Annual Report 2018

Attock Refinery Limited

Leveraging
Human Resource
to Achieve Excellence Annual Report 201
8

A
t Attock Refinery Limited (ARL), we consider
Human Resource (HR) as our prime resource
and it is our corporate HR policy to attain the
highest standards of professionalism throughout
the organization by promoting and recognizing
individual capabilities, productivity, commitment
and contribution. We take pride in the fact that
ARL is an Equal Opportunity Employer guided
by a Values System thoroughly embedded in our
organizational culture.

Our highly professional and dedicated HR works

in a culture supportive of openness, fairness,
meritocracy, teamwork, empowerment, knowledge
Attock Refinery
sharing and innovation in relentless pursuit of Limited

continual improvement and achieving excellence.

ARL training and development system aims at The Company lays special emphasis on healthy
developing a workforce which understands the work- life balance. Employees are encouraged
organizational culture and adheres to its values to participate in various social and recreational
and norms in letter and spirit. In this realm, activities and to use our state-of-the-art indoor and
we have devised an all-encompassing training outdoor sports facilities.
programme comprising specific on-the-job-training
including use of highly advanced Operator Training In order to boost the morale of its staff, the
Simulators. Our training matrix also exposes Company presents Quarterly Awards in the areas
our employees to variety of off-the-job trainings of Performance, Safety, Energy Conservation
as speakers and participants in professional and House Keeping. The Company also has Long
conferences / workshops held in-house as well as Service Awards Policy to recognize and appreciate
in-country and abroad. employees’ long meritorious service.

In line with our policy of developing the Organizational functioning, the world over, is being
management for enhanced responsibilities, transformed and new challenges are emerging.
Career and Succession Planning is considered Organizations are implementing strategies
a major HR activity to prepare the staff for aimed at creation and sharing of information for
greater responsibilities. Departmental heads organizational effectiveness and high performance.
in coordination with HR department, work out This process of Knowledge Management needs
development and progression plan for potential a corporate environment fostering learning and
employees. innovation. The current economic down turn
confronts us with a daunting challenge calling for
ARL regularly participates in different HR surveys creative and out of box solutions.
for continual improvement of HR systems and
remuneration policy to remain competitive. The Our HR is ready and capable not only to face the
Company also obtains employees’ feedback through challenges ahead but also to seek opportunities in
a structured performance improvement system. them.
Contents

01
COMPANY
OVERVIEW
04 Honors and Achievements
06 Vision, Mission & Core Values
07 Strategic Plan
08 Company Profile
09 Accreditation & Certifications
10 Series of Firsts & Major Events
12 ARL Products
14 Board of Directors
18 Board Committees
19 Company Information
20 The Management
22 Management Committees
23 Organogram
24 Health, Safety, Environment & Quality (HSEQ) Policy
25 Energy Policy
26 Human Resource Policy
28 Whistle Blowing Policy
30 Code of Conduct for Protection against Harassment at Workplace
32 United Nations Global Compact
34 Business Process Re-Engineering Research & Development
36 Corporate Social Responsibility

02
CHAIRMAN’S REVIEW
& DIRECTORS’ REPORT
42 Chairman’s Review
44 Directors’ Report
69 Directors’ Report (In Urdu)

03
SHAREHOLDERS’
INFORMATION
70 Financial Statistical Summary
72 Financial Highlights of ARL
75 Analysis of Financial Statements
76 Composition of Statement of Financial Position
78 Vertical Analysis
80 Horizontal Analysis
82 Statement of Contribution & Value Addition
83 Financial Highlights of AHL
84 Pattern of Shareholding
04
GOVERNANCE
88 Code of Conduct

05
94 Statement of Compliance
96 Review Report on Statement of Compliance

FINANCIAL
STATEMENTS
99 Independent Auditors’ Report to the Members
104 Statement of Financial Position
106 Statement of Profit or Loss
107 Statement of Comprehensive Income
108 Statement of Cash Flow
109 Statement of Changes in Equity
110 Notes to the Financial Statements

06
CONSOLIDATED
FINANCIAL STATEMENTS
153 Independent Auditors’ Report to the Members
158 Consolidated Statement of Financial Position
160 Consolidated Statement of Profit or Loss
161 Consolidated Statement of Comprehensive Income
162 Consolidated Statement of Cash Flow
163 Consolidated Statement of Changes in Equity
164 Notes to the Consolidated Financial Statements

07
NOTICE OF
AGM & PROXY FORM
206 Notice of Annual General Meeting
210 AGM Location Map
211 Glossary
213 Proxy Form
215 Proxy Form (in Urdu)
4 Leveraging HR to Achieve Excellence

Honors &
Achievements

Asia First prize of Best

Sustainability “Living the UN Sustainability
Reporting Global Compact Report
15th Annual Award 2017 Business Award 2017 Platinum Award”
Environment by CSR Works Sustainability by ICAP & ICMAP in overall category
Excellence Awards Singapore Award 2017 of EFP’s 13th Best
2018 by FFEH Practices Award for
OHS&E 2017
 Annual Report 2018 5

Great
vision
without
great
people is
irrelevant.
6 Leveraging HR to Achieve Excellence

Vision, Mission
& Core Values

VISION MISSION CORE VALUES

To be a world class and leading We will utilize best blend of Our success will not be a matter
organization continuously state-of-the-art technologies, of chance, but a commitment to
providing high quality diversified high performing people, excellent the following enduring beliefs and
environment-friendly energy business processes and synergetic values that are engrained in the
resources and petrochemicals. organizational culture thus way we think and take actions to
exceeding expectations of all pursue a climate of excellence:
stakeholders.
 Annual Report 2018 7

Strategic
Plan
The Company’s strategic plans
Integrity & Ethics include enhancement of its
Integrity, honesty, high ethical, refining capacity and production
legal and safety standards are of better and more environment
a cornerstone of our business friendly petroleum products to
practices. maintain and expand its market
in an efficient, effective and
Quality economical manner. Under
We pursue quality as a way of this plan, the Company has
life. It is an attitude that affects completed an Up-gradation
everything we do for relentless Team Work Project comprising of installation
pursuit of excellence. We believe that competent of a Pre-flash Unit, an
and satisfied people are the Isomerization Complex, a Diesel
Social Responsibility Company’s heart, muscle and Hydro Desulfurization Unit and
We believe in respect for the soul. We savour flashes of expansion of captive power plant.
community and preserving the genius in the organization’s Projects targeting environmental
environment for our future life by reinforcing attitude of and social improvement for
generations and keeping teamwork and knowledge- community development are also
National interest paramount in sharing based on mutual regular feature of Company’s
all our actions. respect, trust and openness. strategic plans.

Learning & Innovation Empowerment

We embrace lifelong learning We flourish under an
and innovation as an essential ecosystem of shared
catalyst for our future success. understanding founded
We believe in continuous on the concept of
improvement and to seize empowerment, accountability
opportunities inherent in and open communication in
change to shape the future. all directions.
8 Leveraging HR to Achieve Excellence

Company
Profile

A
ttock Refinery Limited (ARL) was incorporated Solvent Extraction Unit for smoke-point correction of
as a Private Limited Company in November, Kerosene were added.
1978 to take over the business of The Attock
Oil Company Limited (AOC) relating to refining There were subsequent discoveries of oil at Meyal
of crude oil and supplying of refined petroleum and Toot (1968). Reservoir studies during the period
products. It was subsequently converted into a 1970-78 further indicated high potential for crude
Public Limited Company in June, 1979 and its shares oil production of around 20,000 bpd. In 1981, the
are quoted on the Pakistan Stock Exchange Limited. capacity of Refinery was increased by the addition of
The Company is also registered with Central two distillation units of 20,000 and 5,000 bpd capacity,
Depository Company of Pakistan Limited (CDC). respectively. Due to their vintage, the old units for lube/
wax production, as well as Edeleanu, were closed down
Original paid-up capital of the Company was Rs in 1986. Another expansion and up gradation project
80 million which was subscribed by the holding was completed in 1999 with the installation of a Heavy
company i.e. AOC, Government of Pakistan, Crude Unit of 10,000 bpd and a Catalytic Reformer of
investment companies and general public. The 5,000 bpd. In 2000, a Captive Power Plant with installed
present paid-up capital of the Company is Rs 852.93 capacity of 7.5 Megawatt was commissioned.
million.
The latest Expansion / Up-gradation Project completed
ARL is the pioneer of crude oil refining in the country in November 2016 comprised the following:
with its operations dating back to 1922. Backed by a i) Diesel Hydro Desulphurization (DHDS) unit: This
rich experience of more than 96 years of successful has reduced Sulphur contents in the High Speed
operations, ARL’s plants have been gradually Diesel to meet Euro II specification;
upgraded/ replaced with state-of-the-art hardware ii) Preflash unit: This has increased refining capacity
to remain competitive and meet new challenges and by 10,400 bpd;
requirements. iii) Light Naphtha Isomerization unit: This has
enhanced production of Premium Motor Gasoline
It all began in February 1922, when two small stills by about 20,000 M. Tons per month;
of 2,500 barrel per day (bpd) came on stream at iv) Expansion of existing Captive power plant by
Morgah following the first discovery of oil at Khaur 18 MW.
where drilling started on January 22, 1915 and at
very shallow depth of 223 feet 5,000 barrels of oil ARL’s current nameplate capacity stands at 53,400 bpd
flowed. After discovery of oil in Dhulian in 1937, the and it possesses the capability to process lightest to
Refinery was expanded in late thirties and early heaviest (10-65 API) crudes. The Company is ISO 9001,
forties. A 5,500 bpd Lummus Two-Stage-Distillation ISO 14001, ISO/ IEC 17025, OHSAS 18001 certified and
Unit, a Dubbs Thermal Cracker Lubricating Oil is the first refinery in Pakistan to implement ISO 50001
Refinery, Wax Purification facility and the Edeleanu (Energy Management System).
 Annual Report 2018 9

Accreditation & Certifications

IMPLEMENTED AT ARL

ISO-9001: 2015 ISO-14001 : 2015 OHSAS-18001 : 2007 ISO/IEC-17025 : 2005

QUALITY MANAGEMENT ENVIRONMENTAL OCCUPATIONAL HEALTH AND
LABORATORY
SYSTEM MANAGEMENT SYSTEM SAFETY ASSESSMENT SERIES Energy Management System
MANAGEMENT SYSTEM
10 Leveraging HR to Achieve Excellence

Series of Firsts &

Major Events

1922 1987 1998 1999 2001 2002 2006

First refinery First to start First to First to First major First major First major
of the region dispensing major produce low produce low industry to get industry to industry to get
products through sulfur diesel lead premium ISO 9001: 2000 get ISO 14001 OHSAS 18001
pipeline using – less than gasoline direct certification certification certification
computerized 0.5% from refinery
metering system process First to
First to produce poly-
produce low First to achieve mer modified
sulfur furnace ISO 9002 asphalt
– less than 1% certification for
quality control
laboratory
 Annual Report 2018 11

2007 2008 2009 2012 2013 2017

First in Oil and First HSE First HR First in Pakistan Commencement Preflash,
Gas sector to Conference Conference to declare of settingup ISOM, DHDS &
get ISO 17025 implementation of ARL Up- Auxillary units
accreditation of ISO 50001 gradation commissioned
(Energy Project
Management
System)

First Plant
Maintenance
& Operations
Conference
12 Leveraging HR to Achieve Excellence

LIQUEFIED PETROLEUM GAS (LPG)

LPG, is a flammable mixture of hydrocarbon gases used
as a fuel in heating appliances and vehicles. As its’ boiling
point is below room temperature, LPG will evaporate
quickly at normal temperatures and pressures and is
usually supplied in pressurized steel vessels. ARL is
producing LPG as per PSQCA Specifications.

NAPHTHA
Number of flammable liquid mixtures of hydrocarbons i.e.
a component of natural gas condensate or a distillation
product. Export of high quality color-less Naphtha by ARL

ARL is adding to the national exchequer in terms of foreign

exchange inflows.

Products JET FUEL

ARL is producing Jet fuel, a type of aviation fuel designed
for use in aircraft powered by gas-turbine engines. It is
clear to straw-colored in appearance. JP-1 is provided to
PSO, Shell and JP-8 to Pakistan Air Force.

LIGHT DIESEL OIL (LDO)

Light diesel oil is a product that is burned in a furnace or
boiler for the generation of heat or used in an engine for
the generation of power. LDO is used for diesel engines,
generally of the stationery type operating below 750 rpm.

MINERAL TURPENTINE TAR (MTT)

ARL is producing an inexpensive petroleum-based
replacement for the vegetable-based turpentine. It is
commonly used as paint thinner for oil-based paint and
cleaning brushes and as an organic solvent in other
applications.

FURNACE FUEL OIL (FFO)

ARL supplies Furnace Fuel oil which is commercial heating
oil for burner; it is also used in power plants. Major portion
of this fuel is supplied to Independent Power Producers
(IPPs) for the production of Electricity.

PAVING GRADE ASPHALTS

A dark brown to black cementations material in which the
predominating constituents are bitumen which is obtained
during processing. ARL is producing two grades products
60/70 and 80/100.

POLYMER MODIFIED BITUMEN (PMB)

ARL is the only refinery of Pakistan producing this special
product. Bitumen is further treated with polymer which
enhances consistency, reduces temperature susceptibility,
improves stiffness and cohesion, increases flexibility,
resilience and toughness, develops binder-aggregate
adhesion. It is worth mentioning that Pakistan motorway is
using latest polymer-modified bitumen produced by ARL.
 Annual Report 2018 13

PREMIUM MOTOR GASOLINE (PMG)

It is a transparent petroleum-derived liquid that is
primarily used as a fuel in internal combustion engines.
Some additives are also added in it to improve quality. ARL
is a major provider of PMG around the country. During the
year the Company started producing 90 RON PMG.

KEROSENE OIL
It is a thin, clear liquid formed from hydrocarbons.
Kerosene is the main fuel used for cooking and kerosene
stoves have replaced traditional wood-based cooking
appliances.

HIGH SPEED DIESEL (HSD)

HSD produced by ARL is used as a fuel for high speed
diesel engines like buses, lorries, generating sets,
locomotives etc. Gas turbine requiring distillate fuels
normally make use of HSD as fuel. After commissioning
of DHDS units, ARL is supplying HSD with low sulphur
contents (500ppm) to meet Euro-II specification.

SOLVENT OIL
It is a mixture of liquid hydrocarbon obtained from
petroleum and used as a solvent in commercial production
and laboratory research. It readily dissolves all petroleum
fractions, vegetable oils & fats and organic compounds of
sulfur, oxygen and nitrogen. The solvent action increases
with the solvent’s aromatic-hydrocarbon content.

JUTE BATCHING OIL (JBO)

JBO produced by ARL is mainly used as in the jute industry
to make the jute fibers pliable. JBO is also used by
processors to produce various industrial oils. ARL is the
only refinery in Pakistan that produces JBO.

RESIDUAL FURNACE FUEL OIL (RFO)

It is special high-viscosity residual oil requiring
preheating. This fuel is specially manufactured for Attock
Gen Limited (165 Mega Watt) power plant.

CUTBACK ASPHALTS
Cutback Asphalt is manufactured by blending asphalt
cement with a solvent. There are two major types of
Cutback Asphalt based on the relative rate of evaporation
of the solvent: Rapid-Curing (RC), Medium-Curing
(MC). RC Cutback Asphalt is used primarily for surface
treatments and tack coat. MC Cutback Asphalt is typically
used for prime coat, surface treatments and stockpile
patching mixes. ARL is producing three grades i.e. RC-70,
RC-250 & MC-70.
14 Leveraging HR to Achieve Excellence

Board of
Directors

MR. LAITH G. PHARAON

Non Executive Director
(Chairman Attock Group of Companies)

A businessman and an international

investor who has financial and trading
interests in Pakistan and other parts
of the world in various sectors like
petroleum, power generation, chemical,
real estate and cement etc. Mr. Laith
holds a graduate degree from the
University of Southern California. He is
also Director on the Board of various
Companies in the Group.
 Annual Report 2018 15

MR. WAEL G. PHARAON MR. SHUAIB A. MALIK MR. ABDUS SATTAR

Non Executive Director Chairman/ Non Executive Director & Non Executive Director
Alternate Director to Mr. Laith G. Pharaon

A businessman and an international Mr. Abdus Sattar has over 35 years

investor who has financial and trading Mr. Shuaib A. Malik has been of Financial Management experience
interests in Pakistan and other associated with Attock Group of at key positions of responsibility in
parts of the world in various sectors Companies for around four decades. various Government organizations/
like petroleum, power generation, He started his career as an Executive ministries, commercial organizations
chemical, real estate and cement etc. Officer in The Attock Oil Company with the main objective of controlling
Mr. Wael holds a graduate degree. Limited in July 1977 and served in costs of various commodities, to
He is also Director on the Board of different Companies in the Group at watch consumer interest, minimize
various Companies in the Group. various times with the responsibility to government subsidies, improve
supervise and oversee the operations government revenues, eliminate
and affairs of these Companies. He wasteful expenses/ leakages and
has exhaustive experience related fixation of gas and POL prices.
to various aspects of upstream, After serving as Financial Advisor
midstream and downstream to Ministry of Petroleum & Natural
petroleum business. He obtained Resources, Government of Pakistan,
his bachelor’s degree from Punjab he also remained Financial Advisor
University and has attended many for Mari Gas Company Limited for
international management programs, around 8 years including 6 years as its
workshops and conferences including Director on the Board. While working
two such programs at British Institute as Financial Advisor in Ministry of
of Management, UK and Harvard Petroleum, he also served as Director
Business School, USA. Presently, on a number of boards like OGDCL,
he is holding the position of Group PPL, SNGPL, SSGCL, PSO, PARCO,
Chief Executive of the Attock Group of ARL, POL, NRL, PMDC etc. as a
Companies besides being a Director nominee of Government of Pakistan for
on the Board of all the Companies in about 7 years. He is a fellow member
the Group. of Institute of Cost and Management
Accountants of Pakistan (ICMAP)
and was also nominated as council
member of ICMAP for 3 years (Jan
2000 to Dec 2002) by the Government
of Pakistan. He has attended many
advance financial management
courses, programs and trainings in
institutions of international repute
in Pakistan and abroad. Presently,
he is on the Board of Pakistan
Oilfields Limited, Attock Refinery
Limited, Attock Cement Pakistan
Limited, Attock Petroleum Limited
and National Refinery Limited and a
visiting faculty member of a number of
reputed universities and professional
institutions.
16 Leveraging HR to Achieve Excellence

Board of Directors

MR. JAMIL A. KHAN MR. SHAMIM AHMAD KHAN MR. G. A. SABRI

Non Executive Director Independent Non Executive Director Independent Non Executive Director

Mr. Jamil A. Khan was previously After joining Civil Service of Pakistan, Mr. G.A. Sabri did his Master’s in
working in Pakistan Air Force in Mr. Shamim Ahmad Khan served in Chemical Engineering from Punjab
General Duty Pilot Branch and senior positions in the Government, University in 1972. He has vast
continued to serve in various particularly in the Ministry of Finance experience in the petroleum sector.
operational, administration and staff and retired as Secretary, Ministry of He has served in senior positions
positions for over sixteen years. Commerce. For ten years, he worked in the Ministry of Petroleum and
in Corporate Law Authority, regulatory Natural Resources as Director General
He joined National Refinery Limited body for the corporate sector as Renewables and Energy Resources,
in 2005 immediately after its Member and later as Chairman. He Director General Gas, Director General
privatization and is presently serving restructured it as Securities and Oil, Director General Petroleum
as Deputy Managing Director and a Exchange Commission of Pakistan Concessions, Additional Secretary
member of the Board of Directors (SECP) and became its first Chairman. Petroleum and retired as Special
as an alternate director. He is a After leaving SECP in 2000, he has Secretary Petroleum in 2010.
graduate in aero sciences and holds been serving as director of a number
a degree of Masters in Business of listed companies. Presently, he is During his service, G.A. Sabri
Administration (Finance) besides a non executive director of Packages, frequently tackled, and accomplished
qualifying the directors training IGI Insurance and Abbott Laboratories. various tasks of national importance.
program from Pakistan Institute of He is also Chairman of IGI Life He facilitated the approval and
Corporate Governance (PICG). Insurance. Earlier he has served commissioning of PARCO refinery,
on the Boards of ABN AMRO/ Royal Bosicar Refinery, White Oil Pipeline
Bank of Scotland, Linde Pakistan and Project and Attock Petroleum Ltd.
Pakistan Reinsurance Company. He He zealously worked to strengthen
has also been associated with non policies, drafting concession
government sector. For six years, agreements, both onshore & offshore,
he served as Member/ Chairman, rules and the new Petroleum Policy
Certification Panel, Pakistan Center 2008 in house. He was Chairman of
for Philanthropy and presently he two public sector organisations and
is member of Board of Governors member of Board of Directors of
of SDPI. Mr. Khan has undertaken a almost 18 top oil and gas companies
number of consultancy assignments from time to time. He remains one
for Asian Development Bank, World of the foremost energy experts of
Bank and DFID. Pakistan.
 Annual Report 2018 17

MR. BABAR BASHIR NAWAZ MR. M. ADIL KHATTAK

Alternate Director to Chief Executive Officer
Mr. Wael G. Pharaon

Mr. Babar has over 32 years of Mr. M. Adil Khattak, Chief Executive
experience with the Attock Group Officer of Attock Refinery Limited
of Companies. During this period, (ARL) since 2005 has been associated
he has held various positions in with The Attock Oil Group in Pakistan
Finance, Personnel, Marketing & for the last 42 years. Prior to re-joining
General Management before being ARL as CEO, he worked for two years
appointed as the Chief Executive of as Chief Operating Officer of Attock
Attock Cement Pakistan Limited in Petroleum Limited. Mr. Khattak has
2002. Mr. Bashir holds a Master’s extensive experience in engineering,
degree in Business Administration maintenance, human resource
from the Quaid-e-Azam University management, project management
in Islamabad and at present is also and marketing.
a Director on the Board of all the
listed companies of the Group in Mr. Khattak also holds the positions
Pakistan. He has attended various of Chief Executive Officer of Attock
courses, workshops and seminars in Hospital (Pvt.) Ltd., and National
Pakistan and abroad on the business Cleaner Production Centre (NCPC).
management and has substantial He is Director on the Boards of Attock
knowledge of the cement industry Information Technology Services
in Pakistan. Currently he is also Limited and Petroleum Institute of
a member of the Management Pakistan (PIP). He is also a Member
Committee of the Overseas Investors on the Boards of Governors of
Chamber of Commerce and Industry Lahore University of Management
and the All Pakistan Cement Sciences (LUMS), Ghulam Ishaq Khan
Manufacturing Association. Institute of Engineering Sciences
and Technology (GIKI), Sustainable
Development Policy Institute (SDPI),
Corporate Advisory Committee (NUST),
Governing Council (PMQA), National
Productivity Organization and Member
Board of Studies, UET, Peshawar. Mr.
Khattak is President of Attock Sahara
Foundation, an NGO, working for the
poor and needy people of Morgah and
its surrounding areas.

Mr. Khattak holds a master’s degree

in engineering from Texas Tech
University, USA and has attended
many technical, financial and
management programs in institutions
of international repute in Pakistan,
USA, Europe and Japan.
 18 Leveraging HR to Achieve Excellence

Board
Committees

PHOTOGRAPH OF THE 192ND BOARD OF DIRECTORS MEETING HELD ON AUGUST 14, 2018, IN DUBAI, UNITED ARAB EMIRATES

AUDIT COMMITTEE HR & REMUNERATION COMMITTEE

Shamim Ahmad Khan G. A. Sabri
Chairman Chairman
(Independent Director) (Independent Director)

Shuaib A. Malik Shuaib A. Malik

Member Member

Abdus Sattar Jamil A. Khan

Member Member

G. A. Sabri M. Adil Khattak

Member Member
(Independent Director)

Babar Bashir Nawaz

Member
(Alternate Director)

Responsibility Responsibility
The Audit Committee’s primary role is to ensure The prime role of the Human Resource
compliance with the best practices of Code of & Remuneration Committee is to give
Corporate Governance, statutory laws, safeguard recommendations on matters like human
of Company’s assets through monitoring resource management policies, selection,
of internal control system and fulfill other evaluation, compensation (including retirement
responsibilities under the Code. benefits) and succession planning of the CEO,
CFO, Company Secretary and Head of Internal
Audit to the Board. The Committee also considers
recommendations of CEO on such matters for key
management positions.
 Annual Report 2018 19

Company
Information
Chief Executive Officer
M. Adil Khattak

Chief Financial Officer

Syed Asad Abbas (FCA)

Company Secretary
Saif ur Rehman Mirza (FCA)

Bankers
Al Baraka Bank (Pakistan) Limited
Allied Bank Limited
Askari Bank Limited
Bank Alfalah Limited
Bank Al Habib Limited
Dubai Islamic Bank Pakistan Limited
Faysal Bank Limited
Habib Bank Limited
JS Bank Limited
MCB Bank Limited
Meezan Bank Limited
National Bank of Pakistan
Soneri Bank Limited
The Bank of Punjab
United Bank Limited

Auditors
A. F. Ferguson & Co.
Chartered Accountants

Legal Advisor
Ali Sibtain Fazli & Associates
Legal Advisors, Advocates & Solicitors

Share Registrar
Central Depository Company of Pakistan Limited
Share Registrar Department,
CDC House, 99-B, Block ‘B’,
S.M.C.H.S., Main Shahra-e-Faisal,
Karachi-74400.

Registered Office
The Refinery, Morgah, Rawalpindi
Tel: (051) 5487041-5
Fax: (051) 5487093
(051) 5406229
E-mail: info@[Link]
Website: [Link]
20 Leveraging HR to Achieve Excellence

The
Management
 Annual Report 2018 21

Left to Right:

Saif-ur-Rehman Mirza
Company Secretary

Anwar Saeed
Manager (HSEQ)

Salman Tariq
AGM (Maintenance)

Javed Iqbal Malik

AGM (HR & A)

M. Adil Khattak
Chief Executive Officer

Ejaz H. Randhawa
DGM (Operations)

Syed Asad Abbas

Chief Financial Officer

Asif Saeed
Senior Manager (C & MM)

Munir A. Temuri
AGM (TS, P&D)

Usman Ishaq Raja

Manager (BR&A)

Saeed Uddin Faruqi

Manager (Engineering)
22 Leveraging HR to Achieve Excellence

Management
Committees

Various Committees have been formulated to look after the operational and
financial matters of the Company. Brief description of the role of Committees
involved in strategic matters is given below:

ECONO-TECH. COMMITTEE BID EVALUATION COMMITTEE

This Committee reviews all new The primary responsibility of this
proposals relating to Refinery Committee is to review cases of
operations and projects and bids for purchase of goods and
formulates recommendations services to ensure acquisition of
after discussing/ evaluating it from the most suitable resource at the
technical and economic aspects. optimum price.

BUDGET COMMITTEE RISK MANAGEMENT

This Committee reviews and & STRATEGIC PLAN
recommends the annual budget COMMITTEE
proposals for the approval of This Committee discusses and
the Board of Directors. It also decides all matters related to risk
monitors the approved budget management and strategic plan of
utilization. Attock Refinery Limited.

APPRAISAL COMMITTEE STANDING COMMITTEE FOR

The role of this Committee is GENDER JUSTICE
to review and propose annual The prime responsibility of this
MANAGEMENT COMMITTEE increments and promotions Committee is to safeguard rights
This Committee which is of management staff. The of employees and making the work
constituted of all departmental Committee also proposes environment free of harassment.
heads meets fortnightly under the areas for improvement for each In case of any complaint, conduct
chairmanship of CEO to coordinate employee. proper investigation and advise
and discuss various issues. CEO for appropriate action.
PRICING COMMITTEE
VALUE & ETHICS COMMITTEE This Committee is responsible for TRAINING STEERING &
The primary role of this determining prices of deregulated SCHOLARSHIP COMMITTEE
Committee is to investigate and products from time to time. This Committee proposes names
advise the CEO appropriate action of staff members for outside
regarding violation of ARL Core CENTRAL HSE COMMITTEE trainings and also approves
Values and related codes and The primary role of this scholarships for employees’
policies. Committee is to set operating children.
policy and procedures consistent
SUCCESSION PLANNING AND with HSEQ Policy and to monitor
CAREER MANAGEMENT implementation of the policy.
COMMITTEE Furthermore, this Committee
This Committee is responsible for provides a strategic direction, sets
initiating and taking all necessary goals and objectives, monitors
steps towards formulation and performance and provides a
implementation of an appropriate mechanism for dealing with safety
Succession Planning and Career behavior issues.
Management System in the
Company.
 Annual Report 2018 23

Organogram

BOARD OF
DIRECTORS

HR & Audit
Remuneration Committee
Committee

CHIEF EXECUTIVE
OFFICER

Commercial Financial & Human Health, Safety, Business

Technical Operations & Material Corporate Resource & Maintenance Engineering Environment Review &
Services Management Affairs Administration & Quality Assurance

AGM DGM Sr. Manager AGM AGM AGM Manager Manager Manager
(TS, P&D) (Operations) (C & MM) (F & CA) (HR & A) (Maintenance) (Engineering) (HSEQ) (BR & A)

Administrative Reporting
Functional Reporting
24 Leveraging HR to Achieve Excellence

Health, Safety, Environment & Quality

(HSEQ) Policy

ARL is committed to provide SAFETY

the best quality products in the ARL ensures that every employee
market, endeavors to protect the or contractor works under the
environment and to ensure health safest possible conditions. It is our
and safety of its employees, con- firm belief that every effort must
tractors, customers and work for be made to avoid accidents, injury
continual improvements in Health, to people, damage to property and QUALITY
Safety, Environment and Quality the environment. ARL recognizes employees’ input
(HSEQ) systems. ARL is commit- towards quality by emphasizing
ted to comply with all applicable ARL believes that practically all skills development and
Health, Safety, Environment and accidents are preventable by professionalism. ARL must be
Quality laws and regulations. The carrying out risk assessments customer driven, cost effective and
Policy shall be used to demon- and reducing risks identified by continuously improving services,
strate this commitment through: appropriate controls. works and products to meet
requirements of the market.
HEALTH ENVIRONMENT
ARL seeks to conduct its activities ARL is committed to prevent ARL conducts periodic audits and
in such a way as to promote the pollution by the efficient use of risk assessment of its activities,
health of and avoid harm to its energy throughout its operations, processes and products for setting
employees, contractors, visitors recycle and reuse of the effluent and reviewing its objectives and
and the community. wherever possible and use of targets to provide assurance, to
cost-effective cleaner production improve HSEQ standards and loss
techniques that lead to preventive control. ARL is committed to share
approach for sustainable all pertinent information related to
development. HSEQ with all concerned parties.
 Annual Report 2018 25

Energy Policy

As a responsible corporate entity, efficiency and optimization is the to energy efficiency and
Attock Refinery Limited (ARL) key to sustainable development. conservation and review
is cognizant that natural energy them periodically to ensure
resources are not only scarce but In our economic and development sustainable growth.
also very precious and need to be strategies, we focus on initiatives
optimally utilized. Ever-increasing that will use energy resources 3. RESPONSIBLE
environmental consciousness more efficiently. To further DEVELOPMENT:
as well as market competition enhance the energy management, ARL is committed to comply
demands enhancement of energy ARL has set the following energy with all applicable legal
efficiency and energy conservation objectives: requirements in respect of
where possible. Energy energy efficiency, conservation
conservation positively impacts 1. USE OF ROBUST, and its reporting.
environment and goes a long way SCIENTIFICALLY SOUND
in reducing greenhouse gases and TECHNOLOGY: 4. ENERGY CONSERVATION
other hazardous emissions. This will enable the AWARENESS:
optimization of the existing To keep abreast with latest
ARL is committed to produce resources and employing development in energy
quality petroleum products by energy efficient equipment conservation technologies and
employing economical energy while protecting the inculcate energy conservation
efficient processes and equipment. environment. culture in all our activities.
It is our goal to reduce energy
consumption where possible 2. ENERGY MANAGEMENT:
by regular monitoring and up ARL believes in setting
gradation. We believe that energy realistic targets pertaining
26 Leveraging HR to Achieve Excellence

Human Resource
Policy
ARL Corporate policy on human resources is to attain 4. Provide and maintain comfortable, peaceful and
the highest standards of professionalism throughout orderly working conditions.
the organization by recognizing and revealing
individual capabilities, productivity, commitment and 5. Promote from within whenever possible and
contribution. ARL firmly believes that the continued provide opportunities for growth and promotion to
progress and success of the Company depends upon the employees.
to a great extent on its personnel – that only with a
carefully selected, well trained, achievement oriented 6. Treat each employee with fairness and respect
and dedicated employee force, can the Company and in return expect from him service marked by
maintain its Leadership in the Refining industry. And dedication, devotion, commitment and loyalty.
because the most valuable asset of the Company is
its personnel, ARL has the following human resource 7. Encourage each employee to improve and develop
policies: him/ her self and thereby prepare him/ her for
positions of higher responsibility.
1. Employ the best-qualified persons available,
recognizing each person as an individual thus 8. Recognize and reward efficiency, team
affording equal opportunity. work, discipline and dedication to duty and
responsibility.
2. Pay just and responsible compensation in line
with the industry standards, job requirements and 9. Exhaust all means to resolve Labor-Management
work force. differences, if any, promptly and amicably.

3. Help employees to attain their maximum 10. Provide a wholesome and friendly atmosphere for
efficiency and effectiveness through a well- harmonious Labor-Management relations.
rounded training and development program.
Annual Report 2018 27
28 Leveraging HR to Achieve Excellence

Whistle Blowing
Policy
The Management encourages whistle blowing culture l The Whistle Blower has sufficient evidence(s)
in the organization and has adopted a culture to to ensure genuineness of the fact after a proper
detect, identify and report any activity which is not investigation at his/ her own end.
in line with the Company policies, any misuse of
l The Whistle Blower understands that his/ her act
Company’s properties or any breach of law which may
will cause more good than harm to the Company
affect the reputation of the Company. The Company
and he/ she is doing this because of his/ her
has adopted the best corporate policies to protect
loyalty with the Company and
employee(s) who report corporate wrongdoings, illegal
conduct, internal fraud and discrimination against l The Whistle Blower understands the seriousness
retaliation. The Company promotes transparency of his/ her action and is ready to assume his/ her
and accountability through publication of accurate own responsibility.
financial information to all the stakeholders,
implementation of sound effective and efficient The Management understands that through the use
internal control system and operational procedures. of a good Whistle Blowing Plan, they can discover
and develop a powerful ally in building trust with
All employees have signed a code of conduct and the its employees and manage fair and transparent
Company takes any deviation very seriously. operations. The Company therefore provides a
mechanism whereby any employee who meets the
The Company encourages Whistle Blowing to raise the above referred conditions can report any case based
issue directly to Chief Executive Officer provided that:- on merit without any fear of retaliation and reprisal.
 Annual Report 2018 29

Technology is
teaching us to be
Human again
30 Leveraging HR to Achieve Excellence

Code of Conduct for Protection against

Harassment at WorkPlace
OBJECTIVE: EXPLANATION:
Attock Refinery Limited (ARL) is dedicated to provide Definition of Harassment:
a working environment that ensures that each & For this policy, Harassment is defined as:
every employee is treated with respect & dignity and
afforded with equitable conduct. The Company is “Engaging in a course of vexatious comment or
committed to encourage a positive professional work conduct against an employee in a workplace that
atmosphere that is essential for the professional is known or ought reasonably to be known to be
growth of its staff and it also promotes equality of unwelcomed, unsolicited, unreciprocated and usually
opportunity. Harassment, therefore, has no place (but not always) repeated. It is behavior that is likely to
at ARL. This policy affirms ARL’s zero tolerance for offend, humiliate or intimidate”.
harassment on bases of race, color, origin, gender,
religion, age or any physical attributes. The policy also For harassment to occur there does not have to be an
assures employees the right to employment in a place intention to offend or harass. It is the impact of the
of work that is free from harassment and intimidation behavior on the person who is receiving it, together
in accordance with the spirit and theme of “Protection with the nature of the behavior, which determines
Against Harassment of Women at workplace Act, whether it is harassment.
2010”(the Act).
Further, ‘workplace’ in this context is defined to
Harassment is not necessarily confined to the include not only the usual work environment, but also
behavior of seniors toward juniors, it can take place work related events, seminars, conferences, work
between colleagues at the same level or involve staff functions and business trips.
behaving inappropriately towards more senior staff.
Forms of harassment include but not limited to:
The Company views harassment to be among the 1. Verbal abuse: Unwanted comment that offends,
most serious breaches of work place decorum. humiliates or engenders anxiety or fear.
Consequently, appropriate disciplinary or corrective 2. Bullying: Repeated mistreatment, verbal abuse,
action, ranging from a warning to termination, can be or conduct which is threatening, humiliating,
expected if such a situation arises and demands for it. intimidating, or that which interferes with work.
3. Sexual harassment: Unwelcome sexual advances,
It should be noted that harassment can also lead to
requests for sexual favors, and other verbal or
civil and criminal claims beyond the Company’s own
physical conduct of a sexual nature.
disciplinary proceedings.
4. Racial/ religious harassment: Any unwanted
comment referring to the worker’s religious
Application:
affiliation or racial background that attempts to
This policy applies to all employees who work in
humiliate or demean a worker.
the Company; that includes Senior and Junior
management employees and office staff members 5. Age harassment: include offensive remarks
including internees or apprentices/ trainees. The about a person’s age and treating that person
Company will not tolerate harassment whether it is by unfavorably on basis of his/ her age.
fellow Employees, junior or senior staff members. 6. Stalking: is unwanted or obsessive attention
which includes staring, following or monitoring.
The workplace includes:
1. All offices or other premises where business of
the Company is conducted;
2. All Company-related activities performed at
any other location away from the Company’s
premises;
3. Any social, business or other functions where the
behavior or remarks may have an effect on the
place of work or workplace relations.
 Annual Report 2018 31

ROLES AND RESPONSIBILITIES: Complaints:

All staff members have a personal accountability to 1. Although, it is the responsibility of the
make sure that their conduct is not in conflict with Departmental Heads/ Managerial Members to
this policy. address the issue of Harassment however, in
case of non-resolution of the complaint, any
All staff members are expected to participate in staff member of the Company with a harassment
this endeavor which in turn would strengthen and concern may bring an official complaint to the
promote the development of a work environment free Inquiry Committee. All such complaints will be
from harassment. investigated promptly.
The Management is responsible for: 2. All records of complaints that include the
l Discouraging and stopping employment-related meetings, discussions, dialogues, investigation
harassment; results, and other related material will be kept
l Examining every official written complaint of confidential by the Committee/ Company, except
harassment; for where revelation is required for disciplining
l Taking proper corrective measures to react to or any other remedial process.
any substantiated allegations of harassment in 3. After investigating the matter, the Committee
the Company; will forward its report to the competent Authority
l Ensuring that all staff members of the who is the Chief Executive Officer of the
Company are aware of the harassment Company. If it is confirmed that a harassment
predicament and as to what their individual and allegation is valid, strict disciplinary or corrective
collective responsibilities are with respect to actions will be taken accordingly. However, false
circumventing/stopping harassment. allegations/complaints will result in disciplinary
action against the original Complainant.
RESOLUTION OF
HARASSMENT COMPLAINTS: NO REPRISAL:
The Company is committed to provide a helpful The Company is committed to ensure that no staff
working environment to resolve harassment worries member, who brings forward a (genuine) harassment
by setting up an Inquiry Committee consisting of 3 complaint, is subjected to any kind of reprisal. Any
members to be constituted by the Chief Executive retaliatory action will be viewed as a disciplinable
Officer. matter.

EMPLOYEES, WHO HAVE BEEN SUBJECTED TO HARASSMENT, MAY WRITE DIRECTLY TO THE CHIEF
EXECUTIVE OFFICER FOR RESOLUTION OF THEIR CASES.
32 Leveraging HR to Achieve Excellence

United Nations

1
Global Compact

Ten Principles Adopted by the Company in

January 2008 as a Guideline to Business Management

United Nations Global LABOR STANDARDS

Compact (UNGC), the Principle 3:
world’s largest corporate Businesses should uphold the
sustainability initiative is a freedom of association and the
effective recognition of the right to
call to action for corporate
collective bargaining;
sector. Attock Refinery
Limited adopted it voluntarily Principle 4:
during the year 2008 in The elimination of all forms of
pursuance of its commitment forced and compulsory labour;

to sustainable growth Principle 5:

while contributing to global The effective abolition of child
priorities. We wish to be labour; and
among the architects of a Principle 6:
better world by becoming key The elimination of discrimination
partner in tackling our world’s in respect of employment and
most pressing challenges. occupation.

The Global Compact asks ENVIRONMENT

companies to embrace, Principle 7:

support and enact, within Businesses should support
a precautionary approach to
their sphere of influence,
environmental challenges;
a set of core values in the
areas of human rights, labour Principle 8:
standards, the environment Undertake initiatives to
promote greater environmental
and anti-corruption:
responsibility; and

HUMAN RIGHTS Principle 9:

Principle 1: Encourage the development
Businesses should support and diffusion of environmentally
and respect the protection of friendly technologies.
internationally proclaimed human
rights; and ANTI-CORRUPTION
Principle 10:
Principle 2: Businesses should work against
Make sure that they are not corruption in all its forms,
complicit in human rights abuses. including extortion and bribery.
 Annual Report 2018 33

Communication on Progress
Year: March 2017 to February 2018

STATEMENT OF The call of the United Nations issues is a daunting task,

CONTINUED SUPPORT Global Compact (UNGC) to especially to embark on patrolling
Since its inception in 1922, Attock corporate sector companies is a of boundaries between legal and
Refinery Limited (ARL) has been noble undertaking to embrace, illegal, ethical and unethical,
taking keen interest in economic support and enact, within their right and wrong, fair and unfair. In
elevation, social cohesion, ethical sphere of influence in four order to work within the defined
consideration and environmental areas of Human Rights; Labour, boundaries and eliminate barriers
friendly impact of our activities on Environment and Anti-Corruption. to innovative ideas, ARL business
various stakeholders. To achieve In this realm, ARL has adopted practices are aligned with our
this objective, we have been UNGC ten principles which deeply embedded core values.
following the triple P approach i.e. make meaningful difference by We believe that it is not a onetime
People, Planet & Profits. developing holistic approach for stand, rather a continuous and
society and future generations. enduring journey to achieve
In addition to recognition of wholesome success.
ARL’s dedication towards the In pursuance of compliance
ten principles of UNGC, the with the UNGC principles, ARL reiterates its resolve towards
Company was awarded “Living it is our privilege to confirm best global practices to remain
the UN Global Compact Business that ARL’s strategic planning on the forefront of a socially
Excellence” Award in 2016. ARL and development towards responsible company through
transparent sustainable practices sustainability is based on strict adherence of UNGC guiding
and sustainability reporting were diversification, competitiveness, principles.
also awarded by ICAP-ICMP transparency of our operations
Pakistan in year 2016. ARL won complying with all the pertinent
Environment Excellence Award and applicable national and
2017 of National Forum for international laws, rules,
Environment & Health (NFEH) and regulations and standards,
the Company was shortlisted as a environmental protection,
finalist for the category of Asia’s synchronized community and – Sd –
best Environmental Reporting & social responsibility services. M. Adil Khattak
Asia’s Best Stakeholder Reporting Chief Executive Officer
Awards in Asia’s Sustainability We also realize that integrated
Reporting Awards 2017. approach to manage diverse February 21, 2018
34 Leveraging HR to Achieve Excellence

Business Process Re-Engineering,

Research & Development
1. A Continuous Catalyst Regeneration (CCR)
Reformer Unit is being planned to upgrade the
surplus naphtha pool to PMG. This unit will
enable ARL to meet the growing demand of
PMG by producing high Octane product without
addition of octane boosting additives. ARL
invited bids from leading technology providers
(Licensors) i.e. M/s UOP, USA and M/s Axens,
France. The technology selection is in progress
and it is expected that the Contract for Licensor
Process Design Package (PDP) will be awarded
by 3rd Quarter of 2018.

2. Government of Pakistan has imposed curbs

on the use of fuel oil for power generation by
Independent Power Producers (IPPs) due to the
availability of re-gasified LNG. Reduced Furnace
oil demand has a direct impact on refinery
throughput. A scoping study for upgradation
of bottom-of-barrel has been initiated to
evaluate the most viable option / technology for
Furnace oil minimization by maximizing middle
distillates. For this purpose, correspondence
with reputable technology providers like UOP,
KBR, Axens and Haldor-Topsoe is underway.

3. Optimized performance test run of Diesel Hydro

Desulphurization unit (DHDS) at 110% of the
design capacity was done successfully.

4. ARL was facing abnormally high increase in

Naphtha Hydrotreater Reactor pressure drop at
Reformer plant. It was controlled by in–house
modification in feed tanks and use of Cattrap
disc technology in consultation with UOP.

5. The project of Remotely Operated Isolation

Valves (ROIVs) installation was conceived to
improve safety at plants. An in-house study
The Company continued its was conducted in order to identify the number
endeavors to further improving the of ROIVs required and to outline the project
requirements. Detailed engineering work for
operational and administrative
their installation has now been completed.
efficiency in order to have positive
impact over product quality and 6. In-house safety review recommended the closed
drain system for Sour Water Stripping Unit (SWS)
production slate. Some of the major
in view of H2S hazard. Initially basic engineering
tasks performed in this connection for the project was completed by ARL engineers.
are as follows: After that; a detailed engineering contract
awarded to a third party consultant.
 Annual Report 2018 35

7. Based on the R&D on spent caustic disposal,

ARL team developed its treatment method and
temporary facility using indigenous resources. life and declared fit for operation. Recommended
After successful trial run and chemical process plant piping along with Atmospheric Heater
treatment of all the spent caustic streams; ARL refractory and tubes were also replaced.
engineers did basic engineering to install a
permanent and properly designed facility with 12. In-house HAZOP study of Hydrogen Plant was
improved reliability, controls and efficiency. carried out to fulfill HSEQ requirements and
Contract has been awarded to a third party identify risk control techniques.
consultant for detailed engineering and expected
to be completed during FY 2018-19. 13. Aviation fuel production facilities from plants to
final dispatch are annually audited by third party.
8. Low sulfur in ARL Diesel stream does not allow This year, Air Total Aviation France, ranked ARL
Sulfur Recovery Unit operation at minimum overall level of operations from “SATISFACTORY”
design capacity. The Licensor M/s Jacobs was to “GOOD”.
contacted to review the turndown capacity of
the unit. Basic engineering study has been 14. Improved performance of Effluent Treatment
done which has concluded that the unit can Plant (ETP) resulted in yearly recovery of 20
be operated with minor changes related to Million gallons of reusable water for refinery
mechanical and instrumentation along with operations and 11,000 barrels of recovered oil for
introduction of a new catalyst in first of the four reprocessing.
reactors.
15. Direct supplies of Aviation fuel from ARL to new
9. ARL in consultation with UOP took initiative to Islamabad airport started.
test the Light naphtha Hydrotreator (LHT) at
higher throughput after detailed evaluation. 16. Three new tube wells (192,000 gallons/day) were
Plant throughput was gradually increased up developed and commissioned to fulfill refinery
to 125% load with respect to design feed rate. operations requirement of water.
The test run provided satisfactory results and
enabled ARL to operate LHT unit above its 17. Process Water conservation (10,000 gallons/
general design margin of 10%. LHT is now day) was ensured by diverting treated water
continuously operating on 116% load for more from Sour Water Unit (SWU) to Heavy Crude Unit
than 8 months. The Licensor UOP has also been (HCU) for desalting purpose.
contacted to review and validate the results. This
has helped in maximum capacity utilization of 18. Heavy crude unit as-built P & IDs drawings were
ISOM unit for PMG production. updated.

10. Due to decreased supply of SNGPL gas different 19. Continuous and enhanced fuel gas production
options of backup fuel availability were evaluated from Amine Unit (AMU) was ensured using
and LPG Vaporizer was finally selected for in-house jacketed steam modification on Sour
implementation. It uses stored liquid LPG as gases feed line at AMU. This modification also
feedstock and vaporizes to gas for use through helped to fix the H2S release hazard at plant.
normal refinery gas gathering system. LPG
Vaporizer has been installed, commissioned and 20. Operator Training Simulator (OTS) is a tool
tested successfully. which creates real time environment identical
to control room for plant operators. During
11. Lummus unit was shut down for Annual last year; 73 persons participated the training
Turnaround and third party inspection in sessions. Out of these six (6) engineers, eight
February 2018. M/s SGS did detailed inspection (8) board men and six (6) field operators are
of plant piping and equipment to ascertain useful performing independent duty at different plants.
36 Leveraging HR to Achieve Excellence

Corporate
Social Responsibility
Since its inception in 1922, Attock Refinery Limited’s contribution towards CSR
has been an important part of our core values. During these long years, we
have taken exhaustive initiatives in this realm and continue to find ways and
means to meaningfully contribute towards community welfare activities as
enumerated below:

ATTOCK SAHARA FOUNDATION (ASF)

ASF is Company sponsored Non Profit Organization c. ASF sustains itself through a well equipped
(NPO) which is significantly contributing in national medium size Industrial Stitching Section which is
wellbeing by uplifting the socio economic condition of the main source of income to meet its manifesto
the deprived segment of local community especially as well as providing employment to widows,
the female population. During the year under review physically challenged and special persons.
Rs. 19.54 million were spent on following:
d. With the view to augment income of ASF and
a. Apprenticeship Program, Scholarship Scheme, to provide an opportunity to the local cottage
Marriage Support Fund, Poor Patient Fund, industry (mostly based on the skills imparted
organized collection and distribution of Zakat to poor women of the area by ASF) as well as
and various welfare and community development recreation to local population. Company organizes
projects like women skill development, capacity a grand ASF Meena Bazaar annually on its
building and skill enhancement. premises. This family event is whole heartedly
participated by all and sundry of the surrounding
b. ASF’s focus is on enabling women to become communities and is another source of major
earning hands to enhance their family incomes by income.
imparting necessary skills like stitching, hand and
machine embroidery, “Adda” work, training as e. ASF also has a play group level school on “no
beautician, basic and advanced computer training profit no loss basis” for about 70 children.
and spoken English skills.
 Annual Report 2018 37

COMMUNITY WELFARE
a. The Company sponsors well maintained
playgrounds for hockey, cricket and football along
with other sports facilities. We also patronize
parks in the vicinity, provide potable water and
health care to the surrounding communities. The
total expenditure on such activities amounted to
over Rs. 2.28 million.

b. The Company provides administrative support to

schools and mosques in the surrounding area.
During the year we spent Rs. 1.48 million under
this head.

c. We provide financial assistance of Rs. 0.54 million EDUCATION/ TRAINING

to an NGO working for the betterment of the a. The Company is operating an extensive
visually impaired. management training program of 1 to 2 years
for fresh graduates. The annual expenditure on
d. Fuel worth Rs. 100,000 per annum is being these training schemes amounts to over Rs. 28.57
provided to Govt. Special School for Hearing million.
Impaired.
b. The Company offers scholarships from class 6 to
e. Fuel worth Rs. 1.55 million has also been provided PhD level to employees’ children. During the year
to Rawalpindi Golf Club during 2017-18 for 39 scholarships were awarded and 31 brilliant
promotion of Golf. students amongst employees’ children were
recognized by awarding prizes. The Company
f. The Company pays Rs. 75,000 per annum to incurred an annual expenditure of Rs. 3.41
the two adjoining Union Councils i.e. Morgah million.
and Kotha Kalan, as contribution towards their
development expenditure. BUSINESS ETHICS AND
ANTI-CORRUPTION MEASURES
EMPLOYMENT OF SPECIAL PERSONS The Company has voluntarily adopted United Nations
The Company not only provides equal employment Global Compact (UNGC) principles since year 2008
opportunities to special persons but takes an in its business practices leading to fight against
extra step to help them to earn respectable living. corruption in all its forms, including extortion and
Emoluments to the tune of Rs 3.27 million were spent bribery.
in this noble cause.
38 Leveraging HR to Achieve Excellence

Corporate Social Responsibility

HEALTH, SAFETY, ENVIRONMENT AND f. The Company is installing roof top solar panel
PROTECTION MEASURES system under a phased program to maximize use
In line with the Health, Safety, Environment and of clean and renewable energy.
Quality (HSEQ) policy of the Company, following
activities and programs were conducted: g. Safety Week, World Occupational Health &
Safety Day, No Littering Day, World Water Day,
a. The water used in the production process is Biodiversity Day, World Environment Day, Earth
treated at the Effluent Treatment Plant to ensure Day, Dengue Awareness Campaign and Global
that the effluent water leaving the refinery meets Hand Washing Day were observed in collaboration
the Punjab Environmental Quality Standards with National Cleaner Production Centre (NCPC).
(PEQS). This has also helped in conservation and
recycling of water. GREEN ENVIRONMENTAL INITIATIVES
a. The Company has established the Morgah
b. The Company supports National Cleaner Biodiversity Park which uses recycled water for
Production Centre Foundation (NCPC), an its orchards through drip & sprinkler irrigation
NPO which provides analytical/ environmental systems. It helps to conserve the biodiversity
and waste management services including of the Potohar Region and provides a healthy
bioremediation and incineration. environment, recreation and education to the
visitors.
c. The Company has taken a step forward
towards achieving excellence in Environmental
Management Systems by following British Safety
Council 5 Star Environmental Audit Rating
program guidelines for adopting best practices.
The Company achieved 4 Star rating this year.

d. Hazard and Operability (HAZOP) study is

conducted on all process areas at regular
intervals to identify and control the hazards at
Process units. This year 31 HAZOP (Hydrogen
Plant) recommendations have been successfully
implemented.

e. Waste water treatment facility recycles 4,000

liters per day of Canteen waste water for use in
fruit orchard through drip irrigation.
 Annual Report 2018 39

c. The Company plants 10,000 to 12,000 saplings

each year which include about 2,000 fruit and
indigenous plants. Tree saplings are also being
donated to various educational institutions and
local communities to enhance the vegetation
cover and improve the environmental conditions
in the surrounding communities to conserve
natural ecosystems for future generations.

d. The Company has recently planted a Citrus

& Guava orchard on 10 acres in the existing
vegetable/ fruit orchard area with drip irrigation
system in collaboration with the Government of
Punjab.

ENERGY CONSERVATION
b. Under Morgah Biodiversity project, the Company The Company has implemented Energy Management
has initiated several CSR activities for the benefits System ISO 50001-2011 and continues with its internal
of employees and local communities which include program to conserve energy by creating awareness
natural honey production, fruits like peach, grapes, among its employees and initiatives to optimize energy
strawberries, citrus etc. and organic vegetables. consumption in the Refinery.
40 Leveraging HR to Achieve Excellence

Corporate Social Responsibility

INDUSTRIAL RELATIONS/ WORKERS WELFARE CONTRIBUTION TO THE NATIONAL ECONOMY

The Company extends maximum benefits to its a. The Company’s annual contribution to the
employees and ensures cordial industrial relations national exchequer in the form of taxes and
through the Collective Bargaining Agent (CBA). In this duties amounted to over Rs 44.15 million while
context the Company extends following facilities: foreign exchange savings of US $ 126 million
were achieved through import substitution and
a. The Company provides highly subsidized food exports. Through its recent expansion of refinery
through its dining facilities and wheat flour. capacity the Company has substantially increased
production of value added deficit products i.e. high
b. The Company nominates on annual basis, four speed diesel (HSD) and motor gasoline thereby
members each of Non-Management Staff along with further saving valuable foreign exchange.
their spouses or dependents through open ballot
for performing Hajj and Umrah. The Company also b. The Company not only operates on 100%
nominates on annual basis, one non-Muslim worker indigenous crude oil thus providing a major
along with spouse through open ballot for visiting outlet to more than 42 oilfields spread over the
their sacred places in Pakistan. The total cost northern part of Pakistan but is the main source
incurred on this account was over Rs.3.4 million. of petroleum products to the civil and defense
sectors of the Northern Region of Pakistan. It
c. The Company gives quarterly Good Performance is also a catalyst in the deployment of a large
and Long Service awards to its workers. transportation fleet for crude oil and refined
products movement.
d. The Company provides pick and drop for employees’
school and college going children.

PHOTOGRAPH OF THE RETIRING EMPLOYEES WITH CEO – DECEMBER 2017.

Annual Report 2018 41
42 Leveraging HR to Achieve Excellence

Chairman’s
Review
On behalf of the Board of Directors, I am pleased prices of the petroleum products. The thin margins
to present the Company’s 40th Annual Report which were not sufficient enough to absorb the refining cost
includes review of the Company’s operations and the and heavy exchange losses which resulted in loss from
audited financial statements for the year ended refinery operations. However, non-refinery income
June 30, 2018. enabled the Company to post a net profit of
Rs 579 million (June 30, 2017: Profit of Rs 5,414
Business Review million).
The business environment during the financial
year 2017-18 remained challenging and disturbing. Overall Performance
Political instability, widening current account deficit and Effectiveness of the Board
and unprecedented continuous devaluation of A formal and effective mechanism is in place for
currency were the major contributors towards the an annual evaluation of performance of the Board,
economic difficulties of the country. members of the Board and its Committees. On
the basis of the feedback received through this
The prices of crude oil kept on increasing throughout mechanism overall performance of the Board has
the year along with Pak Rupee devaluation and due been found to be Good and effective. Further, the
to the prevailing pricing mechanism the resultant Board has played a pivotal role in achieving the
increase couldn’t be fully compensated, through Company’s objective.
 Annual Report 2018 43

Business Risks, Challenges and Future Outlook energy resources and petrochemicals. In pursuance
Although present macroeconomic indicators of of this commitment, studies are underway to improve
the country appear to be depressed. We hope that products’ specs and to further refine bottom of the
the post-election period may bring some stability barrel.
on the economic front. In addition to the economic
reforms, we look forward to the formulation of Acknowledgement
long term business friendly refining policy to avoid On behalf of the Board, I appreciate untiring efforts
abrupt changes in energy mix and product’s specs of our employees and express gratitude to all
etc. without first letting the investor recover the stakeholders including our valued customers, crude
investment already made based on incentives oil suppliers, banks, suppliers and contractors for
announced by the Government which unfortunately their continued cooperation and support.
remained unfulfilled. The expected economic reforms
and formulation of the long awaited refining policy
would definitely result in restoring the investors’
confidence.
– Sd –
Your Company is committed to pursuing its vision to August 14, 2018 Shuaib A. Malik
provide high quality diversified environment-friendly Dubai, United Arab Emirates Chairman

43
44 Leveraging HR to Achieve Excellence

Directors’
Report

It gives us immense pleasure to present on behalf of the Board of Directors,

the Company’s 40th Annual Report which includes the Audited Financial
Statements of the Company together with Auditors’ Report thereon for the year
ended June 30, 2018.

1 FINANCIAL
RESULTS
During the year under review the Despite all these unfavourable factors, the Company managed timely
Company suffered loss after tax payments of all financial commitments including repayment of long term
of Rs 1,013 million from refinery loan, financial charges, payments to crude oil suppliers, government
operations (June 30, 2017: Profit levies and taxes etc.
of Rs 3,699 million). Non-refinery
income during the current year As more fully explained in note 6 to the accounts, the Company has
was Rs 1,592 million (June 30, changed its accounting policy with respect to accounting treatment
2017: Rs 1,715 million). This and presentation of Surplus on Revaluation of Fixed Assets. Under the
enabled the Company to absorb new policy, the surplus on revaluation of fixed assets would now be
the loss from refinery operations included in equity. This change has been made to comply with the new
and post net profit of Rs 579 requirement as per the Companies Act, 2017.
million (June 30, 2017: Profit of Rs

2
5,414 million) resulting in earning APPROPRIATION
per share of Rs 6.79 (June 30, AND DIVIDEND
2017: Rs 63.47 per share).
2.1 Appropriation
Multiple factors which were 2018 2017
beyond control of the Company’s Rs ‘000
management have contributed
towards this loss. These mainly Profit after tax 578,978 5,413,664
included continuous rise in Less: Other comprehensive loss (129,777) (36,572)
price of crude oil which under
449,201 5,377,092
the present pricing mechanism
Un-appropriated profit b/f 9,697,786 8,300,694
couldn’t be forthwith recovered
from prices of the petroleum Profit available for appropriation 10,146,987 13,677,786
products, heavy exchange
Appropriation:
loss of Rs 1,396 million due
to phenomenal devaluation of Amount transferred (to) /from special reserve
Pak Rupee and some capacity for expansion/ modernisaion 1,012,558 (3,553,535)
constraints faced during second Final Cash Dividend paid for the year 2017:
quarter of the year due to abrupt Rs 6.00 per share (2016: Rs 5.00 per share) (511,758) (426,465)
decision of the Government to
shut-down furnace fueled IPPs. Un-appropriated profit c/f 10,647,787 9,697,786
Annual Report 2018 45
46 Leveraging HR to Achieve Excellence

Directors’ Report

2.2 Bonus Shares / Dividend

The Directors have
recommended issuance
of bonus shares at the
rate of 25% i.e. one share
for every four shares
held (June 30, 2017: Nil).
The recommendations of
issuance of the bonus shares
is subject to approval by the
shareholders in the Annual
General Meeting. No cash
dividend has been proposed
for the current year (June 30,
2017: 60%)

3 PRINCIPAL ACTIVITIES,
DEVELOPMENT AND
PERFORMANCE
Principal activities, development
and performance of the
Company’s business during the
financial year were as follows: 2.279 million Tons (June 2017: efficiency in refinery operations
2.221 million Tons). Major part and to proactively pursue
In continuation of ARL up- of the entire indigenous crude for improvement in products
gradation project; one year production from the northern specifications. In this respect
guarantee period of all the newly region including enhanced various tasks and activities were
installed units was successfully production from certain fields was carried out. Details regarding
completed. During the year, the processed at the Refinery. business process re-engineering,
overall utilization of the refinery research & development have
capacity was about 94% (June A total of 2.271 million Tons been given in a separate section of
30, 2017: 98%). The declining of crude oil (June 2017: 2.197 the annual report (Please refer to
trend in capacity utilization was million Tons) was received from page 34 of the annual report).
mainly due to abrupt decision of 42 different oil fields which was
government to shut-down furnace
fueled power plants in country
during second quarter of the year.
processed at various units. Your
refinery has the unique capability
and distinction of processing
4 IMPACT OF THE
COMPANY’S BUSINESS
ON ENVIRONMENT
As a result of this decision, the varied quality of both heavy and The Company remains well
Company was forced to operate light crude oil produced from cognizant of its responsibility
the refinery at lower throughput fields across the whole country. toward environment. In this
to deal with the problem of connection the Company has
increasing stock of furnace fuel All the crude processing units taken concrete steps for energy
and the declining ullage. The operated smoothly. The Company management, water preservation,
matter was immediately taken up supplied 2.213 million Tons conservation of biodiversity
with Government at the highest (June 2017: 2.162 million Tons) and resource efficiency to
level and few emergency steps of various petroleum products demonstrate its seriousness
were implemented by Government during the year, meeting the to achieve the ultimate goal to
which provided relief to refineries. standard quality specifications. control and minimize the impact
The Company remains committed on environment. Implementation
During the year under review, to improve business processes of energy management Standard
the refinery’s throughput was to ensure greater safety and ISO-50001, up-gradation of
 Annual Report 2018 47

effluent treatment plant and water

conservation measures like drip
irrigation, waste water recycling/
reuse demonstrate our continuous
commitment for environment,
safety, and quality. Company’s
efforts in this regard have been
recognized and the Company has
received awards from prestigious
organizations in the fields of
Environmental and Sustainability
Reporting.

5 PRICING
FORMULA
The pricing of the Company’s
petroleum products is carried out
under the Import Parity Pricing
Formula, as modified from time to
time by the Government 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.
Among other directives, the
Pricing Formula requires
refineries to transfer the amount
of profit above 50% of paid-up
48 Leveraging HR to Achieve Excellence

Directors’ Report

8 REFINERY’S FUTURE PLANS

FOR EXPANSION AND
UP-GRADATION
Upcoming challenges being faced
by the refinery includes handling
of continuously increasing
local crude oil production
from North of the country and
further improvement in product
specifications.

share capital as at July 1, 2002 In order to further improve

to a Special Reserve account for the product specifications and
expansion/modernization. enhance value added products
volume, studies are underway for
Your Company has taken up with installation of process units like
the Government, the matter of The Company’s management Continuous Catalytic Reformer
withdrawal of enhancement in has taken up this matter with the (CCR), Hydrocracker, Delayed
deemed duty on High Speed Diesel Government at various forums Coker and additional reactor at
from 7.5% to 9% as this additional recommending that capping on DHDS Unit. With the setting up of
deemed duty was committed by payment of dividend should be these units, the Company aims
the Government as an incentive removed or at least should be to produce higher RON gasoline,
for setting up of DHDS unit which based on existing paid-up share diesel of Euro III and Euro IV
the Company has successfully capital as revised from time to quality and further refining
installed and commissioned. time. of furnace fuel to high value
products.
The refineries have taken up
some issues with the Government
relating to sudden change in
7 PRINCIPAL RISKS
AND UNCERTAINITIES
Under the present pricing formula
ARL has plans to install a state-
of-the-art new deep conversion
specification of the products and the Company remains exposed to green- field refinery of 50,000
pricing mechanism. the risk of adverse fluctuation in BPD capacity, if sustainable
the prices of petroleum products enhanced supplies of local crude

6 SHARE
CAPITAL
The issued, subscribed and
and crude oil. The Company
has time and again taken up the
matter with the Government and
from North become available
and the Government announces
an investment friendly Refining
paid-up capital of the Company look forward to formulation and Policy.
as at June 30, 2018 was Rs implementation of a Refining
852.93 million. As per the pricing Policy which can take care of all All of the above mentioned plans
formula, the maximum profits stakeholders. Financial risks are depended upon availability of
available for distribution from relating to the business of the sustainable local crude, suitable
refinery operations cannot exceed Company and the details to quality of crude, demand supply
an amount equivalent to 50% of manage these risk have been situation of petroleum products
the paid-up capital of Rs 291.6 explained in detail in note 40.3 to and the prevalent/future product
million as at July 01, 2002. the accounts. specifications in the country.
 Annual Report 2018 49

9 HUMAN RESOURCE
DEVELOPMENT
Human resource has always remained the most
valuable asset of the Company. The Company makes
sure that all employees are treated with dignity and
respect. The Company also ensures maintenance of
open and healthy working environment which in turn
makes it possible for the employees to put in their
best effort. Various steps taken by the Company for
its human resource capital development are outlined
below:

9.1 Employee Development and Training

We continuously endeavor to ensure systematic were awarded in the fields of core performance,
enhancement of technical and managerial safety, and housekeeping. In addition to
competence of our human resource through this, four employees along with spouse were
well rounded training and development. selected through balloting for Haj and Umrah,
Training plan forms a part of our performance and one Non-Muslim employee with spouse
management strategy and is formulated on was also selected through balloting for visit of
the basis of training need assessment, staff holy sites.
career plans, succession plan and other
organizational requirements. In connection 9.3 Manpower Rationalization Study
with the commissioning of new units, over After completion of Manpower Rationalization
285 employees were inducted after thorough Study, the revised organogram was approved
screening of the candidates. The next step by the Board and the required recruitment was
was to ensure training of the newly recruited made.
employees. In this respect manpower training
requirement for new units were accomplished
through in-house resources and induction of
Operator Training Simulator (OTS).
10 ORGANIZATIONAL
DEVELOPMENT

10.1 Recruitment Job Portal

9.2 Motivational and Encouragement Awards ARL management has taken the initiative for
With a view to encourage staff in attaining their providing Online Job portal for easy access
optimum level of performance, ARL organized to target market for efficient recruitment
regular quarterly awards ceremony where process. The system will be used to build a pool
the star performers of all departments were of candidates and will provide online window
recognized through commemorative shields for all the potential candidates for different
and cash awards. These performance awards positions.
50 Leveraging HR to Achieve Excellence

Directors’ Report

10.2 Refinery Security Re-vamp 10.4 CBA Referendum 2018

In view of unfavorable national security The referendum for Collective Bargaining
environment, ARL security apparatus went Agent (CBA) was held on June 26, 2018
through a major re-vamp. In doing so security amongst three contesting Trade Unions.
manpower inside Refinery, main security The Refinery Employees Union obtained
barriers and General Office have been majority votes. The Registrar of Trade Unions,
strengthened. Coverage of CCTV cameras has Rawalpindi awarded the CBA certificate to
been enhanced and central control room has them for a period of two years from June 2018
been set up. Private Security Company guards to June 2020.
are being replaced with young, physically fit and
well trained ARL guards having a higher sense 10.5 CBA Agreement
of ownership. CBA has submitted its charter of demand and
negotiations thereon are in progress between
10.3 HSE Conference the CBA and ARL Management. The resultant
ARL’s 5th conference on Health, Safety & agreement would be valid for two years.
Environment (HSE) was organized which Compensation and benefit of the agreement
was attended by over 100 participants. HSE would be given to the workers w.e.f. July 1,
professionals and experts from 33 industries 2017.
participated in the one day conference.

11 CORPORATE
SOCIAL RESPONSIBILITY
The Company continued to carry out numerous steps
and measures towards the activity of Corporate
Social Responsibility (CSR). Details for CSR activity
have been given in a separate section of the annual
report (Please refer to page 36 of the annual report).
The Company is proud to have long history of
carrying out such activities.

12 CORPORATE AWARDS
AND RECOGNITIONS

12.1 Employers Federation of Pakistan (EFP)’s

Award
Employers Federation of Pakistan (EFP)
regularly holds competition among different
industries to acknowledge the efforts taken for
the improvement of Occupational health safety
and environment. This year ARL has won
“Platinum Award” in overall category of EFP’s
13th Best Practices Award in Occupational
Safety and Health (OSH). ARL’s HSE team
deserves appreciation over this distinction.

12.2 Asia Sustainability Reporting Awards 2017

ARL has been awarded as finalist for two
categories of “Asia’s Best Stakeholders
Reporting” and “Asia’s Best Environmental
Reporting” in Asia Sustainability Reporting
Awards 2017 organized by CSR Works
International Pte Ltd, Singapore.
 Annual Report 2018 51

13 CORPORATE
GOVERNANCE
The Board of Directors and the Company remain
committed to the principles of good corporate
management practice with emphasis on transparency
and disclosures. The Board and management are
cognizant of their responsibilities and monitor the
refinery operations and performance to enhance the
12.3 United Nationals Global Compact Award accuracy, comprehensiveness and transparency of
This award recognizes and acknowledges financial and non-financial information.
enterprises which integrate the ten principles
of United Nations Global Compact into The Company is fully compliant with the Code of
their business philosophy and demonstrate Corporate Governance and as per the requirements of
adherence to these principles in action. the listing regulations, following specific statements
are being given hereunder:
ARL won first prize of “Living the UN Global
Compact Business Sustainability Award 2017” i. Proper books of accounts of the Company have
in the large national companies category, in been maintained.
recognition of best practices in Embracing
SDGs and Integrating the Ten Principles of ii. The financial statements prepared by the
UNGC presented by Global Compact Network management present fairly its state of affairs,
Pakistan & Employers Federation of Pakistan. the results of its operations, cash flows and
changes in equity.
12.4 15th Annual Environment Excellence Awards
2018 iii. Appropriate accounting policies have been
The Company won “15th Annual Environment consistently applied in preparation of financial
Excellence Award 2018” on the platform statements which conform to the Approved
of “National Forum for Environment and Accounting Standards as applicable in
Health”. This award is recognition of the Pakistan. The accounting estimates, wherever
tremendous work put in by ARL Health Safety & required, are based on reasonable and prudent
Environment team. judgment.
52 Leveraging HR to Achieve Excellence

Directors’ Report

iv. International Financial Reporting Standards, DTP in due course of time. Further, an alternate
as applicable in Pakistan, have been followed director and the Chief Executive Officer of the
in preparation of financial statements and any Company have also completed the DTP.
departures therefrom has been adequately
disclosed and explained. xii. The Board strives to continuously improve its
and Board Committees’ effectiveness. Board
v. The system of internal control is sound in of Directors has developed a mechanism
design and has been effectively implemented as required under the Code of Corporate
and monitored. Governance to undertake annual evaluation
to assess Board’s and its Committees’
vi. There are no significant doubts upon the performance. The Board also reviews
Company’s ability to continue as a going developments in corporate governance to
concern. ensure that the Company always remains
aligned with best practices.
vii. There is no reported instance of any material
departure from the best practices of Corporate xiii. The Board of Directors have formulated a
Governance. Directors’ Remuneration Policy its main
features include that every director including
viii. Significant deviations from last year’s operating alternate directors are entitled to meeting fee
results, future plans and changes, if any, in as remuneration for attending meetings of
pricing formula have been separately disclosed, the Board of Directors. No remuneration shall
as appropriate, in the Chairman’s Review and be paid for attending General Meeting(s) or
this Report of the Directors. meetings of the Committee(s) of the Board and/
or any other business meetings of the Company.
ix. All major Government levies in the normal
course of business, amounting to Rs. 1,464 xiv. Key operating and financial data of last 6 years
million, payable as at June 30, 2018 have been is annexed.
cleared subsequent to the year end.
A separate statement of compliance signed
x. The value of investments in employee’s by the Chairman is separately included in this
retirement funds based on the latest unaudited Annual Report.
accounts as at June 30, 2018 are as follows:

Management Staff Pension Fund

Rs in million

853
14 CREDIT
RATING
The Company’s long term and short term rating is
Staff Provident Fund 379 ‘AA’ (Double A) and ‘A1+’ (A one plus) respectively.
General Staff Provident Fund 504 The credit rating was conducted by The Pakistan
Gratuity Fund 442 Credit Rating Agency (PACRA). These rating denote a
very low expectation of credit risk emanating from a
xi. In terms of Regulation 20 of the Listed very strong capacity for timely payments of financial
Companies (Code of Corporate Governance) commitments.
Regulations, 2017, the Companies shall
ensure that all the directors on their boards
have acquired the prescribed certification
under Director Training Program by June 30,
2021. Amongst the new elected Board four (4)
directors of the Company meet the exemption
requirement of the Director’s Training Program
(DTP), while one (1) director has already
completed this program. The remaining two (2)
directors shall obtain certification under the
 Annual Report 2018 53

15 DIRECTORS AND BOARD MEETINGS

HELD DURING THE YEAR
15.1 Directors of the Company & Board’s Composition
The following persons were the Directors of the Company during
the year:

S. No. Name of Directors Designation Gender

1. Mr. Laith G. Pharaon Non-Executive Director Male

2. Mr. Wael G. Pharaon Non-Executive Director Male
3. Mr. Shuaib A. Malik (Chairman) Non-Executive Director Male
4. Mr. Abdus Sattar Non-Executive Director Male
5. Mr. Sajid Nawaz Non-Executive Director Male
6. Mr. Jamil A. Khan Non-Executive Director Male
7. Mr. Shamim Ahmad Khan Independent Director Male

15.2 Directors meetings held during the year

During the year under review, five meetings of the Board of
Directors were held and the attendance of Directors was as under:-

Number of
Total number of board meetings
Name of Directors board meetings attended

Mr. Laith G. Pharaon ** 5 4*

Mr. Wael G. Pharaon 5 5
Mr. Shuaib A. Malik (Chairman) 5 5
Mr. Abdus Sattar 5 5
Mr. Sajid Nawaz 5 5
Mr. Jamil A. Khan 5 5
Mr. Shamim Ahmad Khan ** 5 4
Mr. M. Adil Khattak, CEO 5 5

* Overseas directors attended the meetings either in person or

through alternate directors.
** Leave of absence was granted to director who could not attend
the meeting.

15.3 Meeting Held outside Pakistan

During the year ended June 30, 2018, one meeting of Board of
Directors was held outside Pakistan to review and approve annual
audited financial statements of the Company.
54 Leveraging HR to Achieve Excellence

Directors’ Report

16 BOARD COMMITTEES MEETINGS

HELD DURING THE YEAR
During the year under review, detail of Board’s Committees meetings
held is as under:-

AUDIT COMMITTEE
Number
Total number of meetings
Name of Directors of meetings attended

Mr. Tariq Iqbal Khan 4 4

Mr. Abdus Sattar 4 4
Mr. Sajid Nawaz 4 4
Mr. Shamim Ahmad Khan 4 2
Mr. Babar Bashir Nawaz 4 4

HUMAN RESOURCE & REMUNERATION (HR & R) COMMITTEE

Number
Total number of meetings
Name of Directors of meetings attended

Mr. Shuaib A. Malik 1 1

Mr. Sajid Nawaz 1 1
Mr. M. Adil Khattak 1 1
 Annual Report 2018 55

17 NEWLY ELECTED
BOARD & ITS COMPOSITION
An Extra-Ordinary General Meeting of the shareholders was held on July
16, 2018 at which following seven persons were elected as directors for a
term of 3 years commencing from July 18, 2018:

The Board of Directors of the Company as at July 18, 2018 consists of

following persons:

S. No. Name of Directors Designation Gender

1. Mr. Laith G. Pharaon Non-Executive Director Male

2. Mr. Wael G. Pharaon Non-Executive Director Male
3. Mr. Shuaib A. Malik (Chairman) Non-Executive Director Male
4. Mr. Abdus Sattar Non-Executive Director Male
5. Mr. Jamil A. Khan Non-Executive Director Male
6. Mr. Shamim Ahmad Khan Independent Director Male
7. Mr. G.A. Sabri Independent Director Male

The Board places on record its appreciation for the valuable services
rendered by the outgoing directors.

The newly elected Board of Directors appointed Mr. Shuaib A. Malik

as Chairman of the Board for a term of three years commencing from
July 18, 2018. The Board also re-appointed Mr. M Adil Khattak as Chief
Executive Officer for a period of one year commencing from July 18, 2018.

The newly elected Board constituted the following Committees of the

Board namely:

AUDIT COMMITTEE
S. No. Name of Directors Designation

1. Mr. Shamim Ahmad Khan Chairman

2. Mr. Shuaib A. Malik Member
3. Mr. Abdus Sattar Member
4. Mr. G.A. Sabri Member
5. Mr. Babar Bashir Nawaz Member

HUMAN RESOURCE & REMUNERATION (HR&R) COMMITTEE

S. No. Name of Directors Designation

1. Mr. G.A. Sabri Chairman

2. Mr. Shuaib A. Malik Member
3. Mr. Jamil A. Khan Member
4. Mr. M. Adil Khattak Member
56 Leveraging HR to Achieve Excellence

Directors’ Report

18 AUDITORS
The Auditors Messrs A.F. Ferguson & Co.
Chartered Accountants retired and offered themselves
22 SUBSIDIARY
COMPANY
The Company has a wholly owned subsidiary
for reappointment. The Audit Committee has company; Attock Hospital (Private) Limited (AHL).
recommended the reappointment of Messrs A.F. The accounts of AHL have been consolidated with the
Ferguson & Co. Chartered Accountants as auditors for accounts of ARL and are annexed to these accounts.
the financial year ending June 30, 2019.

19 PATTERN OF SHAREHOLDING
The total number of Company’s shareholders
23 CONSOLIDATED
ACCOUNTS
The consolidated accounts of the Company and its
as at June 30, 2018 was 4,475 as against 3,585 on subsidiary are annexed.
June 30, 2017. The pattern of shareholding as at June
30, 2018 is included in this Annual Report. All trades
in the shares of the Company, if any, carried out by For and on behalf of the Board.
the Directors, CEO, CFO and Company Secretary and
their spouses and minor children are also annexed.

20 EARNINGS
PER SHARE
Based on the net profit for the current year the
earnings per share was Rs 6.79 (June 2017: – Sd – – Sd –
Rs 63.47).
Abdus Sattar M. Adil Khattak
Director Chief Executive Officer

21 HOLDING
COMPANY
The Attock Oil Company Limited, incorporated in August 14, 2018
England, is the Holding Company of Attock Refinery Dubai, United Arab Emirates
Limited.
 Annual Report 2018 57

– Sd – – Sd –
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Financial Statistical Summary

Attock Refinery Limited

30 June (Rupees in Million)

2018 2017 2016 2015 2014 2013

TRADING RESULTS
Sales (Net of Govt. Levies) 129,588.62 101,386.94 66,564.92 128,905.43 175,067.85 163,300.53
Reimbursement from/ (to) Government 7.95 24.85 - - - -
Turnover 129,596.57 101,411.79 66,564.92 128,905.43 175,067.85 163,300.53
Cost of Sales 130,675.23 97,078.92 67,466.75 128,352.37 174,930.91 160,259.07
Gross profit/ (loss) (1,078.66) 4,332.87 (901.83) 553.06 136.94 3,041.46
Administration and Distribution cost 695.28 644.07 571.08 539.04 469.43 398.78
Other Income 1,977.48 1,434.22 927.38 1,349.64 1,764.18 3,082.10
Non-Refinery Income 1,591.54 1,714.33 1,519.74 1,409.45 1,847.12 1,298.09
Operating profit 1,795.08 6,837.35 974.21 2,773.11 3,278.81 7,022.87
Financial and other charges 2,819.03 1,465.80 162.68 397.06 104.61 954.51
Profit before tax (1,023.95) 5,371.55 811.53 2,376.05 3,174.20 6,068.36
Taxation (1,602.93) (42.11) (4.82) 561.81 630.81 2,142.68
Profit after tax 578.98 5,413.66 816.35 1,814.24 2,543.39 3,925.68
Dividend - (511.76) (426.47) (426.47) - (426.47)
Transfer from/ (to) special reserves 1,012.56 (3,553.53) - (259.00) (550.48) (2,481.80)
STATEMENT OF FINANCIAL POSITION SUMMARY
Paid-up Capital 852.93 852.93 852.93 852.93 852.93 852.93
Reserves 28,767.54 30,227.19 24,399.35 25,445.05 25,551.55 21,878.63
Unappropriated Profit brought forward 9,697.79 8,300.70 7,937.28 6,528.17 4,753.55 4,034.65
Share holder’ funds 39,318.26 39,380.82 33,189.56 32,826.15 31,158.03 26,766.21
Financing facilities (Long term including current portion) 14,842.92 19,872.17 15,163.68 11,658.99 480.69 -
Property, plant & equipment (less depreciation) 33,239.76 35,356.80 34,965.03 31,571.32 16,858.66 10,015.57
Net current assets 4,110.24 7,902.64 (1,102.24) (1,397.99) 1,260.78 3,358.31
CASH FLOW SUMMARY
Cash flows from operating activities 7,353.16 7,156.81 (2,727.70) 399.96 1,438.58 74.16
Cash flows from investing activities 2,491.91 1,963.22 (172.69) (11,832.72) (1,453.25) 2,376.51
Cash flows from financing activities (8,542.68) 2,826.74 1,887.58 10,859.03 276.64 (1,291.09)
Increase / (Decrease) in cash and cash equivalents 1,302.39 11,946.77 (1,012.81) (573.72) 261.97 1,161.30
PROFITABILITY RATIOS
Gross profit ratio % (0.83) 4.27 (1.35) 0.43 0.08 1.86
Net profit to sales % 0.45 5.34 1.23 1.41 1.45 2.40
EBITDA margin to sales % 2.55 8.78 1.71 2.07 2.00 3.87
Operating leverage ratio Time (3.21) 11.32 1.26 0.96 (0.17) 13.61
Return on equity % 1.47 13.75 2.46 5.53 8.16 14.67
Return on capital employed % 1.02 10.06 1.76 4.77 8.71 18.85
LIQUIDITY RATIO
Current ratio Time 1.08 1.23 0.96 0.96 1.04 1.09
Quick/ acid test ratio Time 0.82 1.00 0.65 0.72 0.69 0.76
Cash to current liabilities Time 0.45 0.63 0.35 0.29 0.31 0.29
Cash flow from operations to sales Time 0.06 0.07 (0.04) - 0.01 -
ACTIVITY/TURNOVER RATIO
Inventory turnover ratio Time 16.86 15.63 10.16 14.16 15.02 14.31
No. of days in inventory Days 22 23 36 26 24 26
Debtor turnover ratio Time 12.05 14.16 8.41 11.63 14.31 5.97
[Link] days in receivables Days 30 26 44 31 26 61
Creditor turnover ratio Time 5.75 5.88 3.64 5.87 8.36 4.08
No. of days in payables Days 63 62 101 62 44 89
Total assets turnover ratio Time 1.35 1.11 0.88 1.60 2.59 2.53
Fixed assets turnover ratio Time 3.78 2.87 1.90 4.08 10.38 16.30
Operating cycle (11) (13) (21) (5) 6 (2)
 Annual Report 2018 71

30 June (Rupees in Million)

2018 2017 2015 2014 2013 2012

INVESTMENT/ MARKET RATIO

Earnings per share (EPS) Rs 6.79 63.47 9.57 21.27 29.82 46.03
(on shares outstanding at 30 June)
Dividend % - 60 50 50 - 50
Cash dividend per share Rs - 6.00 5.00 5.00 - 5.00
Bonus share issue * % 25 - - - - -
Price earning ratio Time 31.71 6.03 29.27 10.74 7.12 5.54
Dividend yield ratio % - 1.57 1.78 2.19 - 1.96
Dividend cover ratio Time - 10.58 1.91 4.25 - 9.21
Dividend payout ratio % - 9.45 52.25 23.51 - 10.86
Break-Up Value (Rs per share) Rs 460.98 461.71 389.12 384.86 365.31 313.81
Highest market value per share during the year Rs 430.88 508.16 288.77 235.11 272.81 208.28
Lowest market value per share during the year Rs 187.05 294.14 188.67 146.48 173.85 123.94
Market value per share June 30, Rs 215.31 382.58 280.14 228.45 212.29 255.15
CAPITAL STRUCTURE RATIOS
Financial leverage ratio Time 0.38 0.50 0.46 0.36 0.02 -
Debt to equity ratio % 27 : 73 34 : 66 31 : 69 26 : 74 2 : 98 -
Weighted average cost of debt % 5.54 5.41 6.77 7.61 7.81 -
Interest cover ratio Time 0.48 5.42 - - - -

* The Board has proposed bonus shares @ 25% in their meeting held on August 14, 2018.
Comparative figures have been restated to reflect changes as per Companies Act, 2017.

Ratio Analysis
PROFITABILITY RATIOS
Decline in profitability ratios of the company
due to unfavourable fluctuations in
international prices of Petroleum Products
as well as decline in Refinery’s throughput
during the year.

LIQUIDITY RATIOS
The company has slight decline in liquidity
ratios of the Company which was due to
continuous increase in the prices of crude oils
and devaluation of Pakistani Rupee.

ACTIVITY TURNOVER RATIOS

Overall activity turnover Ratios have
improved, mainly due to the change in
creditors’ turnover ratio and number of days
in payables.

INVESTMENT/ MARKET RATIOS

Decline in overall profitability of the company
resulted in reduction in Market/ Investment
Ratios. Heavy Exchange loss of Rs. 1.4 billion
due to devaluation of Pak Rupees added to the
aggrieved situation.
72 Leveraging HR to Achieve Excellence

Financial Highlights
Attock Refinery Limited

Net Sales Gross Profit Ratio

(Rs in million) (In Percentage) 4.27
175,068
163,301

128,905 1.86

129,597
0.08 0.43

101,412
66,565

(0.83)
(1.35)
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Cost of Sales Net Profit Ratio 5.34

(Rs in million) (In Percentage)
174,931
160,259

130,675
128,352

2.40
97,079

1.45 1.41
67,467

0.45
1.23

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Gross Profit/(Loss) Cash Dividend Yield 2.19

(Rs in million) (In Percentage)
4,333

1.96 1.57
3,041

1.78
(1,079)
553

(902)
137

–
2013 2014 2015 2016 2017 2018 –
2013 2014 2015 2016 2017 2018

Provision for Taxation Cash Dividend Payout 52.25

(Rs in million) (In Percentage)
2,143

631

562

23.51

10.89
(1,603)
(5)

(42)

9.45
– –
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Profit after Taxation Price Earnings Ratio 31.71

(Rs in million) (In Percentage) 29.27
5,414
3,926

2,543

10.74
1,814

579

7.12
5.54 6.03
816

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
 Annual Report 2018 73

Earnings Per Share Market Value Per Share 508.16

(Rupees) High - Low (Rupees)
430.88

63.47
High
Average 288.77
Low 272.81
235.11 294.14
46.03

208.28
29.82

188.67 187.05
173.85

9.57

6.79
21.27

146.48
123.94
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Break-up Value Cash Flow from 7,157 7,353

(Rs per Share) Operating Activities
461.71

460.98
(Rupees in million)
389.12
384.86
365.31
313.81

1,439
74 400

(2,728)
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Dividend Per Share Cash Flow from

6.00

(Rupees) Investing Activities 1,963 2,492

(Rupees in million)
5.00

5.00

5.00

(173)
(1,453)
2,377

– – (11,833)
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Number of Shareholders Cash Flow from 10,859

(Numbers) Financing Activities
4,475

(Rupees in million)
3,849

2,827
3,585
3,383

3,160
3,042

277 1,888
(1,291)

(8,543)
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

EBITDA - Margin to Sales Return on

(In Percentage) Capital Employed
8.78

(In Percentage)

18.85
10.06
3.86

4.77
8.71 1.76
2.55

1.02
2.07
2.00

1.71

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
74 Leveraging HR to Achieve Excellence

Financial Highlights - Attock Refinery Limited

Paid-up Capital Long Term Investments

(Rs in million) (Rs in million)

13,265

13,265

13,265

13,265

13,265

13,265
852.93

852.93

852.93

852.93

852.93

852.93
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Reserves Current Assets

38,528

(Rs in million) (Rs in million)

38,465

53,255
32,337
31,973
30,305

42,057
41,247
25,913

37,122

35,170

26,714
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Long Term Financing Foreign Exchange

296
(Rs in million) Saving
17,672

(US$ in million)
14,614

212
12,643

188

180
11,109

128
79
481

–
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Current Liabilities Contribution to

National Exchequer
49,145

(Rs in million)
44,147

(Rs in million)
38,713
37,888

36,846
36,568

36,789
35,862

35,010
34,154

29,586
27,816

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Fixed Assets less Gross Refinery Margin

Depreciation ($ per Barrel)
5.40
35,357
34,965

(Rs in million)
33,240
31,571

4.30
3.35
16,859

1.93
1.81
10,016

1.02

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
 Annual Report 2018 75
Analysis of

Financial Statements
Attock Refinery Limited

ANALYSIS OF FINANCIAL POSITION Administration and distribution cost:

Administration and distribution cost increased by 8%
Share capital and Reserve: from Rs 644 million in 2017 to Rs 695 million in 2018
Equity didn’t show much variation as a result of due to normal escalation.
payment of dividend which was partially offset by
profit for the current year. Finance cost:
During the year finance cost has increased as a result
Long term financing: of devaluation of Pak rupee.
During the year long term financing has decreased
from Rs 17,672 million to Rs 12,643 million. After Other Income:
completion of up gradation Project, there were Other income increased by 38% from Rs 1,434 million
scheduled payments of Rs. 2,200 million and to Rs 1,977 million mainly on account of increase in
prepayment of Rs 3,000 million. Income from bank deposits.

Current liabilities: Taxation:

Trade and other payables have increased during The current year’s tax liability has been adjusted
the year due to increase in prices of crude oil and against balance of tax credit for Balancing
devaluation of Pak Rupee against US Dollar. Modernization and Replacement carried forward from
last year. Provision for income tax recorded by the
Property, plant and equipment: Company for tax years 2011 and 2012 has been partially
Property, plant and equipment have witnessed a written back amounting to Rs 1,072 million in view
downward trend due to decrease in operating assets of favourable judgments of tax appellate authorities
as a result of depreciation charge for the year including those passed in Company’s own matter or in
being Rs 2.5 billion. Property, plant and equipment such matters as are being contested by the Company.
represents 33% of Company’s Statement of Financial
Position. Non-refinery income:
Non-refinery income decreased from Rs 1,715 million
Current assets: to Rs 1,592 million due to decrease in dividend
Current Assets have increased by 27% from Rs income from associated companies during the year as
42,057 million to Rs 53,255 million during the current compared to the last year.
financial year, mainly due to increase in stock in trade
and trade debtors as a result of increase in prices of
crude oil and products. ANALYSIS OF CASH FLOWS STATEMENT

Operating activities:
ANALYSIS OF PROFIT OR LOSS There was a net cash inflow of Rs 7,353 million during
the year. The main reason was favourable fluctuation
Revenue: in prices of crude oil and petroleum products, along
During the current year, net sales revenue has with increase in throughput. Moreover there was an
increased by 28% from Rs 101,412 million to Rs improvement in recoveries from customers.
129,597 million. This increase reflects upward trend
in international prices of Petroleum Products by 25% Investing activities:
which prevailed during the year as well as increase in Cash flow from investing activities has improved
Refinery’s throughput resulting in increase of sales as cash outflow from investing activities decreased
volume by 2% after the successful completion of Up- significantly during the current financial year after
gradation Projects. completion of ARL up gradation Project. Income from
bank deposits has also increased.
Cost of Sales:
During the period under review, cost of sales Financing activities:
increased by 35% from Rs 97,079 million to Rs 130,675 Cash outflow from financing activities has increased
million due to upward trend in prices of crude oil in during the current Financial Year as a result of
international market as well as increase in Refinery’s repayment of loan facility availed for ARL Upgradation
throughput. Project.
76 Leveraging HR to Achieve Excellence

Composition of
Statement of Financial Position
Attock Refinery Limited

Fixed and Current Assets Equities and Liabilities

(In Percentage) (In Percentage)

32%
38%
1%

23%
2018 12% 2018
49% 12%

16%
17%

39%
42%
1%

24%
2017 2017
38%
14%

19%
11% 12%

● Property, plant and equipment ● Issued, subscribed and paid-up capital

● Long term investments ● Reserves and surplus
● Trade debts ● Long term financing
● Stock-in-trade and others ● Current liabilities and provisions
● Cash and bank balances
Annual Report 2018 77
78 Leveraging HR to Achieve Excellence

Vertical
Analysis

2018 2017
Rs in million % Rs in million %

STATEMENT OF FINANCIAL POSITION

Equity and reserves 39,318.26 38.89 39,380.81 43.17
Long term loan 12,642.92 12.50 17,672.17 19.38
Total current liabilities 49,144.86 48.61 34,153.92 37.45
101,106.04 100.00 91,206.90 100.00

Property, plant and equipment 33,239.76 32.88 35,356.80 38.77

Long term investments 13,264.92 13.12 13,264.92 14.54
Non-current assets 1,346.26 1.33 528.63 0.58
Stores, spares and loose tools 2,905.75 2.87 2,193.27 2.40
Stock-in-trade 9,789.00 9.68 5,712.34 6.26
Trade debts 15,748.28 15.58 10,678.54 11.71
Loans, advances, deposits, prepayments
and other receivables 1,871.72 1.85 1,842.29 2.02
Short term investment 985.84 0.98 - -
Cash and bank balances 21,954.51 21.71 21,630.11 23.72
101,106.04 100.00 91,206.90 100.00

STATEMENT OF PROFIT & LOSS

Net Sales 129,596.57 100.00 101,411.79 100.00
Cost of sales (130,675.23) (100.83) (97,078.92) (95.73)
Gross profit/ (loss) (1,078.66) (0.83) 4,332.87 4.27
Administration expenses 645.12 0.50 595.02 0.59
Distribution cost 50.16 0.04 49.05 0.05
Other charges (106.27) (0.08) 202.66 0.20
(589.01) (0.46) (846.73) (0.84)
Other income 1,977.48 1.53 1,434.22 1.41
Operating profit/ (loss) 309.81 0.24 4,920.36 4.84
Finance cost (2,925.30) (2.26) (1,263.14) (1.25)
Profit/ (loss) before taxation from refinery operations (2,615.49) (2.02) 3,657.22 3.59
Taxation 1,602.93 1.24 42.11 0.04
Profit/ (loss) after taxation from refinery operations (1,012.56) (0.78) 3,699.33 3.63
Income from non-refinery operations less
applicable charges and taxation 1,591.54 1.23 1,714.33 1.69
Profit for the year 578.98 0.45 5,413.66 5.32
 Annual Report 2018 79

2016 2015 2014 2013

Rs in million % Rs in million % Rs in million % Rs in million %

33,189.56 43.89 32,826.15 40.78 31,158.04 46.16 26,766.21 41.40

14,613.68 19.33 11,108.99 13.80 480.69 0.71 - -
27,815.95 36.78 36,568.27 45.42 35,861.58 53.13 37,888.48 58.60
75,619.19 100.00 80,503.41 100.00 67,500.31 100.00 64,654.69 100.00

34,965.03 46.24 31,571.32 39.22 16,858.66 24.98 10,015.57 15.50

13,264.92 17.54 13,264.92 16.48 13,264.92 19.65 13,264.92 20.52
675.54 0.89 496.89 0.62 254.36 0.38 127.42 0.17
1,815.41 2.40 2,008.56 2.49 786.54 1.17 688.13 1.06
6,707.64 8.87 6,574.13 8.17 11,555.71 17.11 11,744.81 18.17
6,889.43 9.11 14,417.78 17.91 13,239.27 19.61 17,499.31 27.07

1,618.02 2.14 1,475.22 1.83 273.93 0.41 309.56 0.48

- - - - - - - -
9,683.20 12.81 10,694.59 13.28 11,266.92 16.69 11,004.97 17.03
75,619.19 100.00 80,503.41 100.00 67,500.31 100.00 64,654.69 100.00

66,564.92 100.00 128,905.43 100.00 175,067.85 100.00 163,300.53 100.00

(67,466.75) (101.35) (128,352.37) (99.57) (174,930.91) (99.92) (160,259.07) (98.14)
(901.83) (1.35) 553.06 0.43 136.94 0.08 3,041.46 1.86
520.54 0.78 492.55 0.38 425.89 0.24 358.36 0.22
50.54 0.08 46.48 0.04 43.53 0.02 40.40 0.02
5.80 0.01 81.94 0.06 102.86 0.06 405.96 0.25
(576.88) (0.87) (620.97) (0.48) (572.28) (0.32) (804.72) (0.49)
927.38 1.39 1,349.64 1.05 1,764.18 1.01 3,082.10 1.89
(551.33) (0.83) 1,281.73 1.00 1,328.84 0.77 5,318.84 3.26
(156.88) (0.25) (315.12) (0.25) (1.75) - (548.56) (0.34)
(708.21) (1.08) 966.61 0.75 1,327.09 0.77 4,770.28 2.92
4.82 0.01 (561.81) (0.44) (630.81) (0.36) (2,142.68) (1.31)
(703.39) (1.07) 404.80 0.31 696.28 0.41 2,627.60 1.61

1,519.74 2.28 1,409.46 1.09 1,847.13 1.06 1,298.10 0.79

816.35 1.21 1,814.26 1.40 2,543.41 1.47 3,925.70 2.40
80 Leveraging HR to Achieve Excellence

Horizontal
Analysis

2018 2017
Increase/ (Decrease) Increase/ (Decrease)
from last year from last year
Rs in million % Rs in million %

BALANCE SHEET
STATEMENT OF FINANCIAL POSITION
Equity and reserves 39,318.26 (0.16) 39,380.81 18.65
Long term loan 12,642.92 (28.46) 17,672.17 20.93
Total current liabilities 49,144.86 43.89 34,153.92 22.79
101,106.04 10.85 91,206.90 20.61

Property, plant and equipment 33,239.76 (5.99) 35,356.80 1.12

Long term investments 13,264.92 - 13,264.92 -
Non-current assets 1,346.26 154.67 528.63 (21.75)
Stores, spares and loose tools 2,905.75 32.48 2,193.27 20.81
Stock-in-trade 9,789.00 71.37 5,712.34 (14.84)
Trade debts 15,748.28 47.48 10,678.54 55.00
Loans, advances, deposits, prepayments
and other receivables 1,871.72 1.60 1,842.29 13.86
Short term investment 985.84 100.00 - -
Cash and bank balances 21,954.51 1.50 21,630.11 123.38
101,106.04 10.85 91,206.90 20.61

STATEMENT OF PROFIT & LOSS

Net Sales 129,596.57 27.79 101,411.79 52.35
Cost of sales (130,675.23) 34.61 (97,078.92) 43.89
Gross prof it/ (loss) (1,078.66) (124.89) 4,332.87 580.45
Administration expenses 645.12 8.42 595.02 14.31
Distribution cost 50.16 2.26 49.05 (2.95)
Other charges (106.27) (152.44) 202.66 3,394.14
(589.01) (30.44) (846.73) 46.78
Other income 1,977.48 37.88 1,434.22 54.65
Operating profit/ (loss) 309.81 (93.70) 4,920.36 992.45
Finance cost (2,925.30) 131.59 (1,263.14) 705.16
Profit/ (loss) before taxation from refinery operations (2,615.49) (171.52) 3,657.22 616.40
Taxation 1,602.93 3,706.53 42.11 773.65
Profit/ (loss) after taxation from refinery operations (1,012.56) (127.37) 3,699.33 625.93
Income from non-refinery operations less
applicable charges and taxation 1,591.54 (7.16) 1,714.33 12.80
Profit for the year 578.98 (89.31) 5,413.66 563.15
 Annual Report 2018 81

2016 2015 2014 2013

Increase/ (Decrease) Increase/ (Decrease) Increase/ (Decrease) Increase/ (Decrease)
from last year from last year from last year from last year
Rs in million % Rs in million % Rs in million % Rs in million %

33,189.56 1.11 32,826.15 5.35 31,158.04 16.41 26,766.21 100.00

14,613.68 31.55 11,108.99 2,211.05 480.69 100.00 - -
27,815.95 (23.93) 36,568.27 1.97 35,861.58 (5.35) 37,888.48 100.00
75,619.19 (6.07) 80,503.41 19.26 67,500.31 4.40 64,654.69 100.00

34,965.03 10.75 31,571.32 87.27 16,858.66 68.32 10,015.57 100.00

13,264.92 - 13,264.92 - 13,264.92 - 13,264.92 100.00
675.54 35.96 496.89 95.35 254.36 99.62 127.42 100.00
1,815.41 (9.62) 2,008.56 155.37 786.54 14.30 688.13 100.00
6,707.64 2.03 6,574.13 (43.11) 11,555.71 (1.61) 11,744.81 100.00
6,889.43 (52.22) 14,417.78 8.90 13,239.27 (24.34) 17,499.31 100.00

1,618.02 9.68 1,475.22 438.54 273.93 (11.51) 309.56 100.00

- - - - - - - -
9,683.20 (9.46) 10,694.59 (5.08) 11,266.92 2.38 11,004.97 100.00
75,619.19 (6.07) 80,503.41 19.26 67,500.31 4.40 64,654.69 100.00

66,564.92 (48.36) 128,905.43 (26.37) 175,067.85 7.21 163,300.53 100.00

(67,466.75) (47.44) (128,352.37) (26.63) (174,930.91) 9.16 (160,259.07) 100.00
(901.83) (263.06) 553.06 303.86 136.94 (95.50) 3,041.46 100.00
520.54 5.68 492.55 15.65 425.89 18.84 358.36 100.00
50.54 8.73 46.48 6.78 43.53 7.75 40.40 100.00
5.80 (92.92) 81.94 (20.34) 102.86 (74.66) 405.96 100.00
(576.88) (7.10) (620.97) 8.51 (572.28) (28.88) (804.72) 100.00
927.38 (31.29) 1,349.64 (23.50) 1,764.18 (42.76) 3,082.10 100.00
(551.33) (143.02) 1,281.73 (3.55) 1,328.84 (75.02) 5,318.84 100.00
(156.88) (50.22) (315.12) 17,906.86 (1.75) (99.68) (548.56) 100.00
(708.21) (173.27) 966.61 (27.16) 1,327.09 (72.18) 4,770.28 100.00
4.82 100.86 (561.81) (10.94) (630.81) (70.56) (2,142.68) 100.00
(703.39) (273.77) 404.80 (41.86) 696.28 (73.50) 2,627.60 100.00

1,519.74 7.82 1,409.46 (23.69) 1,847.13 42.29 1,298.10 100.00

816.35 (55.01) 1,814.26 (28.67) 2,543.41 (35.21) 3,925.70 100.00
82 Leveraging HR to Achieve Excellence

Statement of
Contribution & Value Addition

2018 2017
Rs ‘000 Rs ‘000

VALUE ADDITION AND DISTRIBUTIONS

Employees as remuneration 1,504 1,414
Government as taxes 43,295 36,208
Shareholders as dividends * - 512
Retained within the business (1,013) 3,554
Foreign exchange savings US$ 128 million

CONTRIBUTION TO NATIONAL EXCHEQUER

Government levies on petroleum products 43,295 36,208
Income tax paid 672 516
Import/export duties 180 65

44,147 36,789

* The Board has proposed bonus shares @ 25% in its meeting held on August 14, 2018.
 Annual Report 2018 83

Financial Highlights
Attock Hospital (Pvt.) Limited

Equities & Liabilities Fixed and Current Assets

(In Percentage) (In Percentage)
21%
11% 1%
3% 7%

7% ● Operating Assets
● Stock of medicines and 12%
consumable items
2018 ● Trade debts 2018
79% 31%
● Paid-up capital ● Deferred Taxation
● Capital reserve ● Income tax refundable
● Trade and other payabes ● Cash and bank balances
● Accumulated profit 28%

Total Revenue including Revenue from

149

Other Income Private Patients

147

52

(Rs in million) (Rs in million)

48
112

43
103

40
88

34
80

24

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
84 Leveraging HR to Achieve Excellence

Pattern of Shareholding
As at June 30, 2018

Number of Shareholding Total Shares

Shareholders From To Held

1109 1 100 65,472

1301 101 500 431,672
671 501 1000 580,469
916 1001 5000 2,124,378
202 5001 10000 1,552,858
75 10001 15000 974,761
38 15001 20000 697,119
24 20001 25000 561,329
22 25001 30000 615,450
8 30001 35000 272,728
12 35001 40000 461,400
8 40001 45000 341,112
7 45001 50000 349,200
3 50001 55000 160,000
8 55001 60000 460,000
9 60001 65000 560,933
1 65001 70000 69,200
2 70001 75000 150,000
2 75001 80000 155,160
3 80001 85000 244,600
3 90001 100000 300,000
1 100001 105000 100,224
3 105001 110000 323,500
1 110001 115000 111,000
1 135001 140000 140,000
2 140001 145000 285,000
4 150001 155000 613,514
3 160001 165000 487,700
1 165001 170000 170,000
1 170001 175000 171,204
1 180001 185000 182,600
3 195001 200000 595,300
1 215001 220000 217,100
2 220001 225000 442,272
1 235001 240000 240,000
1 240001 245000 244,000
1 245001 250000 245,109
1 255001 260000 257,700
1 295001 300000 300,000
1 305001 310000 308,359
1 340001 345000 345,000
1 345001 350000 347,034
2 350001 355000 704,000
1 375001 380000 375,062
1 395001 400000 398,600
1 425001 430000 430,000
1 455001 460000 457,500
1 525001 530000 527,500
 Annual Report 2018 85

Number of Shareholding Total Shares

Shareholders From To Held

2 615001 620000 1,232,057

1 621001 625000 625,000
1 665001 670000 666,200
1 760001 765000 763,300
1 860001 870000 868,600
1 1005001 1010000 1,005,700
1 1430001 1435000 1,432,000
1 2450001 2455000 2,450,700
1 4060001 4065000 4,063,100
1 7260001 7265000 7,260,400
1 44775001 44780000 44,778,824
4475 85,293,000

Categories of Shareholders
As at June 30, 2018
Category-
Category Number of wise No. of Category-wise
No. Categories of Shareholders shares held folios/ CDC shares held %age

1 Individuals 4,235 13,886,334 16.28

2 Investment Companies 3 206,300 0.24
3 Joint Stock Companies 101 2,297,820 2.70
4 Directors, Chief Executive Officer and their
Spouse and minor Children 12 275,998 0.32
Mr. Laith G. Pharaon 1
Mr. Wael G. Pharaon 1
Mr. Shuaib A. Malik 264,301
Mr. Abdus Sattar 1
Mr. Tariq Iqbal Khan 5,001
Mrs. Azra Tariq (Wife of Mr. Tariq Iqbal Khan) 2,000
Mr. Sajid Nawaz 5
Mr. Jamil A. Khan 1
Mr. Muhammad Adil Khattak 4,687
5 Executives 2 58 0.00
6 Associated Companies, Undertakings
and Related Parties 3 53,471,224 62.69
The Attock Oil Company Limited 52,039,224
Attock Petroleum Limited 1,432,000
7 Public Sector Companies and Corporations -
8 Banks, Development Financial Institutions,
Non-Banking Financial Institutions, Insurance
Companies, Takaful, Modarabas & Pension Funds 61 8,839,921 10.37
86 Leveraging HR to Achieve Excellence

Categories of Shareholders as at June 30, 2018

Category-
Category Number of wise No. of Category-wise
No. Categories of Shareholders shares held folios/ CDC shares held %age

9 Mutual Funds 36 1,769,371 2.08

Prudential Stocks Fund Ltd (03360) 8,400
MCBFSL - Trustee Pak Oman Islamic Asset Allocation Fund 2,000
MCBFSL - Trustee NAFA Income Fund - MT 23,300
MC FSL Trustee JS - Income Fund - MT 39,800
CDC - Trustee First Dawood Mutual Fund 3,200
CDC - Trustee Unit Trust of Pakistan 25,000
CDC - Trustee AKD Index Tracker Fund 7,419
CDC - Trustee HBL Energy Fund 60,500
CDC - Trustee NAFA Income Opportunity Fund 1,500
CDC - Trustee Al Meezan Mutual Fund 600
CDC - Trustee Meezan Islamic Fund 154,400
CDC - Trustee NAFA Stock Fund 1,600
CDC - Trustee NAFA Multi Asset Fund 2,100
CDC - Trustee MCB DCF Income Fund 25,500
CDC - Trustee Meezan Tahaffuz Pension Fund - Equity Sub Fund 69,200
CDC - Trustee Dawood Islamic Fund 3,200
CDC - Trustee NAFA Islamic Asset Allocation Fund 33,600
CDC - Trustee APIF - Equity Sub Fund 5,000
CDC - Trustee NIT-Equity Market Opportunity Fund 375,062
CDC - Trustee NAFA Savings Plus Fund - MT 17,500
CDC - Trustee KSE Meezan Index Fund 61,333
CDC - Trustee Lakson Income Fund - MT 13,800
CDC - Trustee NAFA Pension Fund Equity Sub-Fund Account 400
CDC - Trustee NAFA Islamic Pension Fund Equity Account 5,900
CDC - Trustee First Capital Mutual Fund 2,500
CDC - Trustee Faysal Savings Growth Fund - MT 5,200
CDC - Trustee National Investment (Unit) Trust 616,057
CDC - Trustee Pakistan Pension Fund - Equity Sub Fund 100
CDC - Trustee NAFA Income Opportunity Fund - MT 56,600
CDC - Trustee First Habib Income Fund - MT 50,500
CDC - Trustee Faysal MTs Fund - MT 55,900
CDC - Trustee NAFA Islamic Energy Fund 300
CDC - Trustee Meezan Energy Fund 900
CDC - Trustee UBL Income Opportunity Fund - MT 25,100
CDC - Trustee - Meezan Dedicated Equity Fund 15,800
M/s National Bank of Pakistan 100
10 Foreign Investors 12 1,749,970 2.05
11 Co-operative Societies 1 900 0.00
12 Charitable Trusts 7 173,200 0.20
13 Others 2 2,621,904 3.07

Total 4,475 85,293,000 100.00

Shareholders holding five percent or more voting interest in the listed company
Total paid-up Capital of the Company 85,293,000 shares
5% of the paid-up Capital of the Company 4,264,650 shares
 Annual Report 2018 87

Name (s) of No. of

Shareholder (s) Description shares held % age

The Attock Oil Company Limited Falls in Category # 6 52,039,224 61.01

Trade in shares by Directors, CEO, CFO, Company Secretary,

Executives and their Spouses and Minor Children
No. of shares No. of
Name Designation purchased shares sold

Mr. Shuaib A. Malik Director & Chairman 6,600 -

88 Leveraging HR to Achieve Excellence

Code of Conduct

INTRODUCTION
At Attock Refinery Limited we are committed to conduct business in an
honest, ethical, transparent and legal manner. Our actions are governed by
the values and principles that we share. The Company wants to be seen as a
role model in the corporate community by its conduct and business practices.
All this depends on the Company’s personnel, as they are the ones who are at
the forefront of the Company’s affairs with the outside world. All directors and
employees have to be familiar with their obligations in this regard and have
to conduct accordingly.

This Code of conduct in general is in accordance with

Company’s core values, goals and objectives that must
be interpreted and applied within the framework of
laws and customs in which the Company operates. This
code will be obligatory for each director and employee
to adhere to.

1. Integrity & Ethics

“Integrity, honesty, high ethical, legal and safety
standards are cornerstones of our business
practices”.

i) Respect, Honesty and Integrity

Directors and employees are expected to
exercise honesty, objectivity and due diligence in
performance of their duties and responsibilities.
They are also directed to perform their work with
due professionalism.

ii) Compliance with Laws, Rules and Regulations

The Company is committed to comply and take
all reasonable actions for compliance, with all
applicable laws, rules and regulations of the State
or local jurisdiction in which the Company conducts
business. Every director and employee, no matter
what position he or she holds, is responsible for
ensuring compliance with applicable laws.

iii) Full and Fair Disclosure

Directors and employees are expected to help the
Company in making full, fair, accurate, timely and
understandable disclosure in compliance with all
applicable laws and regulations, in all reports and
documents that the Company files with, furnishes
to or otherwise submits to any governmental
authorities in the applicable jurisdiction and in
all other public communications made by the
Company.
 Annual Report 2018 89

iv) Prevent Conflict of Interest

Directors and employees, irrespective of their
function, grade or standing, must avoid conflict of
interest situations between their direct or indirect
(including members of immediate family) personal
interests and the interest of the Company. Also, no
employee will perform any kind of work (involving
monetary benefit directly or otherwise) for a third
party without proper approval of CEO.

Employees must notify their direct supervisor of

any actual or potential conflict of interest situation
and obtain a written ruling as to their individual
case. In case of directors, such ruling can only
be given by the Board and will be disclosed to the
shareholders.

v) Trading in Company’s shares never exceed the level of detail provided

Trading by directors and employees in the in quarterly and annual reports or official
Company’s shares is possible only in accordance statements issued at the presentation of these
with the more detailed guidelines issued from figures. As regards topics such as financial
time to time by corporate management in performance, acquisitions, divestments, joint
accordance with applicable laws. ventures and major investments, no information
should be released to the press without prior
vi) Inside information consultation with the Management. Employees
Directors and employees may become aware should not make statements that might make
of information about the Company that has not third parties capable of “insider trading” on the
been made public. The use of such non-public or stock market.
“inside” information about the Company other
than in the normal performance of one’s work, viii) Corporate Opportunities
profession or position is unethical and may also Directors and Employees are expected not to:
be a violation of law.
a) take personal use of opportunities that are
Directors and employees becoming aware of discovered through the use of Company’s
information which might be price sensitive with property, information or position.
respect to the Company’s shares have to make
sure that such information is treated strictly b) use Company’s property, information, or position
confidentially and not disclosed to any colleagues for personal gains.
or to third parties other than on a strict need-to
know basis. Directors and employees are expected to put aside
their personal interests in favor of the Company’s
Potentially price sensitive information pertaining interests.
to shares must be brought promptly to the
attention of the management, who will deliberate ix) Competition and Fair Dealing
on the need for public disclosure. Only the The Company seeks to outperform its competition
Management will decide on such disclosure. In fairly and honestly. Stealing proprietary
case of doubt, seek contact with the CFO. information, possessing trade secret information
without the owner’s consent, or inducing such
vii) Media relations and disclosures disclosures by past or present employees of
To protect commercially sensitive information, other companies is prohibited. Each director
financial details released to the media should and employee is expected to deal fairly with
90 Leveraging HR to Achieve Excellence

Code of Conduct

xi) Record Keeping

The Company is committed to compliance with all
applicable laws and regulations that require the
Company to maintain proper records and accounts
which accurately and fairly reflect the Company’s
transactions. It is essential that all transactions
be recorded and described truthfully, timely and
accurately on the Company’s books. No false,
artificial or misleading transactions or entries
shall be reflected or made in the books or records
of the Company for any reason.

Records must always be retained or destroyed

according to the Company’s record retention
policies.

xii) Protection of Privacy and Confidentiality

All directors and employees, both during and
Company’s customers, suppliers, competitors after their employment, must respect the
and other employees. No one is to take unfair exclusivity and trade secrets of the Company, its
advantage of anyone through manipulation, abuse customers, suppliers and other colleagues and
of privileged information, or any other unfair may not disclose any such information unless the
practice. individual or firm owning the information properly
authorizes the release or disclosure.
The Company is committed to selling its products
and services honestly and will not pursue any All the Company’s assets (processes, data,
activity that requires to act unlawfully or in designs, etc.) are considered as certified
violation of this Code. information of the Company. Any disclosure will
be considered as grounds, not only for termination
Bribes, kickbacks and other improper payments of services/ employment, but also for criminal
shall not be made on behalf of the Company in prosecution, legal action or other legal remedies
connection with any of its businesses. However, available during or after employment with the
tip, gratuity or hospitality may be offered if Company to recover the damages and losses
such act is customary and is not illegal under sustained.
applicable law. Any commission payment should
be justified by a clear and traceable service xiii) Protection and Proper use of Company’s Assets/
rendered to the Company. Data
Each director and employee is expected to be the
The remuneration of agents, distributors and guardian of the Company’s assets and should
commissioners cannot exceed normal business ensure its efficient use. Theft, carelessness and
rates and practices. All such expenses should be waste have a direct and negative impact on the
reported and recorded in the Company’s book of Company’s profitability. All of the Company’s
accounts. assets should be used for legitimate business
purposes only.
x) Protect Health, Safety and Security
The Company intends to provide each director The use, directly or indirectly, of Company’s funds
and employee with a safe work environment and for political contributions to any organization
comply with all applicable health and safety laws. or to any candidate for public office is strictly
Employees and directors should avoid violence prohibited.
and threatening behavior and report to work in
fair condition to perform their duties.
 Annual Report 2018 91

Corporate funds and assets will be utilized solely

for lawful and proper purposes in line with the
Company’s objectives.

xiv) Gift Receiving

Directors and employees will not accept gifts
or favors from existing or potential customers,
vendors or anyone doing or seeking to do business
with the Company.

However, this does not preclude giving or

receiving gifts or entertainment which are
customary and proper in the circumstances,
provided that no obligation could be, or be
perceived to be, expected in connection with the
gifts or entertainment.

xv) Internet use/ Information Technology It will be responsibility of all of us to ensure that
As a general rule, all Information Technology ARL must be customer driven, cost effective
related resources and facilities are provided only and continuously improving services, works and
for internal use and/ or business-related matters. products to meet requirements of the market.
Information Technology facilities which have been
provided to employees should never be used for 3. Social Responsibility
personal gain or profit and remain the property “We believe in respect for the community and
of the Company. Disclosure or dissemination of preserving the environment for our future
confidential or proprietary information regarding generations and keeping national interests
the Company, its products, or its customers paramount in all our actions.”
outside the official communication structures is
strictly prohibited. ARL encourages the spirit of volunteerism in
its employees for activities of environmental
xvi) Compliance with Business Travel Policies protection and Social and Community
The safety of employees while on a business trip is development to fulfill ARL’s commitment for its
of vital importance to the Company. The Company Corporate Social Responsibility.
encourages the traveler and his/ her supervisor
to exercise good judgment when determining ARL is committed to prevent pollution by efficient
whether travel to a high-risk area is necessary use of energy throughout its operations, recycle
and is for the Company’s business purposes. and reuse the effluent where it is possible and
use cost effective cleaner production techniques
It is not permitted to combine business trips with that lead to preventive approach for sustainable
a vacation or to take along spouse, relative or development.
friend without the prior written authorization from
Management. 4. Learning and Innovation
“We embrace lifelong learning and innovation as
2. Quality an essential catalyst for our future success. We
“We pursue quality as a way of life. It is an attitude believe in continuous improvement and to seize
that affects everything we do for relentless pursuit opportunities inherent in change to shape the
of excellence.” future”.

ARL recognizes employees’ input towards All employees of ARL will strive to keep
quality by emphasizing skills development and themselves abreast with the new developments in
professionalism. their respective areas and will not hesitate to take
92 Leveraging HR to Achieve Excellence

Code of Conduct

initiatives that could bring improvement in the way The Company also encourages constructive
of our working. All efforts in this respect should reasonable criticism by the employees of
eventually translate into improved efficiencies and the management and its policies. Such an
minimization of wastages at all levels. atmosphere can only be encouraged in an
environment free from any prospects of retaliation
The Company encourages and facilitates its due to the expression of honest opinion.
employees in the activities of knowledge sharing,
research and development and promoting the 6. Empowerment
change management culture. “We flourish under an ecosystem of shared
understanding founded on the concept of
5. Team Work empowerment, accountability and open
“We believe that competent and satisfied people communication in all directions.”
are the Company’s heart, muscle and soul. We
savor flashes of genius in organization’s life by i) Communication
reinforcing attitude of team work and knowledge All communications, whether internal or
sharing based on mutual respect, trust and external, should be accurate, forthright and
openness.” wherever required, confidential. The Company is
committed to conduct business in an open and
We will all make our utmost efforts to foster team honest manner and provide open communication
work in our respective areas of operation and will channels that encourage candid dialogue.
give special attention to the following aspects:
ii) Delegation of Authority and Accountability
i) Equal Employment Opportunity The guidelines in respect of delegation of
The Company believes in providing equal authority i.e. “Limits of Authority” will be
opportunity to everyone around. The Company implemented in letter and spirit. All employees
policies in this regard have to be complied with are expected to follow these limits and ensure
and no discrimination upon race, religion, age, maximum decentralization of decision making in
national origin, gender, or disability is acceptable. their respective areas. The Company also expects
No harassment or discrimination of any kind that with such a level of empowered culture
will be tolerated. Directors and employees must the employees will understand that they will be
comply with standards/ laws with regard to child responsible for their decisions and would be fully
labor and forced labor. accountable for that.

ii) Employee Retention 7. Compliance

High quality employee’s attraction and retention It is the responsibility of each director and
is very important. The Company will offer employee to comply with this code. Failure to do
competitive packages to the deserving candidates. so will result in appropriate disciplinary action,
The Company strongly believes in personnel including possible warning issuance, suspension
development and employee-training programs are and termination of employment, legal action
arranged regularly. and reimbursement to the Company for any
losses or damages resulting from such violation.
iii) Work Environment Compliance also includes the responsibility to
All employees are to be treated with respect. promptly report any apparent violation of the
The Company is highly committed to provide its provisions of this code.
employees and directors with a safe, healthy and
open work environment, free from harassment, Any employee meeting with difficulties in the
intimidation, or personal behavior not conducive understanding or application of this Code should
to a productive work climate. In response, refer to his/ her functional head or, if required to CEO.
the Company expects consummate employee Director in such a situation may refer to the Board.
allegiance to the Company and due diligence in
his/ her job.
Annual Report 2018 93
94 Leveraging HR to Achieve Excellence

Statement of Compliance
with Listed Companies (Code of Corporate Governance) Regulations, 2017

Name of Company: Attock Refinery Limited

Year ended: June 30, 2018

The Company has complied with the requirements of 4. The Company has prepared a Code of Conduct
the Regulations in the following manner: and has ensured that appropriate steps have been
taken to disseminate it throughout the Company
1. The total number of directors are seven as per the along with its supporting policies and procedures.
following:
Gender Number
5. The Board has developed a vision/mission
statement, overall corporate strategy and
Male 7 significant policies of the Company. A complete
Female Nil record of particulars of significant policies along
with the dates on which they were approved or
In accordance with the contents of Regulation 7 of
amended has been maintained.
the Code of Corporate Governance Regulations,
2017 (the 2017 Code), grace period is available to
6. All the powers of the Board have been duly
the Company in appointing female director.
exercised and decisions on relevant matters
have been taken by Board/ Shareholders
2. The composition of the Board as at June 30, 2018
as empowered by the relevant provisions
is as follows:
of Companies Act 2017 (the Act) and these
Category Names Regulations.

Independent Director Mr. Shamim Ahmad Khan

7. The meetings of the Board were presided over by
Other Non-executive Mr. Laith G. Pharaon the Chairman and, in his absence, by a director
Directors (Alternate Director: Mr. Tariq Iqbal Khan) elected by the Board for this purpose. The Board
Mr. Wael G. Pharaon has complied with the requirements of the Act
(Alternate Director: Mr. Babar Bashir Nawaz) and the Regulations with respect to frequency,
Mr. Shuaib A. Malik recording and circulating minutes of meeting of
Mr. Abdus Sattar the Board.

Mr. Sajid Nawaz

8. The Board of directors has a formal policy and
Mr. Jamil A. Khan transparent procedures for remuneration of
Executive Directors - directors in accordance with the Act and these
Regulations.
Further, as per the proviso to Regulation 6 of the
2017 Code, grace period has been prescribed in 9. In terms of Regulation 20 of the 2017 Code,
respect of transition phase for composition of the Companies are required to ensure that all
the Board with respect to minimum number of the directors on their board have acquired the
independent directors as specified in the 2017 prescribed certification under Director Training
Code. Subsequent to the year end, fresh election Program by June 30, 2021. Presently, four (4)
for the Company’s Board of Directors were held directors of the Company meet the exemption
on July 16, 2018, and the related requirement of requirement of the Director’s Training Program
the 2017 Code has also been complied with. (DTP), while two (2) directors have already
completed this program. The remaining one (1)
3. The directors have confirmed that none of them director shall obtain certification under the DTP
is serving as a director on more than seven listed in due course of time. Further, two alternate
companies, including this Company (excluding the directors and the Chief Executive Officer (CEO) of
listed subsidiaries of listed holding companies the Company have also completed the DTP.
where applicable).
 Annual Report 2018 95

10. The Board has approved appointment of Chief

Financial Officer (CFO), Company Secretary
and Head of Internal Audit, including their
remuneration and terms and conditions of
employment and complied with relevant
requirements of the Regulations.

11. CFO and CEO duly endorsed the financial

statements before approval of the Board.

12. The Board has formed committees comprising of

members given below:

Committees Composition/Name

Audit Committee Chairman

Mr. Shamim Ahmad Khan
Members
Mr. Abdus Sattar 15. The Board has set up an effective internal audit
Mr. Sajid Nawaz
function.
Mr. Tariq Iqbal Khan
(Alternate Director for Mr. Laith G. Pharaon)
16. The statutory auditors of the company
Mr. Babar Bashir Nawaz
have confirmed that they have been given a
(Alternate Director for Mr. Wael G. Pharaon)
satisfactory rating under the quality control
HR & Remuneration Chairman review program of the ICAP and registered with
Committee Mr. Shamim Ahmad Khan Audit Oversight Board of Pakistan, that they or
Members any of the partners of the firm, their spouses
Mr. Shuaib A. Malik and minor children do not hold shares of the
Mr. Sajid Nawaz company and that the firm and all its partners
Mr. M. Adil Khattak are in compliance with International Federation
of Accountants (IFAC) guidelines on code of
ethics as adopted by the ICAP.
The Company was in compliance with the Code of
Corporate Governance, 2012 for the year ended
17. The statutory auditors or the persons
June 30, 2018. Further, during the year, the
associated with them have not been appointed
committees of the Board of Directors have been
to provide other services except in accordance
reconstituted to comply with the requirements of
with the Act, these regulations or any other
the 2017 Code.
regulatory requirement and the auditors
have confirmed that they have observed IFAC
13. The terms of reference of the aforesaid
guidelines in this regard.
committees have been formed, documented and
advised to the committee for compliance.
18. We confirm that all other requirements of the
Regulations have been complied with.
14. The frequency of meetings of the committee were
as per following:

Meetings Frequency

Audit Committee Four quarterly meetings were held during – Sd –

the financial year ended June 30, 2018.
(SHUAIB A. MALIK)
HR and Remuneration One meeting was held during the financial Chairman
Committee year ended June 30, 2018. August 14, 2018
96 Leveraging HR to Achieve Excellence

To the members of Attock Refinery Limited

Review Report on the Statement of Compliance
contained in Listed Companies (Code of Corporate Governance) Regulations, 2017

We have reviewed the enclosed Statement of Act, 2017. We are only required and have ensured
Compliance with the Listed Companies (Code of compliance of this requirement to the extent of the
Corporate Governance) Regulations, 2017 (the approval of the related party transactions by the
Regulations) prepared by the Board of Directors of Board of Directors upon recommendation of the Audit
Attock Refinery Limited for the year ended June Committee. We have not carried out procedures to
30, 2018 in accordance with the requirements of assess and determine the Company’s process for
regulation 40 of the Regulations. identification of related parties and that whether the
related party transactions were undertaken at arm’s
The responsibility for compliance with the length price or not.
Regulations is that of the Board of Directors of the
Company. Our responsibility is to review whether Based on our review, nothing has come to our
the Statement of Compliance reflects the status of attention which causes us to believe that the
the Company’s compliance with the provisions of the Statement of Compliance does not appropriately
Regulations and report if it does not and to highlight reflect the Company’s compliance, in all material
any non-compliance with the requirements of the respects, with the requirements contained in the
Regulations. A review is limited primarily to inquiries Regulations as applicable to the Company for the year
of the Company’s personnel and review of various ended June 30, 2018.
documents prepared by the Company to comply with
the Regulations.

As a part of our audit of the financial statements

we are required to obtain an understanding of the
accounting and internal control systems sufficient to
plan the audit and develop an effective audit approach.
We are not required to consider whether the Board – Sd –
of Directors’ statement on internal control covers
all risks and controls or to form an opinion on the Chartered Accountants
effectiveness of such internal controls, the Company’s Islamabad
corporate governance procedures and risks. Date: August 30, 2018

The Regulations require the Company to place before

the Audit Committee, and upon recommendation
of the Audit Committee, place before the Board of
Directors for their review and approval, its related
party transactions and also ensure compliance with
the requirements of section 208 of the Companies
 Annual Report 2018 97

Annual Audited
Financial Statements
for the year ended June 30, 2018
98 Leveraging HR to Achieve Excellence
 Annual Report 2018 99

Independent Auditors’ Report to the Members

Report on the Audit of Financial Statements

OPINION
We have audited the annexed financial statements of Attock Refinery Limited (the Company), which comprise the
statement of financial position as at June 30, 2018, and the statement of profit or loss and statement of comprehensive
income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory information, 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 the audit.
In our opinion and to the best of our information and according to the explanations given to us, the statement of financial
position, statement of profit or loss and statement of comprehensive income, the statement of changes in equity and
the statement of cash flows together with the notes forming part thereof conform with the accounting and reporting
standards as applicable in Pakistan and give the information required by the Companies Act, 2017 (XIX of 2017), 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, 2018 and
of the profit and other comprehensive loss, the changes in equity and its cash flows for the year then ended.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered
Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
100 Leveraging HR to Achieve Excellence Annual Report 2018 101

Following are the key audit matters:

Key Audit Matter

i) New requirements under the Companies Act, 2017 ii) Review of recoverability of deferred tax asset iii) Contingency with respect to crude oil pricing iv) Reversal of prior year tax and related provisions
(Refer note 4 to the financial statements) (Refer note 17 of the financial statements) (Refer note 12 of the financial statements) (Refer note 29 and 32 of the financial statements)

The provisions of the fourth schedule to the Companies Under International Accounting Standard 12, Income Taxes, The Company purchases crude oil from various During the year, the Company, based on the advice of
Act, 2017 (the Act) became applicable to the Company the Company is required to review recoverability of the oilfields in the country per the allocation made to the its tax consultant, reversed a cumulative provision of
for the first time in the preparation of these annexed deferred tax assets recognised in the statement of financial Company by the Federal Government from respective Rs 1,190 million in respect of tax and related amount
financial statements. position at each reporting period. oilfields. Likewise, the Company was allocated crude of Workers Welfare Fund (WWF) on the premise that
The Act, has also brought certain changes with Recognition of deferred tax asset position involved oil from two oil fields in March 2007 and September demands raised for related tax years have already
regards to preparation and presentation of the annual managements’ estimate of the future available taxable 2009 respectively on provisional price basis as per the been paid by the Company and the likelihood of
financial statements of the Company. profits of the Company based on an approved business related Petroleum Concession Agreement (PCA). further tax demands arising in respect of those tax
plan. This estimation is inherently uncertain and requires years is remote.
As part of this transition to the requirements, the In March 2018, Crude Oil Sale and Purchase
judgement in relation to the future cash flows and also Agreement (COSA) with effective date of March 27, We focused on this matter due to the significance
management performed a gap analysis to identify
involves assessment of timing of reversals of un-used 2007 was executed between the President of Pakistan of the amount involved and significant management
differences, between the previous and the current
tax losses as to determine the availability of future profits and the working interest owners of the above judgement this area.
financial reporting framework and as a result certain
against which tax deductions represented by the deferred mentioned PCA whereby various matters including
changes were made in the Company’s annexed
tax assets can be offset. the pricing mechanism for crude oil were prescribed. Our procedures in relation to management
financial statements.
Subsequently, an amount of Rs 2,484 million has judgement regarding the matter included:
As at June 30, 2018, the Company carries a net deferred
In view of the extensive impacts in the annexed been demanded by the crude oil suppliers from the
tax asset of Rs 1,397 million in its statement of financial – Reviewing the assessment documents issued by
financial statements due to first time application of Company in respect of the alleged arrears of crude oil
position after derecognizing deferred tax asset to the extent the taxation department (the Department) and
the fourth schedule to the Act, we considered it as a price for certain period prior to signing of COSA.
of Rs 154.37 million. details related to the proceedings in the matter of
key audit matter.
The demand has not been acknowledged by the instant tax years at different forums including the
We considered this matter due to significant value of
How the matter is addressed in our audit Company and not provided for in its books of account High Court and the Supreme Court.
deferred tax asset and assumptions used by management
in this area. based on the Company’s assessment of related – Reviewing the advice obtained by the Company
We reviewed and understood the requirements of
matter and on the legal advices obtained from its form its tax consultants.
the Fourth schedule to the Act. Our audit procedures
Our procedures in relation to this matter included: legal consultants. Contingency has been disclosed in
included the following: – Involving auditor’s tax specialist to review the
– Evaluating the appropriateness of components of the financial statements.
– Considered the management’s process to relevant supporting documentation including
management’s computation including consideration of We focused on this matter due to the significance the advice of management’s tax consultant to
identify the additional disclosures required in the
un-used tax losses, tax credit on investments, minimum of the amount involved, demand raised by crude oil assess the reasonableness of the management’s
Company’s annexed financial statements.
tax and alternative corporate tax for which deferred tax suppliers and significant management judgement in assessment of the matter.
– Obtained relevant underlying supports for assets were recognised. this area.
the additional disclosures and assessed their
– Analysing the requirements of the Income Tax Ordinance,
appropriateness for the sufficient audit evidence. Our procedures in relation to management judgement
2001, in relation to above and considering the factors
regarding the matter included:
– Verified on test basis the supporting evidence for the including aging analysis, expiry periods of relevant
additional disclosure and ensured appropriateness deferred tax assets and tax rates enacted. – Reviewing the contents of the signed PCA.
of the disclosures made. – Assessing the reasonableness of cash flow and taxable – Reviewed the pricing mechanism historically
profits projections, challenging and performing audit followed by the working interest owners of the PCA.
procedures on assumptions such as growth rate, – Reviewing the contents of the signed COSA.
production patterns, future revenue and costs, comparing
– Reviewing the debit note received by the Company
the assumptions to, historical results, considering
from the operator of the PCA and Company’s certain
approved budget comparing the current year’s results
subsequent correspondence with the operator of
with prior year forecast and considering other relevant
PCA.
information to assess the quality of Company’s
forecasting process in determining the projections. – Reviewing legal opinions obtained by the Company
from its legal consultants.
– Testing mathematical accuracy of projections along
consideration of use of appropriate tax rate as applicable – Seeking independent advice from auditor’s legal
on temporary differences. consultant to assess the matter and Company’s
contention in this respect.
– Assessing the appropriateness of management’s
accounting for deferred taxes and the accuracy of related
disclosures.
102 Leveraging HR to Achieve Excellence Annual Report 2018 103

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
Management is responsible for the other information. The other information obtained at the date of this auditor’s report audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
is information included in the director’s report, but does not include the financial statements of the company and our doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
auditor’s report thereon. are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a
conclusion thereon.
going concern.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
obtained in the audit, or otherwise appears to be materially misstated.
presentation.
If based on the work we have performed, on other information obtained prior to the date of this auditor’s report, we
conclude ‘that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard. We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
RESPONSIBILITIES OF MANAGEMENT AND BOARD OF DIRECTORS FOR THE FINANCIAL STATEMENTS We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017 (XIX of 2017) on our independence, and where applicable, related safeguards.
and for such internal control as management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error. From the matters communicated with the board of directors, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
do so.
Board of directors are responsible for overseeing the Company’s financial reporting process. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Based on our audit, we further report that in our opinion:
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
b) the statement of financial position, the statement of profit or loss and statement of other comprehensive income, the
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
statement of changes in equity and the statement of cash flows together with the notes thereon have been drawn up
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;
as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the
the economic decisions of users taken on the basis of these financial statements. Company’s business; and

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the company
professional skepticism throughout the audit. We also: and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, The engagement partner on the audit resulting in this independent auditor’s report is Mr. JehanZeb Amin.
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the – Sd –
Company’s internal control.
Chartered Accountants
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and Islamabad
related disclosures made by management. Date: August 30, 2018
100 Leveraging HR to Achieve Excellence

Following are the key audit matters:

Key Audit Matter

i) New requirements under the Companies Act, 2017 ii) Review of recoverability of deferred tax asset
(Refer note 4 to the financial statements) (Refer note 17 of the financial statements)

The provisions of the fourth schedule to the Companies Under International Accounting Standard 12, Income Taxes,
Act, 2017 (the Act) became applicable to the Company the Company is required to review recoverability of the
for the first time in the preparation of these annexed deferred tax assets recognised in the statement of financial
financial statements. position at each reporting period.
The Act, has also brought certain changes with Recognition of deferred tax asset position involved
regards to preparation and presentation of the annual managements’ estimate of the future available taxable
financial statements of the Company. profits of the Company based on an approved business
plan. This estimation is inherently uncertain and requires
As part of this transition to the requirements, the
judgement in relation to the future cash flows and also
management performed a gap analysis to identify
involves assessment of timing of reversals of un-used
differences, between the previous and the current
tax losses as to determine the availability of future profits
financial reporting framework and as a result certain
against which tax deductions represented by the deferred
changes were made in the Company’s annexed
tax assets can be offset.
financial statements.
As at June 30, 2018, the Company carries a net deferred
In view of the extensive impacts in the annexed
tax asset of Rs 1,397 million in its statement of financial
financial statements due to first time application of
position after derecognizing deferred tax asset to the extent
the fourth schedule to the Act, we considered it as a
of Rs 154.37 million.
key audit matter.
We considered this matter due to significant value of
How the matter is addressed in our audit deferred tax asset and assumptions used by management
We reviewed and understood the requirements of in this area.
the Fourth schedule to the Act. Our audit procedures
Our procedures in relation to this matter included:
included the following:
– Evaluating the appropriateness of components of
– Considered the management’s process to
management’s computation including consideration of
identify the additional disclosures required in the
un-used tax losses, tax credit on investments, minimum
Company’s annexed financial statements.
tax and alternative corporate tax for which deferred tax
– Obtained relevant underlying supports for assets were recognised.
the additional disclosures and assessed their
– Analysing the requirements of the Income Tax Ordinance,
appropriateness for the sufficient audit evidence.
2001, in relation to above and considering the factors
– Verified on test basis the supporting evidence for the including aging analysis, expiry periods of relevant
additional disclosure and ensured appropriateness deferred tax assets and tax rates enacted.
of the disclosures made. – Assessing the reasonableness of cash flow and taxable
profits projections, challenging and performing audit
procedures on assumptions such as growth rate,
production patterns, future revenue and costs, comparing
the assumptions to, historical results, considering
approved budget comparing the current year’s results
with prior year forecast and considering other relevant
information to assess the quality of Company’s
forecasting process in determining the projections.
– Testing mathematical accuracy of projections along
consideration of use of appropriate tax rate as applicable
on temporary differences.
– Assessing the appropriateness of management’s
accounting for deferred taxes and the accuracy of related
disclosures.
 Annual Report 2018 101

iii) Contingency with respect to crude oil pricing iv) Reversal of prior year tax and related provisions
(Refer note 12 of the financial statements) (Refer note 29 and 32 of the financial statements)

The Company purchases crude oil from various During the year, the Company, based on the advice of
oilfields in the country per the allocation made to the its tax consultant, reversed a cumulative provision of
Company by the Federal Government from respective Rs 1,190 million in respect of tax and related amount
oilfields. Likewise, the Company was allocated crude of Workers Welfare Fund (WWF) on the premise that
oil from two oil fields in March 2007 and September demands raised for related tax years have already
2009 respectively on provisional price basis as per the been paid by the Company and the likelihood of
related Petroleum Concession Agreement (PCA). further tax demands arising in respect of those tax
years is remote.
In March 2018, Crude Oil Sale and Purchase
Agreement (COSA) with effective date of March 27, We focused on this matter due to the significance
2007 was executed between the President of Pakistan of the amount involved and significant management
and the working interest owners of the above judgement this area.
mentioned PCA whereby various matters including
the pricing mechanism for crude oil were prescribed. Our procedures in relation to management
Subsequently, an amount of Rs 2,484 million has judgement regarding the matter included:
been demanded by the crude oil suppliers from the – Reviewing the assessment documents issued by
Company in respect of the alleged arrears of crude oil the taxation department (the Department) and
price for certain period prior to signing of COSA. details related to the proceedings in the matter of
The demand has not been acknowledged by the instant tax years at different forums including the
Company and not provided for in its books of account High Court and the Supreme Court.
based on the Company’s assessment of related – Reviewing the advice obtained by the Company
matter and on the legal advices obtained from its form its tax consultants.
legal consultants. Contingency has been disclosed in
– Involving auditor’s tax specialist to review the
the financial statements.
relevant supporting documentation including
We focused on this matter due to the significance the advice of management’s tax consultant to
of the amount involved, demand raised by crude oil assess the reasonableness of the management’s
suppliers and significant management judgement in assessment of the matter.
this area.

Our procedures in relation to management judgement

regarding the matter included:
– Reviewing the contents of the signed PCA.
– Reviewed the pricing mechanism historically
followed by the working interest owners of the PCA.
– Reviewing the contents of the signed COSA.
– Reviewing the debit note received by the Company
from the operator of the PCA and Company’s certain
subsequent correspondence with the operator of
PCA.
– Reviewing legal opinions obtained by the Company
from its legal consultants.
– Seeking independent advice from auditor’s legal
consultant to assess the matter and Company’s
contention in this respect.
102 Leveraging HR to Achieve Excellence

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON
Management is responsible for the other information. The other information obtained at the date of this auditor’s report
is information included in the director’s report, but does not include the financial statements of the company and our
auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
If based on the work we have performed, on other information obtained prior to the date of this auditor’s report, we
conclude ‘that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.

RESPONSIBILITIES OF MANAGEMENT AND BOARD OF DIRECTORS FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the
accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017 (XIX of 2017)
and for such internal control as management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to
do so.
Board of directors are responsible for overseeing the Company’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
 Annual Report 2018 103

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a
going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.

We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
b) the statement of financial position, the statement of profit or loss and statement of other comprehensive income, the
statement of changes in equity and the statement of cash flows together with the notes thereon have been drawn up
in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the
Company’s business; and
d) 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 7 of that Ordinance.

The engagement partner on the audit resulting in this independent auditor’s report is Mr. JehanZeb Amin.

– Sd –
Chartered Accountants
Islamabad
Date: August 30, 2018
104 Leveraging HR to Achieve Excellence

Statement of Financial Position

As at June 30, 2018

June 30, June 30, July 1,

2018 2017 2016
Note Rs ‘000 Rs ‘000 Rs ‘000
(Restated) (Restated)

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Share capital
Authorised share capital 8 1,500,000 1,500,000 1,500,000
Issued, subscribed and paid-up capital 8 852,930 852,930 852,930
Reserves and surplus 9 26,412,754 26,475,311 21,524,684
Surplus on revaluation of freehold land 13 12,052,576 12,052,576 10,811,949
39,318,260 39,380,817 33,189,563

NON CURRENT LIABILITIES

Long term financing 10 12,642,916 17,672,166 14,613,682

CURRENT LIABILITIES
Trade and other payables 11 44,510,275 28,166,813 23,035,971
Accrued mark-up on long term financing 10 260,909 338,226 266,556
Current portion of long term financing 10 2,200,000 2,200,000 550,000
Unclaimed dividends 9,839 8,898 7,658
Provision for taxation 2,163,842 3,439,980 3,955,760
49,144,865 34,153,917 27,815,945

TOTAL EQUITY AND LIABILITIES 101,106,041 91,206,900 75,619,190

CONTINGENCIES AND COMMITMENTS 12

 Annual Report 2018 105

June 30, June 30, July 1,

2018 2017 2016
Note Rs ‘000 Rs ‘000 Rs ‘000
(Restated) (Restated)

ASSETS

NON CURRENT ASSETS

PROPERTY, PLANT AND EQUIPMENT

Operating assets 13 32,817,565 35,133,344 12,148,054
Capital work-in-progress 14 303,043 142,057 22,733,687
Major spares parts and stand-by equipment 119,151 81,396 83,293
33,239,759 35,356,797 34,965,034

LONG TERM INVESTMENTS 15 13,264,915 13,264,915 13,264,915

LONG TERM LOANS AND DEPOSITS 16 42,115 34,642 31,289

DEFERRED TAXATION 17 1,304,152 493,985 644,246

CURRENT ASSETS
Stores, spares and loose tools 18 2,905,748 2,193,275 1,815,409
Stock-in-trade 19 9,788,997 5,712,344 6,707,642
Trade debts 20 15,748,278 10,678,545 6,889,427
Loans, advances, deposits, prepayments
and other receivables 21 1,871,717 1,842,288 1,618,030
Short term investment 22 985,846 - -
Cash and bank balances 23 21,954,514 21,630,109 9,683,198
53,255,100 42,056,561 26,713,706

TOTAL ASSETS 101,106,041 91,206,900 75,619,190

The annexed notes 1 to 46 form an integral part of these financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
106 Leveraging HR to Achieve Excellence

Statement of Profit or Loss

For the year ended June 30, 2018
2018 2017
Note Rs ‘000 Rs ‘000

Gross sales 24 179,430,555 139,515,951

Taxes, duties, levies, discounts and price differential 25 (49,833,990) (38,104,159)
Net sales 129,596,565 101,411,792
Cost of sales 26 (130,675,227) (97,078,919)
Gross (loss)/ profit (1,078,662) 4,332,873

Administration expenses 27 645,120 595,023

Distribution cost 28 50,156 49,047
Other charges 29 (106,271) 202,660
(589,005) (846,730)
Other income 30 1,977,477 1,434,222
Operating profit 309,810 4,920,365
Finance cost 31 (2,925,299) (1,263,141)
(Loss)/ profit before taxation from refinery operations (2,615,489) 3,657,224
Taxation 32 1,602,931 42,111
(Loss)/ profit after taxation from refinery operations (1,012,558) 3,699,335
Income from non-refinery operations less
applicable charges and taxation 33 1,591,536 1,714,329
Profit for the year 578,978 5,413,664

(Loss)/ earnings per share - basic and diluted (Rs)

Refinery operations (11.87) 43.37
Non-refinery operations 18.66 20.10
34 6.79 63.47

The annexed notes 1 to 46 form an integral part of these financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
 Annual Report 2018 107

Statement of Comprehensive Income

For the year ended June 30, 2018
2018 2017
Note Rs ‘000 Rs ‘000

Profit for the year 578,978 5,413,664

Other comprehensive income

Items that will not be reclassified to profit or loss

Remeasurement loss on staff retirement benefit plans 35 (168,758) (52,246)
Related deferred tax credit 47,252 15,674
Effect of change in rate of tax (8,271) -
(129,777) (36,572)
Surplus on revaluation of freehold land 13.1 - 1,240,627
Other comprehensive (loss)/ income - net of tax (129,777) 1,204,055

Total comprehensive income for the year 449,201 6,617,719

The annexed notes 1 to 46 form an integral part of these financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
108 Leveraging HR to Achieve Excellence

Statement of Cash Flow

For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from - customers 174,378,760 135,793,300
- others 793,213 564,202
175,171,973 136,357,502

Cash paid for operating costs (123,851,464) (92,476,563)

Cash paid to Government for duties, taxes and other levies (43,294,913) (36,208,351)
Income tax paid (672,432) (515,780)
Net cash generated from operating activities 7,353,164 7,156,808

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property, plant and equipment (452,480) (953,733)
Proceeds against disposal of operating assets 7,987 7,685
Long term loans and deposits (7,472) (3,353)
Income received on bank deposits 1,124,301 889,065
Dividends received 1,819,574 2,023,553
Net cash flows generated from investing activities 2,491,910 1,963,217

CASH FLOWS FROM FINANCING ACTIVITIES

Long term financing (5,200,000) 4,689,509
Transaction cost on long term financing (500) (6,076)
Finance cost (2,831,366) (1,431,464)
Dividends paid (510,818) (425,225)
Net cash (outflows)/inflows from financing activities (8,542,684) 2,826,744
INCREASE IN CASH AND CASH EQUIVALENTS DURING THE YEAR 1,302,390 11,946,769

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 21,630,109 9,683,198

Effect of exchange rate changes 7,861 142

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 43 22,940,360 21,630,109

The annexed notes 1 to 46 form an integral part of these financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
 Annual Report 2018 109

Statement of Changes in Equity

For the year ended June 30, 2018

Capital reserve Revenue reserve

Special Utilised special Surplus on
reserve for reserve for revaluation
Share expansion/ expansion/ Investment General Un-appropriated of freehold
capital modernisation modernisation Others reserve reserve Profit land Total
Rs ’000

Balance as at July 1, 2016 852,930 9,455,212 - 5,948 3,762,775 55 8,300,694 10,811,949 33,189,563

Distribution to owners:
Final cash dividend @ 50% related to the
year ended June 30, 2016 - - - - - - (426,465) - (426,465)

Total comprehensive income

Profit for the year - - - - - - 5,413,664 - 5,413,664
Other comprehensive (loss)/ income
for the year - - - - - - (36,572) 1,240,627 1,204,055
- - - - - - 5,377,092 1,240,627 6,617,719
Transfer to special reserve for expansion/
modernisation - note 9.1 - 3,553,535 - - - - (3,553,535) - -
Transfer to utilised special reserve - note 9.2 - (10,962,934) 10,962,934 - - - - - -
Balance at June 30, 2017 852,930 2,045,813 10,962,934 5,948 3,762,775 55 9,697,786 12,052,576 39,380,817

Distribution to owners:
Final cash dividend @ 60% related to the
year ended June 30, 2017 - - - - - - (511,758) - (511,758)

Total comprehensive income

Profit for the year - - - - - - 578,978 - 578,978
Other comprehensive loss for the year - - - - - - (129,777) - (129,777)
- - - - - - 449,201 - 449,201
Loss from refinery operations transferred
from unappropriated profit to Special
Reserve - note 9.1 - (1,012,558) - - - - 1,012,558 - -
Balance at June 30, 2018 852,930 1,033,255 10,962,934 5,948 3,762,775 55 10,647,787 12,052,576 39,318,260

The annexed notes 1 to 46 form an integral part of these financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
110 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

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 Pakistan Stock Exchange Limited. 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. SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING THE COMPANY’S FINANCIAL POSITION

AND PERFORMANCE
The financial position and performance of the Company was affected by the following events and transactions
during the year:
i) The Company has suffered a net exchange loss of Rs 1,396.03 million in respect of its purchases and
liabilities denominated in US Dollars and as also referred to in note 31.
ii) Consequent to the decision of government to shut-down furnace fueled power plants in country there
was a reduction in capacity utilization of the refinery during the month of November 2017. In view of the
foregoing, the Company was compelled to operate the refinery at lower throughput to deal with the problem
of increasing stock of furnace fuel and the declining ullage.
iii) Other significant transactions and events have been adequately described in these financial statements. For
detail performance review of the Company, refer Directors’ Report.

3. STATEMENT OF COMPLIANCE
These are separate financial statements of the company and have been prepared in accordance with the
accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards applicable
in Pakistan comprise of:
– International Financial Reporting Standards (IFRS Standards) issued by the International Accounting
Standards Board (IASB) as notified under the Companies Act, 2017;and
– Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards,
the provisions of and directives issued under the Companies Act, 2017 have been followed.

4. NEW AND REVISED STANDARDS AND INTERPETATIONS

4.1 The fourth schedule to the Companies Act, 2017 (the Act) became applicable to the Company for the first time for
the preparation of these financial statements. The Act (including its fourth schedule) forms an integral part of
the statutory financial reporting framework applicable to the Company and amongst other, prescribes the nature
and content of disclosures in relation to various elements of the financial statements.
The Act has also brought certain changes with regard to preparation and presentation of annual and interim
financial statements of the Company. These changes include change in nomenclature of primary financial
statements. Further, the disclosure requirements contained in the Fourth schedule to the Act have been revised,
resulting in the:
– elimination of duplicative disclosures with the IFRS disclosure requirements; and
– incorporation of significant additional disclosures.
– Specific additional disclosures and changes to the existing disclosures as a result of this change are stated
in notes 2, 5.7, 6, 11, 12, 13.2, 13.3, 16, 20.2, 21.2, 27.2, 32.4, 36, 38.2, 38.3, 39, 44, 45.1, 45.2 and 45.4.

4.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been
early adopted by the Company:
 Annual Report 2018 111

Effective date
(annual reporting periods
beginning on or after)

IAS 19 Employee benefits (Amendments) January 1, 2019

IAS 28 Investment in Associates and Joint Ventures (Amendments) January 1, 2019
IAS 40 Investment property (Amendments) January 1, 2018
IFRS 2 Share-based Payment (Amendments) January 1, 2018
IFRS 4 Insurance contracts (Amendments) January 1, 2018
IFRS 9 Financial Instruments July 1, 2018
IFRS 15 Revenue from Contracts with Customers July 1, 2018
IFRS 16 Leases January 1, 2019
IFRIC 22 Foreign Currency Transactions and Advance Consideration January 1, 2018
IFRIC 23 Uncertainty Over Income Tax January 1, 2019

The management anticipates that the adoption of the above standards, amendments and interpretations in
future periods, will have no material impact on the financial statements other than the impact on presentation/
disclosures. The management is in the process of assessing the impact of changes laid down by the IFRS 9, 15
and 16 on its financial statements.
Further, the following new standards and interpretations have been issued by the International Accounting
Standards Board (IASB), which are yet to be notified by the Securities and Exchange Commission of Pakistan
(SECP), for the purpose of their applicability in Pakistan:

IFRS 1 First-time Adoption of International Financial Reporting Standards

IFRS 14 Regulatory Deferral Accounts
IFRS 17 Insurance Contracts

The following interpretations issued by the IASB have been waived of by SECP:
IFRIC 4 Determining whether an arrangement contains lease
IFRIC 12 Service concession arrangements

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5.1 Basis of measurement
These financial statements have been prepared under the historical cost convention modified by revaluation of
freehold land referred to in note 5.7, certain financial instruments which are carried at their fair values and staff
retirement gratuity and pension plans which are carried at present value of defined benefit obligation net of fair
value of plan assets.

5.2 Dividend and revenue reserves appropriation

Dividend and movement in revenue reserves are recognised in the financial statements in the period in which
these are approved.

5.3 Employee retirement benefits

The main features of the retirement benefit schemes operated by the Company for its employees are as follows:

i) Defined benefit plans

The Company operates approved pension fund for its management staff and approved gratuity fund for its
management and non-management staff. The investments of Pension and gratuity funds are made through
approved trust funds. Gratuity is deductible from pension. Management staff hired after January 1, 2012 are only
entitled to benefits under gratuity fund. Contributions are made in accordance with actuarial recommendations.
Actuarial valuations are conducted by an independent actuary, annually using projected unit credit method
related details of which are given in note 35 to the financial statements. The obligation at the statement of
112 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

financial position is measured at the present value of the estimated future cash outflows. All contributions are
charged to statement of profit or loss for the year.
Actuarial gains and losses (remeasurement gains/losses) on employees’ retirement benefit plans are recognised
immediately in other comprehensive income and past service cost is recognized in statement of profit or loss
when they occur.
Calculation of gratuity and pension requires assumptions to be made of future outcomes which mainly includes
increase in remuneration, expected long-term return on plan assets and the discount rate used to convert future
cash flows to current values. Calculations are sensitive to changes in the underlying assumptions.

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.

5.4 Employee compensated absences

The Company also provides for compensated absences for all employees in accordance with the rules of the
Company.

5.5 Taxation
Income tax expense comprises of current and deferred tax.
Current tax
Provision for current taxation is based on taxable income at the applicable rates of taxation after taking into
account tax credits and tax rebates, if any. Income tax expense is recognised in statement of profit or loss except
to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Deferred tax
Deferred income tax is accounted for using the statement of financial position 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, un-used tax losses
and tax credits can be utilized. Deferred tax is calculated at the rates that are substantially 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.
The Company takes into account the current income tax law and decisions taken by the taxation authorities.
Instances where the Company’s views differ from the income tax department at the assessment stage and where
the Company considers that its view on items of material nature is in accordance with law, the amounts are
shown as contingent liabilities.
Investment tax credits are considered not substantially different from other tax credits. Accordingly in such
situations tax credits are deducted from current tax amount to the extent of tax credit availed while recognising
deferred tax credit for the unused investment tax credit.

5.6 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 outflow of resources embodying economic benefit will be required to settle the
obligation and a reliable estimate of the amount can be made.
 Annual Report 2018 113

5.7 Property, plant and equipment and capital work-in-progress

a) Cost
Operating fixed assets except freehold land are stated at cost less accumulated depreciation and impairment
losses. Freehold land is stated at revalued amount. Capital work-in-progress and major spare parts and standby
equipment 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) Revaluation
Increase in the carrying amount arising on revaluation of freehold land are recognised in other comprehensive
income and accumulated in shareholders’ equity under the heading surplus on revaluation of freehold land. To
the extent that the increase reverses a decrease previously recognised in statement of profit or loss, the increase
is first recognised in statement of profit or loss. Decreases that reverse previous increases of the same asset are
first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset;
all other decreases are charged to statement of profit or loss.
c) Depreciation
Depreciation on operating assets is calculated using the straight-line method to allocate their cost over their
estimated useful life at the rates specified in note 13.
d) 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.
e) Gains and losses on disposal
Gains and losses arising on disposal of assets are included in income currently.

5.8 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 statement of financial position 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 extent that assets carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss has been recognised. An impairment loss
or reversal of impairment loss is recognised in the statement of profit or loss.

5.9 Investments
5.9.1 Investment in subsidiaries
Investment in subsidiary is initially recognised at cost. At subsequent reporting date, recoverable amounts are
estimated to determine the extent of impairment loss, if any, and carrying amount of investment is adjusted
accordingly. Impairment losses are recognised as expense in the statement of profit or loss. Where impairment
loss is subsequently reversed, the carrying amounts of investment are increased to its revised recoverable
amount, limited to the extent of initial cost of investment. Reversal of impairment losses are recognised in the
statement of profit or loss.
The profits or losses of subsidiaries are carried forward in their financial statements and are not dealt within
these financial statements except to the extent of dividend declared by the subsidiaries. Gains and losses on
disposal of investment are included in other income. When the disposal on investment in subsidiary results in
loss of control such that it becomes an associate, the retained investment is carried at cost.
5.9.2 Investment in associates
Investments in associates and jointly controlled entities are initially recognised at cost. At subsequent reporting
date, the recoverable amounts are estimated to determine the extent of impairment losses, if any, and
carrying amounts of investments are adjusted accordingly. Impairment losses are recognised as expense in
114 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

the statement of profit or loss. Where impairment losses are subsequently reversed, the carrying amounts
of these investments are increased to the revised recoverable amounts but limited to the extent of initial cost
of investments. A reversal of impairment loss is recognised in the statement of profit or loss. The profits and
losses of associates and jointly controlled entities are carried forward in their financial statements and are not
dealt within these financial statements except to the extent of dividend declared by the associates and jointly
controlled entities. Gains and losses on disposal of investments are included in the statement of profit or loss.

5.10 Stores, spares and loose tools

These are valued at moving average cost less allowance for obsolete and slow moving items. Items in transit are
stated at invoice value plus other charges incidental thereto.

5.11 Stock in trade

Stock-in-trade is valued at the lower of cost and net realisable value.
Cost in relation to crude oil is determined on a First-in-First-Out (FIFO) basis. In relation to semi-finished and
finished products, cost represents the cost of crude oil and an appropriate portion of manufacturing overheads.
Net realisable value represents selling prices in the ordinary course of business less costs necessarily to be
incurred for its sale.

5.12 Revenue recognition

Revenue is recognised to the extent that it is probable that economic benefits will flow to 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.
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 to charge product prices equivalent to the
‘import parity’ price, calculated under prescribed parameters.
ii) Income from crude desalter operations, rental income, handling and service income are recognized on accrual
basis.
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.

5.13 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.

5.14 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 statement of financial position date. Exchange differences are dealt with
through the statement of profit or loss.

5.15 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.
 Annual Report 2018 115

5.16 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.
5.16.1 Held-to-maturity investments
Investments with fixed payments and maturity that the Company has the intent and ability to hold to maturity are
classified as held-to-maturity investments and are carried at amortised cost less impairment losses.
5.16.2 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the statement of financial position 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 statement of financial position. Loans and receivables are carried at amortized cost using the
effective interest method.
5.16.3 Available-for-sale investments
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified
in any of the other categories. They are included in non-current assets unless management intends to dispose
of the investment within 12 months of the statement of financial position date.
Available-for-sale investments are initially recognised at cost and carried at fair value at the statement of
financial position date. Fair value of a quoted investment is determined in relation to its market value (current
bid prices) at the statement of financial position date. If the market for a financial asset is not active (and for
unlisted securities), the Company establishes fair value by using valuation techniques. Adjustment arising from
remeasurement of investment to fair value is recorded in equity and taken to income on disposal of investment
or when the investment is determined to be impaired.
5.16.4 Investment at fair value through profit or loss
Investments classified as investments at fair value through profit or loss are initially measured at cost being
fair value of consideration given. At subsequent dates these investments are measured at fair value with any
resulting gains or losses recognised directly in the statement of profit or loss. The fair value of such investments
is determined on the basis of prevailing market prices.

5.17 Trade debts and other receivables

Trade debts and other receivables are recognised and carried at their amortised cost less an allowance for any
uncollectable amounts. Carrying amounts of trade debts and other receivables are assessed on a regular basis
and if there is any doubt about the realisability of these receivables, appropriate amount of provision is made.

5.18 Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit
or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares.
Basic and diluted EPS relating to Refinery and Non-refinery operations is also calculated in line with the manner
described above by dividing the profit or loss attributable to ordinary shareholders from Refinery and Non-
refinery operations respectively.
116 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

5.19 Finance income

Finance income comprises interest income on funds invested (including available-for-sale financial assets),
dividend income, gain on disposal of available-for-sale financial assets and changes in fair value of investments
held for trading. Interest income is recognised as it accrues in the statement of profit or loss, using effective
interest method. Dividend income is recognised in the statement of profit or loss on the date that the Company’s
right to receive payment is established.

5.20 Finance cost

Finance costs comprise interest expense on borrowings, changes in fair value of investment carried at fair value
through the statement of profit or loss and impairment losses recognised on financial assets.
Foreign currency gains and losses are reported separately.

5.21 Contingent Liabilities

A contingent liability is disclosed when the Company has a possible obligation as a result of past events, whose
existence will be confirmed only by the occurrence or non-occurrence, of one or more uncertain future events
not wholly within the control of the Company; or the Company has a present legal or constructive obligation that
arises from past events, but it is not probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.

5.22 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.

5.23 Offsetting
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position 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.

5.24 Cash and cash equivalents

For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand, bank balances and
highly liquid short term investments.

5.25 Borrowings and their costs

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the statement of profit or loss over the period of the borrowings using the effective interest
method.
Fees paid on the establishment of loan facilities are recognised as transaction costs on the borrowing to the
extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until
the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a transaction cost on borrowing and amortised over the period of the facility
to which it relates.
Borrowing costs are recognised as an expense in the period in which these are incurred except where such costs
are directly attributable to the acquisition, construction or production of a qualifying asset in which case such
costs are capitalised as part of the cost of that asset.

5.26 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors that makes
strategic decisions. The management has determined that the Company has a single reportable segment as the
Board of Directors views the Company’s operations as one reportable segment.
 Annual Report 2018 117

6. CHANGE IN ACCOUNTING POLICY

Section 235 of the Repealed Companies Ordinance, 1984 specified the accounting treatment and presentation of
the surplus on revaluation of fixed [Link] specific provision/section in the Repealed Companies Ordinance,
1984 relating to the surplus on revaluation of fixed assets has not been carried forward in the Companies Act,
2017. In view of foregoing and the contents of note 3 & note 4.1 the accounting and presentation of revaluation
surplus is required to be made in accordance with the requirements of International Accounting Standard (IAS)
16, Property,Plant and Equipment.
The applicability of requirements of IAS 16 accordingly results in the change in accounting policy of revaluation
of surplus in following manner:
– present surplus on revaluation of fixed assets under equity;
– offset the deficit arising from revaluation of the particular asset; and
– transfer the realized surplus directly to the retained earnings/unappropriated profit;
The change in accounting policy has been accounted for retrospectively in accordance with the requirements
of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ and the corresponding figures have
been restated. The effect of retrospective application in case of the Company has resulted in reclassification of
surplus on revaluation of freehold land to reserves. There is no other impact of the retrospective application on
the amounts of surplus presented in prior years.

7. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of financial statements in conformity with the approved accounting standards requires the use
of certain accounting estimates. It also requires management to exercise its judgment in the process of applying
the Company’s accounting policies. 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) Surplus on revaluation of freehold land - 13.1
ii) Contingencies - note 12
iii) Estimated useful life of operating assets - note 13
iv) Deferred taxation - note 17
v) Provision for taxation - note 32
vi) Provision for employees’ defined benefit plans - note 35

8. SHARE CAPITAL

8.1 Authorised share capital

2018 2017 2018 2017
Number of shares Rs ‘000 Rs ‘000

150,000,000 150,000,000 Ordinary shares of Rs 10 each 1,500,000 1,500,000

8.2 Issued, subscribed and paid up capital

2018 2017 2018 2017
Number of shares Ordinary shares of Rs 10 each Rs ‘000 Rs ‘000

8,000,000 8,000,000 Fully paid in cash 80,000 80,000

77,293,000 77,293,000 Shares issued as fully paid bonus shares 772,930 772,930
85,293,000 85,293,000 852,930 852,930

The parent company Attock Oil Company Limited held 52,039,224 (2017: 52,039,224) ordinary shares and the
associated company Attock Petroleum Limited held 1,432,000 (2017: 1,432,000) ordinary shares at the year end.
118 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

9. RESERVES AND SURPLUS

Capital reserve
Special reserve for expansion/ modernisation - note 9.1 1,033,255 2,045,813
Utilised special reserve for expansion/ modernisation - note 9.2 10,962,934 10,962,934

Others
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
Revenue reserve
Investment reserve - note 9.3 3,762,775 3,762,775
General reserve 55 55
Unappropriated profit 10,647,787 9,697,786
14,410,617 13,460,616
26,412,754 26,475,311

9.1 Represents amounts retained as per the stipulations of the Government under the pricing formula and is
available only for making investment in expansion or Up-gradation of the refinery or off setting any loss 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.
Under the Policy Framework for Up-gradation and Expansion of Refineries, 2013 issued by the Ministry of Energy
- Petroleum Division (the Ministry) as amended from time to time, the refineries are required to transfer the
amount of profit above 50% of paid-up capital as at July 1, 2002 into a Special Reserve Account which shall be
available for utilisation for Up-gradation of refineries or may also be utilized in off setting losses of the refinery
from refinery operations.
Following is the status of special reserve for expansion/ modernization utilzation on up-gradation and expansion
projects from July 1, 1997 to June 30, 2018:

2018 2017
Rs ‘000 Rs ‘000

Balance as at July 1 2,045,813 9,455,212

Transfer (from)/to for the year (1,012,558) 3,553,535
Transfer to utlised special reserve for expansion/modernisation - note 9.2 - (10,962,934)
Balance as at June 30 1,033,255 2,045,813

9.2 Represents amounts utilized out of the Special Reserve for expansion/modernization of the refinery. The total
amount of capital expenditure incurred on Refinery expansion/mordernisation till June 30, 2018 is Rs 28,390
million including Rs 17,427 million spent over and above the available balance in the Special Reserve which has
been incurred by the Company from its own resources.
9.3 The Company has set aside gain on sale of investment as investment reserve to meet any future losses/
impairment on investments.
 Annual Report 2018 119

2018 2017
Rs ‘000 Rs ‘000

10. LONG TERM FINANCING - secured

From banking companies
Syndicated Term Finance - note 10.1 11,494,985 15,380,448
Musharaka Finance - note 10.2 3,762,252 5,034,006
15,257,237 20,414,454

Less: Unamortized transaction cost on financing:

Balance as at July 1 204,062 243,300
Addition during the year 500 6,076
Amortization for the year (51,150) (45,314)
Balance as at June 30 153,412 204,062
15,103,825 20,210,392
Current portion of long term financing (2,200,000) (2,200,000)
12,903,825 18,010,392
Mark-up payable shown as current liability (260,909) (338,226)
12,642,916 17,672,166

10.1 The Company entered into a syndicated finance agreement with a consortium of banks which includes Bank
Al-Habib Limited as the Agent Bank for a term finance facility of Rs 16,575 million for ARL Up-gradation Projects.
The facility carries a mark-up of 3 months KIBOR plus 1.70% which is payable on quarterly basis. The tenure of
this facility is 13 years.
10.2 The Company obtained Musharaka finance facility of Rs 5,425 million from Bank AL-Habib Limited (the Bank)
as the Investment Agent for ARL Up-gradation Projects. The total Musharaka investment amounts to Rs 8,029
million and Investment Agent’s (the Bank) share in Musharaka Assets A is nil % (2017: 47.64%) while its share in
Musharaka Assets B is 68.72% (2017: 69.90%) respectively. While the Managing Co-owner’s (the Company) share
in Musharaka Assets A is 100% (2017: 52.36%) while its share in Musharaka Assets B is 31.28% (2017: 30.10%)
respectively. The tenure of this facility is 13 years. The rental payments under this facility are calculated on the
basis of 3 months KIBOR plus 1.70% on value of unit purchased on each Musharaka Assets purchase date under
Musharaka agreement.
10.3 The facilities referred to in notes 10.1 and 10.2 are secured by first pari passu charge by way of hypothecation
over all present and future current assets to the extent of Rs 15,000 million. Further, the facility is also secured by
first pari passu charge by way of hypothecation over all present and future movable fixed assets of the Company
and mortgage over identified immovable property. Until the payment of all the outstanding amounts due by the
Company have been paid in full, the Company cannot, except with the prior written consent of the Agent Bank/
Investment Agent, permit the collective shareholding of Attock Oil Company Limited in the Company to fall below
51%.
10.4 During the year the Company, in addition to the scheduled quarterly principal payments, also repaid an amount
of Rs 3,000 million in respect of facilities referred to in note 10.1 and 10.2.
120 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

11. TRADE AND OTHER PAYABLES

Creditors - note 11.1 24,291,759 16,159,357
Due to The Attock Oil Company Limited - Holding Company 110,497 24,006
Due to Attock Hospital (Private) Limited - Subsidiary Company 220 -
Due to associated companies
Pakistan Oilfields Limited 2,478,433 1,221,175
Attock Sahara Foundation 754 -
Attock Solar (Private) Limited 970 -
Accrued liabilities and provisions - note 11.1 4,027,691 3,874,612
Due to the Government under pricing formula 4,883,264 2,247,775
Custom duty payable to Government 6,888,202 3,318,978
Sales tax payable 168,206 -
Payable to statutory authorities in respect of petroleum
development levy and excise duty 1,295,938 1,053,049
Advance payments from customers 119,274 101,336
Workers’ Profit Participation Fund - note 21.1 - 83,663
ARL Gratuity Fund 102,136 54,523
Staff Pension Fund 123,877 5,536
Crude oil freight adjustable through inland freight
equalisation margin 15,761 20,010
Deposits from customers adjustable against freight
and Government levies payable on their behalf 376 376
Security deposits 2,917 2,417
44,510,275 28,166,813

11.1 These balances include amounts retained from payments to crude suppliers for purchase of local crude as
per the directives of the Ministry of Energy - Petroleum Division (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 along with accumulated profits amounted to Rs 3,113.17 million (2017: Rs 2,944.91 million).
 Annual Report 2018 121

2018 2017
Rs ‘000 Rs ‘000

12. CONTINGENCIES AND COMMITMENTS

Contingencies:
i) Consequent to amendment through the Finance Act, 2014, SRO 1,326,706 1,326,706
575(I)/2006 was withdrawn. As a result all imports relating to
the ARL Up-gradation Project were subjected to higher rate
of customs duties, sales tax and income tax. Aggrieved by the
withdrawal of the said SRO, the Company filed a writ petition on
August 20, 2014 in the Lahore High Court, Rawalpindi Bench (the
Court). The Court granted interim relief by allowing release of the
imports against submission of bank guarantees and restrained
customs authorities from charging increased amount of customs
duty/ sales tax. Bank guarantees were issued in favour of Collector
of Customs, as per the directives of the Court. These guarantees
include amounts aggregating to Rs 731 million on account of
adjustable/ claimable government levies.
Based on advice from legal advisor the Company is confident
that there are reasonable grounds for a favourable decision and
accordingly this liability has not been recognized in the financial
statements. Several hearings of the case have been held but the
matter is still under adjudication.

ii) Due to circular debt in the oil industry, certain amounts due from
the oil marketing companies (OMCs) and due to crude oil suppliers
have not been paid/ received 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 party.

iii) Guarantees issued by banks on behalf of the Company (other than 414 493
(i) above)

iv) Claims for land compensation contested by the Company 1,300 1,300

v) Price adjustment related to crude oil purchases as referred to in

note 26.1, the amount of which can not be presently quantified

vi) In March 2018, Crude Oil Sale and Purchase Agreement (COSA) 2,484,098 -
with effective date of March 27, 2007 has been executed between
the President of Pakistan and the working interest owners of a
Petroleum Concession Agreement (PCA) whereby various matters
including the pricing mechanism for crude oil were prescribed.
The Company has been purchasing crude oil from the related
oil fields since 2007 and 2009. In this respect, an amount of
Rs 2,484 million has been demanded from the Company as alleged
arrears of crude oil price for certain period prior to signing of
aforementioned COSA.
Based on the Company’s assessment of related matter and
based on the legal advices obtained from its legal consultants
the Company has not acknowledged the related demand and
accordingly, not provided for the same in its books of account.
122 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

vii) Claim by the Company from Government on account of additional 1,081,087 464,638
deemed duty on High Speed Diesel (HSD). In the Policy Framework
of 2013 for Up-gradation of Refineries, the Government had
committed to enhance deemed duty on HSD from 7.5% to 9%
subject to setting up of Diesel Hydrodesulphurisation (DHDS) unit.
However, this incentive has been withdrawn on April 25, 2016.
The Company has strongly taken up with the Government the
matter of withdrawal of additional deemed duty as this incentive
was primarily given to recover the cost of investment on DHDS
unit which the Company has successfully installed and
commissioned.
viii) The Finance Act, 2017 introduced tax on every public company at 418,470 -
the rate of 7.5% of its accounting profit before tax for the year.
However, this tax shall not apply in case of a public company which
distributes at least 40% of its after tax profits within six months of
the end of the tax year through cash or bonus shares.
Aggrieved by this amendment, the Company filed a writ petition
on August 3, 2017 in Sindh High Court (Court), Karachi. The Court
has granted stay to the Company. Subsequently, a notification
was issued on February 13, 2018 by the Federal Board of Revenue
whereby exemption was granted in the incidental matter to the
companies that are subject to restrictions imposed by Government
of Pakistan on distribution of dividend. Accordingly, no charge has
been recorded for the related tax.”

Commitments:
i) Capital expenditure 129,754 77,194

ii) Letters of credit for purchase of store items 88,941 143,871

 Annual Report 2018 123

13. OPERATING ASSETS

Furniture,
Freehold land Buildings on Plant and Computer fixtures and
(note 13.1) freehold land machinery equipment equipment Vehicles Total
Rs ‘000

As at June 30, 2016

Cost or valuation 10,866,170 206,774 5,352,287 72,440 146,870 127,632 16,772,173
Accumulated depreciation - (99,049) (4,318,517) (52,683) (70,342) (83,528) (4,624,119)
Net book value 10,866,170 107,725 1,033,770 19,757 76,528 44,104 12,148,054
Year ended June 30, 2017
Opening net book value 10,866,170 107,725 1,033,770 19,757 76,528 44,104 12,148,054
Additions - 6,981 23,755,609 9,084 12,432 28,198 23,812,304
Revaluation surplus 1,240,628 - - - - - 1,240,628
Disposals
Cost - - (33,334) (6,941) (2,033) (4,307) (46,615)
Depreciation - - 33,334 6,926 1,559 4,307 46,126
- - - (15) (474) - (489)
Depreciation charge - (10,336) (2,022,588) (7,429) (10,728) (16,072) (2,067,153)
Closing net book value 12,106,798 104,370 22,766,791 21,397 77,758 56,230 35,133,344
As at June 30, 2017
Cost or valuation 12,106,798 213,755 29,074,562 74,583 157,269 151,523 41,778,490
Accumulated depreciation - (109,385) (6,307,771) (53,186) (79,511) (95,293) (6,645,146)
Net book value 12,106,798 104,370 22,766,791 21,397 77,758 56,230 35,133,344

Year ended June 30, 2018

Opening net book value 12,106,798 104,370 22,766,791 21,397 77,758 56,230 35,133,344
Additions - 27,653 174,356 9,019 9,803 32,909 253,740
Revaluation surplus - - - - - - -
Disposals
Cost - - - (2,413) (2,232) (13,012) (17,657)
Depreciation - - - 2,405 2,056 12,971 17,432
- - - (8) (176) (41) (225)
Depreciation charge - (9,771) (2,519,379) (7,656) (11,508) (20,980) (2,569,294)
Closing net book value 12,106,798 122,252 20,421,768 22,752 75,877 68,118 32,817,565

As at June 30, 2018

Cost or valuation 12,106,798 241,408 29,248,918 81,189 164,840 171,420 42,014,573
Accumulated depreciation - (119,156) (8,827,150) (58,437) (88,963) (103,302) (9,197,008)
Net book value 12,106,798 122,252 20,421,768 22,752 75,877 68,118 32,817,565

Annual rate of
depreciation (%) - 5 10 20 10 20

13.1 Freehold land was revalued in May 2017 and the revaluation surplus of Rs 1,240.63 million was added to the
value of freehold land and corresponding amount was transferred to surplus on revaluation of freehold land. Had
the freehold land been stated on the historical cost basis, the carrying amount of land would have been Rs 54.22
million (2017: Rs 54.22 million)
13.2 Forced sales value of freehold land based on valuation conducted in May 2017 was Rs 9,685.44 million.
124 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

13.3 Particulars of immovable property (i.e. land and building) in the name of Company are as follows:

Location Usage of immovable property Total Area

(In acres)

Morgah Rawalpindi Refinery processing plants,office and staff colony 398.44

Chak Shahpur, Morgah, Rawalpindi Water wells 44.96
Humak (adjacent DHA II), Islamabad Water wells 7.34

2018 2017
Rs ‘000 Rs ‘000

13.4 The depreciation charge for the year has been allocated as follows:

Cost of sales - note 26 2,542,227 2,042,846

Administration expenses - note 27 26,301 23,564
Distribution cost - note 28 766 743
2,569,294 2,067,153

14. CAPITAL WORK-IN-PROGRESS

Balance as at July 1 142,057 22,733,687
Additions during the year - note 14.1 322,186 1,170,751
Transfer to operating assets
- Buildings on freehold land 27,653 6,981
- Plant and machinery 133,547 23,746,756
- Furniture and fixtures - 8,644
(161,200) (23,762,381)
Balance as at June 30 303,043 142,057

Breakup of the closing balance of capital work-in-progress

Civil works 7,720 15,830
Plant and machinery 294,323 125,227
Pipeline project 1,000 1,000
303,043 142,057

14.1 Financing cost amounting to Rs nil (2017: Rs 265.04 million) has been capitalised which includes Rs nil (2017:
Rs 11.21 million) in respect of amortization of transaction cost on long term financing arranged for the purpose
of ARL Up-gradation projects.
 Annual Report 2018 125

2018 2017
% age % age
holding Rs ‘000 holding Rs ‘000

15. LONG TERM INVESTMENTS - AT COST

Associated Companies
Quoted
National Refinery Limited (NRL) 25 8,046,635 25 8,046,635
19,991,640 (2017: 19,991,640) fully paid
ordinary shares including 3,331,940 (2017:
3,331,940) bonus shares of Rs 10 each
Market value as at June 30, 2018: Rs 8,856
million (June 30, 2017: Rs 14,514 million)
Attock Petroleum Limited (APL) 21.88 4,463,485 21.88 4,463,485
18,144,138 (2017: 18,144,138) fully paid
ordinary shares including 7,644,058 (2017:
7,644,058) bonus shares of Rs 10 each
Market value as at June 30, 2018: Rs 10,705
million (June 30, 2017: Rs 11,366 million)
12,510,120 12,510,120
Unquoted
Attock Gen Limited (AGL) 30 748,295 30 748,295
7,482,957 (2017: 7,482,957) fully paid ordinary
shares of Rs 100 each - note 15.1
Attock Information Technology Services
(Private) Limited 10 4,500 10 4,500
450,000 (2017: 450,000) fully paid ordinary
shares of Rs 10 each
752,795 752,795
Subsidiary Company
Unquoted
Attock Hospital (Private) Limited 100 2,000 100 2,000
200,000 (2017: 200,000) fully paid ordinary
shares of Rs 10 each
13,264,915 13,264,915

All associated and subsidiary companies are incorporated in Pakistan.

15.1 In October 2017, the Board of Directors of the Company approved to offer 3.95% out of the Company`s 30%
shareholding in paid up capital of Attock Gen Limited’s (AGL) to the general public including employees/officers
of the Company upon listing of the shares of AGL on the Pakistan Stock Exchange Limited. However, the proposed
offer has not yet been made.
126 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

16. LONG TERM LOANS AND DEPOSITS

Loans - secured and considered good - note 16.1
Employees 65,716 51,621
Executives 7,888 2,892
73,604 54,513
Amounts due within next twelve months shown
under current assets - note 21 (44,479) (31,880)
29,125 22,633
Security deposits 12,990 12,009
42,115 34,642

16.1 These are interest free loans for miscellaneous purposes and are recoverable in 24, 36, and 60 equal monthly
installments depending on case to case basis. These loans are secured against outstanding provident fund
balance or a third party guarantee. Receivable from executives of the Company 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 7.89 million (2017: Rs 6.26 million).

2018 2017
Rs ‘000 Rs ‘000

17. DEFERRED TAXATION

The balance of deferred tax is in respect of following
major temporary differences:

Accelerated tax depreciation (1,787,485) (2,085,362)

Minimum tax - note 17.2 1,244,201 785,230
Unused tax losses 1,531,518 1,068,004
Alternative corporate tax in excess of minimum tax 102,684 102,684
Remeasurement loss on staff retirement benefit plans 163,049 124,068
Unused tax credit on investment - 444,065
Provisions 50,185 55,296
1,304,152 493,985

17.1 Movement of deferred tax asset

Balance as at July 1 493,985 644,246
Tax charge recognised in statement of profit or loss 771,186 (165,935)
Tax charge recognised in other comprehensive income 38,981 15,674
Balance as at June 30 1,304,152 493,985

17.2 The deferred tax asset recognised in the financial statements represents the management’s best estimate of
the potential benefit which is expected to be realized in the future years in the form of reduced tax liability as the
Company would be able to set off the tax liability in those years against minimum tax and unused tax loss against
the taxable profits of future years. Based on management’s assessment of future available taxable profits, the
carrying amount of deferred tax asset was reduced by an amount of Rs 154.37 million in respect of minimum tax
expiring in 2019.
 Annual Report 2018 127

2018 2017
Rs ‘000 Rs ‘000

18. STORES, SPARES AND LOOSE TOOLS

Stores (including items in transit amounting to
Rs 537.31 million; 2017: Rs 327.807 million) 2,196,757 1,682,902
Spares 854,077 642,909
Loose tools 864 997
3,051,698 2,326,808
Less: Provision for slow moving items - note 18.1 145,950 133,533
2,905,748 2,193,275

18.1 Movement in provision for slow moving items

Balance at July 1 133,533 123,358
Provision for the year 12,417 10,175
Balance at June 30 145,950 133,533

19. STOCK-IN-TRADE
Crude oil 1,981,197 1,382,589
Semi-finished products 1,434,159 791,726
Finished products - note 19.2 6,373,641 3,538,029
9,788,997 5,712,344

19.1 Stock-in-trade include stocks carried at net realisable value of Rs 5,688.51 million (2017: Rs 3,118.46 million).
Adjustments amounting to Rs 871.36 million (2017: Rs 553.63 million) have been made to closing inventory to
write down stocks to their net realisable value.

2018 2017
Rs ‘000 Rs ‘000

19.2 Naphtha stock held by third parties

At National Refinery Limited 625,357 366,263
In transit 46,671 86,782
672,028 453,045

20. TRADE DEBTS - unsecured and considered good

20.1 Trade debts include amount receivable from associated companies Attock Petroleum Limited Rs 10,413 million
(2017: Rs 7,290 million) and Pakistan Oilfields Limited Rs 42 million (2017: Rs nil).
Age analysis of trade debts from associated companies, past due but not impaired.

2018 2017
Rs ‘000 Rs ‘000

0 to 6 months 3,649,697 3,883,005

6 to 12 months 3,074,531 1,243,505
Above 12 months - -
6,724,228 5,126,510

20.2 The maximum aggregate amount due from the related party at the end of any month during the year was
Rs 12,921.54 million (2017: Rs 9,339.53 million).
128 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

21. LOANS, ADVANCES, DEPOSITS, PREPAYMENTS

AND OTHER RECEIVABLES
Loans and advances - considered good
Current portion of long term loans - secured - note 16
Employees 37,723 29,337
Executives 6,756 2,543
44,479 31,880
Advances
Suppliers 50,078 64,084
Employees 4,644 3,653
54,722 67,737
99,201 99,617
Deposits and prepayments
Trade deposits 286 286
Short term prepayments 151,446 112,126
151,732 112,412
Other receivables - considered good
Due from Subsidiary Company
Attock Hospital (Private) Limited - 589
Due from associated companies
Attock Information Technology Services (Private) Limited 503 481
Attock Petroleum Limited 1,462,881 1,419,677
Attock Leisure and Management Associates (Private) Limited 12 12
Attock Gen Limited 247 322
National Cleaner Production Centre Foundation 4,906 3,518
National Refinery Limited 3,087 3,726
Attock Sahara Foundation - 994
Income accrued on bank deposits 104,729 30,236
Sales tax receivable - 145,620
Workers’ Profit Participation Fund - note 21.1 20,000 -
Other receivables 24,419 25,084
1,620,784 1,630,259
1,871,717 1,842,288

21.1 Workers’ Profit Participation Fund

Balance receivable / (payable) as at July 1 (83,663) 56,950
Interest on fund utilised in Company’s business (5,673) -
Amount paid to the fund 109,336 153,050
Amount allocated for the year - note 29 & 33 - (293,663)
Balance receivable / (payable) as at June 30 20,000 (83,663)

21.2 The maximum aggregate amount due from the related parties at the end of any month during the year was
Rs 1,471.64 million (2017: Rs 1,429.32 million)
 Annual Report 2018 129

Age analysis of related parties from associated companies, past due but not impaired.
2018 2017
Rs ‘000 Rs ‘000

0 to 6 months 468,064 260,300

6 to 12 months 204,705 96,701
Above 12 months 798,867 1,072,318
1,471,636 1,429,319

22. SHORT TERM INVESTMENT

Represents investment in 3 months Government Treasury Bills bearing markup @ 6.24% (2017: nil %) per annum.

2018 2017
Rs ‘000 Rs ‘000

23. CASH AND BANK BALANCES

Cash in hand (includes US $ 2,298; 2017: US $ 4,126) 1,200 1,298

With banks:
Local currency
Current accounts 27,959 7,286
Deposit accounts - note 23.1, 23.2 and 23.3 8,005,069 8,883,105
Savings accounts 13,862,915 12,689,007

Foreign currency
Saving accounts (US $ 472,578; 2017: US $ 471,502) 57,371 49,413
21,954,514 21,630,109

23.1 Deposit accounts include Rs nil (2017: Rs 2,883.11 million) placed in 90 days interest-bearing account consequent
to directives of the Ministry of Energy (Petroleum Division) on account of amounts withheld alongwith related
interest earned thereon net of withholding tax as referred to in note 11.1. Pursuant to same directives a Term
Deposit Receipt (TDR) amounting to Rs 3,005 million (2017: Rs nil) was initially placed in 12 months interest
bearing account with the term that allows the Company to opt for pre-mature encashment. The said TDR has
been encashed subsequent to the balance sheet date.
23.2 Balances with banks include Rs 5,000 million (June 30, 2017: Rs 6,000 million) in respect of deposits placed in
90-days interest-bearing account.
23.3 Bank deposits of Rs 1,327.12 million (2017: Rs 1,327.20 million) were under lien with bank against a bank
guarantee issued on behalf of the Company.
23.4 Balances with banks include Rs 2.92 million (2017: Rs 2.42 million) in respect of security deposits received from
customers etc.
23.5 Interest/ mark-up earned on balances with banks ranged between 4.00% to 7.50% (2017: 3.75% to 7.25%) with
weighted average rate of 6.06% (2017: 6.10%) per annum.
2018 2017
Rs ‘000 Rs ‘000

24. GROSS SALES

Local sales 172,373,033 128,882,780
Naphtha export sales 7,049,572 10,608,323
Reimbursement due from the Government under import
parity pricing formula - note 24.1 7,950 24,848
179,430,555 139,515,951
24.1 This represents amount due from the Government of Pakistan on account of shortfall in ex-refinery prices of
Kerosine oil under the import parity pricing formula.
130 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

2018 2017
Rs ‘000 Rs ‘000

25. TAXES, DUTIES, LEVIES, DISCOUNTS AND PRICE DIFFERENTIAL

Sales tax 29,675,049 23,230,312
Petroleum development levy 15,488,407 11,873,201
Custom duties and other levies - note 25.1 3,569,384 2,360,571
Discounts 50,201 -
HSD price differential - note 25.2 - 4,848
PMG RON differential - note 25.3 1,050,949 635,227
49,833,990 38,104,159

25.1 This includes Rs 3,569.22 million (2017: Rs 2,360.37 million) recovered from customers and payable to the
Government of Pakistan (GoP) on account of custom duty on PMG and HSD. OGRA has approved the mechanism
for recovery of regulatory duty/ custom duty on November 16, 2017. The mechanism is yet to be implemented.
25.2 This represents amount payable to GoP on account of differential between import parity price of HSD and
import price of Pakistan State Oil Company Limited (PSO) relating to the period July 1 to July 3, 2016. After
commencement of production of Euro II compliant diesel by the Company with effect from July 4, 2016, this price
differential has ceased to arise.
25.3 This represents amount payable to GoP on account of differential between price of PSO’s imported 92 RON PMG
and 87/90 RON PMG sold by the Company during the year.

2018 2017
Rs ‘000 Rs ‘000

26.
COST OF SALES
Opening stock of semi-finished products 791,726 571,674
Crude oil consumed - note 26.1 122,516,323 87,812,553
Transportation and handling charges 836,153 1,562,521
Salaries, wages and other benefits - note 26.2 1,084,525 1,013,863
Printing and stationery 4,030 3,945
Chemicals consumed 3,072,736 1,029,130
Fuel and power 3,209,026 2,662,637
Rent, rates and taxes 65,125 57,309
Telephone 2,065 3,298
Professional charges for technical services 6,482 5,829
Insurance 267,759 149,397
Repairs and maintenance (including stores and spares
consumed Rs 194.44 million; 2017: Rs 114.23 million) 501,571 515,146
Staff transport and traveling 16,689 13,333
Cost of receptacles 21,879 21,657
Research and development 6,682 8,255
Depreciation - note 13.4 2,542,227 2,042,846
134,944,998 97,473,393
Closing stock of semi-finished products (1,434,159) (791,726)
133,510,839 96,681,667

Opening stock of finished products 3,538,029 3,935,281

Closing stock of finished products (6,373,641) (3,538,029)
(2,835,612) 397,252
130,675,227 97,078,919
 Annual Report 2018 131

2018 2017
Rs ‘000 Rs ‘000

26.1 Crude oil consumed

Stock at July 1 1,382,589 2,200,687
Purchases - note 26.1.1 123,114,931 86,994,455
124,497,520 89,195,142
Stock at June 30 (1,981,197) (1,382,589)
122,516,323 87,812,553

Certain crude oil purchases have been recorded based on provisional prices notified by the Government and may
require adjustment in subsequent periods.
26.1.1 Crude oil purchases are net of Rs 209.29 million in respect of reversal of certain accrued charges related to
crude oil purchases for prior periods, considered to be no more payable based on finalization/settlement of the
related charges.
26.2 Salaries, wages and other benefits under cost of sales, administration expenses and distribution cost include
the Company’s contribution to the Pension and Gratuity Fund Rs 38.64 million (2017: Rs 45.41 million) and to the
Provident Fund Rs 34.17 million (2017: Rs 31.47 million).

2018 2017
Rs ‘000 Rs ‘000

27. ADMINISTRATION EXPENSES

Salaries, wages and other benefits - note 26.2 384,665 365,594
Board meeting fee 5,927 5,065
Transport, traveling and entertainment 19,987 17,470
Telephone 2,561 2,508
Electricity, gas and water 12,185 16,528
Printing and stationery 5,553 6,043
Auditor’s remuneration - note 27.1 5,640 6,399
Legal and professional charges 12,938 14,511
Repairs and maintenance 117,059 96,560
Subscription 23,541 13,742
Publicity 6,064 6,535
Scholarship scheme 3,415 2,855
Rent, rates and taxes 16,379 13,834
Insurance 827 914
Donations - note 27.2 & 27.3 540 586
Training expenses 1,538 2,315
Depreciation - note 13.4 26,301 23,564
645,120 595,023

27.1 Auditor’s remuneration

Annual audit 1,805 1,670
Review of half yearly financial information, audit of consolidated
financial statements, employee funds and special certifications 1,272 995
Tax services 2,043 3,516
Out of pocket expenses 520 218
5,640 6,399
132 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

27.2 Donation equal to/ in excess of Rs 0.5 million includes donation made to Pakistan Foundation for Fighting
Blindness Rs 0.54 million (2017: Rs 0.54 million).
27.3 No director or his spouse had any interest in the donee institutions.

2018 2017
Rs ‘000 Rs ‘000

28. DISTRIBUTION COST

Salaries, wages and other benefits - note 26.2 32,032 32,403
Transport, traveling and entertainment 642 675
Telephone 312 271
Electricity, gas and water 2,294 3,601
Printing and stationery 64 47
Repairs and maintenance including packing and other stores consumed 10,041 7,847
Rent, rates and taxes 4,005 3,460
Depreciation - note 13.4 766 743
50,156 49,047

29. OTHER CHARGES

Provision for slow moving store items 12,417 10,175
Workers’ Profit Participation Fund - 192,485
Reversal of Workers’ Welfare Fund for prior years (118,688) -
(106,271) 202,660

30. OTHER INCOME

Income from financial assets
Income on bank deposits 1,198,793 903,956
Interest on delayed payments 517,453 295,223
Exchange gain (net) - note 30.1 - 7,067
1,716,246 1,206,246
Income from non-financial assets
Income from crude desalter operations - note 30.2 422 6,297
Insurance agency commission 1,671 1,110
Rental income 104,653 94,436
Sale of scrap 31,158 1,426
Profit on disposal of operating assets 7,761 7,196
Calibration charges 3,799 3,779
Handling and service charges 102,112 104,201
Penalties from carriage contractors 94 577
Miscellaneous - note 30.3 9,561 8,954
261,231 227,976
1,977,477 1,434,222

30.1 This is net of exchange loss of Rs nil (2017: Rs 31.25 million) on realization of Naphtha export proceeds.
 Annual Report 2018 133

2018 2017
Rs ‘000 Rs ‘000

30.2 Income from crude desalter operations

Income 73,779 92,448
Less: Operating costs
Salaries, wages and other benefits 2,302 2,624
Chemical consumed 2,859 14,661
Fuel and power 45,684 53,538
Repairs and maintenance 22,512 15,328
73,357 86,151
422 6,297

30.3 This mainly includes income on account of laboratory services provided to different entities.

2018 2017
Rs ‘000 Rs ‘000

31. FINANCE COST

Exchange loss (net) - note 31.1 and note 31.2 1,396,027 -
Interest on long term financing 1,523,002 1,527,118
Interest on Worker Profit Participation Fund 5,673 -
Bank and other charges 597 1,067
2,925,299 1,528,185
Finance cost capitalised - note 31.3 - (265,044)
2,925,299 1,263,141

31.1 This is net of exchange gain of Rs 25.27 million (2017: Rs nil) on realization of Naphtha export proceeds.
31.2 Exchange loss is net of Rs 178 million in respect of reversal of a provision made in prior period relating to
probable liability towards exchange loss, considered to be no more payable based on final settlement of the
related liability.
31.3 The effective interest rate used to determine the amount of financing costs is nil % (2017: 7.82%).

2018 2017
Rs ‘000 Rs ‘000

32. TAXATION
Current tax
For the year - note 32.1 239,773 -
Prior years - note 32.2 (1,071,518) -
(831,745) -
Deferred (771,186) (42,111)
(1,602,931) (42,111)

32.1 This is net of tax credit on investment amounting to Rs 444.07 million (2017: Rs 662.92 million) under the
provisions of the Income Tax Ordinance, 2001.
32.2 Provision for income tax recorded by the Company for certain tax years has been partially written back in view
of favourable judgments of tax appellate authorities including those passed in Company’s own matter or in such
matters as are being contested by the Company.
134 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

32.3 Relationship between tax expense and accounting profit

(refinery operations)

Accounting profit/(loss) before taxation (2,615,489) 3,657,224

Tax at applicable tax rate of 30% (2017: 31%) (784,647) 1,133,739

Prior year adjustment (1,071,518) -
Tax effect of income taxable at special rates 100,240 175,756
Effect of tax credit on investment - (1,315,034)
Effect of lower tax rate for deferred taxation 130,774 (36,572)
Effect of change in tax rate (126,432) -
Deferred tax asset derecognized on minimum tax 154,371 -
Others (5,719) -
(1,602,931) (42,111)

32.4 The Company computes tax based on the generally accepted interpretations of the tax laws to ensure that the
sufficient provision for the purpose of taxation is available which can be analysed as follows:

Tax year Provision for taxation Tax assessed Excess / (deficit)

2017 870,969 769,327 101,642

2016 345,969 370,868 (24,899)
2015 882,453 784,949 97,504

32.4.1 “Tax assessed” represents liability assessed or deemed to be assessed by Tax Authorities. Further, for prior
tax years the Tax Authorities and Company are contesting their respective view points at various fora. After due
consideration of related matters, adequate tax provision is being maintained in respect of the matters pending
at various assessment/appellate fora and same shall be subject to final adjustment upon culmination of related
proceedings.
2018 2017
Rs ‘000 Rs ‘000

33. INCOME FROM NON-REFINERY OPERATIONS

LESS APPLICABLE CHARGES AND TAXATION

Dividend income from associated companies

National Refinery Limited 449,812 399,833
Attock Petroleum Limited 771,126 725,765
Attock Gen Limited 598,637 897,955
1,819,575 2,023,553
Less: Related charges
Workers’ Profit Participation Fund - 101,178
Workers’ Welfare Fund - -
- (101,178)

Income before taxation from non-refinery operations 1,819,575 1,922,375

Less: Taxation - current - note 33.1 228,039 -
- deferred - 208,046
(228,039) (208,046)
1,591,536 1,714,329
 Annual Report 2018 135

33.1 This is net of tax credit on investment amounting to Rs nil (2017: Rs 208.05 million) under section 65b of the
Income Tax Ordinance, 2001.

2018 2017
Rs ‘000 Rs ‘000

33.2 Relationship between tax expense and accounting income

(non-refinery operations)

Accounting profit before taxation 1,819,575 1,922,375

Tax at applicable tax rate of 30% (2017: 31%) 545,873 595,936

Effect of inadmisible expenses - 31,365
Tax effect of income taxable at special rates (317,834) (419,255)
228,039 208,046

34. EARNINGS PER SHARE - BASIC AND DILUTED

(Loss)/ profit after taxation from refinery operations (1,012,558) 3,699,335

Income from non-refinery operations less applicable
charges and taxation 1,591,536 1,714,329
578,978 5,413,664

Weighted average number of fully paid ordinary shares (‘000) 85,293 85,293

(Loss)/ earnings per share - Basic and diluted (Rs)

Refinery operations (11.87) 43.37
Non-refinery operations 18.66 20.10
6.79 63.47

There was no dilutive effect on basic earnings per share.

35. EMPLOYEES’ DEFINED BENEFIT PLANS

The latest actuarial valuation of the employees’ defined benefit plans was conducted at June 30, 2018 using the
projected unit credit method. Details of the defined benefit plans are:

Funded pension Funded gratuity
2018 2017 2018 2017
Rs ‘000 Rs ‘000

a) The amounts recognised in the statement of

financial position:
Present value of defined benefit obligations 977,257 850,975 544,016 515,263
Fair value of plan assets (853,381) (845,439) (441,880) (460,740)
Net liability 123,876 5,536 102,136 54,523

b) The amounts recognised in the statement of

profit or loss:
Current service cost 18,232 16,352 15,907 14,055
Net interest cost 412 13,030 4,079 1,975
18,644 29,382 19,986 16,030
136 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

Funded pension Funded gratuity

2018 2017 2018 2017
Rs ‘000 Rs ‘000

c)Movement in the present value of defined

benefit obligation:
Present value of defined benefit obligation
as at July 1 850,975 790,068 515,263 476,151
Current service cost 18,232 16,352 15,907 14,055
Interest cost 65,848 57,135 38,145 32,781
Benefits paid (45,280) (38,449) (65,506) (77,716)
Remeasurement loss/(gain) on defined
benefit obligation 87,482 25,869 40,207 69,992
Present value of defined benefit obligation
as at June 30 977,257 850,975 544,016 515,263

d) Movement in the fair value of plan assets:

Fair value of plan assets as at July 1 845,439 603,950 460,740 447,939
Expected return on plan assets 65,436 44,105 34,066 30,806
Contributions 16,183 200,179 25,253 51,750
Benefits paid (45,280) (38,449) (65,507) (77,716)
Remeasurement gain/(loss) on plan assets (28,397) 35,654 (12,672) 7,961
Fair value of plan assets as at June 30 853,381 845,439 441,880 460,740

Actual return on plan assets 37,038 79,759 21,394 38,767

The Company expects to contribute Rs 58 million during 2018-19 to its defined benefit pension and gratuity plans
(2017-18: Rs 120 million).
Funded pension Funded gratuity
2018 2017 2018 2017
Rs ‘000 Rs ‘000

e) Plan assets comprise of:

Investment in equity securities 150,139 146,584 9 9
Investment in mutual funds 129,882 142,250 64,449 68,654
Debt instruments 689,275 648,055 392,635 403,000
Deposits with banks 28,237 38,634 27,659 20,751
Share of asset of related parties (144,152) (130,084) (42,872) (31,674)
853,381 845,439 441,880 460,740
f) The expected return on plan assets is based on the market expectations and depend upon the asset portfolio of
the Funds, at the beginning of the year, for returns over the entire life of the related obligations.
Funded pension Funded gratuity
2018 2017 2018 2017
Rs ‘000 Rs ‘000

g)Remeasurement recognised in OCI:

Remeasurement (loss)/gain on obligation
(Loss)/gain due to change in:
Financial assumptions 26,916 (22,916) 5,826 (81)
Experience adjustments (114,398) (2,953) (46,033) (69,911)
(87,482) (25,869) (40,207) (69,992)
Remeasurement (loss) / gain on plan assets (28,397) 35,654 (12,672) 7,961
(115,879) 9,785 (52,879) (62,031)
 Annual Report 2018 137

Funded pension Funded gratuity

2018 2017 2018 2017
Rs ‘000 Rs ‘000

h) Principal actuarial assumptions used in the

actuarial valuation are as follows:
Discount rate 9.00% 7.75% 9.00% 7.75%
Expected return on plan assets 9.00% 7.75% 9.00% 7.75%
Future salary increases 8.00% 7.00% 8.00% 7.00%
Future pension increases 3.50% 2.50% N/A N/A
Demographic assumptions
Rates of employee turnover
Management Low Low Low Low
Non-management Nil Nil Nil Nil
Mortality rates (pre-retirement) SLIC (2001 SLIC (2001 SLIC (2001 SLIC (2001
-05)-1 year -05)-1 year -05)-1 year -05)-1 year
Mortality rates (post retirement) SLIC (2001 SLIC (2001 N/A N/A
-05)-1 year -05)-1 year

i) Sensitivity Analysis:
The calculation of defined benefit obligation is sensitive to assumptions set out above. The following table
summarizes how the impact on the defined benefit obligation at the end of the reporting period would have
increased/ (decreased) as a result of a change in respective assumptions by one percent.
Effect of Effect of
1 percent 1 percent
increase decrease
Rs ‘000 Rs ‘000

Discount rate 1,385,905 1,685,113

Future salary growth 1,583,544 1,464,645
Pension increase 1,623,281 1,433,648

If the life expectancy increases/decreases by 1 year, the impact on defined benefit obligation would be Rs 8.930
million.
The above sensitivity analysis are based on the changes in assumptions while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When
calculating the sensitivity of defined benefit obligation to significant assumptions the same method (present
value of the defined benefit obligation calculated with the projected credit unit method at the end of the reporting
period) has been applied when calculating the liability recognized within the statement of financial position.

j) Projected benefit payments from fund are as follows:

Pension Gratuity
Rs ‘000

FY 2018 23,817 84,453

FY 2019 49,801 144,089
FY 2020 53,906 82,356
FY 2021 57,897 67,488
FY 2022 62,255 86,150
FY 2023-27 414,496 255,031
138 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

k) The weighted average number of years of defined benefit obligation is given below:

Pension Gratuity
Years

Plan duration
June 30, 2018 11.54 4.15
June 30, 2017 11.76 4.27

l) The Company contributes to the gratuity and pension funds on the advice of the fund’s actuary. The contributions
are equal to the current service cost with adjustment for any deficit.

36. DEFINED CONTRIBUTION PLAN

Details of the provident funds based on un-audited financial statements for the year ended June 30, 2018 are as
follows:
2018 2017
Rs ‘000 Rs ‘000

Staff provident fund

Size of the fund 447,885 421,551
Cost of investments made 379,081 308,260
Fair value of investments made 442,914 418,343
%age of investments made 99% 99%

2018 2017
Rs ‘000 %age Rs ‘000 %age

Breakup of investment - at cost

Shares 27,108 7% 23,323 8%
Mutual funds 54,834 14% 19,681 6%
Bank deposits 36,997 10% 16,283 5%
Term deposits 260,142 69% 248,973 81%
379,081 100% 308,260 100%

2018 2017
Rs ‘000 Rs ‘000

General staff provident fund

Size of the fund 551,092 579,729
Cost of investments made 504,023 475,775
Fair value of investments made 541,739 573,657
%age of investments made 98% 99%

2018 2017
Rs ‘000 %age Rs ‘000 %age

Breakup of investment - at cost

Shares 20,311 4% 17,999 4%
Mutual funds 79,270 16% 25,581 5%
Bank deposits 30,609 6% 16,788 4%
Term deposits 373,833 74% 415,407 87%
504,023 100% 475,775 100%

The investments out of provident fund have been made in accordance with the provisions of Section 218 of the
Companies Act, 2017 and the rules formulated for this purpose.
 Annual Report 2018 139

37. 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:
2018 2017
Rs ‘000 Rs ‘000

High speed diesel 66,499,887 52,813,387

Jet petroleum 60,005,438 9,819,224
Motor gasoline 12,565,554 36,648,005
Furnace fuel oil 22,097,005 22,164,987
Naphtha 7,993,626 11,352,259
Others 10,269,045 6,718,089
179,430,555 139,515,951
Less: Duties, taxes and levies 49,833,990 38,104,159
129,596,565 101,411,792

Revenue from four major customers of the Company constitute 84% (2017: 85%) of total revenue during the year.

38. RELATED PARTY TRANSACTIONS

38.1 Attock Oil Company Limited holds 61.01% (2017: 61.01%) 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 from and due to these undertakings are shown under receivables and payables.
The remuneration of Chief Executive, directors and executives is disclosed in note 39 to the financial statements.

2018 2017
Rs ‘000 Rs ‘000

Associated Companies

Pakistan Oilfields Limited

Purchase of crude oil 15,071,353 9,050,827
Purchase of gas 3,779 9,874
Purchase of services 6,470 6,302
Sale of petroleum products 116,936 96,562
Sale of services 17,691 16,488

Attock Petroleum Limited

Sales of petroleum products 43,912,012 29,761,914
Sales of services 86,656 97,882
Purchase of petroleum products 2,289 2,123
Purchases of services 132,569 230,225
Dividend paid 8,592 7,160
Dividend received 771,126 725,766
Interest income on delayed payments 517,453 295,223

National Refinery Limited

Purchases of services 104,620 156,972
Sales of services 126 131
Dividend received 449,812 399,833
140 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

Attock Cement Pakistan Limited

Purchase of services 302 792
Sale of services - 12

Attock Gen Limited

Sales of petroleum products 1,232 1,103
Land lease income 26,399 25,467
Storage tank lease income 18,881 15,385
Dividend received 598,637 897,955
Income from other services and facilities provided to AGL 19,287 18,774

National Cleaner Production Centre

Purchase of services 5,629 2,396
Sale of services 20,352 17,141
Sale of petroleum products 94 -

Attock Information Technology Services (Private) Limited

Purchase of services 48,156 43,224
Sales of petroleum products 265 244
Sale of services 4,376 4,164

Attock Leisure and Management Associates (Private) Limited

Sale of services 50 309

Attock Sahara Foundation

Purchases of services 11,961 8,053
Sales of services 956 684

Attock Solar (Priviate) Limited

Purchases of services 2,136 -
Sales of services 567 -

Holding Company

Attock Oil Company Limited

Purchases of crude oil 401,879 111,855
Purchases of services 398,316 77,086
Sales of services 25,461 25,084
Dividend paid 312,235 260,196

Subsidiary Company

Attock Hospital (Private) Limited

Purchase of services 75,288 74,385
Sale of services 13,431 12,444
Sale of petroleum products 156 85
 Annual Report 2018 141

2018 2017
Rs ‘000 Rs ‘000

Other related parties

Remuneration of Chief Executive and key management

personnel including benefits and perquisites 165,240 142,308
Dividend paid to Chief Executive and key management personnel 1,364 1,148
Directors Fees 5,927 5,065
Contribution to staff retirement benefit plans
Staff Pension Fund 16,183 200,179
Staff Gratuity Fund 25,253 51,750
Staff Provident Fund 34,168 31,472
Contribution to Workers’ Profit Participation Fund - 293,663

38.2 Following are the related parties with whom the Company had entered into transactions or have arrangement/
agreement in place.

Aggregate %
Sr. No. Company Name Basis of association of shareholding

1 The Attock Oil Company Limited Holding Company 61.01%

(Incorporated in UK - Pakistan Branch Office)
2 National Refinery Limited Associated Company 25.00%
3 Attock Petroleum Limited Associated Company 21.88%
4 Attock Gen Limited Associated Company 30.00%
5 Attock Information Technology Services
(Private) Limited Associated Company 10.00%
6 Pakistan Oilfields Limited Associated Company Nill
7 Attock Cement Pakistan Limited Associated Company Nill
8 National Cleaner Production Centre Foundation Associated Company Nill
9 Attock Leisure & Management Associates
(Private) Limited Associated Company Nill
10 Attock Solar (Private) Limited Associated Company Nill
11 Attock Hospital (Private) Limited Wholly owned Subsidiary 100.00%

38.3 Associated Companies incorporated outside Pakistan with whom the Company had entered into transaction or
had agreements are as follows:

Name of undertaking The Attock Oil Company Limited

Registered address 4, Swan Street Manchester England M4 5JN
Country of incorporation United Kingdom
Basis of association Parent company
Aggregate %age of shareholding 61.01%
Chief executive officer Shuaib A. Malik
Operational status Private Limited Company
Auditor’s opinion on latest available financial statements Unqualified opinion
142 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

39. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amounts charged in the accounts for remuneration, including benefits and perquisites, are as
follows:
Chief Executive Executives
2018 2017 2018 2017
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

Managerial remuneration/honorarium 8,951 7,464 57,400 50,534

Bonus 4,375 3,572 24,609 20,673
Company’s contribution to Provident,
Pension and Gratuity Funds - - 13,097 10,005
Housing and utilities 6,324 5,573 46,663 43,719
Leave passage 1,250 1,134 6,516 4,957

20,900 17,743 148,285 129,888

Less: charged to Attock Gen Limited 3,945 5,323 - -

16,955 12,420 148,285 129,888

No of person(s) 1 1 24 23

* Comparative figures have been restated to reflect changes in the defintion of executive as per Companies
Act, 2017.
39.1 In addition to above, the Chief Executive and 19 (2017: 19) executives were provided with limited use of the
Company’s cars. The Chief Executive and all executives were provided with medical facilities. Limited residential
telephone facility was also provided to the Chief Executive and 21 (2017: 21) executives. Gratuity and pension is
payable to the Chief Executive in accordance with the terms of employment while contributions for executives in
respect of gratuity and pension are based on actuarial valuation. Leave passage is paid to Chief Executive and all
executives in accordance with the terms of employment.

39.2 In addition, meeting fee based on actual attendance was paid to 5 (2017: 5) non-executive directors Rs 3.75
million (2017: Rs 2.99 million), Chief Executive Rs 0.77 million (2017: Rs 0.69 million) and 2 (2017: 2) alternate
directors Rs 1.40 million (2017: Rs 1.39 million) of the Company.

2018 2017
Rs ‘000 Rs ‘000

40. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

40.1 Financial assets and liabilities

Financial assets :

Loans and receivables

Maturity upto one year
Trade debts 15,748,278 10,678,545
Loans, advances, deposits & other receivables 1,670,193 1,520,458
Short term invesments 985,846 -
Cash and bank balances
Foreign currency - US $ 57,371 49,413
Local currency 21,897,143 21,580,696
Maturity after one year
Long term loans and deposits 42,115 34,642
40,400,946 33,863,754
 Annual Report 2018 143

2018 2017
Rs ‘000 Rs ‘000

Financial liabilities :

Other financial liabilities

Maturity upto one year
Trade and other payables 31,155,391 21,362,012
Unclaimed dividends 9,839 8,898
Long term financing 2,200,000 2,200,000
Accrued mark-up on long term financing 260,909 338,226
Maturity after one year
Long term financing 12,642,916 17,672,166
46,269,055 41,581,302

40.2 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.
2018 2017
Rating Rs ‘000 Rs ‘000

Trade debts
Counterparties with external credit rating A 1+ 2,829,141 1,559,007

Counterparties without external credit rating

Due from associated companies 10,455,088 7,289,726
Others * 2,464,049 1,829,812
15,748,278 10,678,545

Loans, advances, deposits and other receivables

Counterparties without external credit rating 1,712,308 1,555,100

Short term investments

Counterparties with external credit rating A 1+ 985,846 -

Bank balances
Counterparties with external credit rating A 1+ 21,196,360 21,573,379
A1 756,954 55,432
21,953,314 21,628,811

* These balances represent receivable from oil marketing companies and defence agencies.

40.3 Financial risk management

40.3.1 Financial risk factors
The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk
(including currency risk, interest rate risk and price risk). The Company’s overall risk management policy focuses
on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s
financial performance. The Board of Directors has overall responsibility for the establishment and oversight of
the Company’s risk management framework. The Board is also responsible for developing and monitoring the
Company’s risk management policies.
144 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

a) Credit risk
Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other
party by failing to discharge an obligation.
The Company’s credit risk is primarily attributable to its trade debts and balances at banks. Credit sales are
essentially to oil marketing companies and reputable foreign customers. The Company maintains balances with
banks having satisfactory credit rating. Due to the high credit worthiness of counter parties the credit risk is
considered minimal.
At June 30, 2018, trade debts of Rs 6,724,228 thousand (2017: Rs 5,126,510 thousand) were past due but not
impaired. The aging analysis of these trade debts is as follows:
2018 2017
Rs ‘000 Rs ‘000

0 to 6 months 3,649,697 3,883,005

6 to 12 months 3,074,531 1,243,505
Above 12 months - -
6,724,228 5,126,510

Based on past experience, the management believes that no impairment allowance is necessary in respect of
trade debts.

b) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company’s reputation. The Company uses different methods which assists it
in monitoring cash flow requirements and optimizing its cash return on investments. Typically the Company
ensures that it has sufficient cash on demand to meet expected operational expenses for a reasonable period,
including the servicing of financial obligation; this excludes the potential impact of extreme circumstances that
cannot reasonably be predicted, such as natural disasters. In addition, the Company maintains lines of credit as
mentioned in note 11 to the financial statements.
The table below analysis the contractual maturities of the Company’s financial liabilities into relevant maturity
groupings based on the remaining period at the balance sheet date to the maturity date. The amounts disclosed
in the table are undiscounted cash flows.

Carrying Contractual Less than Above

amount cash flows 1 Year 1 year
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

At June 30, 2018

Long term financing 12,642,916 5,200,000 2,200,000 13,050,000
Trade and other payables 31,155,391 31,155,391 31,155,391 -

At June 30, 2017

Long term financing 17,672,166 4,689,509 2,200,000 18,250,000
Trade and other payables 21,362,012 21,362,012 21,362,012 -

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at
significantly different amounts.
 Annual Report 2018 145

c) Market risk
Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market
interest rates or the market price due to change in credit rating of the issuer or the instrument, change in market
sentiments, speculative activities, supply and demand of securities and liquidity in the market. The Company
incurs financial liabilities to manage its market risk. All such activities are carried out with the approval of the
Board. The Company is exposed to interest rate risk, currency risk and market price 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 57
million (2017: Rs 49 million) and financial liabilities include Rs 3,275 million (2017: Rs 3,093 million) which were
subject to currency risk.

2018 2017

Rupees per USD

Average rate 109.98 104.62
Reporting date rate 121.60 105.00

Sensitivity analysis
At June 30, 2018, 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 225 million (2017: Rs 210 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. The Company has no long term interest bearing financial
assets whose fair value or future cash flows will fluctuate because of changes in market interest rates. Financial
assets and liabilities include balances of Rs 22,911 million (2017: Rs 21,622 million) and Rs 17,956 million (2017:
Rs 22,762 million) respectively, which are subject to interest rate risk. Applicable interest rates for financial
assets and liabilities have been indicated in respective notes.

Sensitivity analysis
At June 30, 2018, if interest rates had been 1% higher/ lower with all other variables held constant, profit after
tax for the year would have been Rs 35 million (2017: Rs 8 million) higher/ lower, mainly as a result of higher/
lower interest income/ expense from these financial assets and liabilities.

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 from interest rate risk or currency risk), whether
those changes are caused by factors specific to the individual financial instrument or its issuer, or factors
affecting all similar financial instruments traded in the market.
At the year end the Company is not exposed to price risk since there are no financial instruments, whose fair
value or future cash flows will fluctuate because of changes in market prices.
146 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

40.3.2 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.
As mentioned in note - 9.1, the Company is subject to pricing formula whereby profits after tax from refinery
operations in excess of 50% of the paid up capital as of July 1, 2002 are transferred to special reserve and can
only be utilized to offset against any future losses or to make investment for expansion or upgradation and is
therefore not available for distribution.

40.4 Fair value of financial assets and liabilities

The carrying values of financial assets and liabilities approximate their fair value.

41. FAIR VALUE HIERARCHY

Fair value of land
Valuation of the freehold land owned by the Company was valued by independent valuers to determine the fair
value of the land as at June 30, 2017. The revaluation surplus was credited to other comprehensive income and
is shown as ‘surplus on revaluation of freehold land’. The different levels have been defined as follows:

- Level 1
Quoted prices (unadjusted) in active market for identical assets/ liabilities.

- Level 2
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices).

- Level 3
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

Fair value of land has been determined using level 2 fair values under following valuation technique.

Level 2 fair value of land has been derived using the sales comparison approach. Sales prices of comparable land
in close proximity are adjusted for differences in key attributes such as property size. The most significant input
into this valuation approach is price per square foot.
 Annual Report 2018 147

2018 2017
Rs ‘000 Rs ‘000

42. CASH GENERATED FROM OPERATIONS

(Loss) / profit before taxation (2,615,489) 3,657,224

Adjustments for:
Depreciation 2,569,294 2,067,153
Gain on disposal of property, plant and equipment (7,761) (7,196)
Provision for slow moving, obsolete and in transit stores 12,417 10,175
Workers Profit Participation Fund (118,688) 192,485
Interest income (1,198,793) (903,956)
Finance cost (net) 2,925,299 1,263,141
Effect of exchange rate changes (7,861) (142)
Interest on delayed payments (517,453) (295,223)
1,040,965 5,983,661
Working capital changes
(Increase)/decrease in current assets:
Stores, spares and loose tools (724,890) (388,041)
Stock-in-trade (4,076,653) 995,298
Trade debts (5,051,795) (3,722,651)
Loans, advances, deposits, prepayments and other receivables 582,517 28,906
(9,270,821) (3,086,488)

Increase in current liabilities:

Trade and other payables 16,359,115 4,928,465
Cash generated from operations
Payments of WPPF and WWF (103,663) (153,050)
Income taxes paid (672,432) (515,780)
(776,095) (668,830)
Net cash generated from operating activities 7,353,164 7,156,808

43. CASH AND CASH EQUIVALENTS

Cash and bank balances 21,954,514 21,630,109

Short term investments - treasury bills 985,846 -
22,940,360 21,630,109
148 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Financial Statements
For the year ended June 30, 2018

44. DISCLOSURE FOR ALL SHARES ISLAMIC INDEX

Following information has been disclosed as required under Paragraph 10 of Part I of the 4th Schedule to the
Companies Act, 2017 relating to “All Shares Islamic Index”.

Description Explanation

i) Loans and advances obtained as

per islamic mode Disclosed in note 10

ii) Deposits Non-interest bearing

iii) Segment revenue Disclosed in note 37

iv) Relationship with banks having Islamic Following is the list of banks with which the
windows Company has a relationship with Islamic window
of operations:
1. Meezan Bank Limited
2. Al-Baraka Bank (Pakistan) Limited
3. Dubai Islamic Bank

v) Short term investments As at June 30, 2018 Rs ‘000’

Placed under interest arrangement 985,846

vi) Bank balances As at June 30, 2018

Placed under interest arrangement 18,140,005
Placed under Shariah permissible arrangement 808,240
18,948,245

vii) Income on bank deposits including For the year ended June 30, 2018
income accrued as at reporting date Placed under interest arrangement 1,185,341
Placed under Shariah permissible arrangement 13,452
1,198,793

viii) Interest paid including accrued as at For the year ended June 30, 2018
reporting date Under interest arrangement 1,147,444
Under Shariah permissible arrangement 375,558
1,523,002

ix) All sources of other income Disclosed in note 30.3

x) Dividend income Disclosed in note 33

xi) Exchange gain Earned from actual currency

Disclosures other than above are not applicable to the Company.

 Annual Report 2018 149

45. GENERAL
45.1 Capacity and production
Against the designed annual refining capacity of US barrels 18.690 million (2017: 18.690 million) the actual
throughput during the year was US barrels 17.552 million (2017: 17.103 million).

2018 2017

45.2 Number of employees

Number of employees at June 30

Permanent 621 583
Contract 296 335
917 918

This includes 617 (2017: 625) number of factory employees.

Average number of employees for the year

Permanent 590 550
Contract 323 374
913 924

This includes 620 (2017: 629) number of factory employees.

45.3 Non-adjusting events after the statement of financial position date

The Board of Directors in its meeting held on August 14, 2018 has proposed an issue of bonus shares in the
proportion of one (2017: nil) share for every four (2017: nil) shares held i.e. 25% (2017: nil) out of unappropriated
profits and a final cash dividend for the year ended June 30, 2018 @ Rs nil (2017 @ Rs 6.00 per share), amounting
to Rs nil (2017: Rs 511,758 thousand) for approval of the members in the annual general meeting to be held on
September 25, 2018.

45.4 Unavailed credit facilities

The Company has entered into an arrangement with banks for obtaining Letter of Credit facility to import
chemical, spare parts and other materials upto a maximum of Rs 3,228.00 million (2017: Rs 3,228.00 million).
The facility is secured against lien on shipping documents. The unavailed facility at June 30, 2018 was Rs 1,784.95
million (2017: Rs 1,705.14 million). The facilities will expire on various dates after June 30, 2018.

45.5 Rounding off

Figures have been rounded off to the nearest thousand of rupees unless otherwise stated.

46. DATE OF AUTHORISATION

These financial statements have been authorised for issue by the Board of Directors of the Company on
August 14, 2018.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
150 Leveraging HR to Achieve Excellence
 Annual Report 2018 151

Annual Audited Consolidated

Financial Statements
for the year ended June 30, 2018
152 Leveraging HR to Achieve Excellence
 Annual Report 2018 153

Independent Auditors’ Report to the Members

Report on the Audit of Consolidated Financial Statements

OPINION
We have audited the annexed consolidated financial statements of Attock Refinery Limited (the Group), and its
subsidiary, Attock Hospital (Private) Limited which comprise the consolidated statement of financial position as at June
30, 2018, and the consolidated statement of profit or loss and consolidated statement of comprehensive income, the
consolidated statement of changes in equity, the consolidated statement of cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies and other explanatory
information.
In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the
group as at June 30, 2018 and of its consolidated financial performance and its consolidated cash flows for the year then
ended in accordance with the accounting and reporting standards as applicable in Pakistan.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered
Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
154 Leveraging HR to Achieve Excellence Annual Report 2018 155

Following are the key audit matters:

Key Audit Matter

i) New requirements under the Companies Act, 2017 ii) Contingency with respect to crude oil pricing iii) Reversal of prior year tax and related provisions independent external investment advisor engaged
(Refer note 4 to the consolidated financial statements) (Refer note 12 of the consolidated financial statements) (Refer note 29 and 32 of the consolidated financial statements) by the Company using a discounted cash flow model
The provisions of the fourth schedule to the which involves estimation of future cash flows. This
The Company purchases crude oil from various During the year, the Company, based on the advice of
Companies Act, 2017 (the Act) became applicable to estimation is inherently uncertain and requires
oilfields in the country per the allocation made to the its tax consultant, reversed a cumulative provision of
the Group for the first time in the preparation of these significant judgement on both future cash flows and
Company by the Federal Government from respective Rs 1,190 million in respect of tax and related amount
annexed consolidated financial statements. the discount rate applied to the future cash flows.
oilfields. Likewise, the Company was allocated crude of Workers Welfare Fund (WWF) on the premise that
The Act, has also brought certain changes with oil from two oil fields in March 2007 and September demand raised for related tax years have already been In view of significant management judgement involved
regards to preparation and presentation of the annual 2009 respectively on provisional price basis as per the paid by the Company and the likelihood of further in the estimation of VIU we consider this as a key audit
consolidated financial statements of the Group. related Petroleum Concession Agreement (PCA). tax demands arising in respect of those tax years is matter.
remote.
As part of this transition to the requirements, the In March 2018, Crude Oil Sale and Purchase Our procedures in relation to assessment of carrying
management performed a gap analysis to identify Agreement (COSA) with effective date of March 27, We focused on this matter due to the significance value of investment in associated company included:
differences between the previous and the current 2007 was executed between the President of Pakistan of the amount involved and significant management
and the working interest owners of the above judgement this area. – Assessing the appropriateness of management’s
financial reporting framework and as a result
mentioned PCA whereby various matters including accounting for investment in associated company.
certain changes were made in the Group’s annexed
the pricing mechanism for crude oil were prescribed. Our procedures in relation to management – Understanding management’s process for
consolidated financial statements.
Subsequently, an amount of Rs 2,484 million has judgement regarding the matter included: identifying the existence of impairment indicators
In view of the extensive impacts in the annexed been demanded by the crude oil suppliers from the – Reviewing the assessment documents issued by in respect of investment in associated company.
consolidated financial statements due to first time Company in respect of the alleged arrears of crude oil the taxation department (the Department) and – Evaluating the independent external investment
application of the fourth schedule to the Act, we price for certain period prior to signing of COSA. details related to the proceedings in the matter of advisor’s competence, capabilities and objectivity.
considered it as a key audit matter.
The demand has not been acknowledged by the instant tax years at different forums including the
High Court and the Supreme Court. – Assessing the valuation methodology used by the
How the matter is addressed in our audit Company and not provided for in its books of account
independent external investment advisor.
based on the Company’s assessment of related – Reviewing the advice obtained by the Company
We reviewed and understood the requirements of
matter and on the legal advices obtained from its form its tax consultants. – Checking, on sample basis, the reasonableness
the Fourth schedule to the Act. Our audit procedures
legal consultants. Contingency has been disclosed in of the input data provided by the management to
included the following: – Involving auditor’s tax specialist to review the
the consolidated financial statements. the independent external investment advisor, to
– Considered the management’s process to identify relevant supporting documentation including supporting evidence.
We focused on this matter due to the significance the advice of management’s tax consultant to
the additional disclosures required in the Group’s
of the amount involved, demand raised by crude oil assess the reasonableness of the management’s – Assessing the reasonableness of cash flow
annexed consolidated financial statements.
suppliers and significant management judgement in assessment of the matter. projection, challenging and performing audit
– Obtained relevant underlying supports for this area. procedures on assumptions such as growth rate,
the additional disclosures and assessed their future revenue and costs, terminal growth rate
appropriateness for the sufficient audit evidence Our procedures in relation to management judgement and discount rate by comparing the assumptions
iv) Investment in associated company
regarding the matter included: to historical results, budgets and comparing the
– Verified on test basis the supporting evidence for the (Refer note 15 to the consolidated financial statements)
additional disclosure and ensured appropriateness – Reviewing the contents of the signed PCA. current year’s results with prior year forecast and
The Company has investment in its associated other relevant information.
of the disclosures made. – Reviewed the pricing mechanism historically company National Refinery Limited (NRL). As at
followed by the working interest owners of the PCA. – Testing mathematical accuracy of cash flows
June 30, 2018, the carrying amount of investment
projection.
– Reviewing the contents of the signed COSA. in above referred associated company amounted to
Rs 14,794 million (net of recognised impairment loss – Performing independently a sensitivity analysis in
– Reviewing the debit note received by the Company of Rs 2,391 million) which carrying value is higher by consideration of the potential impact of reasonably
from the operator of the PCA and Company’s certain Rs 5,938 million in relation to the quoted market value possible upside or downside changes in key
subsequent correspondence with the operator of of such shares. The Company carries out impairment assumptions.
PCA. assessment of the value of Investment where there
– Reviewing legal opinions obtained by the Company are indicators of impairment.
from its legal consultants. The Company has assessed the recoverable amount
– Seeking independent advice from auditor’s legal of the investment in associated companies based on
consultant to assess the matter and Company’s the higher of the value-in-use (“VIU”) and fair value.
contention in this respect. VIU is based on a valuation analysis carried out by an
156 Leveraging HR to Achieve Excellence Annual Report 2018 157

INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
AUDITOR’S REPORT THEREON the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
Management is responsible for the other information. The other information obtained at the date of this auditor’s report significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
is information included in the director’s report, but does not include the consolidated financial statements of the Group exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial
and our auditor’s report thereon. statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
of assurance conclusion thereon.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
a manner that achieves fair presentation.
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
If based on the work we have performed, on other information obtained prior to the date of this auditor’s report, we
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
nothing to report in this regard.

RESPONSIBILITIES OF MANAGEMENT AND BOARD OF DIRECTORS FOR THE CONSOLIDATED

We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit
FINANCIAL STATEMENTS
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with the accounting and reporting standards as applicable in Pakistan and Companies Act, 2017 (XIX of 2017) We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
and for such internal control as management determines is necessary to enable the preparation of consolidated financial independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
statements that are free from material misstatement, whether due to fraud or error. on our independence, and where applicable, related safeguards.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to From the matters communicated with the Board of Directors, we determine those matters that were of most significance
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
alternative but to do so. when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
The Board of directors are responsible for overseeing the Group’s financial reporting process.
communication.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
The engagement partner on the audit resulting in this independent auditor’s report is Mr. JehanZeb Amin.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
– Sd –
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also: Chartered Accountants
Islamabad
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud Date: August 30, 2018
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional missions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
154 Leveraging HR to Achieve Excellence

Following are the key audit matters:

Key Audit Matter

i) New requirements under the Companies Act, 2017 ii) Contingency with respect to crude oil pricing
(Refer note 4 to the consolidated financial statements) (Refer note 12 of the consolidated financial statements)

The provisions of the fourth schedule to the The Company purchases crude oil from various
Companies Act, 2017 (the Act) became applicable to oilfields in the country per the allocation made to the
the Group for the first time in the preparation of these Company by the Federal Government from respective
annexed consolidated financial statements. oilfields. Likewise, the Company was allocated crude
The Act, has also brought certain changes with oil from two oil fields in March 2007 and September
regards to preparation and presentation of the annual 2009 respectively on provisional price basis as per the
consolidated financial statements of the Group. related Petroleum Concession Agreement (PCA).

As part of this transition to the requirements, the In March 2018, Crude Oil Sale and Purchase
management performed a gap analysis to identify Agreement (COSA) with effective date of March 27,
differences between the previous and the current 2007 was executed between the President of Pakistan
financial reporting framework and as a result and the working interest owners of the above
certain changes were made in the Group’s annexed mentioned PCA whereby various matters including
consolidated financial statements. the pricing mechanism for crude oil were prescribed.
Subsequently, an amount of Rs 2,484 million has
In view of the extensive impacts in the annexed been demanded by the crude oil suppliers from the
consolidated financial statements due to first time Company in respect of the alleged arrears of crude oil
application of the fourth schedule to the Act, we price for certain period prior to signing of COSA.
considered it as a key audit matter.
The demand has not been acknowledged by the
How the matter is addressed in our audit Company and not provided for in its books of account
based on the Company’s assessment of related
We reviewed and understood the requirements of
matter and on the legal advices obtained from its
the Fourth schedule to the Act. Our audit procedures
legal consultants. Contingency has been disclosed in
included the following:
the consolidated financial statements.
– Considered the management’s process to identify
We focused on this matter due to the significance
the additional disclosures required in the Group’s
of the amount involved, demand raised by crude oil
annexed consolidated financial statements.
suppliers and significant management judgement in
– Obtained relevant underlying supports for this area.
the additional disclosures and assessed their
appropriateness for the sufficient audit evidence Our procedures in relation to management judgement
regarding the matter included:
– Verified on test basis the supporting evidence for the
additional disclosure and ensured appropriateness – Reviewing the contents of the signed PCA.
of the disclosures made. – Reviewed the pricing mechanism historically
followed by the working interest owners of the PCA.
– Reviewing the contents of the signed COSA.
– Reviewing the debit note received by the Company
from the operator of the PCA and Company’s certain
subsequent correspondence with the operator of
PCA.
– Reviewing legal opinions obtained by the Company
from its legal consultants.
– Seeking independent advice from auditor’s legal
consultant to assess the matter and Company’s
contention in this respect.
 Annual Report 2018 155

iii) Reversal of prior year tax and related provisions independent external investment advisor engaged
(Refer note 29 and 32 of the consolidated financial statements) by the Company using a discounted cash flow model
which involves estimation of future cash flows. This
During the year, the Company, based on the advice of
estimation is inherently uncertain and requires
its tax consultant, reversed a cumulative provision of
significant judgement on both future cash flows and
Rs 1,190 million in respect of tax and related amount
the discount rate applied to the future cash flows.
of Workers Welfare Fund (WWF) on the premise that
demand raised for related tax years have already been In view of significant management judgement involved
paid by the Company and the likelihood of further in the estimation of VIU we consider this as a key audit
tax demands arising in respect of those tax years is matter.
remote.
Our procedures in relation to assessment of carrying
We focused on this matter due to the significance value of investment in associated company included:
of the amount involved and significant management
judgement this area. – Assessing the appropriateness of management’s
accounting for investment in associated company.
Our procedures in relation to management – Understanding management’s process for
judgement regarding the matter included: identifying the existence of impairment indicators
– Reviewing the assessment documents issued by in respect of investment in associated company.
the taxation department (the Department) and – Evaluating the independent external investment
details related to the proceedings in the matter of advisor’s competence, capabilities and objectivity.
instant tax years at different forums including the
High Court and the Supreme Court. – Assessing the valuation methodology used by the
independent external investment advisor.
– Reviewing the advice obtained by the Company
form its tax consultants. – Checking, on sample basis, the reasonableness
of the input data provided by the management to
– Involving auditor’s tax specialist to review the the independent external investment advisor, to
relevant supporting documentation including supporting evidence.
the advice of management’s tax consultant to
assess the reasonableness of the management’s – Assessing the reasonableness of cash flow
assessment of the matter. projection, challenging and performing audit
procedures on assumptions such as growth rate,
future revenue and costs, terminal growth rate
and discount rate by comparing the assumptions
iv) Investment in associated company
to historical results, budgets and comparing the
(Refer note 15 to the consolidated financial statements)
current year’s results with prior year forecast and
The Company has investment in its associated other relevant information.
company National Refinery Limited (NRL). As at
– Testing mathematical accuracy of cash flows
June 30, 2018, the carrying amount of investment
projection.
in above referred associated company amounted to
Rs 14,794 million (net of recognised impairment loss – Performing independently a sensitivity analysis in
of Rs 2,391 million) which carrying value is higher by consideration of the potential impact of reasonably
Rs 5,938 million in relation to the quoted market value possible upside or downside changes in key
of such shares. The Company carries out impairment assumptions.
assessment of the value of Investment where there
are indicators of impairment.
The Company has assessed the recoverable amount
of the investment in associated companies based on
the higher of the value-in-use (“VIU”) and fair value.
VIU is based on a valuation analysis carried out by an
156 Leveraging HR to Achieve Excellence

INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND

AUDITOR’S REPORT THEREON
Management is responsible for the other information. The other information obtained at the date of this auditor’s report
is information included in the director’s report, but does not include the consolidated financial statements of the Group
and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If based on the work we have performed, on other information obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.

RESPONSIBILITIES OF MANAGEMENT AND BOARD OF DIRECTORS FOR THE CONSOLIDATED

FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with the accounting and reporting standards as applicable in Pakistan and Companies Act, 2017 (XIX of 2017)
and for such internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
The Board of directors are responsible for overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional missions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
 Annual Report 2018 157

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.

The engagement partner on the audit resulting in this independent auditor’s report is Mr. JehanZeb Amin.

– Sd –
Chartered Accountants
Islamabad
Date: August 30, 2018
158 Leveraging HR to Achieve Excellence

Consolidated Statement of Financial Position

As at June 30, 2018

June 30, June 30, July 1,

2018 2017 2016
Note Rs ‘000 Rs ‘000 Rs ‘000
(Restated) (Restated)

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Share capital
Authorised 8 1,500,000 1,500,000 1,500,000
Issued, subscribed and paid-up 8 852,930 852,930 852,930
Reserves and surplus 9 36,722,462 36,002,274 29,036,918
Surplus on revaluation of freehold land 13 12,052,576 12,052,576 10,811,949
Fair value gain on available for sale investment 108 - -
49,628,076 48,907,780 40,701,797

NON CURRENT LIABILITIES

Long term financing 10 12,642,916 17,672,166 14,613,682

DEFERRED TAXATION 17 - 652,945 -

CURRENT LIABILITIES
Trade and other payables 11 44,552,948 28,212,632 23,089,140
Accrued mark-up on long term financing 10 260,909 338,226 266,556
Current portion of long term financing 10 2,200,000 2,200,000 550,000
Unclaimed dividends 9,839 8,898 7,658
Provision for taxation 2,163,842 3,439,980 3,955,760
49,187,538 34,199,736 27,869,114

TOTAL EQUITY AND LIABILITIES 111,458,530 101,432,627 83,184,593

CONTINGENCIES AND COMMITMENTS 12

 Annual Report 2018 159

June 30, June 30, July 1,

2018 2017 2016
Note Rs ‘000 Rs ‘000 Rs ‘000
(Restated) (Restated)

ASSETS

NON CURRENT ASSETS

PROPERTY, PLANT AND EQUIPMENT

Operating assets 13 32,829,945 35,140,631 12,156,008
Capital work-in-progress 14 303,043 142,057 22,733,687
Major spares parts and stand-by equipment 119,151 81,396 83,293
33,252,139 35,364,084 34,972,988

LONG TERM INVESTMENTS 15 24,830,227 23,939,539 20,787,112

LONG TERM LOANS AND DEPOSITS 16 42,115 34,757 31,405

DEFERRED TAXATION 17 43,494 - 654,124

CURRENT ASSETS
Stores, spares and loose tools 18 2,905,748 2,193,275 1,815,409
Stock-in-trade 19 9,789,826 5,713,476 6,708,327
Trade debts 20 15,748,306 10,678,578 6,889,447
Loans, advances, deposits, prepayments
and other receivables 21 1,888,643 1,858,901 1,636,512
Short term investment 22 985,846 - -
Cash and bank balances 23 21,972,186 21,650,017 9,689,269
53,290,555 42,094,247 26,738,964

TOTAL ASSETS 111,458,530 101,432,627 83,184,593

The annexed notes 1 to 47 are an integral part of these consolidated financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
160 Leveraging HR to Achieve Excellence

Consolidated Statement of Profit or Loss

For the year ended June 30, 2018
2018 2017
Note Rs ‘000 Rs ‘000

Gross sales 24 179,430,555 139,515,951

Taxes, duties, levies, discounts and price differential 25 (49,833,990) (38,104,159)
Net sales 129,596,565 101,411,792
Cost of sales 26 (130,675,227) (97,078,919)
Gross (loss) /profit (1,078,662) 4,332,873

Administration expenses 27 645,120 595,023

Distribution cost 28 50,156 49,047
Other charges 29 (106,271) 202,660
(589,005) (846,730)
Other income 30 1,977,477 1,434,222
Operating profit 309,810 4,920,365
Finance cost 31 (2,925,299) (1,263,141)
(Loss) /profit before taxation from refinery operations (2,615,489) 3,657,224
Taxation 32 1,602,931 42,111
(Loss) /profit after taxation from refinery operations (1,012,558) 3,699,335

Profit after taxation from non-refinery operations

Impairment reversal on investment in associated company 15 178,420 1,254,835
Profit of Attock Hospital (Private) Limited 33 10,035 21,982
Share in profit of associated companies 34 2,212,851 2,438,662
2,401,306 3,715,479
Profit for the year 1,388,748 7,414,814

Earnings / (loss) per share - basic and diluted (Rs)

Refinery operations (11.87) 43.37
Non-refinery operations 28.15 43.56
35 16.28 86.93

The annexed notes 1 to 47 are an integral part of these consolidated financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
 Annual Report 2018 161

Consolidated Statement of Comprehensive Income

For the year ended June 30, 2018
2018 2017
Note Rs ‘000 Rs ‘000

Profit for the year 1,388,748 7,414,814

Other comprehensive income

Items that will not be reclassified to profit or loss

Remeasurement loss on staff retirement benefit plans 36 (174,749) (57,980)
Related deferred tax credit 48,749 17,394
Effect of change in tax rate (9,579) -
Share of other comprehensive (loss)/profit of associated
companies - net of tax (21,223) 17,593
(156,802) (22,993)
Surplus on revaluation of freehold land 13.1 - 1,240,627
(156,802) 1,217,634

Items that will be reclassified to profit or loss

Fair value adjustment on available for sale investments 108 -

Total comprehensive income for the year 1,232,054 8,632,448

The annexed notes 1 to 47 are an integral part of these consolidated financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
162 Leveraging HR to Achieve Excellence

Consolidated Statement of Cash Flow

For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from - customers 174,524,466 135,940,118
- others 793,213 564,202
175,317,679 136,504,320

Cash paid for operating costs (123,985,695) (92,605,439)

Cash paid to Government for duties, taxes and other levies (43,294,913) (36,208,351)
Income tax paid (680,397) (519,894)
Net cash generated from operating activities 7,356,674 7,170,636

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property, plant and equipment (459,103) (954,282)
Proceeds against disposal of operating assets 7,987 7,685
Long term loans and deposits (7,472) (3,353)
Income received on bank deposits 1,125,178 889,623
Dividends received 1,819,574 2,023,553
Net cash generated from investing activities 2,486,164 1,963,226

CASH FLOWS FROM FINANCING ACTIVITIES

Long term financing (5,200,000) 4,689,509
Transaction cost on long term financing (500) (6,076)
Finance cost (2,831,366) (1,431,464)
Dividends paid (510,818) (425,225)
Net cash (outflow)/inflow from financing activities (8,542,684) 2,826,744

INCREASE IN CASH AND CASH EQUIVALENTS DURING THE YEAR 1,300,154 11,960,606

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 21,650,017 9,689,269

Effect of exchange rate changes 7,861 142

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 44 22,958,032 21,650,017

The annexed notes 1 to 47 are an integral part of these consolidated financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
 Annual Report 2018 163

Consolidated Statement of Changes in Equity

For the year ended June 30, 2018

Capital reserve Revenue reserve

Special Utilised special Surplus on Fair value
reserve for reserve for revaluation gain on
Share expansion/ expansion/ Maintenance General Un-appropriated of freehold available for
capital modernisation modernisation reserve Others reserve profit land sale investment Total
Rs ’000

Balance at June 30, 2016 852,930 10,408,276 - 190,269 119,708 5,102,380 13,216,285 10,811,949 - 40,701,797

Distribution to owners:
Final cash dividend @ 50% related to the year
ended June 30, 2016 - - - - - - (426,465) - - (426,465)
Total comprehensive income
Profit for the year - - - - - - 7,414,814 - - 7,414,814
Other comprehensive (loss)/income for the year - - - - - - (22,993) 1,240,627 - 1,217,634
- - - - - - 7,391,821 1,240,627 - 8,632,448
Transfer to special reserve for expansion/
modernisation - note 9.1 - 3,553,535 - - - - (3,553,535) - - -
Profit after tax from fuel refinery operations
transferred to special reserve by
associated companies - note 9.1 - 992,968 - - - - (992,968) - - -
Transfer to maintenance reserve by an
associated company - note 9.3 - - - 6,410 - - (6,410) - - -
Transfer to general reserve by an associated company - - - - - 1,000,000 (1,000,000) - - -
Transfer to utilised special reserve for expansion/
modernisation by the Company - note 9.1 - (10,962,934) 10,962,934 - - - - - - -
by associated company - (1,946,032) 1,946,032 - - - - - - -
Balance at June 30, 2017 852,930 2,045,813 12,908,966 196,679 119,708 6,102,380 14,628,728 12,052,576 - 48,907,780

Distribution to owners:
Final cash dividend @ 60% related to the year
ended June 30, 2017 - - - - - - (511,758) - - (511,758)
Total comprehensive income
Profit for the year - - - - - - 1,388,748 - - 1,388,748
Other comprehensive (loss)/income for the year - - - - - - (156,802) - 108 (156,694)
- - - - - - 1,231,946 - 108 1,232,054
Transfer to special reserve for expansion/
modernisation - note 9.1 - (1,012,558) - - - - 1,012,558 - - -
Profit after tax from fuel refinery operations
transferred to special reserve by associated
companies - note 9.1 - - - - - - - - - -
Transfer to maintenance reserve by an associated
company - note 9.3 - - - 4,946 - - (4,946) - - -
Transfer to general reserve by an associated company - - - - - 750,000 (750,000) - - -
Transfer to utilised special reserve for expansion/
modernisation by the Company - note 9.1 - - - - - - - - - -
by associated company - - - - - - - - - -
Balance at June 30, 2018 852,930 1,033,255 12,908,966 201,625 119,708 6,852,380 15,606,528 12,052,576 108 49,628,076

The annexed notes 1 to 47 are an integral part of these consolidated financial statements.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
164 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

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 ARL is situated
at Morgah, Rawalpindi. Its shares are quoted on the Pakistan Stock Exchange. 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 from September 1, 1998. AHL is engaged in providing medical services.
AHL is a wholly owned subsidiary of ARL. For the purpose of these financial statements, the Company and its
above referred wholly owned subsidiary AHL is referred to as the Group.

2. SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING THE COMPANY’S FINANCIAL POSITION

AND PERFORMANCE
The financial position and performance of the Company was affected by the following events and transactions
during the year:
i) The Company has suffered a net exchange loss of Rs 1,396.03 million in respect of its purchases and
liabilities denominated in US Dollars and as also referred to in note 31.
ii) Consequent to the decision of government to shut-down furnace fueled power plants in country there
was a reduction in capacity utilization of the refinery during the month of November 2017. In view of the
foregoing, the Company was compelled to operate the refinery at lower throughput to deal with the problem
of increasing stock of furnace fuel and the declining ullage.
iii) Other significant transactions and events have been adequately described in these financial statements. For
detail performance review of the Company, refer Directors’ Report.

3. STATEMENT OF COMPLIANCE
These are consolidated financial statements of the Group and consolidated financial statements have been
prepared in accordance with approved accounting standards as applicable in Pakistan. The accounting and
reporting standards applicable in Pakistan comprise of:
- International Financial Reporting Standards (IFRS Standards) issued by the International Accounting
Standards Board (IASB) as notified under the Companies Act, 2017; and
- Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the
provisions of and directives issued under the Companies Act, 2017 have been followed.

4. NEW AND REVISED STANDARDS AND INTERPRETATIONS

4.1 The fourth schedule to the Companies Act, 2017 (the Act) became applicable to the Group for the first time for the
preparation of these consolidated financial statements. The Act (including its fourth schedule) forms an integral
part of the statutory financial reporting framework applicable to the Group and amongst other, prescribes the
nature and content of disclosures in relation to various elements of the consolidated financial statements.
The Act has also brought certain changes with regard to preparation and presentation of annual and interim
consolidated financial statements of the Group. These changes include change in nomenclature of primary
consolidated financial statements. Further, the disclosure requirements contained in the Fourth schedule to the
Act have been revised, resulting in the:
- elimination of duplicative disclosures with the IFRS disclosure requirements; and
- incorporation of significant additional disclosures.
- Specific additional disclosures and changes to the existing disclosures as a result of this change are stated
in notes 2, 5.8, 6, 9, 11, 12, 13.2, 13.3, 16, 20.2, 21.2, 27.2, 32.4, 37, 39.2, 39.3, 40, 45, 46.1, 46.2 and 46.4
 Annual Report 2018 165

4.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been
early adopted by the Group:

Effective date
(annual reporting periods
beginning on or after)

IAS 19 Employee benefits (Amendments) January 1, 2019

IAS 28 Investment in Associates and Joint Ventures (Amendments) January 1, 2019
IAS 40 Investment property (Amendments) January 1, 2018
IFRS 2 Share-based Payment (Amendments) January 1, 2018
IFRS 4 Insurance contracts (Amendments) January 1, 2018
IFRS 16 Leases January 1, 2019
IFRIC 22 Foreign Currency Transactions and Advance Consideration January 1, 2018
IFRIC 23 Uncertainty Over Income Tax January 1, 2019

The management anticipates that the adoption of the above standards, amendments and interpretations in
future periods, will have no material impact on the consolidated financial statements other than the impact on
presentation/disclosures. The management is in the process of assessing the impact of changes laid down by
the IFRS 9, 15 and 16 on its financial statements.
Further, the following new standards and interpretations have been issued by the International Accounting
Standards Board (IASB), which are yet to be notified by the Securities and Exchange Commission of Pakistan
(SECP), for the purpose of their applicability in Pakistan:

IFRS 1 First-time Adoption of International Financial Reporting Standards

IFRS 14 Regulatory Deferral Accounts
IFRS 17 Insurance Contracts

The following interpretations issued by the IASB have been waived of by SECP:
IFRIC 4 Determining whether an arrangement contains lease
IFRIC 12 Service concession arrangements

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5.1 Basis of measurement
These consolidated financial statements have been prepared under the historical cost convention modified by
revaluation of freehold land referred to in note 5.8, certain financial instruments which are carried at their fair
values and staff retirement gratuity and pension plans which are carried at present value of defined benefit
obligation net of fair value of plan assets.

5.2 Basis of consolidation

a) Subsidiary
The consolidated financial statements include the financial statements of Attock Refinery Limited (ARL) and its
wholly owned subsidiary, Attock Hospital (Private) Limited.
Subsidiary is an entity over which ARL has the control and 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 from the 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.
166 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

b) Associates
Associates are all entities over which the Company has significant influence but not control. Investment in
associated companies is accounted for using the equity method. Under this method the investments are stated
at cost plus the Company’s share in undistributed earnings and losses after acquisition, less any impairment in
the value of individual investments.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate
share of the amounts previously recognised in other comprehensive income is reclassified to statement of profit
or loss where applicable.
The Company’s share of post-acquisition profit is recognised in the consolidated statement of profit or loss, and
its share of post-acquisition movements in consolidated statement of other comprehensive income is recognised
in other comprehensive income with the corresponding adjustment to the carrying amount of the investment.
When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including
any other unsecured receivables, the Company does not recognise further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the associate.
The Company determines at each reporting date whether there is any objective evidence in the associate is
impaired. If this is the case, the Company calculates the amount of impairment as the difference between the
recoverable amount of the associate and its carrying amount and recognises the amount adjacent to share of
profit/ (loss) of associates in the consolidated statement of profit or loss.

5.3 Dividend and revenue reserves appropriation

Dividend and movement in revenue reserves are recognised in the consolidated financial statements in the
period in which these are approved.

5.4 Employee retirement benefits

The main features of the retirement benefit schemes operated by the Group for its employees are as follows:
i) Defined benefit plans
The Group operates approved pension fund for its management staff and approved gratuity fund for its
management and non-management staff. The investments of Pension and gratuity funds are made through
approved trust funds. Gratuity is deductible from pension. Management staff hired after January 1, 2012 are only
entitled to benefits under gratuity fund. Contributions are made in accordance with actuarial recommendations.
Actuarial valuations are conducted by an independent actuary, annually using projected unit credit method
related details of which are given in note 36 to the consolidated financial statements. The obligation at the
statement of consolidated financial position is measured at the present value of the estimated future cash
outflows. All contributions are charged to consolidated statement of profit or loss for the year.
Actuarial gains and losses (remeasurement gains/losses) on employees’ retirement benefit plans are recognised
immediately in other comprehensive income and past service cost is recognized in consolidated statement of
profit or loss when they occur.
Calculation of gratuity and pension requires assumptions to be made of future outcomes which mainly includes
increase in remuneration, expected long-term return on plan assets and the discount rate used to convert future
cash flows to current values. Calculations are sensitive to changes in the underlying assumptions.
ii) Defined contribution plans
The Group 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.

5.5 Employee compensated absences

ARL also provides for compensated absences for all employees in accordance with the rules of the Company.

5.6 Taxation
Income tax expense comprises of current and deferred tax.
 Annual Report 2018 167

Current tax
Provision for current taxation is based on taxable income at the applicable rates of taxation after taking into
account tax credits and tax rebates, if any. Income tax expense is recognised in the consolidated statement of
profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive
income.
Deferred tax
Deferred income tax is accounted for using the consolidated statement of financial position liability method
in respect of all temporary differences arising between the carrying amount of assets and liabilities in the
consolidated 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, un-used tax losses and tax credits can be utilized. Deferred tax is calculated at the rates that are
substantially 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.
The Group takes into account the current income tax law and decisions taken by the taxation authorities.
Instances where the Group’s views differ from the income tax department at the assessment stage and where
the Group considers that its view on items of material nature is in accordance with law, the amounts are shown
as contingent liabilities.
Investment tax credits are considered not substantially different from other tax credits. Accordingly in such
situations tax credits are deducted from current tax amount to the extent of tax credit availed while recognising
deferred tax credit for the unused investment tax credit.

5.7 Provisions
Provisions are recognised when the Company has a legal or constructive obligation as a result of past events,
when it is probable that an outflow of resources embodying economic benefit will be required to settle the
obligation and a reliable estimate of the amount can be made.

5.8 Property, plant and equipment and capital work-in-progress

a) Cost
Operating fixed assets except freehold land are stated at cost less accumulated depreciation and impairment
losses. 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) Revaluation
Increase in the carrying amount arising on revaluation of freehold land are recognised in other comprehensive
income and accumulated in shareholders’ equity under the heading surplus on revaluation of freehold land. To
the extent that the increase reverses a decrease previously recognised in consolidated statement of profit or
loss, the increase is first recognised in consolidated statement of profit or loss. Decreases that reverse previous
increases of the same asset are first recognised in other comprehensive income to the extent of the remaining
surplus attributable to the asset; all other decreases are charged to statement of profit or loss.
c) Depreciation
Depreciation on operating assets is calculated using the straight-line method to allocate their cost over their
estimated useful life at the rates specified in note 13.
d) 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.
e) Gains and losses on disposal
Gains and losses on deletion of assets are included in income currently.
168 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

5.9 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 consolidated statement of financial position 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 extent that assets carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if no impairment loss has been recognised. An
impairment loss or reversal of impairment loss is recognised in the consolidated statement of profit or loss.

5.10 Stores, spares and loose tools

These are valued at moving average cost less allowance for obsolete and slow moving items. Items in transit are
stated at invoice value plus other charges paid thereto.

5.11 Stock-in-trade
Stock-in-trade is valued at the lower of cost and net realisable value.
Cost in relation to crude oil is determined on a First-in-First-Out (FIFO) basis. In relation to semi-finished and
finished products, cost represents the cost of crude oil and an appropriate portion of manufacturing overheads.
Net realisable value represents selling prices in the ordinary course of business less costs necessarily to be
incurred for its sale.

5.12 Revenue recognition

Revenue is recognised to the extent that it is probable that economic benefits will flow to 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.
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.
ii) Income from crude desalter operations, rental income, handling and service income are recognized on accrual
basis.
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.
v) 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 or loss,
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.

5.13 Functional and presentation currency

Items included in the consolidated financial statements are measured using the currency of the primary
economic environment in which the Company operates. The consolidated financial statements are presented in
Pakistani Rupees, which is the Company’s functional currency.

5.14 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 consolidated statement of financial position date. Exchange differences are
dealt with through the consolidated statement of profit or loss.
 Annual Report 2018 169

5.15 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.

5.16 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.

5.16.1 Held-to-maturity investments

Investments with fixed payments and maturity that the Company has the intent and ability to hold to maturity are
classified as held-to-maturity investments and are carried at amortised cost less impairment losses.
5.16.2 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the consolidated statement of financial position 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 consolidated statement of financial position. Loans and receivables are carried at
amortized cost using the effective interest method.
5.16.3 Available-for-sale investments
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified
in any of the other categories. They are included in non-current assets unless management intends to dispose
of the investment within 12 months of the consolidated statement of financial position date.
Available-for-sale investments are initially recognised at cost and carried at fair value at the consolidated
statement of financial position date. Fair value of a quoted investment is determined in relation to its market
value (current bid prices) at the consolidated statement of financial position date. If the market for a financial
asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques.
Adjustment arising from remeasurement of investment to fair value is recorded in equity and taken to income on
disposal of investment or when the investment is determined to be impaired.
5.16.4 Investment at fair value through profit or loss
Investments classified as investments at fair value through profit or loss are initially measured at cost being
fair value of consideration given. At subsequent dates these investments are measured at fair value with any
resulting gains or losses recognised directly in the consolidated statement of profit or loss. The fair value of such
investments is determined on the basis of prevailing market prices.

5.17 Trade debts and other receivables

Trade debts and other receivables are recognised and carried at their amortised cost less an allowance for any
uncollectable amounts. Carrying amounts of trade debts and other receivables are assessed on a regular basis
and if there is any doubt about the realisability of these receivables, appropriate amount of provision is made.

5.18 Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit
or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares.
170 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

Basic and diluted EPS relating to Refinery and Non-refinery operations is also calculated in line with the manner
described above by dividing the profit or loss attributable to ordinary shareholders from Refinery and Non-
refinery operations respectively.

5.19 Finance income

Finance income comprises interest income on funds invested (including available-for-sale financial assets),
dividend income, gain on disposal of available-for-sale financial assets and changes in fair value of investments
held for trading. Interest income is recognised as it accrues in the consolidated statement of profit or loss, using
effective interest method. Dividend income is recognised in the consolidated statement of profit or loss on the
date that the Company’s right to receive payment is established.

5.20 Finance cost

Finance costs comprise interest expense on borrowings, changes in fair value of investment carried at fair value
through the consolidated statement of profit or loss and impairment losses recognised on financial assets.
Foreign currency gains and losses are reported separately.

5.21 Contingent Liabilities

A contingent liability is disclosed when the Company has a possible obligation as a result of past events, whose
existence will be confirmed only by the occurrence or non-occurrence, of one or more uncertain future events
not wholly within the control of the Company; or the Company has a present legal or constructive obligation that
arises from past events, but it is not probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.

5.22 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.

5.23 Offsetting
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of
financial position 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.

5.24 Cash and cash equivalents

For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand, bank balances and
highly liquid short term investments.

5.25 Borrowings and their costs

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the profit or loss over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs on the borrowing to the
extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until
the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a transaction cost on borrowing and amortised over the period of the facility
to which it relates.
Borrowing costs are recognised as an expense in the period in which these are incurred except where such costs
are directly attributable to the acquisition, construction or production of a qualifying asset in which case such
costs are capitalised as part of the cost of that asset.

5.26 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and
 Annual Report 2018 171

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 the
Board of Directors views the Company’s operations as one reportable segment.

6. CHANGE IN ACCOUNTING POLICY

Section 235 of the Repealed Companies Ordinance, 1984 specified the accounting treatment and presentation of
the surplus on revaluation of fixed [Link] specific provision/section in the Repealed Companies Ordinance,
1984 relating to the surplus on revaluation of fixed assets has not been carried forward in the Companies Act,
2017. In view of foregoing and the contents of note 3 & note 4.1 the accounting and presentation of revaluation
surplus is required to be made in accordance with the requirements of International Accounting Standard (IAS)
16, Property,Plant and Equipment.
The applicability of requirements of IAS 16 accordingly results in the change in accounting policy of revaluation
of surplus in following manner:
– present surplus on revaluation of fixed assets under equity;
– offset the deficit arising from revaluation of the particular asset; and
– transfer the realized surplus directly to the retained earnings/unappropriated profit;
The change in accounting policy has been accounted for retrospectively in accordance with the requirements
of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ and the corresponding figures have
been restated. The effect of retrospective application in case of the Company has resulted in reclassification of
surplus on revaluation of freehold land to reserves. There is no other impact of the retrospective application on
the amounts of surplus presented in prior years.

7. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of consolidated 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 consolidated financial statements,
are as follows:
i) Contingencies - note 12
ii) Surplus on revaluation of freehold land - note 13.1
iii) Estimated useful life of operating assets - note 13
iv) Estimate of recoverable amount of investment in an associated company - note 15
v) Deferred taxation - note 17
vi) Provision for taxation - note 32
vii) Provision for employees’ defined benefit plans - note 36
172 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

8. SHARE CAPITAL

8.1 Authorised share capital

2018 2017 2018 2017
Number of shares Rs ‘000 Rs ‘000

150,000,000 150,000,000 Ordinary shares of Rs 10 each 1,500,000 1,500,000

8.2 Issued, subscribed and paid up capital

2018 2017 2018 2017
Number of shares Ordinary shares of Rs 10 each Rs ‘000 Rs ‘000

8,000,000 8,000,000 Fully paid in cash 80,000 80,000

77,293,000 77,293,000 Shares issued as fully paid bonus shares 772,930 772,930
85,293,000 85,293,000 852,930 852,930

The parent company Attock Oil Company Limited held 52,039,224 (2017: 52,039,224) ordinary shares and the
associated company Attock Petroleum Limited held 1,432,000 (2017: 1,432,000) ordinary shares at the year end.

2018 2017
Rs ‘000 Rs ‘000

9. RESERVES AND SURPLUS

Capital reserve
Special reserve for expansion/modernisation - note 9.1 1,033,255 2,045,813
Special reserve for expansion/modernisation of associated company - -
1,033,255 2,045,813

Utilised special reserve for expansion/modernisation - note 9.2 10,962,934 10,962,934

Utilised special reserve for expansion/modernisation of associated company 1,946,032 1,946,032
12,908,966 12,908,966

Maintenance reserve - note 9.3 201,625 196,679

Others
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 shares issued by associated companies 109,760 109,760
119,708 119,708

Revenue reserve
General reserve 6,852,380 6,102,380
Unappropriated profit 15,606,528 14,628,728
22,458,908 20,731,108
36,722,462 36,002,274

9.1 Represents amounts retained as per the stipulations of the Government under the pricing formula and is
available only for making investment in expansion or Up-gradation of the refinery or off setting any loss 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.
 Annual Report 2018 173

Under the Policy Framework for Up-gradation and Expansion of Refineries, 2013 issued by the Ministry of
Energy- Petroleum Division (the Ministry) as amended from time to time, the refineries are required to transfer
the amount of profit above 50% of paid-up capital as at July 1, 2002 into a Special Reserve Account which shall be
available for utilisation for Up-gradation of refineries or may also be utilized in off setting losses of the refinery
from refinery operations.
Following is the status of utilization out of the Special Reserve on Up-gradation and expansion projects from July
1, 1997 to June 30, 2018:

2018 2017
Rs ‘000 Rs ‘000

Balance as at July 1 2,045,813 9,455,212

Transfer (from)/to for the year (1,012,558) 3,553,535
Transfer to utlised special reserve for expansion/modernisation - note 9.2 - (10,962,934)
Balance as at June 30 1,033,255 2,045,813

9.2 Represents amounts utilized out of the special reserve for expansion/ modernization of the refinery. The total
amount of capital expenditure incurred on Refinery expansion/ mordernisation till June 30, 2018 is Rs 28,390
million including Rs 17,427 million spent over and above the available balance in the Special Reserve which have
been incurred by the Company from its own resources.

9.3 Represents amount retained by Attock Gen Limited to pay for major maintenance expenses in terms of the
Power Purchase Agreement.
2018 2017
Rs ‘000 Rs ‘000

10. LONG TERM FINANCING - secured

From banking companies

Syndicated Term Finance - note 10.1 11,494,985 15,380,448
Musharaka Finance - note 10.2 3,762,252 5,034,006
15,257,237 20,414,454

Less: Unamortized transaction cost on financing:

Balance as at July 1 204,062 243,300
Addition during the year 500 6,076
Amortization for the year (51,150) (45,314)
Balance as at June 30 153,412 204,062
15,103,825 20,210,392
Current portion of long term financing (2,200,000) (2,200,000)
12,903,825 18,010,392
Mark-up payable shown as current liability (260,909) (338,226)
12,642,916 17,672,166

10.1 The Company has entered into a syndicated finance agreement with a consortium of banks which includes
Bank AL-Habib Limited as the Agent Bank for a term finance facility of Rs 16,575 million for ARL Up-gradation
Projects. The facility carries a mark-up of 3 months KIBOR plus 1.70% which will be payable on quarterly basis.
The tenure of this facility is 13 years.

10.2 The Company obtained Musharaka finance facility of Rs 5,425 million from Bank AL-Habib Limited (the Bank)
as the Investment Agent for ARL Up-gradation Projects. The total Musharaka investment amounts to Rs 8,029
million and Investment Agent’s (the Bank) share in Musharaka Assets A is nil % (2017: 47.64%) while its share in
Musharaka Assets B is 68.72% (2017: 69.90%) respectively. While the Managing Co-owner’s (the Company) share
174 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

in Musharaka Assets A is 100% (2017: 52.36%) while its share in Musharaka Assets B is 31.28% (2017: 30.10%)
respectively. The tenure of this facility is 13 years. The rental payments under this facility are calculated on the
basis of 3 months KIBOR plus 1.70% on value of unit purchased on each Musharaka Assets purchase date under
Musharaka agreement.

10.3 The facilities referred to in notes 10.1 and 10.2 are secured by first pari passu charge by way of hypothecation
over all present and future current assets to the extent of Rs 15,000 million. Further, the facility is also secured by
first pari passu charge by way of hypothecation over all present and future movable fixed assets of the Company
and mortgage over identified immovable property. Until the payment of all the outstanding amounts due by
the Company have been paid in full, the Company cannot, except with the prior written consent of the Agent
Bank/Investment Agent, permit the collective shareholding of Attock Oil Company Limited in the Company to fall
below 51%.

10.4 During the year the Company, in addition to the scheduled quarterly principal payments, also repaid an amount
of Rs 3,000 million in respect of facilities referred to in note 10.1 and 10.2.

2018 2017
Rs ‘000 Rs ‘000

11. TRADE AND OTHER PAYABLES

Creditors - note 11.1 24,294,232 16,160,601
Due to The Attock Oil Company Limited - Holding Company 110,475 24,001
Due to associated companies
Pakistan Oilfields Limited 2,475,616 1,218,186
Attock Sahara Foundation 754 -
Attock Solar (Pvt.) Limited 970 -
Accrued liabilities and provisions - note 11.1 4,048,226 3,890,947
Due to the Government under pricing formula 4,883,264 2,247,775
Custom duty payable to Government 6,888,202 3,318,978
Advance payments from customers 119,274 101,336
Sales tax payable 168,206 -
Workers’ Profit Participation Fund - note 21.1 - 83,663
ARL Gratuity Fund 109,694 67,879
Staff Pension Fund 138,823 23,194
Crude oil freight adjustable through inland freight
equalisation margin 15,761 20,010
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 1,295,938 1,053,049
Security deposits 3,137 2,637
44,552,948 28,212,632

11.1 These balances include amounts retained from payments to crude suppliers for purchase of local crude as
per the directives of the Ministry of Energy - Petroleum Division (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 along with accumulated profits amounted to Rs 3,113.17 million (2017: Rs 2,944.91 million).
 Annual Report 2018 175

2018 2017
Rs ‘000 Rs ‘000

12. CONTINGENCIES AND COMMITMENTS

Contingencies:
i) Consequent to amendment through the Finance Act, 2014, SRO 1,326,706 1,326,706
575(I)/2006 was withdrawn. As a result all imports relating to
the ARL Up-gradation Project were subjected to higher rate
of customs duties, sales tax and income tax. Aggrieved by the
withdrawal of the said SRO, the Company filed a writ petition on
August 20, 2014 in the Lahore High Court, Rawalpindi Bench (the
Court). The Court granted interim relief by allowing release of the
imports against submission of bank guarantees and restrained
customs authorities from charging increased amount of customs
duty/ sales tax. Bank guarantees were issued in favour of Collector
of Customs, as per the directives of the Court. These guarantees
include amounts aggregating to Rs 731 million on account of
adjustable/ claimable government levies.
Based on advice from legal advisor the Company is confident
that there are reasonable grounds for a favourable decision and
accordingly this liability has not been recognized in the financial
statements. Several hearings of the case have been held but the
matter is still under adjudication.
ii) Due to circular debt in the oil industry, certain amounts due from
the oil marketing companies (OMCs) and due to crude oil suppliers
have not been paid/ received 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 party.
iii) Guarantees issued by banks on behalf of the Company (other than 414 493
(i) above)

iv) Claims for land compensation contested by ARL 1,300 1,300

v) Price adjustment related to crude oil purchases recorded on the

basis of provisional prices as referred to in note 26.1, the amount
of which cannot be presently quantified.
vi) In March 2018, Crude Oil Sale and Purchase Agreement (COSA) 2,484,098 -
with effective date of March 27, 2007 has been executed between
the President of Pakistan and the working interest owners of a
Petroleum Concession Agreement (PCA) whereby various matters
including the pricing mechanism for crude oil were prescribed.
The Company has been purchasing crude oil from the related
oil fields since 2007 and 2009. In this respect, an amount of
Rs 2,484 million has been demanded from the Company as alleged
arrears of crude oil price for certain period prior to signing of
aforementioned COSA.
Based on the Company’s assessment of related matter and
based on the legal advices obtained from its legal consultants
the Company has not acknowledged the related demand and
accordingly, not provided for the same in its books of account.
176 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

vii) Claim by the Company from Government on account of additional 1,081,087 464,638
deemed duty on High Speed Diesel (HSD). In the Policy Framework
of 2013 for Up-gradation of Refineries, the Government had
committed to enhance deemed duty on HSD from 7.5% to 9%
subject to setting up of Diesel Hydrodesulphurisation (DHDS) unit.
However, this incentive has been withdrawn on April 25, 2016.
The Company has strongly taken up with the Government the
matter of withdrawal of additional deemed duty as this incentive
was primarily given to recover the cost of investment on DHDS
unit which the Company has successfully installed and
commissioned.
viii) The Finance Act, 2017 introduced tax on every public company at 418,470 -
the rate of 7.5% of its accounting profit before tax for the year.
However, this tax shall not apply in case of a public company which
distributes at least 40% of its after tax profits within six months of
the end of the tax year through cash or bonus shares.
Aggrieved by this amendment, the Company filed a writ petition
on August 3, 2017 in Sindh High Court (Court), Karachi. The Court
has granted stay to the Company. Subsequently, a notification
was issued on February 13, 2018 by the Federal Board of Revenue
whereby exemption was granted in the incidental matter to the
companies that are subject to restrictions imposed by Government
of Pakistan on distribution of dividend. Accordingly, no charge
has been recorded for the related tax.
ix) The Company’s share in tax contingency of associated 1,474,866 1,523,411
companies

Commitments:
i) Capital expenditure 129,754 77,194

ii) Letters of credit for purchase of store items 88,941 143,871

iii) The Company’s share of commitments of associated companies.

Capital expenditures commitments 1,796,604 1,339,985

Outstanding letters of credit 4,559,627 3,782,297
Others 506,929 503,985
 Annual Report 2018 177

13. OPERATING ASSETS

Furniture,
Freehold land Buildings on Plant and Computer fixtures and
(note 13.1) freehold land machinery equipment equipment Vehicles Total
Rs ‘000

As at June 30, 2016

Cost or valuation 10,866,170 206,774 5,368,809 74,386 149,786 127,632 16,793,557
Accumulated depreciation - (99,049) (4,328,434) (54,156) (72,382) (83,528) (4,637,549)
Net book value 10,866,170 107,725 1,040,375 20,230 77,404 44,104 12,156,008

Year ended June 30, 2017

Opening net book value 10,866,170 107,725 1,040,375 20,230 77,404 44,104 12,156,008
Additions - 6,981 23,756,068 9,084 12,522 28,198 23,812,853
Revaluation surplus 1,240,628 - - - - - 1,240,628
Disposals
Cost - - (33,371) (7,536) (2,166) (4,307) (47,380)
Depreciation - - 33,371 7,521 1,692 4,307 46,891
- - - (15) (474) - (489)
Depreciation charge - (10,336) (2,023,510) (7,565) (10,886) (16,072) (2,068,369)
Closing net book value 12,106,798 104,370 22,772,933 21,734 78,566 56,230 35,140,631

As at June 30, 2017

Cost or valuation 12,106,798 213,755 29,091,506 75,934 160,142 151,523 41,799,658
Accumulated depreciation - (109,385) (6,318,573) (54,200) (81,576) (95,293) (6,659,027)
Net book value 12,106,798 104,370 22,772,933 21,734 78,566 56,230 35,140,631

Year ended June 30, 2018

Opening net book value 12,106,798 104,370 22,772,933 21,734 78,566 56,230 35,140,631
Additions - 27,653 179,913 9,428 10,460 32,909 260,363
Revaluation surplus - - - - - - -
Disposals
Cost - - (274) (2,709) (2,235) (13,012) (18,230)
Depreciation - - 274 2,701 2,059 12,971 18,005
- - - (8) (176) (41) (225)
Depreciation charge - (9,771) (2,520,510) (7,858) (11,705) (20,980) (2,570,824)
Closing net book value 12,106,798 122,252 20,432,336 23,296 77,145 68,118 32,829,945

As at June 30, 2018

Cost or valuation 12,106,798 241,408 29,271,145 82,653 168,367 171,420 42,041,791
Accumulated depreciation - (119,156) (8,838,809) (59,357) (91,222) (103,302) (9,211,846)
Net book value 12,106,798 122,252 20,432,336 23,296 77,145 68,118 32,829,945

Annual rate of
Depreciation (%) - 5 10 20 10 20

13.1 Freehold land was revalued in May 2017 and the revaluation surplus of Rs 1,240.63 million was added to the
value of freehold land and corresponding amount was been transferred to surplus on revaluation of fixed assets.
Had the freehold land been stated on the historical cost basis, the carrying amount of land would have been
Rs 54.22 million (2017: Rs 54.22 million).

13.2 Forced sales value of freehold land based on valuation conducted in May 2017 was Rs 9,685.44 million.
178 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

13.3 Particulars of immovable property (i.e. land and building) in the name of Company are as follows:

Location Usage of immovable property Total Area

(In acres)

Morgah Rawalpindi Refinery processing plants,office and staff colony 398.44

Chak Shahpur, Morgah, Rawalpindi Water wells 44.96
Humak (adjacent DHA II), Islamabad Water wells 7.34

2018 2017
Rs ‘000 Rs ‘000

13.4 The depreciation charge for the year has been allocated as follows:

Cost of sales - note 26 2,542,227 2,042,846

Administration expenses - note 27 26,301 23,564
Distribution cost - note 28 766 743
Depreciation of subsidiary company 1,530 1,216
2,570,824 2,068,369

14. CAPITAL WORK-IN-PROGRESS

Balance as at July 1 142,057 22,733,687

Additions during the year - note 14.1 322,186 1,170,751
Transfer to operating assets
Buildings on freehold land 27,653 6,981
Plant and machinery 133,547 23,746,756
Furniture and fixtures - 8,644
(161,200) (23,762,381)
Balance as at June 30 303,043 142,057

Breakup of the closing balance of capital work-in-progress

Civil works 7,720 15,830
Plant and machinery 294,323 125,227
Pipeline project 1,000 1,000
303,043 142,057

14.1 Financing cost amounting to Rs nil (2017: Rs 265.04 million) has been capitalised which includes Rs nil (2017:
Rs 11.21 million) in respect of amortization of transaction cost on long term financing arranged for the purpose
of ARL Up-gradation projects.
2018 2017
Rs ‘000 Rs ‘000

15. LONG TERM INVESTMENTS

Balance as at July 1 23,939,539 20,787,112

Share of profit after tax of associated companies 2,552,958 3,903,552
Share in other comprehensive (loss)/income (21,115) 17,593
Dividend received from associated companies (1,819,575) (2,023,553)
Impairment reversal on investment 178,420 1,254,835
Balance as at June 30 24,830,227 23,939,539
 Annual Report 2018 179

2018 2017
% age % age
holding Rs ‘000 holding Rs ‘000

15.1 Investment in associated companies

Associated companies
Quoted
National Refinery Limited (NRL) - note 15.4 25 14,793,813 25 14,637,479
19,991,640 (2017: 19,991,640) fully paid
ordinary shares including 3,331,940 (2017:
3,331,940) bonus shares of Rs 10 each
Market value as at June 30, 2018: Rs 8,856
million (June 30, 2017: Rs 14,514 million)
Attock Petroleum Limited (APL) 21.88 7,345,605 21.88 6,897,179
18,144,138 (2017: 18,144,138) fully paid
ordinary shares including 7,644,058 (2017:
7,644,058) bonus shares of Rs 10 each
Market value as at June 30, 2018: Rs 10,705
million (June 30, 2017: Rs 11,366 million)

Unquoted
Attock Gen Limited (AGL) 30 2,666,574 30 2,384,395
7,482,957 (2017: 7,482,957) fully paid ordinary
shares of Rs 100 each note 15.2
Attock Information Technology Services
(Private) Limited (AITSL) 10 24,235 10 20,486
450,000 (2017: 450,000) fully paid ordinary
shares of Rs 10 each
24,830,227 23,939,539

All associated companies are incorporated in Pakistan. Although ARL has less than 20 percent shareholding in
Attock Information Technology Services (Private) Limited, this company has been treated as associates since
ARL has representation on its Board of Directors.

15.2 In October 2017, the Board of Directors of the Company approved to offer 3.95% out of the Company`s 30%
shareholding in paid up capital of Attock Gen Limited’s (AGL) to the general public including employees/officers
of the Company upon listing of the shares of AGL on the Pakistan Stock Exchange Limited. However, the proposed
offer has not yet been made.

15.3 The tables below provide summarised financial information for associated companies that are material to
the Company. The information disclosed reflects the amounts presented in the audited consolidated financial
statements of the relevant associates. Adjustments made by the reporting entity when using the equity method,
including fair value adjustments have been reflected in these consolidated financial statements.
180 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

Attock Information Technology

National Refinery Limited Attock Petroleum Limited Attock Gen Limited Services (Pvt) Limited
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Rupees (‘000) Rupees (‘000) Rupees (‘000) Rupees (‘000)

Summarised statement of
financial position
Current assets 27,547,962 22,751,593 38,148,564 32,500,125 12,798,393 10,957,141 216,946 168,656
Non- current assets 38,266,309 38,634,352 7,346,360 5,303,840 7,527,911 8,000,643 46,546 53,880
Current liabilities (22,206,011) (16,683,185) (26,802,124) (21,339,059) (11,437,725) (9,791,461) (18,146) (13,768)
Non- current liabilities (356,723) (1,362,880) (911,540) (733,581) - (1,218,339) (2,991) (3,901)
Net assets 43,251,537 43,339,880 17,781,260 15,731,325 8,888,579 7,947,984 242,355 204,867

Reconciliation to carrying amounts:

Net assets as at July 1 43,339,880 36,822,443 15,731,325 13,858,343 7,947,984 8,432,118 204,866 167,310
Profit for the period 1,770,684 8,045,781 5,583,113 5,194,825 2,950,743 2,506,584 37,487 37,557
Other comprehensive income/(loss) (59,779) 70,987 (8,058) (4,083) (14,693) 2,465 - -
Dividends paid (1,799,248) (1,599,331) (3,525,120) (3,317,760) (1,995,455) (2,993,183) - -
Net assets as at June 30 43,251,537 43,339,880 17,781,260 15,731,325 8,888,579 7,947,984 242,353 204,867

Company’s percentage shareholding

in the associate 25% 25% 21.88% 21.88% 30.00% 30.00% 10.00% 10.00%

Company’s share in net assets 10,812,884 10,834,970 3,889,686 3,441,260 2,666,574 2,384,395 24,235 20,486
Excess of purchase consideration
over carrying amount at the date
of acquisition 6,371,654 6,371,654 3,455,919 3,455,919 - - - -
Proportionate share in carrying value
of net assets before impairment 17,184,538 17,206,624 7,345,605 6,897,179 2,666,574 2,384,395 24,235 20,486
Impairment (2,390,725) (2,569,145) - - - - - -
Carrying amount of investment 14,793,813 14,637,479 7,345,605 6,897,179 2,666,574 2,384,395 24,235 20,486

Summarised statements of
comprehensive income
Net revenue 136,984,940 107,447,444 177,344,437 138,660,665 13,204,988 12,386,538 111,615 100,959

Profit for the year 1,770,684 8,045,781 5,583,113 5,194,825 2,950,743 2,506,584 37,487 37,557
Other comprehensive income / (loss) (59,779) 70,987 (8,058) (4,083) (14,693) 2,465 - -
Total comprehensive income 1,710,905 8,116,768 5,575,055 5,190,742 2,936,050 2,509,049 37,487 37,557

During the year, dividend received from National Refinery Limited was Rs 449.81 million (2017: Rs 399.83
million), Attock Petroleum Limited was Rs 771.13 million (2017: Rs 725.77 million) and Attock Gen Limited was
Rs 598.64 million (2017: Rs 897.96 million).

15.4 The carrying value of investment in National Refinery Limited at June 30, 2018 is net of impairment loss of
Rs 2,390.72 million (2017: Rs 2,569.14) The carrying value is based on valuation analysis carried out by an
external investment advisor engaged by ARL. 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 average gross profit margin of 5.32% (2017: 4.10%), terminal growth rate of 3% (2017: 4%) and
weighted average cost of capital model based discount rate of 15.13% (2017: 11.67%).
 Annual Report 2018 181

2018 2017
Rs ‘000 Rs ‘000

16. LONG TERM LOANS AND DEPOSITS

Loans to employees - considered good - note 16.1
Employees 65,729 51,751
Executives 7,888 2,892
73,617 54,643

Amounts due within next twelve months shown

under current assets - note 21 (44,492) (31,895)
29,125 22,748
Security deposits 12,990 12,009
42,115 34,757

16.1 These are interest free loans for miscellaneous purposes and are recoverable in 24, 36, and 60 equal monthly
installments depending on case to case basis. These loans are secured against outstanding provident fund
balance or a third party guarantee. Receivable from executives of the Company 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 7.89 million (2017: Rs 6.26 million).

2018 2017
Rs ‘000 Rs ‘000

17. DEFERRED TAXATION

Temporary differences between accounting and tax base
of non-current assets and investment in associated companies (3,056,182) (3,241,602)
Unused tax losses and minimum taxes 2,878,403 1,957,378
Unused tax credit on investment - 444,065
Remeasurement loss on staff retirement benefit plans 171,088 131,918
Provisions 50,185 55,296
43,494 (652,945)

17.1 Movement of deferred tax asset

Balance as at July 1 (652,945) 654,124

Tax charge recognised in profit or loss 659,117 (1,321,601)

Tax charge related to subsidiary accounted for separately (1,848) (2,862)
657,269 (1,324,463)
Tax charge recognised in other comprehensive income 39,170 17,394
Balance as at June 30 43,494 (652,945)

17.2 The deferred tax asset recognised in the financial statements represents the management’s best estimate of
the potential benefit which is expected to be realized in the future years in the form of reduced tax liability as the
Company would be able to set off the tax liability in those years against minimum tax and unused tax loss against
the taxable profits of future years. Based on management’s assessment of future available taxable profits, the
182 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

carrying amount of deferred tax asset was reduced by an amount of Rs 155.43 million in respect of minimum tax
expiring as follows:

Tax year Rs ‘000

2019 154,890
2020 539

17.3 The carry amount of deferred tax asset was reduced by the amount of Rs 0.40 million in respect of minimum tax
expired during the current year.

2018 2017
Rs ‘000 Rs ‘000

18. STORES, SPARES AND LOOSE TOOLS

Stores (including items in transit Rs 537.31 million;
2017: Rs 327.807 million) 2,196,757 1,682,902
Spares 854,077 642,909
Loose tools 864 997
3,051,698 2,326,808
Less: Provision for slow moving items - note 18.1 145,950 133,533
2,905,748 2,193,275

18.1 Movement in provision for slow moving items

Balances at July 1 133,533 123,358
Provision for the year 12,417 10,175
Balances at June 30 145,950 133,533

19. STOCK-IN-TRADE
Crude oil 1,981,197 1,382,589
Semi-finished products 1,434,159 791,726
Finished products - note 19.2 6,373,641 3,538,029
Medical supplies 829 1,132
9,789,826 5,713,476

19.1 Stock-in-trade include stocks carried at net realisable value of Rs 5,688.51 million (2017: Rs 3,118.46 million).
Adjustments amounting to Rs 871.36 million (2017: Rs 553.63 million) have been made to closing inventory to
write down stocks to their net realisable value.

2018 2017
Rs ‘000 Rs ‘000

19.2 Napththa stock held by third parties

At National Refinery Limited 625,357 366,263
In transit 46,671 86,782
672,028 453,045

20. TRADE DEBTS - unsecured and considered good

20.1 Trade debts include amount receivable from associated companies Attock Petroleum Limited Rs 10,413 million
(2017: Rs 7,290 million) and Pakistan Oilfields Limited Rs 42 million (2017: Rs nil).
 Annual Report 2018 183

Age analysis of trade debts from associated companies, past due but not impaired.

2018 2017
Rs ‘000 Rs ‘000

0 to 6 months 3,649,697 3,883,005

6 to 12 months 3,074,531 1,243,505
Above 12 months - -
6,724,228 5,126,510

20.2 The maximum aggregate amount due from the related party at the end of any month during the year was
Rs 12,921.54 million (2017: Rs 9,339.53 million).

2018 2017
Rs ‘000 Rs ‘000

21. LOANS, ADVANCES, DEPOSITS, PREPAYMENTS

AND OTHER RECEIVABLES

LOANS AND ADVANCES - considered good

Current portion of long term loans to employees - note 16
Employees 37,736 5,801
Executives 6,756 26,094

44,492 31,895

Advances
Suppliers 50,078 64,084
Employees 4,702 4,085
54,780 68,169

99,272 100,064

DEPOSITS AND PREPAYMENTS

Trade deposits 286 286
Short term prepayments 151,471 112,150
151,757 112,436

OTHER RECEIVABLES - considered good

Due from associated companies
Attock Information Technology Services (Private) Limited 503 481
Attock Petroleum Limited 1,463,364 1,420,272
Attock Leisure and Management Associates (Private) Limited 12 12
Attock Gen Limited 398 446
Attock Cement Pakistan Limited 5 4
National Cleaner Production Centre Foundation 4,946 3,547
Capgas (Private) Limited 111 27
National Refinery Limited 3,087 3,726
Attock Sahara Foundation - 994
Income accrued on bank deposits 104,729 30,236
Sales tax receivable - 145,620
Workers’ Profit Participation Fund - note 21.1 20,000 -
Income tax refundable 16,040 15,952
Other receivables 24,419 25,084
1,637,614 1,646,401
1,888,643 1,858,901
184 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

21.1 Workers’ Profit Participation Fund

Balance as at July 1 (83,663) 56,950
Interest on fund utilised in Company’s business (5,673) -
Amount paid to the fund 109,336 153,050
Amount allocated for the year - note 29 and 34 - (293,663)
Balance as at June 30 20,000 (83,663)

21.2 The maximum aggregate amount due from the related party at the end of any month during the year was
Rs 1,473.62 million (2017: Rs 1,430.87 million).

Age analysis of other receivables from associated companies, past due but not impaired.

2018 2017
Rs ‘000 Rs ‘000

0 to 6 months 468,114 260,331

6 to 12 months 204,705 96,701
Above 12 months 798,892 1,072,316
1,471,711 1,429,348

22. SHORT TERM INVESTMENT

This represents investment in 3 months Government Treasury Bills bearing markup @ 6.24% (2017: nil %) per
annum.
2018 2017
Rs ‘000 Rs ‘000

23. CASH AND BANK BALANCES

Cash in hand (includes US $ 2,298; 2017: US $ 4,126) 1,472 1,428

With banks:

Local Currency
Current accounts 28,267 7,749
Deposit accounts - note 23.1, 23.2 and 23.3 8,015,069 8,883,105
Savings accounts 13,870,007 12,708,322

Foreign Currency
Saving accounts (US $ 471,502; 2017: US $ 471,502) 57,371 49,413
21,972,186 21,650,017

23.1 Deposit accounts include Rs nil (2017: Rs 2,883.11 million) placed in 90 days interest-bearing account consequent
to directives of the Ministry of Energy (Petroleum Division) on account of amounts withheld alongwith related
interest earned thereon net of withholding tax as referred to in note 11.1. Pursuant to same directives a Term
Deposit Receipt (TDR) amounting to Rs 3,005 million (2017: Rs nil) was initially placed in 12 months interest
bearing account with the term that allows the Company to opt for pre-mature encashment. The said TDR has
been encashed subsequent to the statement of financial position date.

23.2 Balances with banks include Rs 5,010 million (June 30, 2017: Rs 6,000 million) in respect of deposits placed on
90-days interest-bearing account.

23.3 Bank deposits of Rs 1,327.12 million (2017: Rs 1,327.20 million) were under lien with bank against a bank
guarantee issued on behalf of the Company.
 Annual Report 2018 185

23.4 Balances with banks include Rs 3.14 million (2017: Rs 2.42 million) in respect of security deposits received from
customers etc.

23.5 Interest/ mark-up earned on balances with banks ranged between 4.00% to 7.50% (2017: 3.75% to 7.25%) with
weighted average rate of 6.06% (2017: 6.10%) per annum.
2018 2017
Rs ‘000 Rs ‘000

24. GROSS SALES

Local sales 172,373,033 128,882,780
Naphtha export sales 7,049,572 10,608,323
Reimbursement due from the Government under import
parity pricing formula - note 24.1 7,950 24,848
179,430,555 139,515,951

24.1 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.
2018 2017
Rs ‘000 Rs ‘000

25. TAXES, DUTIES, LEVIES, DISCOUNTS AND PRICE DIFFERENTIAL

Sales tax 29,675,049 23,230,312
Petroleum development levy 15,488,407 11,873,201
Custom duties and other levies - note 25.1 3,569,384 2,360,571
Discounts 50,201 -
HSD price differential - note 25.2 - 4,848
PMG RON differential - note 25.3 1,050,949 635,227
49,833,990 38,104,159

25.1 This includes Rs 3,569.22 million (2017: Rs 2,360.37 million) recovered from customers and payable to the
Government of Pakistan (GoP) on account of custom duty on PMG and HSD. OGRA has approved the mechanism
for recovery of regulatory duty/ custom duty on November 16, 2017. The mechanism is yet to be implemented.

25.2 This represents amount payable to GoP on account of differential between import parity price of HSD and
import price of Pakistan State Oil Company Limited (PSO) relating to the period July 1 to July 3, 2016. After
commencement of production of Euro II compliant diesel by the Company with effect from July 4, 2016, this price
differential has ceased to arise.

25.3 This represents amount payable to GoP on account of differential between price of PSO’s imported 92 RON PMG
and 87/90 RON PMG sold by the Company during the year.
186 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

26. COST OF SALES

Opening stock of semi-finished products 791,726 571,674
Crude oil consumed - note 26.1 122,516,323 87,812,553
Transportation and handling charges 836,153 1,562,521
Salaries, wages and other benefits - note 26.2 1,084,525 1,013,863
Printing and stationery 4,030 3,945
Chemicals consumed 3,072,736 1,029,130
Fuel and power 3,209,026 2,662,637
Rent, rates and taxes 65,125 57,309
Telephone 2,065 3,298
Professional charges for technical services 6,482 5,829
Insurance 267,759 149,397
Repairs and maintenance (including stores and spares
consumed Rs 194.44 million; 2017: Rs 114.277 million) 501,571 515,146
Staff transport and traveling 16,689 13,333
Cost of receptacles 21,879 21,657
Research and development 6,682 8,255
Depreciation - note 13.4 2,542,227 2,042,846
134,944,998 97,473,393
Closing stock of semi-finished products (1,434,159) (791,726)
133,510,839 96,681,667

Opening stock of finished products 3,538,029 3,935,281

Closing stock of finished products (6,373,641) (3,538,029)
(2,835,612) 397,252
130,675,227 97,078,919

26.1 Crude oil consumed

Stock as at July 1 1,382,589 2,200,687
Purchases - note 26.1.1 123,114,931 86,994,455
124,497,520 89,195,142
Stock as at June 30 (1,981,197) (1,382,589)
122,516,323 87,812,553

Certain crude purchases have been recorded based on provisional prices notified by the Government and may
require adjustment in subsequent periods.

26.1.1 Crude oil purchases are net of Rs 209.29 million in respect of reversal of certain accrued charges related to
crude oil purchases for prior periods, considered to be no more payable based on finalization/settlement of the
related charges.

26.2 Salaries, wages and other benefits under cost of sales, administration expenses and distribution cost include
the Company’s contribution to the Pension and Gratuity Fund Rs 38.64 million (2017: Rs 45.41 million) and to the
Provident Fund Rs 34.17 million (2017: Rs 31.47 million).
 Annual Report 2018 187

2018 2017
Rs ‘000 Rs ‘000

27. ADMINISTRATION EXPENSES

Salaries, wages and other benefits - note 26.2 384,665 365,594
Board meeting fee 5,927 5,065
Transport, traveling and entertainment 19,987 17,470
Telephone 2,561 2,508
Electricity, gas and water 12,185 16,528
Printing and stationery 5,553 6,043
Auditor’s remuneration - note 27.1 5,640 6,399
Legal and professional charges 12,938 14,511
Repairs and maintenance 117,059 96,560
Subscription 23,541 13,742
Publicity 6,064 6,535
Scholarship scheme 3,415 2,855
Rent, rates and taxes 16,379 13,834
Insurance 827 914
Donations - note 27.2 and 27.3 540 586
Training expenses 1,538 2,315
Depreciation - note 13.4 26,301 23,564
645,120 595,023

27.1 Auditor’s remuneration

Annual audit 1,805 1,670
Review of half yearly financial information, audit of consolidated
financial statements, employee funds and special certifications 1,272 995
Tax services 2,043 3,516
Out of pocket expenses 520 218
5,640 6,399

27.2 Donation equal to/in excess of Rs 0.5 million includes donation made to Pakistan Foundation for Fighting
Blindness Rs 0.54 million (2017: Rs 0.54 million).

27.3 No director or his spouse had any interest in the donee institutions.
2018 2017
Rs ‘000 Rs ‘000

28. DISTRIBUTION COST

Salaries, wages and other benefits - note 26.2 32,032 32,403
Transport, traveling and entertainment 642 675
Telephone 312 271
Electricity, gas, fuel and water 2,294 3,601
Printing and stationery 64 47
Repairs and maintenance including packing and other stores consumed 10,041 7,847
Rent, rates and taxes 4,005 3,460
Depreciation - note 13.4 766 743
50,156 49,047
188 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

29. OTHER CHARGES

Provision for slow moving store items 12,417 10,175
Workers’ Profit Participation Fund - 192,485
Reversal of Workers’ Welfare Fund for prior years (118,688) -
(106,271) 202,660

30. OTHER INCOME

Income from financial assets
Income on bank deposits 1,198,793 903,956
Interest on delayed payments 517,453 295,223
Exchange gain (net) - note 30.1 - 7,067
1,716,246 1,206,246

Income from non-financial assets

Income from crude desalter operations - note 30.2 422 6,297
Insurance agency commission 1,671 1,110
Rental income 104,653 94,436
Sale of scrap 31,158 1,426
Profit on disposal of operating assets 7,761 7,196
Calibration charges 3,799 3,779
Handling and service charges 102,112 104,201
Penalties from carriage contractors 94 577
Miscellaneous - note 30.3 9,561 8,954
261,231 227,976
1,977,477 1,434,222

30.1 This is net of exchange loss of Rs nil (2017: Rs 31.25 million) on realization of Naphtha export proceeds.

2018 2017
Rs ‘000 Rs ‘000

30.2 Income from crude desalter operations

Income 73,779 92,448
Less: Operating costs
Salaries, wages and other benefits 2,302 2,624
Chemicals consumed 2,859 14,661
Fuel and power 45,684 53,538
Repairs and maintenance 22,512 15,328
73,357 86,151
422 6,297

30.3 This mainly includes income on account of laboratory services provided to different entities.
 Annual Report 2018 189

2018 2017
Rs ‘000 Rs ‘000

31. FINANCE COST

Exchange loss (net) - note 31.1 and 31.2 1,396,027 -
Interest on long term financing 1,523,002 1,527,118
Interest on Workers’ Profit Participation Fund 5,673 -
Bank and other charges 597 1,067
2,925,299 1,528,185
Finance cost capitalised - note 31.2 - (265,044)
2,925,299 1,263,141

31.1 This is net of exchange gain of Rs 25.27 million (2017: Rs nil) on realization of Naphtha export proceeds.

31.2 Exchange loss is net of Rs 178 million in respect of reversal of a provision made in prior period relating to
probable liability towards exchange loss, considered to be no more payable based on final settlement of the
related liability.

31.3 The effective interest rate used to determine the amount of financing costs is nill (2017: 7.82%).

2018 2017
Rs ‘000 Rs ‘000

32. TAXATION
Current
For the year - note 32.1 239,773 -
Prior years - note 32.2 (1,071,518) -
(831,745) -
Deferred (771,186) (42,111)
(1,602,931) (42,111)

32.1 This is net of tax credit on investment amounting to Rs 444.07 million (2017: Rs 662.92 million) under the
provisions of the Income Tax Ordinance, 2001.

32.2 Provision for income tax recorded by the Company for certain tax years has been partially written back in view
of favourable judgments of tax appellate authorities including those passed in Company’s own matter or in such
matters as are being contested by the Company.
2018 2017
Rs ‘000 Rs ‘000

32.3 Relationship between tax expense and accounting profit

(refinery operations)

Accounting (loss)/profit before taxation (2,615,489) 3,657,224

Tax at applicable tax rate of 30% (2017: 31%) (784,647) 1,133,739

Prior year adjustment (1,071,518) -
Tax effect of income taxable at special rates 100,240 175,756
Effect of tax credit on investment - (1,315,034)
Effect of lower tax rate for deferred taxation 130,774 (36,572)
Effect of change in tax rate (126,432) -
Deferred tax asset derecognized on minimum tax 154,371 -
Others (5,719) -
(1,602,931) (42,111)
190 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

32.4 The Company computes tax based on the generally accepted interpretations of the tax laws to ensure that the
sufficient provision for the purpose of taxation is available which can be analysed as follows:

Tax year Provision for taxation Tax assessed Excess / (deficit)

2017 870,969 769,327 101,642

2016 345,969 423,256 (77,287)
2015 882,453 784,949 97,504

“Tax assessed” represents liability assessed or deemed to be assessed by Tax Authorities. Further, for prior
tax years the Tax Authorities and Company are contesting their respective view points at various fora. After due
consideration of related matters, adequate tax provision is being maintained in respect of the matters pending
at various assessment/appellate fora and same shall be subject to final adjustment upon culmination of related
proceedings.

33. INTEREST IN SUBSIDIARY

Attock Hospital (Private) Limited (AHL) is ARL’s wholly owned subsidiary with principal activities of provision of
medical services to the Attock Group employees as well as private patients. Unless otherwise stated, it has share
capital consisting solely of ordinary shares that are held directly by ARL. AHL was incorporated in Pakistan which
is also its principal place of business. There are no significant restrictions on Company’s ability to use assets, or
settle liabilities of Attock Hospital (Private) Limited.

33.1 Following is the summarised financial information of AHL. The amounts disclosed are before inter-company
eliminations:
2018 2017
Rs ‘000 Rs ‘000

Summarised statement of financial position

Current assets 38,518 41,272
Non- current assets 19,457 16,138
Current liabilities (45,732) (49,401)
Net assets 12,243 8,009

Summarised statements of other comprehensive income

Revenue - note 33.2 145,779 148,449
Expenses and taxation - note 33.2 136,622 126,467

Profit for the year 10,035 21,982

Other comprehensive loss (5,802) (4,014)

Total comprehensive income for the year 4,233 17,968

Summarised statement of cash flows

Cash flow from operating activities 3,510 13,828
Cash flow from investing activities (5,746) 9
Cash flow from financing activities - -
(2,236) 13,837
 Annual Report 2018 191

33.2 The revenue includes amount billed by AHL to ARL amounting to Rs 75.29 million (2017: Rs 74.39 million) and
operating expenses include Rs 13.59 million (2017: 12.53 million) billed by ARL to AHL, which have not been
eliminated from revenue and expenses. It is considered that this gives a fairer view of the operating results of
ARL since profit from refinery operation are separately presented.

34. SHARE IN PROFIT OF ASSOCIATED COMPANIES

Share in profits of associated companies is based on the audited financial statements of the associated companies
for the year ended June 30, 2018 and has been reflected net of taxation, applicable charges in respect of Workers’
Profit Participation Fund and Workers’ Welfare Fund. Taxation is based on presumptive tax rate applicable to
dividend income from associated companies.
2018 2017
Rs ‘000 Rs ‘000

35. EARNINGS PER SHARE - BASIC AND DILUTED

(Loss) / profit after taxation from refinery operations (1,012,558) 3,699,335
Profit after taxation from non-refinery operations 2,401,306 3,715,479
1,388,748 7,414,814

Weighted average number of fully paid ordinary shares (‘000) 85,293 85,293

(Loss) earnings per share - Basic and diluted (Rs)

Refinery operations (11.87) 43.37
Non-refinery operations 28.15 43.56
16.28 86.93

36. EMPLOYEES’ DEFINED BENEFIT PLANS

The latest actuarial valuation of the employees’ defined benefit plans was conducted at June 30, 2018 using the
projected unit credit method. Details of the defined benefit plans are:

Funded pension Funded gratuity

2018 2017 2018 2017
Rs ‘000 Rs ‘000

a) The amounts recognised in the statement of

financial position:
Present value of defined benefit obligations 1,060,600 928,339 566,829 533,769
Fair value of plan assets (921,777) (905,145) (457,135) (465,890)
Net liability 138,823 23,194 109,694 67,879

b) The amounts recognised in the statement of

profit or loss:
Current service cost 19,568 17,679 16,955 15,013
Net interest cost 1,731 14,407 5,109 3,191
21,299 32,086 22,064 18,204
192 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

Funded pension Funded gratuity

2018 2017 2018 2017
Rs ‘000 Rs ‘000

c) Movement in the present value of defined

benefit obligation:
Present value of defined benefit obligation as at July 1 928,339 857,971 533,771 493,550
Current service cost 19,568 17,679 16,955 15,013
Interest cost 71,826 62,044 39,542 33,997
Benefits paid (49,179) (41,797) (65,711) (78,582)
Benefits payable to outgoing member - - - (1,730)
Remeasurement loss/(gain) of defined
benefit obligation 90,046 32,442 42,272 71,521
Present value of defined benefit
obligation as at June 30 1,060,600 928,339 566,829 533,769

d) Movement in the fair value of plan assets:

Fair value of plan assets as at July 1 905,145 652,305 465,890 446,344
Expected return on plan assets 70,095 47,637 34,433 30,806
Contributions 25,810 209,245 34,859 60,824
Benefits paid (49,179) (41,797) (65,711) (78,582)
Benefits payable to outgoing member (30,094) - (12,336) (1,730)
Remeasurement gain/(loss) of plan assets - 37,755 - 8,228
Fair value of plan assets as at June 30 921,777 905,145 457,135 465,890

Actual return on plan assets 40,000 85,392 22,096 39,034

The Company expects to contribute Rs 62 million (2017-18: Rs 124 million) to its defined benefit pension and
gratuity plans during 2018 - 2019.
Funded pension Funded gratuity
2018 2017 2018 2017
Rs ‘000 Rs ‘000

e) Plan assets comprise of:

Investment in equity securities 300,278 293,167 17 17
Investment in mutual funds 259,765 284,500 128,899 137,309
Deposits with banks 56,474 77,269 55,319 41,502
Debt instruments 1,378,551 1,296,109 785,269 806,000
Benefits due - - - (1,730)
Share of asset of related parties (1,073,291) (1,045,900) (512,369) (517,208)
921,777 905,145 457,135 465,890

f) The expected return on plan assets is based on the market expectations and depend upon the asset portfolio of
the Funds, at the beginning of the year, for returns over the entire life of the related obligations.
 Annual Report 2018 193

Funded pension Funded gratuity

2018 2017 2018 2017
Rs ‘000 Rs ‘000

g) Remeasurement recognised in OCI:

Remeasurement (loss)/gain on obligation
(Loss)/gain due to change in:
Financial assumptions 28,884 (28,383) 6,169 (85)
Experience adjustments (118,930) (4,059) (48,442) (71,436)
(90,046) (32,442) (42,273) (71,521)
Remeasurement (loss)/gain on plan assets (30,094) 37,755 (12,336) 8,228
(120,140) 5,313 (54,609) (63,293)

h) Principal actuarial assumptions used in the

actuarial valuation are as follows:
Discount rate 9.00% 7.75% 9.00% 7.75%
Expected return on plan assets 9.00% 7.75% 9.00% 7.75%
Future salary increases 8.00% 7.00% 8.00% 7.00%
Future pension increases 3.50% 2.50% N/A N/A
Demographic assumptions
Rates of employee turnover
Management Low Low Low Low
Non-management Nil Nil Nil Nil
Mortality rates (pre-retirement) SLIC (2001 SLIC (2001 SLIC (2001 SLIC (2001
-05)-1 year -05)-1 year -05)-1 year -05)-1 year
Mortality rates (post retirement) SLIC (2001 SLIC (2001 N/A N/A
-05)-1 year -05)-1 year

i) Sensitivity Analysis:
The calculation of defined benefit obligation is sensitive to assumptions set out above. The following table
summarizes how the impact on the defined benefit obligation at the end of the reporting period would have
increased/ (decreased) as a result of a change in respective assumptions by one percent.

Effect of Effect of
1 percent 1 percent
increase decrease
Rs ‘000 Rs ‘000

Discount rate 1,459,845 1,768,039

Future salary growth 1,669,142 1,560,573
Pension increase 1,715,371 1,534,314

If the life expectancy increase/decreases by 1 year, the impact on defined benefit obligation would be Rs 9.50
million.

The above sensitivity analysis are based on the changes in assumptions while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When
calculating the sensitivity of defined benefit obligation to significant assumptions the same method (present
value of the defined benefit obligation calculated with the projected credit unit method at the end of the reporting
period) has been applied when calculating the liability recognized within the statement of financial position.
194 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

j) Projected benefit payments from fund are as follows:

Pension Gratuity
Rs ‘000

FY 2018 25,977 87,401

FY 2019 54,256 148,526
FY 2020 58,948 89,166
FY 2021 63,551 67,943
FY 2022 68,078 86,576
FY 2023-27 449,449 265,271

k) The weighted average number of years of defined benefit obligation is given below:
Pension Gratuity
Years

Plan Duration
June 30, 2018 11.54 4.15
June 30, 2017 11.76 4.27

l) The Company contributes to the gratuity and pension funds on the advice of the fund’s actuary. The contributions
are equal to the current service cost with adjustment for any deficit.

37. DEFINED CONTRIBUTION PLAN

Details of the provident funds based on un audited financial statements for the year ended June 30, 2018 are as
follows:

2018 2017
Rs ‘000 Rs ‘000

Staff provident fund

Size of the fund 475,194 447,597
Cost of investments made 402,195 327,306
Fair value of investments made 469,920 444,191
%age of investments made 99% 99%

2018 2017
Rs ‘000 %age Rs ‘000 %age

Breakup of investment - at cost

Shares 28,761 7% 24,764 8%
Mutual Funds 58,177 14% 20,897 6%
Bank deposits 55,115 14% 32,672 10%
Term deposits 260,142 65% 248,973 76%
402,195 100% 327,306 100%
 Annual Report 2018 195

2018 2017
Rs ‘000 Rs ‘000

General Staff Provident Fund

Size of the fund 564,537 592,279
Cost of investments made 516,200 486,075
Fair value of investments made 554,956 586,076
%age of investments made 98% 99%

2018 2017
Rs ‘000 %age Rs ‘000 %age

Breakup of investment - at cost

Shares 20,806 4% 18,389 4%
Mutual Funds 81,085 16% 26,135 5%
Bank deposits 40,476 8% 26,144 5%
Term deposits 373,833 72% 415,407 86%
516,200 100% 486,075 100%

The investments out of provident fund have been made in accordance with the provisions of Section 218 of the
Companies Act, 2017 and the rules formulated for this purpose.

38. 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:
2018 2017
Rs ‘000 Rs ‘000

High Speed Diesel 66,499,887 52,813,387

Jet Petroleum 60,005,438 9,819,224
Motor Gasoline 12,565,554 36,648,005
Furnace Fuel Oil 22,097,005 22,164,987
Naphtha 7,993,626 11,352,259
Others 10,269,045 6,718,089
179,430,555 139,515,951
Less: Taxes, duties, levies and price differential 49,833,990 38,104,159
129,596,565 101,411,792

Revenue from four major customers of the Company constitute 84% (2017: 85%) of total revenue during the year.

39. RELATED PARTY TRANSACTIONS

39.1 Attock Oil Company Limited holds 61.01% (2017: 61.01%) shares of ARL at the year end. Therefore, all subsidiaries
and associated undertakings of Attock Oil Company Limited are related parties of ARL. 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 from and due to these undertakings are shown under receivables and payables. The remuneration of Chief
Executive, directors and executives is disclosed in note 40 to the consolidated financial statements.
196 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

Associated companies

Pakistan Oilfields Limited

Purchase of crude oil 15,071,353 9,050,827
Purchase of gas 3,779 9,874
Purchase of services 6,470 6,302
Sale of petroleum products 116,936 96,562
Sale of services 29,100 28,132

Attock Petroleum Limited

Sale of petroleum products 43,912,012 29,761,914
Sale of services 94,770 104,656
Purchase of petroleum products 2,289 2,123
Purchase of services 132,569 230,225
Dividend paid 8,592 7,160
Dividend received 771,126 725,766
Interest income on delayed payments 517,453 295,223

National Refinery Limited

Purchase of services 104,620 156,972
Sale of services 126 131
Dividend received 449,812 399,833

Attock Cement Pakistan Limited

Purchase of services 302 792
Sale of services 12 19

Attock Gen Limited

Sale of petroleum products 1,232 1,103
Land lease income 26,399 25,467
Storage tank lease income 18,881 15,385
Dividend received 598,637 897,955
Income from other services and facilities provided to AGL 20,380 19,791

National Cleaner Production Centre Foundation

Purchase of services 5,914 2,396
Sale of services 20,442 17,177
Sale of petroleum products 94 -

Attock Information Technology Services (Private) Limited

Purchase of services 48,156 43,224
Sales of petroleum products 265 244
Sale of services 4,376 4,164

Capgas (Private) Limited

Sale of services 590 570

Attock Leisure & Management Associates (Private) Limited

Sales of services 50 309

Attock Sahara Foundation

Purchases of services 11,961 8,053
Sales of services 1,697 684
 Annual Report 2018 197

2018 2017
Rs ‘000 Rs ‘000

Holding Company

Attock Oil Company Limited

Purchase of crude oil 401,879 111,855
Purchase of services 398,316 77,086
Sale of services 25,537 25,156
Dividend paid 312,235 260,196

Other related parties

Remuneration of Chief Executive and key management

personnel including benefits and perquisites 165,241 142,308

Dividend paid to Chief Executive and key management personnel 1,364 1,148
Directors Fees 5,927 5,065
Contribution to staff retirement benefits plans
Staff Pension Fund 25,810 209,245
Staff Gratuity Fund 34,859 60,824
Staff Provident Fund 35,699 32,794

Contribution to Workers’ Profit Participation Fund - 293,663

39.2 Following are the related parties with whom the Company had entered into transactions or have arrangement/
agreement in place.
Aggregate %
Sr. No. Company Name Basis of association of shareholding

1 The Attock Oil Company Limited

(Incorporated in UK -Pakistan Branch Office) Holding Company 61.01%
2 National Refinery Limited Associated Company 25.00%
3 Attock Petroleum Limited Associated Company 21.88%
4 Attock Gen Limited Associated Company 30.00%
5 Attock Information Technology Services
(Private) Limited Associated Company 10.00%
6 Pakistan Oilfields Limited Associated Company Nil
7 Attock Cement Pakistan Limited Associated Company Nil
8 National Cleaner Production Centre Foundation Associated Company Nil
9 Attock Leisure & Management Associates
(Private) Limited Associated Company Nil
10 Attock Solar (Private) Limited Associated Company Nil
11 Attock Hospital (Private) Limited Wholly owned Subsidiary 100.00%
198 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

39.3 Associated Companies incorporated outside Pakistan with whom the Company had entered into transaction or
had agreements are as follows:

Name of undertaking The Attock Oil Company Limited

Registered address 4, Swan Street Manchester England M4 5JN
Country of incorporation United Kingdom
Basis of association Parent company
Aggregate %age of shareholding 61.01%
Chief executive officer Shuaib A. Malik
Operational status Private Limited Company
Auditor’s opinion on latest available financial statements Unqualified opinion

40. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amounts charged in the accounts for remuneration, including benefits and perquisites, were as
follows:
Chief Executive Executives
2018 2017 2018 2017
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

Managerial remuneration/honorarium 8,951 7,464 57,400 50,534

Bonus 4,375 3,572 24,609 20,673
Company’s contribution to Provident,
Pension and Gratuity Funds - - 13,097 10,005
Housing and utilities 6,324 5,573 46,663 43,719
Leave passage 1,250 1,134 6,516 4,957

20,900 17,743 148,285 129,888

Less: charged to Attock Gen Limited (3,945) (5,323) - -

16,955 12,420 148,285 129,888

No of person(s) 1 1 24 23

* Comparative figures have been restated to reflect changes in the defintion of executive as per Companies
Act, 2017.

40.1 In addition to above, the Chief Executive and 19 (2017: 19) executives were provided with limited use of the
Company’s cars. The Chief Executive and all executives were provided with medical facilities. Limited residential
telephone facility was also provided to the Chief Executive and 21 (2017: 21) executives. Gratuity and pension is
payable to the Chief Executive in accordance with the terms of employment while contributions for executives in
respect of gratuity and pension are based on actuarial valuation. Leave passage is paid to Chief Executive and all
executives in accordance with the terms of employment.

40.2 In addition, meeting fee based on actual attendance was paid to 5 (2017: 5) non-executive directors Rs 3.75
million (2017: Rs 2.99 million), Chief Executive Rs 0.77 million (2017: Rs 0.69 million) and 2 (2017: 2) alternate
directors Rs 1.40 million (2017: Rs 1.39 million) of the Company.
 Annual Report 2018 199

2018 2017
Rs ‘000 Rs ‘000

41. FINANCIAL INSTRUMENTS

41.1 Financial assets and liabilities
Financial assets :
Loans and receivables
Maturity upto one year
Trade debts 15,748,306 10,678,578
Loans, advances, deposits & other receivables 1,687,094 1,521,095
Short term invesments 985,846 -
Cash and bank balances
Foreign currency - US $ 57,371 49,413
Local currency 21,914,815 21,600,604
Maturity after one year
Long term loans and deposits 42,115 34,757
40,435,547 33,884,447

Financial liabilities :

Other financial liabilities

Maturity upto one year
Trade and other payables 31,198,064 21,316,758
Unclaimed dividends 9,839 8,898
Long term borrowings 2,200,000 2,200,000
Accrued mark-up on long term financing 260,909 338,226
Maturity after one year
Long term borrowings 12,642,916 17,672,166
46,311,728 41,536,048

41.2 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.
200 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018
2018 2017
Rating Rs ‘000 Rs ‘000

Trade debts
Counterparties with external credit rating A 1+ 2,829,141 1,559,007

Counterparties without external credit rating

Due from associated companies 10,455,088 7,289,726
Others * 2,464,077 1,829,812
15,748,306 10,678,545

Loans, advances, deposits and other receivables

Counterparties without external credit rating 1,729,209 1,555,852

Short term investments

Counterparties with external credit rating A 1+ 985,846 -

Bank balances
Counterparties with external credit rating
A 1+ 20,227,914 21,593,157
A1 756,954 55,432
20,984,868 21,648,589

* These balances represent receivable from oil marketing companies and defence agencies.

41.3 Financial risk management

41.3.1 Financial risk factors

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk
(including currency risk, interest rate risk and price risk). The Company’s overall risk management policy focuses
on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s
financial performance. The Board of Directors has overall responsibility for the establishment and oversight of
the Company’s risk management framework. The Board is also responsible for developing and monitoring the
Company’s risk management policies.

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, 2018, trade debts of Rs 6,726,007 thousand (2017: Rs 5,128,753 thousand) were past due but not
impaired. The ageing analysis of these trade receivables is as follows:
2018 2017
Rs ‘000 Rs ‘000

0 to 6 months 3,651,382 3,885,179

6 to 12 months 3,074,531 1,243,505
Above 12 months 94 69
6,726,007 5,128,753

Based on past experience, the management believes that no impairment allowance is necessary in respect of
bad debts.
 Annual Report 2018 201

b) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company’s reputation. The Company uses different methods which assists it
in monitoring cash flow requirements and optimizing its cash return on investments. Typically the Company
ensures that it has sufficient cash on demand to meet expected operational expenses for a reasonable period,
including the servicing of financial obligation; this excludes the potential impact of extreme circumstances that
cannot reasonably be predicted, such as natural disasters. In addition, the Company maintains lines of credit as
mentioned in note 11 to the financial statements.

The table below analysis the contractual maturities of the Company’s financial liabilities into relevant maturity
groupings based on the remaining period at the consolidated statement of financial position date to the maturity
date. The amounts disclosed in the table are undiscounted cash flows.

Carrying Contractual Less than Above

amount cash flows 1 Year 1 year
Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

At June 30, 2018

Long term financing 12,642,916 5,200,000 2,200,000 13,050,000
Trade and other payables 31,198,064 31,198,064 31,198,064 -

At June 30, 2017

Long term financing 17,672,166 3,650,000 550,000 18,250,000
Trade and other payables 21,316,758 21,316,758 21,316,758 -

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at
significantly different amounts.

c) Market risk
Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market
interest rates or the market price due to change in credit rating of the issuer or the instrument, change in market
sentiments, speculative activities, supply and demand of securities and liquidity in the market. The Company
incurs financial liabilities to manage its market risk. All such activities are carried out with the approval of the
Board. The Company is exposed to interest rate risk, currency risk and market price 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 57
million (2017: Rs 49 million) and financial liabilities include Rs 3,275 million (2017: Rs 3,093 million) which were
subject to currency risk.

2018 2017

Rupees per USD

Average rate 109.98 104.62
Reporting date mid point rate 121.60 105.00
202 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018

Sensitivity analysis
At June 30, 2018, 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 225 million (2017: Rs 210 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. The Company has no long term interest bearing financial
assets whose fair value or future cash flows will fluctuate because of changes in market interest rates. Financial
assets and liabilities include balances of Rs 14,926 million (2017: Rs 21,641 million) and Rs 17,956 million (2017:
Rs 22,817 million) respectively, which are subject to interest rate risk. Applicable interest rates for financial
assets and liabilities have been indicated in respective notes.

Sensitivity analysis
At June 30, 2018, if interest rates had been 1% higher/ lower with all other variables held constant, profit after
tax for the year would have been Rs 21 million (2017: Rs 8 million) higher/ lower, mainly as a result of higher/
lower interest income/ expense from these financial assets and liabilities.

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 from interest rate risk or currency risk), whether
those changes are caused by factors specific to the individual financial instrument or its issuer, or factors
affecting all similar financial instruments traded in the market.

At the year end the Company is not exposed to price risk since there are no financial instruments, whose fair
value or future cash flows will fluctuate because of changes in market prices.

41.3.2 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.

As mentioned in note - 9.1, the Company is subject to pricing formula whereby profits after tax from refinery
operations in excess of 50% of the paid up capital as of July 1, 2002 are transferred to special reserve and can
only be utilized to offset against any future losses or to make investment for expansion or upgradation and is
therefore not available for distribution.

41.4 Fair value of financial assets and liabilities

The carrying values of financial assets and liabilities approximate their fair value.

42. FAIR VALUE HIERARCHY

Fair value of land

Valuation of the freehold land owned by the Company was valued by independent valuers to determine the fair
value of the land as at June 30, 2017. The revaluation surplus was credited to other comprehensive income and
is shown as ‘surplus on revaluation of freehold land’. The different levels have been defined as follows:

- Level 1
Quoted prices (unadjusted) in active market for identical assets/ liabilities.
 Annual Report 2018 203

- Level 2
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices).

- Level 3
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

Fair value of land has been determined using level 2 fair values under following valuation technique.

Level 2 fair value of land has been derived using the sales comparison approach. Sales prices of comparable land
in close proximity are adjusted for differences in key attributes such as property size. The most significant input
into this valuation approach is price per square foot.
2018 2017
Rs ‘000 Rs ‘000

43. CASH GENERATED FROM OPERATIONS

Profit before taxation 135,649 8,847,692

Adjustments for:
Depreciation 2,570,824 2,068,369
Gain on disposal of property, plant and equipment (7,761) (7,196)
Provision for slow moving, obsolete and in transit stores 12,417 10,175
Workers Profit Participation Fund - 192,485
Workers’ Welfare Fund (118,318) 460
Interest income (1,199,671) (904,513)
Finance cost (net) 2,925,299 1,263,141
Effect of exchange rate changes (7,861) (142)
Interest on delayed payments (517,453) (295,223)
Share of profit in associates (2,552,958) (3,903,552)
Impairment reversal on investment in associated company (178,420) (1,254,835)
1,061,747 6,016,861
Working capital changes
(Increase)/decrease in current assets:
Stores, spares and loose tools (724,890) (388,041)
Stock-in-trade (4,076,349) 994,851
Trade debts (5,051,790) (3,722,664)
Loans, advances, deposits, prepayments and other receivables 582,406 27,651
(9,270,623) (3,088,203)

Increase/(decrease) in current liabilities:

Trade and other payables 16,349,611 4,914,921
Cash generated from operations
Payments of WPPF and WWF (103,663) (153,050)
Income taxes paid (680,398) (519,893)
(784,061) (672,943)
Net cash from operating activities 7,356,674 7,170,636
204 Leveraging HR to Achieve Excellence

Notes to and Forming Part of the

Consolidated Financial Statements
For the year ended June 30, 2018
2018 2017
Rs ‘000 Rs ‘000

44. CASH AND CASH EQUIVALENTS

Cash and bank balances 21,962,186 21,650,017
Short term investments 995,846 -
22,958,032 21,650,017

45. DISCLOSURE FOR ALL SHARES ISLAMIC INDEX

Following information has been disclosed with reference to circular no. 29 of 2016 dated September 5, 2016,
issued by the Securities and Exchange Commission of Pakistan relating to “All Shares Islamic Index”.
Description Explanation

i) Loans and advances obtained as

per islamic mode Disclosed in note 10

ii) Deposits Non-interest bearing

iii) Segment revenue Disclosed in note 38

iv) Relationship with banks having Islamic Following is the list of banks with which the
windows Company has a relationship with Islamic window
of operations:
1. Meezan Bank Limited
2. Al-Baraka Bank (Pakistan) Limited
3. Dubai Islamic Bank

v) Short term investment As at June 30, 2018 Rs ‘000

Placed under interest arrangement 995,847

vi) Bank balances As at June 30, 2018

Placed under interest arrangement 18,157,097
Placed under Shariah permissible arrangement 808,240
18,965,337

vii) Income on bank deposits including For the year ended June 30, 2018
income accrued as at reporting date Placed under interest arrangement 2,062,879
Placed under Shariah permissible arrangement 13,452
2,076,331

vii) Interest paid including accrued as at For the year ended June 30, 2018
reporting date Placed under interest arrangement 1,147,444
Placed under Shariah permissible arrangement 375,558
1,523,002

viii) All sources of other income Disclosed in note 30.3

ix) Exchange gain Earned from actual currency

Disclosures other than above are not applicable to the Company.

 Annual Report 2018 205

46. GENERAL

46.1 Capacity and production

Against the designed annual refining capacity of US barrels 18.690 million (2017: 18.690 million) the actual
throughput during the year was US barrels 17.552 million (2017: 17.103 million).

2018 2017

46.2 Number of employees

Number of employees at June 30

Permanent 654 616
Contract 325 363
979 979

This includes 617 (2017: 625) number of factory employees

Average number of employees for the year

Permanent 623 582
Contract 353 403
976 985

This includes 620 (2017: 629) number of factory employees

46.3 Non-adjusting event after the statement of financial position date

The Board of Directors in its meeting held on August 14, 2018 has proposed an issue of bonus shares in the
proportion of one (2017: nil) share for every four (2017: nil) shares held i.e. 25% (2017: nil) out of unappropriated
profits and a final cash dividend for the year ended June 30, 2018 @ Rs nil (2017 @ Rs 6.00 per share), amounting
to Rs nil (2017: Rs 511,758 thousand) for approval of the members in the annual general meeting to be held on
September 25, 2018.

46.4 Unavailed credit facilities

The Company has entered into an arrangement with banks for obtaining Letter of Credit facility to import
chemical, spare parts and other materials upto a maximum of Rs 3,228.00 million (2017: Rs 3,228.00 million).
The facility is secured against lien on shipping documents. The unavailed facility at June 30, 2018 was Rs 1,784.95
million (2017: Rs 1,705.14 million). The facilities will expire on various dates after June 30, 2018.

46.5 Rounding off

Figures have been rounded off to the nearest thousand of rupees unless otherwise stated.

47. DATE OF AUTHORISATION

These consolidated financial statements have been authorised for issue by the Board of Directors of the Company
on August 14, 2018.

– Sd – – Sd – – Sd –
Syed Asad Abbas M. Adil Khattak Abdus Sattar
Chief Financial Officer Chief Executive Officer Director
206 Leveraging HR to Achieve Excellence

Notice of Annual General Meeting

Notice is hereby given that the 40th Annual General Meeting of the Company will be held at Attock House, Morgah,
Rawalpindi on Tuesday, September 25, 2018 at 11:45 a.m. to transact the following business:

ORDINARY BUSINESS:
1. To confirm the minutes of the Twentieth (20th) Extra-Ordinary General Meeting held on July 16, 2018.
2. To receive, consider and approve the audited financial statements of the Company together with Directors’ and
Auditor’s Reports for the year ended June 30, 2018.
3. To appoint auditors for the year ending on June 30, 2019 and fix their remuneration.
4. To transact such other business as may be placed before the meeting with the permission of the Chairman.

SPECIAL BUSINESS:
5. To consider and, if thought fit, to pass the following Resolution as an ordinary resolution:

“Resolved:
a) that a sum of Rs. 213,232,500 out of profits of the Company available for appropriation as at June 30, 2018, be
capitalized and applied for issue of 21,323,250 ordinary shares of Rs. 10 each allotted as fully paid bonus shares to the
members of the Company, whose names appear on the register of members as at close of business on September
18, 2018, in the proportion of one (1) new share for every four (4) shares held;

b) that the bonus shares so allotted shall rank pari passu in every respect with the existing shares;

c) that the members entitled to fractions of a share shall be given sale proceeds of their fractional entitlement for which
purpose the fractions shall be consolidated into whole shares and sold in the stock market; and

d) that the Company Secretary be authorised and empowered to give effect to this resolution and to do or cause to do
all acts, deeds and things that may be necessary or required for issue, allotment and distribution of bonus shares
or payment of the sale proceeds of the fractions. In the case of non-resident member(s), the Secretary is further
authorised to issue/export the bonus shares after fulfilling the statutory requirements.”

By Order of the Board

– Sd –
Registered Office: Saif-ur-Rehman Mirza
The Refinery, Company Secretary
Morgah, Rawalpindi
September 4, 2018
 Annual Report 2018 207

NOTES:

i. A member may appoint a proxy to attend and vote on his / her behalf. Proxies in order to be effective must be received
at the Registered Office of the Company duly stamped and signed not less than 48 hours before the meeting.

ii. In case of individuals, the account holders or sub-account holders and/or the persons whose securities are in group
account and their registration details are uploaded as per the regulations, shall authenticate their identity by showing
their original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting.

iii. In case of corporate entities, the Board of Directors’ resolution/power of attorney with specimen signature of the
nominees shall be produced (unless it has been provided earlier) at the time of the meeting.

FOR APPOINTING PROXIES:

i. In case of individuals, the account holders or sub-account holders and/or the persons whose securities are in group
account and their registration details are uploaded as per the regulations, shall submit the proxy form as per the
above requirements.

ii. The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned
on the form.

iii. Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form.

iv. The proxies shall produce their original CNIC or original passport at the time of meeting.

v. In case of corporate entities, the Board of Directors’ resolution/power of attorney with specimen signature of the
person nominated to represent and vote on behalf of the corporate entity, shall be submitted (unless it has been
provided earlier) along with proxy form to the Company.
208 Leveraging HR to Achieve Excellence

DEDUCTION OF INCOME TAX FOR FILER AND NON FILER:

Currently Section 150 of the Income Tax Ordinance, 2001 prescribed following rates for deduction of withholding tax on the
amount of dividend paid by the companies:

1. Rate of tax deduction for filer of income tax returns 15%

2. Rate of tax deduction for non-filer of income tax returns 20%

In case of Joint account, each holder is to be treated individually as either a filer or non-filer and tax will be deducted on
the basis of shareholding of each joint holder as may be notified by the shareholder, in writing as follows, to our Share
Registrar, or if no notification, each joint holder shall be assumed to have an equal number of shares.

Principal Shareholder Joint Shareholder

Company Folio/CDS Total Shareholding Shareholding
Name & Name &
Name Account No. Shares proportion (No. of proportion (No. of
CNIC No. Shares) CNIC No. Shares)

The CNIC number/NTN details are now mandatory and are required for checking the tax status as per the Active Taxpayers
List (ATL) issued by Federal Board of Revenue (FBR) from time to time.

EXEMPTION FROM DEDUCTION OF INCOME TAX / ZAKAT:

Members seeking exemption from deduction of income tax or are eligible for deduction at a reduced rate, are requested
to submit a valid tax exemption certificate or necessary documentary evidence as the case may be. Members desiring
non-deduction of zakat are also requested to submit a valid declaration for non-deduction of zakat.

CLOSURE OF SHARE TRANSFER BOOKS:

The share transfer books of the Company will remain closed and no transfer of shares will be accepted for registration
from September 19, 2018 to September 25, 2018 (both days inclusive). Transfers received in order at the Shares Registrar
Department of M/s Central Depository Company of Pakistan Limited, CDC House, 99-B, Block ‘B’, S.M.C.H.S., Main
Shahra-e-Faisal, Karachi-74400, Pakistan at the close of business on September 18, 2018 will be treated in time for the
purpose of entitlement of bonus shares, if approved by the shareholders.

TRANSMISSION OF ANNUAL REPORTS THROUGH E-MAIL:

The SECP vide SRO 787 (1)/2014 dated September 08, 2014 has provided an option for shareholders to receive audited
financial statements along with notice of Annual General Meeting electronically through email. Hence, members who are
interested in receiving the annual reports and notice of Annual General Meeting electronically in future are requested
to send their email addresses on the consent form placed on the Company’s website [Link] to the Company’s
Share Registrar. The Company shall, however additionally provide hard copies of the annual report to such members, on
request, free of cost.

CONSENT FOR VIDEO CONFERENCE FACILITY:

In accordance with Section 132(2) of the Companies Act, 2017 if the Company receives consent from members holding
in aggregate 10% or more shareholding residing in a geographical location to participate in the meeting through video
conference at least 7 days prior to the date of Annual General Meeting, the Company will arrange video conference facility
in that city subject to availability of such facility in that city. To avail this facility a request is to be submitted to the Company
Secretary of the Company on given address:

“ The Company Secretary, Attock Refinery Limited, Refinery Post Office, Morgah, Rawalpindi.”
 Annual Report 2018 209

CHANGE OF ADDRESS:
Members are requested to promptly notify any change of address to the Company’s Share Registrar.

AVAILABILITY OF AUDITED FINANCIAL STATEMENTS ON COMPANY’S WEBSITE:

The audited financial statements of the Company for the year ended June 30, 2018 have been made available on the
Company’s website [Link] in addition to annual and quarterly financial statements for the prior years.

PAYMENT OF DIVIDEND THROUGH ELECTRONIC MODE (MANDATORY):

Under the provisions of Section 242 of the Companies Act, 2017, it is mandatory for a listed company to pay cash dividend
to its shareholders only through electronic mode directly into bank account designated by the entitled shareholders. In
order to receive dividend directly into their bank account, shareholders are requested to fill in E-Dividend Form available
on Company’s website i.e. [Link] and send the duly signed Form along with a copy of CNIC to the Share Registrar
of the Company, M/s Central Depository Company of Pakistan Limited, Share Registrar Department, CDC House, 99-B,
Block ‘B’, S.M.C.H.S., Main Shahra-e-Faisal, Karachi-74400, Pakistan, in case of physical shares. In case shares are
held in CDC then E-Dividend Form must be submitted directly to shareholder’s broker/ participant/ CDC account services.
In the absence of bank account details or in case of incomplete details, the Company will be constrained to withhold the
payment of cash dividend of those shareholders who have not provided the same.

STATEMENT UNDER SECTION 134 (3) OF THE COMPANIES ACT, 2017

Issue of Bonus Shares:
The Directors are of the view that with the existing profitability, the Company’s financial position justifies capitalization
of Rs. 213,232,500 out of profits available for appropriation as at June 30, 2018, by issuing fully paid Bonus Shares in
the proportion of one (1) Bonus share for every four (4) ordinary shares held. The Directors of the Company, directly or
indirectly, are not personally interested in this issue, except to the extent of their shareholding in the Company.
210 Leveraging HR to Achieve Excellence

AGM Location Map

ATTOCK
HOUSE
 Annual Report 2018 211

Glossary

AGL HSD OGRA

Attock Gen Limited High Speed Diesel Oil and Gas Regulatory Authority

AGM HSEQ OHSAS

Annual General Meeting Health Safety Environment and Quality Occupational Health and Safety
Management System
AHL HSFO
Attock Hospital (Pvt.) Limited High Sulfur Furnace Fuel Oil OMCs
Oil Marketing Companies
AOC IAS
Attock Oil Company Limited International Accounting Standards PACRA
The Pakistan Credit Rating Agency
APL ICAP Limited
Attock Petroleum Limited Institute of Chartered Accountants of
Pakistan PICG
ASF Pakistan Institute of Corporate
Attock Sahara Foundation ICMAP Governance
Institute of Cost and Management
AITSL Accountants of Pakistan PMB
Attock Information Technology Polymer Modified Bitumen
Services (Pvt.) Limited IFEM
Inland Freight Equalisation Margin PMG
BPD Premium Motor Gasoline
Barrels Per Day IFRS
International Financial Reporting POL
BR&A Standards Pakistan Oilfields Limited
Business Review and Assurance
IPP PSO
CBA Independent Power Producer Pakistan State Oil Company Limited
Collective Bargaining Agent
ISO PSQCA
CCG International Organization for Pakistan Standard Quality Control
Code of Corporate Governance Standardization Authority
CDC JBO RFO
Central Depository Company of Jute Batching Oil Residual Fuel Oil
Pakistan Limited
JPs SECP
CSR Jet Petroleum Securities and Exchange Commission
Corporate Social Responsibility of Pakistan
LDO
DHDS Light Diesel Oil UNGC
Diesel Hydro De-Sulpurization United Nations Global Compact
LPG
EPS Liquefied Petroleum Gas UOP
Earning Per Share Universal Oil Products
LSFO
FFO Low Sulfur Furnace Fuel Oil WPPF
Furnace Fuel Oil Workers Profit Participation Fund
LSRN
GRM Light Straight Run Naphtha WWF
Gross Refiner’s Margin Workers Welfare Fund
MTT
HBU Mineral Turpentine Tar
Howe Baker Unit
NCPC
HOBC National Cleaner Production Centre
High Octane Blending Component
NRL
HR&A National Refinery Limited
Human Resource and Administration
212 Leveraging HR to Achieve Excellence

Notes
 Annual Report 2018 213

Form of Proxy
Attock Refinery Limited
40th Annual General Meeting

I / We

of

being member(s) of Attock Refinery Limited holding

ordinary shares hereby appoint Mr. / Mrs. / Miss

of or failing him / her

of

as my / our proxy in my / our

absence to attend and vote for me/us and on my/our behalf, at the 40th Annual General Meeting of the

Company to be held on Tuesday, September 25, 2018 at 11:45 a.m. at Attock House, Morgah, Rawalpindi and at

any adjournment thereof.

CDC Account No.
Folio No.
Participant I.D. Account No. Signature on
Five Rupees
Revenue Stamp
The Signature should agree
with the specimen registered
with the Company

Dated this day of 2018 Signature of Shareholder

Signature of Proxy

1. WITNESS: 2. WITNESS:

Signature Signature
Name Name
Address Address

CNIC No. or CNIC No. or

Passport No. Passport No.
Important:

1. This Proxy Form, duly completed and signed, must i. Attested copies of CNIC or the passport of the
be received at the Registered Office, P.O. Refinery, shareholders and the proxy shall be provided with the
Morgah, Rawalpindi-46600, Pakistan not less than 48 proxy form.
hours before the time of holding the meeting.
ii. The proxy shall produce his / her original CNIC or
2. If a member appoints more than one proxy and more original passport at the time of the meeting.
than one instruments of proxies are deposited by a
iii. In case of a corporate entity, the Board of Directors’
member with the Company, all such instruments of
resolution / power of attorney with specimen signature
proxy shall be rendered invalid.
shall be submitted (unless it has been provided earlier)
3. For CDC Account Holders / Corporate Entities: alongwith proxy form to the Company.
In addition to the above the following requirements
have to be met:
214 Leveraging HR to Achieve Excellence

AFFIX
CORRECT
POSTAGE

The Company Secretary,

ATTOCK REFINERY LIMITED
P. O. Refinery, Morgah,
Rawalpindi - 46600,
Pakistan.
Annual Report 2018 215
216 Leveraging HR to Achieve Excellence

AFFIX
CORRECT
POSTAGE

The Company Secretary,

ATTOCK REFINERY LIMITED
P. O. Refinery, Morgah,
Rawalpindi - 46600,
Pakistan.
 Designed & Printed by : PrintSol

Attock Refinery Limited

P.O. Refinery, Morgah, Rawalpindi, Pakistan.
Tel: 92-51-5487041-45 | Fax: 92-51-5487093 & 5406229
Email: info@[Link]
[Link]