| Mari Gas Co Ltd - 2006 |
|
BALANCE SHEET AS AT HUNE 30, 2006
==============================================================================================
June 30, June 30,
2006 2005
Note (Rupees in thousand)
==============================================================================================
SHARE CAPITALAND RESERVES
Authorized capital
250,000,000 ordinary shares of Rs 10 each 2,500,000 2,500,000
Issued, subscribed and paid up capital 3 367,500 367,50
General
Reserve 4 2,046 2,046
Undistributed percentage return reserve 5 275,261 207,749
Profit and loss account 6 2,037,839 2,029,955
2,682,646 2,607,250
LONG TERM FINANCING, PROVISIONS
AND DEFERREDLIABILITIES
Long term financing - secured 7 112,100 336,300
Provision for decommissioning cost 8 1,294,481 1,366,791
Deferred taxation 9 47,920 151,002
Other deferred liabilities 10 73,886 85,359
1,528,387 1,939,452
CURRENT LIABILITIES
Current maturity of long term financing - secured 7 224,200 224,200
Accrued and other liabilities 11 3,193,510 2,886,881
Provision for taxation - net 589,205 272,1 31
4,006,915 3,383,212
CONTINGENCIES AND COMMITMENTS 12
8,217,948 7,929,914
FIXED ASSETS
Property, plant and equipment - tangible 13 3,325,033 3,655,381
Intangible assets 14 70,259 71,449
3,395,292 3,726,830
LONG TERM LOANS AND ADVANCES
- considered good 15 5,826 6,646
LONG TERM DEPOSITS AND PREPAYMENTS 16 4,195 4,497
CURRENT ASSETS
Stores and spares 17 166,947 153,799
Trade debts - considered good 18 1,211,969 954,480
Loans and advances - considered good 19 207,269 93,985
Short term prepayments 20 24,343 22,733
Other receivables 21 36,796 26,979
Cash and bank balances 22 3,165,311 2,939,965
4,812,635 4,191,941
8,217,948 7,929,914
==============================================================================================PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2006==============================================================================================
June 30, June 30,
2006 2005
Note (Rupees in thousand)
==============================================================================================
Gross sales - to customers 19,647,311 1 5,933, 143
own consumption 4,603 3,923
19,651,914 15,937,066
Less: Gas development surcharge 12,824,068 10,140,814
General sales tax 2,562,269 2,077,525
Excise duty 638,582 605,706
Adjustment/Surplus payable to the President
of Pakistan as per the Agreement 815,283 419,079
16,840,202 13,243,124
Sales-net 2,811,712 2,693,942
Less: Royalty 351,464 336,743
2,460,248 2,357,199
Operating expenses 23 1,131,447 1,069,045
Exploration expenditure 24 984,710 631,659
2,116,157 1,700,704
Operating profit 344,091 656,495
Other operating income 25 366,223 122,561
710,314 779,056
Finance costs 26 44,258 36,429
Other charges 27 63,418 64,699
107,676 101,128
Profit before taxation 602,638 677,928
Taxation 28 413,391 316,409
Profit after taxation 189,247 361,519
Earnings per share - basic and dilutive
Earnings per share on the basis of distributable profits 29 5.06 4.45
Earnings per share on the basis of Profit and Loss account 29 5.15 9.84
==============================================================================================CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2006==============================================================================================
June 30, June 30,
2006 2005
Note (Rupees in thousand)
==============================================================================================
Cash flows from operating activities
Cash generated from operations 30 568,887 1,608,303
Decrease / (increase) in long-term loans and advances 820 (770)
Decrease /(Increase) in long term deposits & prepayments 302 (1,081)
Unfunded employee benefits paid (2.028) (1,771)
Taxes paid (199,401) (160,068)
Net cash generated from operations 368,580 1,444,613
Cash flows from investing activities
Purchases of property, plant and equipment (130,214) (313,460)
Proceeds from sale of property, plant and equipment 15,293 12,079
Interest received 324,675 84,839
Net cash from /(used in) investing activities 209,754 (216,542)
Cash flows from financing activities
Repayment of long term financing (224,200) (224.200)
Finance cost paid (44,744) (35,840)
Dividends paid (84,044) (111.711)
Net cash used in financing activities - (352,988) (371,751)
Increase in cash and cash equivalents 225,346 856,320
Cash and cash equivalents at beginning of the year 2,939,965 2,083,645
Cash and cash equivalents at end of the year 3,165,311 2,939,965
==============================================================================================STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2006==============================================================================================
Share General Undistributred Profit Total
capital reserve percentage and loss
return reserve account
(Rupees in thousand)
==============================================================================================
Balance as at June 30, 2004 367.500 2,046 158,127 1.830.035 2,357,708
Profit for the year - - - 361,519 361,519
Dividends - - - (111,977) (111,977)
Transferred to undistributed
percentage return reserve - - 49,622 (49,622) -
Balance as at June 30. 2005 367,500 2,046 207.749 2,029,955 2,607,250
Profit for the year - - - 189,247 189,247
Dividends - - - (113,851) (113,851)
Transferred to undistributed
percentage return reserve - - 67,512 (67,512) -
Balance as at June 30. 2006 367,500 2,046 275,261 2,037,839 2,682,646
==============================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 20061. LEGAL STATUS AND OPERATIONS Marl Gas Company Limited ("the Company") is a public limited company incorporated in Pakistan under the Companies 'Ordinance, 1984 and its shares are listed on the Karachi, Lahore and Islamabad stock exchanges. The Company is principally engaged in drilling. exploration, production and sale of natural gas. The gas price mechanism is governed by Mari Gas Well Head Price Agreement dated ("the Agreement") December 22, 1 985 between the President of Islamic republic of Pakistan and the Company. The registered office of the Company is situated at 2 1 Mauve Area, 3rd road, G-1 0/4, Islamabad. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of preparation These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of Companies Ordinance, 1984 or the requirements of the said directives take precedence. 2.2 Accounting convention and basis of measurement These financial statements have been prepared under the historical cost convention except that obligation under certain employees benefits and provision for decommissioning cost have been measured at present value. The preparation of financial statements in conformity with approved accounting standards requires management to make estimates, assumptions and use judgments that affect the application of policies and reported amounts of assets and liabilities and income and expenses. Estimates, assumptions and judgments are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. Revisions to accounting estimates are recognized prospectively commencing from the period of revision. Judgments and estimates made by the management that may have a significant risk of material adjustments to the financial statements in subsequent years are as follows: a) Estimation of natural gas reserves Gas reserves are an important element in impairment testing for development and production assets of the Company. Estimates of natural gas reserves are inherently imprecise, require the application of judgement and are subject to future revision. Proved reserves are estimated by reference to available reservoir and well information, including production and pressure trends for producing reservoirs and, in some cases, subject to definitional limits, to similar data from other producing reservoirs. All proved reserve estimates are subject to revision, either upward or downward, based on new information, such as from development drilling and production activities or from changes in economic factors, including contract terms or development plans. Changes to the Company's estimates of proved reserves, particularly proved developed reserves, also affect the amount of depreciation, depletion and amortization recorded in the financial statements for fixed assets related to hydrocarbon production activities. b) Provision for decommissioning cost Provision is recognized for the future decommissioning and restoration of oil and gas wells, production facilities and pipelines 'at the end of their economic lives. The timing of recognition requires the application of judgment to existing facts and circumstances, which can be subject to change. Estimates of the amounts of provision is based on current legal and constructive requirements, technology and price levels. Because actual outflows can differ from estimates due to changes in laws, regulations, public expectations, technology, prices and conditions, and can take place many years in the future, the carrying amounts of provision is regularly reviewed and adjusted to take account of such changes. c) Employee retirement benefits Certain actuarial assumptions have been adopted as disclosed in note -31 to the financial statements for valuation of present value of defined benefit obligations and fair value of plan assets. Any changes in these assumptions in future years might affect unrecognized gains and losses in those years. d) Income taxes In making the estimates for income taxes currently payable by the Company, the management looks at the income tax law applicable to the Company and the decisions of appellate authorities on certain issues in the past. This involves judgment on the future tax treatment of certain transactions. Deferred tax is recognized based on the expectation of the tax treatment of these transactions. 2.3 Gas price mechanism In terms of Marl Gas Well Head Price Agreement "The Agreement" dated December 22, 1985 between the President of Islamic Republic of Pakistan and Man Gas Company Limited, well head gas price for each ensuing year is determined in accordance with the principles of gas price formula set out in Article II of the Agreement. The Agreement states that the gas price will be at the minimum level to ensure that total revenues generated from sale of gas and other income are sufficient to provide a minimum return of 30%, net of all taxes, on Shareholders' Funds (as defined in the Agreement) after meeting specified ratios and deductibles. The return to shareholders shall be escalated in the event of increase in the Company's gas production beyond the level of 425 MMSCFD at the rate of 1 %. net of all taxes, on Shareholders' Funds for each additional 20 MMSCFD of gas or equivalent oil produced, prorated for part thereof on annual basis, subject to a maximum of 45%. The minimum return to shareholders for the year was 32.18% (2005: 30.98%). Effective July 01, 2001, the Government has authorized the Company to incur expenditure not exceeding the Rupee equivalent of USS 20,000,000 per annum or 30% of the Company's annual gross sales revenue as disclosed in the last audited financial statements, whichever is less, in connection with exploration and development in any Concession area other than Man Field, provided that if such exploration and development result in additional oil and gas production, the revenues generated from such additional oil or gas production shall be credited to and treated as revenue under the Agreement referred to above. 2.4 Taxation Provision for current taxation is based on taxable income at the applicable rate of taxation. The Company accounts for deferred taxation on all timing differences, using the 'liability method' in respect of all major temporary differences between carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of the taxable profit. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that is probable that taxable profits will be available against which deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax liability has been calculated at the estimated effective rate of 25% after taking into account availability of depletion allowance. 2.5 Provisions Provisions are recognized when the Company has a present obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimates can be made of the amount of obligation. 2.6 Decommissioning cost Estimated decommissioning and restoration costs, which are primarily in respect of abandonment and removal of wells and production facilities at Mari Field and the Company's proportionate share in joint venture fields, are based on current requirements, technology and price levels and are stated at fair value, and the associated asset retirement costs are capitalized as part of property, plant and equipment and amortized on unit of production basis over the total proved reserves of the relevant field. The liability is recognized once an obligation (whether legal or constructive) crystallizes in the period when a reasonable estimate of the fair value can be made; a corresponding amount is recognized in property, plant and equipment. The fair value is calculated using amounts discounted over the useful economic life of the assets. The effects of changes resulting from revisions to the timing or the amount of the original estimate of the provision are reflected on a prospective basis. During the year, the Company revised its estimates of outflows of resources to settle decommissioning liability based on future projected cost adjusted to present value. This has been treated as change in accounting estimates applied prospectively, in accordance with IFRIC Interpretation 1 "Changes in Existing Decommissioning, Restoration and Similar Liabilities" which became applicable during the current accounting year.Following line items would not have been effected had there been no change in estimates. ==========================================================================================
(Rupees in thousand)
==========================================================================================
Provision for decommissioning cost would have been higher by (538,148)
Fixed assets would have been higher by 520,468
Depreciation and amortization charge would have been higher by 17,680
==========================================================================================2.7 Employees' retirement benefitsThe Company operates: i) Defined benefit funded pension and gratuity plans for its management employees and defined benefit funded gratuity plan for its non-management employees. Contributions are made to these plans on the basis of actuarial recommendations. Actuarial valuations are conducted periodically using the Projected Unit Credit Actuarial Cost method and the latest valuation was carried out as at June 30, 2006. The results of the valuation are summarized in note 31 to the financial statements. Rules of Management Staff Gratuity Fund have been amended w.e.f. July 01, 2006 which resulted in vested prior service cost of Rs 4.864 million, which has been recognized during the year. Actuarial gains and losses are amortized over the expected remaining service time of employees. ii) Defined benefit unfunded pension plan for its non-management employees. Liability related to accumulated period of service of eligible employees is provided based on actuarial valuation. The latest valuation was carried out as at June 30, 2006 using discount rate of 9% p.a. and pension increase rate of 4% p.a. iii) Defined contribution provident fund for its permanent employees for which contributions are charged to profit and loss account for the year. An amount of Rs 9.519 million (2005 : Rs 8.693 million) has been charged to profit and loss account during the year in respect of this plan using 10% p.a. of the basic salary. The Company has accrued post retirement medical benefits of its management employees based on actuarial valuation carried out as at June 30, 2006 using discount rate of 9% p.a. and increase in cost of medical benefit of 6% p.a. An amount of Rs 5.097 million (June 2005 Rs 4.429 million) has been charged to profit and loss account during the year. The Company has accrued post retirement leave of its management employees based on actuarial valuation carried out as at June 30, 2006 using discount rate of 9% p.a and salary increase rate of 9% p.a . An amount of Rs 3.71 7million (June 2005; Rs 2.935 million) has been charged to profit and loss account during the year. 2.8 Property, Plant and Equipment Operating assets except freehold land are stated at cost less accumulated depreciation. Freehold land and capital work in progress are stated at cost. Depreciation on property plant and equipment is charged to income using the straight line method at rates specified in note 13. Amortization of drilling expenditure related to Man Field is charged to income over a period of 10 years in line with the requirements of the Agreement. Acquisition cost of leases, where commercial reserves have been discovered, are capitalized and amortized on unit of production basis. Depreciation on addition to property plant and equipment is charged from the month in which an asset is available for use while no depreciation is charged for the month in which the asset is disposed off. Gains and losses on disposals are taken to income in the year of disposal. Maintenance and repairs are charged to income as and when incurred. 2.9 Intangible assets Intangible assets are initially recorded at cost where it is probable that they will generate future economic benefits. Intangible assets includes rights and concessions. Intangible assets are subsequently recognized at cost less accumulated amortization including any impairment. Rights and concessions are amortized on the unit of production basis over the total proved reserves of the relevant field. 2.10 Impairment The carrying amount of the Company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. If any such indication exists, the recoverable amount of such assets is estimated and impairment losses are recognized in the profit and loss account. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised recoverable amount but limited to the extent of the initial cost of the asset. A reversal of the impairment loss is recognized in the profit and loss account. 2.11 Stores and spares These are valued at the lower of cost and net realizable value less allowance for obsolete and slow moving items. Material in transit is valued at cost. Cost is determined on the moving average basis and comprises cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Net realizable value signifies estimated selling price in the ordinary course of business less costs necessarily to be incurred in order to make a sale. 2.12 Foreign currency translation Transactions in foreign currencies are recorded at the rate of exchange prevailing on the date of the transaction. Assets and liabilities in foreign currencies are translated into rupees at the rate of exchange ruling at the balance sheet date. All exchange differences are charged to income. 2.13 Revenue recognition Sales are recorded on delivery of gas to customers. Income on bank deposits is proportionately accrued upto the balance sheet date. 2.14 Joint venture operations and exploration expenditure - other than Mari Field Exploration expenditure incurred in concession areas other than Mari Field are expensed as incurred but are subsequently capitalized relating to any reserves of oil and gas that are discovered. Capitalized exploration and development costs are amortized on unit of production basis. Transactions related to joint venture operations in which the Company has a working interest are accounted for on the basis of latest available audited accounts of thejoint venture and where applicable, the cost statements received from the operator of the joint venture, for the intervening period upto the balance sheet date. 2.15 Lease acquisition cost License acquisition cost relating to a license area with no prior technical discovery are treated as exploration expenditure and charged against revenues whereas lease acquisition costs relating to Development and Production lease are recorded as acquisition cost. 2.16 Borrowing cost Borrowing cost is expensed as incurred. 2.17 Financial instruments Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument and assets and liabilities are stated at fair value. The Company derecognizes the financial assets and liabilities when it ceases to be a party to such contractual provisions of the instruments. The Company recognizes the regular way purchase or sale of financial assets using settlement date accounting. a) Trade Debts and other receivables Trade debts and other receivables are due on normal trade terms. These are stated at original invoice amount as reduced by appropriate provision for impairment. Bad debts are written off when identified. b) Cash and cash equivalents Cash and cash equivalents for the purposes of cash flow statement comprise cash in hand and in bank. 2.18 Transactions with related parties Transactions involving related parties arising in the normal course of business are conducted at arm's length at normal commercial rates on the same terms and conditions as applicable to third party transactions. 3. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
24,850,007 (2005: 24,850,007) ordinary shares of
Rs 10 each for cash 248,500 248,500
11,899,993 (2005: 11,899,993) ordinary shares of
Rs 10 each for consideration other than cash 119,000 119,000
367,500 367,500
Major shareholding of the Company is as follows: %age %age
Fauji Foundation 40% 40%
Oil and Gas Development Company Limited 20% 20%
Government of Pakistan 20% 20%
==============================================================================================4. GENERAL RESERVESThe amount held under this reserve represents the un-appropriated profit for the period from December 04, 1984 to December 31, 1985. 5. UNDISTRIBUTED PERCENTAGE RETURN RESERVE 5.1 ==============================================================================================
June 30, June 30,
(Rupees in thousand)
==============================================================================================
Opening balance 207,749 158,127
Transferred from profit and loss account 67,512 49,622
275,261 207,749
==============================================================================================5.2 The amount held in this reserve represents the balance of the percentage return reserve on shareholders' funds as defined in the Agreement.6. PROFIT AND LOSS ACCOUNT The amount of Rs 2,037,839 thousand (2005; Rs 2,029,955 thousand) represents the following: 6.1 Undistributable balance The amount of Rs 2,029,827 thousand, which is not distributable, has been provided through the operation of Article II of Mari Gas Well Head Price Agreement to meet the obligations and to the extent indicated for the following: ==============================================================================
Generated
Generated during the
upto year ended
June 30, 2005 June 30, 2006 Total
(Rupees in thousand)
==============================================================================
a) Rupee element of capital
expenditure (net of depreciation/
amortization) and repayment of
borrowings 1,761,583 3,473 1,765,056
b) Maintenance of debt service ratio 90,234 - 90,234
c) Maintenance of current ratio 174,537 - 1 74,537
Total 2,026,354 3,473 2,029,827
2005 1,828,308 1 98,046 2,026,354
==============================================================================6.2 Distributable balance==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Undistributed guaranteed return 8,012 3,601
==============================================================================================This represents the additional 2.18% (2005: 0.98%) guaranteed return to shareholders on account of increase in gas production during the year.7. LONG TERM FINANCING-SECURED ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
From Habib Bank Limited - note 7.1 336,300 560,500
Less: Current maturity shown under current liabilities 224,200 224,200
112,100 336,300
==============================================================================================7.1 On September 1 5, 2000, the Company entered into an agreement with Habib Bank Limited for financing of its Goru-B Project on mark-up basis. The total amount disbursed is Rs 1,121 million with a corresponding "Marked-up Price" of Rs 2,125 million. The mark-up is payable quarterly on the basis of last successful auction of six months treasury bills cut-off yield plus 1.50% per annum.The effective mark-up rate during the year was 9.667% (2005: 5.0825%) per annum. The loan is repayable in ten half-yearly installments commencing March 2003. The loan is secured by mortgage, hypothecation and floating charges created against all present and future assets of the Company. 8. PROVISION FOR DECOMMISSIONING COST ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Opening balance 1,366,791 1,310,089
Provision for the year (72,310) 56,702
Closing balance 1,294,481 1,366,791
==============================================================================================9. DEFERRED TAXATION==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
This is made up as follows:
Accelerated tax depreciation 288,962 352,041
Provision for unfunded retirement benefits (18,350) (16,171)
Provision for doubtful debts - (6,077)
Exploration expenditure (222,692) (178,791)
Deferred tax liability 47,920 1 51,002
==============================================================================================10. OTHER DEFERRED LIABILITIES==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Post retirement medical benefits - note 31.2 45,481 41,386
Post retirement leaves - note 31.2 19,806 17,115
Unfunded pension plan for non-management 8,113 6,179
Other deferred liabilities 486 20,679
73,886 85,359
==============================================================================================11. ACCRUED AND OTHER LIABILITIES==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Gas development surcharge 2,350,350 1,831,405
General sales tax 227,708 181,729
Excise duty 53,959 52,080
Interest on long term loan 825 1,311
Workers' welfare fund 109,143 79,028
Workers' profits participation fund - note 11.1 33,303 37,131
Staff retirement funds - note 31 31,853 34,178
Retention and earnest money deposits 6,580 6,082
Payable to joint venture partners 1 8,590 137,377
Other accrued liabilities 105,489 96,862
Unclaimed/unpaid dividend 40,427 10,619
Adjustment/ surplus payable to the President of
Pakistan under the provisions of the Agreement 21 5,283 419,079
3,193,510 2,886,881
==============================================================================================11.1 Workers profits participation fund==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Balance payable at beginning of the year 37,131 47,733
Add: Allocation for the year 33,303 37,131
Interest on delayed payment to the
Fund @ 22.85% p.a (2005: 22.62% p.a) 907 1,772
34,210 38,903
71,341 86,636
Less: Amount paid to the Fund 38,038 49,505
Balance payable at end of the year 33,303 37,131
==============================================================================================12. CONTINGENCIES AND COMMITMENTS12.1 In terms of Ministry of Petroleum and Natural Resources instructions through their 'letters DGO(AC)-5(50)/94-IA and DGO(AC)-5(50)/95 dated March30, 1995 and October 01, 1996 respectively, the Company was advised that interest on delayed payment from WAPDA and interest on delayed payment of development surcharge to the Government be taken into account after it is actually received/paid. Interest on delayed payment from WAPDA and interest on delayed payment of development surcharge to the Government at June30, 2006 amounted to Rs 314.187 million (2005: Rs 271.041 million) and Rs 112.392 million (2005: Rs 11 2.392 million) respectively, which will be taken into account when it is actually received / paid. However, it does not affect the current year or future years' profit after taxation which includes the return available to shareholders under the Agreement. 12.2 Other contingencies ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Indemnity bonds given to Collector of Customs
against duty concessions on import of equipment
and materials 255,229 374,890
Claims for regulatory duty - 10,059
==============================================================================================12.3 Commitments==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
(i) Capital expenditure:
- Share in joint ventures 1,743,928 969,491
- Others 110,611 43,341
1,854,539 1,012,832
(ii) Operating lease rentals due:
- Less than one year 4,5241 5,070
- More than one year but less than five years 6,042 9,524
10,566 14,594
==============================================================================================13. PROPERTY, PLANT AND EQUIPMENT - tangible=========================================================================================================================================================================================================================================
Freehold Lease- Buildings Buildings Roads Drilling Equipment Computers Gathering Furniture Vehicles Vehicles Drilling Decommi Decommi Capital work Total
land hold on free- on lease and tools and and and allied lines and heavy light expenditure ssioning ssioning in progress
land hold land hold land bridges equipments general plant equipment fixture Man field cost - cost- (note 13.1)
Marifield Z & ZS field
Rupees '000
=========================================================================================================================================================================================================================================
Cost
Balance as at 01 July 2004 82.364 50.91 1 294.935 45,519 71.853 21,432 302.829 52.247 763.207 33.730 127,385 78.443 2,426,190 1,310,089 185,718 5.846.852
Additions during the year 451 85.722 - 5.360 - 49.958 7,681 10,448 4,193 8.779 5.386 153,450 56.703 - - 313,461 701,592
Disposals - - (184) - - - (4,104) (3,241) - (1,331) (4,576) (6,099) (5,932) * - - (25,467)
Transfers/Adjustments - - - - - - - - - - - - - - - (331.4301 (331,430)
Balance as at 30 June 2005 82.364 51,362 380.473 45,519 77,213 21,432 348.683 56.687 773.655 36.592 131,588 77.730 2.573.708 1,366,792 - 167,749 6,191,547
Balance as at 01 July2005 82.364 51,362 380.473 45,519 77,213 21,432 348.683 56.687 773,655 36.592 131.588 77.730 2.573.708 1.366.792 - 167.749 6.191.547
Additions during the year 61.274 - 24.299 - 20.105 - 30.293 1,290 4.408 5.648 14.458 15.635 8.519 - 38.027 130.214 354.170
Disposals - - . - - - (5.692) 15041 - (154) (19.824) 15.901) - . - - (32.075)
Transfers .. - . - - - . - - - - - - (110.338) - (185.929) (296.267)
Balance as at 30 June 2006 143,638 51,362 404.772 45,519 97.318 21,432 373.284 57.473 778.063 42.086 126,222 87,464 2.582.227 1,256,454 38,027 112.034 6,217,375
Depreciation
Balance as at 01 July 2004 - 1.175 92.923 16.963 40.316 21.432 162.521 32.407 448.021 20.330 104.245 36.086 1.104.237 106.887 - - 2.187.543
Depreciation for the year - 952 18.257 2.276 5.267 - 25.545 tl.213 38.390 2.937 12.206 13.614 201.552 38.820 - - 371.029
Disposals - - (661 - - - (3.285) (3.157) (11.212) (4.511) (5.726) (4.449)) - - - - (22.406)
Balance as at 30 June 2005 - 2.127 111.114 19.239 45.583 21.432 184,781 40.463 48&,411 22.055 111.940 43,974 1.301.340 145.707 - - 2.536.166
Balance as at 01 July2005 - 2.127 111.114 19.239 45.583 21.432 184.781 40.463 486.411 22.055 111.940 43.974 1.301.340 145.707 - - 2.536.166
Depreciation for the year - 959 19.723 2.275 5.760 - 28.219 8.404 39.042 3,391 12.514 15.760 212.937 37.597 - - 386.581
Disposals - - - - - 14.037) (504) - (139) (19.8241 (5.901) - - - - 130.405)
Transfers - - - - - - - . . . . - ,
Balanceasat3oJune2006 - 3.086 130.837 21.514 51.343 21.432 208.963 48.363 525,453 25.307 104,630 53.833 1.514.277 183.304 - - 2.892.342
Carrylngamounrs-2005 82.364 49.235 269.359 26.280 31.630 - 163.902 16.224 287.244 14.537 19.648 33.756 1.272.368 1.221.085 . 167.749 3,655.381
Carryingamounts-2006 143.638 48.276 273.935 24.005 45.975 - 164.321 9,110 252.610 16.779 21.592 33.631 1.067.950 1.073.150 38.027 112.034 3.325.033
Rates of depredation-% - 1.3 5 5 10 20 10 25 10 10 30 20 10 Note 2.6 Note 2.6 -
=========================================================================================================================================================================================================================================13.1 CAPITAL WORK IN PROGRESS==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Goru - B project
Land - 7,531
Phase VI project
Land - 28,792
Others 1,637 283
1,637 29,075
Man Deep 12
Land - 1,855
Materials and equipment 1,968 5,039
Others 263 263
2,231 7,157
SML- 1
Land - 19
Materials and equipment 4,872 8,732
Others 2,144 2,144
7,016 10,895
PIRKOH well
Land 181 -
Materials and equipment 6,103 -
6,284 -
SML - appraisial well
Land 181 -
Materials and equipment 4,031 -
4,212 -
Support of production
Land - 9,952
Building, roads and bridges 48,962 71,402
Plant, machinery and others 41,692 31,737
90,654 113,091
112,034 167,749
==============================================================================================13.2 Details of assets disposed off during the year===========================================================================================================================================
Accumulated Net book Sale Mode of Particulars of Purchaser
Description Cost depreciation value proceeds disposal
Rs. in thousand
===========================================================================================================================================
Property plant and equipment 1.018 738 280 18 Through auction Muhammad Akhtar, Sadiqabad
400 340 60 5 Through auction Ideal Business System, Islamabad
445 356 89 14 Through auction Humayun Khan. Kohat
415 342 73 14 Through auction Humayun (han. Kohat
426 287 139 20 Through auction Sher Khan, Rawalpindi
381 174 207 20 Through auction Sher Khan Rawalpindi
305 54 251 25 Through auction Ideal Business System. Islamabad
13 4 9 I As per Company policy Perviaz Usman
Ex-General Manager Finance
13 4 9 5 As per Company policy Perviaz Usman
Ex-General Manager Finance
13 4 9 5 As per Company policy Dr Asif Ahsen
Ex-Senior Geologist
11 4 7 3 As per Company policy Rao Wajahat Ali
Ex-Senior Officer
11 5 6 I As per Company policy Lt Col (retd) Manzoor Iqbal Awan
Manager Human Resource
12 3 9 I As per Company policy Muhammad Ajmal Abbasi
Ex-Manager Reservoir
12 3 9 I As per Company policy Muhammad Ajmal Abbasi
Ex-Manager Reservoir
12 5 7 1 As per Company policy Javed Iqbal Jadoon
Manager * Planning
13 6 7 1 Through Auction Mushtaq Ahmed, Rahim Yar Khan
13 6 7 1 Through Auction Mushtaq Ahmed, Rahlm Yar Khan
13 6 7 1 Through Auction Mushtaq Ahmed, Rahim Yar Khan
13 6 7 1 Through Auction Mushtaq Ahmed. Rahim Yar Khan
13 6 7 I Through Auction Mushtaq Ahmed. Rahim Var Khan
14 2 12 11 As per Company policy Syed Nayyar Raza Zaidi
Ex-Assistant Manager Accounts
48 24 24 5 As per Company policy Lt Col (retd) Manzoor Iqbal Awan
Manaer Human Resource
16 4 12 6 As per Company policy Perviaz Usman
Ex-Genera) Manager Finance
43 12 31 17 As per Company policy Perviaz Usman
Ex-General Manager Finance
33 11 22 2 As per Company policy Muhammad Ajmal Abbasi
Ex-Manager Reservoir
35 16 19 21 As per Company policy Javed lqal Jadoon
Manager Planning
15 5 10 I As per Company policy Javed lqbal Jadoon
Manager Planning
22 6 16 9 As per Company policy Perviaz Usrnan
Ex-General Manager Finance
22 6 16 8 As per Company policy Perviaz Usman
Ex-General Manager Finance
22 6 16 9 As per Company policy Perviaz Usrnan
Dc-General Manager Finance
26 16 10 3 As per Company policy Muhammad Ajmal Abbasl
Dc-Manager Reservoir
27 16 11 3 As per Company policy Lt. Col (retd( Shahid Abbas
Manager Administration
27 16 11 3 As per Company policy Muhammad Asif
General Manager Finance
27 16 11 3 As per Company policy Muhammad Uaquat Afl Khan
Manager Production
27 16 11 3 As per Company policy Muhammad Uaquat Ali Khan
Manager Production
27 16 11 3 As per Company policy Sarfraz ud din Siddiqui
Ex-General Manager Exploration
27 16 11 3 As per Company policy Javed Iqbal Jadoon
Manager Planning
48 29 19 - Through auction Jaffar Khan, Islamabad
49 29 20 I Through auction Jaffar Khan. Islamabad
25 9 16 1 As per Company policy Muhammad Ajmal Abbasi
Ex-Manager Reservoir
28 5 23 I As per Company policy Muhammad Ajmal Abbasi
Ex-Manager Reservoir
Agregate of other items of
property plant & equipment with
individual book values not
exceeding five thousand 1.533 1.408 125 91 Through auction Miscellaneous
5,693 4.037 1.656 343
Computer and a Bed equipment 504 504 - 8 Through auction Jaffar Khan. Islamabad
Furniture and fixture 154 139 IS 26 Through auction Miscellaneous
Vehicles 25,725 25.725 - 14,916 Through auction Miscellaneous
32.076 30.405 1,671 15,293
===========================================================================================================================================14. INTANGIBLE ASSETS====================================================================================================================================
C 0 S T AMORTIZATION Written Annual
As at As at As at As at down value rate of
Cost Amortization Written Annual
DESCRIPTION July 01 Additions/ June 30, July 0). For the year/ June 30. as at June amortization
2005 (deletions) 2006 2005 (on deletions) 2006 30, 2006 %
Rs' 000 Rs' 000 Rs' 000 Rs' 000 Rs 000 Rs' 000 Rs 000
====================================================================================================================================
Lease acquisition cost -
- Mari Field 91.147 - 91,147 55.983 1.190 55,173 33,974 Ref note 2.9
- Zarghun South Field 36.285 - 36,285 - - - 36.285 Ref. note 2.9
2006 127.432 - 127.432 55.983 1,190 57.173 70,259
====================================================================================================================================
====================================================================================================================================
C 0 S T AMORTIZATION Written Annual
As at As at As at As at down value rate of
DESCRIPTION July 01 Additions/ June 30, July 0). For the year/ June 30. as at June amortization
2005 (deletions) 2006 2005 (on deletions) 2005 30, 2006 %
Rs' 000 Rs' 000 Rs' 000 Rs' 000 Rs 000 Rs' 000 Rs 000
====================================================================================================================================
Lease acquisition cost
- Man Field 91,147 - 91,147 54.865 1.118 55.983 35.164 Ref. note 2.9
- Zarghun South Field 36,285 - 36.285 - - - 36,285 Ref. note 2.9
2005 127.432 - 127,432 54.865 1,118 55.983 71.449
====================================================================================================================================15. LONG TERM LOANS AND ADVANCES - considered good==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Loans and advances-considered good
- Executives 6,626 5,820
- Other employees 5,788 7,109
12,414 12,929
Less: Recoverable within one year - note 19
- Executives 3,688 2,930
- Other employees 2,900 3,353
6,588 6,283
5,826 6,646
==============================================================================================15.1 Reconciliation of carrying amount of loans to executives and other employees==============================================================================
Opening balance Disbursement Repayments Closing balance
as at July 01, during during as at June 30,
2005 the year the year 2006
(Rupees in thousand)
==============================================================================
Executives 5,820 6,956 6,150 6,626
Other employees 7,109 4,781 6,102 5,788
12,929 11,737 12,252 12,414
2005 11,982 10,697 9,750 12,929
==============================================================================1 5.1 The amount outstanding for periods exceeding three years was Rs 0.538 million (2005: Rs 1 .433 million).1 5.2 The maximum amount due from executives at the end of any month during the year was Rs 7.074 million (2005 : Rs 6.372 million). 1 5.3 The loans and advances given to executives and employees represent transport loans and other advances repayable in 36 to 60 equal monthly installments. The loans and advances are interest free. 16. LONG TERM DEPOSITS AND PREPAYMENTS ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Deposits 3,073 3,157
Prepayments 1,122 1,340
4,195 4,497
==============================================================================================17. STORES AND SPARES==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Stores 127,692 115,668
Spares 39,255 38,131
166,947 153,799
==============================================================================================17.1 The stores stated above include stores valuing Rs 0.177 million (2005: Rs 0.219 million) representing the Company's share in the Joint Venture operated by ENI Pakistan Limited.18. TRADE DEBTS - considered good ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Associated undertakings
Water and Power Development Authority 679,979 536,829
Fauji Fertilizer Company Limited 379,262 321,927
Sul Southern Gas Company Limited 1,304 1,025
1,060,545 859,781
Less: Provision for doubtful debts - 24,307
1,060,545 835,474
Others
Engro Chemical Pakistan Limited 1 51,424 119,006
1,211,969 954,480
==============================================================================================The maximum aggregate amount outstanding at the end of any month during the year from associated undertaking was Rs. 1,1 13.085 million (2005: Rs. 877.588 million).19. LOANS AND ADVANCES - considered good ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Loans and advances - note 15
-Executives 3,688 2,930
- Other employees 2,900 3,353
6,588 6,588 6,283
Advances to suppliers and others 7,056 5,179
Advances to JV partners - 96,693 62,283
Royalty paid in advance 96,932 20,240
207,269 93,985
==============================================================================================20. SHORT TERM PREPAYMENTS==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Prepaid insurance 17,559 17,337
Prepaid mining lease 2,921 2,921
Prepaid rent 366 234
Others 3,497 2,241
24,343 22,733
==============================================================================================21. OTHER RECEIVABLES==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Income on bank deposits 33,080 21,074
Sales tax paid under protest 1,709 1,709
Receivable from Oil & Gas Development
Company Limited - 1,515
Receivable from custom authorities 365 365
Others 1,642 2,316
36,796 26,979
==============================================================================================22. CASH AND BANK BALANCES==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Cash in hand 300 300
Balances with banks -
Deposit accounts 3,161,962 2,935,635
Current accounts (including USS 6 thousand,
2005: USS 7 thousand) 3,049 4,030
3,165,011 2,939,665
3,165,311 2,939,965
==============================================================================================23. OPERATING EXPENSES==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Salaries, wages and benefits - note 23.1 319,319 266,905
Employees' retirement benefits 55,965 50,941
Rent, rates and taxes 8,800 2,910
Legal and professional services 6,767 4,535
Fuel, light, power and water 41,022 31,251
Maintenance and repairs 53,561 42,526
Insurance 32,103 31,474
Depreciation and amortization 387,771 372,147
Employees medical and welfare 52,359 48,329
Security and other services 90,562 82,208
Traveling 7,981 10,728
Communications 7,382 9,370
Office supplies 13,656 9,256
Technical software 2,647 8,806
Auditors' remuneration - note 23.2 715 739
Stores and spares consumed 33,999 36,107
Donations-note 23.3 20,524 140
Mobile dispensary and social welfare 36,262 27,091
Training 14,542 17,375
Goru - B deliverability build up test - 5,643
Advertisement 2,014 4,406
Books and periodicals 719 546
Provision for doubtful debts - 24,307
Miscellaneous 6,514 9,933
1,195,184 1,097,673
Less: Recovery from Joint ventures 63,737 28,628
1,131,447 1,069,045
==============================================================================================23.1 This includes Rs. 9.242 million (2005: Rs. 8.4 16 million) on account of defined contribution plan.23.2 AUDITORS REMUNERATION ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Audit fee 287 287
Fee for half yearly review of accounts 100 100
Special reports 184 184
Other certifications 78 105
Out of pocket expenses 66 63
715 739
==============================================================================================23.3 Donations of Rs. 20.524 million relates to earthquake relief activities carried out by the Company during the year. Donations did not include any amount paid to any person or organization in which a director or his spouse had any interest.24. EXPLORATION EXPENDITURE =====================================================================================================
Share in JV Share in JV June 30, June 30,
% age % age 2006 2005
2006 2005 (Rupees in thousand)
=====================================================================================================
Amount expensed in terms of note 2.13
Share in joint ventures under the operatorship of:
MARl GAS COMPANY LIMITED
Zarghun South Field - note 24.2 35.00 35.00 4,771 6.714
Zianat Block- note 24.3 60.00 60.00 166,901 (5.840)
KarakBlock 100.00 100.00 141,991 3,703
Noor Block 100.00 100.00 19,329 5,357
Hanna Block 100.00 - 336 -
Harnai Block 100.00 - 324 -
Sujawal Block 100.00 - 402 -
TOTAL E & P PAKISTAN
G Block 5.00 5.00 2 1.668
H Block - 5.00 - 1,079
ENI PAKISTAN LIMITED
Manchar Block 22.50 22.50 (578) 9,079
PAKISTAN PETROLEUM UMITED
Dhadar Block 27.67 27.67 78,868 28.760
Jhamat Block 25.00 - 660
Hala Block 35.00 35.00 86,743 28,625
Kot Sarang Block 25.00 25.00 117,582 26.371
Pasni Block 25.00 25.00 228,335 442,913
Makran Block 25.00 25.00 1,571 3.303
TULLOW PAKISTAN (DEVELOPMENTS) LIMITED
Nawabshah Block 1 5.00 1 5.00 67,234 56,552
Kohat Block 20.00 - 58,221 -
Bannu West Block 10.00 - 1,504 -
OIL & GAS DEVELOPMENT COMPANY LIMITED
Zamurdan Block 20.00 20.00 9,088 4,707
Kohlu Block 30.00 40.00 1,294 1.597
Kalchas Block 20.00 40.00 533 1.496
PAKISTAN OILFIELDS LIMITED
Hyderabad Block 25.00 25.00 259 14,915
984,710 631,659
==============================================================================================24.1 The exploration expenditure comprises of:=====================================================================================================
Share in JV Share in JV June 30, June 30,
% age % age 2006 2005
2006 2005 (Rupees in thousand)
=====================================================================================================
Geological and geophysical 291,591 108.613
Drilling 601,886 441,241
General and administration 91,233 81,805
984,710 631,659
=====================================================================================================24.2 On January 22, 2004 the Director General Petroleum Concession, Government of Pakistan approved the commercial discovery and development plan and granted a Development and Production Lease over Zarghun South Gas Field for the period of 20 years. Gas Sales Agreement has been initialed with Sui Southern Gas Company Limited (SSGC) and Pipeline Tariff Agreement with SSGC and Gas Price Agreement with Government is under process.24.3 The Company as operator spud the Ziarat Exploratory Well # 1 on September 28, 2005 which proved successful and declared the discovery on December 24, 2005. The Company as operator plans to appraise the area for future potentials. 25. OTHER OPERATING INCOME ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Income from financial assets
Income on bank deposits 336,681 103,220
Income from non financial assets
Gain on sale of property, plant and equipment 1 3,622 9,016
Liquidated damages/minimum billing to a customer 12,751 3,589
Miscellaneous 3,169 6,736
29,542 19,341
366,223 122,561
==============================================================================================26. FINANCE COST==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Mark-up on long term financing - secured 42,816 33,904
Interest on Workers' Profits Participation Fund 906 1,772
Bank charges 536 753
44,258 36,429
==============================================================================================27. OTHER CHARGES==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Workers' profits participation fund 33,303 37,131
Workers' welfare fund 30,115 27,568
63,418 64,699
==============================================================================================28. TAXATION==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Provision for taxation
Current 516,472 472,794
Deferred (103,081) (156,385)
413,391 316,409
==============================================================================================28.1 RECONCILIATION OF TAX CHARGE FOR THE YEAR ==============================================================================================
% %
==============================================================================================
Applicable tax rate 35.00 35.00
Tax effect of amounts that are not deductible
for tax purposes 49.42 23.53
Effect of origination and reversal of temporary differences 8.67 9.00
Tax effect of depletion allowance (24.49) (20.86)
Aggregate effective tax rate charged to income 68.60 46.67
==============================================================================================29. EARNINGS PER SHARE - BASIC AND DILUTIVE==============================================================================================
June 30, June 30,
2006 2005
==============================================================================================
Profit after tax (Rupees in thousand) 189,247 361,519
Less: Undistributable profit as explained in note 6 3,473 198,046
Balance distributable profit after tax 185,774 163,473
No of share outstanding 36,750 36,750
Earnings per share on the basis of distributable
profit -Rupees 5.06 4.45
Earnings per share on the basis of profit and loss
account - Rupees 5.15 9.84
==============================================================================================There is no dilutive effect on the basic earning per share of the Company.30. CASH GENERATED FROM OPERATIONS ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Profit before taxation 602,638 677,928
Adjustment for non cash charges and other items:
Depreciation and amortization 387,771 372,147
Profit on disposal of properly, plant and equipment (13,622) (9,016)
Employees' retirement benefits 11,234 8,651
Interest income (336,681) (103,220)
Finance cost 44,258 36,429
Working capital changes-note 30.1 (126,711) 625,384
568,887 1,608,303
==============================================================================================30.1 Working capital changes==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
(Increase)/decrease in current assets
Stores and spares (13,148) 19,971
Trade debts (278,167) (106,631)
Loans, advances and prepayments (114,894) 37,218
Other receivables 2,189 (43)
(404,020) (49,485)
Increase in current liabilities
Accrued and other liabilities - 277,309 674,869
(126,711) 625,384
==============================================================================================31. EMPLOYEES' DEFINED BENEFIT PLANS31.1 Funded benefits The results of the actuarial valuation carried out as at June 30, 2006 and June 30, 2005 are as follows: ===================================================================================================================
2006 2005
Mana- Mana- Non-Mana- Mana- Mana- Non-Mana
gement gement gement gement gement gement
Pension Gratuity Gratuity Pension Gratuity Gratuity
(Rupees in thousand)
===================================================================================================================
Reconciliation of payable to defined benefit plan
Present value of defined benefit obligations 176,155 55,884 87,131 165,985 47.658 75. 791
Fair value of plan assets (129,628) (21,750) (60,738) (106,431) (26,278) (47,683)
Net actuarial gains or (losses) not recognized (30,280) (26,120) (18,801) (45,978) (13,046) (15.840)
Liability recognized in balance sheet 16,247 8,014 7,592 13,576 8,334 12,268
Movement in payable to defined benefit plan
Opening balance 13,576 8,334 12,268 10,233 9,335 10.133
Less Loan receivable from the fund - - (875) -
Add: Cost for the year 16,247 13,179 7,592 13,576 8,334 12,268
29,823 21,513 19,860 23,809 16.794 22,401
Less: Contribution to fund during the year (13,576) (13,499) (12,268) (10,233) (8,460) (10,133)
16,247 8,014 7,592 13,576 8,334 - 12,268
Movement in fair value of plan assets
Opening balance 106,431 26,278 47,683 85,425 16,884 36,652
Contributions 13,576 13,499 12,268 10.233 8,460 10,133
Expected return on plan assets 11,310 2,697 4,577 8,198 1.388 3.223
Actuarial gain/ (loss) on plan assets '2,950 (1,506) (1,612) 3.246 1,086 (1,472)
Benefits paid (4.639) (19,218) (2,178) (671) (1.540) (853)
Closing balance 129,628 21,750 60,738 106,431 26,278 47.683
Costs for the year
Current service cost 9,552 5,967 4,686 8.150 5,382 4,223
Interest cost 15,334 4,355 6,795 11,035 3,318 5,249
Expected return on assets (11,310) (2,697) (4,577) (8,198) (1,388) (3.223)
Amortization of actuarial (gain)/loss 2,671 690 688 2.589 1.022 517
Recognition of vested past service - 4,864 - - -
Amortization of transitional obligation - - - - - 5,502
Total cost 16,247 13,179 7,592 13,576 8,334 12.268
Actual return on plan assets 14,238 1,908 3,170 11.439 1.625 1,716
===================================================================================================================31.2 Un-funded benefits====================================================================================================================================
2006 2005
Management Non- Management Non-
Management Management
Post Post Post Post
retirement retirement Pension retirement retirement Pension
Leaves Medical Leaves Medical
(Rupees in thousand)
====================================================================================================================================
Reconciliation of payable to defined benefit plan
Present value of defined benefit obligations 19,806 43,752 7,226 17,997 40,162 6,179
Net actuarial gains or (losses) not recognized - 1,729 887 (882) 1,225 -
Book reserve 19,806 45,481 8,113 17,115 41.387 6,179
Movement in payable to defined benefit plan
Opening balance 17,115 41,387 6,179 14.496 38,414 4.891
Add: Cost for the year 3,716 5,097 1,934 2.935 4.429 1,288
20,831 46,484 8,113 17.431 42,843 6,179
Less: Payments during the year (1,025) (1,003) - (316) (1,456) -
19,806 45,481 8,113 17,115 41,387 6,179
Annual costs
Current service cost 1,710 1,467 1,319 1,465 1,332 1,045
Interest cost 2,006 3,630 615 1,470 3,097 243
Total cost 3,716 5,097 1,934 2.935 4,429 1,288
====================================================================================================================================31 .3 The principal actuarial assumptions used in the actuarial valuation of the defined benefit plans are as under: -===============================================================================
2006 2005
===============================================================================
- Discount rate 9% per annum 9% per annum
- Expected rate of return on plan assets 9% per annum 10% per annum
- Expected rate of salary increase 9% per annum 9% per annum
- Expected rate of pension increase 4% per annum 4% per annum
===============================================================================32. FINANCIAL INSTRUMENTS32.1 Financial assets and liabilities ==========================================================================================================================================
2006 2005 2006 2005
Effective Effective Interest Non-Interest Interest Non-interest
rate rate bearing bearing Total bearing bearing Total
(Rupees in thousand)
==========================================================================================================================================
Financial assets
Maturity upto one year
Trade debts - 1,211,969 1,211.969 - 954.480 954.480
Loans and advances - 6,588 6,588 - 6,283 6.283
Other receivables - 33,080 33,080 - 22.588 22.588
Cash and bank balances 10,67 4.11 3,161,962 3,349 3.165,311 2,935,635 4,330 2,939,965
Maturity after one year upto two years
Loan and advances - 5,826 5.826 - 6,646 6,646
Long term deposits - 3,073 3,073 - 3,157 3,157
3,161,962 1,263,885 4,425,847 2,935,635 997,484 3.933.119
Financial liabilities
Maturity upto one year
Long term financing - note 7 9.667 5.08 224,200 - 224.200 224.200 - 224,200
Accrued and other liabilities - 419.047 419,047 - 705.508 705.508
Maturity after one year upto two years
Long term financing - note 7 9.667 5.08 112.100 - 112.100 336,300 - 336.300
Employees' retirement benefits - 73.886 73,886 - 64.680 64.680
336.300 492.933 829.233 560,500 770,188 1.330,688
Off balance sheet items:
Commitments - 1,865.105 1,865,105 - 1.027,426 1,027,426
Indemnity bonds - 255.229 255.229 - 374.890 374.890
- 2,120.334 2,120,334 - 1,402,316 1,402316
==========================================================================================================================================32.2 Concentration of credit riskCredit risk represents the accounting loss that would be recognised at the reporting date if counter parties failed completely to perform as contracted. The company's credit risk is primarily attributable to its trade debts and balances with banks. Credit risk on liquid funds is limited because the counter parties are banks with reasonable high credit ratings. The company has no significant concentration of credit risk as the exposure is spread over a number of counter parties. Out of financial assets of Rs. 4,426 million (2005: Rs. 3,933 million), financial assets which are subject to credit risk amounting Rs. 4,423 million (2005: Rs. 3,930 million). To manage exposure to credit risk, the company applies credit limits to its customers. Trade debts are essentially due from fertilizer companies, power generation company and gas distribution company and the company does not expect these companies to fail to meet their obligations. 32.3 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 take appropriate measures for new requirement. 32.4 Foreign exchange risk Foreign currency exchange risk is the risk that the value of financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises mainly where payables exist due to transaction with foreign suppliers. 32.5 Fair value of financial assets and liabilities The carrying value of financial assets and liabilities approximates their fair value. 33. REMUNERATION OF DIRECTOR, CHIEF EXECUTIVE AND EXECUTIVE The aggregate amount charged in these financial statements for the remuneration of Chief Executive and Executives of the Company were as follows: =======================================================================================================
2006 2005
Chief Chief
Executive Director Executives Executive Director Executives
(Rupees in thousand)
=======================================================================================================
Managerial remuneration 1,494 1,365 57,457 1,397 1,288 47,261
Company's contribution
to provident fund 636 - 5,529 1,017 - 4,537
Housing and utilities 1,669 968 43,494 1,317 925 36,588
Other allowances and benefits 750 654 57,107 1,512 624 46,638
Bonuses 375 354 15,461 200 219 8,388
4,924 3,341 179,048 5,443 3,056 143,412
Number of persons, including
those who worked part of
the year 1 1 65 2 1 54
=======================================================================================================The above are also provided with medical facilities, pension; gratuity and post retirement leave. The Chief Executive and certain executives were provided with free use of company maintained cars, residential telephones and use of club facilities. Executives based at plant site, Daharki are also provided with schooling, shopping trips and subsidized club facilities.In addition, aggregate amount charged in the financial statements for fee to 14 directors (2005: 14) was Rs. 113,000 (2005: Rs. 125,000). 34. CAPACITY AND ACTUAL PRODUCTION Considering the nature of the Company's business, information regarding capacity has no relevance. The actual production of gas for the year ended June 30, 2006 was 171 .045 BSCF (2005:162.263 BSCF). 35. TRANSACTIONS WITH RELATED PARTIES Fauji Foundation holds 40% shares of the Company, therefore all subsidiaries and associated undertakings of Fauji Foundation are related parties of the Company. Other related parties comprise of associated companies, directors, major shareholders, key management personnel and employees' retirement benefit funds and exclude relationships with the Government being a shareholder in the Company. Transactions with related parties other than remuneration and benefits to directors and key management personnel are as follows: ==============================================================================================
June 30, June 30,
2006 2005
(Rupees in thousand)
==============================================================================================
Sale of gas to Fauji Fertilizer Company Limited 8,761,703 7,244,698
Sale of gas to Water and Power Development Authority 7,408,620 5,928,716
Sale of gas to Sui Southern Gas Company Limited 8,376 7,150
Sale of material to Oil & Gas Development Company Limited - 1,514
Contribution to employees' retirement benefit funds 46,537 42,871
Receivable balances with related parties are as follows:
Fauji Fertilizers Company Limited 379,262 321,926
Water and Power Development Authority 679,979 536,829
Sui Southern Gas Company Limited 1,304 1,025
Oil & Gas Development Company Limited - 1,514
Expenses incurred during the year with related parties;
Advertisement expenses for golden jubilee
celebration of Fauji Foundation - 1,625
==============================================================================================Transactions with related parties are based on the normal commercial practices as between independent businesses.36. NUMBER OF EMPLOYEES Total number of employees at the end of the year were 378 (2005: 393). 37 CORRESPONDING FIGURES Previous year's figures have been re-arranged, wherever necessary, for the purpose of comparison. Operating expenses of exploration department and related recoveries from joint ventures have been reclassified with relevant heads of operating expenses and decommissioning cost of Mari Field has been reclassified with tangible fixed asset from intangible fixed assets. 38. GENERAL 38.1 Figures have been rounded off to the nearest thousand of rupees unless otherwise stated. 38.2 These financial statements were authorized for issue on September 21, 2006 by the board of directors of the Company. |