Attock

We have audited the annexed balance sheet of Attock Refinery Limited as at June 30, 2010 and the related
profit and loss

account, statement of comprehensive income, cash flowstatement and statement of changes in equity together with the notes
forming part thereof, for the year then ended and we state that 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.
It is the responsibility of the Company's management to establish and maintain a systemof internal control, and prepare and
present the above said statements in conformity with the approved accounting standards and the requirements of the
Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we
plan and performthe audit to obtain reasonable assurance about whether the above said statements are free of any material
misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the above
said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as
well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis
for our opinion and, after due verification, we report that:
in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, a)
1984;
b) in our opinion
(i) the balance sheet and profit and loss account together with the notes thereon have been drawn up 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 except for the changes as stated in note 3.1 with
which we concur;
(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 were in 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, the balance sheet, profit
and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity
together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan,
and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give
a true and fair view of the state of the Company's affairs as at June 30, 2010 and of the profit, its cash flows 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.
A.F. FERGUSON & CO.
CHARTERED ACCOUNTANTS
KARACHI-LAHORE-ISLAMABAD
Chartered Accountants
Islamabad: September 29, 2010
Engagement partner: Sohail M. Khan
Auditors' Report to the Members
Attock Refinery Limited
Annual Report 2010 55
SHARE CAPITAL AND RESERVES
Share capital
Authorised 6 1,500,000 1,000,000
Issued, subscribed and paid-up 6 852,930 852,930
Reserves and surplus 7 9,420,588 9,294,199
10,273,518 10,147,129
SURPLUS ON REVALUATION OF FREEHOLD LAND 8 1,923,339 1,923,339
12,196,857 12,070,468
DEFERRED LIABILITIES
Provision for staff gratuity 29 140,022 120,130
CURRENT LIABILITIES AND PROVISIONS
Short term finance 9
Trade and other payables 10 44,202,697 30,311,409
Provision for taxation 2,049,256 1,985,536
46,251,953 32,296,945
CONTINGENCIES AND COMMITMENTS 11
58,588,832 44,487,543
Balance Sheet
as at June 30, 2010
2010 2009
Note Rs 000 Rs 000
Attock Refinery Limited 56
PROPERTY, PLANT AND EQUIPMENT
Operating assets 12 2,562,880 2,521,903
Capital work-in-progress 13 260,908 336,072
Stores and spares held for capital expenditure 44,213 58,239
2,868,001 2,916,214
LONG TERM INVESTMENTS 14 13,264,915 13,244,120
LONG TERM LOANS AND DEPOSITS 15 9,925 12,437
DEFERRED TAXATION 16 161,467 184,389
CURRENT ASSETS
Stores, spares and loose tools 17 581,044 573,204
Stock-in-trade 18 7,178,852 4,868,976
Trade debts 19 30,430,263 15,508,763
Loans, advances, deposits, prepayments
and other receivables 20 125,946 377,134
Cash and bank balances 21 3,968,419 6,802,306
42,284,524 28,130,383
58,588,832 44,487,543
The annexed notes 1 to 38 are an integral part of these financial statements.
2010 2009
Note Rs 000 Rs 000
Balance Sheet
as at June 30, 2010
Director Chief Executive
Sales 22 88,184,026 76,546,448
Reimbursement due from the Government
under import parity pricing formula 23 - 714,052
88,184,026 77,260,500
Less : Cost of sales 24 (88,693,686) (75,342,096)
GROSS PROFIT / (LOSS) (509,660) 1,918,404
Less : Administration expenses 25 245,291 222,822
Distribution cost 26 24,834 20,809
Finance cost 27 308,797 1,471,525
Other charges 28 76,745 124,319
(655,667) (1,839,475)
(1,165,327) 78,929
Other income 30 983,335 993,700
PROFIT / (LOSS) BEFORE TAXATION FROM REFINERY OPERATIONS (181,992) 1,072,629
Provision for taxation 31 (293,822) (666,613)
PROFIT / (LOSS) AFTER TAXATION FROM REFINERY OPERATIONS (475,814) 406,016
Income from non-refinery operations less applicable
charges and taxation 32 602,203 610,742
PROFIT FOR THE YEAR 126,389 1,016,758
Earnings / (loss) per share - Basic and diluted (Rs)
Refinery operations (5.58) 4.76
Non-refinery operations 7.06 7.16
37 1.48 11.92
Profit and Loss Account
for the year ended June 30, 2010
Chief Executive Director
2010 2009
Note Rs 000 Rs 000
Profit for the year 126,389 1,016,758
Other comprehensive income - -
Total comprehensive income for the year 126,389 1,016,758
Statement of Comprehensive Income
2010 2009
Rs 000 Rs 000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from - customers 97,334,916 95,624,042
- others 226,370 137,970
97,561,286 95,762,012
Cash paid for operating costs (79,873,828) (82,024,072)
Cash paid to Government for duties, taxes and other levies (21,150,206) (24,888,914)
Income tax paid (278,636) (392,790)
Net cash flows from operating activities (3,741,384) (11,543,764)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (74,819) (188,975)
Sale of property, plant and equipment 4,299 76,571
Purchase of shares of associated companies (20,795) (108,541)
Long term loans and deposits 2,512 295
Income on bank deposits received 589,149 919,439
Dividends received 714,557 735,835
Net cash flows from investing activities 1,214,903 1,434,624
CASH FLOWS FROM FINANCING ACTIVITIES
Finance cost (308,797) (1,471,525)
Dividends paid (170) (566,422)
Net cash flows from financing activities (308,967) (2,037,947)
EFFECT OF EXCHANGE RATE CHANGES 1,561 4,761
(DECREASE) IN CASH AND CASH EQUIVALENTS (2,833,887) (12,142,326)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 6,802,306 18,944,632
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 3,968,419 6,802,306
2010 2009
Rs 000 Rs 000
Cash Flow Statement
Balance at June 30, 2008 710,775 5,948 4,407,932 55 4,574,281 1,923,339 11,622,330
Transfer to investment reserve 3,762,775 (3,762,775)
Bonus shares @ 20% related to the
year ended June 30, 2008 142,155 (142,155)
Final cash dividend @ 80% related
to the year ended June 30, 2008 (568,620) (568,620)
Total comprehensive income
for the year 1,016,758 1,016,758
Transfer to special reserve for expansion /
modernisation - note 7.1 260,216 (260,216)
Balance at June 30, 2009 852,930 5,948 4,668,148 3,762,775 55 857,273 1,923,339 12,070,468
Total comprehensive income
for the year 126,389 126,389
Loss from refinery operations
transferred from unappropriated
profit to special reserve - note 7.1 (475,814) 475,814
Balance at June 30, 2010 852,930 5,948 4,192,334 3,762,775 55 1,459,476 1,923,339 12,196,857

Special reserve
for expansion /
modernisation
Share
capital
Capital
reserve
Un-appropriated
Profit
General
reserve
Surplus on
revaluation of
freehold land Total
Investment
reserve
Statement of Changes in Equity
Rs 000
1. LEGAL STATUS AND OPERATIONS
Attock Refinery Limited (the Company) was incorporated in Pakistan on November 8, 1978 as a private limited company
and was converted into a public company on June 26, 1979. The registered office of the company is situated at Morgah,
Rawalpindi. Its shares are quoted on the Karachi, Lahore and Islamabad Stock Exchanges in Pakistan. It is principally
engaged in the refining of crude oil.
The company is subsidiary of the Attock Oil Company Limited, UK and its ultimate parent is Bay View International
Group S.A.
2. STATEMENT OF COMPLIANCE
These are separate financial statements of the Company. 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, 1984shall prevail.
3. ADOPTIONOF NEWANDREVISEDSTANDARDSANDINTERPRETATIONS
3.1 Changes in accounting policies and disclosures.
(i) IAS 1 (Revised), Presentation of Financial Statements - effective January 1, 2009. All non-owner changes in
equity are required to be presented separately in a performance statement. Companies can choose either to
present one performance statement (statement of comprehensive income) or two statements (profit and loss
account and statement of comprehensive income). The Company has adopted two statements approach to
reflect these changes. The adoption of IAS 1 (Revised) does not materially affect the computations of the results
except some changes in presentation and disclosures.
(ii) IFRS8, Operating Segments - effective January 1, 2009. IFRS8 replaces IAS14, Segment Reporting. The new
standard requires a management approach, under which segment information is presented on the same basis
as that used for internal reporting purposes. 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 decisions. The management has determined that the Company has a single reportable
segment as Board of Directors views the Companys operations as one reportable segment. The adoption of this
standard has therefore only resulted in some additional entity wide disclosure as given in note 33 to these financial
statements.
3.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted
early by the Company.
Effective for periods
beginning on or after
IFRS 2 Share-based payment (Amendments) January 1, 2010
IFRS 5 Non-current assets held-for-sale and discontinued operations (Amendments) January 1, 2010
IFRS 8 Operating segments (Amendments) January 1, 2010
IAS 1 Presentation of financial statements (Revised) January 1, 2010
IAS 7 Statement of cash flows (Amendments) January 1, 2010
IAS 17 Leases (Amendments) January 1, 2010
Notes to and Forming Part of the Financial Statements
IAS 24 Related party disclosures (Revised) January 1, 2011
IAS 32 Financial instruments: Presentation (Amendments) February 1, 2010
IAS 36 Impairment of assets (Amendments) January 1, 2010
IAS 39 Financial instruments: Recognition and measurement (Amendments) January 1, 2010
IFRIC 14 The limit on a defined benefit asset, minimum funding requirements
and their interaction (Amendments) January 1, 2011
IFRIC 19 Extinguishing financial liabilities with equity instruments July 1, 2010
The management anticipates that adoption of above standards, amendments and interpretations in future periods will
have no material impact on the Company's financial statements except for changes in presentation and disclosures.
4. SUMMARYOF SIGNIFICANT ACCOUNTINGPOLICIES
4.1 Basis of measurement
These financial statements have been prepared under the historical cost convention modified by revaluation of freehold
land referred to in note 4.7 and certain other modifications as required by approved accounting standards referred to in
the accounting policies given below.
4.2 Dividend appropriation
Dividend is recognised as a liability in the financial statements in the period in which it is declared.
4.3 Employee retirement benefits
The main features of the retirement benefit schemes operated by the Company for its employees are as follows :
(i) Defined benefits plans
The Company operates a pension plan for its management staff and a gratuity plan for its
non-management staff. Pension plan is invested through an approved trust fund while the gratuity plan is book
reserve plan. Contributions are made in accordance with actuarial recommendations. Actuarial valuations
are conducted through an independent actuary, annually using projected unit credit method. The obligation
at the balance sheet date is measured at the present value of the estimated future cash outflows.
Unrealised net gains and losses are amortised over the expected remaining service of current members.
(ii) Defined contribution plans
The company operates an approved contributory provident fund for all employees. Equal monthly contribution is
made both by the Company and the employee to the fund at the rate of 10%of basic salary.
4.4 Employee compensated absences
The company also provides for compensated absences for all employees in accordance with the rules of the Company.
4.5 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 be utilized.
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 in the case of items credited or
charged to equity in which case it is included in equity.
4.6 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 outflowof resources embodying economic benefit will be required to settle the obligation and a reliable
estimate of the amount can be made.
4.7 Property, plant and equipment
a) Cost
Operating fixed assets except freehold land are stated at cost less accumulated depreciation. Freehold land is
stated at revalued amount. Capital work-in-progress and stores held for capital expenditure are stated at cost.
Cost in relation to certain plant and machinery items include borrowing cost related to the financing of major
projects during construction phase.
b) Depreciation
Operating assets depreciation is calculated using the straight-line method to allocate their cost over their
estimated useful lives at the rates specified in note 12.
c) Repairs and maintenance
Maintenance and normal repairs, including minor alterations, are charged to income as and when incurred.
Renewals and improvements are capitalised and the assets so replaced, if any, are retired.
d) Gains and losses on deletion
Gains and losses on deletion of assets are included in income currently.
4.8 Impairment of non-financial assets
Assets that have an indefinite useful life, for example land, are not subject to amortisation or depreciation and are tested
annually for impairment. Assets that are subject to depreciation/amortisation are reviewed for impairment at each
balance sheet date or whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. Reversals of the impairment losses are restricted to the original cost of the asset. An impairment
loss or reversal of impairment loss is recognised in the profit and loss account.
4.9 Investments in associated and subsidiary companies
These investments are initially valued at cost. At subsequent reporting dates, the Company reviews the carrying amount
of the investment to assess whether there is any indication that such investments have suffered an impairment loss. If
any such indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss, if
any. Such impairment losses or reversal of impairment losses are recognised in the profit and loss account. The profits
and losses of subsidiary and associated companies are carried in the financial statements of the subsidiary and
associated company and are not dealt with for the purpose of these financial statements of the Company except to the
extent of dividend declared by the subsidiary and associated companies.
4.10 Stores, spares and loose tools
These are valued at moving average cost less allowance for obsolete and slowmoving items. Items in transit are stated
at invoice value plus other charges paid thereon.
4.11 Stock - in - trade
Stock-in-trade is valued at the lower of cost and net realisable value. Crude oil in transit is valued at cost comprising
invoice value. Cost in relation to crude oil is determined on the basis of annual average cost of purchases during the year
on the principles of import parity and in relation to semi-finished and finished products it represents the cost of crude oil
and refining charges consisting of direct expenses and appropriate production overheads. Direct expenses are arrived at
on the basis of average cost for the year per barrel of throughput. Production overheads, including depreciation, are
allocated to throughput proportionately on the basis of nameplate capacity.
Net realisable value in relation to finished product represents selling prices in the ordinary course of business less costs
necessarily to be incurred for its sale, as applicable, and in relation to crude oil represents replacement cost at the
balance sheet date.
4.12 Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefits will flowto the Company and the revenue
can be reliably measured. Revenue is recognised as follows:
(i) Revenue from sales is recognised on delivery of products ex-refinery to the customers with the exception that
Naphtha export sales are recognised on the basis of products shipped to customers.
(ii) The Company is operating under the import parity pricing formula, as modified from time to time, whereby it is
charged the cost of crude on 'import parity' basis and is allowed product prices equivalent to the 'import parity'
price, calculated under prescribed parameters.
Effective July 1, 2007, the Government made certain modifications in the prescribed parameters effectively
reducing the price of Kerosene Oil, Light Diesel Oil (LDO) and JP-8 in 2007 and 2008. The Government has further
modified the refineries pricing formula in August, 2008 whereby the 10%duty included in pricing of HSDhas been
cut to 7.5% and the motor gasoline pricing has been unilaterally revised by linking its price to Arab Gulf 95 RON
prices and calculating the price of 87 RON motor gasoline on a unitary method basis. This revision adversely
affect the pricing of HSDand motor gasoline which are Company's two major products.
Earlier in July, 2002, the Government had modified the pricing formula that was applicable to the Company
restricting the distribution of net profits after tax (if any) fromrefinery operations to 50% of paid-up capital as at
July 1, 2002 and diverting the surplus profits, if any, to a special reserve to offset any future loss or make
investment for expansion or upgradation of Refinery. Further the Government had abolished the minimumrate of
return of 10% which continues to be contested by the Company as it represented to the Government that the
already existing agreement for guaranteed return could be modified only with the mutual consent of both the
parties.
(iii) Dividend income is recognised when the right to receive dividend is established.
(iv) Income on bank deposits is recognised using the effective yield method.
4.13 Borrowing cost
Borrowing cost related to the financing of major projects during the construction phase is capitalised. All other
borrowing costs are expensed as incurred.
4.14 Foreign currency transactions and balances
Transactions in foreign currencies are converted into rupees at the rates of exchange ruling on the date of the
transaction. All monetary assets and liabilities denominated in foreign currencies at the year end are translated at
exchange rates prevailing at the balance sheet date. Exchange differences are dealt with through the profit and loss
account.
4.15 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 when the obligation specified in the contract is discharged, cancelled or expired. All financial assets and
liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively. These
are subsequently measured at fair value, amortised cost or cost, as the case may be.
4.16 Financial Assets
The Company classifies its financial assets in the following categories: held-to-maturity investments, loans and
receivables, available for sale investments and investments at fair value through profit or loss. 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 recognized on the trade-date
the date on which the company commits to purchase or sell the asset.
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 at amortised cost less impairment losses.
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.
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 12months of the balance sheet date.
Available-for-sale investments are initially recognised at cost and carried at fair value at the balance sheet date.
Fair value of a quoted investment is determined in relation to its market value (current bid prices) at the balance
4.16.1 Held-to-maturity investments
4.16.2 Loans and receivables
4.16.3 Available-for-sale investments
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 fromremeasurement of investment to fair value is
recorded in equity and taken to income on disposal of investment or when the investment is determined to be
impaired.
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 recognised directly in the profit and loss account. The fair value of such investments is
determined on the basis of prevailing market prices.
4.17 Trade and other payables
Liabilities for trade and other amounts payable including amounts payable to related parties are carried at cost which is
the fair value of the consideration to be paid in the future for goods and services received.
4.18 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 the liability simultaneously.
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 terminvestments.
4.20 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.
5. CRITICAL ACCOUNTINGESTIMATESANDJUDGMENTS
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. The areas 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 14
(ii) Revaluation surplus on freehold land - note 12.2
(iii) Estimated useful life of property, plant and equipment - note 12
(iv) Provision for taxation - note 31
(v) Provision for employee retirement benefits - note 29
4.16.4 Investment at fair value through profit or loss
7. RESERVES AND SURPLUS
Capital reserve
Liabilities taken over from The Attock Oil Company Limited
no longer required 4,800 4,800
Capital gain on sale of building 654 654
Insurance and other claims realised relating to
pre-incorporation period 494 494
5,948 5,948
Special reserve for expansion / modernisation - note 7.1
Additional revenue under processing fee formula related
to 1990-91 and 1991-92 32,929 32,929
Surplus profits under the import parity pricing formula 4,159,405 4,635,219
4,192,334 4,668,148
Revenue reserve
Investment reserve - note 7.2 3,762,775 3,762,775
General reserve 55 55
Unappropriated profit 1,459,476 857,273
5,222,306 4,620,103
9,420,588 9,294,199
7.1 Represents amounts retained as per stipulations of the Government under the pricing formula and is available only for offsetting any
future loss or making investment in expansion or upgradation of the refinery. Transfer to / fromspecial reserve is recognised at each
quarter end and is reviewed for adjustment based on profit / loss on an annual basis. The company has incurred capital expenditure of
Rs 3,878 million on upgradation and expansion projects from July 1, 1997 to June 30, 2010 (July 1, 1997 to June 30, 2009 :
Rs 3,855 million).
7.2 The Company has set aside gain on sale of investment as investment reserve to meet any future losses/impairment on investments.
6. SHARE CAPITAL
Authorised
150,000,000 (2009 : 100,000,000) ordinary shares of Rs 10 each 1,500,000 1,000,000
Issued, subscribed and paid up
8,000,000 ordinary shares of Rs 10 each
Issued for cash 80,000 80,000
Shares issued as fully paid bonus shares
77,293,000 ordinary shares of Rs 10 each 772,930 772,930
The parent Company Attock Oil Company Limited held 48,039,224 (2009 : 48,039,224) ordinary shares and the associated
Company Attock PetroleumLimited held 1,332,000 (2009: 1,332,000 ) ordinary shares at the year end.
2010 2009
Rs 000 Rs 000
2010 2009
Rs 000 Rs 000
10.2 Workers' Profit Participation Fund
Balance at the beginning of the year 94,754 181,441
Add : Interest on Funds utilised in the Company's business 1,344 7,009
96,098 188,450
Less : Amount paid to the Fund 95,040 188,156
1,058 294
Add : Amount allocated for the year - notes 28 and 33 27,150 94,460
28,208 94,754
10. TRADE AND OTHER PAYABLES
Creditors - note 10.1 28,597,616 22,995,072
Due to The Attock Oil Company Limited - Holding Company 151,574 84,985
Due to associated companies
Pakistan Oilfields Limited 1,163,800 837,348
Attock Information Technology Services (Private) Limited 1,904 3,044
Accrued liabilities and provisions - note 10.1 3,175,095 2,830,079
Due to the Government under pricing formula 8,626,856 2,527,290
Advance payments from customers 5,723 30,298
Sales tax payable 1,274,260 441,691
Workers' welfare fund 258,933 234,750
Workers' profit participation fund - note 10.2 28,208 94,754
General staff provident fund - 1,357
Staff provident fund - 1,912
Deposits from customers adjustable against freight
and Government levies payable on their behalf 376 376
Payable to statutory authorities in respect of petroleum
development levy and excise duty 866,417 175,813
Security deposits 48,331 48,866
Unclaimed dividends 3,604 3,774
44,202,697 30,311,409
10.1 These balances include amounts retained frompayments to crude suppliers for purchase of local crude as per the directives of the
Ministry of Petroleumand Natural Resources (the Ministry). Further, as per directive of the Ministry such withheld amounts are to be
retained in designated 90 days interest bearing accounts. The amounts withheld alongwith accumulated profits amounted to
Rs 3,177.551 million (2009: Rs 4,368.984 million).
8. SURPLUS ON REVALUATION OF FREEHOLD LAND
This represents surplus over book value resulting from revaluation of freehold land as referred to in note 12.2 and is not available
for distribution to shareholders.
9. SHORT TERM FINANCE
The Company has negotiated running finance facilities with various banks and accepted facility offer letters to the extent of
Rs 3 billion, which were unutilised at the year end. As and when required, these facilities shall be secured by joint hypothecation by
way of 1st registered charges over the Company's current assets.
2010 2009
Rs 000 Rs 000
2010 2009
Rs 000 Rs 000
11. CONTINGENCIES AND COMMITMENTS
Contingencies :
(i) Due to huge circular debt in the oil industry, certain payments due from/ to the oil
marketing companies (OMCs) and crude oil suppliers respectively have not been
made on their due dates of payment. As a result the Company has raised claims
on OMCs in respect of mark-up on delayed payments as well as received counter
claims from some crude oil suppliers which have not been recognized in the
financial statements as these have not been acknowledged as debt by either
parties.
(ii) Guarantees issued by banks on behalf of the Company 394 350
(iii) Claims for land compensation contested by the Company 1,300 1,300
(iv) Price adjustment related to crude oil purchases as referred to in note 24.1, the
amount of which can not be presently quantified
Commitments outstanding :
(i) Capital expenditure 16,559 37,876
(ii) Letters of credit for purchase of store items 238,971 243,043
12. OPERATING ASSETS
As at July 1, 2008
Cost 1,927,250 101,649 3,985,097 47,676 57,946 73,954 6,193,572
Accumulated depreciation - (38,120) (3,559,632) (41,573) (35,385) (59,342) (3,734,052)
Net book value 1,927,250 63,529 425,465 6,103 22,561 14,612 2,459,520
Year ended June 30, 2009
Opening net book value 1,927,250 63,529 425,465 6,103 22,561 14,612 2,459,520
Additions 50,310 9,618 192,754 4,253 2,986 4,875 264,796
Disposals
Cost (75,000) (6,250) (389) (4,528) (86,167)
Depreciation 6,247 243 4,107 10,597
(75,000) (3) (146) (421) (75,570)
Depreciation charge (5,744) (104,796) (3,474) (5,163) (7,666) (126,843)
Closing net book value 1,977,560 67,403 438,423 6,879 20,238 11,400 2,521,903
As at July 1, 2009
Cost 1,977,560 111,267 4,102,851 45,679 60,543 74,301 6,372,201
Accumulated depreciation (43,864) (3,664,428) (38,800) (40,305) (62,901) (3,850,298)
Net book value 1,977,560 67,403 438,423 6,879 20,238 11,400 2,521,903
Additions 7,456 144,779 2,569 3,435 5,770 164,009
Disposals
Cost (342) (4,123) (4,465)
Depreciation 205 4,122 4,327
(137) (1) (138)
As at June 30, 2010
Cost 1,977,560 118,723 4,247,630 48,248 63,636 75,948 6,531,745
Net book value 1,977,560 69,356 478,742 6,424 19,574 11,224 2,562,880
Annual rate of
Depreciation (%) 5 10 20 10 20
2010 2009
Rs 000 Rs 000
Freehold
land
(note 12.2)
Buildings
on freehold
land
Plant and
machinery
Computer
equipment
Furniture,
fixtures and
equipment Vehicles Total
Rs 000
12.3 The depreciation charge for the year has been allocated as follows :
Cost of sales 112,436 114,446
Administration expenses 9,523 11,417
Distribution cost 302 347
Desalter operating cost 633 633
122,894 126,843
13. CAPITAL WORK-IN-PROGRESS
Opening balance as at July 1, 2009 336,072 441,326
Add : Addition during the year 60,305 90,736
396,377 532,062
Less : Capitalization during the year 135,469 195,990
Closing balance as at June 30, 2010 260,908 336,072
The details are as under :
Civil works 242 242
Plant and machinery 232,246 307,410
Pipeline project 28,420 28,420
260,908 336,072
Assets disposed off to executives :
Vehicles 510 51 Company policy Mr. Haider Abbas Hamdani
562 56 Company policy Mr. Malik Muhammad Yousaf
532 53 Company policy Mr. Irshad Ramay
532 53 Company policy Mr. Khaleeq-uz-Zaman
12.2 Value of freehold land includes revaluation surplus of Rs 1,923.339 million arising fromrevaluation of freehold land in January 2001
carried out by an independent valuer. Valuation was made on the basis of market value. The original cost of the land as at
June 30, 2010 is Rs 54.221 million.
12.1 Fixed assets disposed off during the year are as follows :
2010 2009
Rs 000 Rs 000
Rs 000
Original
cost
Book
value
Sale
proceeds
Mode of
disposal
Particulars of
purchaser
14. LONG TERM INVESTMENTS - AT COST
Associated companies
Quoted
National Refinery Limited (NRL) - note 14.1 25 8,046,635 25 8,046,635
19,991,640 (2009 : 19,991,640) fully paid ordinary
shares including 3,331,940 (2009 : 3,331,940) bonus
shares of Rs 10 each
Market value as at June 30, 2010 : Rs 3,655 million
(June 30, 2009 : Rs 4,399 million)
Attock Petroleum Limited (APL) - note 14.2 21.88 4,463,485 21.88 4,463,485
12,600,096 (2009 : 12,600,096) fully paid ordinary shares
including 2,100,016 (2009 : 2,100,016) bonus shares of
Rs 10 each
(June 30, 2009 : Rs 4,013 million)
Unquoted
Attock Gen Limited (AGL) - note 14.3 30 748,295 30 727,500
7,482,957 (2009 : 7,275,000) fully paid ordinary shares of
Rs 100 each
Attock Information Technology Services (Private) Limited 10 4,500 10 4,500
450,000 (2009 : 450,000) fully paid ordinary shares of
Rs 10 each
13,262,915 13,242,120
Subsidiary company
Unquoted
Attock Hospital (Private) Limited 100 2,000 100 2,000
200,000 (2009: 200,000) fully paid ordinary shares of
Rs 10 each
13,264,915 13,244,120
All associated and subsidiary companies are incorporated in Pakistan.
14.1 Based on a valuation analysis carried out by an external investment advisor engaged by the Company, the recoverable amount of
investment in NRL 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
3.91% (2009 : 5.38%), terminal growth rate of 3% (2009 : 3%) and capital asset pricing model based discount rate of 17.90%
(2009: 18.05%).
14.2 Based on a valuation analysis carried out by the Company, the recoverable amount of investment in Attock PetroleumLimited 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 flowbased valuation methodology which assumes gross profit margin of 4.58%(2009 : 5.16%), terminal
growth rate of 3%(2009: 4.5%) and capital asset pricing model based discount rate of 17.90%(2009: 18.05%).
2009
% age
Rs 000
2010
% age
Rs 000 holding holding
15.2 Reconciliation of carrying amount of loans to executives :
Opening balance as at July 1 5,218 4,366
Add : Disbursements during the year 4,757 5,753
9,975 10,119
Less : Repayments during the year 6,002 4,901
Closing balance as at June 30 3,973 5,218
15. LONG TERM LOANS AND DEPOSITS
Loans to employees - considered good - note 15.1 23,507 28,546
Less : Amounts due within next twelve months shown
under current assets - note 20 (14,530) (17,057)
8,977 11,489
Security deposits 948 948
9,925 12,437
15.1 Loans to employees are for miscellaneous purposes which are recoverable in 24, 36, and 60 equal monthly installments depending
on case to case basis and are secured by a charge on the asset purchased and/or amount due to the employee against provident fund
or a third party guarantee. These are interest free loans. These include an amount of Rs 3.973 million (2009 : Rs 5.218 million)
receivable from Executives of the Company and does not include any amount receivable from Directors or Chief Executive. The
maximum amount due from executives of the Company at the end of any month during the year was Rs 5.779 million (2009 :
Rs 6.913 million).
14.3 Investment in AGL
As at July 1, 2009 7,275,000 727,500
Right shares acquired during the year 207,957 20,795
As at June 30, 2010 7,482,957 748,295
Number of shares Cost
Rs 000
2010 2009
Rs 000 Rs 000
2010 2009
Rs 000 Rs 000
16. DEFERRED TAXATION
Debit balances arising on
Difference between accounting and tax depreciation 83,629 118,353
Provisions for obsolete stores, doubtful debts and gratuity 77,838 66,036
161,467 184,389
17. STORES, SPARES AND LOOSE TOOLS
Stores (including items in transit
Rs 63.15 million ; 2009 : Rs 57.27 million) 344,398 336,212
Spares 290,989 279,955
Loose tools 429 509
635,816 616,676
Less : Provision for slow moving items - note 17.1 54,772 43,472
581,044 573,204
17.1. Provision for slow moving items
Opening balance 43,472 37,300
Add : Provision for the year 11,300 10,600
54,772 47,900
Less : Stores and spares written off - 4,428
54,772 43,472
18. STOCK-IN-TRADE
Crude oil - in stock 2,848,225 1,222,628
- in transit 173,796 219,165
3,022,021 1,441,793
Semi-finished products 483,694 377,749
Finished products - note 18.1 3,673,137 3,049,434
7,178,852 4,868,976
18.1 Finished products include stocks carried at net realisable value of Rs 3,184 million (2009 : Rs 910 million). Adjustments amounting to
Rs 357 million (2009 : Rs 88 million) have been made to closing inventory to write down stocks of finished products to their net
realizable value.
19. TRADE DEBTS
All debtors are unsecured and considered good. These include amount receivable from associated companies Attock Petroleum
Limited Rs 6,723 million (2009 : Rs 3,902 million) and Pakistan Oilfields Limited Rs 5 million (2009 : Rs 8 million).
2010 2009
Rs 000 Rs 000
20. LOANS, ADVANCES, DEPOSITS, PREPAYMENTS
AND OTHER RECEIVABLES
Loans and advances - considered good
Current portion of long term loans to employees - note 15 14,530 17,057
Advances to suppliers 31,970 35,681
Advances to employees 3,503 2,619
50,003 55,357
Deposits and prepayments
Trade deposits 286 286
Short term prepayments 31,680 33,923
31,966 34,209
Other receivables
Due from Subsidiary Company
Attock Hospital (Private) Limited 94 682
Due from associated companies
National Refinery Limited 24 2,478
Attock Petroleum Limited 1,122 4,913
Attock Leisure and Management Associates (Pvt) Limited 28 594
Attock Gen Limited 723 22,304
National Cleaner Production Centre Foundation 2,230 2,053
Attock Cement Pakistan Limited - 46
Due from Staff pension fund 19,935 28,820
Income accrued on bank deposits 3,989 80,494
Crude oil freight adjustable through inland freight equalisation margin 3,615 67,276
Amount adjustable against insurance claims - 75,000
Other receivables 12,217 2,908
43,977 287,568
125,946 377,134
21. CASH AND BANK BALANCES
Cash in hand 918 412
With banks :
Current accounts 5,603 28,560
Deposit accounts 2,849,671 2,000,000
Saving accounts (including US $ 379,677 ; 2009 : US $ 363,249) 1,112,227 4,773,334
3,968,419 6,802,306
2010 2009
Rs 000 Rs 000
22. SALES
Gross sales (excluding Naphtha export sales) 101,666,796 92,766,859
Naphtha export sales 10,321,605 9,131,088
Less : Sale proceeds of Naphtha exports related to third parties 1,130,996 1,058,823
9,190,609 8,072,265
110,857,405 100,839,124
Less : Duties, taxes and levies - note 22.1 22,673,379 24,292,676
88,184,026 76,546,448
22.1 Duties, taxes and levies
Sales tax 13,216,039 11,675,167
Petroleum Development Levy 9,445,993 12,600,264
Custom duties and other levies 11,347 17,245
22,673,379 24,292,676
23. REIMBURSEMENT DUE FROM THE GOVERNMENT UNDER IMPORT PARITY PRICING FORMULA
This represents amount due from the Government of Pakistan on account of shortfall in ex-refinery prices of certain petroleum
products under the import parity pricing formula.
21.1 Balances with banks include Rs 2,849.658 million (2009 : Rs 2,000.000 million) in respect of deposits placed in a 90-day interest-
bearing account consequent to directives of the Ministry of Petroleum & Natural Resources on account of amounts withheld along
with related interest earned thereon, as referred to in note 10.1.
21.2 Bank deposits of Rs 0.394 million (2009 : Rs 0.350 million) were under lien with bank against a bank guarantee issued on behalf of the
Company.
21.3 Balances with banks include Rs 48.331 million (2009: Rs 48.866 million) in respect of security deposits received.
21.4 Balances with banks earned weighted average interest / mark-up @11.28%(2009: @14.04%) per annum.
2010 2009
Rs 000 Rs 000
24. COST OF SALES
Opening stock of semi-finished products 377,749 436,792
Crude oil consumed - note 24.1 86,477,494 72,606,265
Transportation and handling charges 1,229,486 1,076,227
Salaries, wages and other benefits - note 24.2 380,547 342,936
Printing and stationery 1,959 1,965
Chemicals consumed 289,007 322,132
Fuel and power 579,948 458,308
Rent, rates and taxes 6,851 6,934
Telephone 1,589 1,316
Professional charges for technical services 5,562 4,350
Insurance 106,837 81,463
Repairs and maintenance (including stores and spares
consumed Rs 44.741 million ; 2009 : Rs 75.980 million) 206,896 163,067
Staff transport and travelling 8,393 7,679
Cost of receptacles 14,580 15,665
Research and development 1,749 165
Depreciation 112,436 114,446
89,801,083 75,639,710
Closing stock of semi-finished products (483,694) (377,749)
89,317,389 75,261,961
Opening stock of finished products 3,049,434 3,129,569
Closing stock of finished products (3,673,137) (3,049,434)
(623,703) 80,135
88,693,686 75,342,096
24.1 Crude oil consumed
Stock at the beginning of the year 1,441,793 1,278,493
Purchases 88,057,722 72,769,565
89,499,515 74,048,058
Stock at the end of the year (3,022,021) (1,441,793)
86,477,494 72,606,265
Certain crude purchases have been recorded based on provisional prices notified by the Government and may require adjustment in
subsequent periods.
24.2 Salaries, wages and other benefits under cost of sales, administration expenses, distribution cost and income from crude desalter
operations include the Company' s contribution to the Provident Fund amounting to Rs 15.311 million
(2009: Rs 14.708 million).
2010 2009
Rs 000 Rs 000
25. ADMINISTRATION EXPENSES
Staff transport, travelling and entertainment 12,723 9,956
Electricity, gas and water 10,652 6,060
Auditor's remuneration - note 25.1 1,746 1,639
Legal and professional charges 6,214 7,319
Repairs and maintenance 35,703 31,697
Subscription 7,028 5,218
Publicity 3,509 3,473
Scholarship scheme 1,694 1,748
Insurance 987 1,289
Donations * 308 2,742
Training expenses 829 501
Other expenses - 99
245,291 222,822
* No director or his spouse had any interest in the donee institutions.
25.1 Auditor's remuneration
Annual audit 1,000 750
Review of half yearly accounts, audit of consolidated
accounts, staff funds and special certifications 602 454
Tax services - 300
Out of pocket expenses 144 135
1,746 1,639
26. DISTRIBUTION COST
Staff transport, travelling and entertainment 553 576
Telephone 193 161
Electricity, gas, fuel and water 3,550 2,020
Printing and stationery 114 101
Repairs and maintenance including packing and other stores consumed 2,686 1,932
Rent, rates and taxes 390 464
Legal and professional charges 320 347
Depreciation 302 347
24,834 20,809
2010 2009
Rs 000 Rs 000
27. FINANCE COST
Exchange loss 307,306 1,464,423
Interest on Workers' Profit Participation Fund - note 10.2 1,344 7,009
Bank and other charges 147 93
308,797 1,471,525
28. OTHER CHARGES
Employees' retirement benefits
Staff gratuity benefits 29,952 31,120
Staff pension benefits 24,584 1,278
Less : contribution to subsidiary and associated company (2,305) (2,137)
22,279 (859)
Contribution to employees old age benefits scheme 2,780 2,723
55,011 32,984
Provision for slow moving stores 11,300 10,600
Workers' profit participation fund - 57,668
76,745 124,319
2010 2009
Rs 000 Rs 000
a) The amounts recognised in the profit and loss account :
Current service cost 16,760 14,462 4,539 4,680
Interest on obligation 47,384 41,710 19,768 19,721
Expected return on plan assets (45,385) (51,074) - -
Net actuarial losses / (gains) recognised during the year 5,825 (3,820) 5,645 6,719
24,584 1,278 29,952 31,120
b) The amounts recognised in the balance sheet :
Fair value of plan assets 391,481 340,186 - -
Present value of defined benefit obligations (476,121) (387,196) (201,210) (163,030)
(84,640) (47,010) (201,210) (163,030)
Unrecognised actuarial (gains) / losses 104,575 75,830 61,188 42,900
Net asset / (liability) 19,935 28,820 (140,022) (120,130)
c) Movement in the present value of defined benefit obligation :
Present value of defined benefit obligation as at July 1 387,196 321,136 163,030 152,656
Interest cost 47,384 41,710 19,769 19,721
Benefits paid (16,751) (13,105) (10,061) (7,880)
Actuarial (gains) / losses 41,532 22,993 23,933 (6,147)
Present value of defined benefit obligation as at June 30 476,121 387,196 201,210 163,030
d) Changes in the fair value of plan assets :
Fair value of plan assets as at July 1 340,186 385,053 - -
Expected return 45,385 51,074 - -
Benefits paid (16,751) (13,105) - -
Contributions by employer 15,700 14,693 - -
Contributions by associated company - (358) - -
Actuarial gains / (losses) 6,961 (97,171) - -
Fair value of plan assets as at June 30 391,481 340,186 - -
Actual return on plan assets 52,826 (46,577) - -
The company expects to contribute Rs 17.1 million to its defined benefit pension plans during 2010-2011.
29. EMPLOYEES' DEFINED BENEFIT PLANS
The latest actuarial valuation of the employees' defined benefit plans was conducted at June 30, 2010 using the projected unit credit
method. Details of the defined benefit plans are :
Rs 000 Rs 000
2010 2009 2010 2009
Funded defined
benefit
pension plan
Unfunded defined
benefit
gratuity plan
g) Comparison for five years :
Defined Benefit Pension Plan
Present value of defined benefit obligation (476,121) (387,196) (321,136) (291,335) (263,054)
Fair value of plan assets 391,481 340,186 385,053 359,485 280,495
Surplus / (deficit) (84,640) (47,010) 63,917 68,150 17,441
Experience adjustments on plan liabilities 41,532 22,993 (4,263) (609) 23,265
Experience adjustments on plan assets (6,961) 97,171 14,913 (48,803) 29,017
Defined Benefit Gratuity Plan
Fair value of plan assets - - - - -
Deficit (201,210) (163,030) (152,656) (121,894) (96,058)
Experience adjustments on plan liabilities (23,933) (6,147) 23,729 17,982 (1,087)
Experience adjustments on plan assets - - - - -
e) The major categories of plan assets :
Investment in equities 95,878 88,231 - -
Investment in mixed funds 63,444 60,845 - -
Cash 232,159 191,110 - -
391,481 340,186 - -
f) Significant actuarial assumptions at the balance sheet date :
Discount rate 13.00% 12.50% - -
Expected return on plan assets 13.00% 12.50% - -
Future salary increases 10.85% 10.36% - -
Future pension increases 7.62% 7.14% - -
Funded defined
benefit
pension plan
Unfunded defined
benefit
gratuity plan
Rs 000 Rs 000
Rs 000
2008 2007 2006 2010 2009
2010 2009 2010 2009
30. OTHER INCOME
Income from financial assets
Income on bank deposits 512,644 891,045
Interest on delayed payments 292,589 -
Exchange gain 2,557 4,761
807,790 895,806
Income from non-financial assets
Income from crude decanting 15,416 14,458
Income from crude desalter operations - note 30.1 954 13,168
Insurance agency commission 4,336 7,624
Rental income 34,340 19,375
Sale of scrap 7,804 15,658
Profit on disposal of fixed assets 4,161 1,001
Insurance claim * 23,907 -
Calibration charges 2,956 3,431
Handling and service charges 70,842 14,882
Penalties from carriage contractors 3,748 1,694
Miscellaneous 7,081 6,603
175,545 97,894
983,335 993,700
* Represents differential value of claim settled on replacement value basis.
30.1 Income from crude desalter operations
Income 54,945 54,245
Less : Operating costs
53,991 41,077
954 13,168
31. PROVISION FOR TAXATION
Current - for the year 270,900 631,700
Deferred - for the year 22,922 34,913
293,822 666,613
2010 2009
Rs 000 Rs 000
31.1 Relationship between tax expense and accounting profit
Accounting profit / (loss) (181,992) 1,072,629
Tax @ 35% (63,697) 375,420
Income chargeable to tax at special rate 357,519 291,193
293,822 666,613
32. INCOME FROM NON-REFINERY OPERATIONS LESS
APPLICABLE CHARGES AND TAXATION
Dividend income from associated companies
National Refinery Limited 315,002 399,833
Attock Gen Limited 149,659 -
714,557 735,835
Less : Related charges
Workers' profit participation fund 27,150 36,792
Taxation @ 10% ( 2009 : 10%) 71,456 73,584
112,354 125,093
602,203 610,742
33. OPERATING SEGMENTS
High Speed Diesel 36,404,230 34,711,605
Jet Petroleum 11,012,404 11,389,397
Motor Gasoline 27,599,380 24,347,475
Furnace Fuel Oil 17,972,145 15,287,409
Naphtha 9,190,609 8,072,265
Others 8,678,637 7,030,973
110,857,405 100,839,124
Less: Duties, taxes and levies 22,673,379 24,292,676
88,184,026 76,546,448
Revenue from four major customers of the Company constitute 90% of the total revenue during the year ended June 30, 2010
(June 30, 2009 : 90%).
34. RELATED PARTY TRANSACTIONS
Attock Oil Company Limited holds 56.32% (2009 : 56.32%) shares of the Company at the year end. Therefore, all subsidiaries and
associated undertakings of Attock Oil Company Limited are related parties of the Company. The related parties also comprise of
directors, major shareholders, key management personnel, entities over which the directors are able to exercise significant influence
on financial and operating policy decisions and employees' funds. Amount due fromand due to these undertakings are shown under
receivables and payables. The remuneration of Chief Executive, directors and executives is disclosed in note 35 to the financial
statements.
2010 2009
Rs 000 Rs 000
Annual Report 2010
The financial statements have been prepared on the basis of a single repor table segment. Revenue from external customers for
products of the Company are as follows :
2010 2009
Rs 000 Rs 000
83
Sale of goods 33,849,498 25,803,489
Sale of services 142,893 74,159
33,992,391 25,877,648
Purchase of goods 8,265,490 6,689,896
Purchase of services 364,673 363,476
8,630,163 7,053,372
Interest income on delayed payments 292,589 -
Holding Company
Sale of services 1,372 -
Purchase of goods 677,819 428,679
683,594 433,336
Subsidiary Company
Sale of goods 212 217
28,517 26,645
Contribution to employees' pension and provident funds 31,011 29,401
35. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
The aggregate amounts charged in the accounts for remuneration, including benefits and perquisites, were as follows :
Managerial remuneration / honorarium 5,035 4,567 344 1,219 37,904 34,941
Company's contribution to
provident and pension funds 1,070 942 - - 8,243 7,396
Housing and utilities 3,000 2,696 - - 29,259 26,772
Leave passage 519 420 - - 4,520 3,155
9,624 8,625 344 1,219 79,926 72,264
Less: Charged to associated company 2,806 - - - - -
6,818 8,625 344 1,219 79,926 72,264
No. of persons 1 1 2 3 31 29
35.1 In addition, the Chief Executive and 20 (2009 : 21) executives were provided with limited use of the Company's cars. The Chief
Executive and all executives were provided with medical facilities and 8 (2009 : 4) executives were provided with unfurnished
accommodation in Company owned bungalows. Limited residential telephone facility was also provided to the Chief Executive and 17
(2009: 11) executives.
35.2 In addition,4 non-executive directors, chief executive officer and 3 alternate directors of the company were paid meeting fee
aggregating Rs 3.605 million (2009: Rs Nil) based on actual attendence.
2010 2009 2010 2009 2010 2009
Chief Executive Directors Executives
2010 2009
Rs 000 Rs 000
Rs 000
Financial assets :
Maturity upto one year
Trade debts 30,430,263 15,508,763
Loans, advances, deposits and other receivables 62,296 307,530
Cash and bank balances
Foreign currency - US $ 32,654 29,684
Local currency 3,935,765 6,772,622
Maturity after one year
Long term Loans and deposits 9,925 12,437
34,470,903 22,631,036
Financial liabilities :
Trade and other payables 44,196,974 30,281,112
Staff gratuity 140,022 120,130
44,336,996 30,401,242
36.2 Credit quality of financial assets
The credit quality of 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 ratings
determined based on their historical information for any defaults in meeting obligations.
Trade debts
Counterparties with external credit rating 10,153,763 A 1+ 21,157,877
Counterparties without external credit rating
Due from associated companies 3,910,073 6,727,590
Others * 1,444,927 2,544,796
15,508,763 30,430,263
Loans, advances, deposits and other receivabels
Counterparties without external credit rating 319,967 72,221
Bank Balances
Counterparties with external credit rating 6,445,939 A 1+ 3,966,638
344,855 A 1 502
44 A 2 46
11,056 A 3 315
6,801,894 3,967,501
* These balances represent receivable from oil marketing companies and defence agencies.
2010 2009
Rs 000 Rs 000
Loans and receivables
36. FINANCIAL INSTRUMENTS
36.1 Financial assets and liabilities
Other financial liabilities
2010 2009
Rs 000 Rs 000
Rating Balance Balance
2010 2009
Rs 000 Rs 000
0 to 6 months 13,064,184 12,074,031
6 to 12 months 7,332,114 14,481
Above 12 months 4,000,124 74,861
24,396,422 12,163,373
b) Liquidity risk
Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The Company follows an effective cash
management and planning policy to ensure availability of funds and to take appropriate measures for newrequirements.
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 845 million (2009 :
Rs 36 million) and financial liabilities include Rs 9,322 million (2009 : Rs 6,390 million) which were subject to
currency risk.
At June 30, 2010, if the curr ency had weakened / strengthened by 10%against US dollar with all other variables held
constant, profit after tax for the year would have been Rs 551 million ( 2009 : Rs 413 million) lower / higher.
(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.
Financial assets and liabilities include balances of Rs 3,962 million (2009 : Rs 6,773 million) and Rs 3,318 million
(2009: Rs 4,489 million) respectively, which are subject to interest rate risk.
At June 30, 2010, if interest rates had been 1%higher / lower with all other variables held constant, profit after tax for
the year would have been Rs 4million (2009: Rs 15million) higher / lower.
(iii) 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 frominterest 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 in market prices.
36.3 Financial risk management
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.
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 placements with banks. The sales are essentially to oil
marketing companies and reputable foreign customers. The Company's placements are with banks having satisfactory credit
rating. Due to the high credit worthiness of counter parties the credit risk is considered minimal.
At June 30, 2010, trade debts of Rs 24,396,422 thousand (2009 : Rs 12,163,373 thousand) were past due but not imparied.
The ageing analysis of these trade receivables is as follows:
36.3.1 Financial risk factors
2010 2009
Rs 000 Rs 000
37. EARNINGS / (LOSS) PER SHARE - BASIC AND DILUTED
Profit / (loss) after taxation from refinery operations (475,814) 406,016
Income from non-refinery operations less applicable charges and taxation 602,203 610,742
126,389 1,016,758
Number of fully paid weighted average ordinary shares ('000) 85,293 85,293
Earnings / (Loss) per share - Basic and diluted (Rs)
1.48 11.92
38. GENERAL
38.1 Capacity and production
Against the designed annual refining capacity of 14.700 million (2009 : 14.700 million) US barrels the actual throughput during the
year was 13.493 million (2009 : 13.126 million) US barrels. The actual throughput was lower than the annual refining capacity on
account of lowproduct upliftments in certain periods of 2009-2010 and reductions in throughput to minimize losses during adverse
periods of refinery margins.
38.2 Number of employees
Total number of employees at the end of the year were 683 (2009 : 699).
38.3 Date of authorisation
These financial statements have been authorised for issue by the Board of Directors of the Company on
September 29, 2010.
36.3.2 Capital risk management
The Company is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business. The Board of Directors monitors the return on capital and the level of dividend to ordinary
shareholders. There was no change to the Company's approach to the capital management during the year and the company is
not subject to externally imposed capital requirement.
2010 2009
Rs 000 Rs 000
We have audited the annexed consolidated financial statements comprising consolidated balance sheet of Attock Refinery
Limited (ARL) and its subsidiary company, Attock Hospital (Private) Limited as at June 30, 2010 and the related consolidated
profit and loss account, consolidated statement of comprehensive income, consolidated cash flow statement and
consolidated statement of changes in equity together with the notes forming part thereof, for the year then ended. We have also
expressed separate opinions on the financial statements of ARL and its subsidiary company. These financial statements are
the responsibility of ARL's management. Our responsibility is to express an opinion on these financial statements based on our
audit.
Our audit was conducted in accordance with the International Standards on Auditing and accordingly included such tests of
accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements present fairly the financial position of ARL and its subsidiary company as
at June 30, 2010and the results of their operations for the year then ended.
Chartered Accountants
Islamabad : September 29, 2010
Engagement partner: Sohail M Khan
Auditors' Report to the Members
A.F. FERGUSON & CO.
CHARTERED ACCOUNTANTS
KARACHI-LAHORE-ISLAMABAD
SHARE CAPITAL AND RESERVES
Share capital
Authorised 6 1,500,000 1,000,000
Issued, subscribed and paid-up 6 852,930 852,930
Reserves and surplus 7 13,078,482 11,356,577
13,931,412 12,209,507
SURPLUS ON REVALUATION OF FREEHOLD LAND 8 1,923,339 1,923,339
15,854,751 14,132,846
DEFERRED LIABILITIES
Provision for staff gratuity 29 140,022 120,130
CURRENT LIABILITIES AND PROVISIONS
Short term finance 9
Trade and other payables 10 44,210,646 30,317,091
Provision for taxation 2,049,256 1,985,536
46,259,902 32,302,627
CONTINGENCIES AND COMMITMENTS 11
62,254,675 46,555,603
Consolidated Balance Sheet
as at June 30, 2010
2010 2009
Note Rs 000 Rs 000
PROPERTY, PLANT AND EQUIPMENT
Operating assets 12 2,565,183 2,524,816
Capital work-in-progress 13 260,908 336,072
Stores and spares held for capital expenditure 44,213 58,239
2,870,304 2,919,127
LONG TERM INVESTMENTS 14 16,915,229 15,299,218
LONG TERM LOANS AND DEPOSITS 15 9,925 12,437
DEFERRED TAXATION 16 161,695 184,542
CURRENT ASSETS
Stores, spares and loose tools 17 581,044 573,204
Stock-in-trade 18 7,179,547 4,869,728
Trade debts 19 30,430,592 15,510,180
Loans, advances, deposits, prepayments
and other receivables 20 134,601 383,172
Cash and bank balances 21 3,971,738 6,803,995
42,297,522 28,140,279
62,254,675 46,555,603
Consolidated Balance Sheet
as at June 30, 2010
2010 2009
Note Rs 000 Rs 000
Sales 22 88,184,026 76,546,448
Reimbursement due from the Government
under import parity pricing formula 23 - 714,052
88,184,026 77,260,500
Less : Cost of sales 24 (88,693,686) (75,342,096)
GROSS PROFIT / (LOSS) (509,660) 1,918,404
Less : Administration expenses 25 245,291 222,822
Distribution cost 26 24,834 20,809
Finance cost 27 308,797 1,471,525
Other charges 28 76,745 124,319
(655,667) (1,839,475)
(1,165,327) 78,929
Other income 30 983,335 993,700
PROFIT / (LOSS) BEFORE TAXATION FROM REFINERY OPERATIONS (181,992) 1,072,629
(666,613) (293,822) Provision for taxation 31
PROFIT / (LOSS) AFTER TAXATION FROM REFINERY OPERATIONS (475,814) 406,016
PROFIT AFTER TAXATION FROM NON-REFINERY OPERATIONS
Share in profit of associated companies 32 2,234,250 1,102,585
Impairment loss on investment in associated companies 14 (36,531) (143,357)
2,197,719 959,228
PROFIT FOR THE YEAR 1,721,905 1,365,244
Earnings / (loss) per share - Basic and diluted (Rs)
38 20.19 16.01
Consolidated Profit and Loss Account
2010 2009
Note Rs 000 Rs 000
Profit for the year 1,721,905 1,365,244
Other comprehensive income - -
Total comprehensive income for the year 1,721,905 1,365,244
Consolidated Statement of Comprehensive Income
2010 2009
Rs 000 Rs 000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from - customers 97,382,888 95,667,593
- others 226,370 137,970
97,609,258 95,805,563
Cash paid for operating costs (79,917,801) (82,064,169)
Cash paid to Government for duties, taxes and other levies (21,150,206) (24,888,914)
Income tax paid (280,735) (394,673)
Net cash flows from operating activities (3,739,484) (11,542,193)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (75,239) (189,542)
Sale of property, plant and equipment 4,299 76,614
Purchase of shares of associated companies (20,795) (108,541)
Long term loans and deposits 2,512 295
Income on bank deposits received 589,299 919,513
Dividends received 714,557 735,835
Net cash flows from investing activities 1,214,633 1,434,174
CASH FLOWS FROM FINANCING ACTIVITIES
Finance cost (308,797) (1,471,525)
Dividends paid (170) (566,422)
Net cash flows from financing activities (308,967) (2,037,947)
EFFECT OF EXCHANGE RATE CHANGES 1,561 4,761
(DECREASE) IN CASH AND CASH EQUIVALENTS (2,832,257) (12,141,205)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 6,803,995 18,945,200
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 3,971,738 6,803,995
Consolidated Cash Flow Statement
2010 2009
Rs 000 Rs 000
Balance at June 30, 2008 710,775 43,268 5,605,624 - - 819,980 4,233,236 1,923,339 13,336,222
Transfer to investment reserve - - - - 1,709,687 - (1,709,687) - -
Impairment loss on investment in associated
company transferred from unappropriated
profit to investment reserve - - - - (143,357) - 143,357 - -
Bonus shares @ 20 % related to the year
ended June 30, 2008 142,155 - - - - - (142,155) - -
Final cash dividend @ 80 % related to the
year ended June 30, 2008 - - - - - - (568,620) - (568,620)
Total comprehensive income for the year - - - - - - 1,365,244 - 1,365,244
Transfer to special reserve for expansion /
modernisation - note 7.1 - - 260,216 - - - (260,216) - -
Loss from fuel refinery operations
transferred from unappropriated profit to special
reserve by associated companies - note 7.1 - - (680,195) - - - 680,195 - -
Transfer to maintenance reserve
by an associated company - - - 46,680 - - (46,680) - -
Transfer to general reserve by an
associated company - - - - - 364,150 (364,150) - -
Bonus shares issued by an
associated company - 21,000 - - - - (21,000) - -
Balance at June 30, 2009 852,930 64,268 5,185,645 46,680 1,566,330 1,184,130 3,309,524 1,923,339 14,132,846
Impairment loss on investment in
associated company transferred from
unappropriated profit to investment reserve - - - - (36,531) - 36,531 - -
Total comprehensive income for the year - - - - - - 1,721,905 - 1,721,905
Loss from refinery operations transferred
from unappropriated profit to special
reserve - note 7.1 - - (475,814) - - - 475,814 - -
Loss from fuel refinery operations
transferred from unappropriated
profit to special reserve by associated
companies - note 7.1 - - (178,128) - - - 178,128 - -
Transfer to maintenance reserve by
an associated company - - - 80,377 - - (80,377) - -
Transfer to general reserve by an
associated company - - - - - 800,000 (800,000) - -
Balance at June 30, 2010 852,930 64,268 4,531,703 127,057 1,529,799 1,984,130 4,841,525 1,923,339 15,854,751
Special reserve
for expansion /
modernisation
Share
capital
Capital
reserve
Un-appropriated
Profit
General
reserve
Surplus on
revaluation of
freehold land Total
Investment
reserve
Maintenance
reserve
Consolidated Statement of Changes in Equity
Rs 000
1. LEGAL STATUS AND OPERATIONS
and was converted into a public company on June 26, 1979. The registered office of the company is situated at Morgah,
Rawalpindi. Its shares are quoted on the Karachi, Lahore and Islamabad Stock Exchanges in Pakistan. It is principally
engaged in the refining of crude oil.
The company is subsidiary of the Attock Oil Company Limited, UK and its ultimate parent is Bay View International
Group S.A.
Attock Hospital (Private) Limited (AHL) was incorporated in Pakistan on August 24, 1998 as a private limited company
and commenced its operations fromSeptember 1, 1998. AHL is engaged in providing medical services. AHL is a wholly
owned subsidiary of Attock Refinery Limited. For the purpose of these financial statements, ARL and its above referred
wholly owned subsidiary AHL is referred to as 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, 1984shall prevail.
3. ADOPTIONOF NEWANDREVISEDSTANDARDSANDINTERPRETATIONS
3.1 Changes in accounting policies and disclosures
(i) IAS 1 (Revised), Presentation of Financial Statements - effective January 1, 2009. All 'non-owner changes in
equity' are required to be presented separately in a performance statement. Companies can choose either to
present one performance statement (statement of comprehensive income) or two statements (profit and loss
account and statement of comprehensive income). The Company has adopted two statements approach to
reflect these changes. The adoption of IAS 1 (Revised) does not materially affect the computations of the results
except some changes in presentation and disclosures.
(ii) IFRS 8, Operating Segments' - effective January 1, 2009. IFRS 8 replaces IAS 14, Segment Reporting'. The new
standard requires a management approach, under which segment information is presented on the same basis
as that used for internal reporting purposes. 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 decisions. The management has determined that the Company has a single
reportable segment as Board of Directors views the Company's operations as one reportable segment. The
adoption of this standard has therefore only resulted in some additional entity wide disclosure as given in note 34
to these financial statements.
3.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted
early by the Company.
IFRS 2 Share-based payment (Amendments) January 1, 2010
IFRS 5 Non-current assets held-for-sale and discontinued operations (Amendments) January 1, 2010
IFRS 8 Operating segments (Amendments) January 1, 2010
IAS 1 Presentation of financial statements (Revised) January 1, 2010
IAS 7 Statement of cash flows (Amendments) January 1, 2010
Attock Refinery Limited (the Company) was incorporated in Pakistan on November 8, 1978 as a private limited company
Notes to and Forming Part of the Financial Statements Consolidated
IAS 17 Leases (Amendments) January 1, 2010
IAS 24 Related Party Disclosures (Revised) January 1, 2011
IAS 32 Financial Instruments : Presentation (Amendments) February 1, 2010
IAS 36 Impairment of assets (Amendments) January 1, 2010
IAS 39 Financial Instruments : Recognition and measurement (Amendments) January 1, 2010
IFRIC 14 The limit on a defined benefit asset, minimum funding requirements
and their interaction (Amendments) January 1, 2011
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments July 1, 2010
The management anticipates that adoption of above standards, amendments and interpretations in future periods will
have no material impact on the Company's financial statements except for changes in presentation and disclosures.
4. SUMMARYOF SIGNIFICANT ACCOUNTINGPOLICIES
4.1 Basis of measurement
These financial statements have been prepared under the historical cost convention modified by revaluation of freehold
land referred to in note 4.8 and certain other modifications as required by approved accounting standards referred to in
the accounting policies given below.
4.2 Basis of consolidation
The consolidated financial statements include the financial statements of Attock Refinery Limited and its wholly owned
subsidiary, Attock Hospital (Private) Limited.
Subsidiaries are all entities over which the Company has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting rights or otherwise has power to elect and
appoint more than one half of its directors. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group and are de-consolidated fromthe date that control ceases.
The assets and liabilities of subsidiary company have been consolidated on a line by line basis and the carrying value of
investments held by the parent company is eliminated against the subsidiary shareholders' equity in the consolidated
financial statements.
Material intra-company balances and transactions have been eliminated for consolidated purposes.
4.3 Dividend appropriation
Dividend is recognised as a liability in the financial statements in the period in which it is declared.
4.4 Employee retirement benefits
The main features of the retirement benefit schemes operated by the Company for its employees are as follows :
(i) Defined benefits plans
The Company operates a pension plan for its management staff and a gratuity plan for its
non-management staff. Pension plan is invested through an approved trust fund while the gratuity plan is book
reserve plan. Contributions are made in accordance with actuarial recommendations. Actuarial valuations are
conducted through an independent actuary, annually using projected unit credit method. The obligation at the
balance sheet date is measured at the present value of the estimated future cash outflows.
Unrealised net gains and losses are amortised over the expected remaining service of current members.
(ii) Defined contribution plans
The company operates an approved contributory provident fund for all employees. Equal monthly contribution is
made both by the Company and the employee to the fund at the rate of 10%of basic salary.
4.5 Employee compensated absences
The company also provides for compensated absences for all employees in accordance with the rules of the Company.
4.6 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 be utilized.
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 in the case of items credited or
charged to equity in which case it is included in equity.
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 outflowof resources embodying economic benefit will be required to settle the obligation and a reliable
estimate of the amount can be made.
4.8 Property, plant and equipment
a) Cost
Operating fixed assets except freehold land are stated at cost less accumulated depreciation. Freehold land is
stated at revalued amount. Capital work-in-progress and stores held for capital expenditure are stated at cost.
Cost in relation to certain plant and machinery items include borrowing cost related to the financing of major
projects during construction phase.
b) Depreciation
Operating assets depreciation is calculated using the straight-line method to allocate their cost over their
estimated useful lives at the rates specified in note 12.
c) Repairs and maintenance
Maintenance and normal repairs, including minor alterations, are charged to income as and when incurred.
Renewals and improvements are capitalised and the assets so replaced, if any, are retired.
d) Gains and losses on deletion
Gains and losses on deletion of assets are included in income currently.
4.9 Impairment of non-financial assets
Assets that have an indefinite useful life, for example land, are not subject to amortisation or depreciation and are tested
annually for impairment. Assets that are subject to depreciation / amortisation are reviewed for impairment at each
balance sheet date or whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. Reversals of the impairment losses are restricted to the original cost of the asset. An impairment
loss or reversal of impairment loss is recognised in the profit and loss account.
4.10 Investments in associated companies
Investments in associated companies are accounted for using the equity method. Under this method 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 investments.
4.11 Stores, spares and loose tools
These are valued at moving average cost less allowance for obsolete and slowmoving items. Items in transit are stated
at invoice value plus other charges paid thereon.
4.12 Stock - in - trade
Stock-in-trade is valued at the lower of cost and net realisable value. Crude oil in transit is valued at cost comprising
invoice value. Cost in relation to crude oil is determined on the basis of annual average cost of purchases during the year
on the principles of import parity and in relation to semi-finished and finished products it represents the cost of crude oil
and refining charges consisting of direct expenses and appropriate production overheads. Direct expenses are arrived at
on the basis of average cost for the year per barrel of throughput. Production overheads, including depreciation, are
allocated to throughput proportionately on the basis of nameplate capacity.
Net realisable value in relation to finished product represents selling prices in the ordinary course of business less costs
necessarily to be incurred for its sale, as applicable, and in relation to crude oil represents replacement cost at the
balance sheet date.
4.13 Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefits will flowto the Company and the revenue
can be reliably measured. Revenue is recognised as follows :
(i) Revenue from sales is recognised on delivery of products ex-refinery to the customers with the exception that
Naphtha export sales are recognised on the basis of products shipped to customers.
(ii) The Company is operating under the import parity pricing formula, as modified from time to time, whereby it is
charged the cost of crude on 'import parity' basis and is allowed product prices equivalent to the 'import parity'
price, calculated under prescribed parameters.
Effective July 1, 2007, the Government made certain modifications in the prescribed parameters effectively
reducing the price of Kerosene Oil, Light Diesel Oil (LDO) and JP-8 in 2007 and 2008. The Government has further
modified the refineries pricing formula in August, 2008 whereby the 10%duty included in pricing of HSDhas been
cut to 7.5% and the motor gasoline pricing has been unilaterally revised by linking its price to Arab Gulf 95 RON
prices and calculating the price of 87 RON motor gasoline on a unitary method basis. This revision adversely
affect the pricing of HSDand motor gasoline which are Company's two major products.
Earlier in July, 2002, the Government had modified the pricing formula that was applicable to the Company
restricting the distribution of net profits after tax (if any) fromrefinery operations to 50% of paid-up capital as at
July 1, 2002 and diverting the surplus profits, if any, to a special reserve to offset any future loss or make
investment for expansion or upgradation of Refinery. Further the Government had abolished the minimumrate of
return of 10% which continues to be contested by the Company as it represented to the Government that the
already existing agreement for guaranteed return could be modified only with the mutual consent of both the
parties.
(iii) Income on investment 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 company is recognised in the profit and loss
account, and its share of post-acquisition movements in reserve is recognised in reserves. Dividend distribution
by the associated companies is adjusted against the carrying amount of the investment.
(iv) Income on bank deposits is recognised using the effective yield method.
4.14 Borrowing cost
Borrowing cost related to the financing of major projects during the construction phase is capitalised. All other
borrowing costs are expensed as incurred.
4.15 Foreign currency transactions and balances
Transactions in foreign currencies are converted into rupees at the rates of exchange ruling on the date of the
transaction. All monetary assets and liabilities denominated in foreign currencies at the year end are translated at
exchange rates prevailing at the balance sheet date. Exchange differences are dealt with through the profit and loss
account.
4.16 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 when the obligation specified in the contract is discharged, cancelled or expired. All financial assets and
liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively. These
are subsequently measured at fair value, amortised cost or cost, as the case may be.
4.17 Financial Assets
The Company classifies its financial assets in the following categories : held-to-maturity investments, loans and
receivables, available for sale investments and investments at fair value through profit or loss. 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 recognized on the trade-date
the date on which the company commits to purchase or sell the asset.
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 at amortised cost less impairment losses.
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.
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 12months of the balance sheet date.
Available-for-sale investments are initially recognised at cost and carried at fair value at the 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
4.17.1 Held-to-maturity investments
4.17.2 Loans and receivables
4.17.3 Available-for-sale investments
securities), the Company establishes fair value by using valuation techniques. Adjustment arising from
remeasurement of investment to fair value is recorded in equity and taken to income on disposal of
investment or when the investment is determined to be impaired.
classified as investments at fair value through profit or loss are initially measured at cost Investments
being fair value of consideration given. At subsequent dates these investments are measured at fair
value with any resulting gains or losses recognised directly in the profit and loss account. The fair value
of such investments is determined on the basis of prevailing market prices.
4.18 Trade and other payables
Liabilities for trade and other amounts payable including amounts payable to related parties are carried at cost which is
the fair value of the consideration to be paid in the future for goods and services received.
4.19 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 the liability simultaneously.
4.20 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 terminvestments.
4.21 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.
5. CRITICAL ACCOUNTINGESTIMATESANDJUDGMENTS
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. The areas 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 14
(ii) Revaluation surplus on freehold land - note 12.2
(iii) Estimated useful life of property, plant and equipment - note 12
(iv) Provision for taxation - note 31
(v) Provision for employee retirement benefits - note 29
4.17.4 Investment at fair value through profit or loss
7. RESERVES AND SURPLUS
Capital reserve
Liabilities taken over from The Attock Oil Company Limited
no longer required 4,800 4,800
Capital gain on sale of building 654 654
Insurance and other claims realised relating to
pre-incorporation period 494 494
Donation received for purchase of hospital equipment 4,000 4,000
Bonus share issued by associated companies 54,320 54,320
64,268 64,268
Special reserve for expansion / modernisation - note 7.1
Additional revenue under processing fee formula related
to 1990-91 and 1991-92 32,929 32,929
Surplus profits under the import parity pricing formula 4,159,405 4,635,219
Surplus profits of associates under the import parity pricing formula 339,369 517,497
4,531,703 5,185,645
Maintenance reserve - note 7.2 127,057 46,680
Revenue reserve
Investment reserve - note 7.3 1,529,799 1,566,330
General reserve 1,984,130 1,184,130
Unappropriated profit 4,841,525 3,309,524
8,355,454 6,059,984
13,078,482 11,356,577
6. SHARE CAPITAL
Authorised
150,000,000 (2009 : 100,000,000) ordinary shares of Rs 10 each 1,500,000 1,000,000
Issued, subscribed and paid up
Shares issued for cash
Shares issued as fully paid bonus shares
The parent Company Attock Oil Company Limited held 48,039,224 (2009 : 48,039,224) ordinary shares and the associated
company Attock PetroleumLimited held 1,332,000 (2009: 1,332,000 ) ordinary shares at the year end.
2010 2009
Rs 000 Rs 000
2010 2009
Rs 000 Rs 000
10. TRADE AND OTHER PAYABLES
Creditors - note 10.1 28,598,560 22,996,573
Due to The Attock Oil Company Limited - Holding Company 151,574 84,968
Due to associated companies
Pakistan Oilfields Limited 1,163,018 836,481
Attock Cement Pakistan Limited - 21
Accrued liabilities and provisions - note 10.1 3,182,662 2,834,903
Due to the Government under pricing formula 8,626,856 2,527,290
Advance payments from customers 5,723 30,298
Sales tax payable 1,274,260 441,691
Workers' Welfare Fund 258,933 234,750
Workers' Profit Participation Fund - note 10.2 28,208 94,754
General staff provident fund - 1,357
Staff provident fund - 1,912
Deposits from customers adjustable against freight
and Government levies payable on their behalf 376 376
Payable to statutory authorities in respect of petroleum
development levy and excise duty 866,417 175,813
Security deposits 48,551 49,086
Unclaimed dividends 3,604 3,774
44,210,646 30,317,091
10.1 These balances include amounts retained from payments to crude suppliers for purchase of local crude as per the directives
of the Ministry of Petroleum and Natural Resources (the Ministry). Further, as per directive of the Ministry such withheld
amounts are to be retained in designated 90 days interest bearing accounts. The amounts withheld alongwith accumulated
profits amounted to Rs 3,177.551 million (2009: Rs 4,368.984 million).
7.1 Represents amounts retained as per stipulations of the Government under the pricing formula and is available only for
offsetting any future loss or making investment in expansion or upgradation of the refinery. Transfer to / from special reserve is
recognised at each quarter end and is reviewed for adjustment based on profit / loss on an annual basis. The company has
incurred capital expenditure of Rs 3,878 million on upgradation and expansion projects from July 1, 1997 to June 30, 2010
(July 1, 1997 to June 30, 2009 : Rs 3,855 million).
7.2 Represents amount retained by Attock Gen Limited to pay for major maintenance expenses in terms of the Power Purchase
Agreement.
7.3 The Company has set aside gain on sale of investment as investment reserve to meet any future losses / impairment on investments.
8. SURPLUS ON REVALUATION OF FREEHOLD LAND
This represents surplus over book value resulting fromrevaluation of freehold land as referred to in note 12.2 and is not available for
distribution to shareholders.
9. SHORT TERM FINANCE
The Company has negotiated running finance facilities with various banks and accepted facility offer letters to the extent of
Rs 3 billion, which were unutilised at the year end. As and when required, these facilities shall be secured by joint hypothecation by
way of 1st registered charges over the Company's current assets.
2010 2009
Rs 000 Rs 000
10.2 Workers' Profit Participation Fund
Balance at the beginning of the year 94,754 181,441
Add : Interest on funds utilised in the Company's business 1,344 7,009
96,098 188,450
Less : Amount paid to the Fund 95,040 188,156
1,058 294
Add : Amount allocated for the year - notes 28 and 32 27,150 94,460
28,208 94,754
2010 2009
Rs 000 Rs 000
11. CONTINGENCIES AND COMMITMENTS
Contingencies :
(i) Due to huge circular debt in the oil industry, certain payments due from/ to the oil
marketing companies (OMCs) and crude oil suppliers respectively have not been
made on their due dates of payment. As a result the Company and associated
company have raised claims on OMCs in respect of mark-up on delayed
payments as well as received counter claims from some crude oil suppliers
which have not been recognized in the financial statements as these have not
been acknowledged as debt by either parties.
(ii) Guarantees issued by banks on behalf of the Company 394 350
(iii) Claims for land compensation contested by the Company 1,300 1,300
(iv) Price adjustment related to crude oil purchases as referred to in not 24.1, the
amount of which can not be presently quantified
(v) Companys share in guarantees and indemnity bonds issued by associated
1,210,224 1,226,832 companies
(vi) Companys share in tax contingency of an associated company related to
proration of expenses against local and export sales for prior years, as per
show cause notices of tax department. 195,785 -
Commitments outstanding :
(i) Capital expenditure 16,559 37,876
(ii) Letters of credit for purchase of store items 238,971 243,043
Rs 000
As at July 1, 2008
Cost 1,927,250 101,649 3,993,891 48,263 59,367 73,953 6,204,373
Accumulated depreciation - (38,120) (3,565,484) (42,149) (36,313) (59,342) (3,741,408)
Net book value 1,927,250 63,529 428,407 6,114 23,054 14,611 2,462,965
Additions 50,310 9,618 192,951 4,510 3,099 4,875 265,363
Disposals
Cost (75,063) (6,250) (389) (4,528) (86,230)
Depreciation 53 6,247 243 4,107 10,650
(75,010) (3) (146) (421) (75,580)
As at July 1, 2009
Cost 1,977,560 111,267 4,111,779 46,523 62,077 74,300 6,383,506
Net book value 1,977,560 67,403 440,677 7,086 20,691 11,399 2,524,816
Additions 7,456 145,079 2,689 3,435 5,770 164,429
Disposals
Cost (342) (4,122) (4,464)
Depreciation 205 4,122 4,327
(137) - (137)
As at June 30, 2010
Cost 1,977,560 118,723 4,256,858 49,212 65,170 75,948 6,543,471
Net book value 1,977,560 69,356 480,456 6,674 19,913 11,224 2,565,183
Annual rate of
Depreciation (%) 5 10 20 10 20
Freehold
land
(note 12.2)
Buildings
on freehold
land
Plant and
machinery
Computer
equipment
Furniture,
fixtures and
equipment Vehicles Total
12. OPERATING ASSETS
12.3 The depreciation charge for the year has been allocated as follows :
Cost of sales 112,436 114,446
Administration expenses 9,523 11,417
Distribution cost 302 347
Desalter operating cost 633 633
Depreciation of Subsidiary company 1,031 1,089
123,925 127,932
13. CAPITAL WORK-IN-PROGRESS
Opening balance as at July 1, 2009 336,072 441,326
Add : Additions during the year 60,305 90,736
396,377 532,062
Less : Capitalization during the year 135,469 195,990
Closing balance as at June 30, 2010 260,908 336,072
The details are as under :
Civil works 242 242
Plant and machinery 232,246 307,410
Pipeline project 28,420 28,420
260,908 336,072
14. INVESTMENT IN ASSOCIATED COMPANIES
Balance at beginning of the year 15,299,218 14,842,438
Purchase of shares of associated companies 20,795 108,541
Share of profit after tax of associated companies 2,346,304 1,227,431
Dividend received from associated companies (714,557) (735,835)
Impairment loss on investment (36,531) (143,357)
Balance at end of the year 16,915,229 15,299,218
Assets disposed off to executives :
510 51 Company policy Mr. Haider Abbas Hamdani Vehicles
562 56 Company policy Mr. Malik Muhammad Yousaf
532 53 Company policy Mr. Irshad Ramay
532 53 Company policy Mr. Khaleeq-uz-Zaman
12.2 Value of freehold land includes revaluation surplus of Rs 1,923.339 million arising from revaluation of freehold land in January
2001 carried out by an independent valuer. Valuation was made on the basis of market value. The original cost of the land as at
June 30, 2010 is Rs 54.221 million.
Fixed assets disposed off during the year are as follows : 12.1
Original
cost
Book
value
Sale
proceeds
Mode of
disposal
Particulars of
purchaser
2010 2009
Rs 000 Rs 000
Rs 000
14.1 LONG TERM INVESTMENTS
Quoted
National Refinery Limited (NRL) - note 14.2 25 9,930,847 25 9,396,071
shares including 3,331,940 (2009 : 3,331,940)
bonus shares of Rs 10 each
(June 30, 2009 : Rs 4,399 million)
Attock Petroleum Limited (APL) - note 14.3 21.88 5,453,599 21.88 4,986,521
shares including 2,100,016 (2009 : 2,100,016)
bonus shares of Rs 10 each
(June 30, 2009 : Rs 4,013 million)
Unquoted
Attock Gen Limited (AGL) - note 14.4 30 1,523,679 30 910,541
shares of Rs 100 each
Attock Information Technology Services
(Private) Limited (AITSL) - note 14.5 & 14.6 10 7,104 10 6,085
(2009 fullypaid 450,000 : 450,000) shares of Rs 10 each ordinary
16,915,229 15,299,218
All associated and subsidiary companies are incorporated in Pakistan.
14.2 Investment in NRL
As at July 1, 2009 9,396,071 9,556,004
Dividend received (249,896) (399,833)
Share in profit of NRL 821,203 383,257
Impairment loss adjustment to fair value (36,531) (143,357)
As at June 30, 2010 9,930,847 9,396,071
The carrying value of investment in National Refinery Limited at June 30, 2010 is net of impairment loss of Rs 1,350,299 thousand
(2009 : Rs 1,313,768 thousand). The carrying value is based on 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 gross profit margin of 3.91% (2009 : 5.38%),
terminal growth rate of 3%(2009: 3%) and capital asset pricing model based discount rate of 17.90%(2009: 18.05%).
2009
% age
Rs 000 holding Rs 000
2010
% age
holding
Rs 000 Rs 000
2009 2010
15. LONG TERM LOANS AND DEPOSITS
Loans to employees - considered good - note 15.1 23,507 28,546
Less: Amounts due within next twelve months shown
under current assets - note 20 (14,530) (17,057)
8,977 11,489
Security deposits 948 948
9,925 12,437
15.1 Loans to employees are for miscellaneous purposes which are recoverable in 24, 36, and 60 equal monthly installments depending
on case to case basis and are secured by a charge on the asset purchased and / or amount due to the employee against provident fund
or a third party guarantee. These are interest free loans. These include an amount of Rs 3.973 million (2009 : Rs 5.218 million)
receivable from Executives of the Company and does not include any amount receivable from Directors or Chief Executive. The
maximum amount due from executives of the Company at the end of any month during the year was Rs 5.779 million (2009 :
Rs 6.913 million).
14.3 Investment in APL
As at July 1, 2009 4,986,521 4,627,293
Purchase of shares during the year - 24,541
Dividend received (315,002) (336,002)
Share in profit of APL 782,080 670,689
As at June 30, 2010 5,453,599 4,986,521
Based on a valuation analysis carried out by the Company, the recoverable amount of investment in Attock PetroleumLimited 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 flowbased valuation methodology which assumes gross profit margin of 4.58%(2009 : 5.16%), terminal
growth rate of 3%(2009: 4.5%) and capital asset pricing model based discount rate of 17.90%(2009: 18.05%).
Rs 000 Rs 000
2010 2009
Rs 000 Rs 000
2009 2010
Rs 000 Rs 000
2009 2010
14.4 Investment in AGL
As at July 1, 2009 910,541 653,754
Right shares acquired during the year 20,795 84,000
Dividend received (149,659) -
Share in profit of AGL 742,002 172,787
As at June 30, 2010 1,523,679 910,541
14.5 Investment in AITSL
As at July 1, 2009 6,085 5,387
Share in profit of AITSL 1,019 698
As at June 30, 2010 7,104 6,085
14.6 Although the company has less than 20 percent shareholding in Attock Information Technology Services (Private) Limited, this
company has been treated as associates since the Company has representation on its Board of Directors.
15.2 Reconciliation of carrying amount of loans to executives :
Opening balance as on July 1 5,218 4,366
Add: Disbursement during the year 4,757 5,753
9,975 10,119
Less: Repayments during the year 6,002 4,901
Closing balance as at June 30 3,973 5,218
16. DEFERRED TAXATION
Debit balances arising on
Difference between accounting and tax depreciation 83,857 118,506
Provisions for obsolete stores, doubtful debts and gratuity 77,838 66,036
161,695 184,542
17. STORES, SPARES AND LOOSE TOOLS
Stores (including items in transit
Rs 63.15 million ; 2009 : Rs 57.27 million) 344,398 336,212
Spares 290,989 279,955
Loose tools 429 509
635,816 616,676
Less : Provision for slow moving items - note 17.1 54,772 43,472
581,044 573,204
17.1 Provision for slow moving items
Opening balance 43,472 37,300
Add : Provision for the year 11,300 10,600
54,772 47,900
Less : Stores and spares written off - 4,428
54,772 43,472
18. STOCK - IN - TRADE
Crude oil - in stock 2,848,225 1,222,627
- in transit 173,796 219,165
3,022,021 1,441,792
Semi-finished products 483,694 377,749
Finished products - note 18.1 3,673,137 3,049,435
Medical supplies 695 752
7,179,547 4,869,728
2010 2009
Rs 000 Rs 000
20. LOANS, ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
Loans and advances - considered good
Current portion of long term loans to employees - note 15 14,530 17,057
Advances to suppliers 31,970 35,681
Advances to employees 3,503 2,619
50,003 55,357
Deposits and prepayments
Trade deposits 286 286
Short term prepayments 31,713 33,950
31,999 34,236
Other receivables
Due from associated companies
National Refinery Limited 24 2,478
Attock Leisure and Management Associates (Pvt) Limited 28 594
Attock Gen Limited 745 22,319
National Cleaner Production Centre Foundation 2,230 2,053
Due from Staff Pension Fund 19,935 28,820
Income accrued on bank deposits 3,989 80,494
Crude oil freight adjustable through inland freight equalisation margin 3,615 67,276
Amount adjustable against insurance claim - 75,000
Income tax refundable 8,485 6,621
Other receivables 12,217 2,908
52,599 293,579
134,601 383,172
21. CASHANDBANKBALANCES
Cash in hand 979 465
With banks :
Current accounts 5,608 28,626
Deposit accounts 2,849,671 2,000,000
Savings accounts (including US $ 379,677 ; 2009 : US $ 363,249) 1,115,480 4,774,904
3,971,738 6,803,995
18.1 Finished products include stocks carried at net realisable value of Rs 3,184 million (2009 : Rs 910 million). Adjustments amounting to
Rs 357 million (2009 : Rs 88 million) have been made to closing inventory to write down stocks of finished products to their net
realisable value.
19. TRADE DEBTS
All debtors are unsecured and considered good. These include amount receivable from associated companies Attock Petroleum
Limited Rs 6,723 million (2009: Rs 3,902 million) and Pakistan Oilfields Limited Rs 5million (2009: Rs 8million).
2010 2009
Rs 000 Rs 000
22. SALES
Gross sales (excluding Naphtha export sales) 101,666,796 92,766,859
Naphtha export sales 10,321,605 9,131,088
Less : Sale proceeds of Naphtha exports
related to third parties 1,130,996 1,058,823
9,190,609 8,072,265
110,857,405 100,839,124
Less : Duties, taxes and levies - note 22.1 22,673,379 24,292,676
88,184,026 76,546,448
22.1 Duties, taxes and levies
Sales tax 13,216,039 11,675,167
Petroleum Development Levy 9,445,993 12,600,264
Custom duties and other levies 11,347 17,245
22,673,379 24,292,676
23. REIMBURSEMENT DUE FROM THE GOVERNMENT
UNDER IMPORT PARITY PRICING FORMULA
This represents amount due from the Government of Pakistan on account of shortfall in ex-refinery prices of certain petroleum
products under the import parity pricing formula.
21.1 Balances with banks include Rs 2,849.658 million (2009 : Rs 2,000.000 million) in respect of deposits placed in a 90-day interest-
bearing account consequent to directives of the Ministry of Petroleum & Natural Resources on account of amounts withheld
alongwith related interest earned thereon, as referred to in note 10.1.
21.2 Bank deposits of Rs 0.394 million (2009 : Rs 0.350 million) were under lien with bank against a bank guarantee issued on behalf of the
Company.
21.3 Balances with banks include Rs 48.331 million (2009: Rs 48.866 million) in respect of security deposits received.
21.4 Balances with banks earned weighted average interest / mark-up @11.28%(2009: @14.04%) per annum.
2010 2009
Rs 000 Rs 000
24. COST OF SALES
Opening stock of semi-finished products 377,749 436,792
Crude oil consumed - note 24.1 86,477,494 72,606,265
Transportation and handling charges 1,229,486 1,076,227
Professional charges for technical services 5,562 4,350
Insurance 106,837 81,463
Repairs and maintenance (including stores and spares
consumed Rs 44.741 million ; 2009 : Rs 75.980 million) 206,896 163,067
Staff transport and travelling 8,393 7,679
Cost of receptacles 14,580 15,665
Research and development 1,749 165
89,801,083 75,639,710
Closing stock of semi-finished products (483,694) (377,749)
89,317,389 75,261,961
Opening stock of finished products 3,049,434 3,129,569
Closing stock of finished products (3,673,137) (3,049,434)
(623,703) 80,135
88,693,686 75,342,096
24.1 Crude oil consumed
Stock at the beginning of the year 1,441,793 1,278,493
Purchases 88,057,722 72,769,565
89,499,515 74,048,058
Stock at the end of the year (3,022,021) (1,441,793)
86,477,494 72,606,265
Certain crude purchases have been recorded based on provisional prices notified by the Government and may require adjustment in
subsequent periods.
24.2 Salaries, wages and other benefits under cost of sales, administration expenses, distribution cost and income from crude desalter
operations include the Company' s contribution to the Provident Fund amounting to Rs 15.311 million
(2009: Rs 14.708 million).
2010 2009
Rs 000 Rs 000
25. ADMINISTRATION EXPENSES
Staff transport, travelling and entertainment 12,723 9,956
Electricity, gas and water 10,652 6,060
Auditors remuneration - note 25.1 1,746 1,639
Legal and professional charges 6,214 7,319
Subscription 7,028 5,218
Publicity 3,509 3,473
Scholarship scheme 1,694 1,748
Insurance 987 1,289
Donations * 308 2,742
Training expenses 829 501
Other expenses - 99
245,291 222,822
* No director or his spouse had any interest in the donee institutions.
25.1 Auditor's remuneration
Annual audit 1,000 750
Review of half yearly accounts, audit of consolidated
accounts, staff funds and special certifications 602 454
Tax services - 300
Out of pocket expenses 144 135
1,746 1,639
26. DISTRIBUTION COST
Staff transport, travelling and entertainment 553 576
Telephone 193 161
Electricity, gas, fuel and water 3,550 2,020
Printing and stationery 114 101
Repairs and maintenance including packing and other stores consumed 2,686 1,932
Rent, rates and taxes 390 464
Legal and professional charges 320 347
24,834 20,809
2010 2009
Rs 000 Rs 000
27. FINANCE COST
Exchange loss 307,306 1,464,423
Interest on Workers' Profit Participation Fund - note 10.2 1,344 7,009
Bank and other charges 147 93
308,797 1,471,525
28. OTHER CHARGES
Employees' retirement benefits
Staff gratuity benefits 29,952 31,120
Staff pension benefits 24,584 1,278
Less : Contribution to subsidiary and associated companies (2,305) (2,137)
22,279 (859)
Contribution to employees old age benefits scheme 2,780 2,723
55,011 32,984
Provision for slow moving stores 11,300 10,600
Workers' Profit Participation Fund - 57,668
76,745 124,319
2010 2009
Rs 000 Rs 000
a) The amounts recognised in the profit and loss account :
Interest on obligation 47,384 41,710 19,768 19,721
Expected return on plan assets (45,385) (51,074) - -
Net actuarial losses / (gains) recognised during the year 5,825 (3,820) 5,645 6,719
24,584 1,278 29,952 31,120
b) The amounts recognised in the balance sheet :
Fair value of plan assets 391,481 340,186 - -
Present value of defined benefit obligations (476,121) (387,196) (201,210) (163,030)
(84,640) (47,010) (201,210) (163,030)
Unrecognised actuarial (gains) / losses 104,575 75,830 61,188 42,900
Net asset / (liability) 19,935 28,820 (140,022) (120,130)
c) Movement in the present value of defined benefit obligation :
Present value of defined benefit obligation as at July 1 387,196 321,136 163,030 152,656
Interest cost 47,384 41,710 19,769 19,721
Benefits paid (16,751) (13,105) (10,061) (7,880)
Actuarial (gains) / losses 41,532 22,993 23,933 (6,147)
Present value of defined benefit obligation as at June 30 476,121 387,196 201,210 163,030
d) Changes in the fair value of plan assets :
Fair value of plan assets as at July 1 340,186 385,053 - -
Expected return 45,385 51,074 - -
Benefits paid (16,751) (13,105) - -
Contributions by employer 15,700 14,693 - -
Contributions by associated company - (358) - -
Actuarial gains / (losses) 6,961 (97,171) - -
Fair value of plan assets as at June 30 391,481 340,186 - -
Actual return on plan assets 52,826 (46,577) - -
The Company expects to contribute Rs 17.1 million to its defined benefit pension plans during 2010-2011.
29. EMPLOYEES' DEFINED BENEFIT PLANS
The latest actuarial valuation of the employees' defined benefit plans was conducted at June 30, 2010 using the projected unit credit
method. Details of the defined benefit plans are :
Rs 000 Rs 000
2010 2009 2010 2009
Funded defined
benefit
pension plan
Unfunded defined
benefit
gratuity plan
g) Comparison for five years :
Defined Benefit Pension Plan
Fair value of plan assets 391,481 340,186 385,053 359,485 280,495
Surplus / (deficit) (84,640) (47,010) 63,917 68,150 17,441
Experience adjustments on plan liabilities 41,532 22,993 (4,263) (609) 23,265
Experience adjustments on plan assets (6,961) 97,171 14,913 (48,803) 29,017
Defined Benefit Gratuity Plan
Fair value of plan assets - - - - -
Deficit (201,210) (163,030) (152,656) (121,894) (96,058)
Experience adjustments on plan liabilities (23,933) (6,147) 23,729 17,982 (1,087)
Experience adjustments on plan assets - - - - -
e) The major categories of plan assets :
Investment in equities 95,878 88,231 - -
Investment in mixed funds 63,444 60,845 - -
Cash 232,159 191,110 - -
391,481 340,186 - -
f) Significant actuarial assumptions at the balance sheet date :
Discount rate 13.00% 12.50% - -
Expected return on plan assets 13.00% 12.50% - -
Future salary increases 10.85% 10.36% - -
Future pension increases 7.62% 7.14% - -
Rs 000 Rs 000
Rs 000
2008 2007 2006 2010 2009
2010 2009 2010 2009
Funded defined
benefit
pension plan
Unfunded defined
benefit
gratuity plan
30. OTHER INCOME
Income from financial assets
Income on bank deposits 512,644 891,045
Interest on delayed payments 292,589 -
Exchange gain 2,557 4,761
807,790 895,806
Income from non-financial assets
Income from crude decanting 15,416 14,458
Income from crude desalter operations - note 30.1 954 13,168
Insurance agency commission 4,336 7,624
Rental income 34,340 19,375
Sale of scrap 7,804 15,658
Profit on disposal of fixed assets 4,161 1,001
Insurance claim * 23,907 -
Calibration charges 2,956 3,431
Handling and service charges 70,842 14,882
Penalties from carriage contractors 3,748 1,694
Miscellaneous 7,081 6,603
175,545 97,894
983,335 993,700
* Represents differential value of claim settled on replacement value basis.
30.1 Income from crude desalter operations
Income 54,945 54,245
Less : Operating costs
Chemical consumed 8,543 8,380
53,991 41,077
954 13,168
31. PROVISION FOR TAXATION
Current - for the year 270,900 631,700
Deferred - for the year 22,922 34,913
293,822 666,613
2010 2009
Rs 000 Rs 000
31.1 Relationship between tax expense and accounting profit
Accounting profit (181,992) 1,072,629
Tax @ 35% (63,697) 375,420
Income chargeable to tax at special rate 357,519 291,193
293,822 666,613
32. SHARE IN PROFIT OF ASSOCIATED COMPANIES
National Refinery Limited 821,203 383,257
Less : Unrealised profit from intra-group transactions
included in closing stock in trade 2,257 75
782,080 670,689
Attock Gen Limited 742,002 172,787
Attock Information Technology Services (Private) Limited 1,019 698
2,346,304 1,227,431
Less : Related charges
Workers' Profit Participation Fund - note 10.2 27,150 36,792
Taxation 71,456 73,584
112,354 125,093
2,233,950 1,102,338
Profit of Attock Hospital (Private) Limited,
a wholly owned subsidiary - note 32.1 300 247
2,234,250 1,102,585
2010 2009
Rs 000 Rs 000
32.1 Profit from Attock Hospital Private Ltd. (AHL)
Revenue * 46,898 44,339
Less : Operating expenses
Salaries, wages and other benefits (including employees
retirement benefits of Rs 1,302 thousand ; 2009 : Rs 1,317 thousand) 29,418 28,400
Medical consultancy 4,240 4,036
Medical supplies 4,249 4,645
Dietary cost 978 796
Sanitation and general services 1,928 2,099
Utilities and other expenses 4,660 2,918
Audit fee 83 83
46,587 44,066
Operating profit 311 273
Other income 150 107
Profit before taxation 461 380
Provision for taxation - current 236 -
- deferred (75) 133
161 133
Profit after taxation 300 247
* The revenue includes amount billed by AHL to ARL amounting to Rs 28,169 thousand (2009 : Rs 27,393 thousand) and
operating expenses include amount billed by ARL to AHL amounting to Rs 28,517 thousand (2009 : Rs 26,646 thousand)
which have not been eliminated from revenue and expenses. It is considered that this gives a fairer view of the operating
results of the Company.
2010 2009
Rs 000 Rs 000
Assets
National Refinery Limited 51,639,119 42,344,611
Attock Petroleum Limited 21,442,652 18,272,432
Attock Gen Limited 20,473,774 15,437,050
93,632,990 76,120,057
Liabilities
59,608,462 48,589,058
Revenue
207,811,233 174,643,646
Profit
Attock Gen Limited 2,473,341 575,955
9,362,656 5,198,386
The Company's share in shareholders' equity
National Refinery Limited 25.00% 25.00%
Attock Petroleum Limited 21.88% 21.88%
Attock Gen Limited 30.00% 30.00%
Attock Information Technology Services (Private) Limited 10.00% 10.00%
34. OPERATING SEGMENTS
The financial statements have been prepared on the basis of a single reportable segment. Revenue from external customers for
products of the Company are as follows :
High Speed Diesel 36,404,230 34,711,605
Jet Petroleum 11,012,404 11,389,397
Motor Gasoline 27,599,380 24,347,475
Furnace Fuel Oil 17,972,145 15,287,409
Naphtha 9,190,609 8,072,265
Others 8,678,637 7,030,973
110,857,405 100,839,124
Less : Duties, taxes and levies 22,673,379 24,292,676
88,184,026 76,546,448
Revenue from four major customers of the Company constitute 90% of the total revenue during the year ended June 30, 2010
(June 30, 2009 : 90%).
33. SUMMARISED FINANCIAL STATEMENTS OF THE ASSOCIATED COMPANIES
The aggregate assets, liabilities, revenue and profit of associated companies based on their audited financial statement are as
follows :
2010 2009
Rs 000 Rs 000
2010 2009
Rs 000 Rs 000
Managerial remuneration / honorium 5,035 4,567 344 1,219 42,772 39,302
Company's contribution to
provident and pension funds 1,070 942 - - 8,998 8,195
Housing and utilities 3,000 2,696 - - 31,135 28,564
Leave passage 519 420 - - 5,048 3,520
9,624 8,625 344 1,219 87,953 79,581
Less : Amount proportionately charged to
an associated company 2,806 - - - - -
6,818 8,625 344 1,219 87,953 79,581
No. of person(s) 1 1 2 3 32 32
36.1 In addition, the Chief Executive and 21 (2009 : 22) executives were provided with limited use of the Company's cars. The Chief
Executive and all executives were provided with medical facilities and 11 (2009 : 7) executives were provided with unfurnished
accommodation in Company owned bungalows. Limited residential telephone facility was also provided to the Chief Executive and 17
(2009: 14) executives.
36.2 In addition, four non-executive directors, chief executive officer and three alternate directors of the Company were paid meeting fee
aggregating Rs 3.605 million (2009: Rs Nil) based on actual attendance.
35. RELATED PARTY TRANSACTIONS
Attock Oil Company Limited holds 56.32% (2009 : 56.32%) shares of the Company at the year end. Therefore, all subsidiaries and
associated undertakings of Attock Oil Company Limited are related parties of the Company. The related parties also comprise of
directors, major shareholders, key management personnel, entities over which the directors are able to exercise significant influence
on financial and operating policy decisions and employees' funds. Amount due fromand due to these undertakings are shown under
receivables and payables. The remuneration of Chief Executive, directors and executives is disclosed in note 36 to the financial
statements.
Sale of goods 33,849,498 25,803,489
33,997,516 25,881,680
Purchase of goods 8,265,490 6,689,896
8,630,163 7,053,372
Interest income on delayed payments 292,589 -
Holding company
Sale of services 1,372 -
Purchase of goods 677,819 428,679
683,594 433,336
Contribution to employees' pension and provident funds 31,011 29,401
36. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
The aggregate amounts charged in the accounts for remuneration, including benefits and perquisites, were as follows :
2010 2009
Rs 000 Rs 000
Rs 000
2010 2009 2010 2009 2010 2009
Chief Executive Directors Executives
Financial liabilities :
Trade and other payables 44,204,923 30,286,793
Staff gratuity 140,022 120,130
44,344,945 30,406,923
37.2 Credit quality of financial assets
The credit quality of 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 ratings
determined based on their historical information for any defaults in meeting obligations.
Trade debts
A 1+ Counterparties with external credit rating 21,157,877 10,153,763
Counterparties without external credit rating
Due from associated companies 6,727,590 3,910,073
Others * 2,545,125 1,446,344
30,430,592 15,510,180
Loans, advances, deposits and other receivables
Counterparties without external credit rating 72,358 325,978
Bank Balances
A 1+ Counterparties with external credit rating 3,969,896 6,447,576
A 1 502 344,855
A 2 46 44
A 3 315 11,056
3,970,759 6,803,531
* These balances represent receivable from oil marketing companies and defence agencies.
Financial assets :
Trade debts 30,430,592 15,510,180
Loans, advances, deposits and other receivables 62,433 313,541
Cash and bank balances
Foreign currency - US $ 32,654 29,684
Local currency 3,939,084 6,774,311
Long term loans and deposits 9,925 12,437
34,474,688 22,640,153
37. FINANCIAL INSTRUMENTS
37.1 Financial assets and liabilities
2010 2009
Rs 000 Rs 000
Loans and receivables
Other financial liabilities
2010 2009
Rs 000 Rs 000
2009
Rs 000
Rating
2010
Rs 000
Balance Balance
0 to 6 months 13,064,745 12,075,267
6 to 12 months 7,332,114 14,589
Above 12 months 4,000,301 75,275
24,397,160 12,165,131
b) Liquidity risk
Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The Company follows an effective cash
management and planning policy to ensure availability of funds and to take appropriate measures for newrequirements.
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 fromfuture commercial transactions or receivables
and payables that exist due to transactions in foreign currencies. Financial assets include Rs 845 million (2009 :
Rs 36million) and financial liabilities include Rs 9,322 million (2009 : Rs 6,390 million) which were subject to
currency risk.
At June 30, 2010, if the currency had weakened / strengthened by 10%against US dollar with all other variables held
constant, profit after tax for the year would have been Rs 551 million (2009: Rs 413 million) lower / higher.
(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.
Financial assets and liabilities include balances of Rs 3,965 million (2009 : Rs 8,344 million) and
Rs 3,318 million (2009: Rs 4,489 million) respectively, which are subject to interest rate risk.
At June 30, 2010, if interest rates had been 1%higher / lower with all other variables held constant, profit after tax for
the year would have been Rs 4million (2009: Rs 15million) higher / lower.
(iii) 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 frominterest 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 in market prices.
37.3 Financial risk management
The Companys 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 Companys overall risk management policy focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the Companys financial performance.
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 placements with banks. The sales are essentially to oil
marketing companies and reputable foreign customers. The Company's placements are with banks having satisfactory credit
rating. Due to the high credit worthiness of counter parties the credit risk is considered minimal.
At June 30, 2010, trade debts of Rs 24,397,160 thousand (2009 : Rs 12,165,131 thousand) were past due but not impaired.
The ageing analysis of these trade receivables is as follows :
37.3.1 Financial risk factors
2010 2009
Rs 000 Rs 000
38. EARNINGS / (LOSS) PER SHARE - BASIC AND DILUTED
Profit / (loss) after taxation from refinery operations (475,814) 406,016
Profit after taxation from non-refinery operations 2,197,719 959,228
1,721,905 1,365,244
Number of fully paid weighted average ordinary shares ('000) 85,293 85,293
Earnings / (loss) per share - Basic and diluted
20.19 16.01
39. GENERAL
39.1 Capacity and production
Against the designed annual refining capacity of 14.700 million (2009 : 14.700 million) US barrels the actual throughput during the
year was 13.493 million (2009 : 13.126 million) US barrels. The actual throughput was lower than the annual refining capacity on
account of lowproduct upliftments in certain periods of 2009-2010 and reductions in throughput to minimize losses during adverse
periods of refinery margins.
39.2 Number of employees
Total number of employees at the end of the year were 714 (2009 : 730).
39.3 Date of authorisation
These financial statements have been authorised for issue by the Board of Directors of the Company on September 29, 2010.
37.3.2 Capital risk management
The Company is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business. The Board of Directors monitors the return on capital and the level of dividend to ordinary
shareholders. There was no change to the Company's approach to the capital management during the year and the company
is not subject to externally imposed capital requirement.
2010 2009
Rs 000 Rs 000

Attock

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Attock

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We have audited the annexed balance sheet of Attock Refinery Limited as at June 30, 2010 and the related

profit and loss

for the year ended June 30, 2010

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