Basic and Diluted

08

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)

FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2014




Profit for the period

Other comprehensive income

Items that will not be reclassified to profit

or loss

Share of unrealised gain due to change in

fair value of available for sale investments

in associates

Remeasurement of post employement

benefit plans

Less: tax thereon

Reversal of deferred tax asset recognised

on actuarial losses and past service cost

on its realisation

Current tax benefit on actuarial losses and

past service cost

Items that may be reclassified subsequently

to profit or loss

Unrealised (loss)/gain due to change in fair

value of other long-term available for sale

investments

Less: deferred tax thereon

Total comprehensive income for the period


March 31,2014

March 31,2013

(Restated)

(Rupees in ‘000)

Quarter ended

March 31,2014

March 31,2013

(Rupees in ‘000)

9,376,647

5,707

228,042 (77,534) 150,508

-

- -

247,849

- 247,849

9,780,711

3,600,423

(385)

(1,153,000) 392,020

(760,980)

-

- -

398,204

45,353 443,557

3,282,615

3,062,857

1,654

- - -

-

- -

173,193

- 173,193

3,237,704

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)


Capital Reserves

Sharecapital

Surplus onvesting ofnet assets

Unrealisedgain / (loss) on

remeasure-ment of long

terminvestment

available forsale

Company'sshare of

unrealisedgain/(loss) on

remeasurementof available for

saleinvestment in

associates

Revenue Reserves

Generalreserve

Unappro-priatedprofit

Total

---------------------------------------------------------------(Rupees in ‘000)-------------------------------------------------------------------------------

09


Balance as at July 1, 2012 (Audited) as previously reportedEffect of change in accounting policy due

to application of IAS 19 (Revised) - (See note 3.1.1)Acturial losses and past service costLess: deferred tax thereon

Balance as at July 1, 2012 (Restated)

Total comprehensive income for the nine months periodProfit for the nine months period ended March 31,

2013 as reported earlierEffect of change in accounting policy resulting in reversal

of previously amortized actuarial losses and past servicecost (note 3.1)


Profit for the nine months period ended March 31, 2013(Restated)

Other comprehensive incomeUnrealised gain due to change in fair value of long-term

available for sale investmentsShare of unrealised gain due to change in fair value of

available for sale investments in associatesGain on remeasurement of retirement and other service

benefits (See note 3.1.2)Less: deferred tax thereon

Transaction with the ownersFinal dividend for the year ended June 30, 2012 @ Rs.2.5 per shareBonus shares for the year ended June 30, 2012 @ 20%Interim dividend for the year ended June 30, 2013 @Rs. 2.5 per shareBonus shares for the year ended June 30, 2013 @ 20%Balance as at March 31, 2013 (restated)

Total comprehensive income for the three months periodProfit for the three months period ended

June 30, 2013 (reported)Effect of change in accounting policy resulting in

reversal of previously ammortized acturial lossesand past service cost (note 3.1)


Profit for the three months period ended June 30, 2013 (restated)

Other Comprehensive IncomeUnrealised gain due to change in fair value of

long term available for sale investments-net of deferred tax

Share of unrealized gain due to change in fairvalue of available for sale investment in associate

Gain on remeasurement of retirement and other service benefits (See note 3.1.2)


Balance as at June 30, 2013 (restated)

Total comprehensive income for the nine months periodProfit for the nine months period ended March 31, 2014

Other Comprehensive IncomeUnrealised loss due to change in fair value of long term

investments-net of deferred taxShare of unrealized gain due to change in fair

value of available for sale investment in associatesGain on remeasurement of retirement and other

service benefits (See note 3.1.2)Current tax on remeasurement of retirement and

other service benefits (See note 3.1.3)

Reversal of deferred tax asset recognised onacturial losses and past service cost on its realisation

Current tax benefit on acturial losses and pastservice cost (See note 3.1.3)

Transaction with the ownersFinal dividend for the year ended June 30, 2013 @ Rs. 2.5

per shareInterim dividend for the year ended June 30, 2014 @ Rs.

4 per shareBonus shares for the year ended June 30, 2014 @ 10%Balance as at March 31, 2014

1,715,190

- - -

1,715,190

-

- -

-

-

-

- -

- -

- 343,037

-411,645

2,469,872

-

- --

-

-

-

- ---

2,469,872

-

-

-

-

-

-

---

-

-

246,9872,716,859

49,959,908

(2,463,130) 837,465

(1,625,665) 48,334,243

9,316,771

90,721(30,845) 59,876

9,376,647

247,849

5,707

228,042 (77,534) 150,508 404,064

9,780,711

(428,797) -

(514,557)-

57,171,600

3,241,174

30,241(10,283)19,958

3,261,132

58,813

736

228,042 (77,534)150,508

3,471,18960,642,789

19,399,845

(1,171,069)

1,132

(1,048,723)

356,566 (692,157)

(608,653)

608,653 (1,862,094)

17,537,751

(617,468)

(987,949)

- 76,575,123

22,610,693

(2,463,130)837,465

(1,625,665)20,985,028

9,316,771

90,721(30,845)59,876

9,376,647

-

-

228,042(77,534)150,508150,508

9,527,155

(428,797)(343,037)

(514,557)(411,645)

28,814,147

3,241,174

30,241(10,283)19,958

3,261,132

-

-

228,042(77,534)150,508

3,411,64032,225,787

19,399,845

-

-

(1,048,723)

356,566(692,157)

(608,653)

608,653(692,157)

18,707,688

(617,468)

(987,949)

(246,987)49,081,071

25,282,373

- - -

25,282,373

-

--

-

-

-

- -

- -

- -

- -

25,282,373

-

-- -

-

-

-

- - - -

25,282,373

-

-

-

-

-

-

- - -

-

-

-25,282,373

1,431

- - -

1,431

-

- -

-

-

5707

- -

5707 5707

- -

- -

7,138

-

---

-

-

736

-- -

7367,874

-

-

1,132

-

-

-

-1,1321,132

-

-

-9,006

346,848

- - -

346,848

-

- -

-

247,849

-

- -

247,849 247,849

--

--

594,697

-

- --

-

58,813

-

- - -

58,813 653,510

-

(1,171,069)

-

-

-

-

-(1,171,069) (1,171,069)

-

-

-(517,559)

3,373

- - -

3,373

-

--

-

-

-

- -

- -

--

- -3,373

-

-- -

-

-

-

- - --

3,373

-

-

-

-

-

-

- - -

-

-

-3,373

19,399,845

1,132

(1,048,723) 356,566

(692,157)

(608,653)

608,653 -

(2,031,096)

860,027 (1,171,069)

17,537,751



3,604,622

828

7,388 208,556

(5,009,061) (3,927,172)

(501,913)

(5,616,752)

(462,998) (7,914)

13,927 643,139 186,154

6,347,550 (724,055)

5,623,495

192,897

(18,116,141) (17,923,244)

10 11



CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE NINE MONTHS PERIOD ENDED MARCH 31, 2014

CASH (USED IN)/GENERATED FROM OPERATING ACTIVITIESCash (used in)/generated from operationsDecrease in long-term loans, advances and receivables(Increase)/Decrease in long-term deposits and

prepaymentsIncrease in long-term depositsTaxes paidFinance costs paidRetirement benefits paidNet cash (used in)/ generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property, plant and equipmentPurchase of intangibles - computer softwareProceeds from disposal of property, plant and equipmentDividends receivedNet cash (used in) /generated from investing

activities

CASH FLOWS FROM FINANCING ACTIVITIESShort-term finances obtained during the period- net of repaymentDividends paidNet cash generated from financing activities

Net (decrease)/increase in cash and cash equivalentsCash and cash equivalents at beginning of the periodCash and cash equivalents at end of the period

19

20

March 31,2014


March 31,2013

(Rupees in ‘000)

1. LEGAL STATUS AND NATURE OF BUSINESS1.1 Pakistan State Oil Company Limited ("the Company") is a public company

incorporated in Pakistan in 1976 under the repealed Companies Act, 1913(now Companies Ordinance, 1984) and listed on the Karachi, Lahore andIslamabad Stock Exchanges. The registered office of the Company is locatedat PSO House, Khayaban-e-Iqbal, Clifton, Karachi. The principal activities ofthe Company are procurement, storage and marketing of petroleum andrelated products. It also blends and markets various kinds of lubricating oils.

1.2 The Board of Management - Oil nominated by the Federal Government undersection 7 of the Marketing of Petroleum Products (Federal Control) Act, 1974("the Act") manages the affairs of the Company. The provisions of the Actshall have effect notwithstanding anything contained in the Companies Act,1913 (now Companies Ordinance, 1984) or any other law for the time beingin force or any agreement, contract, Memorandum or Articles of Associationof the Company.

2. BASIS OF PREPARATION2.1 This condensed interim financial information has been prepared in accordance

with the requirements of the International Accounting Standard (IAS) - 34"Interim Financial Reporting" and provisions of and directives issued underthe Companies Ordinance, 1984. In case where requirements differ, theprovisions of or directives issued under the Companies Ordinance, 1984have been followed.

2.2 This condensed interim financial information is presented in Pakistan Rupeeswhich is also the Company's functional currency and all financial informationpresented has been rounded off to the nearest thousand rupees unlessotherwise stated.

2.3 This condensed interim financial information is un-audited and should beread in conjunction with the audited annual financial statements of theCompany for the year ended June 30, 2013. This condensed interim financialinformation is being submitted to the shareholders as required by the listingregulations of Karachi, Lahore and Islamabad Stock Exchanges and section245 of the Companies Ordinance, 1984.

3. ACCOUNTING POLICIES3.1 The accounting policies and method of computation adopted for the

preparation of this condensed interim financial information are the same asthose applied in the preparation of the Company's annual audited financialstatements for the year ended June 30, 2013 except as described below.

IAS 19 (revised) - 'Employee Benefits' effective for annual periods beginningon or after January 1, 2013 amends the accounting for employee benefits.The standard requires immediate recognition of past service cost in the profitand loss account and also replaces the interest cost on the defined benefitobligation and the expected return on plan assets with a net interest costbased on the net defined benefit asset or liability and the discount rate,measured at the beginning of the year.

Further, a new term "remeasurements" has been introduced. This is madeup of actuarial gains and losses, the difference between actual investmentreturns and the return implied by the net interest cost. The standard requires"remeasurements" to be recognised in the Balance Sheet immediately, witha charge or credit to be recorded in Statement of Comprehensive Income

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED)


Note


(87,235,511)

19,554

(32,073) 34,704

(10,922,650) (2,997,108) (1,541,004)

(102,674,088)

(773,507) (25,527)

6,616 520,555

(271,863)

68,357,998 (755,760)

67,602,238

(35,343,713)

3,523,233 (31,820,480)

12 13

in the periods in which they occur.

Following the application of IAS 19 (Revised) - 'Employee Benefits', theCompany's policy for staff retirement benefits in respect of remeasurementsand past service costs is amended as follows:

- The amount arising as a result of remeasurements are recognised in theBalance Sheet immediately, with a charge or credit to Other ComprehensiveIncome (OCI) in the periods in which they occur.

- Past sevice costs are recognized immediately in the profit and loss accountin the period in which these arise.

The change in accounting policy has been accounted for retrospectively inaccordance with the requirements of IAS 8 'Accounting Policies, Changesin Accounting Estimates and Errors' and corresponding figures have beenrestated.

3.1.1 The Company's condensed interim financial information is affected by the'remeasurements and past service costs' relating to prior years. Thereconciliation, considering effects of change in accounting policy, have beensummarised below:

3.1.2 The change in accounting policy has resulted in decrease in total

comprehensive income by Rs. 659,037 thousand (March 31, 2013: Rs. 210,383

thousand) the details of which are as follows:

3.1.3 Based on advice of the tax advisors, the Company will claim the cumulative

actuarial losses – net and past service costs relating to approved retirement

benefit plans as allowable tax expense for the year ended June 30, 2014

resulting in reduction in tax liability of Rs. 965,219 thousand.

3.2 In June 2011, the Securities & Exchange Commission of Pakistan on receiving

representations from some of entities covered under the Scheme and after

having consulted the Institute of Chartered Accountants of Pakistan granted

exemption to such entities from the application of IFRS 2 to the Scheme.

There has been no change in status of Benazir Employee Stock Option

Scheme ("the Scheme") as stated in note 2.6 to the audited financial statements

for the year ended June 30, 2013.

Had the exemption not been granted, the staff costs of the Company for the

nine months period would have been higher by Rs. 156,928 thousand, profit

before taxation would have been lower by Rs. 156,928 thousand, retained

earnings would have been lower by Rs. 1,177,189 thousand, earning per

share would have been lower by Rs. 0.58 per share and reserves would

have been higher by Rs. 1,177,189 thousand.

4. ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of this condensed interim financial information in conformity

with the approved accounting standards requires management to make

estimates, assumptions and use judgments that affect the application of

policies and reported amounts of assets and liabilities and income and

expenses. Estimates, assumptions and judgments are continually evaluated

and are based on historical experience and other factors, including reasonable

expectations of future events. However, actual results may differ from these

estimation. Revisions to accounting estimates are recognised prospectively

Impact on comprehensive income

Profit and loss account Benefit/reversal of amortisation of actuarial losses and past

service cost as a result of adoption of IAS 19 (Revised) from: - administrative expenses - distribution and marketing expenses

Less: tax effect thereon Increase in profit for the period

Other comprehensive income Recognition of gains on remeasurement of retirement and other service benefits during the periodLess: tax effect thereon

(Decrease)/ Increase in total comprehensive income for the period Increase in earnings per share (Rupees)

12,546 37,636

(17,062) 33,120

(1,048,723) 356,566

(692,157)

(659,037) 0.12

22,680 68,041

(30,845) 59,876

228,042 (77,534) 150,508

210,384 0.22

Nine Months Period Ended

March 31,2014

March 31,2013

(Rupees in ‘000)

2,518,502

2,443,775

19,355 2,463,130

4,981,632

2,385,137

2,443,775 (456,084)

1,987,691

19,355

(120,961)

4,271,222

Balance as at June 30, 2012 as previously reported

Recognition of previously unrecognised cumulativeactuarial losses and past service cost as a result ofadoption of IAS 19 (Revised):

(i) recognition of cumulative unrecognised actuariallosses at June 30, 2012 in OCI

(ii) recognition of cumulative unrecognised past service cost at June 30, 2012 in unappropriatedprofit

Balance as at June 30, 2012 - as restated

Balance as at June 30, 2013 as previously reported

Recognition of previously unrecognised cumulativeactuarial losses and past service cost as a result ofadoption of IAS 19 (Revised):

(i) recognition of cumulative unrecognisedactuarial losses/(gains) in OCI

-as at June 30, 2012-for the year ended June 30, 2013

(ii) recognition of cumulative unrecognised past service costs at June 30, 2012 in un-appropriated profit

Reversal of actuarial losses and past service costs amortised during the year ended June 30, 2013as a result of adoption of IAS 19 (Revised)

Balance as at June 30, 2013 - restated

Retirement andother service

benefits

Deferred Tax UnappropriatedProfit

1,292,316

830,884

6,581 837,465

2,129,781

2,650,805

830,884 (155,069) 675,815

6,581

(41,127)

3,292,074

22,610,693

(1,612,891)

(12,774) (1,625,665)

20,985,028

33,470,602

(1,612,891) 301,015

(1,311,876)

(12,774)

79,834

32,225,786

(Rupees in ‘000)

14 15

commencing from the period of revision.

Judgments and estimates made by management in the preparation of this

condensed interim financial information are the same as those that were

applied to the audited annual financial statements as at and for the year

ended June 30, 2013.

5. FINANCIAL RISK MANAGEMENT

The financial risk management objectives and policies are consistent with

those disclosed in the annual financial statements of the Company as at and

for the year ended June 30, 2013.

6. PROPERTY, PLANT AND EQUIPMENT

6.1 Additions and disposals to operating assets during the period are as follows:

Buildings on leasehold landTanks and pipelinesPlant and machineryService and filling stationsVehicles and other rolling stockFurniture and fittingsOffice equipmentGas cylinders / regulators

10,487 61,478 40,409 94,525

155,626 24,105 20,786

1,429 408,845

38,419 41,694 67,156

149,648 106,865

3,835 16,155

- 423,772

42 135

29 142

3,479 9

57 -

3,893

- -

57 231 128

7,971 69

3 8,459

(Rupees in ‘000)

Additions (Un-audited)(at cost)

Disposals (Un-audited)(at net book value)

March 31, 2013

March 31, 2014

March 31, 2013

March 31, 2014

The above disposals represented assets costing Rs. 48,434 thousand (March

31, 2013: Rs. 43,784 thousand) and were disposed off for Rs. 6,616 thousand

(March 31, 2013: Rs. 13,927 thousand).

7. INTANGIBLES

Additions made during the period amounted to Rs. 25,527 thousand (March

31, 2013: Rs. 7,914 thousand).

8 LONG TERM INVESTMENTS - AVAILABLE FOR SALE

This includes investment in Pakistan Investment Bonds (PIBs) made in June

2013 out of proceeds received against partial settlement of circular debt. As

at March 31, 2014, the carrying value [net of amortization of Rs. 396,779

thousand (June 30, 2013: Rs. 2,857 thousand)] and fair value of the PIBs were

Rs. 45,742,406 and Rs. 43,448,844 respectively. Thus, an unrealized loss on

remeasurement to fair value of Rs. 2,293,562 thousand was recognized as

at March 31, 2014. During the current period, these PIBs were collateralized

with various bank against borrowing facility of upto Rs. 40,000,000 thousand

(with 10% margin).

UnauditedMarch 31,

2014

Audited June 30,

2013(Restated)

(Rupees in ‘000)

Deductible temporary differences in respect of:Provision for:

- retirement benefits - doubtful trade debts - doubtful receivables - impairment of stores and spare parts- excise, taxes and other duties - impairment of stocks-in-trade - tax amortization

Liabilities offered for taxationUnrealized loss due to change in fair value of long

term available for sale securities (AFS)Others

Taxable temporary differences in respect of:- accelerated tax depreciation- investments in associates accounted for using equity method- Unrealized gain due to change in fair value of long-term AFS securities

649,232 863,220 445,723

8,291 24,763

7,295 561

3,387,349

779,811 2,769

6,169,014

(419,639)

(39,027)

- (458,666) 5,710,348

1,160,103 945,177 393,259

8,291 24,763

7,295 404

1,390,787

- 2,769

3,932,848

(535,743)

(24,815)

(80,215)(640,773)

3,292,075

10. TRADE DEBTS UnauditedMarch 31,

2014

Audited June 30,

2013

(Rupees in ‘000)Considered goodDue from Government agencies and autonomous bodies- Secured- Unsecured

Due from other customers- Secured- Unsecured

Trade debts - considered goodTrade debts - considered doubtfulTrade debts - grossLess: Provision for impairmentTrade debts - net

33,987 107,208,221 107,242,208

1,330,726 66,535,800 67,866,526

175,108,734 2,538,881

177,647,615 (2,538,881)

175,108,734

35,218 39,541,599 39,576,817

1,324,035 35,695,342 37,019,377 76,596,194

2,779,934 79,376,128 (2,779,934) 76,596,194

10.1

10.1

10.2 & 10.4

10.3

Notes

The net change of Rs. 2,418,273 thousand (March 31, 2013: Rs. 1,067,433) in the deferred tax asset

balance for the period has been recognized as under:

- Profit and loss account- Other comprehensive income - investment in AFS securities- Other comprehensive income - remeasurement of post

employement benefits

2,166,899 860,027

(608,653) 2,418,273

1,067,433 -

- 1,067,433

UnauditedMarch 31,

2014

UnauditedMarch 31,

2013

(Rupees in ‘000)

9. DEFERRED TAX

16 17

10.4 Includes Rs. 122,534 thousand (June 30, 2013: 54,816,270 thousand) duefrom related parties.

11. OTHER RECEIVABLES

Included in other receivables is an aggregate amount of Rs. 9,317,893thousand (June 30, 2013: Rs. 9,456,656 thousand) due from GoP on accountof the following:

11.1 Import price differential on motor gasoline aggregating Rs. 1,350,961 thousand(June 30, 2013: Rs.1,350,961 thousand)

These represent price differential claims on account of import of motorgasoline by the Company, being the difference between their landed costsand the ex-refinery prices announced by Oil and Gas Regulatory Authority(OGRA). In 2007, the Company as well as other Oil Marketing Companies(OMCs) were asked in the meeting chaired by Director General Oil to importmotor gasoline to meet the increasing local demand. Accordingly, OMCsapproached the Ministry of Petroleum and Natural Resources, Governmentof Pakistan (MoP&NR) with a proposal for pricing mechanism whereby endconsumer price of motor gasoline was proposed to be fixed at weightedaverage of ex-refinery (import parity) price and landed cost of importedproduct. Although at that time, no response was received from the MoP&NR,the Company alongwith another OMC continued to import motor gasolineon behalf of the industry being confident that price differential on motorgasoline, will be settled as per previous practice i.e. based on the differentialbetween ex-refinery and import cost at the time of filing of cargo with Customs,as imports were being made on MoP&NR's instruction.

The Company continued to follow up this matter with MoP&NR for an earlysettlement of these claims and the concerned ministry has also confirmedvide its letter Ref. PL-NP(4) /2010 -F & P dated July 28, 2010 that the

abovementioned claims are under process. During financial year 2010-2011,MoP&NR - GoP vide its letter No. PL-3(434) /2011Vol XII dated May 31, 2011implemented the ECC decision whereby end consumer price of motorgasoline will be fixed at weighted average of ex-refinery (import parity) priceand landed cost of imported product. Out of total claim of Rs. 6,350,961thousand, the Company has received an amount of Rs. 5,000,000 thousandduring the year ended June 30, 2012. MoP&NR vide its letter Ref. PL-7(4)/2012-13 dated March 1, 2013 informed the Ministry of Finance (MoF)regarding the balance amount payable to the Company and advised toinclude in budgetary allocation.

During the current period, the Company wrote a letter dated January 22,2014 to Directorate General (Oil) MoP & NR, in response to their letter datedJanuary 17, 2014, requesting their assistance for the inclusion of said claimin the Federal Budget 2014-15. Subsequent to the period end, follow up wasalso made with MoP&NR vide our letter dated April 14, 2014 for inclusion ofthe said claims in the federal budget for the year 2014-2015. The Companyis confident to recover the balance amount of Rs. 1,350,961 thousand in duecourse of time.

11.2 Price differential claims (PDC) relating to HSD products aggregating to Rs.650,994 thousand (June 30, 2013: Rs.789,757 thousand)

This represents the balance of price differential claims (PDC) due from GoP.These claims have arisen on the instructions of MoP&NR for keeping theconsumer prices of HSD products stable. This includes an amount of Rs.602,602 which is being withheld by the GoP subject to finalization of thereport on independent verification of these claims.

The GoP vide letter No. 2(5)/2008-BR-1/398 dated April 25, 2012 directedthe Company to adjust an amount of Rs. 514,600 thousand against dividendspayable to GoP. Accordingly, the Company adjusted a total of Rs. 466,209thousand (June 30, 2013: 327,445 thousand) out of dividends paid subsequentto that direction. Subsequent to the period end, the Company has adjustedthe remaining amount of Rs. 48,391 thousand from dividend.

During the current period, the Company wrote a letter dated January 22,2014 to Directorate General (Oil) MoP & NR, in response to their letter datedJanuary 17, 2014, requesting their assistance for the inclusion of said claimin the Federal Budget 2014-15. Subsequent to the period end, follow up wasalso made with MoP&NR vide our letter dated April 14, 2014 for inclusion ofthe said claims in the federal budget for the year 2014-2015. The Companyis confident to recover the balance amount of Rs. 602,603 thousand fromGoP in due course of time.

11.3 Price differential between the products Low Sulphur Furnace Oil (LSFO) andHigh Sulphur Furnace Oil (HSFO) aggregating Rs. 3,407,357 thousand (June30, 2013: Rs. 3,407,357 thousand)

In 1996, through a decision taken at a meeting of the Privatisation Commissionand Finance Division - GoP the Company was advised to supply LSFO to KotAddu Power Project at the HSFO price and WAPDA was advised to absorbthe price differential between the two products. In accordance with thedecision of ECC dated November 4, 2003, the Company was allowed torecover this amount through a pricing mechanism after recovery of theamount outstanding against its claims for import price differential aggregatingto Rs.1,465,406 thousand, the notification for which expired on December

Balance at beginning of the period / year

(Reversal of provision)/provision charged during the

period/year recognized in other operating expenses

Balance at the end of the period / year

2,779,934

(241,053)

2,538,881

2,428,445

351,489

2,779,934

UnauditedMarch 31,

2014

Audited June 30,

2013

(Rupees in ‘000)

10.1 These debts are secured by way of letters of credit and bank guarantees.

10.2 Included therein are overdue amounts aggregating to Rs. 1,351,200 thousand

(June 30 2013: 4,731,491 thousand) receivable from K-Electric Limited (KEL)

(formerly Karachi Electric Supply Company Limited) which has not been

impaired. These receivables are on account of supplies made under Gas

Load Management Programme (GLMP) to KEL during April 2011 and August

2011 at the directives of the GoP. During the current period, the Company

has recovered Rs. 3,380,291 thousand against these GLMP receivables. The

management is confident to recover the remaining amount in due course of

time.

10.3 The movement in provision during the period is as follows:

18 19

13. SHORT TERM BORROWINGS - SECURED

Short-term financesFinances under mark-up arrangements

83,923,584 36,453,805

120,377,389

15,565,586 1,704,095

17,269,681

UnauditedMarch 31,

2014

Audited June 30,

2013

(Rupees in ‘000)

13.1, 13.2 & 13.313.1 & 13.4

Notes

31, 2004. Although no recovery has been made on this account, the Companycontinues to follow up the matter with MoP & NR. In 2005, the Companysubmitted an independent report on the verification of the above claim toMoP&NR, upon their request. In 2006, a joint reconciliation exercise wascarried out with WAPDA as per the decision taken in a meeting held on May19, 2006 under the Chairmanship of Additional Finance Secretary (GoP)and the final reconciliation statements were submitted to MoF andWAPDA. Subsequently, on February 3, 2007 the Company and WAPDAagreed upon the final receivable balance of Rs. 3,407,357 thousand. MoP &NR vide its letter No. PL-7(4)/2012-13 dated March 01, 2013 has requestedthe MoF to make a provision of the said amount in the Federal Budget 2013-2014. During the current period, MoP & NR vide its letter No. PL-7(4)/2012-13 dated September 23, 2013 requested Ministry of Water and Power,Government of Pakistan (MoW&P) to take up the matter with MoF to settlethis long outstanding issue. The Company vide its letter No. PDC/96/13/001dated December 19, 2013 requested the MoW&P for placing the request withMoF to include this claim in the Federal Budget 2014-2015 and the Companyis confident to recover the amount in full in due course of time as said isbeing consistently followed up by the management.

11.4 Price differential claim on account of supply of furnace oil to KEL at NaturalGas prices aggregating to Rs.3,908,581 thousand (June 30, 2013: Rs. 3,908,581thousand)

The Company received a directive from MoP&NR through letter NG(1)-7(58)09-LS(Vol-1) dated November 26, 2009 in which the Company was directed tosupply furnace oil to K-Electric Limited (KEL) (formerly Karachi Electric SupplyCompany Limited) at the prices equivalent to natural gas prices plus applicableduties and taxes under the Natural Gas Load Management Program (NGLMP)for Winter 2009-2010. As per this arrangement the differential cost betweenthe natural gas and furnace oil would be borne by GoP and reimburseddirectly to the Company by Ministry of Finance. The Company was againdirected by GoP in May 2010 to supply furnace oil to KEL at natural gas prices.Accordingly, furnace oil was provided to KEL due to which resulted in pricedifferential claim of Rs. 5,708,581 thousand out of which Rs. 1,800,000thousand were received from MoF in June 2010.

The Ministry of Water & Power vide its letter dated December 24, 2012requested MoF to settle the above mentioned claims at the earliest. TheMoP&NR vide its letter No. DOM-3(17)/2013 dated April 19, 2013 has alsorequested MoF to process the claim of PSO at the earliest. During the period,the Company vide its letter No. PDC/96/13/001 dated December 19, 2013requested the MoW&P for placing the request with MoF to include this claimin the Federal Budget 2014-2015. During the current period, MoW&P vide itsletter dated March 26, 2014 requested the MoF for inclusion of said claim inthe Federal Budget 2014-15 and the Company is confident to recover theamount in full from GoP in due course of time.

11.5 Includes Rs. NIL (June 30, 2013: Rs. 34,323 thousand) receivable from AsiaPetroleum Limited, a related party, on account of facilities charge.

11.6 As at March 31, 2014, other receivables aggregating Rs. 1,310,950 thousand(June 30, 2013: 1,156,645 thousand) were deemed to be impaired and henceprovision of the same amount was made thereagainst.

13.1 The total outstanding balance is against the facilities aggregating Rs. 134,728,711thousand (June 30, 2013: Rs. 43,485,000 thousand) available from variousbanks. These facilities are secured by way of floating / pari passu charge onCompany’s stocks and receivables wheresoever located in Pakistan andTrust Receipts.

13.2 Includes foreign currency (FE-25) borrowings of US$ 408,725 thousandequivalent to Rs. 40,044,817 thousand (June 30, 2013: Nil) payable to variousbanks by the Company. The Company has obtained FE-25 facilitiesaggregating US$ 628,041 thousand equivalent to Rs. 62,966,546 thousandduring the period on directives and assurance of the GoP communicatedvide letter dated November 27, 2013 that it will bear additional cost andforeign exchange losses suffered by the Company on these borrowings.These borrowings are secured against the Trust Receipts.

These foreign currency borrowings have various maturity dates upto June18, 2014 and carry mark-up rates ranging from LIBOR plus 3% to LIBOR plus5% per annum.

13.3 The rate of mark up for these facilities (other than on the foreign currencyborrowings mentioned in note 13.2) ranges from Re. 0.03 to Re. 0.31 (June30, 2013: Re. 0.03 to Re. 0.27) per Rs. 1,000 per day.

13.4 The rate of mark up for these facilities ranges from Re. 0.29 to Re. 0.34 (June30, 2013: Re. 0.28 to Re. 0.33) per Rs. 1,000 per day, net of prompt paymentrebates. These facilities are renewable subject to payment of repurchaseprice on specified dates.

14. CONTINGENCIES AND COMMITMENTS

14.1 ContingenciesThe Company has contingent liabilities in respect of legal claims in theordinary course of business.

14.1.1 Claims against the Company not acknowledged as debts amounts to Rs.12,588,765 thousand (June 30, 2013: Rs. 15,280,622 thousand). This includesclaim amounting to Rs.10,662,090 thousand (June 30, 2013: Rs. 13,684,734thousand) for delayed payment charges on the understanding that this amountwill be payable only when the Company will fully realize interest due from

12. TRADE AND OTHER PAYABLES

12.1 This includes amounts payable in respect of purchase of oil from local andforeign suppliers aggregating Rs.105,451,004 thousand (June 30, 2013: Rs.138,194,325 thousand).

12.2 Includes Rs. 12,807,764 thousand (June 30, 2013 : Rs. 4,277,628 thousand)due to related parties.

20 21

all other entities under the circular debt chain (which is more than the aboveamount). Charges claimed by the Company for delayed payment by customersdue to circular debt are recognized on receipt basis as the ultimate outcomeof the matter and amount of settlement between the stakeholders cannotbe presently determined.

14.1.2 In the assessment years 1996-97 and 1997-98, the taxation authorities appliedpresumptive tax on the Company to the value of petroleum products importedby the Company on behalf of the GoP by treating the Company as the importerof such products. The Income Tax Appellate Tribunal (ITAT) cancelled theorder of the assessing officer, and as a consequence of the order of the ITAT,an amount of Rs. 958,152 thousand became refundable to the Company,which was adjusted against the tax liability of the subsequent years. Thedepartment had filed an appeal with the High Court of Sindh against theaforesaid decision of the ITAT, which was adjudicated against the Company.The Company filed petition for leave to appeal with the Supreme Court ofPakistan against the aforementioned decision, which was granted by theSupreme Court of Pakistan through its order dated March 7, 2007 and alsosuspended the operation of the impugned judgment of the High Court ofSindh. The management maintains that the Company was merely acting asa handling agent on behalf of GoP, which was in fact the importer of theproducts. Hence, the ultimate liability, if any, is recoverable from GoP, forwhich the management is in communication with the MoP & NR.

Based on the merits of the case and its legal advisors' opinion, the Companyis confident that the ultimate outcome of the matter would be in its favourand therefore no provision has been made in this respect in this condensedinterim financial information.

14.1.3 The Company received demands for tax years 2004 to 2008, from thetaxation authorities aggregating to Rs. 823,227 thousand in respect of taxless withheld on incentives paid to dealers operating retail outlets. As perthe taxation authorities, such payments were in the nature of prizes on salespromotion to dealers and hence subject to withholding of tax @ 20% undersection 156 of the Income Tax Ordinance (ITO), 2001. The Company maintainsthat such incentives to dealers attract tax @ 10% under section 156A of theITO, 2001. The Company is currently contesting the case at Appellate TribunalInland Revenue (ATIR) level. Though the Company has the right to recoverthe demands from dealers, however the Company has, as a matter ofprudence, created a provision of Rs. 501,234 thousand against the aforesaiddemands raised by the Income Tax Authority. In respect of balance remainingof tax demand over provision i.e. Rs. 321,993 thousand the Company hasalready recovered from the dealers Rs. 202,494 thousand (as at June 30,2013: Rs. 184,844 thousand) and is in the process of recovering the balanceamount of Rs.119,499 thousand (June 30, 2013: Rs. 137,149 thousand).

14.1.4 The Deputy Commissioner Inland Revenue (DCIR), Federal Board of Revenue(FBR) through his orders passed under the ITO, 2001 classified the paymentsin respect of trade discounts and advertisement expenses incurred duringtax years 2009 and 2010 as prizes subject to withholding of tax @ 20% undersection 156 of the ITO, 2001. Consequently, total tax demands of Rs. 339,312thousand was created in the abovementioned orders which was subsequentlyrectified and amended to Rs. 318,837 thousand. The said rectification ordersfor the tax years 2009 and 2010 were further revised on October 11, 2011and November 29, 2011 respectively and the said demands were reducedto Rs. 165,856 thousand. The Company has the contention that trade discountsattract tax @ 10% under section 156A of the ITO, 2001 and advertisement

expenses attract taxes @ 6% under section 153 of the ITO, 2001 which havebeen duly paid by the Company. The Company is currently contesting thecase before ATIR which is pending for hearing. Based on the views of taxadvisors of the Company, the management believes that these matters willultimately be decided in the Company’s favour. Accordingly, no provisionhas been made for these tax demands in this condensed interim financialinformation.

14.1.5 The Assistant Commissioner Inland Revenue (ACIR), FBR through his ordersclassified the payments in respect of trade discounts during tax years 2011and 2012 as prizes subject to withholding tax @ 20% under section 156 ofthe ITO, 2001. Consequently tax demand aggregating to Rs. 262,030 thousandwas created through the abovementioned orders against which the Companyhas filed rectification applications which are pending. The Company has thecontention that trade discounts attract tax @ 10% under section 156A of theITO, 2001 which have been duly paid by the Company. The Company hasfiled appeals against the aforesaid orders before Commissioner InlandRevenue [CIR (Appeals)], which are pending for hearing. Based on the viewsof tax advisors of the Company, the management believes that the matterwill ultimately be decided in the Company’s favour and accordingly noprovision has been made in this respect in this condensed interim financialinformation.

14.1.6 The taxation officer passed assessment orders in respect of tax years 2004to 2008 and made certain disallowances and additions resulting in anadditional tax demand of Rs. 1,733,038 thousand. These orders were laterrectified and amended to Rs. 1,389,050 thousand. The Company filed appealsagainst these orders before CIR (Appeals) which were decided in favour ofthe Company on several points. During the current period, the Companyreceived revised orders in which effects of matters decided in favour of theCompany by CIR (Appeals) were incorporated resulting in tax refunds of Rs.420,385 thousand. The Company has adjusted these tax refunds againstfuture tax payments. The Company has filed appeals before Appellate TribunalInland Revenue (ATIR) against disallowances/add backs which were upheldin order of CIR (Appeals) for these years. The appeals with ATIR are pendingfor hearing. Based on views of the tax advisors, the management believesthat the matters will ultimately be decided in the favour of the Company.Accordingly, no provision has been made for the said matters in this condensedinterim financial information.

14.1.7 The taxation officer passed assessment orders in respect of tax years 2009to 2011 and made certain disallowances and additions resulting in an additionaltax demand of Rs. 4,598,246 thousand. The Company filed appeals againstthese orders before CIR (Appeals) who decided certain matters in favour ofthe Company. During the year ended June 30, 2013, the Company receivedrevised orders after taking into effect for matters decided in favour of theCompany by CIR (Appeals) and tax refunds of Rs. 2,114,028 thousand havebeen determined in these revised orders which have been subsequentlyadjusted against other tax payments. The Company has filed appeals beforeATIR for remaining points adjudicated against the Company by CIR (Appeals)which are pending for hearing. Based on the views of tax advisors of theCompany, the management believes that the matters will ultimately bedecided in the favour of the Company. Accordingly, no provision has beenmade for the said matters in this condensed interim financial information.

14.1.8 ACIR through his order dated June 29, 2013 made certain additions anddisallowances in respect of tax year 2012 and raised tax demand of

22 23

Rs. 2,293,495 thousand. The Company has filed an appeal against that orderbefore the CIR (Appeals) which is pending for hearing. Based on the viewsof tax advisors of the Company, the management believes that the matterswill ultimately be decided in the favour of the Company. Accordingly, noprovision has been made in this respect in this condensed interim financialinformation.

14.1.9 ACIR through his order dated January 28, 2014 made certain additions anddisallowances in respect of tax year 2013 and raised tax demand of Rs.802,678 thousand. The Company has filed an appeal against that orderbefore the CIR (Appeals) which is pending for hearing. Based on the viewsof tax advisors of the Company, the management believes that the matterswill ultimately be decided in the favour of the Company. Accordingly, noprovision has been made in this respect in this condensed interim financialinformation.

14.1.10 A sales tax order-in-original No. 01/2010 dated March 30, 2010 was issuedby DCIR, FBR in respect of sales tax audit of the Company for the tax years2004-2007. Under the said order, a demand of Rs. 883,864 thousand wasraised on account of certain transactions and default surcharge of Rs. 512,172thousand was imposed. The ATIR decided the case in favour of the Company.However, the tax department has filed an appeal against the aforesaiddecision of ATIR in the High Court of Sindh which is pending for hearing.Based on the views of tax advisors of the Company, the management believesthat the matters will ultimately be decided in the favour of the Company.Accordingly, no provision has been made for the said matters in this condensedinterim financial information.

14.1.11 A sales tax order-in-original No.01/2011 dated June 30, 2011 was issued bythe DCIR, FBR in respect of sales tax audit of the Company for tax year 2008.Under the said order, a demand of Rs. 643,759 thousand was raised onaccount of certain matters and penalty of Rs. 32,188 thousand was imposed.The Company filed an appeal against the said order before the CIR (Appeals)which has been decided in favor of the Company through order No.11 of 2012 dated September 27, 2012. The department has filed an appeal against thesaid order before the ATIR which is pending for adjudication. Based on theview of tax advisors of the Company, the management believes that thematter will ultimatlely be decided in the Company's favour. Accordingly, noprovision has been made for the said amount in this condensed interimfinancial information.

14.1.12 An Order was passed by Assistant Commissioner (IR) - Enforcement andCollection Division against the Company on January 22, 2011 in which ademand was raised in respect of input sales tax claimed amounting to Rs.650,446 thousand. The demand also included default surcharge (to becalculated at the time of final payment) and penalty of Rs. 32,522 thousandat the rate of 5% of sales tax. The demand was created on the grounds thatthe Company failed to make payments to the supplier in respect of thesepurchases through banking channels within 180 days of the issuance of salestax invoice as required under section 73(2) of the Sales Act, 1990. TheCompany is now contesting the case at ATIR which is pending for adjudication.Further, the Company has obtained stay from High Court of Sindh againstthe said demand. Based on the views of tax advisors of the Company, themanagement believes that the matter will ultimately be decided in theCompany’s favour. Accordingly, no provision has been made for theaformentioned demand in this condensed interim financial information.

14.1.13 A sales tax order-in-original No. 01/2012 dated January 16, 2013 was issuedby DCIR, FBR in respect of delayed payment of sales tax due in sales taxreturn for March 2011. Under the said order, a demand of Rs. 437,305thousand has been raised which comprised default surcharge of Rs. 82,265thousand and penalty of Rs. 355,040 thousand on late payment. The Companythen filed an appeal against the said order before CIR (Appeals) which wasdecided against the Company. The Company filed an appeal against theaforesaid order of CIR (Appeals) before ATIR vide order dated September13, 2013 which upheld the imposition of default surcharge however vacatedpenalty imposed for de novo consideration before adjudication authority.The Company has filed an appeal before the High Court of Sindh againstimposition of default surcharge which is pending for hearing. Based on theviews of tax advisors of the Company, the management believes that thematter will ultimately be decided in the favour of the Company. Accordingly,no provision has been made in this respect in this condensed interim financialinformation.

14.1.14 In the year 2005, a demand was raised by the Collector of Customs, SalesTax and Central Excise (Adjudication) in respect of sales tax, central exciseduty and petroleum development levy aggregating to Rs. 165,781 thousandinclusive of additional sales tax and central excise duty on exports of POLproducts to Afghanistan during the period August 2002 to November 2003.The demand was raised on the grounds that the export consignments werenot verified by the Pakistan Embassy / Consulate in Afghanistan as requiredunder Export Policy and Procedures, 2000. It is the Company’s contentionthat this requirement was in suspension as in the aforesaid period the PakistanEmbassy / Consulate was not fully functional. This condition of suspensionwas removed only on July 22, 2004 through Export Policy Order, 2004 whenthe Pakistan Embassy / Consulate became fully functional in Afghanistan.Besides the issue of verification, it is also the Company’s contention thatexport of POL products to Afghanistan can be verified from the relevantdocuments and therefore, the demand is unwarranted.

The Company had been contesting the matter before honorable ATIR whohas remanded the case back to adjudication officer vide its order datedFebruary 06, 2012. Based on the view of tax advisors, the Company isconfident that the ultimate outcome of the matter would be in its favour andtherefore no provision has been made in this respect in this CondensedInterim financial information.

14.1.15 The Government of Sindh through Sindh Finance Act, 1994 imposedinfrastructure fee for development and maintenance of infrastructure ongoods entering or leaving the Province through air or sea at prescribedrates. The Company is contesting the levy along with other companies in theHigh Court of Sindh. Through the interim order passed on May 31, 2011 theHigh Court has ordered that for every consignment cleared after December28, 2006, 50% of the value of infrastructure fee should be paid in cash anda bank guarantee for the remaining amount should be submitted until thefinal order is passed. On the directive of the Directorate of Excise andTaxation (Taxes-III), up to March 31, 2014, the management has depositedRs. 61,294 thousand in cash and provided bank guarantee amounting toRs.61,294 thousand with the Excise and Taxation Department. Based on theviews of its legal advisors, the management believes that the matter willultimately be decided in the Company’s favour. Total amount of possibleobligation, if any, cannot be determined with sufficient reliability. Accordingly,no provision has been made against infrastructure fee in this condensed

24 25

interim financial information.

14.2 Commitments

14.2.1 Commitments in respect of capital expenditurecontracted for but not yet incurred is as follows:

- Property, plant and equipment- Intangibles

1,338,677 44,893

1,383,570

971,32914,486

985,815

UnauditedMarch 31,

2014

Audited June 30,

2013

(Rupees in ‘000)

14.2.2 Letters of credit and bank guarantees outstanding as at March 31, 2014amounted to Rs. 13,999,700 thousand (June 30, 2013: Rs. 10,046,727 thousand).

15. OTHER INCOME

Included therein is an amount of Rs. 12,216,343 thousand (March 31, 2013:Rs. 1,933,148 thousand) representing delayed payment mark-up receivedduring the period from various customers and profit of Rs. 3,373,786 thousand(March 31, 2013: Nil) on Pakistan Investment Bonds (PIBs).

16. Other Operating Expenses

Included therein are foreign exchange loss (net), contribution to workers'profits participation fund and workers' welfare fund amounting to Rs. 1,182,075thousand (March 31, 2013: Rs. 1,330,874 thousand), Rs. 1,552,153 thousand(March 31, 2013: Rs. 725,458 thousand) and Rs. 672,404 thousand (March 31,2013: Rs. 345,969 thousand) respectively.

17. TAXATION

18. EARNINGS PER SHARE

18.1 Basic

Current- for the period- for prior periodDeferred - for the period

5,811,994 (115,062)

(1,067,433)4,629,499

March 31,2014

(Rupees in ‘000)

March 31,2013

(Restated)

3,074,476 -

(1,137,842) 1,936,634

2,237,417 -

(623,412)1,614,005

March 31,2014

(Rupees in ‘000)

March 31,2013

(Restated)

Profit after taxation attributableto ordinary shareholders

Weighted average number ofordinary shares in issue duringthe period (2013:Restated)

Earnings per share in rupees(2013:Restated)

19,399,845‘

271,685,939

71.41

9,376,647

271,685,939

34.51

(Rupees in ‘000)

UnauditedNine months period ended

March 31,2014

March 31,2013

(Restated)

(Rupees in ‘000)

UnauditedQuarter ended

March 31,2014

March 31,2013

(Restated)

3,062,857

271,685,939

11.27

3,600,423

271,685,939

13.25

18.2 Diluted

There is no dilutive effect on the basic earnings per share of the Companyas there were no convertible potential ordinary shares in issue as at March31, 2014 and March 31, 2013.

19. CASH (USED IN)/GENERATED FROM OPERATIONS

Un-audited

March 31,2014

March 31,2013

(Rupees in ‘000)

2,965,922 (20,889,166) (17,923,244)

4,633,325 (36,453,805) (31,820,480)

Cash and bank balancesFinance under mark-up arrangements

Note

13

20. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise of the following items included in thebalance sheet:

Number of shares for prior period has been adjusted for the effect of bonusshares issued during the intervening period till March 31, 2014.

12,037,017 (28,292)

(2,166,899)9,841,826

19.1


Profit before taxation

Adjustment for:

Depreciation and amortizationAmortization of premium on purchase of PIBs(Reversal) / provision against doubtful trade debtsRetirement and other services benefits accruedGain on disposal of operating assetsShare of profit from associatesDividend incomeFinance costs

Working capital changesCash (used in)/generated from operations

Working capital changes

(Increase) / decrease in current assets:- Stores, spare parts and loose tools- Stock in trade- Trade debts- Loans and advances- Deposits and short-term prepayments- Mark-up/interest receivable- Other receivables

Decrease in current liabilities:- Trade and other payables

14,006,146

880,462 -

6,734 786,191

(7,666) (477,695) (221,750)

6,038,536 7,004,812

(17,406,336) 3,604,622

(10,959) (5,001,732) 73,836,847

19,811 1,736,254

- (3,621,403)

(84,365,153) (17,406,335)

March 31,2014

March 31,2013

Restated(Rupees in ‘000)

29,241,671

796,111 396,779

(241,053) 690,504

(2,723) (423,174) (236,656)

7,413,401 8,393,189

(124,870,371) (87,235,511)

(21,117) (5,176,124)

(98,271,487) (17,257) 689,419

1,270,667 6,740,062

(30,084,534) (124,870,371)

19.1

Note

UnauditedQuarter ended


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35,877 6,862

164,571 3,941

414,527 1,666,955

231,340 200,000

75,391

19,573,450-

299,980

2,719,222 221,750

96,332 -

6,600

13,059

98,530,951 682,348

210,227,832 638,999 103,720

61,551 1,112,171

70,001 1,505,742

356,233 82,398

190,189 4,367

-

56,924 7,548

158,671 -

276,351 1,586,707

827,958 548,085

77,978

17,757,993 17,955 12,830

2,442,476 218,701

138,763 3,373,786

7,950

16,884

122,206,706 4,281,225

268,556,534 87,290

135,640 12,743

747,330 92,680

2,516,733 279,744

3,123,837

181,972 5,306

2,811

March 31,2014

March 31,2013


(Rupees in ‘000)

Nature of transaction

PurchasesDividend receivedIncome (facility charges)Rental incomeDividend receivedPipeline charges

ContributionsContributionsContributions

PurchasesDividend receivedOther expense

Pipeline chargesDividend received

Dividend adjusted againstprice differential claimIncome from PIBs

Contribution towardsexpenses of BOM

Dividend

Purchases Freight chargesSales Transportation chargesUtility charges Rental charges Insurance premium paidDividend paidOther income receivedPipeline charges Other expense

Managerial RemunerationContribution to retirement benefitsVehicles having book value ofRs. 2.811 million transferred underemployee car scheme (Sale proceeds)

Name of the related partyand relationship with theCompany

Associates

- Pak Grease ManufacturingCompany(Private) Limited

- Asia Petroleum Limited

Retirement benefit funds

- Pension Funds- Gratuity Fund- Provident Funds

Other related parties

- Pakistan Refinery Limited

- Pak Arab Pipeline Company Limited

- Government of Pakistan

- Board of management - Oil

- Benazir Employees’ Stock Option Scheme

State - controlled entities -various

Key management personnel

21. TRANSACTIONS WITH RELATED PARTIES

Related parties comprise of associated companies, retirement benefit funds,state owned / controlled entities, common directorship companies, Governmentof Pakistan and key management personnel.

Details of transactions with the related parties during the period, other thandislosed elsewhere in the condensed interim financial information, are asfollows:

26

21.1 The related party status of outstanding receivables and payables as at March31, 2014 are included in respective notes to the condensed interim financialinformation.

21.2 Contributions to staff retirement benefit funds are in accordance with theterms of the service rules. Remuneration of key management personnel arein accordance with the terms of the employment / appointment. Othertransactions with the related parties are carried out at agreed terms.22.Operating segments

22. OPERATING SEGMENTS

This condensed interim financial information has been prepared on the basisof a single reportable segment.

Sales from fuel products and others represent 99% and 1% (March 31, 2013:99% and 1%) of total revenue of the Company respectively.

Total sales of the Company relating to customers in Pakistan was 98.4%during the nine months period ended March 31, 2014 (March 31, 2013: 98.3%).

"All non-current assets of the Company as at March 31, 2014 are located inPakistan.

Sales to three major customers of the Company is around 32% during thenine months period ended March 31, 2014 (March 31, 2013: 30%).

23. CORRESPONDING FIGURES

Corresponding figures have been rearranged and reclassified, wherevernecessary, for the purposes of comparison and to reflect the substance ofthe transactions . No significant rearrangements or reclassifications weremade in the condensed interim financial information except the following:



24. DATE OF AUTHORISATION FOR ISSUE

The condensed interim financial information was authorised for issue onApril 28, 2014 by the Board of Management - Oil of the Company.

From To

Description Reclasssified (Rupees in ‘000)

Distribution andmarketing expenses

Administrativeexpenses

Cost of products sold

Reclassifications made dueto amendments in FourthSchedule, CompaniesOrdinance, 1984:

- Depreciation andamortization

“

Exchange losses

Depreciation andamortization

Depreciation andamortization

Other operating expenses

822,377

58,085

1,188,929

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REPORT FOR THE NINE MONTHS ENDED MARCH 31, 2014Amjad Parvez Janjua Managing Director Muhammad Naeem...

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